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The government agency is quietly funding some of the industry’s most exciting early stage companies.
When the George W. Bush administration established the Advanced Research Projects Agency - Energy, better known as ARPA-E, the number one goal for the new agency sounded an ambitious and patriotic note: “To enhance the economic and energy security of the United States through the development of energy technologies.” And from that uncontroversial foundation, a bipartisan bastion of cleantech innovation was born.
I knew I wanted to dig into the critical role that ARPA-E plays in the climate tech funding landscape after Rajesh Swaminathan, a partner at Khosla Ventures, told me that he views the agency as the “least talked about VC in town.” So I reached out to ARPA-E’s director, Evelyn Wang, to learn more.
Of course, ARPA-E isn’t actually a venture capital firm — it provides no-strings-attached funding to promising energy projects rather than aiming for a return on investment. “So a little bit different,” Wang told me. “Our mission is very much focused on energy independence, reducing greenhouse gas emissions, and enhancing energy efficiency.”
The Bush administration established ARPA-E in 2007 with the passage of the America COMPETES Act, which aimed to improve the technological competitiveness of the United States via investments in research and development. But the agency was funded for the first time in 2009, under Obama, as a part of an $800 billion stimulus package in response to the Great Recession. A substantial chunk of that funding — $90 billion — was allocated for clean energy, which the administration would go on to boast amounted to the “largest single investment in clean energy in history.”
Yet whether it’s been Bush or Obama — or Trump or Biden — in the White House, the messaging around ARPA-E has always trended less towards renewables and climate mitigation and more towards energy security and economic competitiveness. As the name suggests, ARPA-E is modeled after the Defense Advanced Research Projects Agency, or DARPA, which was established in 1958 in response to the Soviet’s launch of the Sputnik satellite. DARPA has since helped birth such little-known tech as the entire internet, GPS, automated voice recognition, and self-driving cars.
But while the de facto customer for DARPA-developed tech is always the Department of Defense, the pathway to commercialization for ARPA-E projects mainly relies on private sector interest. In that sense, the goal of ARPA-E is neatly aligned with that of venture capitalists: Get tech to market. Because while scientific learnings are all well and good, Wang said that “ultimately, we need to see these technologies commercialized — to actually be out there — to actually affect the ecosystem and change the energy landscape.”
Since ARPA-E can eschew the profit motive, it’s able to fund high-risk, high-reward projects at the earliest stages, when most investors would be reluctant to take on that level of uncertainty. Yet the inherent risk means the success rate for ARPA-E projects as measured by metrics such as the number of companies it’s spawned (157), exits via mergers, acquisitions or IPOs (30), and additional partnerships with other government agencies (360), can seem low compared to the 1,590 projects that the agency has funded over the past 15 years. A climate tech investor I spoke with on background told me that while they love ARPA-E and are glad it exists, they were expecting more success stories by now.
That’s at least partially because even after a project is funded and proof-of-concept has been demonstrated, there’s often still a ways to go before investors are ready to jump in. “I think when we first stood up ARPA-E, the idea was that at that point, it would be sufficiently de-risked for the private sector to then pick it up and invest,” Wang told me. But frequently, that hasn’t been the case. ARPA-E usually funds projects for one to three years, but often climate tech innovation relies on deeply complex and thus inherently slow advancements in science and engineering — think fusion energy, novel battery development, or direct air capture. Many venture funds have 10 year time horizons, so if investors don’t see a payoff happening in that timeframe, they’ll probably hold back.
The investor I spoke with on background told me that ARPA-E has become more effective in partnership with the Office of Clean Energy Demonstrations, established in 2021 under the Department of Energy, which uses its $25 billion budget to create model buildouts of new technology with private sector partners. Earlier this year, OCED selected six ARPA-E awardees focused on industrial decarbonization to receive a combined total of up to $775 million.
Even so, the investor told me, ARPA-E funding alone still might not be enough to get companies to a place where OCED would be interested. To help close that gap, ARPA-E started a program called SCALEUP, a mouthful of an acronym for The Seeding Critical Advances for Leading Energy (Technologies) with Untapped Potential, in 2019. It provides a small number of ARPA-E projects with follow-on funding to further prove out their concepts — provided they can identify at least one commercialization partner such as a potential customer, end-user, or supplier willing to take a stake in the development of the tech and help it get to market.
So far, Wang says the program has yielded some successes. The list includes LongPath Technologies, which monitors methane emissions and leaks in the oil and gas industry and received a conditional loan last year from the DOE’s Loan Programs Office; Natron Energy, which just opened the first commercial-scale sodium-ion battery production facility in the U.S.; and Sila, a battery materials manufacturer that has raised over $1.3 billion in total, and secured contracts with Mercedes-Benz and Panasonic.
