FY23 Budget Outcomes: DOE Applied Energy R&D

To help the U.S. transition to clean energy, the Biden administration has secured hundreds of billions of dollars for new large-scale technology demonstration and deployment initiatives through the Infrastructure Investment and Jobs Act of 2021 and last year’s Inflation Reduction Act. About $100 billion of that money is for the Department of Energy.

In addition, the administration has also had some success in raising annual appropriations for DOE’s established applied energy R&D programs. In fiscal year 2023, Congress provided increases in the range of 7% to 8% for the DOE offices that support renewable energy, nuclear energy, and carbon management technology R&D, following on increases of about 10% the year before. Those outcomes are comparable to the amounts sought for nuclear energy and carbon management but fall well short of ambitious requests made for renewable energy and emissions-reducing technologies in sectors such as transportation and manufacturing.

Congress provided detailed direction for DOE in an explanatory statement accompanying its fiscal year 2023 spending legislation and a report prepared by House appropriators. Detailed figures are collected in FYI’s Federal Science Budget Tracker .

Nuclear energy

The Office of Nuclear Energy’s annual budget increased 7% to $1.77 billion, which includes $300 million for activities that would ordinarily have been part of the office’s main budget but were instead provided through a special supplemental appropriation. Transferring that money to the supplement exempted it from the spending caps Republicans and Democrats negotiated for the year, but to sustain this funding next fiscal year, Congress will have to provide another supplement or expand the office’s base budget. Either option could prove difficult if Republicans remain firm on their goal of restraining federal spending.

Advanced reactors. In recent years, DOE and Congress have ramped up support for developing nuclear reactors that depart from traditional water-cooled designs. The infrastructure act provided $2.48 billion across four years for two demonstration plants the department is supporting and Congress provided an additional $60 million this year via the supplement. The supplement also included $120 million for five ongoing projects involving reactor design and development or construction of experimental reactors. Funding for the Advanced Reactor Technologies program, which supports related R&D, decreased by $10 million to $49 million. Up to $20 million of that total is allocated to ramping up work on the liquid metal-cooled MARVEL (Microreactor Applications Research Validation and Evaluation) reactor project at Idaho National Lab.

National Reactor Innovation Center. The NRIC was established at Idaho National Lab in 2019 to assist companies in testing and demonstrating advanced reactor concepts. It received $50 million this year as well as $20 million for construction of a reactor testbed called LOTUS (Laboratory for Operations and Testing in the United States).

Versatile Test Reactor. For a second year, Congress has provided no funding for a proposed multi-billion-dollar user facility that would expose components and fuel to radiation environments similar to those that will exist in advanced reactors. The administration sought $45 million to keep early design work moving ahead but had deprioritized the project on the grounds it would compete for resources with the advanced reactor demonstration program.

HALEU availability. Many advanced reactor designs call for high-assay low-enriched uranium fuel, which contains a higher concentration of the highly fissile uranium-235 isotope than the fuel used in current commercial reactors. Congress has directed DOE to work to establish domestic HALEU supplies and more than doubled the budget for that effort to $100 million. Russia’s invasion of Ukraine has raised concerns about how at present HALEU can only be commercially obtained from Russian suppliers. Last fall, Congress rejected an administration request for a special appropriation of $1.5 billion to reduce reliance on Russian HALEU and ordinary low-enriched uranium, though leaders of the Senate Energy and Natural Resources Committee are now proposing $3.5 billion to bolster domestic uranium production with up to $1 billion allocated for HALEU.

University reactors. Congress declined the administration’s request of $45 million to launch a program that would support research reactor construction and upgrade projects at universities. However, it directed DOE to provide further details about the need for such projects, suggesting appropriators may be willing to support them in fiscal year 2024. In the meantime, the National Institute of Standards and Technology appropriation did include a $20 million earmark requested by Rep. Blaine Luetkemeyer (R-MO) for work on a “next generation” reactor at the University of Missouri, which currently hosts a reactor that began operating in 1966 and is the most powerful one operated by a university in the U.S.

Renewable energy

Wind energy. The budget for wind energy increased 16% to $132 million, but the administration had proposed more than doubling the program’s size, with much of the additional funding going toward a new R&D initiative for floating offshore wind turbines. The wind energy program has also received $60 million through the infrastructure act for general R&D and demonstration projects as well as $40 million for technology manufacturing and recycling projects.

Solar energy. While the administration sought an 84% boost in solar energy R&D funding, Congress provided a 10% increase to $318 million. Much of the additional money the administration requested was to support manufacturing and supply-chain initiatives. Via the infrastructure act, the solar energy program has received $40 million for general R&D and demonstration projects, $20 million for an advanced solar energy manufacturing initiative, and $20 million for projects in technology recycling.

Geothermal energy. The administration also sought an 85% funding increase for geothermal technologies and Congress provided an 8% increase to $118 million. DOE also recently solicited proposals for pilot demonstrations of enhanced geothermal systems that will receive $74 million of the $84 million the infrastructure act is providing for the geothermal program.

