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Chapter 4
FEDERAL GOVERNMENT SUPPORT
SUMMARY
A review of federal support of electrochemical science and
technology revealed that funding levels for basic research and for
applied research and development were, respectively, about $30 million
and $60 million annually. The funding was heavily oriented toward two
areas advanced energy conversion devices and corrosion. This level of
funding Inky be compared with current major electrochemical markets
(nearly $30 billion) and projected new ones ($20 billion). Four
conclusions were reached: First, the support framework from federal
agencies is provided along traditional disciplinary lines, whereas the
field is multidisciplinary. Second, current funding does not
sufficiently emphasize unconventional high-risk, high-payoff research.
Third, the federal R&D budget for this area is inadequate to contribute
effectively to a competitive and modern industry; in particular, the
major shortfall in funding is in innovative applied work. Fourth, to
exploit research results, attention should be given to science and
technology transfer, particularly to the removal of institutional
barriers to invention and commercialization. For a few electrochemical
programs, where national objectives cannot be achieved through privately
funded ventures, temporary initiatives staffed by personnel from
industry, universities, and national laboratories should be created for
a defined period and for a specific goal.
INTRODUCTION
Given the large markets and the industrial infrastructure that
support some of the electrolytic technologies, the question naturally
arises as to the justification and role for federal support of
electrochemical science and engineering. Such support would be clearly
warranted in certain cases where the national interest is involved, such
as security, trade balance, health, energy, and environmental
protection. The contribution of electrochemical technology to each of
these areas and of electrochemical phenomena to essential technologies
has been documented in Chapter 2.
33
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FEDERAL FUNDING LEVELS
The federal government has made major commitments to support certain
aspects of electrochemical science and engineering. The committee
obtained information on the level of federal support of basic research
and of applied research and development (i.e., classifications 6.1 and
6.2/6.3/6.4, respectively, in Department of Defense terminology). This
information was obtained from program managers in the Departments of
Commerce, Defense, Energy, Interior, and Transportation, the National
Science Foundation, the National Aeronautics and Space Administration
and the National Institutes of Health (see Acknowledgments). Results
were sent back to key individuals for validation. The review was
considered to be complete when no additional program managers were
suggested as sources by persons being contacted.
The government funding for fiscal years 1984 through 1987 is
summarized in Table 4-1. Several points should be emphasized:
· Basic and applied efforts receive approximately $30 million and
$60 million, respectively, and the ratio of applied to basic work is
thus about 2:1.
v Two agencies (DOD and DOE) provide nearly all (more than
80 percent) of the federal funding in electrochemistry. In turn, most
DOD and DOE support addresses advanced energy conversion devices for
military and civilian applications.
· Electrochemistry programs, both basic and applied, are oriented
primarily toward batteries, fuel cells, corrosion, and analytical
techniques.
Corrosion was identified by most agencies as part of their
electrochemistry programs. Total basic and applied funding for
corrosion was about $9 million and $7 million, respectively; these
amounts are included in the amounts shown in Table 4-1.
Major program changes during the period surveyed were (a) new
starts in DOD for programs on advanced electrochemical concepts
(batteries and fuel cells with very high specific energy and/or specific
power) and (b) significant reductions in two DOE electrochemical
programs the first in the energy conservation office, which supports
generic technology efforts as well as battery development, and the
second in the fossil energy office on fuel cell development for utility
power generation. These program changes reduced DOE applied support to
a level below that for DOD beginning in fiscal year 1986.
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TABLE 4-1 Summary of Federal Funding in
Electrochemistry for Fiscal Years
1984-1987 (in millions of dollars)
1987
Classification 1984 1985 1986 (estimated)
Basic research 26.3 28.9 28.8 30.5
Applied R&D 60.6 63.9 66.3 59.9
Total 86.9 92.8 95.1 90.4
l
· Discussion among the various programs is conducted on an ad hoc
basis through the Interagency Advanced Power Group (1), which
maintains information on federally funded research and development in
several areas, including electrochemistry. This group provides a forum
for informal discussion of technical and financial trends. It is not a
coordinating body.