When you look at ARPA-E’s success rate in terms of dollars in and dollars out, though, it starts to look pretty darn efficacious as is. Since 2009, ARPA-E has provided more than $3.8 billion for research and development, leading to over $12.6 billion in private-sector follow-on funding, while the 30 exits to date have yielded a combined market valuation of $22.2 billion. And since it often takes climate tech companies around a decade to mature to the point where they’re ready for an exit event, many of ARPA-E’s companies have yet to reach the acquisition or IPO threshold.
These days, ARPA-E projects are facing a completely different funding landscape than in the 2000s — one ripe with both excitement and cash as well as increasing competition. So while Wang told me that the agency’s goal is always to look for “technological whitespace” in the energy landscape, “it's getting more crowded,” she said. “And I think in that context, we've strategically decided that we should also think about broader vision type efforts.” To that end, ARPA-E has identified three comprehensive focus areas: developing clean primary energy sources such as geothermal, small modular nuclear reactors, fusion and geologic hydrogen; power delivery for non-electrical sources, such as energy transported via hydrogen or heat; and figuring out how to source carbon sustainably, such as via engineered plants and algae.
Now that ARPA-E has been supporting projects for a decade and a half, it’s getting more experimental when it comes to developing novel testbeds for its tech. Exhibit A is the San Antonio International Airport, whichrecently signed a memorandum of understanding with the agency to deploy a series of ARPA-E backed technologies.
Many major airports are actually higher tech than passengers may realize, and given the mounting pressure on the aviation industry to decarbonize, they’re also open to novel sustainability solutions. In San Antonio, the airport is deploying EV chargers from Imagen Energy and sodium-ion battery tech from Natron Energy, both of which could help electrify their ground vehicles, as well as a distributed energy management system from Autogrid, which allows airports to control their virtual power plants, microgrids, EV fleet, and demand response measures. Other tech, such as hybrid-electric planes from Ampaire, could be integrated into the airport in the future.
That’s a lot of technology development for not many headlines. And when a company raises a major round or goes public, sometimes you have to dig deep to discover their ARPA-E origins. Hence, the “least talked about VC in town” comment. In some sense, Wang says, this is intentional.
“When we think about success, if our teams, our companies are successful, and they shine, then we shine,” she told me, and maybe that’s the way it should continue to be. Because while advertising government investment in anything seen as “clean” or “green” can immediately draw both partisan praise and ire, funding for ARPA-E has been steadily creeping up nearly every year since 2015. And yes, that includes the Trump era, even though the former president seemingly wanted to axe the agency altogether. Congress, it turned out, was not on board with that plan.
“Our mission is about energy independence and bolstering our economy and I think everyone agrees with this mission,” Wang told me. “Everyone,” of course, will always be an overstatement. But perhaps Wang is right that the agency does function better as a behind-the-scenes player. As she put it, speaking of the companies the agency funds, “It’s more about them, right? And how that affects the ecosystem, and helps our nation in terms of what we need to do as a country, and how that sets an example for the world.”
Editor’s note: This story initially misstated the size of the American Recovery and Reinvestment Act and the amount of funding allocated to clean energy.
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On executive orders, the Supreme Court, and a “particularly dangerous situation” in Los Angeles.
Current conditions:Nearly 10 million people are under alert today for fire weather conditions in southern California • The coastal waters off China hit their highest average temperature, 70.7 degrees Fahrenheit, since record-keeping began • A blast of cold air will bring freezing temperatures to an estimated 80% of Americans in the next week.
High winds returned to Los Angeles on Monday night and will peak on Tuesday, the “most dangerous” day of the week for the city still battling severe and deadly fires. In anticipation of the dry Santa Ana winds, the National Weather Service issued its highest fire weather warning, citing a “particularly dangerous situation” in Los Angeles and Ventura Counties for the first time since December 2020.
A new brush fire, the Auto Fire, ignited in Oxnard, Ventura County, on Monday evening. It spread 55 acres before firefighters stopped it. Meanwhile, investigators continue to look for the cause of the Palisades Fire, which ignited near a week-old burn scar, a popular partying spot, and damaged wooden utility poles, according to a New York Times analysis.
National Weather Service
Trump is planning an executive order banning offshore wind developments on the East Coast, Heatmap’s Jael Holzman reported Monday. The news came from New Jersey Republican Representative Jeff Van Drew, who said he’s working with Trump’s team to “to prevent this offshore wind catastrophe from wreaking havoc on the hardworking people who call our coastal towns home.”
Van Drew’s press release also said that this order is “just the beginning,” and that it would be finalized “within the first few months of the administration,” a far cry from the Day One action Trump has promised. Van Drew had earlier told New Jersey reporters that the ban would last six months.
