Prioritizing Rural Ranching Operations in BLM Solar Arrays
Securing America’s Energy Independence through Solar Energy while Keeping America’s Ranching Industry Intact
Through the new Western Solar Plan (official name: Final Utility-Scale Solar Energy Development Programmatic Environmental Impact Statement and Proposed Resource Management Plan Amendments), the Bureau of Land Management (BLM) designated over 31 million acres of federal land across 11 states as priority zones for future solar development. About 30 million acres of this land will overlap with current livestock grazing allotments. Building conventional solar developments replaces traditional livestock grazing lands, decreasing economic opportunities for American ranchers. It doesn’t have to be this way. Practices like agrivoltaics are a win-win-win for America’s energy industry, American ranchers, and our rural American economies. To accomplish this, BLM’s right-of-way application materials should require applicants to address how solar arrays will be planned, designed, and operated to support traditional ranching practices and surrounding rural economies.
Challenge and Opportunity
Due to the decreasing cost of solar energy, the United States is undergoing a surge in large-scale solar photovoltaic developments. Over the past decade, 121 GW of solar capacity was added with continued growth projected through 2050. The BLM has the potential to significantly increase federal income from solar land leases while simultaneously preserving traditional American ranching operations. The BLM simply needs to request such solutions when selecting the companies that will develop solar projects on public land. The August 2024 Western Solar Plan makes progress on identifying lands eligible for solar developments that are close to transmission lines and on degraded lands, but does not go far enough to ensure the access and viability of grazing operations within them.
Constructing large-scale solar farms generally requires clearing and grading large areas of land, which destroys vegetation, erodes topsoil, and makes land unsuitable for grazing livestock. But alternative approaches exist. Small changes in construction practices, improved wire management, and minor alterations to the solar array racking system allow for agrivoltaics where land is simultaneously used for agriculture and solar energy production. Agrivoltaics can improve forage production outcomes in dry years and reduce livestock heat related mortality. Both benefits support rural ranching families, enabling them to produce more beef and lamb for American markets. There are already market solutions that eliminate the need for grading lands and support integrating large animals in solar arrays without decreasing solar energy output.
However, BLM’s application materials do not require solar developers to plan for long-term grazing and land management practices within solar arrays that could facilitate traditional ranching operations. Solar energy projects on BLM lands are often not authorized through competitive leases, but by BLM granting a right-of-way (ROW). The ROW application materials address “likely environmental effects” and “probable effects on” various plants and wildlife but do not address how to keep current grazing or ranching businesses on the same land. The lack of long term agriculture considerations in ROW application materials negatively impacts rural ranching communities. BLM can lead the way in ensuring U.S. solar array design and management plans integrate traditional ranching and grazing operations.
Plan of Action
The following recommendations are listed in order of priority from easiest to more challenging.
Recommendation 1. Require Right of Way applicants to address how they will maintain current ranching and grazing activities.
At a minimum, BLM should update its ROW application materials to add questions about how proposed projects will 1) preserve current ranching and grazing leases, and 2) economically affect nearby communities. BLM should prefer solar projects that maintain current land uses and deliver substantial economic benefits to local ranching families or conservation land trusts.
Recommendation 2. Create a separate Right of Way application for solar projects to better address their particular impacts.
BLM’s ROW application does not specifically address the impacts of solar arrays. Currently, ROWs are used for many different purposes like transportation, utility systems, telecommunications and other facilities. Given that utility-scale solar arrays occupy thousands of acres—significantly more than the small footprint of other ROW uses—BLM should pay special attention to the stewardship of public lands used for solar developments. Creating a dedicated ROW application for solar energy systems will help BLM select the best projects to provide the most value to rural Americans.
Recommendation 3. Make the selection process for solar companies to lease BLM land competitive.
BLM’s ROW application is not a competitive process. It is simply an application to use land. This leaves land lease revenue on the table that the federal government could use. By making a Request for Proposal (RFP) competitive bid process, BLM could select between solar companies based on land lease rates and a list of evaluation criteria for how the project will satisfy Recommendations 1 and 2. Using a competitive process will allow the federal government to generate more revenue and select solar projects with the most local benefits.
Recommendation 4. Integrate land stewardship into evaluation criteria for selecting solar projects.
Once the BLM begins selecting solar companies through a competitive process, it is important to select appropriate evaluation criteria. Independent research by the Colorado Agrivoltaic Learning Center, found that most solar development RFPs by utilities and municipalities attribute the vast majority of the selection criteria to the price of the energy and a company’s history and financial capabilities. Very rarely does the evaluation criteria of a solar development RFP specify any land stewardship or local partnerships. BLM could place 20-30% of a project’s evaluation on how the public’s land will continue to be stewarded by rural communities and legacy ranching families for decades to come. This change will encourage companies to compete on how to support rural ranching families without requiring the government to add any financial incentives.
Conclusion
BLM has the opportunity to increase the federal government’s income from solar land leases while simultaneously keeping rural economies and ranching families thriving. Revising the ROW application process or creating new processes to select solar projects that design for and practice agrivoltaics will maximize positive outcomes for rural America. BLM can keep traditional ranching communities on its lands within solar arrays and still provide the beef and lamb our country wants. By advancing agrivoltaics, BLM will continue its tradition of working hand-in-hand with rural communities while generating increased revenue from solar energy deployments.
This action-ready policy memo is part of Day One 2025 — our effort to bring forward bold policy ideas, grounded in science and evidence, that can tackle the country’s biggest challenges and bring us closer to the prosperous, equitable and safe future that we all hope for whoever takes office in 2025 and beyond.
The Energy Transition Workforce Initiative
The energy transition underway in the United States continues to present a unique set of opportunities to put Americans back to work through the deployment of new technologies, infrastructure, energy efficiency, and expansion of the electricity system to meet our carbon goals. Unlike many previous industrial transitions, the U.S. can directly influence the pace of change, promote greater social equity, and create new jobs to replace those that are phasing out.
Since 2021, significant policies have been enacted to support this transition, including the Infrastructure Investment and Jobs Act (IIJA), CHIPS and Science Act, and the Inflation Reduction Act. The most recent Congressional Budget Office estimates of the energy-related spending of these three pieces of legislation was at least $956 billion over a 10-year period.
Despite these historic investments, additional work remains to be done. To supplement the accomplishments of the last four years, the next administration should:
- Establish the Energy Workforce and Economic Development Extension Program inside the Department of Energy (DOE).
- Restore the interagency Energy and Advanced Manufacturing Workforce Initiative.
- Initiate the Energy Transition Community Benefits Training Program.
- Establish a national public-private commission on steel decarbonization.
- Restore the DOE Labor Working Group under the direction of a senior advisor to the Secretary of Energy.
Challenge and Opportunity
In 2023, the energy sector added over 250,000 jobs, with clean energy accounting for 56% of jobs. Energy efficiency jobs, such as the manufacture and installation of heat pumps, added 74,700 jobs, the most of any technology area. While energy jobs are found in every state in America, fossil fuel production jobs and the infrastructure associated with them are highly concentrated. In 2020, 73% of the roughly one million oil, coal, and natural gas production jobs were in just 10 states. By 2023, 70,000 of those jobs were lost in the same 10 states, leaving the communities that host them at risk of economic decline. The Interagency Working Group on Coal and Power Plant Communities was established by Executive Order in 2021 to address this issue and provide new incentives for clean energy production such as the Sparkz and Form Energy battery plants in West Virginia. To date, over $538 billion of competitive and formula funding has been provided to “revitalize America’s energy communities.”
Plan of Action
On day one, the next administration should announce the expansion of the DOE Office of Energy Jobs to lead the following efforts.
Recommendation 1. Establish the Energy Workforce and Economic Development Extension Program (EWEDEP) inside the DOE.
Modeled after the Agricultural Extension Program, and in partnership with the National Laboratories, the EWEDEP should provide technical advice to the state decarbonization plans funded by the Environmental Protection Agency, as well as to municipalities, regional entities, tribal governments, and private-sector businesses. Led by the Office of Energy Jobs, this program should also assist regional, state, local, and tribal governments in developing and implementing technical decarbonization strategies that simultaneously create good local jobs. State and regional support staff for the Office of Energy Jobs should be located in each of the national laboratories.
Recommendation 2. Restore the interagency Energy and Advanced Manufacturing Workforce Initiative (EAMWI).
During the Obama Administration, EAMWI, run by the Department of Energy, coordinated activities between the Departments of Energy, Labor, Education, Commerce, and Defense and the National Science Foundation to harmonize planning, training, and curriculum development for the new energy workforce. In addition to resuming those coordinative activities, the next administration should mandate that the EAMWI produce quarterly assessments of the needs and opportunities in workforce training in response to the requirements of the energy transition. Based on updated USEER data from 2024 and ongoing job occupational needs’ assessments, EAMWI should provide annual reports on state energy workforce needs to the appropriate federal and state agencies in charge of energy, education, and economic development strategies.
Recommendation 3. Initiate the Energy Transition Community Benefits Training Program.
Community Benefit Plans (CBPs) and Community Benefit Agreements (CBAs) have emerged as the primary tools for monitoring job quality metrics in the energy transition, particularly those that are supported by federal government grants and loans. This program should provide expert training in the design and performance of CBPs and CBAs for company executives, community organizations and advocates, labor unions, and local government employees. This program should be informed by an advisory board of experts from business schools, trade associations, labor unions, and community stakeholders.
Recommendation 4. Establish a national public-private commission on steel decarbonization.
Decarbonizing the steel industry will be one of the most difficult and expensive challenges posed on the energy transition. Appointing a national commission of industry stakeholders, including business, labor, communities, and federal agencies, will be critical for developing a model for managing hard-to-decarbonize, industrial sectors of the economy in ways that create quality jobs, protect communities, and build broad consensus among the American people. DOE should also establish an Office of Steel Decarbonization to implement the commission’s recommendations.
Recommendation 5. Restore the DOE Labor Working Group under the direction of a senior advisor to the Secretary of Energy.
The DOE Labor Working Group provided monthly guidance on how to implement high wage strategies in the energy sector while preserving jobs and reducing greenhouse gas emissions. Member organizations included energy sector unions involved in the mining, extraction, manufacturing, construction, utility, and transportation industry sectors.
After initiating these actions on day one, the next administration should prioritize legislation establishing an Energy Transition Adjustment Assistance Program (ETAAP). In some cases, the loss of fossil fuel jobs in concentrated parts of the country will require retraining of current employees to prepare them for new careers with new employers. The U.S. will need a program to provide income support greater than extended unemployment to recipients undergoing retraining. Such a program should learn from the shortcomings of the Trade Adjustment Assistance (TAA) program by providing more supportive services. Based on two-year training costs and average participation rates of TAA-certified beneficiaries, a minimum of $20 billion for worker retraining should be allocated as part of this effort.
In addition, the Interagency Working Group on Coal and Power Plant Communities should be consulted to design standards for broad eligibility to participate in the ETAAP, including energy-intensive manufacturing businesses impacted by the energy transition. Finally, as existing energy companies transition to producing cleaner forms of energy, the program should consider subsidizing the retraining of existing energy-sector employees to provide new skills for the transition.
Conclusion
Unlike many previous industrial transitions, which were driven by new technologies and market forces, decarbonization is driven largely by social policy interventions. Thus, well-planned responses, based on timely clean-energy economic development investments, can provide good jobs and economic opportunity for displaced workers and affected communities. The clean energy tax credits included in the IRA should be maintained and extended. Labor standards and domestic content rules should be attached to both grants and formula spending. Finally, the lending authorities for the DOE Loan Program Office should be expanded to include energy infrastructure, energy-intensive manufacturing, and energy efficiency projects. With such an approach, the U.S. and its workers can benefit from the global push to decarbonize.
This idea was originally published on February 1, 2021. We’ve republished this updated version on November 27, 2024.
This action-ready policy memo is part of Day One 2025 — our effort to bring forward bold policy ideas, grounded in science and evidence, that can tackle the country’s biggest challenges and bring us closer to the prosperous, equitable and safe future that we all hope for whoever takes office in 2025 and beyond.
The main challenge is providing a timely economic development response to impacted communities before the most serious job losses have occurred. Our goal is to create a Federal Emergency Management Agency (FEMA)-like response in advance of the economic storm devastating some communities because of the loss of fossil fuel jobs. However, unlike FEMA, most federal economic development programs are not designed to respond to emergency job loss, and they require annual appropriations and lengthy preparations.
The overall success of the Energy Transition Workforce Initiative will be measured by the number and quality of jobs created in the communities expected to be hardest hit by the energy transition, the timeliness of the intervention, and the stability of the communities. Utilization rates of EWEDEP technical support for regions, state, local and tribal governments to develop implementation plans will also be a primary measure.
U.S. Energy Security Compacts: Enhancing American Leadership and Influence with Global Energy Investment
This policy proposal was incubated at the Energy for Growth Hub and workshopped at FAS in May 2024.
Increasingly, U.S. national security priorities depend heavily on bolstering the energy security of key allies, including developing and emerging economies. But U.S. capacity to deliver this investment is hamstrung by critical gaps in approach, capability, and tools.
The new administration should work with Congress to give the Millennium Challenge Corporation (MCC) the mandate and capacity to lead the U.S. interagency in implementing ‘Energy Security Compacts’, bilateral packages of investment and support for allies whose energy security is closely tied to core U.S. priorities. This would require minor amendments to the Millennium Challenge Act of 2003 to add a fourth business line to MCC’s Compact operations and grant the agency authority to coordinate an interagency working group contributing complementary tools and resources.
This proposal presents an opportunity to deliver on global energy security, an issue with broad appeal and major national security benefits. This initiative would strengthen economic partnerships with allies overseas, who consistently rank energy security as a top priority; enhance U.S. influence and credibility in advancing global infrastructure; and expand growing markets for U.S. energy technology. This proposal is built on the foundations and successes of MCC, a signature achievement of the G.W. Bush administration, and is informed by lessons learned from other initiatives launched by previous presidents of both parties.
Challenge and Opportunity
More than ever before, U.S. national security depends on bolstering the energy security of key allies. Core examples include:
- Securing physical energy assets: In countries under immediate or potential military threat, the U.S. may seek to secure vulnerable critical energy infrastructure, restore energy services to local populations, and build a foundation for long-term restoration.
- Countering dependence on geostrategic competitors: U.S. allies’ reliance on geostrategic competitors for energy supply or technologies poses short- and long-term threats to national security. Russia is building large nuclear reactors in major economies including Turkey, Egypt, India, and Bangladesh; has signed agreements to supply nuclear technology to at least 40 countries; and has agreed to provide training and technical assistance to at least another 14. Targeted U.S. support, investment, and commercial diplomacy can head off such dependence by expanding competition.
- Driving economic growth and enduring diplomatic relationships: Many developing and emerging economies face severe challenges in providing reliable, affordable electricity to their populations. This hampers basic livelihoods; constrains economic activity, job creation, and internet access; and contributes to deteriorating economic conditions driving instability and unrest. Of all the constraints analyses conducted by MCC since its creation, roughly half identified energy as a country’s top economic constraint. As emerging economies grow, their economic stability has an expanding influence over global economic performance and security. In coming decades, they will require vast increases in reliable energy to grow their manufacturing and service industries and employ rapidly growing populations. U.S. investment can provide the foundation for market-driven growth and enduring diplomatic partnerships.
- Diversifying supply chains: Many crucial technologies depend on minerals sourced from developing economies without reliable electricity. For example, Zambia accounts for about 4% of global copper supply and would like to scale up production. But recurring droughts have shuttered the country’s major hydropower plant and led to electricity outages, making it difficult for mining operations to continue or grow. Scaling up the mining and processing of key minerals in developing economies will require investment in improving power supply.
The U.S. needs a mechanism that enables quick, efficient, and effective investment and policy responses to the specific concerns facing key allies. Currently, U.S. capacity to deliver such support is hamstrung by key gaps in approach, capabilities, and tools. The most salient challenges include:
A project-by-project approach limits systemic impact: U.S. overseas investment agencies including the Development Finance Corporation (DFC), the U.S. Trade and Development Agency (USTDA), and the Export-Import Bank (EXIM) are built to advance individual commercial energy transactions across many different countries. This approach has value–but is insufficient in cases where the goal is to secure a particular country’s entire energy system by building strong, competitive markets. That will require approaching the energy sector as a complex and interconnected system, rather than a set of stand-alone transactions.
