The Defense Department’s research arm, DARPA, changed the world when it invented the Internet. So why couldn’t its counterpart at the Energy Department, ARPA-E, unleash a similar revolution to free us from the tyranny of oil?
“I get that question a lot,” says Arun Majumdar, director of the Advanced Research Projects Agency-Energy.
The answer will disappoint green-energy enthusiasts and may surprise those who have been wondering whether the Gulf Oil Spill will be a catalyst for lasting change.
Majumdar, an accomplished scientist and engineer who’s been running ARPA-E for just eight months, says it could take a decade or more for the agency to come up with the “equivalent of the Internet.”
There is no shortage of good ideas, Majumdar tells a conference of energy experts hosted by the Center for Strategic and International Studies, in Washington, D.C. The problem is not a lack of innovation but rather the enormous hurdles that promising clean-energy technologies must overcome to gain acceptance in the larger market.
“The biggest challenge is the scaling,” says Majumdar. He worries that the next big technological breakthroughs in green energy will be conceived in the United States but will be mass-produced and marketed elsewhere — most likely in countries where governments and investors are less afraid of betting on technologies that are considered financially risky in the United States.
It has happened over and over, Majumdar says. A number of seminal technologies that revolutionized the energy industry originated in the United States but never were manufactured in large volumes here.
A mechanical engineering professor at the University of Texas in Austin, John Goodenough, invented lithium-ion batteries. Yet the United States only makes 1 percent of the global production of those batteries. Scientists at Bell Labs created the modern solar cell but the United States today has less than 10 percent of the manufacturing share.
When ARPA-E announced plans to award more than $150 million worth of contracts to companies that came up with groundbreaking concepts, it received almost 4,000 papers. The agency only was expecting 500, at most. The Department of Energy’s computer system crashed from the unanticipated volume.
Just 37 projects were funded at about $4 million each, over three years. They include new techniques to make cellulosic biofuel at lower cost, and novel ways to store electricity in a smart grid.
Many of the winners are startup firms for which it was too hard to raise funds from the private sector. “The venture capitalists kept telling them this is too risky,” says Majumdar.
During recent visits with Wall Street VCs, Majumdar says, he was told straight up that firms are “rethinking investments because the ‘exit strategy’ is not clear to them.” Translation: It’s hard to justify bankrolling energy technologies as long as the United States doesn’t embrace a national strategy to end its addiction to oil.
The U.S. government is the nation’s biggest buyer of energy, but that is still only 1 percent of consumption. The government alone can’t move the market.
Majumdar is hopeful that some of ARPA-E’s money — $400 million budgeted last year and $300 million requested for next year — might lead to breakthroughs in much-needed areas such as high-density batteries and techniques to capture and store carbon emissions.
High-density batteries are a linchpin in efforts to boost sales of electric plug-in cars. Current batteries are too expensive, heavy, and don’t offer enough range. At $1,000 per kilowatt hour, electric cars are pricey, and out-of-reach for most people. It needs to be about $250 to be affordable, says Majumdar.
Similarly, carbon capture remains exceedingly costly, at about $80 per ton. Considering that in Europe, carbon trades at about $30 per ton, for the United States, it’s financially a non-starter. “You lose $50 per ton,” he says. More efficient ways of capturing and storing carbon are needed.
In view of the scope of the nation’s energy problems, it seems doubtful that ARPA-E can make much of a dent, at least in the near future. Critics have knocked the agency for favoring radical ideas that are not necessarily the most marketable. They also doubt that the U.S. government can continue to finance ARPA-E at the current levels. The funds for fiscal year 2010 came from the Recovery Act, not the regular budget. It’s not yet certain that Congress will approve the Obama administration’s request for 2011.
The larger question remains whether the United States will have a lead role in a future world that one day could be powered by renewable energy. So far, the evidence points to China as the front runner, not necessarily because it generates the most innovation but simply because it is pouring loads of money into projects and is perfecting manufacturing techniques for green products.
China invested $34.6 billion in clean energy last year, which is nearly double the U.S. total of $18.6 billion, noted a study by the nonprofit Pew Charitable Trusts. Worldwide investments were estimated at $162 billion in 2009. During the past five years, the United States also trailed four other countries — Turkey, Brazil, the United Kingdom and Italy — in the rate of clean energy investment growth.
Ergo, it may not matter whether ARPA-E can replicate the success of its cousin DARPA, even if it does spawn the energy equivalent of the Internet.
With the magnitude of foreign clean energy investment, U.S. efforts could be too little, too late. And as Majumdar points out: “We have not paid attention to energy. … It hasn’t been on our radar screen since the 1970s.”