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Energy Innovation Wins Big in Congress: An FY20 Appropriations Snapshot

The Brief

The Fiscal Year 2020 appropriations package resulted in significant bipartisan, bicameral support for increased energy innovation funding. The continued ramp up in spending for innovation of energy resources and technologies, particularly clean energy technologies, will lead to improved emissions reduction efforts and greater international economic competitiveness for the United States.

The Bipartisan Policy Center Energy Project’s portfolio is focused on developing pragmatic, evidence-based policy solutions for the nation’s energy and climate challenges. BPC has worked for years to amplify the importance of increased energy innovation, since it is a strong driver of economic growth, quality job creation, and international economic competitiveness. This key focus led BPC to convene the American Energy Innovation Council and the Direct Air Capture Advisory Council. The AEIC advocates for an aggressive ramp-up in investment to better support the U.S. energy innovation ecosystem. The Direct Air Capture Advisory Council aims to amplify discourse about direct air capture and its key role in a technology-inclusive emissions reduction and carbon dioxide removal portfolio.

BPC has worked diligently to ensure that the technologies and programs listed here, along with many others, continue to receive strong federal research and development funding. We are grateful to Congress for passing an FY20 appropriations package that recognizes the importance of greater investment in energy and the overall U.S. innovation ecosystem.

Below, we consider a small selection of notable FY20 energy innovation appropriations.

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Advanced Research Projects Agency-Energy

FY20 Appropriations: Provides DOE $425 million for ARPA-E

Since its inception, ARPA-E has played an integral role in supporting high-risk, high-reward companies that are in the initial stages of the innovation lifecycle. The agency engages with innovators and entrepreneurs who have had difficulties in securing the necessary private sector funding to continue researching and developing their technologies or processes. Due to this unique role, there is a backlog of projects vying for ARPA-E’s funding support. With a greater budget—especially a 16% budget increase from the FY19 appropriations level of $366 million—ARPA-E will be able to further spur innovation, leading to positive impacts for the economic competitiveness of the United States.

Carbon Dioxide Removal, particularly Direct Air Capture

FY20 Appropriations: Provides DOE $60 million for R&D of carbon dioxide removal technology, with at least $35 million of that specifically for direct air capture; provides Department of Defense $8 million for R&D of direct air capture and ocean carbon capture technologies

This new funding for carbon dioxide removal R&D is a stark signal of the importance of improving new technologies that will impact both emissions removal and U.S. economic growth.

Due to rising emissions trends not only in the United States, but around the world, it is no longer enough to simply switch to cleaner energy technologies. To achieve net-zero carbon dioxide emissions by 2050, it is necessary to begin removing carbon dioxide from the atmosphere. These two complementary activities: emissions reduction (e.g., switching to clean energy technologies, improved energy efficiency, etc.) and carbon dioxide removal, will require robust and consistent spending on R&D of a variety of technological tools.

Among the wide range of carbon dioxide removal technologies, direct air capture, which removes carbon dioxide directly from the atmosphere, is emerging as a potentially powerful tool. Direct air capture is unique among carbon dioxide removal approaches because it can be sited where needed, used to support both carbon utilization and carbon sequestration, and possesses significant scaling opportunities. Direct air capture should be able to occupy a variety of roles and produce considerable environmental and economic benefits in a low-carbon future. Newly dedicated funding of $35 million is much needed to improve efficiencies of this promising nascent technology.

DOD will also take on direct air capture and ocean carbon capture work under the direction of the SEA FUEL Act, which was included in the National Defense Authorization Act. DOD’s $8 million for R&D is sure to further researchers’ understanding of these two notable technological processes and will also complement DOE’s efforts.

Carbon Use and Reuse

FY20 Appropriations: Provides DOE $21 million for R&D

Carbon use and reuse has not traditionally been a primary topic of focus for the United States, as is reflected in previous appropriations packages. In recent years, however, the demand for emissions reduction and clean technologies has grown, along with the global market for carbon dioxide. Carbon dioxide can be used as an input in a variety of processes, ranging from carbonated beverage production to enhanced oil recovery. To help U.S. companies increase their competitiveness in the global market for carbon dioxide, federal investment in carbon use and reuse (in parallel with carbon capture) must increase, a sentiment that is echoed by the significant funding increase for such technologies and processes in the FY20 appropriations package.

Critical Materials Institute

FY20 Appropriations: Provides DOE $25 million for R&D

In recognition of its importance to the U.S. innovation ecosystem, Congress has maintained appropriations funding of $25 million for the Critical Materials Institute. CMI, a DOE Innovation Hub located at Ames Laboratory, focuses on technologies that use materials more efficiently and eliminate the need for certain materials subject to supply disruptions. In particular, CMI concentrates on rare earth materials, battery materials (e.g., cobalt, lithium, manganese, graphite), as well as indium and gallium. A stable supply of these materials, as well as increased recycling, diversification of materials used, and technological innovations are all necessary to support cost-effective and innovative clean energy technology research, development, demonstration, deployment, and commercialization. Consistent funding for CMI will enable it to focus on materials that are fundamental to a low-carbon clean energy future.

Industrial Carbon Capture

FY20 Appropriations: Provides DOE $4 million for R&D

Newly dedicated funding and language to support industrial carbon capture and broader decarbonization efforts in the FY20 appropriations will be a boon to the sector and its emissions profile. It has become increasingly clear in recent years that more innovative solutions are necessary to contend with emissions in the industrial sector (steel, cement, aviation, etc.). Although much of the U.S. industrial sector has taken significant steps to increase energy efficiency and reduce emissions, there is only so much it can accomplish without viable alternative low- or zero-carbon sources of fuel (e.g., hydrogen, advanced nuclear, etc.) and process innovations (many industrial chemical reactions generate emissions). Until such resources and processes are developed and incorporated cost-effectively, carbon capture placed at industrial plants is one key method to mitigate emissions from this sector. Previously, DOE’s Office of Fossil Energy had no dedicated funding for industrial carbon capture.

Loan Programs Office Title 17 Loan Guarantee Program

FY20 Appropriations: Provides DOE $29 million for the Title 17 administrative expenses

LPO has been crucial for strengthening America’s global competitiveness in innovative clean energy technologies. LPO provides financing to projects in the later stages of the innovation lifecycle that struggle to attract private investment, often because of perceived project risk. LPO’s Title 17 program is its largest and longest-standing program and is meant to help energy project developers bridge the technological “valley of death.” Thus far, the Title 17 program portfolio has included: nuclear energy, advanced fossil energy development, concentrating and photovoltaic solar, wind energy, geothermal energy, storage and transmission, and bioenergy and biofuels projects. Adequate and consistent appropriations for the Title 17 program’s administrative expenses ensure that LPO staff can do their due diligence when considering projects for direct loans, partial loans, or loan guarantees. The appropriations for the Title 17 program’s administrative expenses have vacillated over the years (due to a number of complex factors); for instance, appropriations for the Title 17 program were about $31 million for FY18, dropped to $13 million in FY19, and have swung up again with FY20 appropriations.

Natural Gas Carbon Capture

FY20 Appropriations: Provides DOE $7 million for R&D

In the past, appropriations for carbon capture have been primarily directed towards coal plants, with scarcely any focus on the role of carbon capture systems at natural gas plants. While investments in research and development for carbon capture at coal plants should continue, increased focus on carbon capture for natural gas technologies is greatly needed. This is particularly important since natural gas will continue to play an important role in the global energy resource mix in the decades to come. This issue has steadily gained recognition, as is evidenced by the explicit appropriations funding for carbon capture for natural gas systems in the FY20 appropriations package.

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