FY22 Budget Request: DOE Applied Energy R&D

The Biden administration’s fiscal year 2022 budget request for the Department of Energy seeks double-digit percentage increases across all of the department’s applied energy offices. Among its more striking proposals, the administration seeks to create an Advanced Research Projects Agency for Climate and an Office of Clean Energy Demonstrations, and to refocus DOE’s fossil energy office on carbon mitigation technologies while halting all “direct fossil fuel subsidies.”

The request complements multiyear climate R&D spending proposals included in President Biden’s American Jobs Plan. Elements of the plan could be funded through special spending bills outside of the ordinary annual appropriations process, though the plan’s energy R&D proposals were excluded from a tentative bipartisan deal reached last week on an infrastructure spending package.

However, other avenues for funding applied energy R&D outside of DOE’s annual appropriation could still open up, particularly as Senate Energy and Natural Resources Committee Chair Joe Manchin (D-WV) is poised to be a key player in negotiating any special spending legislation that may emerge. This month, his committee released draft infrastructure spending legislation that would directly provide billions of dollars for DOE to support R&D and demonstration projects in areas such as carbon capture technology, industrial emissions mitigation, advanced nuclear reactors, and energy storage. Many of those proposals were already authorized through the Energy Act of 2020 but are not included in the budget request or are funded at less than their target levels.

Summary figures from the request and links to relevant budget documents are available in FYI’s Federal Science Budget Tracker .

Innovation offices and cross-cutting programs

Clean energy crosscut. DOE reports that, across the entire department, its total spending related to “climate and clean energy” would increase by nearly 50% to $11.4 billion, with the Office of Energy Efficiency and Renewable Energy (EERE) accounting for the bulk of the increase.

ARPA-E and ARPA–C. The administration is requesting $500 million for ARPA–E, a $73 million increase, as well as $200 million for DOE’s contribution to the new ARPA for Climate, which would focus on innovation in areas other than energy. With a total proposed initial budget of $500 million drawn from across federal agencies, ARPA–C would be housed within DOE and employ ARPA–E’s program management model to support projects such as sensor development for greenhouse gas detection, agricultural and other land-use innovations, carbon-neutral waste and recycling, and resilient infrastructure development. The American Jobs Plan proposes an additional one-time infusion of $15 billion for ARPA–C.

Office of Clean Energy Demonstrations. The administration requests $400 million to establish an office that would issue competitive solicitations for large-scale demonstration projects that address “crosscutting” energy challenges. The request states the office would issue at least one solicitation per year, with the first year’s solicitation focusing on commercial-scale energy storage. DOE states that the office will also provide project management support for DOE’s applied energy offices and “will not displace current technology-specific demonstration efforts.”

Energy storage. Funding for the DOE-wide Energy Storage Grand Challenge initiative would increase about 150% under the request to $1.2 billion, which includes the solicitation from the new Office of Clean Energy Demonstrations. Various efforts within EERE would continue to account for a large portion of the initiative, while mostly new efforts within the Office of Nuclear Energy that involve coupling energy storage methods to nuclear power generation would amount to $164 million of the total. The administration seeks to ramp up funding for the new Grid Storage Launchpad facility at Pacific Northwest National Lab from $23 million to $47 million, marking the final installment of construction funds needed to complete the $77 million project. DOE is starting construction this year with an aim of completing work by 2025.

Hydrogen initiatives. DOE recently announced a goal of reducing the price of hydrogen produced from renewable energy by 80% to $1 per kilogram by 2030 as its first “Energy Earthshot,” an initiative that seeks to address technical and cost barriers associated with deploying clean energy technologies. The department is currently seeking input on potential demonstration and deployment projects it might support. Meanwhile, the administration proposes to increase funding for EERE’s Hydrogen and Fuel Cell Technologies program by a third to $198 million and to increase funding by 59% to $141 million for efforts to produce hydrogen from fossil resources. Through the American Jobs Plan, the administration also proposes creating 15 hydrogen demonstration projects in “distressed communities.”

