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

Richard M. Jones
Number 118 - December 3, 2010  |  Search FYI  |   FYI Archives  |   Subscribe to FYI

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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.  

Richard M. Jones
Media and Government Relations Division
American Institute of Physics