New Infrastructure Law to Provide Billions to Energy Technology Projects

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Publication date: 
November 9, 2021
Number: 
99

The special infrastructure spending legislation just approved by Congress includes around $25 billion for energy technology demonstration projects, as well as targeted budget increases for R&D programs at the Department of Energy and the U.S. Geological Survey.

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House Speaker Nancy Pelosi (D-CA) signs the Infrastructure Investment and Jobs Act.

(Image credit – Office of Rep. Pelosi)

In the coming days, President Biden will sign the Infrastructure Investment and Jobs Act, which will provide around a half-trillion dollars in new funding, largely for priorities such as upgrading the U.S. electric grid, transportation systems, and broadband networks. The House passed the bill late last week on a largely partisan vote of 228 to 206, almost three months after the Senate advanced it on a more bipartisan vote of 69 to 30.

Research and technology maturation are a relatively minor focus within the bill, but will nonetheless receive tens of billions of dollars, largely targeted to commercial demonstration projects funded by the Department of Energy. The spending will vastly expand DOE’s efforts in carbon mitigation and hydrogen production, and it will scale up R&D at DOE and the U.S. Geological Survey aimed at reducing U.S. dependence on foreign supplies of critical minerals.

Funds that the bill allocates for fiscal year 2022 will become available after Biden signs it, notwithstanding that the year’s ordinary appropriations have not been completed. Funds the bill allocates for future years will likewise not require any further congressional action to take effect, providing a degree of budgetary certainty unusual for federal R&D programs.

Large-scale energy technology projects

The infrastructure bill provides around $25 billion for energy technology demonstration projects, of which $21.5 billion will be routed through a new DOE Office of Clean Energy Demonstrations proposed in the Biden administration’s budget request. The administration had sought $400 million to launch the office, but its fiscal year 2022 budget will actually be more than $5 billion, not counting any additional funds that may be provided through ordinary appropriations.

While DOE has supported large-scale technology demonstrations in the past, the infrastructure bill moves these activities to a new echelon of importance, building on the vision Congress set out a year ago in the Energy Act of 2020. Accordingly, DOE will now have to scale up its current capabilities for selecting and administering such projects.

Carbon management. The bill represents a sea change in DOE’s support for carbon capture, utilization, and storage (CCUS), providing more than $6 billion over five years for R&D and technology demonstrations. Over half the funding will go to carbon capture projects, with the Energy Act stipulating that DOE aim to fund six demonstration projects: two for coal power plants, two for natural gas power plants, and two for industrial facilities. The Energy Act further directs DOE to support two carbon storage projects, one in each of the “two major coal-producing regions in the United States.” 

DOE has previously faced challenges in administering CCUS demonstrations. House Science Committee Chair Eddie Bernice Johnson (D-TX) recently pointed out that of nine CCUS demonstrations DOE supported over the last 15 years, only one was completed and none remain in operation. She also noted the Government Accountability Office will soon release a report analyzing that track record.

In addition to the CCUS funding, the infrastructure bill provides $3.5 billion over five years to establish four regional “hubs” for removing carbon dioxide directly from the atmosphere, an initiative not included in the Energy Act. The bill prioritizes projects that are scalable and directs DOE to locate two of the hubs “to the maximum extent practicable … in economically distressed communities in the regions of the United States with high levels of coal, oil, or natural gas resources.” The bill also provides $115 million in one-time funding for prize competitions focused on pre-commercial and commercial direct air capture technologies. 

The bill further provides more than $2 billion to set up a loan program to support the construction of infrastructure for transporting carbon dioxide and $500 million over four years to fund demonstration projects for reducing greenhouse gas emissions from industrial sources. 

Regional clean hydrogen hubs. The bill dramatically expands DOE’s support for hydrogen fuel, providing $8 billion over five years to support the establishment of four regional hubs for producing “clean” hydrogen, another initiative not included in the Energy Act. Hydrogen could potentially serve as an important clean fuel source for applications in areas such as transportation and industry, but currently its most economical means of production is from fossil fuels, which entails high greenhouse gas emissions. “Green hydrogen” produced from renewable energy has no such emissions, but it involves high costs, which DOE’s recently announced “Hydrogen Shot” initiative aims to drive down by 80%. 

