While the United States has not been the most aggressive country in addressing climate change, it has supported a program dedicated to funding innovative clean energy technology. Known as the Advanced Research Projects Agency–Energy (ARPA-E), this initiative has allocated over $4 billion in the past 15 years to universities and startups aiming to revolutionize energy production.
Securing funding for groundbreaking technology is challenging because these projects can take years or even decades to become profitable. Many innovative technologies struggle to survive the “valley of death” between initial experimentation and becoming a viable business. ARPA-E, inspired by a similar program by the U.S. military, seeks to bridge this gap and support the development of future climate technologies.
A report from the National Academies of Science, commissioned by Congress and released last week, highlights that ARPA-E’s high-risk, high-reward strategy is effective. The program’s $4 billion investment has resulted in over $20 billion in additional funding and more than 1,400 patents. Projects funded by ARPA-E have a higher likelihood of obtaining patents and additional investment compared to those that were not funded. The report also notes a “crowding in” effect, where approximately 40 percent of ARPA-E grants lead other companies to pursue similar technologies after a startup demonstrates feasibility.
Chris Bataille, a fellow at the Columbia University Center on Global Energy Policy and an expert in clean energy technology development, commented on the program, saying, “We’re trying to enable very talented people who could be doing other things to spend their lives trying to do incredibly risky things that, probabilistically speaking, will not deliver a profit in time to benefit them.” Bataille was not involved in the report.
The report committee, comprising over a dozen scientists and energy experts, recommended that Congress significantly increase ARPA-E’s funding. It also suggested a shift in focus from renewables and electric vehicles to more challenging energy issues, a change partially supported by the Trump administration.
Established in 2009, ARPA-E initially focused on solar panel improvements and lithium-ion batteries, which were not yet competitive with traditional energy sources. (Another Department of Energy program provided early support to Tesla.) These technologies have since become significantly cheaper due to China’s substantial investment in manufacturing. The report suggests ARPA-E no longer needs to focus on renewable technologies, aligning with some climate experts’ views that solar does not require tax subsidies like those in the Inflation Reduction Act under Joe Biden’s presidency.
However, solar and wind energy are only effective when conditions are favorable, and much of the national grid still depends on coal and gas plants that can operate continuously. This is particularly true for factories and data centers that require a steady power supply. In these areas, ARPA-E’s investments are proving effective.
Recent ARPA-E grantees are focusing on providing “clean firm” power available continuously. Notable among these is Fervo, which uses deep wells to generate electricity from geothermal heat. Supported by ARPA-E since 2019, Fervo went public this year and is partnering with Google to supply power to data centers in Nevada. Other successes include Form Energy, which creates iron-air batteries capable of storing large amounts of clean energy for several days, and X-energy, known for building small-scale nuclear reactors.
Given these achievements, report authors advocate for ARPA-E to now focus on the most challenging climate issues, which may take decades to resolve. Areas of potential include nuclear fusion, which could theoretically offer limitless clean energy, and “seasonal energy storage,” involving batteries capable of storing solar and wind energy for winter months when these resources are scarce. Crucially, developing carbon-free methods for producing steel and cement, which together account for about 8 percent of global emissions, is highlighted as significant for climate progress.
Bataille emphasized the need for continuous innovation to transition away from fossil fuels, stating, “You need this sort of constant innovation to move us off the fossil fuel pathway, right? Because we’re very firmly entrenched on it. We’re talking about projects that will likely be profitable, but they’re just not valued unless the government values them. There’s probably one-one-hundredth of the necessary money going into those.”
Donald Trump attempted to defund ARPA-E during his first term by withholding funds allocated by Congress. In his second term, the administration has sought to eliminate billions of dollars in climate grants from the Biden era. Trump’s budget proposal to Congress this year included a nearly 50 percent reduction for ARPA-E, although the Department of Energy continues to issue new grants for experimental technologies like long-duration energy storage, fusion reactors, and lithium mining.
In a statement to Grist, the department described ARPA-E as advancing Trump’s agenda for American energy dominance by supporting breakthrough, high-risk technologies. The proposed funding cut, however, was characterized as demonstrating fiscal discipline and a commitment to an efficient government.
Despite not dismantling the program, Trump’s policies have impacted the clean tech sector’s growth, which ARPA-E has helped nurture. For instance, Natron Energy, which received ARPA-E funding for sodium-ion battery development, announced plans in 2024 to build a $1.4 billion facility in Rocky Mount, North Carolina. However, Trump’s reelection cooled private sector interest in electric vehicles, preventing the company from securing investors for its factory. Natron Energy closed last year.
