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House Science Committee Explores Ways to Improve ARPA-E

Each year the Department of Energy (DOE) allocates billions of dollars across various programs to fund research and development and clean technological breakthroughs that benefit America’s economy and environment. This week the House Science and Technology Committee’s Energy subcommittee held a hearing to understand the impact and improve one of the most impactful DOE programs, the Advanced Research Project Agency-Energy (ARPA-E).

>>>READ: Three Federal Innovation Programs That Lawmakers Should Prioritize

Modeled after the  Defense Advanced Research Projects Agency, which led to breakthrough technologies like GPS and the Internet, Congress created ARPA-E to competitively fund high-risk, high-reward projects. ARPA-E differentiates itself from other DOE programs by embracing a Silicon Valley approach to staffing and project management. While most R&D projects are decades-long, ARPA-E’s terminate after a few years. Additionally, DOE recruits program directors from the private sector and academia to serve three to five-year stints. As Rep. Brandon Williams, the Chairman of the subcommittee aptly pointed out, this “limited time frame fosters an environment of ‘move fast and break things,’ which is highly conducive to innovation and economic growth.”

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Indeed, this Silicon Valley-like approach has yielded impressive results for the program. Since 2009 ARPA-E has provided $3.76 billion in R&D funding to more than 1,500 projects which has yielded $12.1 billion in private sector funding for 230 projects and 29 exits with market valuations worth more than $21.9 billion. The program has worked closely with startups like Heirloom Carbon and Fervo Energy to scale up their innovative clean technologies.  154 companies have formed in the fields of nuclear fusion, fission, and energy storage. ARPA-E is currently funding several programs across a wide range of solutions including iron and steel decarbonization, marine biomass, CO2 crop storage, and data center cooling. 

Despite the success of the program and the broad bipartisan support, issues remain, one of the biggest of which being intellectual property. Many of the contracts for companies and startups that are looking to partner with DOE are structured in a way that intellectual property and other critical data have to be turned over to the department. Dr. Ryan Umstattd, Vice President of fusion company Zap Energy and former ARPE-E director, was a witness in the hearing and explained the challenges of the current structure of IP ownership: 

“Risk is at the core of the intellectual property issue. In most research development that the Office of Science funds, the government is taking on a certain amount of risk with regards to if there’s going to be a cost overrun, if there’s going to be a schedule delay, if there’s technical performance that doesn’t meet the required performance standards and the government has to then choose to pay to overcome [those risks]. In [ARPA-E’s] Milestone Program, the companies actually are bearing all of that risk themselves. 

It’s up to the Department of Energy to actually accept that a milestone has been accomplished to the performance specifications as well as to the schedule before they decide if there’s even going to be a payment. When that payment is made, it is actually less than half of the cost that the company has paid to execute that particular body of work. In some cases it’s much less than half.” 

This lack of IP ownership is also important for future funding. Without it, potential investors may be disincentivized to invest in American companies and instead turn to foreign firms.

>>>READ: New Report Details How Reorganizing the Department of Energy Will Accelerate Innovation

Unfortunately, intellectual property is a problem across DOE programs. As a recent report from ClearPath notes, China routinely “exploits the openness of the U.S. research environment to steal U.S. intellectual property (IP) and transfer technology to advance its economic and security interests to the detriment of the United States.” Shoring up intellectual property protections should be a priority as the U.S. hopes to maintain its energy security and clean tech leadership. 

According to Dr. Tim Held, the Chief Technology Officer at Echogen Power Systems and witness at the hearing, policymakers should also focus on funding ARPA-E’s SCALEUP program. With $100 million in funding, SCALEUP works to help previously funded ARPA-E awardees reach market commercialization. To be selected, SCALEUP selectees must deliver a workable path to commercial deployment and the ability to attract private sector investments. 

ARPA-E plays a pivotal role in driving energy innovation. With changes, the program can be more effective in accelerating technological breakthroughs that bolster economic progress, reduce emissions, and advance American leadership. 

The views and opinions expressed are those of the author’s and do not necessarily reflect the official policy or position of C3.

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