COMMITTEE PERSPECTIVE ON FEDERAL FUNDING
Analyses (2,3) of the federal budget show that total federal
government-sponsored research and development was $53 billion in fiscal
year 1985. Basic and applied support was about $S billion and
$45 billion, respectively, or about 0.2 percent and 1.1 percent of the
gross national product (about $3800 billion in 1984 and $4000 billion in
1985~. Corresponding figures can be obtained for the field of
electrochemistry by using $30 billion for electrochemical sales (from
Table 3-2 and discussion in Chapter 3~. From Table 4-1, basic and
applied federal support of electrochemistry, including corrosion, was
about $30 million and $60 million, respectively, or about 0.1 percent
and 0.2 percent of electrochemical sales. These percentages represent
upper limits, since no credit has been taken for exports into
international markets or for other technologies based on electrochemical
phenomena, such as colloids.
Funding of Applied Efforts
Both the funding level and its trend for exploratory applied work
underpinning commercial nondefense markets deserve comment. As shown
above, federal support of basic and applied efforts in the electro-
chemical field, as a percentage of market value, is below the
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corresponding percentages for overall federal support of research and
development. The data also show that the ratio of total funding applied
to total basic funding for the overall federal program in 1985 is about
6:1, versus a ratio of 2:1 for the federal program in electrochemistry.
A ratio of 10:1 is the rule of thumb for high-technology areas, once
developmental efforts have begun (4~.
While such comparisons provide only approximate guidelines, there
nonetheless appears to be a major shortfall in federal support of
electrochemical programs, primarily in applied areas. Given the
$13 to $24 billion potential annual new markets in electrochemistry
(Table 3-3), the consensus of the committee was that the federal funding
of applied efforts (Table 4-1) should be substantially increased, indeed
doubled, in the near term. Thus the committee concluded that an
increase in federal support of electrochemical research on the order of
$60 million is justified, with the bulk directed toward anolied
~ ~ .
innovative research and early stages of exploratory development. This
increase should be phased in over a period of 3 to 5 years. Increased
support of applications-oriented efforts would be cost-effective both
for traditional electrochemical technologies and for new-generation
opportunities.
Although the committee recognized that most guidelines for research
investment are inexact, experience for medium-technology industries has
generally shown that the level of total research and development should
be about 3 percent of sales to maintain competitiveness (5~. By
this criterion, the annual total support for applied work in the range
of $500 to $800 million is justified for electrochemical applications;
of this total amount, industry, including venture capital, would
contribute the principal portion. In the area of production of
established materials, such as metals and chemicals, the major
contributions would come from established industries. In others, such
as advanced batteries and fuel cells, venture capital and government
could provide the major impetus.
For example, with new markets for commercial-sector batteries and
fuel cells estimated at $2 to $10 billion annually (Table 3-3), yearly
total funding of research and development on the order of $100 million
(actually $60 to $300 million hased on ~ percent of nrnincter1 markets)
. ~ _ ~ _ ,,
is warranted up to the point of commercial demonstration. Excluding
DOD, government funding of electrochemistry associated with batteries
and fuel cells decreased from about $35 million in fiscal year 1984 to
about $20 million for 1987 (mostly for the Department of Energy). The
aggregate of private funding is about $30 million annually. In view of
the scientific and technical problems and the potential payoff (in terms
of new systems and new electrochemical energy conversion industries),
the present funding level is inadequate for aggressive technology
development. A funding level twice the present value could be put to
excellent use without modifying the existing research and development
infrastructure.
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More specifically, research and development work on batteries and
fuel cells depends on the federal government for support because the
lead time in development is longer than can be supported by private
industry. In addition, the existence of the targeted markets has not
been demonstrated in most cases. Federal support is therefore needed to
bring new electrochemical systems to the point where the risk is low
enough so that it can be assumed by industry. The development of fuel
cell and battery technology is in the federal interest because of energy
independence and national security considerations. The role of industry
in this field is to provide a significant portion of the expertise and
some of the funding for the development of new electrochemical systems
into marketable products, once feasibility on an engineering scale has
been established.
