DOE Has $39 BIllion in Stimulus Bucks to Spend

April / May 2009 By: Tom Michael Volume 7 Number 2

Print this Article

E-mail this Article

When President Obama rolled out his economic stimulus plan in February, the construction element—€”new roads and refurbished schools—€”got much of the attention. But nearly $40 billion in stimulus money approved for the Department of Energy has the potential to do even more for the economy, as well as the nation's long-term health.

Energy Secretary Steven Chu has outlined a set of stimulus spending priorities that aims not only to create thousands of new jobs, but also accelerate America's push toward a cleaner, more independent energy future. The opportunities for innovators and investors are immense. Matt Rogers, Chu's stimulus point man at DOE, told Innovation that the agency is revamping its approach to dealing with private sector in hopes of getting the money out the door quickly and effectively.

"We want to create the kind of partnership between the DOE and the private sector that historically we may not have had," Rogers said. Competition for the stimulus dollars will be intense, but he said that will ensure that only the best ideas get funded.

"The more competition we have, the better the projects," Rogers said. "We need the market to bring forward good projects. We are committed to getting the money into the marketplace so it's working for the American people."
Private industry has taken notice. By mid-March DOE had already received applications for $100 billion worth of stimulus funds. The department is now in the process of hiring roughly three dozen new loan officers to help sift through the applications.

Rogers has also said the DOE is in the process of revamping the web site (doe.gov) to provide interested applicants with more and better direction.
The funding breakdown is as follows:
—€ $16.8 billion for energy efficiency renewable energy
—€ $6 billion for environmental management
—€ $4.5 billion for Smart Grid and related programs
—€ $3.4 billion for fossil energy R&D
—€ $1.6 billion for science
—€ $0.4 billion for ARPA-E (Advanced Research Projects Agency—€”Energy)
The stimulus package for DOE also includes $6 billion for innovative technologies loan guarantees.

The DOE's web site describes its goals with respect to the stimulus as "a strategic effort to achieve maximum short-term economic and jobs impact while bolstering the nation's long-term scientific strength—€¦."
That includes:
—€ Accelerated construction of key scientific facilities
—€ Acquisition of advanced scientific instrumentation
—€ Upgrades and modernization of the national laboratory infrastructure
—€ Expanded research support for graduate students, postdocs and Ph.D. scientists in the areas of high energy and nuclear physics to biofuels, solar energy, solid-state lighting, superconductivity, electrical transmission and storage, carbon sequestration, combustion, environmental cleanup, materials science for energy efficiency and other fields.

Senator Jeff Bingaman, the New Mexico Democrat who chairs the Energy and Natural Resources Committee, said that his while his committee has oversight responsibility for the DOE spending, Congress was not involved in setting the priorities. Nevertheless, the senator said he is pleased with DOE's direction so far.

"In general, I'm happy with what I'm seeing," Bingaman said. "I think the money is going toward the kinds of projects and activities it was intended to go to. I think they have the right priorities."

Secretary Chu, Matt Rogers and others responsible for doling out the money at DOE undoubtedly appreciate the vote of confidence from Capitol Hill. But they also feel immense pressure to get the job done and done right. The accolades could quickly turn into complaints if the money is wasted.

"We're trying to move this money to the market quickly, but we're also trying to do it in a way that is disciplined and well-structured," Rogers said. "The first funds out of the door will receive a high degree of scrutiny in the market and you don't want to have a problem."

One of the most significant elements of the DOE stimulus plan is battery research. When gasoline prices soared over $4 per gallon last year, interest in creating electric cars also skyrocketed. And even though gas is back to about $2 per gallon—€”for now—€”DOE is still aiming to advance battery technology.

"It really tries to establish a major U.S. manufacturing capability around advanced batteries for vehicles and other technology applications," he said, adding that the U.S. imports most of the batteries it uses for vehicles.

"That's going to be a highly competitive grant program with lots of different companies and technologies applying for the $2 billion in funds available," he said.

Rogers also said DOE is sending massive chunks of money to cities and counties, giving them latitude to spend the money in ways that best benefit those communities.

"We want to provide a very clear indication that government can work in your local community," he said. "That's what we're working very hard to demonstrate here."

Under the act, cities and counties must fill out a short-form application that binds them to certain rules. Of course, localities are expected to clamor for the money but they should be aware—€”the act requires a level of accountability and transparency they might not be accustomed to. Localities accepting the stimulus money must also submit detailed plans attesting to how they will spend it. That helps DOE keep track of different projects and monitor which ones are working best.

"We have a wonderful laboratory right now where different cities and counties are trying differing approaches," Rogers said. "If we can get best practices sharing to occur rapidly, our opportunity to have a major impact is actually pretty high."

Efforts to get some of the money out the door have already hit at least one snag. Washington-based Baard Energy announced in late March that it would pull the plug on their application for a DOE loan for the Ohio River Clean Fuels Project because of threatened litigation. The Natural Resources Defense Council and the Sierra Club challenged permits issued by the Ohio Environmental Protection Agency and the Army Corps of Engineers.

Baard CEO John Baardson said the legal tangle would defeat the idea of getting the money into the marketplace quickly.

"In our judgment, we did not think it was worthwhile to put at risk over a million dollars of non-refundable submission fees and associated costs to participate in any federal program that has this much uncertainty," Baardson said.

Bingaman said while there may be occasional hiccups in spending the stimulus money, the overall opportunity for investors, scientists and the private-sector can't be discounted.

"There are tremendous opportunities," Bingaman said, adding that he's working on energy legislation now that will create even more incentives for private investment and innovation through tax credits. "We're hoping to do even more to stimulate investment."

Rogers said he's gratified to work on a project that he said will reap dividends for working Americans and the country itself.

"I am highly confident we have the opportunity to not only contribute to the economic recovery in a material way, but also make a measurable down-payment on the energy and environmental future of the country as a result of the recovery act," he said.

Tom Michael is Innovation's Washington bureau chief.