A product of two years of legislative work, the Energy Act of 2020 overhauls policy across the Department of Energy’s applied energy and fusion R&D programs, including by recommending substantial funding increases and greatly expanding efforts aimed at reducing carbon emissions.
At the end of December, U.S. energy policy received its biggest overhaul in more than a decade when President Trump signed the Energy Act of 2020 as part of a legislative package that also finalized fiscal year 2021 appropriations and delivered a new round of pandemic relief spending.
Reconciling parallel House and Senate efforts, the act updates congressional direction for the Department of Energy’s applied energy offices and fusion science program, and in many cases prescribes significant funding increases. While actual funding is contingent on future appropriations, the act sets goals for large-scale technology projects that prefigure new funding opportunities for commercial ventures in addition to continued support for R&D at universities and DOE’s national labs.
Passing the act was a high priority for Sen. Lisa Murkowski (R-AK) as she served her third and final term as chair of the Senate Energy and Natural Resources Committee. She has cast the legislation as a long-overdue successor to the Energy Independence and Security Act of 2007 and an achievement of consensus-based, bipartisan lawmaking. Committee Ranking Member Joe Manchin (D-WV) worked closely with her on the effort and, with Democrats now taking over the Senate, he is in line to take her spot as chair.
A number of congressional Democrats are framing the act as a prelude to more aggressive steps. House Science Committee Chair Eddie Bernice Johnson (D-TX) has called it a “down payment,” while Senate Minority Leader Chuck Schumer (D-NY), now set to lead the majority, welcomed it as a climate policy win in a “difficult political environment.” He argued, though, that the legislation is inadequate against the threats of climate change and said he plans to work with the incoming Biden administration to “deliver bold climate action in the Senate.”
Alongside the Energy Act, the package it is attached to includes a separate provision requiring that the U.S. phase down the use of hydrofluorocarbons (HFCs), a potent class of greenhouse gases, to 15% of a baseline level by 2036. Ironically, the same provision temporarily derailed the Senate energy legislation when it was introduced as a potential amendment last spring.
The HFC phasedown brings U.S. policy into alignment with the 2016 Kigali agreement and has been anticipated by industry, which has traditionally employed HFCs as refrigerants but is transitioning to alternatives. Environmental groups are hailing the provision as a critical contribution to a global HFC-elimination effort that aims to avert up to 0.4 degrees Celsius in climatic warming.
Some of the act’s most far-reaching energy innovation provisions relate to carbon mitigation. Within DOE, the legislation gives carbon capture, utilization, and storage (CCUS) activities a more central place in the Office of Fossil Energy’s R&D portfolio, recommending Congress immediately increase their combined annual funding from a current level of about $200 million to more than $1 billion. It also removes statutory direction for DOE’s coal power technology program while leaving the statutes in place for natural gas programs.
Carbon capture projects. About half the envisioned CCUS budget would fund carbon capture technology demonstrations with a goal of supporting six by the end of fiscal year 2025. The act stipulates two would be for coal power plants, two for natural gas plants, and two for industrial facilities. In addition, the act envisions spending about $200 million annually on pilot projects for moving new technologies beyond laboratory-scale development.
Carbon storage and utilization. The act recommends Congress more than double current funding levels for carbon storage and utilization to an initial combined level of about $250 million with utilization activities now administered as their own program. The storage program is to be focused on geological and environmental research and on technology testing and it is authorized to support large-scale carbon sequestration demonstrations. The utilization program is to be focused on analyzing carbon life cycles and exploring novel uses for carbon dioxide and fossil fuel materials. The program is required to support one two-year demonstration project in each of the “two major coal-producing regions of the United States.” A provision in the package that is separate from the Energy Act and adapted from the Utilizing Significant Emissions with Innovative Technologies (USE IT) Act also updates policy for DOE carbon utilization activities.
Atmospheric removal. DOE is directed to lead a multi-agency program supporting technologies and methods for removing carbon dioxide from the air. The act specifies that the program may include R&D and demonstration efforts related to direct air capture technologies, bioenergy, enhanced geological weathering, agriculture, forests, and artificial and natural carbon sinks. DOE is to conduct two technology prize competitions focused respectively on precommercial capture from “dilute” media that are less than 1% carbon dioxide, and on commercial applications of direct air capture technologies. The department is also directed to make an award for at least one direct air capture test center. Drawing from DOE’s Fossil Energy, Energy Efficiency and Renewable Energy, and Science offices, the act recommends annual funding of more than $60 million for the program, about double the current level of $32.5 million. An additional $115 million in one-time funding is recommended to fund the center and the prize competitions.