Diffusion of tools across the interagency hinders coordination. The U.S. has powerful tools to support energy security–including through direct investment, policy support, and technical and commercial assistance–but they are spread across at least nine different agencies. Optimizing deployment will require efficient coordination, incentives for collaboration; and less fragmented engagement with private partners.
Insufficient leverage to incentivize reforms weakens accountability. Ultimately, energy security depends heavily on decisions made by the partner country’s government. In many cases, governments need to make tough decisions and advance key reforms before the U.S. can help crowd in private capital. Many U.S. agencies provide technical assistance to strengthen policy and regulatory frameworks but lack concrete mechanisms to incentivize these reforms or make U.S. funding contingent on progress.
Limited tools supporting vital enabling public infrastructure blocks out private investment. The most challenging bottleneck to modernizing and strengthening a power sector is often not financing new power generation (which can easily attract private investment under the right conditions), but supporting critical enabling infrastructure including grid networks. In most emerging markets, these are public assets, wholly or partially state-owned. However, most U.S. energy finance tools are designed to support only private sector-led investments. This effectively limits their effectiveness to the generation sector, which already attracts far more capital than transmission or distribution.
To succeed, an energy security investment mechanism should:
- Enable investment highly tailored to the specific needs and priorities of partners;
- Provide support across the entire energy sector value chain, strengthening markets to enable greater direct investment by DFC and the private sector;
- Co-invest with partner countries in shared priorities, with strong accountability mechanisms.
Plan of Action
The new administration should work with Congress to give the Millennium Challenge Corporation the mandate to implement ‘Energy Security Compacts’ (ESCs) addressing the primary constraints to energy security in specific countries, and to coordinate the rest of the interagency in contributing relevant tools and resources. This proposal builds on and reflects key lessons learned from previous efforts by administrations of both parties.
Each Energy Security Compact would include the following:
- A process led by MCC and the National Security Council (NSC) to identify priority countries.
- An analysis jointly conducted by MCC and the partner country on the key constraints to energy security.
- Negotiation, led by MCC with support from NSC, of a multi-year Energy Security Compact, anchored by MCC support for a specific set of investments and reforms, and complemented by relevant contributions from the interagency. The Energy Security Compact would define agency-specific responsibilities and include clear objectives and measurable targets.
- Implementation of the Energy Security Compact, led by MCC and NSC. To manage this process, MCC and NSC would co-lead an Interagency Working Group comprising representatives from all relevant agencies.
- Results reporting, based on MCC’s top-ranked reporting process, to the National Security Council and Congress.
This would require the following congressional actions:
- Amend the Millennium Challenge Act of 2003: Grant MCC the expanded mandate to deploy Energy Security Compacts as a fourth business line. This should include language applying more flexible eligibility criteria to ESCs, and broadening the set of countries in which MCC can operate when implementing an ESC. Give MCC the mandate to co-lead an interagency working group with NSC.
- Plus up MCC Appropriation: ESCs can be launched as a pilot project in a few markets. But ultimately, the model’s success and impact will depend on MCC appropriations, including for direct investment and dedicated staff. MCC has a track record of outstanding transparency in evaluating its programs and reporting results.
- Strengthen DFC through reauthorization. The ultimate success of ESCs hinges on DFC’s ability to deploy more capital in the energy sector. DFC’s congressional authorization expires in September 2025, presenting an opportunity to enhance the agency’s reach and impact in energy security. Key recommendations for reauthorization include: 1) Addressing the equity scoring challenge; and 2) Raising DFC’s maximum contingent liability to $100 billion.
- Budget. The initiative could operate under various budget scenarios. The model is specifically designed to be scalable, based on the number of countries with which the U.S. wants to engage. It prioritizes efficiency by drawing on existing appropriations and authorities, by focusing U.S. resources on the highest priority countries and challenges, and by better coordinating the deployment of various U.S. tools.
This proposal draws heavily on the successes and struggles of initiatives from previous administrations of both parties. The most important lessons include:
- From MCC: The Compact model works. Multi-year Compact agreements are an effective way to ensure country buy-in, leadership, and accountability through the joint negotiation process and the establishment of clear goals and metrics. Compacts are also an effective mechanism to support hard infrastructure because they provide multi-year resources.
- From MCC: Investments should be based on rigorous analysis. MCC’s Constraints Analyses identify the most important constraints to economic growth in a given country. That same rigor should be applied to energy security, ensuring that U.S. investments target the highest impact projects, including those with the greatest positive impact on crowding in additional private sector capital.
- From Power Africa: Interagency coordination can work. Coordinating implementation across U.S. agencies is a chronic challenge. But it is essential to ESCs–and to successful energy investment more broadly. The ESC proposal draws on lessons learned from the Power Africa Coordinator’s Office. Specifically, joint-leadership with the NSC focuses effort and ensures alignment with broader strategic priorities. A mechanism to easily transfer funds from the Coordinator’s Office to other agencies incentivizes collaboration, and enables the U.S. to respond more quickly to unanticipated needs. And finally, staffing the office with individuals seconded from relevant agencies ensures that staff understand the available tools, how they can be deployed effectively, and how (and with whom) to work with to ensure success. Legislative language creating a Coordinator’s Office for ESCs can be modeled on language in the Electrify Africa Act of 2015, which created Power Africa’s interagency working group.
Conclusion
The new administration should work with Congress to empower the Millennium Challenge Corporation to lead the U.S. interagency in crafting ‘Energy Security Compacts’. This effort would provide the U.S. with the capability to coordinate direct investment in the energy security of a partner country and contribute to U.S. national priorities including diversifying energy supply chains, investing in the economic stability and performance of rapidly growing markets, and supporting allies with energy systems under direct threat.
This action-ready policy memo is part of Day One 2025 — our effort to bring forward bold policy ideas, grounded in science and evidence, that can tackle the country’s biggest challenges and bring us closer to the prosperous, equitable and safe future that we all hope for whoever takes office in 2025 and beyond.
MCC’s model already includes multi-year Compacts targeting major constraints to economic growth. The agency already has the structure and skills to implement Energy Security Compacts in place, including a strong track record of successful investment across many energy sector compacts. MCC enjoys a strong bipartisan reputation and consistently ranks as the world’s most transparent bilateral development donor. Finally, MCC is unique among U.S. agencies in being able to put large-scale grant capital into public infrastructure, a crucial tool for energy sector support–particularly in emerging and developing economies. Co-leading the design and implementation of ESCs with the NSC will ensure that MCC’s technical skills and experience are balanced with NSC’s view on strategic and diplomatic goals.
This proposal supports existing proposed legislative changes to increase MCC’s impact by expanding the set of countries eligible for support. The Millennium Challenge Act of 2003 currently defines the candidate country pool in a way that MCC has determined prevents it from “considering numerous middle-income countries that face substantial threats to their economic development paths and ability to reduce poverty.” Expanding that country pool would increase the potential for impact. Secondly, the country selection process for ESCs should be amended to include strategic considerations and to enable participation by the NSC.
Strengthening the National Labs’ Workforce
The Department of Energy’s National Labs are the beating heart of the U.S.’s leadership in scientific research and innovation. Spread across the country, these institutions provide vital scientific resources to researchers and produce much of the technological progress that make our country’s growth possible. However, to achieve that lofty mission, the Labs need highly skilled people. Not just scientists, but technicians, support staff, and leaders too.
While the Labs have a strong workforce, they also face challenges that make it difficult to recruit and retain the people they need to continue leading the world’s scientific research. This memo outlines challenges, successful strategies, and policy recommendations to ensure that the workforce of the National Labs thrives. It was developed through discussions and interviews with staff and former staff of seven of DOE’s national Labs, as well as representatives from Lab operators, tech transfer recruitment agencies, members of the science academies and basic science advocacy community, and more.
Major Challenges
Lack of awareness of Lab career opportunities
Interviewees reported that there were a few major challenges to recruitment, including the struggle to compete with industry salaries and context-specific location issues like high costs of housing or remote areas. However, many interviewees reported that some of these challenges could be overcome by the unique opportunity that working at a national lab offers: critical, exciting scientific research, flexibility to pursue interests, opportunities to take entrepreneurial leave and come back to the Lab, stable employment, and receiving and providing mentorship.
However, leaders found that talent pools of undergraduates and graduate students were often not aware of the opportunities available at Labs – including employment, research projects, internships and educational programs.
Resources for recruitment and hiring
One of the challenges cited most often was the lack of resources: for quick hiring, for outreach and education programs, for internships and development programs, and for targeted recruitment. Labs noted that funding is not keeping up with need – they lack the staff and financing to conduct large workforce development initiatives at the pace the Labs are growing.
For targeted recruitment, HR professionals in Labs lack funding for emerging technologies (like quantum tech, AI, and fusion). Many also noted that there was a lack of funding for non-scientist positions like technicians – there are not enough resources for training and development for these roles.
Interviewees underscored the importance of K-12 and community outreach programs in educating the community about opportunities at the lab, as well as the importance of internship and development programs like the Office of Science’s Workforce Development for Teachers and Scientists (WDTS) and Science Undergraduate Laboratory Internships (SULI) in building a talent pipeline of early career scientists.
Weaker pensions and potentially benefits depending on contractor
Overlapping concerns around competitive pensions, benefits, and salaries abounded. Many interviewees described the Labs as a happy medium between industry and government – more competitive salaries than government, but better work-life balance and more security than the private sector. However, some of the most appealing benefits like a strong pension have been diluted in the past decade. Changes in how the Labs negotiate contracts with operators led to weakened pensions across the board. Some Labs still offer pensions, but the reduction of those resources removed an incentive for employees to stay long-term and not jump between opportunities.
Lab employees often receive specific training not found anywhere else in the scientific research ecosystem – which means retaining them is important. Earlier-career employees have some desire to experience different positions across industry and government. Entrepreneurial leave programs, combined with long-term security and benefits detailed below could be a winning combination for retention.
Successful Strategies
Of course, DOE’s Labs have proved innovative and tactical to address these challenges. They have developed and used these successful strategies to strengthen their recruitment and retention infrastructure.
Internships/opportunities to build relationships with prospective employees/outreach
Lab teams rely heavily on internships – both graduate and undergraduate – and outreach opportunities to build relationships with prospective employees. Many Labs start recruitment early, and their workforce development doubles as community outreach. Labs have programs that connect their work to their immediate communities, from tabling at state and county fairs to hosting school tours to offering teachers rotational programs within the Labs.
Labs focus on opportunities for undergraduate and graduate students to not only learn about careers and life at the Labs, but also gain unique training and build skills that sets them up for jobs later on. Internships, especially those with permanent, guaranteed funding like the Science Undergraduate Laboratory Internship, were explicitly lauded by Labs for how useful they are in building a talent pipeline. Summer internships, relationships with universities, and offering research funding are all ways Labs keep involved with the community.
Creative and/or non-monetary benefits
Without reliable pensions or the ability to offer salary in line with private sector levels, Labs are getting creative with benefits. Some Labs are located in areas with high costs of living and offer housing stipends for short periods of time. Other Labs offer stipends or benefits for family and elder care, or even relocation allowances for higher-level or hard-to-fill positions. Labs’ relationship with their contracting organization can allow for more creativity when it comes to benefits.
Entrepreneurial Leave programs
One program in particular that offers huge potential for growth is the Entrepreneurial Leave program (ELP). The Labs that use this program speak highly of it – it offers benefits beyond just workforce development.
ELPs can offer a happy medium to employees that enjoy the stability and security of a career with the Labs but crave new professional experiences and challenges. ELP allows them to use their skills and knowledge to try out the private sector for a short time and then return to the Labs. Not only can this support retention, but returning employees bring back knowledge to support technology transfer, commercial partnerships, and further research.
Policy Recommendations
Overall, Labs want more resources for workforce development. Permanent, consistent funding for internship and outreach programs are at the top of that list.
In addition, formalizing and encouraging the use of entrepreneurial leave programs could help Labs stay competitive with the private sector. Congress can take the following steps to continue to support the Labs’ workforce.
Invest resources in workforce development and outreach programs
Congress should increase funding for the Workforce Development for Teachers and Scientists (WDTS) programs – at least to the levels in DOE’s FY25 budget request, if not higher. These include undergraduate and graduate internships as well as educational opportunities for K-12 students and teachers and faculty. Funding has varied over the years – DOE’s FY25 budget request asked for an increase of just over $1 million across the programs. Maintaining and increasing funding for these programs is key for strengthening the talent pipeline of researchers across the country.
Labs rely on these programs to bring in new talent. Many interviewees emphasized that the lack of awareness of Lab jobs combined with the specific training required makes it difficult to onboard candidates using traditional recruitment. Programs like WDTS can help provide a pathway into the Labs for researchers of all backgrounds.
Workforce development programs can also help retain staff – including providing resources for mentorship programs or rotational programs to send researchers to different Labs for a tour of duty. But these need consistent funding through DOE rather than requiring Labs to set aside funding. Minimally, meeting DOE’s program funding requests across WDTS would help support the programs.
Similarly, in order to inform students about lab opportunities early, Congress should provide funding for community engagement and outreach initiatives. These can include partnerships with universities, hiring fairs, and camps for students.
Fund and standardize Entrepreneurial Leave programs across DOE Labs
Entrepreneurial leave programs can be a boon for Labs in retaining staff and offering developmental opportunities as well as spurring technology transfer and Lab partnerships – in turn driving economic growth and the development of intellectual property domestically. Their authorization in the CHIPS and Science Act was a significant win for the Labs. However, programs are inconsistently implemented across the Labs, making it difficult for those with fewer resources or knowledge to get the full benefit.
Congress should appropriate funds to stand up these programs at all Labs – to support DOE in providing guidance, technical assistance, and sharing best practices for EL programs across the Labs. Supporting entrepreneurial skills within the Labs is already embedded within the Office of Technology Transitions’ priorities.
Funding for strategic human capital initiatives
Labs may share certain challenges, but individual Labs face a range of unique challenges as well depending on location and research focus area. Overall funding for human capital could help Labs develop initiatives and direct resources where they need to go. More directed funding towards under-resourced or emerging initiatives (similar to this recently introduced bill) could also be helpful. Labs could stand up outreach programs, hiring fairs, or transition or mentorship programs, depending on need.
Some HR professionals at Labs reported having trouble keeping up with immigration policy changes and fully supporting international postdocs and students, or managing benefits negotiations with contractor operators. Additional funding for HR could help alleviate the pressures.
Develop innovative HR initiatives
Congress can support the development of innovative practices. Some Labs face high housing prices in their communities, making it difficult to attract competitive and diverse applicants. Congress could provide funding for housing stipends and potentially offer these stipends under national security authorities at certain Labs. Similarly, Congress could fund relocation assistance programs.
Congress could also authorize the use of the Direct Hire Authority for Labs to help them hire more quickly for targeted roles. Building off of the success of the Clean Energy Corps, the Labs could use the authority to take full advantage of outreach programs, especially at universities, and market the opportunity as a prestigious, exciting way to work at the forefront of scientific progress.
Overall, providing more resources to the Labs in the form of funding for retention and recruitment is what’s needed to continue to maintain a competitive, high-quality scientific workforce.
How Should FESI Work with DOE? Lessons Learned From Other Agency-Affiliated Foundations
In May, Secretary Granholm took the first official step towards standing up the Foundation for Energy Security and Innovation (FESI) by naming its inaugural board. FESI, authorized in the CHIPS and Science Act of 2022 and appropriated in the FY24 budget, holds a unique place in the clean energy ecosystem. It can convene public-private partnerships and accept non-governmental and philanthropic funding to spur important projects. FESI holds tremendous potential for empowering the DOE mission and accelerating the energy transition.
Through the Friends of FESI Initiative at FAS, we’ve identified a few opportunities for FESI to have some big wins early on – including boosting next-generation geothermal development and supporting pilot stage demonstrations for nascent clean energy technologies. We’ve also written about how important it is for the FESI Board to be ambitious and to think big. It’s important that FESI be intentional and thoughtful about the way that it’s structured and connected to the Department of Energy (DOE). The advantage of an entity like FESI is that it’s independent, non-governmental, and flexible. Therefore, its relationship to DOE must be complementary to DOE’s mission, but not tethered too tightly. FESI should not be bound by the same rules as DOE.
