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Energy Innovation Investments Proposed in President’s Budget

By Jason Burwen

Friday, March 7, 2014

President Obama’s Fiscal Year (FY) 2015 budget requests $9.7 billion for the Department of Energy’s (DOE) investments in energy innovation. This represents a 10 percent increase over the FY2014 enacted budget for DOE’s energy innovation programs. In particular, the president’s plan increases the budgets of the Office of Energy Efficiency and Renewable Energy (EERE) and the Advanced Projects Research Agency – Energy (ARPA-E) by 21 percent and 16 percent, respectively, above FY2014 enacted levels.

Several highlights from the FY2015 budget request for DOE’s innovation programs illustrate the president’s desired direction of federal investments. The budget request for EERE specifically emphasizes electric vehicle and battery R&D, offshore wind power demonstration, enhanced geothermal energy demonstration and advanced energy manufacturing innovation. The budget request for ARPA-E lists 4-5 new competitive grant solicitations focused on “new ways to generate, store, and use energy,” in addition to a new open solicitation. The Fossil Energy office request includes $25 million to begin planning a carbon capture demonstration on a natural gas-fired power plant, with cuts to FY2014 enacted budgets for carbon capture and storage R&D. The Nuclear Energy office request includes $27.5 million to begin planning a pre-commercial pilot of electricity generation from supercritical carbon dioxide. Additionally, the budget request specifies budgets for activities across multiple DOE offices, including grid modernization and advanced computing for energy technology simulations.

Additionally, the president’s budget repeats its calls for Congress to establish an Energy Security Trust, which would allocate $2 billion over 10 years from federal oil and gas lease revenue to alternative fuel and vehicle technology research and development (R&D).

The only new line item in DOE’s budget request is $484 million as part of the Opportunity, Security and Growth Initiative (OSGI). The OSGI represents $56 billion in discretionary investments across multiple agencies, intended to “spur economic progress and strengthen our national security.” For DOE, the OSGI would include additional investments in clean energy development and deployment, as well as critical infrastructure resilience. Additionally, the president’s previously proposed $200 million Race to the Top for Energy Efficiency and Grid Modernization program is rolled into the OSGI.

Interestingly, the president’s FY2015 request for DOE investments in energy innovation also represents a 1 percent decrease from the president’s FY2014 request for these items. In particular, after ambitious requests for EERE and ARPA-E in FY2014, the president has scaled back the requests for these programs by 17 percent and 14 percent, respectively. At the same time, the FY2015 request increases requests for Nuclear and Fossil Energy budgets from FY2014 by 17 percent and 13 percent, respectively.

In addition to DOE, the president’s FY2015 budget request includes energy innovation investments at the Department of Defense (DOD) and the Department of Agriculture (USDA).

The budget request for DOD is not yet detailed enough to fully quantify investments in energy innovation. However, the president’s request cites a deliberate emphasis on “improving the fuel efficiency of existing equipment, developing and fielding innovative energy technologies, expand¬ing renewable energy sources and improving the energy efficiency of buildings.” The FY2015 budget proposal requests $2.9 billion (a 3.5 percent increase from FY2014) for the Defense Advanced Research Projects Agency (DARPA), a portion of which undertakes energy-relevant R&D. Both the Army and Navy are expected to continue previous programs to procure renewable energy and advanced energy infrastructure for military bases. DOD also cites continuing use of third-party financing to deploy new energy efficiency projects and suggests aiming to sign at least $800 million of such projects in the near term.

The budget request for USDA, including mandatory amounts from the Farm Bill, proposes more than $190 million for programs supporting bio-energy research, development, demonstration, and deployment. Additionally, the budget request for USDA proposes $5.3 billion of loan and loan guarantee authority to assist the deployment of cleaner fossil energy and renewable energy in rural power districts.

Innovation is vital to meeting the economic, security, and environmental challenges of America’s energy system. For this reason, both BPC’s Strategic Energy Policy Initiative and American Energy Innovation Council have underscored the critical importance of federal investments in energy innovation to economic growth and international competitiveness.

2014-03-07 00:00:00

KEYWORDS: ADVANCED PROJECTS RESEARCH AGENCY, AMERICAN ENERGY INNOVATION COUNCIL (AEIC), DEPARTMENT OF AGRICULTURE, DEPARTMENT OF DEFENSE, DEPARTMENT OF ENERGY, FARM BILL, OFFICE OF ENERGY EFFICIENCY AND RENEWABLE ENERGY, PRESIDENT BARACK OBAMA, STRATEGIC ENERGY POLICY INITIATIVE