Industrial carbon emissions. The act creates a new multi-agency program aimed at reducing carbon emissions from industrial sources outside the electrical power sector, which are considered a particular challenge to reaching nationwide net-zero carbon emissions. Within DOE, the act recommends that annual funding for these efforts ramp up from an initial level of $20 million to $150 million by fiscal year 2024. The program is to be guided by a new independent advisory committee and complemented by a new DOE program to provide technical assistance to industry in implementing emissions-reducing technologies.
Advanced reactor demonstrations. The act formally authorizes the Advanced Reactor Demonstration Program that DOE created last year at the direction of congressional appropriators. The aim of the program, which has already issued awards for two demonstration projects, is to speed the commercialization of nuclear reactors with designs that depart markedly from currently operating reactors. Although the act does not set goals for awarding or completing demonstrations, it recommends Congress immediately start spending $405 million per year on the program, considerably more than the $250 million just appropriated for the program’s second year. The act does not stipulate that the government enter an agreement to purchase power from an advanced reactor, which was a feature of an earlier version of the legislation.
Versatile Test Reactor. The act recommends that Congress ramp up construction funding for the Versatile Test Reactor to $584 million by fiscal year 2025. The reactor is a proposed user facility for irradiating materials, nuclear fuels, and components with the high-energy neutrons that would be employed in certain advanced reactor designs. DOE estimates the facility will cost between $2.6 billion and $5.8 billion to build. Although Congress directed DOE to move ahead quickly with the reactor in 2018 through its Nuclear Energy Innovation Capabilities Act, appropriators have just pumped the brakes on the project, reducing its annual budget from $65 million to $45 million and directing DOE to reformulate it as a public-private partnership, potentially using a milestone-based funding approach.
Enriched fuel availability. The act backs DOE’s continued provision of R&D and financial assistance to support the development of a domestic supply of high-assay low-enriched uranium (HALEU). HALEU is uranium that is enriched to consist of nearly 20% uranium-235, a highly fissionable isotope, and is required by many advanced reactor designs. DOE is currently backing a private HALEU production demonstration at a facility in Ohio with a completion date in early 2022.
Within the Office of Science, DOE’s Fusion Energy Sciences program has long supported basic research in nuclear fusion and plasma science, and the act now specifies it should “address the scientific and engineering challenges to building a cost competitive fusion power plant and to support the development of a competitive fusion power industry in the United States.” The act also recommends Congress fund the program at more than $900 million annually in each of the next five years, considerably above the current level of $672 million as well as the constrained budget scenarios considered in the program’s new long-range strategic plan.
ITER. The act recommends an immediate hike in the fusion program budget to $996 million to accommodate a one-time increase in the U.S. contribution to the France-based ITER project to $374 million. After that, contributions would remain steady at $281 million. Congress appropriated $242 million for ITER this fiscal year.
Fusion ventures. The act establishes a new “milestone-based development program,” which aims to foster the emergence of a U.S. fusion power industry by supporting “construction of new full-scale fusion systems capable of demonstrating significant improvements in the performance of such systems.” Any entity deemed to have the “necessary resources and expertise” is eligible for participation and must bear all project costs up front, receiving reimbursement only after achieving defined project milestones. The act recommends a funding profile that rises from $45 million to $105 million by fiscal year 2023, descending back to $45 million by fiscal year 2025.
Non-tokomak and enabling technologies. Within the Fusion Energy Sciences portfolio, the act lays out a larger emphasis on approaches to fusion that do not involve employing tokamaks, which are magnetic plasma confinement devices that have a toroidal geometry. The act recommends that within the program budget, $25 million be allocated per year for supporting inertial fusion methods, such as ion beam, laser, and pulsed power fusion systems. Currently, most of DOE’s work in inertial fusion is conducted through its nuclear weapons program. The act also establishes a separate program in “alternative and enabling concepts,” with recommended annual funding of $50 million. The program is to support work in areas such as non-tokomak magnetic confinement approaches, magnetized target fusion energy concepts, the use of high-temperature superconductors to achieve high magnetic fields, the use of liquid metals to address problems relating to the interaction of plasma with the fusion device wall, advanced “blankets” for heat management and fuel breeding, and advanced computing activities.