While the board has been organizing itself and selecting a leadership team, we’ve been gathering insights from leaders at other Congressionally-chartered foundations to provide best practices and lessons learned for a young FESI. Below, we make a case for the mutually-beneficial agreement that DOE and FESI should pursue, outline the arrangements that three of FESI’s fellow foundations have with their anchor agencies, and highlight which elements FESI would be wise to incorporate based on existing foundation models. Structuring an effective relationship between FESI and DOE from the start is crucial for ensuring that FESI delivers impact for years to come.
Other Transactions Agreements (OTA)
If FESI is going to continue to receive Congressional appropriations through DOE, which we hope it will, it should be structured from the start in a way that allows it to be as effective as possible while it receives both taxpayer dollars and private support. The legal arrangement between FESI and DOE that most lends itself to supporting these conditions is an Other Transactions (OT) agreement. Congress has granted several agencies, including DOE, the authority to use OTs for research, prototype, and production purposes, and these agreements aren’t bound by the same regulations that government contracts or grants are. FESI and DOE wouldn’t have to reinvent the wheel to design a mutually beneficial OT agreement after looking at other shining examples from other agencies.
Effective Use of an Other Transactions Agreement Between FNIH and NIH
Many consider the gold standard of public-private accomplishment – made possible through an Other Transactions Agreement – to be a partnership first ideated in the early days of the COVID-19 pandemic. Leaders at the National Institute of Health (NIH) and the Foundation for National Institute of Health (FNIH) were faced with an unprecedented need for developing a vaccine on an accelerated timeline. In a matter of weeks, these leaders pulled together a government-industry-academia coalition to coordinate research and clinical testing efforts. The resulting partnership is called ACTIV (Accelerating COVID-19 Therapeutic Interventions and Vaccines) and includes eight U.S. government agencies, 20 biopharmaceutical companies and several nonprofit organizations.
Like the COVID-19 pandemic, climate change is a global crisis. Expedited energy research, commercialization, and deployment efforts require cohesive collaboration between government and the private sector. Other Transactions consortia like ACTIV pool together the funding to support some of the brightest minds in the field, in alignment with the national agenda, and return discoveries to the public domain. Pursuing an OT agreement allowed the FNIH and NIH to act swiftly and at the scale required to begin to tackle the task of developing a life-saving vaccine.
What We Can Learn from Other Agency-Affiliated Foundations
FESI Needs to Find its Specific Value-Add and then Execute
The allure of an independent, non-governmental foundation like FESI is pretty straightforward. Unencumbered by traditional government processes, agency-affiliated foundations are nimble, fast-moving, and don’t face the same operational barriers as government when working with the private sector. They can raise and pool funds from private and philanthropic donors. For that reason, it’s crucial that FESI differentiates itself from DOE and doesn’t become a shadow agency. Although FESI’s mission aligns with that of the DOE’s, and may focus on programs similar to those of ARPA-E, there is a drastic difference between being a federal agency and being a foundation affiliated with a federal agency.
FESI’s potential relies on its ability to be independent enough to take risks while still maintaining a strong relationship with DOE and the agency’s mission. FESI’s goals should be aligned with DOE’s through frequent communication with the agency – to understand priorities, opportunities, and barriers it might face in achieving those goals. In reality, neither FESI nor DOE can directly instruct the other what to do, but the two entities should be aligned and aware of what the other is doing at all times.
Additionally, a young FESI should figure out what it can do that DOE can’t and then capitalize on that. The Foundation for Food & Agriculture Research (FFAR), for example, was established with a specific purpose of convening public private partnerships. At the time, the USDA struggled to connect with industry. FFAR found its benefit by serving as a more flexible extension of the agency’s aims. FESI could play a similar role – acting in concert with DOE, but playing different instruments.
More important than the agreement are the relationships between FESI and DOE leaders and staff
Pursue a flexible agreement that can be revisited and revised
Whatever relationship structure DOE and FESI decide on needs to be flexible enough so that they can both exercise the relationship required to tackle problems together. The agreement needs to be more than a list of what FESI can and can’t do. Based on other foundations’ experiences, it is best to revisit, revise, and refresh the document every so often. An ancient contract collects dust and doesn’t serve FESI or DOE. Luckily, Other Transactions agreements can be amended at any time.
Select a strategic executive director with a vision
DOE is racing against time to commercialize the clean energy technology needed to solve difficult decarbonization challenges. With FESI’s strength being its agility and ability to act quickly, the foundation is poised to be an invaluable asset to DOE’s mission. Whomever the FESI Board designates to lead this fight must walk in on day one with a clear, focused vision ready to fund projects that earn wins and to work with the board to make good on their promises. One of the first challenges they will face will be educating the ecosystem about FESI’s role and purpose. A clearly articulated answer to, “What does FESI hope to accomplish?” is key for fundraising and program design and execution.
Being FESI’s first ever executive director is no small feat and the board’s selection should be a quick study who has proven experience under their belt for fundraising and managing nine-figure budgets – the scale that we hope FESI is one day able to operate at. A successful leader will have high credibility throughout the energy system and with both political parties. They will bring with them networks that span sectors and add on to those of the board members. With these assets in tow, the Secretary of Energy should be excited about the FESI executive director and eager to work with them.
The agreement is the backstop, but the game is played at the plate
An overarching theme across each agency-affiliated foundation is the importance of agency-foundation relationships that are based on deep trust. One foundation leader even said, “It’s really not about the paper – [the structuring agreement] – at all.” Instead, they said, the success of an agency and its foundation runs on “tacit knowledge and relationships” that will grow over time between foundation and agency. Clearly, an agreement needs to be in place between FESI and DOE, but if the organization “runs exclusively off those pieces of paper, it won’t be its best self.”
As a young FESI grows over time, leaders of each organization – the FESI executive director and the Secretary of Energy – and the board and the executive director should all be in close contact with one another. Any of these folks should be able to pick up the phone, dial their counterpart, and give them good – or bad – news directly. These relationships should be prioritized and fostered, especially early on.
Create and raise the profile of FESI as early as possible
By far the greatest benefit of DOE having an agency-affiliated foundation is that FESI can raise and distribute funding more quickly and more efficiently than DOE will ever be able to. This can be a great driver for DOE success as FESI’s role is to support the agency. The FNIH, for example, can raise funding from biopharma, send it into projects, and then grant it out, all while avoiding cumbersome procedures since that money doesn’t belong to taxpayers.
To successfully fundraise, FESI will need the staff and the infrastructure needed to identify and execute on promising projects. Leaders at other foundations have found that their respective funder ecosystems are drawn to projects that fill a gap and that convene the public and private sectors. Whenever possible, and to the extent possible, FESI should aim to pool funding from different streams by convening consortia – in order to avoid the procedural strings attached to receiving federal dollars. One example, the Biomarkers Consortium, led by the FNIH, pools funding from government, for-profit, and non-profit partners. Members of this consortium pay annual dues to participate and contribute their scientific and technical expertise as advisors.
How Do Other Congressionally-chartered Foundations Work with Their Agencies?
The Foundation for Food & Agriculture Research and the U.S. Dept. of Agriculture
In the first year of the Foundation for Food & Agriculture Research (FFAR), it had $200 million from Congress, one staff member, and no reputation to fundraise off of. By year three, FFAR had established its first public-private consortium – composed of companies and global research organizations working to develop crop varieties to meet global nutritional demands in a changing environment. FFAR provided the Crops of the Future Collaborative with an initial $10 million investment that was matched by participants for a total investment of $20 million. The law requires that the foundation matches every dollar of public funding with at least one dollar from a private source. This partnership marked FFAR’s first big, early win that set the young foundation on a road to success.
FFAR is unique among its fellow foundations as it doesn’t receive any funding from USDA. Instead, FFAR receives appropriations from the Farm Bill about every five years as mandatory funding that doesn’t go through the regular appropriations process. Because of this, this funding is separate from that of the USDA’s so the funding streams remain separate and not in competition with one another. While FFAR doesn’t receive money from USDA, USDA can receive grants from FFAR and the two entities conduct business in close coordination with one another. Whenever FFAR identifies a program for launch, its staff run the possibility past the USDA to ensure that FFAR is filling a USDA gap and that there isn’t any programmatic overlap.
A memorandum of understanding (MOU) is the legal agreement of choice that structures the relationship between USDA and FFAR. This document describes how the two exchange with each other and is updated every other year. In addition, FFAR has USDA representatives sit as ex-officio members of its board. While FFAR remains to this day quite independent of the USDA, according to staff, the agency is a “valued piece” of the work of the foundation.
In addition to having an MOU with USDA, FFAR has MOUs and funding agreements with each of the corporations in their consortia. These funding agreements either give FFAR money or fund the project directly. The foundation’s public private partnerships are generally funded through a competitive grants process or through direct contract; however, the foundation also uses prize competitions to encourage the development of new technologies.
When it comes to fundraising as a science-based organization, FFAR has encountered distinct challenges. Most of its fundraising is done by its Executive Director and scientists who solicit funding for each of its six main research focus areas. Initially, in 2016, these six “Challenge Areas” were selected by the board of directors using stakeholder input to address urgent food and agricultural needs. Recently, FFAR has pivoted to a framework that is based on four overarching priority areas – Agroecosystems, Production Systems, Healthy Food Systems and Scientific Workforce Development. Defining focus areas creates clarity and structure for a foundation working in an overwhelming abyss of opportunity. It would be wise for FESI leadership to define a handful of focus areas to hone in on in its early rounds of projects.
Most of FFAR’s fundraising efforts are on a project and program basis, instead of finding high net-worth individuals that will donate large sums of untethered money. To be a successful fundraiser, FFAR leaders must be able to clearly articulate the vision of the foundation, locate projects that will appeal to donors, and also be able to articulate the benefits to donors (i.e. receiving early access to information or notice of publications). FFAR leaders have found that projects that promise to fill gaps between the public and private sector have proven highly enticing amongst the funder community.
The Foundation for the National Institutes of Health and The National Institutes of Health
The Foundation for the National Institutes of Health (FNIH) is going on its 35th year advancing the mission of the NIH and leading public-private partnerships that advance breakthrough biomedical discoveries. Its authorizing statute has been amended slightly since it was initially passed in 1990, but its language served as a model for FESI’s authorization legislation.
The FNIH statute does not lay down specific rules or regulations for projects or programs that the organization is confined to. Instead, it allows the foundation to do whatever its leaders decide, as long as it relates to NIH and there’s a partner from the NIH involved. Per law, the NIH Director is required to transfer “not less than $1.25 million and not more than $5 million” of the agency’s annual appropriations to FNIH. Between FY2015 and FY2022, NIH transferred between $1 million and $1.25 million annually to FNIH for administrative and operational expenses (less than 0.01% of NIH’s annual budget).The FNIH and the NIH also have a Memorandum of Understanding (MOU) signed to facilitate the legal relationship between each organization, though this agreement has aged since it was signed and the relationship in practice is more informal.
The National Fish and Wildlife Foundation and the Fish and Wildlife Service
The National Fish and Wildlife Foundation (NFWF), chartered by Congress to work with the Fish and Wildlife Service (FWS), is the nation’s largest non-governmental conservation grant-maker. In fiscal year 2023 alone, the NFWF awarded $1.3 billion to 797 projects that will generate a total conservation impact of $1.7 billion.
NFWF doesn’t have a guiding agreement, like an MOU, with FWS. Instead, it uses the text language in the initial authorizing legislation. Since its inception, NFWF has built cooperative agreements with roughly 15 other agencies and 150 active federal funding sources. These agreements function as mechanisms through which agencies can transfer appropriated funds over to NFWF to administer and deploy to projects on the ground. These cooperative agreements are revisited on a program-specific basis; some are revised annually, while others last over a five-year period.
Congress mandates that each federal dollar NFWF awards is matched with a non-federal dollar or “equivalent goods and services.” NFWF also has its own policy that it aims to achieve at least a 2:1 return on its project portfolio — $2 raised in matching contributions to every federal dollar awarded. This non-federal funding comes from conservation-focused philanthropic foundations, but also project developers needing to fulfill regulatory obligations, or even from legal settlements, such as in the case of NFWF receiving $2.544 billion from BP and Transocean to fund Gulf Coast projects impacted by the Deepwater Horizon oil spill.
To distribute this money, NFWF solicits its own requests for proposals (RFP), separate from FWS, and awards roughly 98% of its grants to NGOs or state/local governments. If it wanted, FWS could apply to or be a joint applicant to receive a grant issued by NFWF. Earlier this year, NFWF announced an RFP – the “America the Beautiful Challenge” – that pooled funds $119 million from multiple federal agencies and the private sector to eventually award to project applicants working to address conservation and public access needs across public, Tribal, and private lands. NFWF has review committees composed of NFWF staff and third-party expert consultants or members of other involved agencies. These committees converge to discuss a proposed slate of projects to decide which move forward before the NFWF Board delivers its seal of approval.
While NFWF is regarded as a successful model of a foundation supporting several federal agencies, its accomplishments are slightly distinct from what FESI has been created to do. As a 501(c)3, NFWF is able to channel funds from various sources, both public and private, to support projects that comply with federal conservation and resilience requirements. NFWF works closely with the Department of Defense to fund resilience projects that protect military bases and nearby towns against natural disasters in coastal areas. With just under 200 employees, NFWF is also able to serve as a “release valve” for agencies that do not have the workforce capacity to handle the influx of work generated by the Bipartisan Infrastructure Law (BIL) or Inflation Reduction Act (IRA), for example. While FESI could take on projects that DOE doesn’t have the capacity or agility to handle, it should also operate independently and aim to act on ideas that originate from outside of DOE.
Takeaways for FESI
The foundations that have preceded FESI, each chartered by Congress to support the mission of federal agencies, have proven that these models can be successful. They have supported public-private partnerships to produce life-saving vaccines, breakthrough discoveries in food and agriculture, and to more quickly distribute grants to conservation organizations on the ground. FESI was authorized and appropriated by Congress to accelerate innovation to support the global transition to affordable and reliable low-carbon energy. Its inaugural board is now tasked with choosing leadership and pursuing strategic projects that will put FESI on a path to accomplishing the goals set before it.
In order to deliver on its potential, FESI should initially select focus areas that will guide the foundation’s projects intentionally and methodically, like FFAR has done. Foundation leaders should also pursue a flexible legal arrangement with DOE that allows leaders from both entities to work together freely and flexibly. An Other Transactions Agreement is an ideal choice to structure this agreement, as it can be revisited as often as desired and frees transactions between DOE and FESI from regulations that government contracts or grants are bound by. FESI’s potential contributions to the global energy transition and national security rely on its ability to be independent enough to take risks while simultaneously pursuing projects that complement DOE’s mission. An effective legal agreement that structures the foundation’s relationship with DOE will ensure that FESI delivers impact for years to come.
Critical Thinking on Critical Minerals
How the U.S. Government Can Support the Development of Domestic Production Capacity for the Battery Supply Chain
Access to critical minerals supply chains will be crucial to the clean energy transition in the United States. Batteries for electric vehicles, in particular, will require the U.S. to consume an order of magnitude more lithium, nickel, cobalt, and graphite than it currently consumes. Currently, these materials are sourced from around the world. Mining of critical minerals is concentrated in just a few countries for each material, but is becoming increasingly geographically diverse as global demand incentivizes new exploration and development. Processing of critical minerals, however, is heavily concentrated in a single country—China—raising the risk of supply chain disruption.
To address this, the U.S. government has signaled its desire to onshore and diversify critical minerals supply chains through key legislation, such as the Bipartisan Infrastructure Law and the Inflation Reduction Act, and trade policies. The development of new mining and processing projects entails significant costs, however, and project financiers require developers to demonstrate certainty that projects will generate profit through securing long-term offtake agreements with buyers. This is made difficult by two factors: critical minerals markets are volatile, and, without subsidies or trade protections, domestically-produced critical minerals have trouble competing against low-priced imports, making it difficult for producers and potential buyers to negotiate a mutually agreeable price (or price floor). As a result, progress in expanding the domestic critical minerals supply may not occur fast enough to catch up to the growing consumption of critical minerals.
