How Integrated Funding at DOE Can Spur Climate Innovation

With the passage of the Infrastructure Investment and Jobs Act (IIJA) and the Inflation Reduction Act (IRA), the U.S. Department of Energy (DOE) has received billions of dollars in funding to research, develop, demonstrate, and deploy innovative climate technologies. Together, this funding offers a unique opportunity for the DOE to improve coordination across its offices and to maximize its impact on IIJA and IRA implementation in local communities throughout the country.

In the coming years, the DOE is expected to issue several Funding Opportunity Announcements (FOAs), soliciting applications from research organizations and businesses seeking IIJA and IRA funding. Historically, the DOE has encouraged applicants to apply for several funding opportunities at a time. If applicants are lucky, they will get enough funding through these piecewise awards to support their envisioned projects. But because DOE offices make award decisions for competitive programs individually, applicants often receive only a fraction of the funding they need.

On the surface, a “peanut butter approach” to funding—in which funds are spread thin and wide across an array of communities and projects—may seem like a productive use of DOE resources. However, the reach and effect of such projects are crippled by a lack of total funding. An applicant granted partial DOE funding may be able to cover the costs of standing up a Research, Development & Demonstration (RD&D) project but may be prevented from carrying out its full, transformative vision. 

Integrated review: a new approach to DOE funding

Absent internal coordination, the DOE’s current funding practices set us on a path of incremental change—far from the transformative trajectory needed to meet the United States’ climate goals. To maximize the impact of IIJA, IRA, and department resources, the DOE should move toward adopting an integrated funding approach for its competitive programs, in which DOE offices coordinate to provide projects with full, transformational funding. 

Under an integrated funding approach, applicants would submit application packages to be jointly and comprehensively reviewed by several DOE offices. Going beyond the DOE’s existing levels of coordination on program design and strategy alignment across offices, this new approach would ensure DOE offices work in concert to support a suite of place-based projects and programs, as opposed to just one activity at the community level. 

An integrated funding approach would also offer much-needed guidance to the DOE offices whose missions are functionally intertwined; these include the Office of Clean Energy Demonstrations, the Office of Manufacturing and Energy Supply Chains, the Advanced Materials and Manufacturing Technologies Office, and the Industrial Efficiency and Decarbonization Office. Indeed, the DOE has long stated that its newly established offices are intended to coordinate closely together. But the department has yet to provide a clear vision for this coordination, even as IIJA and IRA implementation plans unfold. 

How place-based programs stand to benefit

To illustrate further, imagine an urban area with gas-dependent buildings and infrastructure, and a population that is reliant on private, high-emissions motorized transport. To facilitate the transition toward a clean, sustainable urban energy system, this city would need to take sweeping action to meet its charging infrastructure needs and administer ambitious buildings- and vehicles-focused programs, among other things. If the city applied to the DOE today, it might receive an award for grid integration or program technical assistance—but funding for both would be far from guaranteed. 

Under an integrated funding approach, however, the city would effectively submit a single application to multiple DOE offices. After joint review, a chain of DOE awards would be dispensed to the city by teams from across the DOE: for example, from the Office of State and Community Energy Programs to assist the city in developing a net-zero strategy; from both the Office of Electricity and the Grid Deployment Office to pilot newer grid controls to manage newly electrified buildings and charging infrastructure; and from the Solar Energy Technologies Office and Building Technologies Office to fund the development of collaborative workforce programs that will facilitate solar installations, or the demonstration of novel building technologies and retrofit practices. 

Changes to DOE funding approach will require changes in legislation

The DOE’s approach to funding must be updated to facilitate the clean energy transition and meet the moment on climate. To accomplish a coordinated funding approach at the DOE, changes in legislative authority will be needed. For example, Congress could authorize DOE to conduct a pilot program that draws money from different DOE offices for a joint FOA. Such authorizing legislation could direct the DOE to channel up to 5 percent of funding from relevant programs to be used for place-based initiatives.

The DOE could further reduce barriers to participation in the innovation pipeline by developing a directory of DOE programs that partake in the integrated funding approach, which could serve as a one-stop shop to help potential applicants navigate the federal funding process.

Whether found regionally or locally, bottom-up solutions are a crucial path to demonstrating and deploying clean energy technologies in the United States. Congress could support the climate innovation process at these levels by directing the DOE to adopt an integrated funding approach across its competitive funding programs. Doing so would make the best use of IIJA and IRA funds and DOE expertise and fast-track U.S. efforts in order to meet our ambitious climate goals by the middle of the century.