3
Policy-Related Issues

The continued growth of the U.S. chemical industry in an increasingly competitive global market will depend on the continuous development and implementation of leading-edge technologies that enable U.S. chemical producers to deliver safer, better, and cheaper products. In the past, growth was dependent on informal, quasicooperative interactions between the three principal sectors of the U.S. research infrastructure: academia, government, and industry. This infrastructure can provide a pool of talent for continuing the tradition of innovation and productivity.

DOE, the National Aeronautics and Space Administration, the U.S. Department of Commerce, and the U.S. Department of Defense have encouraged cooperative R&D via agreements that have stimulated strong interest in industry, academia, and government. Unfortunately, because of complex funding mechanisms and uncertainties about ownership of proprietary information, this approach may no longer be viable. The number of agreements, which peaked at more than 500 in 1994, had dropped to approximately 100 in 1996 (Via, 1998).

The committee encourages industry and academia to take advantage of the tremendous capabilities of the national laboratories, especially for interdisciplinary research, to expand the limits of science and technologies in the national interest. This will require that issues related to intellectual property be resolved. From industry’s point of view, approaches such as those practiced by the Advanced Technology Program (ATP) of the National Institute of Standards and Technology, could serve as a model for expanded programs at DOE national laboratories. ATP addresses the issues most important to industry: ownership of intellectual properties and proprietary information. Large companies and small business have different needs. While the interests of large companies are focused on intellectual property rights, the interests of small businesses, except for biochemical and biomedical companies, tend to be focused on ensuring access to experts who can answer questions. These differences were the subject of discussion at OIT Customer Day (February 16, 2000). Under ATP, an industry can either



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3 Policy-Related Issues The continued growth of the U.S. chemical industry in an increasingly competitive global market will depend on the continuous development and implementation of leading-edge technologies that enable U.S. chemical producers to deliver safer, better, and cheaper products. In the past, growth was dependent on informal, quasicooperative interactions between the three principal sectors of the U.S. research infrastructure: academia, government, and industry. This infrastructure can provide a pool of talent for continuing the tradition of innovation and productivity. DOE, the National Aeronautics and Space Administration, the U.S. Department of Commerce, and the U.S. Department of Defense have encouraged cooperative R&D via agreements that have stimulated strong interest in industry, academia, and government. Unfortunately, because of complex funding mechanisms and uncertainties about ownership of proprietary information, this approach may no longer be viable. The number of agreements, which peaked at more than 500 in 1994, had dropped to approximately 100 in 1996 (Via, 1998). The committee encourages industry and academia to take advantage of the tremendous capabilities of the national laboratories, especially for interdisciplinary research, to expand the limits of science and technologies in the national interest. This will require that issues related to intellectual property be resolved. From industry’s point of view, approaches such as those practiced by the Advanced Technology Program (ATP) of the National Institute of Standards and Technology, could serve as a model for expanded programs at DOE national laboratories. ATP addresses the issues most important to industry: ownership of intellectual properties and proprietary information. Large companies and small business have different needs. While the interests of large companies are focused on intellectual property rights, the interests of small businesses, except for biochemical and biomedical companies, tend to be focused on ensuring access to experts who can answer questions. These differences were the subject of discussion at OIT Customer Day (February 16, 2000). Under ATP, an industry can either

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own or have the first right of refusal to technologies developed by the industry-government partnership. The industry partner also has the right to license the technology to a third party. In this respect, these partnerships differ from the cooperative R&D agreements (CRADAs), under which government owns the intellectual properties, and licensing details are negotiated between the parties. INNOVATION In the last decade or so, as a result of changes in financial markets and the global economy, industry has shifted the focus of its research to short-term process and product development to meet specific needs. The committee believes that OIT, unlike industry, should fund R&D on high-risk, innovative approaches that have high potential payoffs to address targeted needs well into the future. Catalysis, although critical to the chemical industry, is also a component of a number of other national critical technologies and is vital to energy security (Jackson, 2000; Phillips, 1991). Therefore, government-supported research would be in the national interest, as long as it is focused on precompetitive, high-risk, innovative research. Short-term, applied research should continue to be supported by industry. Recommendation. The Office of Industrial Technologies should support precompetitive, high-risk, innovative research that has a high potential payoffs of addressing targeted industry needs. COMPUTATIONAL TECHNOLOGY, COMBINATORIAL CHEMISTRY, AND DATA MANAGEMENT High-throughput computational screening has advanced catalytic science, but this technology has not been widely used for the rapid synthesis of a multicomponent catalysts. In addition, combinatorial chemistry could be expanded to enable rapid screening of the chemical properties produced from these new catalysts, as well as to evaluate properties, such as rheology and other physical properties, from small-scale samples. The use of computational technology for predicting the effect of a catalyst on a chemical structure and its performance remains elusive. Advancement of this tool will have a broad impact on catalytic research and the entire chemical industry. Recommendation. The Office of Industrial Technologies should assist industry in supporting the development of improved high-throughput

