ARPA-E and Innovation

Last week, the Advanced Research Projects Agency – Energy (ARPA-E) announced support for 33 new projects aimed at developing an affordable and scalable clean energy transportation sector. The projects are the latest round of public investment from ARPA-E in high-risk, high-reward low-carbon energy innovations that could be game-changing in the fight to address climate change. The projects are notable because Washington’s current fragile budget and policy environment – a dangerous combination of sequestration, budget cuts, and an overall negative view of energy innovation – puts ARPA-E’s funding at risk for the next fiscal year.

First, let’s look at the programs. ARPA-E takes investing in new sectors of energy innovation seriously – ARPA-E’s due-diligence includes a small, but dedicated government staff, interaction with industry to understand emerging research problems, and a constant influx of new program managers. Program managers are brought in on three year temporary terms to carry out their investments. ARPA-E’s Deputy Director Cheryl Martin explained this is important because the “three year cycle doesn’t allow us to drink our own cool-aide.” In other words, it prevents stagnation of investments and allows for fresh approaches to energy innovation.

The two new programs fit well within the ARPA-E investment portfolio, and continue the agency’s aim to tackle significant problems related to advancing clean energy technologies through new methods.

The METALS program (Modern Electro/Thermochemical Advancements for Light-metal Systems) aims to make vehicle light weighting an affordable option for manufacturers, while also decreasing vehicle production emissions. Two pathways exist today. Carbon fiber is a growing light weight option that is seeing significant innovation, but is still impacted by high production costs. Light weight metals, such as aluminum and magnesium, are another path forward, but are also costly and greenhouse gas emission intensive to use in vehicle part production.

METAL aims to address both cost and emission issues through new processes, technologies, and integrated approaches to the most costly and energy intensive portions of light weight metal production. For example, ARPA-E is supporting a project led by aluminum manufacturer Alcoa that seeks to develop a bulk aluminum production process modeled after molten glass technology which would consume significantly less energy than conventional techniques. Pacific Northwest National Lab received support to develop a novel technique for extracting magnesium from seawater and converting it to metal. Valparaiso University aims to develop a process that produces magnesium using concentrated solar power for heating, removing much of the need for traditional electricity consumption.

The REMOTE program (Reducing Emissions using Methanotrophic Organisms for Transportation Energy) is focused on turning America’s increasingly abundant domestic natural gas supply into a viable low-carbon liquid fuel for vehicles. Turning gas to liquid is technically possible today through, for example, the Fischer-Tropsch conversion process which uses various types of metal catalysts. But these approaches are costly and produce low amounts of liquid fuel compared to the energy used for conversion. Bio-based conversion methods also exist, but current technology results in low energy conversion rates as well. The result is a gas-based liquid fuel more expensive than gasoline that cannot scale.

REMOTE aims to solve these problems by supporting new bioconversion technologies that can produce gas-derived fuels at less than $2 per gallon with over 60 percent conversion efficiency – an immediate breakthrough in the gas-to-liquid fuel industry. For instance, Lawrence Berkeley National Lab received a grant to develop a breakthrough enzyme to produce a liquid fuel without the need for oxygen or energy. MOgene Green Chemicals aims to bioengineer an organism that turns methane into a liquid fuel using photosynthetic processes. And Penn State University aims to engineer a biocatalyst that uses methane to produce chemical precursors to liquid fuels.

Complex program acronyms aside, the METALS and REMOTE projects are indicative of ARPA-E pushing the boundaries of clean energy innovation in distinctive and atypical directions. At the event announcing the new projects, Cheryl Martin stated that this represents, “ARPA-E growing up.” Through the end of 2012, ARPA-E has supported over 285 projects, totaling $770 million in total funding.

But as former Tennessee Congressman Bart Gordon put it at the announcement, “ARPA-E is still young and really fragile.” Most recently, the House Energy and Water Appropriations bill proposed slashing its budget from $260 million to $50 million, even though it was originally proposed as a $1 billion agency. Gordon put a fine point on these budget dangers noting that, “this funding cycle could make ARPA-E go away.”

Even a cursory glance at the types of projects ARPA-E supports makes its tenuous budget position seem nonsensical. ARPA-E is filling a fundamentally important gap in the United States energy innovation ecosystem. Stephen Hoover, the CEO of PARC - the innovation arm of Xerox - argued at the event that the risky investments ARPA-E makes are, “the kinds of risk companies can’t take on. The federal government does a lot of investing in basic science, but it has a role advancing high-risk ideas to advance science towards solving particular problems.”

More so, ARPA-E is raising America’s energy innovation flag and building a network where risky and transformative ideas can develop. As Bart Gordon put it, “ARPA-E is giving hope to entrepreneurs that there is a place to go,” particularly as the private energy sector and venture capitalists increasingly takes on less technical risk. There’s simply no other institution – public or private – in the United States focused on next-gen energy innovation in the way ARPA-E is, and the new METALS and REMOTE projects are shining examples of this. The most important question moving forward is whether policymakers can find the consensus to continue funding such an integral program.