Secretary Chu’s Department of Energy: Four Years Later

After four years of low-profile ups and high-profile downs, Nobel Prize-winning Secretary of Energy Steven Chu will be stepping down. Coming from a career in research and academia, many critics questioned how he would fair in the politically charged atmosphere inside the Beltway. In a climate where science and data often take a back seat, he certainly faced a new perspective of success. So after his tenure at the helm of the Department of Energy, where do we stand?

Secretary Chu came to the Department of Energy at a unique time, for both the Department and the country. Historically DOE has actually done relatively little with respect to energy; their primary tasks have traditionally been to maintain our arsenal of nuclear weapons and clean up contamination at the government’s nuclear sites. Of the $24.3 billion budget in 2008, the year before Chu took up the post, $15.8 billion was tagged for “atomic energy defense activities,” including nuclear security and environmental cleanups (here and in more detail here). As the country dealt with economic recession, however, the Energy Department faced an economic new order of their own: The 2009 Recovery Act practically overwhelmed the Department with $36 billion in stimulus money, most of which was to be spent over a two-year period. Managing this massive influx of spending directives proved to be one of the great challenges of Chu’s time as Secretary, but also led to some of his most important accomplishments.

Assessing the immediate impact of large and diverse federal agencies is not a straightforward task. With respect to the Department of Energy, whose most promising projects focus on research, developing high risk, high reward technologies, and inducing shifts in the complex and stubborn global energy landscape, doing so is nearly impossible. Since many of their programs have medium- and long-term goals, only deeming successful those that have already started to pay dividends ignores the very nature of these investments. But while giving an assessment of every initiative would be premature, we can evaluate a few central components of Secretary Chu’s term that help paint a picture of his impact.

One DOE program that has had immediate benefits is the Weatherization Assistance Program. Aimed at improving the energy efficiency of lower-income homes, this initiative has been around for over 30 years and has helped weatherize over seven million homes. While the program has certainly had long-term success, over one million of these weatherization projects have occurred since 2009, boosted by the Recover Act. These families save an average of over $400 a year on utility bills. Another program that has taken off under Secretary Chu is the Advanced Research Projects Agency – Energy (ARPA-E). Modeled after the military’s DARPA with the goal of pursuing innovative, game-changing ideas that are too uncertain to attract private investment, ARPA-E was created by Congress in 2007 – but without a budget. It wasn’t until 2009 that the Recovery Act provided $400 million of initial funding. Under Secretary Chu, ARPA-E has funded over 275 “high-potential energy technology projects.” We may not know for decades the payoff of these investments, but DOE’s absorption of the risks will certainly help move some clean technologies beyond their infancy.

Another signature success of the past four years is DOE’s loan guarantee program. While the high-profile bankruptcy of the DOE-backed solar company Solyndra caused a flood of bad press about the program, in reality it has been remarkably successful. The Department distributed about $34 billion in loan guarantees to 33 companies under this program (Solyndra included). While more could fail in the future, so far only three have filed for bankruptcy, an impressively low rate considering that the program was created with the expectation that some companies would fold. And as it turns out, the defaults will almost certainly end up costing less than the amount Congress set aside for failed companies. By and large, the loan guarantee program has been a success, and persistent claims to the contrary seem politically motivated.

But not all of DOE’s recent programs have been successful. A prime example is their $2.4 billion investment in advanced battery facilities in the US. The plants have all been constructed, but many of them aren’t churning out batteries due to lower-than-expected demand for electric vehicles. At this stage, it’s difficult to argue that the investment was a good one, and the program represents the broader problems associated with government investments in a market that isn’t ready. Renewable energy prices depict another questionable success; although the price of wind and solar have dropped dramatically in the last four years, it’s difficult to say how much of this decline is due to DOE. These and other indicators are influenced by a number of outside factors, including Chinese subsidies and global demand. For some, this is an uncomfortable revelation that in the global energy market, Secretary Chu may have been more of a bystander than we would like to think.

The Verdict: Secretary Chu oversaw a changing role for the Department of Energy. During his tenure, several key programs have had excellent results while others have floundered. The reality is that the outcomes of many long-term investments initiated on his watch will not be clear for several years, or even decades. He was responsible for unprecedented investment in clean energy, however, and shaped the Department’s image as the government’s best-funded effort to address climate change. Without DOE’s support over the past four years, clean energy in the US would certainly not be where it is today.

Image courtesy of: Sailom/freedigitalphotos.net.

Image courtesy of: Sailom/freedigitalphotos.net.

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