Next week the 2011 ARPA-E Energy Innovation Summit will be held in Washington, D.C.  The Summit is a much-anticipated annual conference highlighting the development of next generation energy technologies in the United States and the Department of Energy’s flagship Advanced Research Projects Agency – Energy (ARPA-E), which provides critical financial support for those technologies.

The Summit will convene at a time of considerable uncertainty.  Although the Obama Administration’s FY 2012 budget proposes to increase funding for ARPA-E to $650 million, up from the $389 million last appropriated in FY 2009, H.R. 1, the continuing budget resolution proposed by House Republicans, cuts the ARPA-E budget to a mere $50 million. 

It is hard to tell what is policy and what is posturing in the budgetary Donnybrook unfolding in Washington.  Optimists hold that that if bi-partisan consensus can be reached on anything, it is on the importance of technology innovation to the long-term competitiveness of the U.S. economy and on breaking the stranglehold of foreign petroleum upon it.  Pessimists point out that with political priorities so sharply focused on short-term job creation, funding for research and development is an obvious candidate for the knife.

Either way, Summit participants will be in the thick of it.  The federal government shuts down on March 4, if a new continuing resolution is not agreed upon.  That could mean a long walk home for many Summit participants if airport flight controllers are placed on furlough.

Levity aside, the uncertain future of ARPA-E highlights the serious question of how the development of next generation energy technology can be funded in the United States.  Funding next generation energy technology is critical.   The future of vehicle electrification and its ability to break the petroleum stranglehold depends entirely upon the scientific community’s ability to develop new, more powerful, next generation batteries.  For reasons I have written about before, the private venture capital community is structurally incapable of financing this kind of innovation.  The money must come from somewhere else.

We will see over the next week how much of a political football ARPA-E and similar energy research programs have become.  In the meantime, let’s root for the optimists.  But we must also start thinking about alternatives.  ARPA-E is a great idea and a good program.  But this week’s lesson should be that we have to keep thinking about new ways to fund critical advanced energy research.  Building the electric vehicles that ultimately replace petroleum-fueled cars will require as much creativity by policy and financial experts as by experts in battery and materials sciences.