Critical minerals and materials. As part of its efforts to develop domestic supply chains for minerals and materials that are used in various important technologies, the administration is seeking to increase funding for R&D on mineral extraction, manufacturing, and recycling at DOE from $146 million to $233 million, largely split between its fossil and renewables offices. Increased funding within EERE’s Advanced Manufacturing Office would in part support the establishment of a new lab-industry consortium to “de-risk and validate successful technology innovations for critical minerals, including test-bed facilities to scale up technology solutions around identified gaps such as metal conversion or magnet manufacturing,” among other activities. The Critical Materials Institute at Ames Laboratory will conclude its award as an Energy Innovation Hub, though its activities will still be eligible for support through other DOE programs.

Fossil Energy and Carbon Management

The administration seeks to increase funding for the renamed Office of Fossil Energy and Carbon Management by 19% to $890 million and shift its focus decisively toward carbon reduction. In line with an executive order President Biden issued in February, it proposes that the office no longer fund R&D, demonstration, and deployment projects that are “focused on unabated fossil combustion, traditional fossil-fueled power generation, or increased production of fossil fuels.”

CCUS and carbon dioxide removal. The combined budget for the office’s carbon capture, utilization, and storage (CCUS) programs would increase by 61% to $368 million under the request. However, that amount still falls well short of the nearly $1.3 billion recommended in the Energy Act of 2020, of which most was for carbon capture pilot and demonstration projects that are not included in the request. DOE does follow the Energy Act in proposing a program dedicated to developing methods for removing carbon directly from the atmosphere. DOE requests $63 million for the program, an increase of $23 million over existing efforts. Separate from that budget, the administration is also requesting $25 million for the entire cost of constructing a Direct Air Capture Test Center at the National Energy Technology Lab.

Fossil fuels. In accord with its reorientation of the office around carbon management, the administration proposes to more than double the Natural Gas Technologies program’s budget to $130 million but focus it entirely on emissions reduction and carbon-neutral hydrogen production. Coal and petroleum energy R&D programs that are not deemed to align with the administration’s ban on direct fossil fuel subsidies would be terminated.

Energy Efficiency and Renewable Energy

The administration proposes to boost funding for EERE by 65% to $4.7 billion, with all major R&D programs slated to receive increases exceeding 30%. The topline increase exceeds the amount recommended by the Energy Act and would accelerate demonstration and deployment activities aimed at enabling widespread integration of renewable energy technologies into the power system.

Wind energy. Funding for the Wind Energy program would increase 86% under the request to $205 million, within which the budget for grid integration and analysis would jump almost 10-fold to $47 million. The offshore wind energy budget would increase from $63 million to $100 million, focused on efforts such as selecting sites for turbines, developing cost-effective floating platform designs, and coupling offshore wind energy to energy storage and hydrogen production.

Geothermal energy. The administration proposes to increase funding for the Geothermal Technologies program by 54% to $164 million, though funding for the Frontier Observatory in Research in Geothermal Energy (FORGE) would decrease by one-third to $20 million. The request does not propose to expand FORGE to additional sites beyond its current one in Utah, though the Energy Act of 2020 authorized up to two additional sites. Most of the additional funding would instead go to the Hydrothermal Resources; Low Temperature and Coproduced Resources; and Data, Modeling, and Analysis programs. The request also proposes to establish a new consortium program called Geothermal Energy from Oil and gas Demonstrated Engineering (GEODE), which will seek to facilitate the transfer of technology and expertise from the oil and gas industry into geothermal energy.

Solar energy. Funding for the Solar Energy program would increase 38% to $387 million, with most of the increase focused on R&D related to manufacturing and competitiveness, systems integration, and overcoming “soft cost” barriers to deployment. Funding for photovoltaic technologies would increase 10% to almost $80 million, while funding for concentrating solar power technologies would remain steady at $60 million.

Water power. A 31% increase in the Water Power program budget to $197 million would be allocated almost entirely to efforts in hydropower that would include “dramatically expanding” analysis of the impacts of climate change on hydropower systems and developing a design for at least one hydropower test facility. Within a mostly flat budget for marine energy, the administration requests no new funding for the recently awarded Atlantic Marine Energy Center, proposing to continue work using funding already appropriated.