Although the act establishes no major new initiatives across DOE’s renewable energy programs, it recommends increasing their collective budgets from their current level of $646 million to $782 million. The act also provides updated direction for what kinds of projects the programs should support, detailing activities spanning from R&D through to demonstration projects and commercialization assistance.
Geothermal energy. Among the renewable energy programs, the act recommends the largest budget increase for geothermal energy, from a current level of $106 million to $170 million. It authorizes expanding the Frontier Observatory for Research in Geothermal Energy (FORGE) program from its current research and test site in Utah to up to two additional sites. In addition, it directs DOE to support four demonstrations of enhanced geothermal systems, including at least one east of the Mississippi River.
DOE is directed to establish a new Energy Storage System Research, Development, and Deployment Program, focused on both short and long-duration large-scale storage systems, storage for transportation, and associated problems such as recycling and disposal. By the end of fiscal year 2023, the department is to enter agreements to carry out three system demonstration projects, including at least one for a long-duration storage system. It is also directed to establish a joint program with the Defense Department to demonstrate and help commercialize promising long-duration storage technologies.
The act recommends Congress appropriate $201 million per year to DOE for the overall program, drawing on resources from DOE’s Electricity, Energy Efficiency and Renewable Energy, and Science offices. That is slightly below the $205 million the House had proposed appropriating for DOE’s current Energy Storage Grand Challenge initiative this year.
Advanced Research Projects Agency–Energy
The act recommends that Congress ramp up the budget for ARPA–E from its current record-high level of $427 million to $761 million by fiscal year 2025. The 2005 Rising Above the Gathering Storm report, which called for Congress to create the agency, envisioned it having a $1 billion budget.
Through the act, ARPA–E’s mission is also expanding to encompass work on nuclear waste cleanup and the resilience, reliability, and security of energy systems. Other provisions stipulate that agency grantees must demonstrate that their projects cannot secure alternative funding and direct the agency to avoid duplicating the efforts of other parts of DOE and other research agencies.
Energy-water nexus. The act directs DOE to establish an Interagency Research, Development, and Demonstration Coordination Committee on the Nexus of Energy and Water for Sustainability (NEWS) in cooperation with the Department of the Interior, and to establish an associated office to support the committee’s administrative functions. The committee is tasked with establishing a unified strategy around a range of issues within the NEWS rubric, including water use efficiency in energy applications, energy use in water supply systems, and generating energy from water or wastewater systems. The committee’s work builds on efforts initiated during the Obama administration.
Low-dose radiation research. Building on the DOE Research and Innovation Act’s requirement that the Office of Science revive its low-dose radiation research program, the Energy Act recommends immediately allocating $20 million per year to these activities, increasing to $40 million by fiscal year 2024. In its fiscal year 2021 appropriation, Congress directed DOE to spend at least $5 million on the program.
Technology transfer and partnerships. The act cements in statute the Office of Technology Transitions that DOE created in 2015 to coordinate commercial development of the department’s research outputs and to oversee the Energy Technology Commercialization Fund created through the Energy Policy Act of 2005. The act also provides additional direction concerning how the fund is to be used to support commercialization efforts. In addition, the act gives statutory backing to DOE’s lab partnering service pilot program, a three year effort to foster partnerships between public and private sector entities and DOE national labs.
EPSCoR. Administration of DOE’s Established Program to Stimulate Competitive Research is elevated from the Office of Science to the energy secretary’s office and its authority is expanded to include DOE’s applied energy R&D and environmental management programs. The program supports efforts to build research capacity in states that traditionally receive smaller shares of federal research grant funding.
National Energy Technology Lab. NETL is the only one of DOE’s 17 national labs that the department operates directly, requiring it to abide by many rules that do not apply to the other, contractor-operated labs. To provide NETL with more administrative flexibility, the act grants it special hiring authorities available to the other labs and authorizes its participation in DOE’s Laboratory-Directed R&D program, which allows labs to reserve up to 6% of their operating and capital budget for discretionary projects.