Meanwhile, in other executive order news, Biden issued an order on Tuesday directing the Energy and Defense departments to lease federal lands for “gigawatt-scale” data centers, according to E&E News, but only if they bring online enough clean energy to match their facilities’ needs.
On Monday, the Supreme Court refused to hear a lawsuit brought by Utah attempting to seize control of the “unappropriated” federal lands in the state. Opponents argued that the lawsuit, if successful, would have put public lands across the West on the path to privatization since Utah and other states likely couldn’t afford to manage them and would have had to sell off much of them. However, “while the Court’s decision denying original review of Utah’s claims is welcome news for our shared public lands, we fully expect Utah’s misguided attacks to continue,” Alison Flint, the senior legal director at The Wilderness Society, said in a statement.
As I reported last month, the Utah lawsuit organizers “seem prepared to make an appeal to Congress or the Trump administration if the Supreme Court doesn’t make a move in their favor,” given that “funding for the messaging for Stand for Our Land, the publicity arm of the lawsuit, has reportedly outpaced the spending on lawyers.
Also on Monday, the Supreme Court declined to hear a fossil fuel industry argument to block states, municipalities, and other groups from seeking damages for the harms caused by climate change. The appeal by Sunoco, Exxon Mobil, Chevron, and others stemmed from a high-profile lawsuit in Honolulu that seeks to hold energy companies accountable for causing “a substantial portion” of the effects of climate change. Had the Supreme Court taken up the case, similar lawsuits by California and others likely would have been paused during deliberations. The American Enterprise Institute, a conservative think tank, responded to Monday’s decision by claiming activists will now “make themselves the nation’s energy regulators.”
A little over a week after the start of New York City’s congestion pricing, the Metropolitan Transportation Authority released data showing significant decreases in the amount of time passengers spend in inbound traffic. On average, during the morning commute, traffic times have decreased by 30% to 40%; in some cases, such as during rush hour in the Holland Tunnel, travel time has been cut in half, going from over 11 minutes to under five. Due to the traffic reductions, some bus routes are up to 28% faster now than at the same time last year. “It has been a very good week here in New York,” MTA deputy chief Juliette Michaelson said in a news conference.
So far, the MTA has seen an average of 43,000 fewer drivers entering the congestion pricing zone, which begins below 60th St. and costs $9 during the day. While Gothamist notes that this is only a 7.3% reduction compared to last January, many New Yorkers say congestion pricing effects are visibly noticeable in the streets of lower Manhattan.
The Brooklyn Bridge as congestion pricing went into effect. Photo by Michael M. Santiago/Getty Images
Oil and gas magnate Harold Hamm is throwing a “swanky party” to celebrate the inauguration of Donald Trump, on whose campaign he spent more than $4.3 million, according to the research group Fieldnotes and The New York Times. Interior Secretary nominee Doug Burgum was among the invitees, although an advisor has said he does not plan to attend; one of the party’s several major oil and gas industry sponsors, Liberty Energy, was founded by Chris Wright, Trump’s nominee for Energy Secretary.
In May, Trump met with oil and gas executives at his Mar-a-Lago resort and promised industry-friendly tax and regulatory policies and an aggressive stance against wind energy if they helped fund his White House bid. The oil and gas industry ultimately invested some $75 million in efforts to help re-elect the former president and contributed millions to his legal defense.
25% — That’s the level of tariff Alberta Premier Danielle Smith said Canada should prepare for after a meeting with incoming President Trump — and not expect exceptions for its crude oil exports to the U.S., per Bloomberg’s Javier Blas.
Though it might not be as comprehensive or as permanent as renewables advocates have feared, it’s also “just the beginning,” the congressman said.
President-elect Donald Trump’s team is drafting an executive order to “halt offshore wind turbine activities” along the East Coast, working with the office of Republican Rep. Jeff Van Drew of New Jersey, the congressman said in a press release from his office Monday afternoon.
“This executive order is just the beginning,” Van Drew said in a statement. “We will fight tooth and nail to prevent this offshore wind catastrophe from wreaking havoc on the hardworking people who call our coastal towns home.”
The announcement indicates that some in the anti-wind space are leaving open the possibility that Trump’s much-hyped offshore wind ban may be less sweeping than initially suggested.
In its press release, Van Drew’s office said the executive order would “lay the groundwork for permanent measures against the projects,” leaving the door open to only a temporary pause on permitting new projects. The congressman had recently told New Jersey reporters that he anticipates only a six-month moratorium on offshore wind.
The release also stated that the “proposed order” is “expected to be finalized within the first few months of the administration,” which is a far cry from Trump’s promise to stop projects on Day 1. If enacted, a pause would essentially halt all U.S. offshore wind development because the sought-after stretches of national coastline are entirely within federal waters.