To accelerate project financing and development, the Department of Energy (DOE) should help generate demand certainty through backstopping the offtake of processed, battery-grade critical minerals at a minimum price floor. Ideally, this would be accomplished by paying producers the difference between the market price and the price floor, allowing them to sign offtake agreements and sell their products at a competitive market price. Offtake agreements, in turn, allow developers to secure project financing and proceed at full speed with development.
While demand-side support can help address the challenges faced by individual developers, market-wide issues with price volatility and transparency require additional solutions. Currently, the pricing mechanisms available for battery-grade critical minerals are limited to either third-party price assessments with opaque sources or the market exchange traded price of imperfect proxies. Concerns have been raised about the reliability of these existing mechanisms, hindering market participation and complicating discussions on pricing.
As the North American critical minerals industry and market develops, DOE should support the parallel development of more transparent, North American based pricing mechanisms to improve price discovery and reduce uncertainty. In the short- and medium-term, this could be accomplished through government-backed auctions, which could be combined with offtake backstop agreements. Auctions are great mechanisms for price discovery, and data from them can help improve market price assessments. In the long-term, DOE could support the creation of new market exchanges for trading critical minerals in North America. Exchange trading enables greater price transparency and provides opportunities for hedging against price volatility.
Through this two-pronged approach, DOE would simultaneously accelerate the development of the domestic critical minerals supply chain through addressing short-term market needs, while building a more transparent and reliable marketplace for the future.
Introduction
The global transportation system is currently undergoing a transition to electric vehicles (EVs) that will fundamentally transform not only our transportation system, but also domestic manufacturing and supply chains. Demand for lithium ion batteries, the most important and expensive component of EVs, is expected to grow 600% by 2030 compared to 2023, and the U.S. currently imports a majority of its lithium batteries. To ensure a stable and successful transition to EVs, the U.S. needs to reduce its import-dependence and build out its domestic supply chain for critical minerals and battery manufacturing.
Crucial to that will be securing access to battery-grade critical minerals. Lithium, nickel, cobalt, and graphite are the primary critical minerals used in EV batteries. All four were included in the 2023 Department of Energy (DOE) Critical Minerals List. Cobalt and graphite are considered at risk of shortage in the short-term (2020-2025), while all four materials are at risk in the medium-term (2025-2030).
As shown in Figure 1, the domestic supply chain for batteries and critical minerals consists primarily of downstream buyers like automakers and battery assemblers, though there are a growing number of battery cell manufacturers thanks to domestic sourcing requirements in the Inflation Reduction Act (IRA) incentives. The U.S. has major gaps in upstream and midstream activities—mining of critical minerals, refining/processing, and the production of active materials and battery components. These industries are concentrated globally in a small number of countries, presenting supply chain risks. By developing new domestic industries within these gaps, the federal government can help build out new, resilient clean energy supply chains.
This report is organized into three main sections. The first section provides an overview of current global supply chains and the process of converting different raw materials into battery-grade critical minerals. The second section delves into the pricing and offtake challenges that projects face and proposes demand-side support solutions to provide the price and volume certainty necessary to obtain project financing. The final section takes a look at existing pricing mechanisms and proposes two approaches that the government can take to facilitate price discovery and transparency, with an eye towards mitigating market volatility in the long term. Given DOE’s central role in supporting the development of domestic clean energy industries, the policies proposed in this report were designed with DOE in mind as the main implementer.
Adapted from Li-BRIDGE
Segments highlighting in light blue indicated gaps in U.S. supply chains. See original graphic from Li-BRIDGE for more information.
Section 1. Understanding Critical Minerals Supply Chains
Global Critical Minerals Sources
Globally, 65% or more of processed lithium, cobalt, and graphite originates from a single country: China (Figure 2). This concentration is particularly acute for graphite, 91% of which was processed by China in 2023. This market concentration has made downstream buyers in the U.S. overly dependent on sourcing from a single country. The concentration of supply chains in any one country makes them vulnerable to disruptions within that country—whether they be natural disasters, pandemics, geopolitical conflict, or macroeconomic changes. Moreover, lithium, nickel, cobalt, and graphite are all expected to experience shortages over the next decade. In the case of future shortages, concentration in other countries puts U.S. access to critical minerals at risk. Rocky foreign relations and competition between the U.S. and China over the past few years have put further strain on this dependence. In October 2023, China announced new export controls on graphite, though it has not yet restricted supply, in response to the U.S.’s export restrictions on semiconductor chips to China and other “foreign entities of concern” (FEOC).
Expanding domestic processing of critical minerals and manufacturing of battery components can help reduce dependence on Chinese sources and ensure access to critical minerals in future shortages. However, these efforts will hurt Chinese businesses, so the U.S. will also need to anticipate additional protectionist measures from China.
On the other hand, mining of critical minerals—with the exception of graphite and rare earth elements—occurs primarily outside of China. These operations are also concentrated in a small handful of countries, shown in Figure 3. Consequently, geopolitical disruptions affecting any of those primary countries can significantly affect the price and supply of the material globally. For example, Russia is the third largest producer of nickel. In the aftermath of Russia’s invasion of Ukraine at the beginning of 2022, expectations of shortages triggered a historic short squeeze of nickel on the London Metal Exchange (LME), the primary global trading platform, significantly disrupting the global market.
To address global supply chain concentration, new incentives and grant programs were passed in the IRA and the Bipartisan Infrastructure Law. These include the 30D clean vehicle tax credit, the 45X advanced manufacturing production credit, and the Battery Materials Processing Grants Program (see Domestic Price Premium section for further discussion). Thanks to these policies, there are now on the order of a hundred North American projects in mining, processing, and active1 material manufacturing in development. The success of these and future projects will help create new domestic sources of critical minerals and batteries to feed the EV transition in the U.S. However, success is not guaranteed. A number of challenges to investment in the critical minerals supply chain will need to be addressed first.
Battery Materials Supply Chain
Critical minerals are used to make battery electrodes. These electrodes require specific forms of critical minerals for their production processes: typically lithium hydroxide or carbonate, nickel sulfate, cobalt sulfate, and a blend of coated spherical graphite and synthetic graphite.2
Lithium hydroxide/carbonate typically comes from two sources: spodumene, a hard rock ore that is mined primarily in Australia, and lithium brine, which is primarily found in South America (Figure 3). Traditionally, lithium brine must be evaporated in large open-air pools before the lithium can be extracted, but new technologies are emerging for direct lithium extraction that significantly reduces the need for evaporation. Whereas spodumene mining and refining are typically conducted by separate entities, lithium brine operations are typically fully integrated. A third source of lithium that has yet to be put into commercial production is lithium clay. The U.S. is leading the development of projects to extract and refine lithium from clay deposits.
Nickel sulfate can be made from either nickel metal, which was historically the preferred feedstock, or directly from nickel intermediate products, such as mixed hydroxide precipitate and nickel matte, which are the feedstocks that most Chinese producers have switched to in the past few years (Figure 4). Though demand from batteries is driving much of the nickel project development in the U.S., since nickel metal has a much larger market than nickel sulfate, developers are designing their projects with the flexibility to produce either nickel metal or nickel sulfate.
Cobalt is primarily produced in the Democratic Republic of the Congo from cobalt-copper ore. Cobalt can also be found in lesser amounts in nickel and other metallic ores. Cobalt concentrate is extracted from cobalt-bearing ore and then processed into cobalt hydroxide. At this point, the cobalt hydroxide can be further processed into either cobalt sulfate for batteries or cobalt metal and other chemicals for other purposes.
Battery cathodes come in a variety of chemistries: lithium nickel manganese cobalt (NMC) is the most common in lithium-ion batteries thanks to its higher energy density, while lithium iron phosphate is growing in popularity for its affordability and use of more abundantly available materials, but is not as energy dense. Cathode active material (CAM) manufacturers purchase lithium hydroxide/carbonate, nickel sulfate, and cobalt sulfate and then convert them into CAM powders. These powders are then sold to battery cell manufacturers, who coat them onto copper electrodes to produce cathodes.
Graphite can be synthesized from petroleum needle coke, a fossil fuel waste material, or mined from natural deposits. Natural graphite typically comes in the form of flakes and is reshaped into spherical graphite to reduce its particle size and improve its material properties. Spherical graphite is then coated with a protective layer to prevent unwanted chemical reactions when charging and discharging the battery.
The majority of battery anodes on the market are made using just graphite, so there is no intermediate step between processors and battery cell manufacturers. Producers of battery-grade synthetic graphite and coated spherical graphite sell these materials directly to cell manufacturers, who coat them onto electrodes to make anodes. These battery-grade forms of graphite are also referred to as graphite anode powder or, more generally, as anode active materials. Thus, the terms graphite processor and graphite anode manufacturer are interchangeable.
Section 2. Building Out Domestic Production Capacity
Challenges Facing Project Developers
Offtake Agreements
Offtake agreements (a.k.a. supply agreements or contracts) are an agreement between a producer and a buyer to purchase a future product. They are a key requirement for project financing because they provide lenders and investors with the certainty that if a project is built, there will be revenue generated from sales to pay back the loan and justify the valuation of the business. The vast majority of feedstocks and battery-grade materials are sold under offtake agreements, though small amounts are also sold on the spot market in one-off transactions. Offtake agreements are made at every step of the supply chain: between miners and processors (if they’re not vertically integrated), between processors and component manufacturers; and between component manufacturers and cell manufacturers. Due to domestic automakers’ concerns about potential material shortages upstream and the desire to secure IRA incentives, many of them have also been entering into offtake agreements directly with North American miners and processors. Tesla has started constructing their own domestic lithium processing plant.
Historically, these offtake agreements were structured as fixed-price deals. However, when prices on the spot market go too high, sellers often find a way to rip up the contract, and vice versa, when spot prices go too low, buyers often find a way to get out of the contract. As a result, more and more offtake agreements for battery-grade lithium, nickel, and cobalt have become indexed to spot prices, with price floors and/or ceilings set as guardrails and adjustments for premiums and discounts based on other factors (e.g. IRA compliance, risk from a greenfield producer, etc.).
Graphite is the one exception where buyers and suppliers have mostly stuck to fixed-price agreements. There are two main reasons for this: graphite pricing is opaque and products exhibit much more variation, complicating attempts to index the price. As a result, cell manufacturers don’t consider the available price indexes to accurately reflect the value of the specific products they are buying.
Offtake agreements for battery cells are also typically partially indexed on the price of the critical minerals used to manufacture them. In other words, a certain amount of the price per unit of battery cell is fixed in the agreement, while the rest is variable based on the index price of critical minerals at the time of transaction.
Domestic critical minerals projects face two key challenges to securing investment and offtake agreements: market volatility and a lack of price competitiveness. The price difference between materials produced domestically and those produced internationally stems from two underlying causes: the current oversupply from Chinese-owned companies and the domestic price premium.
Market Volatility
Lithium, cobalt, and graphite have relatively low-volume markets with a small customer base compared to traditional commodities. Low-volume products experience low liquidity, meaning it can be difficult to buy or sell quickly, so slight changes in supply and demand can result in sharp price swings, creating a volatile market. Because of the higher risk and smaller market, companies and investors tend to prefer mining and processing of base metals, such as copper, which have much larger markets, resulting in underinvestment in production capacity.
In comparison, nickel is a base metal commodity, primarily used for stainless steel production. However, due to its rapidly growing use in battery production, its price has become increasingly linked to other battery materials, resulting in greater volatility than other base metals. Moreover, the short squeeze in 2022 forced LME to suspend trading and cancel transactions for the first time in three decades. As a result, trust in the price of nickel on LME faltered, many market participants dropped out, and volatility grew due to low trading volumes.
For all four of these materials, prices reached record highs in 2022 and subsequently crashed in 2023 (Figure 4). Nickel, cobalt, and graphite experienced price declines of 30-45%, while lithium prices dropped by an enormous 75%. As discussed above, market volatility discourages investment into critical minerals production capacity. The current low prices have caused some domestic projects to be paused or canceled. For example, Jervois halted operation of its Idaho cobalt mine in March 2023 due to cobalt prices dropping below its operating costs. In January 2024, lithium giant Albemarle announced that it was delaying plans to begin construction on a new South Carolina lithium hydroxide processing plant.
Retrospective analysis suggests that mining companies, battery investors, and automakers had all made overly optimistic demand projections and ramped up their production a bit too fast. These projections assumed that EV demand would keep growing as fast as it did immediately after the pandemic and that China’s lifting of pandemic restrictions would unlock even faster growth in the largest EV market. Instead, China, which makes up over 60% of the EV market, emerged into an economic downturn, and global demand elsewhere didn’t grow quite as fast as projected, as backlogs built up during the pandemic were cleared. (It is important to note that the EV market is still growing at significant rates—global EV sales increased by 35% from 2022 to 2023—just not as fast as companies had wished.) Consequently, supply has temporarily outpaced demand. Midstream and upstream companies stopped receiving new purchase orders while automakers worked through their stock build-up. Prices fell rapidly as a result and are now bottoming out. Some companies are waiting for prices to recover before they restart construction and operation of existing projects or invest in expanding production further.
While companies are responding to short-term market signals, the U.S. government needs to act in anticipation of long-term demand growth outpacing current planned capacity. Price volatility in critical minerals markets will need to be addressed to ensure that companies and financiers continue investing in expanding production capacity. Otherwise, demand projections suggest that the supply chain will experience new shortages later this decade.
Oversupply
The current oversupply of critical minerals has been exacerbated by below market-rate financing and subsidies from the Chinese government. Many of these policies began in 2009, incentivizing a wave of investment not just in China, but also in mineral-rich countries. These subsidies played a large role in the 2010s in building out nascent battery critical minerals supply chains. Now, however, they are causing overproduction from Chinese-owned companies, which threatens to push out competitors from other countries.
Overproduction begins with mining. Chinese companies are the primary financial backers for 80% of both the Democratic Republic of the Congo’s cobalt mines and Indonesia’s nickel mines. Chinese companies have also expanded their reach in lithium, buying half of all the lithium mines offered for sale since 2018, in addition to domestically mining 18% of global lithium. For graphite, 82% of natural graphite was mined directly in China in 2023, and nearly all natural and synthetic graphite is processed in China.
After the price crash in 2023, while other companies pulled back their production volume significantly, Chinese-owned companies pulled back much less and in some cases continued to expand their production, generating an oversupply of lithium, cobalt, nickel, and natural and synthetic graphite. Government policies enabled these decisions by making it financially viable for Chinese companies to sell materials at low prices that would otherwise be unsustainable.
Domestic Price Premium (and Current Policies Addressing It)
Domestically-produced critical minerals and battery electrode active materials come with a higher cost of production over imported materials due to higher wages and stricter environmental regulations in the U.S. The IRA’s new 30D and 45X tax credit and upcoming section 301 tariffs help address this problem by creating financial incentives for using domestically produced materials, allowing them to compete on a more even playing field with imported materials.
The 30D New Clean Vehicle Tax Credit provides up to $7,500 per EV purchased, but it requires eligible EVs to be manufactured from critical minerals and battery components that are FEOC-compliant, meaning they cannot be sourced from companies with relationships to China, North Korea, Russia, and Iran. It also requires that an increasing percentage of critical minerals used to make the EV batteries be extracted or processed in the U.S. or a Free Trade Agreement country. These two requirements apply to lithium, nickel, cobalt, and graphite. For graphite, however, since nearly all processing occurs in China and there is currently no domestic supply, the US Treasury has chosen to exempt it from the 30D tax credit’s FEOC and domestic sourcing requirements until 2027 to give automakers time to develop alternate supply chains.
The 45X Advanced Manufacturing Production Tax Credit subsidizes 10% of the production cost for each unit of critical minerals processed. The Internal Revenue Service’s proposed regulations for this tax credit interprets the legislation for 45X as applying only to the value-added production cost, meaning that the cost of purchasing raw materials and processing chemicals is not included in the covered production costs. This limits the amount of subsidy that will be provided to processors. The strength of 45X, though, is that unlike the 30D tax credit, there is no sunset clause for critical minerals, providing a long term guarantee of support.
