Market News

 April 02, 2019
Trump's budget could have chilling effect on U.S. clean energy leadership

 At the Ames Laboratory, a national energy lab in the heart of Iowa, scientists and engineers are developing low-cost substitutes for the rare-earth metals used in electric-vehicle batteries and solar cells to reduce the need for imports from geopolitical rivals like China.

It's the kind of foundational research and development being carried out at national labs across the country that has helped to dramatically lower energy technology costs and pushed clean energy toward a tipping point.

But that renewable energy work and its local economic impact are at risk in the Trump administration's budget proposal for the coming year.

The administration's proposal would zero out energy efficiency and renewable energy (EERE) funding at the Ames lab and would slash similar funding by more than half at almost all of the national labs with EERE programs. With labs targeted for cuts in more than a dozen states, each representing jobs and local economic impact, the budget plan isn't likely to get through Congress without major changes, but scientists say that kind of proposal alone can have a chilling impact.

At the flagship National Renewable Energy Lab, where breakthroughs in solar, wind and electric vehicle technology have increased energy efficiency and lowered costs, the administration's proposed budget would leave wind power projects with a third of their current funding. Work on energy efficient buildings technologies, targeting another major source of greenhouse gas emissions driving climate change, would be left with less than 8 percent of current funding, according to the budget documents released in March by the Department of Energy.

In all, the proposed budget would cut 86 percent of new spending for the Energy Department and labs' work in energy efficiency and renewable energy, going from nearly $2.4 billion to a proposed $343 million.

Congress started hearings on the Energy Department budget last week, and the funding numbers are likely to change significantly before it's done. That happened in each of the past two years as President Donald Trump and his administration promoted fossil fuel interests and talked down renewable energy.

But the threat still has a chilling effect on scientists and the surrounding communities, where the total proposed cuts at the national labs would cost thousands of jobs and interrupt work that is essential to the leadership of the U.S. and its private businesses in the energy economy, congressional Democrats and scientists say.

The proposal may do damage even if lawmakers reject the bulk of the cuts, said Jacob Carter of the Union of Concerned Scientists, because it creates a sense of instability at the labs, hurting morale and any sense of job security and undermining officials' ability to attract and retain scientists. And any cuts that are eventually approved also ripple through the surrounding economies, connected universities and businesses.

"The fallout of this would be drastic given the multiplier-effect on DOE-supported jobs is in the range that could double or triple that job fallout," U.S. Rep. Marcy Kaptur, D-Ohio, chair of the subcommittee that oversees the Energy Department budget, said at a hearing last week. "It is no secret that the innovation economy faces fierce international competition, including those with nefarious intent."

House Democrats estimate the budget cuts would eliminate 6,100 jobs in the national labs, many of which would be in energy efficiency and renewable energy.

"We're sliding backward," Kaptur said.

Energy Secretary Rick Perry discussed the budget before U.S. House and Senate committees last week, emphasizing the research areas getting increases in funding, such as supercomputing, but saying little to disagree with lawmakers from both parties who questioned the proposed cuts to the national labs.

Perry said the administration's budget was just the beginning of a process, noting that when he was in Texas politics, "the governor's budget was a very useful doorstop." With the Energy Department's budget proposal, he said he was just "saluting the flag on the 5 percent reduction across the board" that had been ordered by the White House, then he went on to praise the national labs' work as "what keeps America ahead."

'Crown Jewels' of U.S. Science Capabilities

The Department of Energy's national labs are the "crown jewels in the national science capability," said Lynn Orr, who was undersecretary for science and energy at the department for the final three years of the Obama administration, overseeing budgets for 13 of the 17 national labs. He now teaches at Stanford.

"People mostly don't know what the labs are, what they do," he said. "Taken together, they are a very important part of our national R&D enterprise."

The labs are the foundation of the Energy Department's research and development efforts, and those efforts helped to make the department by far the leader among government agencies in the number of patents per billion dollars of spending in 2013 and 2014, according to a report done while Orr was at the agency.

They developed crucial technology used in electric vehicle batteries, designed utility-scale energy storage now used by private companies, developed coatings used to reduce wear and tear on wind turbines, and worked with industry to develop energy efficient lighting and window technologies, among many other developments.

Pooling Expertise for Difficult Research

Ames Laboratory, nestled among the science buildings at Iowa State University in Ames, specializes in developing new materials to improve the efficiency of manufacturing and clean energy technologies.