Support Framework
Chapters 5 and 6 document areas of electrochemical science and
engineering that could advance rapidly with a higher priority in federal
programs at this time. The field warrants a higher priority because of
its large economic impact as well as from a second viewpoint the growing
recognition of the essential role of government support for multi-
disciplinary activities, which establish bridges among the various
contributing disciplines (6~. Most federal agencies and offices,
however, currently support research along the lines of traditional
disciplines. This arrangement works for some electrochemical problems
when the solution lies primarily within a single discipline. For
multidisciplinary problems, however, the present orientation inhibits
the broad perspective that is needed. Electrochemical science and
technology would be more effectively nurtured through federal programs
if given a multidisciplinary support framework. This would benefit both
basic research and applied efforts. Agency program managers recognize
the desirability of funding this field as an interdisciplinary effort,
in spite of organizational constraints, but the current results are far
from optimal.
Unconventional High-Risk Programs
The present distribution of government funds is weighted principally
toward problems associated with advanced energy conversion devices and
secondarily on corrosion. Programs of comparable magnitude focused on
other high-risk, high-payoff areas, such as electrochemical aspects of
microelectronics, surface processing, membranes, sensors, and waste
utilization, are needed. Excellent opportunities for new technology in
these areas lie outside the financial base of existing electrochemical
industries, so that a federal role in realizing these opportunities is
essential. Support of such fields, together with existing programs,
,
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would provide the broad-based coverage of electrochemistry that is
necessary to exploit these opportunities.
Science and Technology Transfer
Of the many factors affecting science and technology transfer,
one federal policy regarding patent and licensing rights has recently
been changed. The committee welcomes this as an incentive for reduction
of other institutional barriers to technology transfer and venture
initiation. It specifically endorses establishing at universities and
national laboratories practices that enable inventors and entrepreneurs
to realize the economic benefits of their work. The committee
recommends that these individuals be enabled to share with their
institutions the rights to exploit their inventions and the monetary
benefits therefrom in a framework that will encourage formation of
commercial enterprises. At present some universities and institutions
retain these rights, even though they are often unable to act in a
timely manner for high-technology areas, where a product can become
obsolete in 3 to 5 years. Active entrepreneurship could alleviate the
need for the commitment of large federal outlays for demonstration
programs.
Beyond the emphasis on the creation of ventures, joint efforts
involving industries, government, and universities should be undertaken
when major well-defined national technical goals are to be attained.
These initiatives would provide for an integrated industry-national
laboratory-university collaborative effort in developing the products
and processes necessary to maximize the probability of yielding a
commercially successful product. The initiatives would have an
agreed-upon lifetime, after which the investigators would return to
their home organizations. This plan would provide for effective science
and technology transfer and would ensure rapid implementation of
research results in the development process. The "partnership" between
industry and government in the development centers is a key tool in
moving the technology into industry rapidly. Such joint and focused
efforts are common today in Japan and are quite successful in operating
for a defined period of time and creating specific technologies.
REFERENCES
1. Semiannual Compilation of Project Briefs. Washington, D.C.: Power
Information Center, Feb. 19&6.
The United States Budget in Brief, Fiscal Year 1987. Government
Printing Office Document S/N 041-001-00301-1, Jan. 1986.
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3.
Erdevig, E. The Bucks Stop Elsewhere: The Midwest's Share of
Federal R&D. Federal Reserve Bank of Chicago Economic Perspectives,
Nov.-Dec. 1984, p. 13.
Assessment of Research Needs for Advanced Fuel Cells. DOE Advanced
Fuel Cells, DOE Advanced Fuel Cell Working Groups, DOE/ER/30060-T-1,
1985.
5. Business Week. R&D Scoreboard. Issue 2902, July 8, 1985, pp.
86-106.
6. Keyworth, G. A. An administrative perspective of federal science
policy. The Bridge, National Academy of Engineering, 16~1), Spring
1986, p. 5.
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Representative terms from entire chapter:
electrochemical science
