PCAST Recommends Better Coordination and Increased Funding for U.S. Energy Transformation

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Publication date: 
3 December 2010

Warning  that the United States cannot wait the customary 50 years to adopt new energy  systems, the President’s Council of Advisors on Science and Technology   sent President Obama a report recommending a formal, coordinated approach to  the development of federal energy policy and a dramatic increase in federal  spending for energy research, development, demonstration and deployment.  

Ernest  Moniz of MIT and Maxine Savitz of the National Academy of Engineering were the  co-chairs of the 16-member PCAST Energy Technology Innovation System Working  Group that released its report released on Monday.  Requested by Energy Secretary Stephen Chu last  fall, the “Report to the President on Accelerating the Pace of Change in Energy  Technologies Though an Integrated Federal Policy”makes  important recommendations to accelerate within the next ten to twenty years “large-scale  transformation of energy production, delivery, and use to a low-carbon energy  system at a pace commensurate with mitigation of climate change risk.” In  developing the report, the Working Group met with Members of Congress and their  staffs, and officials from the Department of Energy, Office of Management and  Budget, national laboratories, universities, corporations, and other  organizations.

The  Working Group made eleven recommendations, two of which will attract the most  immediate attention.  The first calls for  the Executive Office of the President to conduct an interagency Quadrennial  Energy Review.  The proposed QER is  modeled on the Quadrennial Defense Review, the latest of which was issued in  February and is 128 pages long.  The Working Group describes this strategic QER  as a “multiyear roadmap” with short, intermediate, and long-term objectives to  guide the formulation of federal energy policy, Executive actions, and the  determination of resource requirements.   Importantly, the Working Group envisions the QER as the basis for  four-year authorization legislation that would guide annual appropriations.  Acknowledging the difficulty of an effort of  this magnitude and complexity, the Working Group recommends that the Department  of Energy first issue its own QER that would be completed by June 1, 2011.  After a staged series of annual updates, the  first government-wide QER would be produced by January 2015, and would be  issued every four years thereafter.  In  describing this effort, the report states:

“A  QER process would, in some sense, formulate an integrated energy policy for the  twenty-first century.  It will span  mission and vision definition, strategy, and tactics. The QER and the process  leading to it would provide an effective tool for Administration-wide coherence  on energy and for effective dialog with Congress on a coordinated legislative  agenda. Presidential interest and engagement will be a necessary ingredient for  success.”

Additional  information about the government-wide and Department of Energy QERs can be found  on pages 8 through 11 of the report.

The report’s second major  recommendation is a tripling of funding for energy science and technology.  The United States spends, as a fraction of  its Gross Domestic Product, significantly less on public energy RD&D than  Japan, Korea, France, and China.  Using a  number developed by the American Energy Innovation Council in its 2010 report,  “A Business Plan for America’s Energy Future,” the PCAST Working Group calls for $16 billion in annual  funding for clean energy innovation.  $12  billion of this would be allocated to R&D, with the remaining $4 billion  for “large-scale demonstrations and deployment.”  Regarding this funding, the Working Group  states:

“A high priority is expansion of  innovative new programs such as the Energy Frontier Research Centers (EFRCs, in  Basic Energy Science), ARPA-E, the Energy Innovation Hubs (in various science  and energy offices), and Bioenergy Research Centers (BRCs). These programs  largely incorporate the key program characteristics outlined by the AEIC and  have had strong peer review selection processes. While it is too early to  evaluate the long-term impact of these new programs, we applaud the initiation  of new ways of advancing the innovation agenda. We also note that the EFRC,  ARPA-E, Hub, and BRC programs constitute an interrelated set of multiyear  commitments to energy science and technology, and that their establishment spans  the previous and current Administrations. Congress also has played an active  role in advancing this agenda, especially with ARPA-E. This history offers hope  that these innovation programs will enjoy stable bipartisan support and  multiyear funding commitments.”

The report predicts “This increase will  provide the U.S. with the potential to leapfrog to development and deployment  of the advanced energy technologies that will define a robust 21st century  energy system.”

Current federal energy S&T funding  is approximately $5 billion.  Acknowledging  the size of the recommended increase and federal budget constraints, the  Working Group explains:

“With regard to resources, we recognize  that the discretionary budget is under severe pressure, so that a $10 billion  or $11 billion annual increase in energy RDD&D would be nearly impossible  to reach soon through the appropriations process. Without at least some ‘front-loading’  of this increased investment, however, benefits are unlikely to accrue in the  next decade.”

In order to provide this funding, the  report states:

"We recommend that the President  engage the private sector and Congress to generate about $10 billion per year  of additional RD&D funding through new revenue streams. This can be  accomplished through legislation or through regulatory mechanisms put in place  with the collaboration of the engaged industries, state and local governments,  non-governmental organizations, and consumer representatives.”

As examples of possible revenue  streams, the Working Group calculated a one mill/kWh charge would raise $4  billion per year, as would a two cents per gallon tax on a gallon of  transportation fuel.   A similar mechanism enabled important research  on coal bed methane resulting in the cumulative production of 25 trillion cubic  feet of gas, characterized in the report as “a very large return on a  relatively small RD&D investment.”

In addition to these recommendations,  the Working Group calls for a realignment of federal energy subsidies and  incentives; the use of the government’s purchasing power to advance energy technology  innovation; the reestablishment of the National Science and Technology  Council’s Committee on International Science, Engineering, and Technology; a  DOE training grant program; the initiation of a multidisciplinary social  science research program; and changes to   DOE’s procedures to “align internal processes and organization with  energy objectives.” 

In commenting on the report at its  release on Monday, the Staff Director of the Senate Committee on Energy and  Natural Resources called the PCAST report on point, and predicted that its  recommendations are likely to receive bipartisan support.  A similar effort in the early 1990s led to  the passage of significant energy legislation.   “There are grounds to be cautiously optimistic” he said. 

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