The bill stipulates that at least one of the hubs should employ fossil fuels coupled with carbon capture, at least one should employ renewable energy, and at least one should employ nuclear energy. The bill also stipulates that at least two of the hubs should, to the maximum extent practicable, be located in regions that produce natural gas. Aside from the regional hub program, the bill includes $1 billion for a clean hydrogen electrolysis demonstration program and $500 million for a clean hydrogen manufacturing and recycling program.

Nuclear reactors. The bill provides almost $2.5 billion across six years for two cost-sharing agreements for nuclear reactor demonstrations that were first funded through fiscal year 2020 appropriations. The company TerraPower is building a 345-megawatt sodium-cooled reactor at a retired coal power plant in Wyoming, and the company X-energy is building a 320-megawatt reactor near DOE’s Hanford site in Washington that will employ TRISO, a pellet-based fuel designed to resist meltdowns. DOE has indicated it expects to provide $3.2 billion to the two projects in total. Separately, the bill includes $6 billion over five years to create and fund a Civil Nuclear Credit Program that will subsidize currently operating nuclear power plants facing economic difficulties.

Energy storage. The bill provides $355 million over four years to support energy storage demonstration projects, as well as $150 million over the same period for a DOE program to jointly demonstrate long-duration demonstration projects with the Defense Department. It also includes $3 billion for battery materials processing grants, another $3 billion for battery manufacturing and recycling grants, and $125 million for battery recycling R&D and demonstration grants.

Grid reliability and resilience. The bill includes $5 billion over five years for projects that demonstrate “innovative approaches to transmission, storage, and distribution infrastructure to harden and enhance resilience and reliability” of the U.S. electric grid, and another $5 billion over the same period for grants to improve the resilience of existing grid infrastructure.

Demonstrations on mine land. The bill includes $500 million over five years to support up to five clean energy demonstration projects on land formerly occupied by mines, at least two of which are to be solar energy projects.

Other programs

Aside from the large sums for large-scale energy technology projects, the bill includes smaller amounts for R&D and infrastructure related to renewable energy, critical minerals, manufacturing, and environmental monitoring.

Critical minerals. Over $1.6 billion is directed to critical minerals R&D and supply chain security programs, split between DOE and the U.S. Geological Survey. DOE will receive $400 million across four years to award R&D grants related to the mining and recycling of critical minerals and $140 million, all in the current fiscal year, to support the establishment of an academic facility that will research the reclamation and refinement of rare earth elements. USGS is allocated $167 million in the current fiscal year to establish a USGS-owned academic facility for research in energy and minerals. The agency will also receive $320 million over five years to expand its Earth Mapping Resources Initiative. Earth MRI currently has an annual budget of just over $10 million, supporting efforts to identify and map critical mineral resources in the U.S.

Advanced manufacturing. The bill provides $150 million over five years to establish a “Future of Industry” program that, among other activities, will set up academic centers to help manufacturers implement technologies for applications such as energy management, “smart” manufacturing, and cybersecurity. A further $400 million is provided for project implementation grants to manufacturers.

Renewable energy R&D. The bill includes $420 million for renewable energy R&D, split between solar, wind, water, and geothermal projects. The amounts would supplement these programs’ annual appropriations, providing funding for many of the efforts authorized in the Energy Act.

Environmental monitoring. The National Oceanic and Atmospheric Administration will receive $3 billion over five years, with the bulk of the appropriation going toward environmental protection and restoration activities and a smaller portion dedicated to improving observation and modeling systems. Of the total, $492 million is for coastal and inland flooding mapping and modeling, $150 million is for improving observation systems in ocean, coastal, and Great Lakes regions, $100 million is for wildfire prediction and monitoring efforts, and $80 million is for supercomputing infrastructure. The Departments of the Interior and Agriculture will also receive $10 million each to establish a joint program with NOAA that uses geostationary weather satellites for early wildfire detection, as well as $10 million each for the Joint Fire Science Program they co-manage.

Other programs. Among the remaining R&D funds in the bill, the Department of Homeland Security’s Science and Technology Directorate will receive $158 million for work to protect critical U.S. infrastructure. Eligible uses include projects that build resilience to electromagnetic pulses and geomagnetic disturbances, such as those caused by solar storms. The bill also authorizes the Department of Transportation to create an Advanced Research Projects Agency for Infrastructure, but does not allocate any funds for it.

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