This month, C3 Solutions Action signed on to a bipartisan coalition letter calling for steady, robust federal funding for energy research, development, and demonstration. Addressed to the leadership of the House and Senate Appropriations Committees, the letter highlights the United States’ long history of energy innovation and the importance of maintaining that leadership.
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Both parties face important decisions about the future of the U.S. energy sector. Concerns about affordability, rising electricity demand from AI and electrification, dependence on potentially adversarial countries for critical materials and addressing environmental challenges all point to areas where targeted government action may be warranted.
The trouble is that policymakers all too often identify a real problem and respond with policies that are overly broad, expensive, or prescriptive. Many climate policies fall into this category. Mandates, poorly designed subsidies, and attempts to force premature deployment of favored technologies can raise costs, distort markets, invite rent-seeking, and ultimately undermine the goals they are meant to advance. When government tries to dictate politically preferred outcomes rather than address clear market failures, it usually falls short and sticks taxpayers and consumers with the bill.
This does not mean that the government has no role, but it does mean that Congress should prioritize policy tools with a clear economic rationale and a demonstrated record of success. Public funding for energy research and development is one of those tools.
The basic case for federal R&D support is well established. While there is robust private sector R&D, markets tend to underinvest in research because individual firms cannot capture all the benefits of the knowledge they create. New discoveries often spill over to other companies, industries, and consumers. That is especially true in energy, where innovations can lower costs, improve reliability and reduce emissions.
However, not every federal grant or program is justified. Federal funding should be transparent and targeted to areas where public support is most warranted: basic research, early-stage technology development, and certain first-of-a-kind demonstrations, not mature technologies that should be able to compete in the marketplace.
Unfortunately, today’s politics often inverts this logic. Too much support flows to politically preferred, more mature technologies with greater commercial potential, while higher-risk, earlier-stage research with the greatest potential social benefits receives less attention. The goal should be to identify where government can play a constructive role without crowding out private investment or distorting markets.
That should be the framework Congress applies as it considers funding for energy innovation. Well-designed, steady, and robust R&D support is one of the few genuinely targeted ways that government can help advance American competitiveness, improve affordability, and make real environmental progress.
The views and opinions expressed are those of the author’s and do not necessarily reflect the official policy or position of C3.