High Praise, Low Number: House FY 2012 Funding Recommendation Slashes ARPA-E Budget

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Publication date: 
28 June 2011
Number: 
77

Without  a stated reason in the committee report, the FY 2012 House Energy and Water  Development Appropriations Bill recommends, as compared to this year, a cut of  44.3 percent or $79.6 million in the FY 2012 budget for the Advanced Research  Projects Agency-Energy.  The $100.0  million level in the proposed bill stands in stark contrast to the $550.0  million Administration request.  An  attempt to increase this funding was rejected when the bill was considered by  the full committee, as reviewed below, with notable opposition from a senior  Democratic member.

The  appropriators devoted two pages to ARPA-E in the committee report   accompanying the bill that were, on balance, very supportive of the  agency.  In the introduction to this  section, the appropriators state:

“The  Advanced Research Projects Agency - Energy (ARPA-E) supports research aimed at  rapidly developing energy technologies whose development and commercialization  are too risky to attract sufficient private sector investment, but that are  capable of significantly changing the energy sector to address our critical  economic and energy security challenges. Projects funded by ARPA-E include such  wide-ranging areas as production processes for transportation fuel alternatives  that can reduce our dependence on imported oil, heating and cooling  technologies with exceptionally high energy efficiency, and improvements in  petroleum refining processes.”

Excerpts  from other sections follow:

Personnel

“ARPA-E,  launched in the first half of 2009, has been widely praised for its internal management  and its effective collaboration with industry and academia.” 

"Further,  the Administration has emphasized the importance of hiring leading technical  experts to serve for limited terms as ARPA-E program directors, and it has had  notable success assembling a strong leadership team known to be at the  technical forefront of ARPA-E areas of focus. The Committee encourages the  Department to apply lessons learned from ARPA-E’s program director strategy to  other Department of Energy programs, and to evaluate whether term assignments  of technical experts for program management positions are advantageous and  practical in other Department program offices.”

Up-front  Project Funding

“The  Department has decided to fund ARPA-E projects in fiscal year 2012 in the same  fashion by fully funding most new awards with fiscal year 2012 appropriations.  The Committee       supports  this decision, as it will not create mortgages on funding in future years and  will preserve the program’s flexibility to enter new technology areas each year  rather than saddling the       budget  with commitments to past awards.”

Project  Risk

“Project  risk, however, is difficult to measure and quantify, and the Department has not  set forth a plan for how it intends to do so more coherently than on a  case-by-case basis. The Committee strongly encourages the Department to fund  only projects that cannot otherwise attract private capital investment, and  directs ARPA-E to provide to the Committee, not later than December 15, 2011, a  definition of estimated project risk that guides the determination of what  projects should  be funded by ARPA-E and what are more appropriate for other Department  programs.

“ARPA-E  leadership has noted that failure of projects is endemic to the high risk level  deliberately chosen by the program. The organization is accordingly considering  the first terminations of projects that have not met performance standards. The  Committee does not view  a measured quantity of project terminations as a symptom of program failure,  but rather as an indication that the program has chosen projects with an appropriately  high level of risk. Further, the Committee views the termination of projects as  a sign of strong program management capable of enforcing a commitment to use scarce  federal funding effectively.”

The  final section is entitled Progress Report, and is below in full:

“Only  in its third calendar year of operation, ARPA-E is still an experimental  research model for energy innovation and the Department must continue to  closely evaluate the efficacy of the program. By its nature, some of the  program’s projects will yield moderate successes, some projects will fail, and  perhaps others will yield great success. However, the Department has not       stated  how it will measure the program’s overall success in the near-, mid- and  long-term. The Department must determine the frequency with which ARPA-E  projects should succeed in order to consider the overall program a success, and  over what timeframe it expects the program to yield successes that  significantly impact the energy marketplace and American competitiveness.

“The  Committee looks forward to receiving a clear articulation by the Department of  its measurement plan, project success rate targets, and market impact goals for  ARPA-E. To help the Committee begin to gauge ARPA-E’s success rates, the  Department is directed to provide,       not  later than February 10, 2012, a listing of all projects, including areas of  focus; federal funding levels, private sector capital attracted before and  after engagement with ARPA-E, and an assessment of project performance compared  with ARPA-E’s project targets. The Committee acknowledges the tension between  transparency and confidentiality for award recipients when ARPA-E reports on  project metrics, and the Committee will work with ARPA-E to find the right  balance.”

When  the full House Appropriations Committee considered the bill on June 15, Rep.  Adam Schiff (D-CA) offered an amendment to restore ARPA-E’s proposed FY 2012 funding  to its current level of $179 million a year.   Schiff lauded ARPA-E’s funding of high risk, high reward R&D and its  management structure, saying that the government should encourage such an  approach.  He cited a report   by Norman Augustine, Bill Gates, Jeff Immelt and other senior corporate leaders  recommending ARPA-E annual funding of $1 billion.  While acknowledging the need to reduce the  federal deficit, Schiff stressed the importance of research such as that supported  by ARPA-E to energy advances and national security.

Energy  and Water Development Appropriations Subcommittee Chairman Rodney Frelinghuysen  (R-NJ) opposed the amendment.  He pointed  out that the almost $80 million Schiff wanted to restore to ARPA-E’s budget was  not offset by a funding reduction elsewhere in the bill.  If adopted, Schiff’s amendment would require  reductions to be made in other subcommittee allocations, cautioned  Frelinghuysen.

The  subcommittee’s Ranking Democratic Member, Peter Visclosky (D-IN), was far more  pointed in his opposition, telling his colleagues:  “My concern is ARPA-E is about a year to  eighteen months old.  We also have 21  labs and technology centers at DOE.  We  have 46 Energy Frontier Research Centers.   Assuming this bill is adopted in its entirety, we are going to have five  Hubs for energy innovation.   We have 3  Bioenergy Research Centers.  And we have  a Joint Genome Institute.  At this point,  until DOE can prove that they can manage programs adequately and stop creating more  stove pipes I’m not interested in pushing another $79 million at them.”

Rep.  Chaka Fattah (D-PA) spoke in favor of the amendment, praising ARPA-E’s business-centered  approach and its research into new battery technologies enabling the U.S. to significantly  increase its global market share.  Fattah  and Schiff’s recommendation to maintain ARPA-E’s funding at its current level  did not sway a majority of their fellow appropriators.  Schiff’s amendment failed on a voice vote.  Said Schiff before the vote was taken: “If  there’s an illustration of cutting the seed corn, I think, in the federal  budget this year, this may be it.”

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