Water power. The administration proposed an 18% increase for water power and Congress provided a 10% increase to $179 million. The program has also received $36 million from the infrastructure act for hydropower projects, $70 million for marine energy projects, and $40 million specifically for the National Marine Energy Centers program.

Carbon management and decarbonization

Atmospheric carbon dioxide removal. DOE is currently accepting proposals for projects that will receive the $3.5 billion the infrastructure act is providing for four regional “hubs” that will remove carbon dioxide from the atmosphere and either store it in geological formations or employ it in commercial products. The department will provide $1.2 billion through a first tranche of awards supporting early work on the projects. DOE has also received $115 million to fund two prize competitions for earlier-stage technology development. Across ordinary DOE program budgets, Congress raised the minimum total funding level for carbon dioxide removal by 35% to $140 million, though DOE reported it was already spending $164 million in fiscal year 2021 with a further $84 million via the Advanced Research Projects Agency–Energy.

Carbon capture from point sources. DOE has just opened a call for proposals that will result in the award of up to $1.7 billion of the $2.54 billion the infrastructure act is providing for commercial-scale carbon capture demonstration projects. The act requires DOE to support two such projects at coal power plants, two at natural gas power plants, and two at industrial sites. Another call that opened at the same time will lead to the award of up to $820 million of the $937 million the act provided for large-scale pilot projects. The infrastructure act is also providing $100 million for carbon capture technology engineering and design projects and Congress has raised the annual budget for DOE’s established carbon capture technology program from $99 million to $135 million.

Carbon storage, utilization, and transport. The infrastructure act is providing DOE with $2.5 billion for carbon storage validation and testing projects, $2.1 billion for financing carbon dioxide transportation infrastructure, and $310 million for carbon utilization projects. Congress has also increased the annual budget for DOE’s established carbon transport and storage R&D program from $97 million to $110 million and the annual budget for the carbon utilization R&D program from $29 million to $50 million.

Industrial decarbonization. DOE is receiving $500 million through the infrastructure act to fund demonstrations of technologies for lowering industrial greenhouse gas emissions, which the department expects to couple with $5.8 billion the Inflation Reduction Act is providing for related technology deployment projects. Congress has also raised its direction for the minimum amount DOE should allocate to industrial decarbonization across its main R&D programs by 34% to $685 million. DOE reported spending $689 million in the area in fiscal year 2021 with a further $103 million via ARPA–E.

Hydrogen. DOE is currently accepting proposals for regional “clean hydrogen hubs,” with the aim of selecting between six and 10 that will together receive $7 billion of the $8 billion the infrastructure act is providing for that purpose. The act is also providing a further $1 billion for a clean hydrogen electrolysis program and $500 million for clean hydrogen manufacturing and recycling projects. Meanwhile, the annual budget for DOE’s Hydrogen and Fuel Cell Technologies program has increased from $158 million to $170 million and Congress has directed that DOE allocate at least $316 million to hydrogen activities across its main R&D programs. Lawmakers also earmarked funds for several university-based hydrogen R&D efforts, including $4 million for Georgia Tech’s Strategic Energy Institute, $3 million for the Colorado School of Mines, and $3 million for the University of Toledo.

Energy storage

Congress has raised its direction for the minimum amount DOE should allocate to energy storage across its main R&D programs by 8% to $540 million and the department reported it spent $600 million in fiscal year 2021. The infrastructure act is also providing $355 million for an energy storage and pilot grant initiative as well as $6 billion for industrial projects related to battery manufacturing, recycling, and material processing.

Critical minerals and materials

The minimum amount to be allocated to activities related to the production, use, and recycling of critical minerals and materials, and for the development of alternatives has been raised 48% to $249 million. DOE reported spending $204 million in fiscal year 2021. The infrastructure act is also providing $675 million for activities and a new facility related to critical materials, as well as $125 million for R&D projects related to battery and critical mineral recycling. A further $267 million from the act will support activities related to the extraction of rare earth elements and critical minerals from coal waste and other conventional sources, which includes $156 million for a “first-of-a-kind” refinery facility.

Advanced Research Projects Agency–Energy

Last year, the administration failed to convince Congress to create a multi-agency “Advanced Research Projects Agency” for climate. This year, the administration sought to increase the budget for the existing Advanced Research Projects Agency–Energy from $450 million to $700 million, with the additional funding dedicated to building up a portfolio focused on “climate adaptation and resilience innovations.” However, Congress only increased ARPA–E’s budget to $470 million and reiterated its stance that funding such innovations is already within the agency’s established authority.

Laboratory infrastructure

The Inflation Reduction Act provided a one-time appropriation of $450 million last year for infrastructure and general plant projects, divided evenly between Idaho National Lab, the National Renewable Energy Lab, and the National Energy Technology Lab.