Its Critical Materials Institute brings together engineers and scientists from labs and universities around the country to pool their resources on projects involving rare-earth metals and other important materials that could be subject to supply disruptions.

It's not "sexy" research, so the work of the lab and others like it often isn't known or appreciated by the public, said Tom Barton, a chemist who was director of the lab from 1988 to 2007, and is now on the faculty at Iowa State.

But it's important to U.S. competitiveness, he said.

"I think the Ames lab is something the state of Iowa should be proud of, and it's something the nation should be proud of," Barton said.

Under the administration's budget proposal, funding for the lab's research related to energy efficiency and renewable energy would be eliminated. That includes the advanced manufacturing research.

A spokeswoman for the lab declined to comment about the potential effects of budget cuts, referring those questions to the Department of Energy, which had no comment. Adam Schwartz, the lab's director, emailed a statement about the importance of what the lab does.

"We use our scientific expertise and unique capabilities to create materials and energy solutions for our economic and national security," Schwartz said. The lab has about 380 employees, plus shared faculty with Iowa State, visiting scientists and graduate students.

Officials at other labs also declined to publicly discuss the president's budget proposal for the most part, directing questions to the Department of Energy.

NREL's Economic Impact Tops $1 Billion a Year

The National Renewable Energy Laboratory in Golden, Colorado, would also face transformative cuts under the Trump administration's proposed budget, dropping from $332 million this fiscal year to $206 million in the next one.

That kind of loss would reverberate across the entire renewable energy industry, which relies on research from the lab to improve the efficiency of wind turbines, solar panels and other components of the clean energy economy.

The lab issued a news release this month calling attention to a study about the economic impact of the lab's work. During the 2017 fiscal year, the lab had 1,745 full-time and part-time employees and contributed $1.1 billion to the nation's economy, the release said. A lab spokeswoman referred budget questions to the Energy Department.

At the Pacific Northwest National Laboratory in Richland, Washington, where the research and development work includes making the electricity grid more efficient and resilient, overall funding would fall from $603 million this year to $521 million under the administration's proposed budget. Funding for its energy efficiency and renewable energy work would drop from about $78 million in the current year to $24 million next year, according the budget breakdown released in March.

The cut didn't make sense to Republican Rep. Dan Newhouse of Washington, who asked Perry to explain at the hearing. Perry said he agreed that the lab's work was vital.

Newhouse's objection reflects why the labs' funding is typically protected: The national labs are found in communities nationwide, represented by Republicans and Democrats, and several are in states with an outsize influence on presidential politics, such as Iowa.

The Energy Department's Argument

The Department of Energy says in a budget summary document that the cuts to energy efficiency and renewable energy funding are part of a focus on "early-stage R&D, where the federal role is strongest, and reflects an increased reliance on the private sector to fund later-stage research." In other words, it argues that the government should have a smaller role in developing technologies that are close to being ready for market.

Orr saw early indications of that approach during the transition to the Trump administration after the 2016 election.

"Their view, I think, is that it's fine to do the fundamental science, but if it's stuff that has potential commercial utility, even if it's far downstream, that should be done by private industry," Orr said.

He disagrees with that approach and thinks it is harmful to the economy to reduce funding for energy efficiency and clean energy.

There is a worldwide race to see which countries and companies will be leaders in the transition to clean energy, and the U.S. is unwise to reduce the government's role, he said.

Fears of a Chilling Impact on Science

A larger concern is that the administration is eroding the country's science infrastructure, said Carter of the Union of Concerned Scientists, who previously was a scientist for the U.S. Environmental Protection Agency.

The administration is succeeding at sending a message to scientists that their work is not valued and that they will face ongoing instability about budgets, he said.

The Union of Concerned Scientists found low morale in a survey of federal scientists last year. It didn't include employees of the national labs, but Carter suspects that there are similar problems there.

Barton, the former Ames lab director, said the constant threat of cuts may be bad for morale, but the fact that this threat comes almost every budget cycle reduces its effect.

If the budget cuts were to be enacted, that would be bad for the economy and bad for the environment, Kaptur told Perry during the hearing.

"Emblazoned on the president's budget request are the words, 'A Budget for a Better America: Promises Kept, Taxpayers First,'" she said. "However, the proposals in this request tell a very different story. In fact, the president's budget request harms America's energy future, our competitiveness, our consumers and our economy."