In terms of tariffs, the Biden administration announced in May 2024, a new set of section 301 tariffs on Chinese products, including EVs, batteries, battery components, and critical minerals. The critical minerals tariffs include a 25% tariff on cobalt ores and concentrates that will go into effect in 2024 and a 25% tariff on natural flake graphite that will go into effect in 2026. In addition, there are preexisting 25% tariffs in section 301 for natural and synthetic graphite anode powder. These tariffs were previously waived to give automakers time to diversify their supply chains, but the U.S. Trade Representative (USTR) announced in May 2024 that the exemptions would expire for good on June 14th, 2024, citing the lack of progress from automakers as a reason for not extending them.
Current State of Supply Chain Development
For lithium, despite market volatility, offtake demand for existing domestic projects has remained strong thanks to IRA incentives. Based on industry conversations, many of the projects that are developed enough to make offtake agreements have either signed away their full output capacity or are actively in the process of negotiating agreements. Strong demand combined with tax incentives has enabled producers to negotiate offtake agreements that guarantee a price floor at or above their capital and operating costs. Lithium is the only material for which the current planned mining and processing capacity for North America is expected to meet demand from planned U.S. gigafactories.
Graphite project developers report that the 25% tariff coming into force will be sufficient to close the price gap between domestically produced materials and imported materials, enabling them to secure offtake agreements at a sustainable price. Furthermore, the Internal Revenue Service will require 30D tax credit recipients to submit period reports on progress that they are making on sourcing graphite outside of China. If automakers take these reports and the 2027 exemption deadline seriously, there will be even more motivation to work with domestic graphite producers. However, the current planned production capacity for North America still falls significantly short of demand from planned U.S. battery gigafactories. Processing capacity is the bottleneck for production output, so there is room for additional investment in processing capacity.
Pricing has been a challenge for cobalt though. Jervois briefly opened the only primary cobalt mine in the U.S. before shutting down a few months later due to the price crash. Jervois has said that as soon as prices for standard-grade cobalt rise above $20/pound, they will be able to reopen the mine, but that has yet to happen. Moreover, the real bottleneck is in cobalt processing, which has attracted less attention and investment than other critical minerals in the U.S. There are currently no cobalt sulfate refineries in North America; only one or two are in development in the U.S. and a few more in Canada.3
Nickel sulfate is also facing pricing challenges, and, similar to cobalt, there is an insufficient amount of nickel sulfate processing capacity being developed domestically. There is one processing plant being developed in the U.S. that will be able to produce either nickel metal or nickel sulfate and a few more nickel sulfate refineries being developed in Canada.
Policy Solutions to Support the Development of Processing Capacity
The U.S. government should prioritize the expansion of processing capacity for lithium, graphite, cobalt, and nickel. Demand from domestic battery manufacturing is expected to outpace the current planned capacity for all of these materials, and processing capacity is the key bottleneck in the supply chain. Tariffs and tax incentives have resulted in favorable pricing for lithium and graphite project developers, but cobalt and nickel processing has gotten less support and attention.
DOE should provide demand-side support for processed, battery-grade critical minerals to accelerate the development of processing capacity and address cobalt and nickel pricing needs. The Office of Manufacturing and Energy Supply Chains (MESC) within DOE would be the ideal entity to administer such a program, given its mandate to address vulnerabilities in U.S. energy supply chains. In the immediate term, funding could come from MESC’s Battery Materials Processing Grants program, which has roughly $1.9B in remaining, uncommitted funds. Below we propose a few demand-support mechanisms that MESC could consider.
Long term, the Bipartisan Policy Center proposes that Congress establish and appropriate funding for a new government corporation that would take on the responsibility of administering demand-support mechanisms as necessary to mitigate volume and price uncertainty and ensure that domestic processing capacity grows to sufficiently meet critical minerals needs.
Offtake Backstops
Offtake backstops would commit MESC to guaranteeing the purchase of a specific amount of materials at a minimum negotiated price if producers are unable to find buyers at that price. This essentially creates a price floor for specific producers while also providing a volume guarantee. Offtake backstops help derisk project development and enable developers to access project financing. Backstop agreements should be made for at least the first five years of a plant’s operations, similar to a regular offtake agreement. Ideally, MESC should prioritize funding for critical minerals with the largest expected shortages based on current planned capacity—i.e., nickel, cobalt, and graphite.
There are two primary ways that DOE could implement offtake backstops:
First. The simplest approach would be for DOE to pay processors the difference between the spot price index (adjusted for premiums and discounts) and the pre-negotiated price floor for each unit of material, similar to how a pay-for-difference or one-sided contract-for-difference would work.4 This would enable processors to sign offtake agreements with no price floor, accelerating negotiations and thus the pace of project development. Processors could also choose to keep some of their output capacity uncommitted so that they can sell their products on the spot market without worrying about prices collapsing in the future.
A more limited form of this could look like DOE subsidizing the price floor for specific offtake agreements between a processor and a buyer. This type of intervention requires a bit more preliminary work from processors, since they would have to identify and bring a buyer to the table before applying for support.
Second. Purchasing the actual materials would be a more complex route for DOE to take, since the agency would have to be ready to receive delivery of the materials. The agency could do this by either setting up a system of warehouses suitable for storing battery-grade critical minerals or using “virtual warehousing,” as proposed by the Bipartisan Policy Center. An actual warehousing system could be set up by contracting with existing U.S. warehouses, such as those in LME and CME’s networks, to expand or upgrade their facilities to store critical minerals. These warehouses could also be made available for companies’ to store their private stockpiles, increasing the utility of the warehousing system and justifying the cost of setting it up. Virtual warehousing would entail DOE paying producers to store materials on-site at their processing plants.
The physical reserve provides an additional opportunity for DOE to address market volatility by choosing when it sells materials from the reserve. For example, DOE could pause sales of a material when there is an oversupply on the market and prices dip or ramp up sales when there is a shortage and prices spike. However, this can only be used to address short-term fluctuations in supply and demand (e.g. a few months to a few years at most), since these chemicals have limited shelf lives.
A third way to implement offtake backstops that would also support price discovery and transparency is discussed in Section 3.
Section 3. Creating Stable and Transparent Markets
Concerns about Pricing Mechanisms
Market volatility in critical minerals markets has raised concerns about just how reliable the current pricing mechanisms for these markets are. There are two main ways that prices in a market are determined: third-party price assessments and market exchanges. A third approach that has attracted renewed attention this year is auctions. Below, we walk through these three approaches and propose potential solutions for addressing challenges in price discovery and transparency.
Index Pricing
Price reporting agencies like Fastmarkets and Benchmark Mineral Intelligence offer subscription services to help market participants assess the price of commodities in a region. These agencies develop rosters of companies for each commodity, who regularly contribute information on transaction prices. That intel is then used to generate price indexes. Fastmarkets and Benchmark’s indexes are primarily based on prices provided by large, high-volume sellers and buyers. Smaller buyers may pay higher than index prices.
It can be hard to establish reliable price indexes in immature markets if there is an insufficient volume of transactions or if the majority of transactions are made by a small set of companies. For example, lithium processing is concentrated among a small number of companies in China and spot transactions are a minority share of the market. New entrants and smaller producers have raised concern that these companies have significant control over Asian spot prices reported by Fastmarkets and Benchmark, which are used to set offtake agreement prices, and that the price indexes are not sufficiently transparent.
Exchange Trading
Market exchanges are a key feature of mature markets that helps reduce market volatility. Market exchanges allow for a wider range of participants, improving market liquidity, and enables price discovery and transparency. Companies up and down the supply chain can use physically-delivered futures and options contracts to hedge against price volatility and gain visibility into expectations for the market’s general direction to help inform decision-making. This can help derisk the effect of market volatility on investments in new production capacity.
Of the materials we’ve discussed, nickel and cobalt metal are the only two that are physically traded on a market exchange, specifically LME. Metals make good exchange commodities due to their fungibility. Other forms of nickel and cobalt are typically priced as a percentage of the payable price for nickel and cobalt metal. LME’s nickel price is used as the global benchmark for many nickel products, while the in-warehouse price of cobalt metal in Rotterdam, Europe’s largest seaport, is used as the global benchmark for many cobalt products. These pricing relationships enable companies to use nickel and cobalt metal as proxies for hedging related materials.
After nickel trading volumes plummeted on LME in the wake of the short squeeze, doubts were raised about LME’s ability to accurately benchmark its price, sparking interest in alternative exchanges. In April 2024, UK-based Global Commodities Holdings Ltd (GCHL) launched a new trading platform for nickel metal that is only available to producers, consumers, and merchants directly involved in the physical market, excluding speculative traders. The trading platform will deliver globally “from Baltimore to Yokohama.” GCHL is using the prices on the platform to publish its own price index and is also working with Intercontinental Exchange to create cash-settled derivatives contracts. This new platform could potentially expand to other metals and critical minerals.
In addition to LME’s troubles though, changes in the battery supply chain have led to a growing divergence between the nickel and cobalt metal traded on exchanges and the actual chemicals used to make batteries. Chinese processors who produce most of the global supply of nickel sulfate have mostly switched from nickel metal to cheaper nickel intermediate products as their primary feedstock. Consequently, market participants say that the LME exchange price for nickel metal, which is mostly driven by stainless steel, no longer reflects market conditions for the battery sector, raising the need for new tradeable contracts and pricing mechanisms. For the cobalt industry, 75% of demand comes from batteries, which use cobalt sulfate. Cobalt metal makes up only 18% of the market, of which only 10-15% is traded on the spot market. As a result, cobalt chemicals producers have transitioned away from using the metal reference price towards fixed-prices or cobalt sulfate payables.
These trends motivate the development of new exchange contracts for physically trading nickel and cobalt chemicals that can enable price discovery separate from the metals markets. There is also a need to develop exchange contracts for materials like lithium and graphite with immature markets that exhibit significant volatility.
However, exchange trading of these materials is complicated by their nature as specialty chemicals: they have limited shelf lives and more complex storage requirements, unlike metal commodities. Lithium and graphite products also exhibit significant variations that affect how buyers can use them. For example, depending on the types and level of impurities in lithium hydroxide/carbonate, manufacturers of cathode active materials may need to conduct different chemical processes to remove them. Offtakers may also require that products meet additional specifications based on the characteristics they need for their CAM and battery chemistries.
For these reasons, major exchanges like LME, the Chicago Mercantile Exchange (CME), and the Singapore Exchange (SGX) have instead chosen to launch cash-settled contracts for lithium hydroxide/carbonate and cobalt hydroxide that allow for financial trading, but require buyers and sellers to arrange physical delivery separately from the exchange. Large firms have begun to participate increasingly in these derivatives markets to hedge against market volatility, but the lack of physical settlement limits their utility to producers who still need to physically deliver their products in order to make a profit. Nevertheless, CME’s contracts for lithium and cobalt have seen significant growth in transaction volume. LME, CME, and SGX all use Fastmarkets’ price indexes as the basis for their cash-settled contracts.
As regional industries mature and products become more standardized, these exchanges may begin to add physically settled contracts for battery-grade critical minerals. For example, the Guangzhou Futures Exchange (GFEX) in China, where the vast majority of lithium refining currently occurs, began offering physically settled contracts for lithium carbonate in August 2023. Though the exchange exhibited significant volatility in its first few months, raising concerns, the first round of physical deliveries in January 2024 occurred successfully, and trading volumes have been substantial this year. Access to GFEX is currently limited to Chinese entities and their affiliates, but another trading platform could come to do the same for North America over the next few decades as lithium production volume grows and a spot market emerges. Abaxx Exchange, a Singapore-based startup, has also launched a physically settled futures contract for nickel sulfate with delivery points in Singapore and Rotterdam. A North American delivery point could be added as the North American supply chain matures.
No market exchange for graphite currently exists, since products in the industry vary even greater than other materials. Even the currently available price indexes are not seen as sufficiently robust for offtake pricing.
Auctions
In the absence of a globally accessible market exchange for lithium and concerns about the transparency of index pricing, Albemarle, the top producer of lithium worldwide, has turned to auctions of spodumene concentrate and lithium carbonate as a means to improve market transparency and an “approach to price discovery that can lead to fair product valuation.” Albemarle’s first auction in March of spodumene concentrate in China closed at a price of $1200/ton, which was in line with spot prices reported by Asian Metal, but about 10% greater than prices provided by other price reporting agencies like Fastmarkets. Plans are in place to continue conducting regular auctions at the rate of about one per week in China and other locations like Australia. Lithium hydroxide will be auctioned as well. Auction data will be provided to Fastmarkets and other price reporting agencies to be formulated into publicly available price indexes.
Auctions are not a new concept: in 2021 and 2022, Pilbara Minerals regularly conducted auctions of spodumene on its own platform Battery Metals Exchange, helping to improve market sentiment. Now, though, the company says that most of its material is now committed to offtakers, so auctions have mostly stopped, though it did hold an auction for spodumene concentrate in March. If other lithium producers join Albemarle in conducting auctions, the data could help improve the accuracy and transparency of price indexes. Auctions could also be used to inform the pricing of other battery-grade critical minerals.
Policy Solutions to Support Price Discovery and Transparency Across the Market
Right now, the only pricing mechanisms available to domestic project developers are spot price indexes for battery-grade critical minerals in Asia or global benchmarks for proxies like nickel and cobalt metal. Long-term, the development of new pricing mechanisms for North America will be crucial to price discovery and transparency in this new market. There are two ways that DOE could help facilitate this: one that could be implemented immediately for some materials and one that will require domestic production volume to scale up first.
First. Government-Backed Auctions: Auctions require project developers to keep a portion of their expected output uncommitted to any offtakers. However, there is a risk that future auctions won’t generate a price sufficient to offset capital and operating expenses, so processors are unlikely to do this on their own, especially for their first domestic project. MESC could address this by providing a backstop guarantee for the portion of a producer’s output that they commit to regularly auctioning for a set timespan. If, in the future, auctions are unable to generate a price above a pre-negotiated price floor, then DOE would pay sellers the difference between the highest auction price and the price floor for each unit sold. Such an agreement could be made using DOE’s Other Transaction Authority. DOE could separately contract with a platform such as MetalsHub to conduct the auction.
Government-backed auctions would enable the discovery of a true North American price for different battery-grade critical minerals and the raw materials used to make them, generating a useful comparison point with Asian spot prices. Such a scheme would also help address developers’ price and demand needs for project financing. These backstop-auction agreements could be complementary to the other types of backstop agreements proposed earlier and potentially more appealing than physically offtaking materials since the government would not have to receive delivery of the materials and there would be a built-in mechanism to sell the materials to an appropriate buyer. If successful, companies could continue to conduct auctions independently after the agreements expire.
Second. New Benchmark Contracts: Employ America has proposed that the Loan Programs Office (LPO) could use Section 1703 to guarantee lending to a market exchange to develop new, physically settled benchmark contracts for battery-grade critical minerals. The development of new contracts should include producers in the entire North American region. Canada also has a significant number of mines and processing plants in development. Including those projects would increase the number of participants, market volume, and liquidity of new benchmark contracts.
In order for auctions or new benchmark contracts to operate successfully, three prerequisites must be met:
- There must be a sufficient volume of materials available for sale (i.e. production output that is not committed to an offtaker).
- There must be sufficient product standardization in the industry such that materials produced by different companies can be used interchangeably by a significant number of buyers.
- There must be a sufficient volume of demand from buyers, brokers, and traders.
Market exchanges typically conduct research into stakeholders to understand whether or not the market is mature enough to meet these requirements before they launch a new contract. Interest from buyers and sellers must indicate that there would be sufficient trading volume for the exchange to make a profit greater than the cost of setting up the new contract. A loan from LPO under Section 1703 can help offset some of those upfront costs and potentially make it worthwhile for an exchange to launch a new contract in a less mature market than they typically would.
Government-backed auctions, on the other hand, solve the first prerequisite by offering guarantees to producers for keeping a portion of their production output uncommitted. Product standardization can also be less stringent, since each producer can hold separate auctions, with varying material specifications, unlike market exchanges where there must be a single set of product standards.
Given current market conditions, no battery-grade critical minerals can meet the above prerequisites for new benchmark contracts, primarily due to a lack of available volume, though there are also issues with product standardization for certain materials. However, nickel, cobalt, lithium, and graphite could be good candidates for government-backed auctions. DOE should start engaging with project developers that have yet to fully commit their output to offtakers and gauge their interest in backstop-auction agreements.
