Is U.S. Department of Energy spending aligned with the nation’s needs?

Since the 1940s the United States government has provided substantial financial support for energy-related research, development, and demonstration (RD&D). The Climate Policy Lab at Tufts University maintains a database on RD&D spending by the U.S. Department of Energy (DOE) from 1978 to the present. This is a rich history of politics, technical and industrial innovation, basic science, national security, environmental concerns, and other forces shaping how much DOE spends and where its priorities lie1.


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During World War II the focus was on securing adequate supplies of liquid fuels for air, ground, and maritime transport. The Manhattan Project accelerated nuclear fission technology to produce the atomic bomb. After World War II, the government’s focus shifted to supporting the deployment of energy to support economic growth.

The Atomic Energy Commission (AEC) was formed in 1946 to direct nuclear research towards “atoms for peace,” namely electricity production. The Federal Energy Administration (FEA) was established in 1974 and the Energy Research and Development Administration (ERDA) in 1975 in response to the oil embargo imposed by the Organization of Arab Petroleum Exporting Countries in 1973. The Department of Energy was established in 1977, incorporating activities of the FEA and ERDA. All the energy RD&D programs—fossil, nuclear, renewable, and energy efficiency—were brought under its administration2.


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One of the most striking features of this history is the dramatic decline in federal support for civilian energy RD&D for the two decades after the creation of the DOE. In 1978 the energy technology budget was about $9.9 billion (constant $2020). In 1998 funding was about $1.9 billion, a decline of nearly 80 percent. Every major category of funding was hit with a major cut in funding. In real terms, funding in the early 2020s is still below the levels of the late 1970s. Energy efficiency is the only major area that is funded at a higher level today than in 1978 (about 2.5 times higher in real terms).

Priorities shift dramatically over time. The early years of the DOE were focused on nuclear energy and fossil fuels, with a particular emphasis on large, expensive demonstration projects, such as coal liquefaction, the fast breeder reactor, and the tokamak fusion reactor. Renewable energy RD&D funds were spent on large-scale solar demonstration projects3. Within nuclear energy, there was a dramatic shift in spending priority away from fission to fusion from 1980 through the early 2000s.

The American Recovery and Reinvestment Act (ARRA) of 2009 was a one-time stimulus of billions of dollars in energy RD&D that benefited multiple programs. Fossil fuels got a major boost in the form of more than $800 million for clean coal and $1.6 billion for carbon sequestration4. Renewable energy and efficiency programs also benefited from enormous one-time pulses of funding to support wind and solar power generation, building energy efficiency, and energy storage.

Within fossil fuels, coal received over three-quarters of annual expenditures for the first decade of the DOE’s existence. That was followed by a significant shift towards oil and natural gas throughout the 1990s, and then a swing back towards coal in the 2000s. Carbon sequestration received a significant increase in funding in the mid-2000s that extends through the 2020s.


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In the early 1990s, solar received upwards of half of all funding directed at renewable energy. In the 2000s biomass received a substantial increase in funding among renewables as did wind energy. Some observers might be surprised to learn that geothermal energy has averaged about 10% share of all renewable energy funding since 1978.


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Within energy efficiency, the transportation sector has consistently received 40 to 50% of funding from the DOE. Over the past decade, industrial energy efficiency has received a fivefold increase in spending.


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The chart below illustrates the cumulative spending on energy by major category from 1978 to 2023. Unlike the previous charts, this one includes DOE spending on basic energy sciences. That refers to research into strategic areas of science important to DOE’s larger energy missions, including materials, chemistry, applied math, biosciences, engineering, and geosciences.


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What are the major takeaways? Basic scientific research has received the most support followed by nuclear energy (fission plus fission). The latter is a direct result of making nuclear power a core principle of DOE’s founding strategic mission. Critics might reasonably question the wisdom of the $27 billion invested in fusion given that it has not supplied a single kilowatt hour of electricity, a recent breakthrough notwithstanding5.

The prioritization of fossil fuels is not surprising given the foundational role that oil, coal, and natural gas played in the economic and military development of the nation, the perceived critical nature of oil in natural security, and the powerful vested political interests driving the business of fossil fuels.

But are recent spending decisions aligned with the needs of the nation? Given the speed with which we need to decarbonize our way of life to avoid climate calamity, it seems absurd that we are spending less on energy research and development today than we did 50 years ago. The recent increase in spending on clean energy and energy efficiency is clearly welcome, but the ongoing heavy spending on carbon-based energy systems diverts very scarce resources from solving the carbon problem.

1 Fehner, Terrence R., and Jack M. Holl. “Department of Energy 1977-1994: A Summary History.” Energy History Series. U.S. Department of Energy, 1994.

2 Historical overview is from Clark, Corrie E. “Renewable Energy R&D Funding History: A Comparison with Funding for Nuclear Energy, Fossil Energy, Energy Efficiency, and Electric Systems R&D.” Congressional Research Service, 2018.

3 American Physical Society, Panel on Public Affairs. “R&D Priorities Within the Department of Energy,” 1996.

4 An additional $1 billion in ARRA was allocated for FutureGEN, a plan to retrofit a closed coal-fired power plant in Meredosia, Illinois to demonstrate advanced carbon capture in storage technology. In 2015, the DOE terminated financing of the project due to insufficient time to complete the project before a required deadline under the ARRA. The project was plagued by escalating costs, uncertainty about private funding, and lawsuits from environmental groups.

5 U.S. Department of Energy, “DOE National Laboratory Makes History by Achieving Fusion Ignition,” December 13, 2022,

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