Whether this is just caution from Van Drew’s people or a true moderation of Trump’s ambition we’ll soon find out. Inauguration Day is in less than a week.
Imagine for a moment that you’re an aerial firefighter pilot. You have one of the most dangerous jobs in the country, and now you’ve been called in to fight the devastating fires burning in Los Angeles County’s famously tricky, hilly terrain. You’re working long hours — not as long as your colleagues on the ground due to flight time limitations, but the maximum scheduling allows — not to mention the added external pressures you’re also facing. Even the incoming president recently wondered aloud why the fires aren’t under control yet and insinuated that it’s your and your colleagues’ fault.
You’re on a sortie, getting ready for a particularly white-knuckle drop at a low altitude in poor visibility conditions when an object catches your eye outside the cockpit window: an authorized drone dangerously close to your wing.
Aerial firefighters don’t have to imagine this terrifying scenario; they’ve lived it. Last week, a drone punched a hole in the wing of a Québécois “Super Scooper” plane that had traveled down from Canada to fight the fires, grounding Palisades firefighting operations for an agonizing half-hour. Thirty minutes might not seem like much, but it is precious time lost when the Santa Ana winds have already curtailed aerial operations.
“I am shocked by what happened in Los Angeles with the drone,” Anna Lau, a forestry communication coordinator with the Montana Department of Natural Resources and Conservation, told me. The Montana DNRC has also had to contend with unauthorized drones grounding its firefighting planes. “We’re following what’s going on very closely, and it’s shocking to us,” Lau went on. Leaving the skies clear so that firefighters can get on with their work “just seems like a no-brainer, especially when people are actively trying to tackle the situation at hand and fighting to save homes, property, and lives.”
Courtesy of U.S. Forest Service
Although the Super Scooper collision was by far the most egregious case, according to authorities there have been at least 40 “incidents involving drones” in the airspace around L.A. since the fires started. (Notably, the Federal Aviation Administration has not granted any waivers for the air space around Palisades, meaning any drone images you see of the region, including on the news, were “probably shot illegally,” Intelligencer reports.) So far, law enforcement has arrested three people connected to drones flying near the L.A. fires, and the FBI is seeking information regarding the Super Scooper collision.
Such a problem is hardly isolated to these fires, though. The Forest Service reports that drones led to the suspension of or interfered with at least 172 fire responses between 2015 and 2020. Some people, including Mike Fraietta, an FAA-certified drone pilot and the founder of the drone-detection company Gargoyle Systems, believe the true number of interferences is much higher — closer to 400.
Law enforcement likes to say that unauthorized drone use falls into three buckets — clueless, criminal, or careless — and Fraietta was inclined to believe that it’s mostly the former in L.A. Hobbyists and other casual drone operators “don’t know the regulations or that this is a danger,” he said. “There’s a lot of ignorance.” To raise awareness, he suggested law enforcement and the media highlight the steep penalties for flying drones in wildfire no-fly zones, which is punishable by up to 12 months in prison or a fine of $75,000.
“What we’re seeing, particularly in California, is TikTok and Instagram influencers trying to get a shot and get likes,” Fraietta conjectured. In the case of the drone that hit the Super Scooper, it “might have been a case of citizen journalism, like, Well, I have the ability to get this shot and share what’s going on.”
Emergency management teams are waking up, too. Many technologies are on the horizon for drone detection, identification, and deflection, including Wi-Fi jamming, which was used to ground climate activists’ drones at Heathrow Airport in 2019. Jamming is less practical in an emergency situation like the one in L.A., though, where lives could be at stake if people can’t communicate.
Still, the fact of the matter is that firefighters waste precious time dealing with drones when there are far more pressing issues that need their attention. Lau, in Montana, described how even just a 12-minute interruption to firefighting efforts can put a community at risk. “The biggest public awareness message we put out is, ‘If you fly, we can’t,’” she said.
Fraietta, though, noted that drone technology could be used positively in the future, including on wildfire detection and monitoring, prescribed burns, and communicating with firefighters or victims on the ground.
“We don’t want to see this turn into the FAA saying, ‘Hey everyone, no more drones in the United States because of this incident,’” Fraietta said. “You don’t shut down I-95 because a few people are running drugs up and down it, right? Drones are going to be super beneficial to the country long term.”
But critically, in the case of a wildfire, such tools belong in the right hands — not the hands of your neighbor who got a DJI Mini 3 for Christmas. “Their one shot isn’t worth it,” Lau said.
Editor’s note: This story has been updated to reflect that the Québécois firefighting planes are called Super Scoopers, not super soakers.