Nickel and Cobalt
As discussed prior, there are only a handful of nickel and cobalt sulfate refineries currently being developed in North America, making it difficult to establish a benchmark contract for North America. None of the project developers have yet signed offtake agreements covering their full production capacity, so backstop-auction agreements could be appealing to project developers and their investors. Given that more than half of the projects in development are located in Canada, MESC and DOE’s Office of International Affairs should collaborate with the Canadian government in designing and implementing government-backed auctions.
Lithium
Domestic companies have expressed interest in establishing North American-based spot markets and price indexes for lithium hydroxide and carbonate, but say that it will take quite a few years before production volume is large enough to warrant that. Product variation has also been a concern from lithium processors when the idea of a market exchange or public auction has been raised. Lessons could be learned from the GFEX battery-grade lithium carbonate contracts. GFEX set standards on the purity, moisture, loss on ignition, and maximum content of different impurities. Some Chinese companies were able to meet these standards, while others were not, preventing them from participating in the futures market or requiring them to trade their materials as lower-purity industrial-grade lithium carbonate, which sells for a discounted price. Other companies producing lithium of much higher quality than the GFEX standards, opted to continue selling on the spot market because they could charge a premium on the standard price. Despite some companies choosing not to participate, trading volumes on GFEX have been substantial, and the exchange was able to weather through initial concerns of a short squeeze, suggesting that challenges with product variation can be overcome through standardization.
Analysts have proposed that spodumene could be a better candidate for exchange trading, since it is fungible and does not have the limited shelf-life or storage requirements of lithium salts. 60% of global lithium comes from spodumene, and the U.S. has some of the largest spodumene deposits in the world, so spodumene would be a good proxy for lithium salts in North America. However, the two domestic developers of spodumene mines are planning to construct processing plants to convert the spodumene into battery-grade lithium on-site. Similarly, the two Canadian mines that currently produce spodumene are also planning to build their own processing plants. These vertical integration plans mean that there is unlikely to be large amounts of spodumene available for sale on a market exchange in the near future.
DOE could, however, work with miners and processors to sign backstop-auction agreements for smaller amounts of lithium hydroxide/carbonate and spodumene that they have yet to commit to offtakers. This may be especially appealing to companies that have announced delays to project development due to current low market prices and help derisk bringing timelines forward. Interest in these future auctions could also help gauge the potential for developing new benchmark contracts for lithium hydroxide/carbonate further down the line.
Graphite
Natural and synthetic graphite anode material products currently exhibit a great range of variation and insufficient product standardization, so a market exchange would not be viable at the moment. As the domestic graphite industry develops, DOE should work with graphite anode material producers and battery manufacturers to understand the types and degree of variations that exist across products and discuss avenues towards product standardization. Government-backed auctions could be a smaller-scale way to test the viability of product standards developed from that process, perhaps using several tiers or categories to group products. Natural and synthetic graphite would have to be treated separately, of course.
Conclusion
The current global critical minerals supply chain partially reflects the results of over a decade of focused, industrial policies implemented by the Chinese government. If the U.S. wants to lead the clean energy transition, critical minerals will also need to become a cornerstone of U.S. industrial policy. Developing a robust North American critical minerals industry would bolster U.S. energy security and independence and ensure a smooth energy transition.
Promising progress has already been made in lithium, with planned processing capacity expected to meet demand from future battery manufacturing. However, market and pricing challenges remain for battery-grade nickel, cobalt, and graphite, which will fall far short of future demand without additional intervention. This report proposes that DOE take a two-pronged approach to supporting the critical minerals industry through offtake backstops, which address project developers’ current pricing dilemmas, and the development of more reliable and transparent pricing mechanisms such as government-backed auctions, which will set up markets for the future.
While the solutions proposed in this report focus on DOE as the primary implementer, Congress also has a role to play in authorizing and appropriating new funding necessary to execute a cohesive industrial strategy on critical minerals . The policies proposed in this report can also be applied to other critical minerals crucial for the energy transition and our national security. Similar analysis of other critical minerals markets and end uses should be conducted to understand how these solutions can be tailored to those industry needs.
Get Ready, Get Set, FESI!: Putting Pilot-Stage Clean Energy Technologies on a Commercialization Fast Track
It may sound dramatic, but “Valleys of Death” are delaying the United States’ technology development progress needed to achieve the energy security and innovation goals of this decade. As emerging clean energy technologies move along the innovation pipeline from first concept to commercialization, they encounter hurdles that can prove to be a death knell for young startups. These “Valleys of Death” are gaps in funding and support that the Department of Energy (DOE) hasn’t quite figured out how to fill – especially for projects that require less than $25 million.
The International Energy Agency (IEA) estimates that to reach net-zero emissions by 2050, almost 35% of CO2 emissions to avoid require technologies that are not yet past the demonstration stage. It’s important to note that this share is even higher in harder-to-decarbonize sectors like long-haul transportation and heavy industry. To reach this metric, a massive effort within the next ten years is needed for these technologies to reach readiness for deployment in a timely manner.
Although programs exist within DOE to address different barriers to innovation, they are largely constrained to specific types of technologies and limited in the type of support they can provide. This has led to a discontinuous support system with gaps that leave technologies stranded as they wait in the “valleys of death” limbo. A “Fast Track” program at DOE – supported by the CHIPS and Science-authorized Foundation for Energy Security and Innovation (FESI) – would remove obstacles for rapidly-growing startups that are hindered by traditional government processes. FESI is uniquely positioned to be a valuable tool for DOE and its allies as they seek to fill the gaps in the technology innovation pipeline.
Where does FAS come in?
The Department of Energy follows the lead of other agencies that have established agency-affiliated foundations to help achieve their missions, like the Foundation for the National Institutes of Health (FNIH) and the Foundation for Food & Agriculture Research (FFAR). These models have proven successful at facilitating easier collaboration between agencies and philanthropy, industry, and communities while guarding against conflicts of interest that might arise from such collaboration. Notably, in 2020, the FNIH coordinated a public-private working group, ACTIV, between eight U.S. government agencies and 20 companies and nonprofits to speed up the development of the most promising COVID-19 vaccines.
As part of our efforts to support DOE in standing up its new foundation with the Friends of FESI Initiative, FAS is identifying potential use cases for FESI – structured projects that the foundation could take on as it begins work. The projects must forward DOE’s mission in some way, with a particular focus on accelerating clean energy technology commercialization.
In early April, we convened leaders from DOE, philanthropy, industry, finance, the startup community, and fellow NGOs to workshop a few of the existing ideas for how to implement a Fast Track program at DOE. We kicked things off with some remarks from DOE leaders and then split off into four breakout groups for three discussion sessions.
In these sessions, participants brainstormed potential challenges, refinements, likely supporters, and specific opportunities that each idea could support. Each discussion was focused around what FESI’s unique value-add was for each concept and how best FESI and DOE could complement each other’s work to operationalize the idea. The four main ideas are explored in more detail below.
Support Pilot-scale Technologies on the Path to Commercialization
The technology readiness level (TRL) framework has been used to determine an emerging technology’s maturity since NASA first started using it in the 1970s. The TRL scale begins at “1” when a technology is in the basic research phase and ends at “9” when the technology has proven itself in an operating environment and is deemed ready for full commercial deployment.
However, getting to TRL 9 alone is insufficient for a technology to actually get to demonstration and deployment. For an emerging clean technology to be successfully commercialized, it must be completely de-risked for adoption and have an established economic ecosystem that is prepped to welcome it. To better assess true readiness for commercial adoption, the Office of Technology Transitions (OTT) at the Department of Energy (DOE) uses a joint “TRL/Adoption Readiness Level (ARL)” framework. As depicted by the adoption readiness level scale below, a technology’s path to demonstration and deployment is less linear in reality than the TRL scale alone suggests.
Source: The Office of Technology Transitions at the Department of Energy
There remains a significant gap in federal support for technologies trying to progress through the mid-stages of the TRL/ARL scales. Projects that fall within this gap require additional testing and validation of their prototype, and private investment is often inaccessible until questions are answered about the market relevance and competitiveness of the technology.
FESI could contribute to a pilot-scale demonstration program to help small- and medium-scale technologies move from mid-TRLs to high-TRLs and low to medium ARLs by making flexible funding available to innovators that DOE cannot provide within its own authorities and programs. Because of its unique relationship as a public-private convener, FESI could reach the technologies that are not mature enough, or don’t qualify, for DOE support, and those that are not quite to the point where there is interest from private investors. It could use its convening ability to help identify and incubate these projects. As it becomes more capable over time, FESI might also play a role in project management, following the lead of the Foundation for the NIH.
Leverage the National Labs for Tech Maturation
The National Laboratories have long worked to facilitate collaboration with private industry to apply Lab expertise and translate scientific developments to commercial application. However, there remains a need to improve the speed and effectiveness of collaboration with the private sector.
A Laboratory-directed Technology Maturation (LDTM) program, first ideated by the EFI Foundation, would enable the National Labs to allocate funding for technology maturation projects. This program would be modeled after the highly successful DOE Office of Science Laboratory-directed Research and Development (LDRD) program and it would focus on taking ideas at the earliest Technology Readiness Levels (TRLs) and translating them to proof of concept—from TRL 1 and 2 to TRL 3. This program would translate scientific discoveries coming out of the Labs into technology applications that have great potential for demonstration and deployment. FESI could assist in increasing the effectiveness of this effort by lowering the transaction costs of working with the private sector. It could also be a clearinghouse for LDTM-funded scientists who need partners for their projects to be successful, or could support an Entrepreneur-in-Residence or entrepreneurial postdoc program that could house such partners.
While FESI would be a practical convener of non-federal funding for this program, the magnitude of the funding needed to establish this program may not be well-suited for an initial project for the foundation to take on. It is estimated that each project would be in the ballpark of $5-20 million, and funding a full portfolio, which private sponsors are more likely to be interested in, is a nine-figure venture. Supporting a LDTM program is a promising idea for further down the line as FESI grows and matures.
Align Later-stage R&D Market Needs with Corporate Interest via a Commercialization Consortium
Industry and investors often struggle to connect with government-sponsored technologies that fit their plans and priorities. At the same time, government-sponsored researchers often struggle to navigate the path to commercialization for new technologies.
Based on a model widely-used by the Department of Defense (DOD), an open consortium is a mechanism and means to convene industry and highlight relevant opportunities coming out of DOE-funded work. The model creates an accessible and flexible pathway to get U.S.-funded inventions to commercial outcomes.
FESI could function as the Consortium Management Organization (CMO), pictured below, to help structure interactions and facilitate communications between DOE sponsors and award recipients while freeing government staff from “picking winners.” As the CMO, FESI would issue task orders and handle contracting per the consortium agreement, which would be organized under DOE’s other transactions authority (OTA). In this model, FESI could work with DOE staff in applied R&D offices and OCED to identify opportunities and needs in the development pipeline, and in parallel work with consortium members (including holders of DOE subject inventions, industry partners, and investors) to build teams and scope projects to advance targeted technology development efforts.
This consortium could help work out the kinks in the pipeline to ensure that successful technologies in the applied offices have sufficient “runway” to reach TRL 7, and that OCED has a healthy pipeline of candidate technologies for scaled demonstrations. FESI could mitigate the offtake risk that is known to stall first-of-a-kind projects, like financing a lithium extraction project, for example. Partners in industry and the investment community will be aligned, and potentially provide cost share, in order to gain access to technologies emerging from DOE subject inventions.
The Time is Right
This workshop comes at a prime time for FESI. The Secretary of Energy appointed the inaugural FESI board—composed of 13 leaders in innovation, national security, philanthropy, business, science, and other sectors—in mid-May. In the coming months, the board will formally set up the organization, hire staff, adopt an agenda, and begin to pursue projects that will make a real impact to advance DOE’s mission. As Friends of FESI, we want to see the foundation position itself for the grand impact it is designed to have.
The above proposals are actionable and affordable projects that a young FESI is uniquely-positioned to achieve. That said, supporting pilot-stage demonstrations is only one area where FESI can make an impact. If you have additional ideas for how FESI could leverage its unique flexibility to accelerate the clean energy transition, please reach out to our team at fesifriends@fas.org. You can also keep up with the Friends of FESI Initiative by signing up for our email newsletter. Email us!
Building a Firm Foundation for the DOE Foundation: It All Starts with a Solid Board
The U.S. Department of Energy (DOE) has a vital mission: “to ensure America’s security and prosperity by addressing its energy, environmental and nuclear challenges through transformative science and technology solutions.” In 2022’s CHIPS and Science Act, Congress gave DOE a new partner to accelerate its pursuit of this mission: the Foundation for Energy Security and Innovation (FESI). As ‘Friends of FESI’ we want to see this new foundation set up from day one to successfully fulfill the promise of its large impact.
Once fully established, FESI will be an independent 501(c)3 non-profit organization with a complementary relationship to DOE. It will raise money from non-governmental sources to support activities of joint interest to the Department and its constituents, such as accelerating commercialization of next-generation geothermal power and bridging gaps in the clean energy technology innovation pipeline.
Judging by the success of other agency-affiliated foundations that served as a template for FESI, the potential for the Foundation’s impact is hefty. The National Fish and Wildlife Foundation, chartered by Congress to work with the Fish and Wildlife Service, for instance, is the nation’s largest non-governmental conservation grant-maker. In fiscal year 2023 alone, the NFWF awarded $1.3 billion to 797 projects that will generate a total conservation impact of $1.7 billion.
FESI’s creation is timely. As the U.S. races to net-zero, the International Energy Agency estimates that at least $90 billion of public funding needs to be raised by 2026 for an efficient portfolio of demonstration projects. For perspective, the most recent yearly budget for the entire DOE is just slightly more than half of that number. Non-DOE funding to support innovation is essential to ensure that energy remains affordable and reliable. DOE’s mission is a vital national interest, and the Department needs all the help it can get. The stronger FESI is, the more it will be able to help.
This week, Secretary of Energy Granholm took the first official step to create FESI by appointing its inaugural board. The board consists of 13 accomplished members whose backgrounds span the nation’s regions and communities and who have deep experience in innovation, national security, philanthropy, business, science, and other sectors.
A strong founding board is an essential ingredient in FESI’s success, and we are pleased to see that its members reflect the bipartisan support that FESI has had since legislation to form it was first introduced. While non-partisan technical and market expertise is vital to make objective judgments about hiring and investments, bipartisan relationships will ensure that FESI is sustained through changes of partisan control of Congress and the presidency.
Another key to FESI’s success will be stringent conflict of interest rules. Public-private partnerships, like those that FESI will foster, are always at risk of being subverted to pursue only private ends. It is equally important for FESI to also prioritize transparency and oversight of compliance with these rules to avoid the appearance of any conflict of interest that would undermine its progress.
What Happens Next?
In the coming weeks and months, the FESI board will hire a CEO and other leaders. This board will set FESI’s agenda and initial priorities, and later down the line, it will also eventually appoint its own successors. Its imprint will be long-lasting. The organizational culture the board creates will strongly influence whether FESI will make a real difference for energy, climate, science, national security, and the economy. As ‘Friends of FESI’ we are eager to see what the FESI board decides to take on first.
To learn more about the Inaugural FESI Board nominees, check out the DOE press release here.
