The Biden administration’s 2022 budget released on Friday includes major funding increases for important Department of Energy (DOE) programs to drive clean energy innovation, address the climate crisis, and build a strong and equitable economy. These funding increases complement the investments proposed in the President’s American Jobs Plan (AJP). Now it’s up to Congress to pass AJP and write a government funding bill that reflects the President’s proposals.
Below are five components of the budget that would accelerate clean energy innovation and redirect DOE programs toward our greatest challenges and opportunities.
1. Historic Funding Increases for Clean Energy
The budget includes $4.7 billion in regular-year funding for DOE’s Office of Energy Efficiency and Renewable Energy (EERE), a $2 billion (or 65%) increase from 2021. EERE houses the agency’s efforts focused on heavy industry, building decarbonization, clean transportation technologies, and renewable power. These programs are underfunded relative to the need for investment and the opportunity to build out domestic clean energy industries. The administration’s budget would give these programs a much-needed funding boost.
The budget also ramps up funding for other clean energy programs at DOE and establishes a new Advanced Research Projects Agency – Climate with initial funding of $500 million, of which $200 million is at DOE.
2. Demonstrations & Deployment to Round Out the Innovation Portfolio
The budget emphasizes funding for demonstration projects and deployment of climate solutions, a welcome pivot from the Trump DOE’s narrow focus on early-stage research and development. The new Office of Clean Energy Demonstrations, funded at $400 million, fills a critical gap in DOE’s efforts to commercialize newer, better clean energy technologies, reduce costs, and address barriers to widespread deployment. The $300 million for Build Back Better Challenge grants will help bring the benefits of clean energy to more communities. And the focus throughout the budget on research, development, demonstrations, and deployment will better equip DOE to accelerate clean energy innovation at the scale necessary.
3. Bringing Clean Energy to More Communities
DOE should play a critical role ensuring that more communities see the benefits of technologies like renewable energy, energy efficiency, and electric vehicles. Strong community engagement practices and funding for clean energy projects to benefit low-income, pollution-burdened, and energy transition communities and communities of color can help DOE meet these goals.
The budget includes several new programs to bring clean energy to more communities. For example, it proposes to prioritize the new Build Back Better Challenge grants for marginalized, overburdened, and energy transition communities. It also appears to expand the Weatherization Assistance Program—one of the only existing efforts focused on low-income communities—to enable more households to access funding for cost- and energy-saving retrofits, though the details on the expanded program are not yet clear.
The budget also indicates that EERE’s goal is to accelerate a just, equitable clean energy transition. This explicit focus, while just a start, is an important shift. Historically, EERE and most other offices at DOE have not been designed to support equity and environmental and energy justice.
4. Procurement and Funding to Decarbonize Heavy Industry
Technologies to clean up industrial facilities like steel mills and cement plants are critical to addressing the climate crisis. But these sectors have long been a major gap in DOE innovation efforts. The budget acknowledges that decarbonizing heavy industry should be a focus for both EERE and the Office of Fossil Energy and Carbon Management. This focus is a great first step toward building out a strong federal industrial sector program. As Congress turns the President’s proposals into a detailed appropriations bill, we hope to see large funding increases for the Advanced Manufacturing Office, funding for large-scale demonstrations at industrial facilities, and support for DOE to expand its heavy industry efforts to include electrification, hydrogen, circular economy measures, novel processes, and carbon capture and storage.
The budget also includes more details on the industrial-sector decarbonization efforts proposed in the American Jobs Plan, including, notably, funding to procure low-carbon materials. The federal government is a top purchaser of industrial products like steel and cement for the construction of roads, bridges, buildings and other projects. Government procurement is thus a critical lever in creating early markets and sustained demand for cleaner materials, alongside direct investments to help ensure U.S. industry is making the cleanest products on the market.
To better leverage procurement to drive innovation, the federal government should support efforts to create a reporting system that helps manufacturers account for all the carbon associated with producing a range of industrial products, and require that all construction projects receiving federal funds take climate pollution and labor protection into account when awarding contracts. We urge Congress to include funding in the FY22 budget for the federal government to support these priorities. Doing so will ensure we capture the significant emissions reduction opportunities associated with switching to lower-carbon materials in projects funded by the American Jobs Plan.
5. Support for State, Local, and Tribal Governments
Action from states and municipal governments is critical to meeting our climate goals; increasing clean energy; and driving adoption of innovative technologies, policies, and business models. Federal funding is necessary to support states and cities in these endeavors, but current programs lack the budget to meaningfully support them.
The budget proposes several new programs to support states and cities, including Build Back Better Challenge grants for states and a new Local Government Energy Program. The success of these programs will depend on the details, but it is promising to see new efforts to support states and cities in the budget. Moreover, these programs build on the block grant funding proposed in the American Jobs Plan to provide an influx of support for states to advance clean energy, building electrification, and efficiency.
The budget also includes funding increases to support tribal nations to advance clean energy. Households on tribal lands lack access to electricity at extremely high rates and often face high costs to connect to the electricity grid. The budget proposes a six-fold increase in funding for the Office of Indian Energy (a $100 million increase) to support American Indian and Alaskan Native nations, including to help address energy access and energy poverty.
Federal clean energy programs have already helped foster a revolution in technologies like solar panels, wind turbines, and electric vehicle batteries. Now, we have an opportunity to accelerate clean energy innovation to improve, demonstrate, and deploy the technologies and strategies we need to combat the climate crisis. With the right funding and policies, we can do so in a way that creates strong economic growth rooted in the industries of the future, addresses inequalities in our energy and economic systems, and cuts pollution in places that have borne the brunt of it in the past. President Biden’s energy budget is a major step toward realizing these goals, and Congress should pass a government funding bill that incorporates these proposals and brings the benefits of clean energy to communities across the country.