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screening and computational technologies that will benefit the entire chemical industry. FUNDING FOR CATALYSIS RESEARCH Catalysis and related process technologies are critical to the U.S. chemical industry, as well as the rubber, cement, pharmaceutical, and petrochemical industries. Catalysis is involved in more than 25 percent of the U.S. gross domestic product and is critical to the manufacture of more than 60 percent of industrial products. Industry still provides a significant percentage of total funding for catalysis R&D. The committee estimates that approximately $1 billion is spent annually on catalysis research, at least 90 percent of which is geared toward short-term applied research, process and product development, environmental issues, and technical supports. According to the National Science Foundation, of the $158 billion allocated for industrial research in 1997, 6.6 percent was spent on exploratory, basic research, 20 percent was spent on applied research, and 73 percent was spent on development (NSF, 1997). Currently, federal funding for catalysis research comes mainly comes from DOE and the U.S. Department of Commerce (supplemented by the National Science Foundation) through ATP (see Table 3-1 ). Funding by OIT (shown in Table 3-2 ) for catalysis research is estimated to be about one-third of OIT’s total budget for chemical research. TABLE 3-1 Funding by the U.S. Department of Commerce for Catalysis Research Year Amount ($ millions) Number of Projects 1994 3.99 2 1995 50.69 9 1997 1.72 1 1998 5.93 3 1999 29.48 2 Source: ATP, 2000. OIT’s budget of approximately $4 million is used to support 20 catalysis research projects. If the number of projects were reduced and the R&D coordinated with R&D by other federal agencies, the combined budget would achieve a critical mass to support many high-impact research projects.

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TABLE 3-2 Funding by OIT for Chemical and Catalysis Research Year Chemical Research ($ millions) Catalysis Research ($ millions, estimated) 1998 11.4 3.5–4.0 1999 12.4 4.0 2000 12.5 4.0 2001 (projected) 12.5 4.0 Source: OIT, 2000. Recommendation. The Office of Industrial Technologies should consider reducing the number of projects it funds and coordinating its projects with those of other federal agencies to provide enough critical mass to support innovative research in many areas. PROPOSAL REVIEW PROCESS It is essential that industry involvement be promoted in the proposal review process. Currently, all proposals are reviewed by committees with members drawn from academia and national laboratory staff, with some level of participation by industry. In addition, the review process is inefficient. Even though many CRADAs are small (in the range of $100,000), it may take as long as a year for a proposal to be approved. In addition, industry is required to submit a complicated, lengthy proposal. As a result, the level of industrial participation is declining. OIT could adopt a two-step approach to streamlining the process, a preliminary review step and a final review step. The preliminary review would require evaluating short, focused proposals (two to five pages) describing the problem to be addressed, the current state of technology, the innovative approach to be taken, and a paragraph describing the contributions expected of each team member. The proposals selected for further consideration would be followed by longer proposals (10 to 15 pages) addressing the critical issues. This approach would encourage broad-based participation by the academic and industrial scientific community and would improve the efficiency of the proposal process. Recommendation. The Office of Industrial Technologies should promote industry involvement in the proposal review process and also streamline this review process.

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PROGRAM METRICS The value of OIT’s research program would be enhanced by the establishment of aggressive objectives and a formal assessment process. At the moment, OIT uses an informal assessment procedure judging the success of a program by the number of papers published or patents issued. The committee believes the assessment should be based on the impact of the developed technology on real applications. Each program should undergo a formal annual review, as well as semiannual assessments by industry participants. The assessments should include both performance-specific targets and increases in the knowledge base that could become a basis for future research. At the termination of a program, an overall assessment should be made to provide internal guidance for future proposals and programs. Recommendation. The Office of Industrial Technologies (OIT) should establish aggressive objectives and procedures for assessing the progress of each program. Programs should be formally reviewed annually by OIT and semiannually by industry participants. RESEARCH CENTERS The U.S. catalyst research community is facing increased global competition from private and government-supported research centers in Europe and Japan. Britain, the Netherlands, Germany, and France have all established government/industry research centers to maximize available funding and talent. The Institute for Environmental Catalysis at Northwestern University as one response by the U.S. government to multidisciplinary academic/industry initiatives in Europe and Japan. In addition, the national laboratories have valuable capabilities and facilities for catalysis research, such as chemical kinetics instrumentation, molten carbonate fuel cells, scalable computing (Ames Laboratory), bioprocessing (Oak Ridge National Laboratory), computational science membrane reactors (Argonne National Laboratory), biocatalysis engineering (Brookhaven National Laboratory), biocatalysis and photocatalysis thermochemistry (National Renewable Energy Laboratory), energy-research scientific computing, combinatorial chemistry (Lawrence Berkeley Laboratory), chemical process development, biocatalysis, plasma exhaust catalysis (Pacific Northwest National Laboratory), high-performance computing, reactor hydrodynamics, polymerization catalysis (Sandia National Laboratories), high-performance computing, supercritical fluids, fuel cells, biocatalysis (Los Alamos National Laboratory).

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Based on these capabilities, a number of virtual centers of excellence could be created to enhance collaborative research and knowledge integration. Such a strategy could be coordinated by trade associations, like the ones that developed Vision 2020. National laboratories, industry, and academia would all greatly benefit from this interaction. Addressing the multidisciplinary problems associated with surface, analytical, inorganic, organometallic, and synthetic chemistry, as well as the engineering requirements for developing new catalytic science and technologies, will require a critical mass of talent and funding. Despite the high overhead of the national laboratories compared to academic or industry facilities, the national laboratories offer unique capabilities. Overhead might be reduced by drawing on the pool of talented postdoctoral fellows who could work under the guidance of national laboratory staff for a nominal cost. Team members need not be in the same location. Many large chemical companies already have virtual catalyst research centers with members located in company laboratories around the world. Recommendation. The Office of Industrial Technologies should encourage and facilitate the formation of “virtual catalyst research centers” based on the unique capabilities of the national laboratories.