The Federation of American Scientists (FAS) Applauds the Newly Announced Board Selected to Lead the Foundation for Energy Security and Innovation (FESI)
FAS eager to see the Board set an ambitious agenda that aligns with the potential scale of FESI’s impact
Washington, D.C. – May 9, 2024 – Earlier today Secretary of Energy Granholm took the first official step to stand up the Department of Energy-affiliated non-profit Foundation for Energy Security and Innovation (FESI) by appointing its inaugural board. Today the “Friends of FESI” Initiative of the nonpartisan, non-profit Federation of American Scientists (FAS) steps forward to applaud the Secretary, congratulate the new board members, and wish FESI well as it officially begins its first year. The Inaugural FESI Board consists of 13 accomplished members whose backgrounds span the nation’s regions and communities and who have deep experience in innovation, national security, philanthropy, business, science, and other sectors. It includes:
- Jason Walsh, BlueGreen Alliance
- Nancy Pfund, DBL Partners
- Rita Baranwal, Westinghouse Electric
- Vicky Bailey, Anderson Stratton
- Mike Boots, Breakthrough Energy
- Miranda Ballentine, Clean Energy
- Stephen Pearse, Yucatan Rock
- Noel Bakhtian, Bezos Earth Fund
- Mung Chiang, President of Purdue University
- Noelle Laing, Builder’s Initiative Foundation
- Katie McGinty, Johnson Controls
- Tomeka McLeod, Hydrogen VP at bp
- Rudy Wynter, National Grid NY
Since the CHIPS and Science Act authorized FESI in 2022, FAS, along with many allies and supporters who collectively comprise the “Friends of FESI,” have been working to enable FESI to achieve its full potential as a major contributor to the achievement of DOE’s vital goals. “Friends of FESI” has been seeking projects and activities that the foundation could take on that would advance the DOE mission through collaboration with private sector and philanthropic partners.
“FAS enthusiastically celebrates this FESI milestone because, as one of the country’s oldest science and technology-focused public interest organizations, we recognize the scale of the energy transition challenge and the urgency to broker new collaborations and models to move new energy technology from lab to market,” says Dan Correa, CEO of FAS. “As a ‘Friend of FESI’ FAS continues our outreach amongst our diverse network of experts to surface the best ideas for FESI to consider implementing.” The federation is soliciting ideas at fas.org/fesi, underway since FESI’s authorization.
FESI has great potential to foster the public-private partnerships necessary to accelerate the innovation and commercialization of technologies that will power the transition to clean energy. Gathering this diverse group of accomplished board members is the first step. The next is for the FESI Board to pursue projects set to make real impact. Given FESI’s bipartisan support in the CHIPS & Science Act, FAS hopes the board is joined by Congress, industry leaders and others to continue to support FESI in its initial years.
“FESI’s establishment is a vital initial step, but its value will depend on what happens next,” says David M. Hart, a professor at George Mason University’s Schar School of Policy and Government and leader of the “Friends of FESI” initiative at FAS. “FESI’s new Board of Directors should take immediate actions that have immediate impact, but more importantly, put the foundation on a path to expand that impact exponentially in the coming years. That means thinking big from the start, identifying unique high-leverage opportunities, and systematically building the capacity to realize them.”
###
ABOUT FAS
The Federation of American Scientists (FAS) works to advance progress on a broad suite of contemporary issues where science, technology, and innovation policy can deliver dramatic progress, and seeks to ensure that scientific and technical expertise have a seat at the policymaking table. Established in 1945 by scientists in response to the atomic bomb, FAS continues to work on behalf of a safer, more equitable, and more peaceful world. More information at fas.org.
Resources
Building a Firm Foundation for the DOE Foundation: It All Starts with a Solid Board
https://fas.org/publication/fesi-board-launch/
FAS use case criteria:
https://fas.org/publication/fesi-priority-use-cases/
FAS open call for FESI ideas:
https://fas.org/publication/share-an-idea-for-what-fesi-can-do-to-advance-does-mission/
DOE announcing FESI board:
https://www.energy.gov/articles/doe-appoints-inaugural-board-directors-groundbreaking-new-foundation
DOE release announcing FESI:
https://www.energy.gov/articles/doe-launches-foundation-energy-security-and-innovation
DOE’s FY25 Budget Request Remains Committed to the U.S. Transition to Clean Energy
The Biden Administration has prioritized the clean energy transition as a core element of its governing agenda, via massive legislative victories like the Inflation Reduction Act (IRA) and Bipartisan Infrastructure Law (BIL), and through its ongoing whole-of-government focus on clean innovation. The Administration has continued to push for further investments, but faces a difficult fiscal environment in Congress – which has meant shortfalls for many priority areas like funding for CHIPS and Science. In March, the Administration released the FY 2025 budget request for the Department of Energy (DOE), and with it seeks to extend the gains of the past few years. This blog post highlights a selection of priority proposals in the FY 2025 request.
Scaling Clean Energy Technologies
BIL and IRA gave DOE a new mandate to support the demonstration, deployment, and commercialization of clean energy technologies, and established the Office of Clean Energy Demonstrations (OCED) to achieve this. OCED is tasked with managing a range of large-scale commercial demonstration programs, which provide cost-share funding on the order of $50 to $500 million. OCED’s $30 billion portfolio of BIL- and IRA-funded programs include the Industrial Demonstrations Program, which recently announced selections for award negotiations; the Regional Clean Hydrogen Hubs; the Advanced Reactor Demonstration Projects; and others.
Now that the majority of its BIL and IRA funding has been awarded, OCED is looking to continue building on this momentum, but annual appropriations have not been easy. OCED last year sought to significantly ramp up its annual appropriations to $215 million, but appropriators ended up providing only $50 million in new funding to OCED – nearly 50% less than FY23. Such an outcome hinders OCED’s ability to launch first-of-a-kind demonstration programs in new areas or expand existing programs, particularly since several OCED programs (like most IIJA and IRA initiatives) are vastly oversubscribed. For instance, OCED’s Industrial Demonstrations program provided awards of $6.3 billion, but received 411 concept papers requesting over $60 billion in federal funding with $100 billion in matching private dollars. Other programs at OCED, including the Energy Improvements in Rural and Remote Areas and the Clean Hydrogen Hubs, were similarly oversubscribed.
For FY 2025, OCED is again proposing a funding ramp-up to $180 million. This includes a new extreme heat demonstration program in collaboration with DOE’s Office of State and Community Energy Programs (SCEP). SCEP has requested $35 million to lead the planning and design phases, while OCED’s request of $70 million will fund the federal cost-share for three to six community-scale demonstration projects. The new program will provide much needed funding for solutions to address extreme heat, which is the top weather-related cause of death for Americans and is only expected to worsen with global temperatures increasing each year.
In addition to OCED’s portfolio, BIL funded a $5 billion Grid Innovation Program (GRIP) managed by the Grid Deployment Office (GDO). GRIP focuses on central grid infrastructure, but GDO also has a portfolio of work on microgrids, which improve resiliency by enabling communities to maintain electricity access even when the larger grid goes down. BIL established some programs that can be used to fund certain components of microgrids or to purchase microgrid capacity, but these programs are unable to fund full scale microgrid demonstration projects. For FY 2025, GDO is requesting $30 million for a new Microgrid Generation and Design Deployment Program that will fill that gap.
Complementary to these large-scale demonstration programs are a suite of small-scale pilot demonstration programs managed by offices under the Under Secretary for Science and Innovation (S4), which provide grants that are typically less than $20 million.
Within the Office of Energy Efficiency and Renewable Energy (EERE), the Geothermal Technologies Office (GTO) has been running a rolling funding opportunity for enhanced geothermal systems (EGS) pilot demonstrations, authorized by BIL and funded by annual appropriations. For FY 2025, GTO is requesting continued funding for this program so that they can support additional greenfield demonstration projects.
EGS is important as a future source of clean, firm energy, but it’s not the only promising next-generation geothermal technology, as closed-loop geothermal has also demonstrated the potential to be cost-competitive with EGS. Currently, only EGS projects are eligible in GTO’s program, despite the fact that BIL and prior legislation intended a more inclusive approach. As such, the Federation of American Scientists has joined with the next-generation geothermal community—including organizations representing both EGS and closed-loop geothermal companies—to call on DOE to take a tech agnostic approach and expand the scope of the program to include all next-generation technologies. We also call on Congress to adopt report language directing DOE to include demonstration projects using closed-loop and other next-generation geothermal technologies, and to appropriate at least GTO’s full budget request of $156 million.
Other proposed demonstration activities across the DOE enterprise include:
- Demonstration programs for reservoir thermal energy storage and thermal energy networks within GTO’s low temperature and coproduced resources portfolio ($24 million);
- Demonstration of wind hybrid systems, which use wind energy to produce hydrogen for energy storage or direct industrial usage, by the Wind Energy Technologies Office ($23.5 million);
- Expansion of in-water demonstrations of grid-scale wave energy devices at the Water Power Technologies Office’s testing facility PacWave ($50 million);
- Validation and demonstration of heat pumps and energy efficiency retrofits in commercial and residential buildings by the Building Technologies Office ($27 million and $32.5 million, respectively);
- Demonstration and validation of a new grid technology by the Office of Electricity ($7 million); and
- Support from the Office of Nuclear Energy to help address the technical, operational, and regulatory challenges facing five potential future demonstration projects, as a part of the Advanced Reactor Demonstration Program ($142.5 million).
Tech Transitions and FESI
The Office of Technology Transitions (OTT) was established in 2015 to get the most out of DOE’s RD&D portfolio by better aligning the Department’s science research enterprise with industry and public needs. A core part of OTT’s mission is to expand the commercial impact of DOE’s research investments by developing viable market pathways for technologies coming out of the National Labs. Despite having a relatively small budget, OTT’s mission is crucial for the rapid acceleration of the energy transition.
In FY 2024, however, OTT’s budget was cut by 10% which put a damper on the Office’s ability to carry out its mission. In response, in FY25, OTT is seeking $7.1 million more than its $20 million budget from the previous fiscal year in an attempt to ramp up funding for its programs. This increase also includes a separate funding line item of $3 million for the Foundation of Energy Security and Innovation (FESI), the DOE-affiliated 501(c)3 nonprofit organization established in the CHIPS and Science Act. FESI has significant potential to complement DOE’s mission by being a flexible tool to accelerate clean energy innovation and commercialization. Since the Foundation is a non-federal entity, it can catalyze public-private collaboration and raise private and philanthropic capital to put towards specific projects like funding pilot wells for next-generation geothermal power or filling funding gaps for pilot-scale technologies along the innovation pipeline, for example.
In addition to overseeing the standing up of FESI, OTT facilitates five main programs including the Technology Commercialization Fund, the Energy I-Corps Program, the Lab Partnering Service, the EnergyTech University Prize, and the Technology Commercialization Internship Program. Each of these programs is designed to increase industry and innovator access to the Labs while also bolstering the commercial pathway for emerging energy technologies, and together they’re vital to the success of clean energy technology commercialization.
Opportunities for Support Through Congressional Control Points
The FY 2025 DOE request also looks to support the vital work of several new offices by establishing Congressional control points – meaning they’d be treated as standalone entities in appropriations, rather than subaccounts of other offices. Last year’s request sought new control points for the Office of State and Community Energy Programs, Federal Energy Management Program, and Manufacturing and Energy Supply Chains, but Congress has yet to act.
It’s an incredibly wonky topic, but it’s actually pretty important: establishing control points for these offices can help create a baseline for future funding and maintain institutional consistency. Becoming standalone offices can also help them carry out their missions, by giving them the authority to engage with other partners including federal agencies, creating more pathways for collaboration with energy-intensive agencies like the Defense Department.
Stephanie Bostwick, Office of Indian Energy Policy and Programs, Training the Next Generation of Clean Energy Experts
This series of interviews spotlights scientists working across the country to implement the U.S. Department of Energy’s massive efforts to transition the country to clean energy, and improve equity and address climate injustice along the way. The Federation’s clean energy workforce report discusses the challenges and opportunities associated with ramping up this dynamic, in-demand workforce. These interviews have been edited for length and do not necessarily reflect the views of the DOE.
An aerospace engineer and educator by trade, Stephanie Bostwick has spent her career building connections between clean energy, the communities that need it, and the future clean energy experts of the world. Now at the Office of Indian Energy Policy and Programs, she supports Tribal Colleges and Universities (TCUs) as they develop the future workforce and build out clean energy projects.
Teaching Clean Energy
After years of working in the aerospace industry, Stephanie switched over to teaching – first at Lake Washington Institute of Technology and later at Northwest Indian College. At these community colleges, Stephanie helped build engineering curricula that focused explicitly on clean energy – introducing solar and other technologies to “try and get students moving in a direction that would support the future that this country is moving in.” “Now that we’re focused on [clean energy], we’re trying to train people and encourage them to go down that path so they could do something that supports their communities.”
The transition made sense for other reasons too. Stephanie is a member of Blackfeet Nation and continues to work with Tribal communities like the Lummi Nation. She saw communities around her moving towards clean energy. Her students were more interested in jobs where they would not only make a good living, but make a difference in their communities as well. At the time, the Lummi Nation was exploring solar energy projects and looking to build up a solar workforce. Having educational resources that aligned with these needs helped prepare students for a changing world.
The National Renewable Energy Lab and DOE
As Stephanie grew these programs as a faculty member, she also participated in several fellowships that strengthened her subject matter expertise in clean energy: solar power systems, microgrids, and more. These opportunities gave her the tools and knowledge to champion clean energy at her institutions and in her community. “It’s been exciting to learn a whole new field and be able to explain it to folks at a level that helps them engage with it as well.”
One of these fellowships, the Visiting Faculty Program, brought her to the National Renewable Energy Laboratory, where after the fellowship she stayed permanently to support Tribes with technical assistance on clean energy projects.
Now on detail to the DOE’s Office of Indian Energy Policy and Programs, she supports TCUs. “My role involves doing outreach to all the TCUs, letting them know that we have funding, and then figuring out what technical assistance they might need and connecting them with our engineers.” In addition, she provides support with curriculum development for clean energy programs, as well as for energy resilient infrastructure on physical campuses.
The Tribal communities she works with face many barriers to a renewable energy transition. “One of the larger issues is transmission and distribution lines that aren’t suitable for adding a significant amount of renewable energy to. [Tribes] need transmission infrastructure – we need to back up and figure out this issue.” There’s also some hesitation about clean energy solutions that might not work in more rural areas with extreme weather – heavy snowpack in the winter, and very hot summers. There are concerns about how useful electric vehicles could be in areas where the closest hospital is hours away, for example.
But despite these concerns, Stephanie says, there’s a lot of interest in and enthusiasm for renewable energy solutions. That’s part of why she loves her job: “The awesome thing is that folks are really interested in a conversion to clean energy and what they can do to support the Tribe. It’s really fun to go out there and see that people want to move in that direction.”
One of the most rewarding parts of her role so far has been to see progress on her old projects. When she was a faculty member at Northwest Indian College, the Lummi Nation was focused on conducting solar microgrid feasibility studies and starting to look for people to fill out a local solar workforce. In her current role, she has been able to support the Lummi Nation and the TCUs she works with in applying for and receiving funding for building out those microgrids. In just a few years, what seemed like an uphill battle is already underway to becoming a reality.
“While it’s felt slow, it’s only been a few years and it’s been really exciting to watch how we have been able to incorporate the training and make these big things happen that seemed so distant back when we received our first grant.”
Stephanie wants to look beyond supporting Tribes on specific projects and funding opportunities and help them build capacity long-term. Her office is currently working on initiatives to do just that – in order to hand the reins of energy planning and development over to the communities themselves. “The goal is to make sure that Tribes have that internal knowledge so that in the future, they’re able to do all that on their own and not have to rely on others. Sovereignty implies that, but there are still complications. It’s exciting to move in that direction.”
Ultimately, the goal for many Tribal communities is to be able to generate their own power and distribute it to other communities – to sell the energy they generate. There are still hurdles, but Stephanie’s office helps supply Tribes with tools to get there.
One of the special things about her position is that she’s able to work and live in the communities she serves – the remote flexibilities of DOE offer more than just personal benefits. “For me, staying in the community that I’m in and integrated into and being able to continue to do my work at the college is really important to me.”
In addition to her role at DOE, Stephanie supports students in more personal ways as well – taking Zoom calls with mentees to offer advice on aerospace careers or just help with their calculus homework. The ability to merge personal and professional pursuits in support of the clean energy transition is gratifying, even if there is still so much more to do.
“It’s exciting to have the resources and knowledge and be able to share that with the TCUs and hopefully get them on the cutting edge. It’s still an uphill battle, but it’s a very worthy battle.”
Finding True North: How Community Navigator Programs Can Forward Distributional Justice
State, local, and Tribal governments still face major capacity issues when it comes to accessing federal funding opportunities – even with the sheer amount of programs started since the Bipartisan Infrastructure Law (BIL) and Inflation Reduction Act (IRA) were passed. Communities need more technical assistance if implementation of those bills is going to reach its full potential, but federal agencies charged with distributing funding can’t offer the amount needed to get resources to where they need to go quickly, effectively, and equitably.
