Fund ARPA-E at $1 billion per year.

The Defense Advanced Research Projects Agency (DARPA) is legendary for its innovation. As the research arm of the Department of Defense, it is responsible for early investments in computer networking, the Internet, virtual reality, and artificial intelligence. Several factors explain DARPA’s success:

  • The review process for funding technology is internal, lean and fast.
  • It has a risk-taking culture, and it is idea-driven and outcome-oriented.
  • Congress grants it significant money but remains relatively hands-off. The work is not constrained by earmarks or excessive scrutiny; this freedom fosters creativity.
  • Its bottom-up governance focuses on hiring an eclectic, world-class managerial and technical staff.

The Advanced Research Projects Agency-Energy (ARPA-E) applies the same principles to the energy sector that have made DARPA successful in the defense sector. ARPA-E, a recommendation of the Gathering Storm report, was established by the Department of Energy. It focuses exclusively on high-risk, high-payoff technologies that can change the way energy is generated, stored, and used. Projects are selected for their potential to make rapid progress toward commercialization, and funds are not extended without demonstrable progress within two or three years.

ARPA-E is designed to follow DARPA’s highly entrepreneurial approach to RD&D by funding scientists and technologists to accelerate immature energy technologies with exceptional potential. ARPA-E does not fund discovery science, nor does it support incremental improvements to current technologies. Its managers take a hands-on approach to managing the funded program activities. Authorized in 2007 without an initial budget, ARPA-E received stimulus funding of $400 million for two years over 2009 and 2010. For 2011, the Department of Energy has requested $300 million. ARPA-E provides support for early-stage energy innovation.

Administrators especially hope to receive proposals from companies, laboratories, and universities that have formed interdisciplinary partnerships. The amount of ARPA-E funding provided to a particular project can range from $500,000 to $10 million. In ARPA-E’s first year of operation, the agency only had funds to support 37 of the 3,700 proposals it received—just 1 percent. The second round of awards funded less than 7 percent of applicants in just three focus areas— biofuels, carbon capture, and batteries for electric vehicles.

For example, ARPA-E is supporting Nalco Co. of Napierville, IL, to develop a new process to capture carbon in the smokestacks of coal-fired power plants, building on a partnership the company already has with Argonne National Laboratory. The objective of the project is to use less energy to capture 90 percent of a coal plant’s CO2 emissions at a lower cost. If successful, this new technology will cut carbon capture costs at coal-fired power plants by as much as half, making it more affordable for such plants to clean up their emissions.

ARPA-E is asking innovators to come up with truly novel ideas; it is looking for “game changers.” The program has high potential for long-term success, but only if it is given the autonomy, budget, clear signals of support, and ability to implement needed projects. We believe a multi-year commitment at a $1 billion annual level would be well invested as a part of the recommended $16 billion total.