Industrial decarbonization. The administration aims to substantially reorient the mission of the Advanced Manufacturing Office to support industrial decarbonization efforts. The budget for the office would increase by 39% to $551 million, with much of the increase supporting the creation of two new Clean Energy Manufacturing Innovation Institutes focused on industrial decarbonization. The administration states that across all of DOE, the request would more than double funding for efforts related to industrial decarbonization to $1.4 billion.

Nuclear Energy

The administration proposes to increase funding for the Office of Nuclear Energy by 22% to $1.9 billion.

Advanced reactor demonstrations. The administration proposes to ramp up funding for the Advanced Reactor Demonstration Program from $250 million to $370 million, short of the $405 million recommended in the Energy Act. Last year, DOE awarded cost-sharing agreements to the companies TerraPower and X-energy to demonstrate two advanced reactor designs, stating it expects to spend $3.2 billion on the projects over seven years pending funding availability. DOE requests $246 million to continue early work on the projects in the coming fiscal year. TerraPower recently announced that it plans to build its reactor at a retiring coal plant in Wyoming. The request also proposes to increase funding for the National Reactor Innovation Center from $30 million to $55 million, in part to support the development of reactor testbeds.

Versatile Test Reactor. The request includes $145 million to continue early work on the Versatile Test Reactor, a proposed user facility that would provide a U.S.-based capability for irradiating fuels, components, and materials with high-energy neutrons. Such a capability would facilitate the refinement of designs for various kinds of advanced nuclear reactors that would employ such neutrons. Last year, though, Congress pumped the breaks on the project, reducing its budget from $65 million to $45 million after senators expressed concern about its cost, which DOE has estimated will fall between $2.6 billion and $5.8 billion. Congress also directed the department to reformulate the project as a private-public partnership. The request does not address that possibility, but it states the administration now plans to sequence the reactor’s design and construction to follow TerraPower’s demonstration project in order to take advantage of knowledge gained from development of its similar design and to optimize the use of resources and expert personnel that both projects will require.

Transformational Challenge Reactor. The administration requests no funding for a project at Oak Ridge National Lab to demonstrate a small-scale nuclear reactor built using additive manufacturing methods. Stating that the project has already been wound down in view of the “tremendous recent advances that have been made in microreactor research and development,” the request notes that associated work in areas such as advanced manufacturing has been transferred to other R&D programs.

High-assay, low-enriched uranium. The administration requests $33 million for a new program to support the manufacture and use of HALEU, a fuel required in many proposed advanced reactors. In the short run, the program would support the distribution of HALEU from DOE uranium inventories, and in the longer-term facilitate the build-out of private-sector production capabilities. The program would build off an existing DOE-supported project by the company Centrus that will demonstrate HALEU production capabilities and has already received all the funding it requires.

Grid integrity

Risk management. Funding for the Office of Cybersecurity, Energy Security, and Emergency Response (CESER) would increase by 29% to $201 million under the request, allowing the office to expand its risk management programs to address vulnerabilities such as supply chain threats, natural hazards exacerbated by climate change, and electromagnetic pulses and geomagnetic disturbances.

Grid resilience. Funding for the Office of Electricity’s Transmission Reliability and Resilience program would decrease 23% to $37 million, largely reflecting the completion of the North American Energy Resilience Model, a tool for supporting planning and contingency analyses related to electric grid vulnerabilities. In addition, the request repeats last year’s proposal to create a university-based Engineering Research Center dedicated to obtaining “fundamental knowledge” about various aspects of the electric power system. The center would be jointly funded by DOE and the National Science Foundation.

Cybersecurity. The administration requests $25 million for the Cybersecurity R&D program, which it proposes to transfer from CESER to the Office of Electricity. The request states that in protecting the electric grid from cyber attacks “the increasing focus is on data and physics to redesign the current grid architecture that exposes the electricity system to cyber threats.” It notes that one strategy involves “using technology, design modifications, or operational considerations to mitigate physical consequences that might result from a cyber-attack.”