House Science Subcommittee on Investigations and Oversight Holds Hearing on a Review of the Advanced Research Projects Agency-Energy

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Publication date: 
8 March 2012
Number: 
37

“If the federal  government is going to fund energy research it should not duplicate or  crowd-out private sector investment.  It  should focus on revolutionary breakthroughs that will transform our energy  infrastructure.” -- Rep. Paul Broun (R-GA), Chairman of the Subcommittee on  Investigations and Oversight

The House Committee on Science, Space, and Technology’s  Subcommittee on Investigations and Oversight held a hearing on January 23, 2012  entitled “A Review of the Advanced Research Projects Agency-Energy.”  The goals of this hearing were to review the  performance of the Advanced Research Projects Agency – Energy (ARPA-E), which  is a Department of Energy (DOE) agency, and to evaluate the recent Government  Accountability Office (GAO) and Department of Energy Inspector General reports  on the activities of ARPA-E. 

The witnesses for the hearing were: Arun Majumdar, ARPA-E  Director; Gregory H. Friedman, DOE Inspector General (IG); and Frank Rusco, GAO  Director of the Natural Resources and Environment Division.

ARPA-E was established in 2007 by the America COMPETES  Act.  The goals of ARPA-E are to “overcome the long-term and high-risk  technological barriers in the development of energy technologies” that  result in “reductions of imports of  energy from foreign sources; reductions of energy-related emissions, including  greenhouse gases; and improvement in the energy efficiency of all economic  sectors.” 

The America COMPETES Act instructed ARPA-E to achieve  these goals by “identifying and promoting  revolutionary advances in fundamental sciences; translating scientific  discoveries and cutting-edge inventions into technological innovations; and  accelerating transformational technological advances in areas that industry by  itself is not likely to undertake because of the technical and financial  uncertainty.”

The opening statements of Broun and Rep. Paul Tonko  (D-NY) set the tone for the hearing: 

“The Committee was  concerned that ARPA-E would compete with the Office of Science for scarce  resources, thereby undermining basic research.   Similarly, the Committee was also concerned that ARPA-E could  unnecessarily duplicate DOE’s significant related work in other programs and  areas scattered throughout the department.   Finally the Committee was concerned ARPA-E would focus on late-stage  technology development and commercialization efforts that are better left for  the private sector to undertake, thereby accepting both the risk and the  potentially great reward,” said Broun.

“ARPA-E could apply  the successful DARPA model to the energy sector and enable promising ideas to  move expediently towards proof-of-concept or demonstration.  ARPA-E was to take on a scope of work that  the private sector could not take on by itself and to accelerate the timeline  of innovation in a way other agencies or venture capital could not do alone.  Nothing in the GAO report that tackles this  question suggests ARPA-E is doing anything but what the Congress and the  President envisioned when ARPA-E was established in 2007,” said Tonko.

Majumdar began his testimony by highlighting the work of  ARPA-E, stating that “ARPA-E looks to  high impact research projects that the private sector is unlikely to invest in,  but if successful, could create the foundation for entirely new industries.” He  emphasized that “projects focus on  research on innovative energy technologies while increasing America’s  competitiveness in rare earth alternatives and breakthroughs in biofuels,  thermal storage, grid controls, and solar power electronics.”

While discussing the results of the GAO report, Majumdar  highlighted that ARPA-E agreed with the findings in the GAO report that “most ARPA-E projects could not have been  funded solely by private investors and venture capitalist[s] generally do not  fund projects that ARPA-E looks to fund.”  Projects which used ARPA-E funding are, as he insisted, separate and  different in scope from those funded by venture capital firms. 

In his testimony, Rusco said that “venture capital firms generally do not fund projects that rely on  unproven technological concepts or lack working prototypes demonstrating the  technology.”  He discussed examples  where funding from ARPA-E was used for new and cutting-edge research and  technology transfer.  He cited 18  applications for ARPA-E funding that had also received funding from venture  capital firms.  However, he stated later  during the questioning period following his testimony, that in most of these 18  cases, the funding received from ARPA-E was used for items which were  technologically different than the items which received from the venture  capital firms. 

Friedman testified that the IG report “revealed that ARPA-E generally had effective  systems in place to make research awards and to deploy Recovery Act  resources.  Of particular note, we found  that ARPA-E, despite being a relatively new program, had developed and  implemented research proposal selection criteria designed to make certain that  awards were consistent with its mission objectives.” 

Following the testimony, the majority of Member questions  were on the subject of whether or not ARPA-E funded only cutting-edge and new  projects that would not otherwise have been funded by the private sector.  A heated discussion ensued between Democrats  and Republicans with the Republicans questioning whether or not ARPA-E funded  programs which also received outside private sector funding truly required  ARPA-E funding to complete projects.  Democrats  argued that funding used to accelerate projects contributes to American  competitiveness in that those projects are being developed faster and can enter  the market sooner. 

Majumdar insisted that ARPA-E has “never funded any idea that has been funded by the private sector.”

When asked by Rep. Jerry McNerney (D-CA) whether or not  ARPA-E picks winners and losers as it provides funding to energy projects,  Majumdar responded that ARPA-E finds white spaces in the market, where there is  a need for new development, and then provides funding to multiple companies to  develop technologies to fill that need.   He emphasized that ARPA-E does not dictate which company is better than  others, but instead ARPA-E allows for a competitive market to develop in areas  where new technology and ideas are necessary. 

When asked by Broun whether ARPA-E funds only went to  projects that were too risky for the private sector, the panelists stated that  ARPA-E funds were used only for new ideas. 

Committee Chairman Ralph Hall (R-TX) asked where does  ARPA-E fit within the DOE list of priorities, to which Majumdar responded “Secretary Chu has said many times in the  past that ARPA-E is one of his top priorities.”

To view the hearing and read the reports discussed by the  Subcommittee, visit the website.