Community navigator programs offer a potential solution. Navigators are local and regional experts with a deep understanding of the climate and clean energy challenges and opportunities in their area. These navigators can be trained in federal funding requirements, clean energy technologies, permitting processes, and more – allowing them to share that knowledge with their communities and boost capacity.
Federal agencies like the Department of Energy (DOE) should invest in standing up these programs by collecting feedback on specific capacity needs from regional partners and attaching them to existing technical assistance funding. These programs can look different, but agencies should consider specific goals and desired outcomes, identify appropriate regional and local partners, and explore additional flexible funding opportunities to get them off the ground.
Community navigator programs can provide much-needed capacity combined with deep place-based knowledge to create local champions with expertise in accessing federal funding – relieving agencies of technical assistance burdens and smoothing grant-writing processes for local and state partners. Agencies should quickly take advantage of these programs to implement funding more effectively.
Challenge
BIL/IRA implementation is well under way, with countless programs being stood up at record speed by federal agencies. Of course, the sheer size of the packages means that there is still quite a bit of funding on the table at DOE that risks not being distributed effectively or equitably in the allotted time frame. While the agency is making huge strides to roll out its resources—which include state-level block grants, loan guarantee programs, and tax rebates—it has limited capacity to fully understand the unique needs of individual cities and communities and to support each location effectively in accessing funding opportunities and implementing related programs.
Subnational actors own the burden of distributing and applying for funding. States, cities, and communities want to support distribution, but they are not equally prepared to access federal funding quickly. They lack what officials call absorptive capacity, the ability to apply for, distribute, and implement funding packages. Agencies don’t have comprehensive knowledge of barriers to implementation across the hundreds of thousands of communities and can’t provide individualized technical assistance that is needed.
Two recent research projects identified several keys ways that cities, state governments, and technical assistance organizations need support from federal agencies:
- Identifying appropriate federal funding opportunities and matching with projects and stakeholders
- Understanding complex federal requirements and processes for accessing those opportunities
- Assistance with completing applications quickly and accurately
- Assembling the necessary technical capacity during the pre-application period to develop a quality application with a higher likelihood of funding
- Guidance on allowable expenditures from federal funding that support the overall technical capacity or coordinating capability of a subnational entity to collect, analyze, and securely share data on project outcomes
While this research focuses on several BIL/IRA agencies, the Department of Energy in particular distributed hundreds of billions of dollars to communities over the past few years. DOE faces an additional challenge: up until 2020, the agency was mainly focused on conducting basic science research. With the advent of BIL, IRA, and the CHIPS and Science Act, it had to adjust quickly to conduct more deployment and loan guarantee activities.
In order to meet community needs, DOE needs help – and at its core, this problem is one of talent and capacity. Since the passage of BIL, DOE has increased its hiring and bolstered its offices through the Clean Energy Corps.
Yet even if DOE could hire faster and more effectively, the sheer scope of the problem outweighs any number of federal employees. Candidates need not only certain skills but also knowledge specific to each community. To fully meet the needs of the localities and individuals it aims to reach, DOE would need to develop thorough community competency for the entire country. With over 29,000 defined communities in the United States – with about half being classified as ‘low capacity’ – it’s simply impossible to hire enough people or identify and overcome the barriers each one faces in the short amount of time allotted to implementation of BIL/IRA. Government needs outside support in order to distribute funds quickly and equitably.
Opportunity
DOE, the rest of the federal government, and the national labs are keen to provide significant technical assistance for their programs. DOE’s Office of State and Community Energy Programs has put considerable time and energy into expanding its community support efforts, including the recently stood up Office of Community Engagement and the Community Energy Fellows program.
National labs have been engaging communities for a long time – the National Renewable Energy Laboratory (NREL) conducts trainings and information sessions, answers questions, and connects communities with regional and federal resources. Colorado and Alaska, for example, were well-positioned to take advantage of federal funding when BIL/IRA were released as a result of federal training opportunities from the NREL, DOE, and other institutions, as well as local and regional coordinated approaches to preparing. Their absorptive capacity has helped them successfully access opportunities – but only because communities, cities, and Tribal governments in those regions have spent the last decade preparing for clean energy opportunities.
While this type of long-term technical assistance and training is necessary, there are resources available right now that are at risk of not being used if states, cities, and communities can’t develop capacity quickly. As DOE continues to flex its deployment and demonstration muscles, the agency needs to invest in community engagement and regional capacity to ensure long-term success across the country.
A key way that DOE can help meet the needs of states and cities that are implementing funding is by standing up community navigator programs. These programs take many forms, but broadly, they leverage the expertise of individuals or organizations within a state or community that can act as guides to the barriers and opportunities within that place.
Community navigators themselves have several benefits. They can act as a catalytic resource by delivering quality technical assistance where federal agencies may not have capacity. In DOE’s case, this could help communities understand funding opportunities and requirements, identify appropriate funding opportunities, explore new clean energy technologies that might meet the needs of the community, and actually complete applications for funding quickly and accurately. They understand regional assets and available capital and have strong existing relationships. Further, community navigators can help build networks – connecting community-based organizations, start-ups, and subnational government agencies based on focus areas.
The DOE and other agencies with BIL/IRA mandates should design programs to leverage these navigators in order to better support state and local organizations with implementation. Programs that leverage community navigators will increase the efficiency of federal technical assistance resources, stretching them further, and will help build capacity within subnational organizations to sustain climate and clean energy initiatives longer term.
These programs can target a range of issues. In the past, they have been used to support access to individual benefits, but expanding their scope could lead to broader results for communities. Training community organizations, and by extension individuals, on how to engage with federal funding and assess capital, development, and infrastructure improvement opportunities in their own regions can help federal agencies take a more holistic approach to implementation and supporting communities. Applying for funding takes work, and navigators can help – but they can also support the rollout of proposed programs once funding is awarded and ensure the projects are seen through their life cycles. For example, understanding broader federal guidance on funding opportunities like the Office of Management and Budget’s proposed revisions to the Uniform Grants Guidance can give navigators and communities additional tools for monitoring and evaluation and administrative capacity.
Benefits of these programs aren’t limited to funding opportunities and program implementation – they can help smooth permitting processes as well. Navigators can act as ready-made champions for and experts on clean energy technologies and potential community concerns. In some communities, distrust of clean energy sources, companies, and government officials can slow permitting, especially for emerging technologies that are subject to misinformation or lack of wider recognition. Supporting community champions that understand the technologies, can advocate on their behalf, and can facilitate relationship building between developers and community members can reduce opposition to clean energy projects.
Further, community navigator programs could help alleviate cost-recovery concerns from permitting teams. Permitting staff within agencies understand that communities need support, especially in the pre-application period, but in the interest of being good stewards of taxpayer dollars they are often reluctant to invest in applications that may not turn into projects.
Overall, these programs have major potential for expanding the technical assistance resources of federal agencies and the capacity of state and local governments and community-based organizations. Federal agencies with a BIL/IRA mandate should design and stand up these programs alongside the rollout of funding opportunities.
Plan of Action
With the Biden Administration’s focus on community engagement and climate and energy justice, agencies have a window of opportunity in which to expand these programs. In order to effectively expand community navigator programs, offices should:
Build community navigator programs into existing technical assistance budgets.
Offices at agencies and subcomponents with BIL/IRA funding like the Department of Energy, the Bureau of Ocean Energy Management, the Bureau of Land Management (BLM), and the Environmental Protection Agency (EPA) have expanded their technical assistance programs alongside introducing new initiatives from that same funding. Community navigator programs are primarily models for providing technical assistance – and can use programmatic funding. Offices should assess funding capabilities and explore flexible funding mechanisms like the ones below.
Some existing programs are attached to large block grant funding, like DOE’s Community Energy Programs attached to the Energy Efficiency and Conservation Block Grant Program. This is a useful practice as the funding source has broad goals and is relatively large and regionally nonspecific.
Collect feedback from regional partners on specific challenges and capacity needs to appropriately tailor community navigator programs.
Before setting up a program, offices should convene local and regional partners to assess major challenges in communities and better design a program. Feedback collection can take the form of journey mapping, listening sessions, convenings, or other structures. These meetings should rely on partners’ expertise and understanding of the opportunities specific to their communities.
For example, if there’s sufficient capacity for grant-writing but a lack of expertise in specific clean energy technologies that a region is interested in, that would inform the goals, curricula, and partners of a particular program. It also would help determine where the program should sit: if it’s targeted at developing clean energy expertise in order to overcome permitting hurdles, it might fit better at the BLM or be a good candidate for a partnership between a DOE office and BLM.
Partner with other federal agencies to develop more holistic programs.
The goals of these programs often speak to the mission of several agencies – for example, the goal of just and equitable technical assistance has already led to the Environmental Justice Thriving Communities Technical Assistance Centers program, a collaboration between EPA and DOE. By combining resources, agencies and offices can even further expand the capacity of a region and increase accessibility to more federal funding opportunities.
A good example of offices collaborating on these programs is below, with the Arctic Energy Ambassadors, funded by the Office of State and Community Energy Programs (SCEP) and the Arctic Energy Office.
Roadmap for Success
There are several initial considerations for building out a program, including solidifying the program’s goals, ensuring available funding sources and mechanisms, and identifying regional and local partners to ensure it is sustainable and effective. Community navigator programs should:
Identify a need and outline clear goals for the program.
Offices should clearly understand the goals of a program. This should go without saying, but given the inconsistency in needs, capacity, and readiness across different communities, it’s key to develop a program that has defined what success looks like for the participants and region. For example, community navigator programs could specifically work to help a region navigate permitting processes; develop several projects of a singular clean energy technology; or understand how to apply for federal grants effectively. Just one of those goals could underpin an entire program.
Ideally, community navigator programs would offer a more holistic approach – working with regional organizations or training participants who understand the challenges and opportunities within their region to identify and assess federal funding opportunities and work together to develop projects from start to finish. But agencies just setting up programs should start with a more directed approach and seek to understand what would be most helpful for an area.
Source and secure available funding, including considerations for flexible mechanisms.
There are a number of available models using different funding and structural mechanisms. Part of the benefit of these programs is that they don’t rely solely on hiring new technical assistance staff, and offices can use programmatic funds more flexibly to work with partners. Rather than hiring staff to work directly for an agency, offices can work with local and regional organizations to administer programs, train other individuals and organizations, and augment local and community capacity.
Further, offices should aim to work across the agency and identify opportunities to pool resources. The IRA provided a significant amount of funding for technical assistance across the agency – for example, the State Energy Program funding at SCEP, the Energy Improvements in Rural and Remote Areas funding at the Office of Clean Energy Demonstrations (OCED), and the Environmental Justice Thriving Communities Technical Assistance Centers program from a Department of Transportation/Department of Energy partnership could all be used to fund these programs or award funding to organizations that could administer programs.
Community navigator programs could also be good candidates for entities like FESI, the DOE’s newly authorized Foundation for Energy Security and Innovation. Although FESI must be set up by DOE, once formally established it becomes a 501(c)(3) organization and can combine congressionally appropriated funding with philanthropic or private investments, making it a more flexible tool for collaborative projects. FESI is a good tool for the partnerships described above – it could hold funding from various sources and support partners overseeing programs while convening with their federal counterparts.
Finally, DOE is also exploring the expanded use of Partnership Intermediary Agreements (PIAs), public-private partnership tools that are explicitly targeted at nontraditional partners. As the DOE continues to announce and distribute BIL/IRA funds, these agreements could be used to administer community navigator programs.
Build relationships and partner with appropriate local and regional stakeholders.
Funding shouldn’t be the only consideration. Agency offices need to ensure they identify appropriate local and regional partners, both for administration and funding. Partners should be their own form of community navigators – they should understand the region’s clean energy ecosystem and the unique needs of the communities within. In different places, the reach and existence of these partners may vary – not every locality will have a dedicated nonprofit or institution supporting clean energy development, environmental justice, or workforce, for example. In those cases, there could be regional or county-level partners that have broader scope and more capacity and would be more effective federal partners. Partner organizations should not only understand community needs but have a baseline level of experience in working with the federal government in order to effectively function as the link between the two entities. Finding the right balance of community understanding and experience with federal funding is key.
This is not foolproof. NREL’s ‘Community to Clean Energy (C2C) Peer Learning Cohorts’ can help local champions share challenges and best practices across states and communities and are useful tools for enhancing local capacity. But this program faces similar challenges as other technical assistance programs: participants engage with federal institutions that provide training and technical expertise that may not directly speak to local experience. It may be more effective to train a local or regional organization with a deeper understanding of the specific challenges and opportunities of a place and greater immediate buy-in from the community. It’s challenging for NREL as well to identify the best candidates in communities across the country without that in-depth knowledge of a region.
Additional federal technical assistance support is sorely needed if BIL/IRA funds are to be distributed equitably and quickly. Federal agencies are moving faster than ever before but don’t have the capacity to assess state and local needs. Developing models for state and local partners can help agencies get funding out the door and where it needs to go to support communities moving towards a clean energy transition.
Case Study: DOE’s Arctic Energy Ambassadors
DOE’s Arctic Energy Office (AEO) has been training state level champions for years but recently introduced the Arctic Energy Ambassadors program, using community navigators to expand clean energy project development.
The program, announced in late October 2023, will support regional champions of clean energy with training and resources to help expand their impact in their communities and across Alaska. The ambassadors’ ultimate goal is clean energy project development: helping local practitioners access federal resources, identify appropriate funding opportunities, and address their communities’ specific clean energy challenges.
The Arctic Energy Office is leading the program with help from several federal and subnational organizations. DOE’s Office of State and Community Engagement and Office of Energy Efficiency and Renewable Energy are also providing funding.
On the ground, the Denali Commission will oversee distribution of funding, and the Alaska Municipal League will administer the program. The combination of comparative advantages is what will hopefully make this program successful. The Denali Commission, in addition to receiving congressionally appropriated funding, can receive funds from other nonfederal sources in service of its mission. This could help the Commission sustain the ambassadors over the longer term and use funds more flexibly. The Commission also has closer relationships with state-level and Tribal governments and can provide insight into regional clean energy needs.
The Alaska Municipal League (AML) brings additional value as a partner; its role in supporting local governments across Alaska gives it a strong sense of community strengths and needs. AML will recruit, assess, and identify the 12 ambassadors and coordinate program logistics and travel for programming. Identifying the right candidates for the program requires in-depth knowledge of Alaskan communities, including more rural and remote ones.
For its own part, the AEO will provide the content and technical expertise for the program. DOE continues to host an incredible wealth of subject matter knowledge on cutting-edge clean energy technologies, and its leadership in this area combined with the local understanding and administration by AML and Denali Commission will help the Arctic Energy Ambassadors succeed in the years to come.
In all, strong local and regional partners, diverse funding sources and flexible mechanisms for delivering it, and clear goals for community navigator programs are key for successful administration. The Arctic Energy Ambassadors represents one model that other agencies can look to for success.
Case study: SCEP’s Community Energy Fellows Program
DOE’s State and Community Energy Programs office has been working tirelessly to implement BIL and IRA, and last year as part of those efforts it introduced the Community Energy Fellows Program (CEFP).
This program aims to support local and Tribal governments with their projects funded by the Energy Efficiency and Conservation Block Grants. CEFP matches midcareer energy professionals with host organizations to provide support and technical assistance on projects as well as learn more about how clean energy development happens.
Because the program has a much broader scope than the Arctic Energy Fellows, it solicits and assesses host institutions as well as Fellows. This allows SCEP to more effectively match the two based on issue areas, expertise, and specific skillsets. This structure allows for multiple community navigators – the host institution understands the needs of its community and the Fellow brings expertise in federal programs and clean energy development. Both parties gain from the fellowship.
In addition, SCEP has added another resource: Clean Energy Coaches, who provide another layer of expertise to the host institution and the Fellow. These coaches will help develop the Fellows’ skills as they work to support the host institution and community.
Some of the awards are already being rolled out, with a second call for host institutions and Fellows out now. Communities in southern Maine participating in the program are optimistic about the support that navigators will provide – and their project leads have a keen sense of the challenges in their communities.
As the program continues to grow, it can provide a great opportunity for other agencies and offices to learn from its success.