America pioneered many of the clean energy technologies now being used and manufactured around the world, but the edge we once held in clean tech is slipping to foreign competitors. Five years ago, scientists warned the U.S. was falling behind other nations and Congress responded by creating the Advanced Research Projects Agency, or ARPA-E, to help fund the development of breakthrough energy technologies.

Now, this initiative faces political headwinds and the U.S. risks any momentum gained since ARPA-E was founded. In this one-on-one interview, ARPA-E Director Arun Majumdar discusses the energy challenges America faces from other countries and how the U.S. must “out-innovate” its competitors to spur new economic growth. You can watch the full interview by clicking the video below:

Majumdar cautions the U.S. must not pull back on clean energy funding because of the risk of failure. America’s past innovation successes have always come from a history of “trying something and not being afraid of failure,” he said. “If it doesn’t work and you fail, that’s fine – you learn quickly and you come back again.” The agency is modeled after the Defense Department's decades' old DARPA, credited with producing innovations we take for granted today, like the Internet and GPS.

Since his agency first secured funding in 2009, Majumdar has identified promising technologies to fund in an effort to help America reclaim a lead in the global clean energy economy race. Not all grants will result in success, but the program is necessary because “we are losing a technological lead right now,” he said.  

The agency recently announced $156 million in grants to speed the development of new, cutting-edge energy technologies. Overall, in four rounds of funding, 181 ventures have received grants of $550,000 to $9 million. And, one-third of the projects are small startup companies that have spun out of university research.

ARPA-E is focused on a wide range of technologies, but sees some of the biggest potential in the next generation of batteries, expected to be more powerful, lighter, and even cheaper than what we use now. Other funding highlights have included semiconductors for hybrid and electric vehicles, advanced biodiesel and wind power technologies, and storing compressed air in underground salt caverns.

Majumdar says energy is, "the biggest business opportunity out there." But it's an expensive one and getting money from Congress hasn't been easy. ARPA-E asked for $300 million in funding for 2011. Congress approved a little more than half that - $180 million.

Much more is at stake than just today’s economic well-being, however. “I consider this the future of our nation – this is our children and grandchildren,” said Majumdar. “Their security depends on what we do in energy, because if we get that right, we’ll ensure their security.”