Steven Chu's High-Risk Program Gives Energy Innovation a Jolt

In an effort to promote green technologies, the government is investing in cutting-edge ideas.

By + More

A funny thing happened when Steven Chu arrived to head the Department of Energy last year. Chu, a physicist, got his start at AT&T Bell Labs, once a dynamo, a real powerhouse of technology innovation. That's where he did the work that won him his Nobel Prize, and he's often talked about what a great place it was and how quickly things got done there.

When Chu got to Washington, he wanted DOE to hustle. He wanted it to move quickly, for example, to give out loans to clean energy projects. He asked some of the career employees how long it would take to start handing out money. He was told 24 to 36 months. Chu was shocked. "That's not acceptable," he said, according to someone familiar with the exchange. "We are going to get it done in three." (The first loan went out that March.)

People who have heard this story chuckle because they say that it's a good reminder of how slowly the government moves. But it's also a tale of how slowly the energy landscape in America is changing and how people like Chu, who are itching to change it, are frustrated with the pace. The United States, as pretty much anyone will tell you, is trying to race China to develop clean energy technologies—the wind turbines and solar panels and advanced batteries and energy storage devices of the future—and a lot of people are worried that the country is lagging, even losing, when it comes to innovation. Over the past 20 years, the amount of money that government and private companies have spent on energy research in the United States has tanked. Meanwhile, scientists and engineers increasingly fret about what they call the energy "valley of death," a figurative place where promising ideas go to die because they just can't get the funding they need to advance.

Chu knows this is a big problem. At the center of his effort to remedy it is a radical new program called ARPA–E, or the Advanced Research Projects Agency–Energy. The idea for the program came from a report Chu contributed to in 2005, and Congress authorized it in 2007 but never gave it any funding. Then ARPA–E got $400 million in President Obama's stimulus package. The name doesn't reveal much, except that it's modeled after the military's wildly successful Defense Advanced Research Projects Agency, known as DARPA. It was created in 1958, a year after the Soviets launched Sputnik into space, which sent Americans into a state of soul-searching panic about not being technologically superior. Vowing never to be caught from behind again, the U.S. government launched DARPA "to prevent technological surprise to the U.S." (The mission has since been expanded to creating "technological surprise for our enemies.") DARPA gave birth to the Internet and has been credited with major strides in advanced aircraft, missiles, and surveillance, just to name a few fields. In other words, it turned panic into dominance.

Much of DARPA's success reflects the way it approaches innovation. Its annual budget is about $3.2 billion. By design, almost all of its research is undertaken at universities and private labs, not government facilities. The Defense Department puts out calls for proposals on a certain topic—say, shape-shifting materials—and funds the ones that look most promising. The ventures don't last long, perhaps a couple of years, and then the Defense Department moves on to something else. If a project fails, that's OK. If it succeeds, the government can buy it. The whole point is to foster breakthroughs quickly, to recruit the brightest talent, and to avoid all the impediments that tend to make "government innovation" seem like an oxymoron.

Energy innovations. Can this approach do for energy what it has done for the military? Can it help usher in a new industrial revolution, this time in clean energy? Last year, Chu chose Arun Majumdar, a former colleague at Lawrence Berkeley National Laboratory, to lead the agency. As of this spring, Majumdar had a staff of 12 working under him, including some of the sharpest minds poached from the private sector. "ARPA–E is sort of this infant baby that's coming out and needs to be nurtured," says Majumdar. "I am like the baby sitter, and as with any baby, there are many issues."