The recently signed Full-Year Continuing Appropriations and Extensions Act, 2025 (FY25 CR) offers a snapshot of America’s commitment to energy innovation – but it’s what happens next that will determine whether we maintain our technological edge or cede leadership to global competitors.

While certain areas of our energy innovation ecosystem are currently well-funded, and others less so, the path forward remains precarious. Today, Clean Tomorrow and Third Way are releasing our analysis of FY25 funding levels compared to the recommendations in Energizing America, published by the Information and Technology Innovation Foundation (ITIF) and the Center on Global Energy Policy at Columbia University’s School of International & Public Affairs (SIPA) in 2020, examining how current investments align with America’s strategic innovation needs.

A Closing Window of Opportunity

The truth today is stark: the significant investments made through the Energy Act of 2020 and the Bipartisan Infrastructure Law (BIL) are approaching their expiration dates. With funding from BIL expiring next year, without congressional action to sustain momentum many critical programs will see dramatic funding reductions.

We’ve been here before and should heed lessons from the past. When the American Recovery and Reinvestment Act invested $90 billion in clean energy innovation, with $35 billion to DOE, in 2009, the United States failed to maintain the necessary ongoing support to capitalize on these investments. Much of the funding sunset in just a few years, leaving other countries to make up for gaps in American leadership. This time, the stakes are even higher as international competition intensifies and the window for establishing dominance in emerging energy technologies narrows.

Bright Spots and Blind Spots

The Office of Clean Energy Demonstrations and Fossil Energy and Carbon Management are currently funded well above the levels recommended in Energizing America, enabling critical demonstration projects that de-risk emerging technologies and attract private investment. These programs are proving their value, with projects like the X-Energy advanced nuclear demonstration in Texas and industrial decarbonization initiatives already attracting follow-on private capital. It’s critical that these programs continue and that projects selected for award are seen through to completion.

However, implementation challenges and administrative actions threaten this progress. Recent reductions in DOE’s workforce, uncertain priorities, and permitting delays jeopardize the successful execution of OCED and FECM’s programs. Even well-funded initiatives can falter if implementation falls short.

More concerning are the significant funding gaps in key innovation areas. ARPA-E – one of the most successful innovation catalysts in the federal government – received just $470 million, far below the $918 million recommended to maintain America’s competitive edge. Similarly, the Office of Nuclear Energy faces a $130 million shortfall compared to recommended levels, despite bipartisan support for nuclear innovation.

The Valley of Death Grows Wider

Clean energy technologies face a particularly treacherous path from laboratory breakthrough to commercial deployment – what innovation experts call the “valley of death.” Federal funding and leadership play a critical role in bridging this gap, especially for technologies that address national priorities but face significant market barriers.

Without sustained, predictable funding, this valley becomes nearly impassable. Promising technologies stall in development, innovative companies fail, and America’s competitive position erodes. We cannot afford a repeat of past cycles where initial investments weren’t followed by the sustained support needed to commercialize promising technologies.

Beyond Funding: Building Innovation Capacity

While funding levels matter enormously, so does the capacity to effectively deploy these resources. Recent staffing reductions at DOE and administrative uncertainties threaten to undermine even well-funded programs. The expertise and continuity necessary to evaluate projects, manage complex partnerships, and navigate regulatory hurdles are just as important as the dollars appropriated. With key offices like OCED reported to be shuttering and awarded grants reported to be near cancellation, we’ll be closely tracking how the funding and implementation landscape evolves in the coming months as we work toward a clean energy future where the US leads the world on the technologies of tomorrow.

Clean energy innovation isn’t just about developing new technologies – it’s about building the institutional knowledge, workforce skills, and collaborative networks that make commercialization possible. These capabilities require sustained investment and stable leadership.

The Path Forward

As we detail with Third Way in our full analysis, maintaining America’s energy innovation leadership will require:

1. Extending funding authorizations for critical programs before they expire
2. Addressing implementation challenges by ensuring DOE has the staff and resources to effectively deploy funds
3. Closing funding gaps in underinvested areas like ARPA-E
4. Developing more effective mechanisms to bridge the commercialization valley of death
5. Building bipartisan consensus around the strategic importance of energy innovation

Energy innovation should transcend partisan divides. Whether motivated by economic competitiveness, energy security, or environmental concerns, maintaining America’s technological leadership serves our national interest.

The funding levels established in recent years represent progress, but they’re just the beginning. The real test lies in whether we can sustain this momentum, address critical gaps, and build the innovation ecosystem necessary to bring transformative energy technologies to market. The alternative – ceding leadership to international competitors – is a path we cannot afford to take.

Read Clean Tomorrow and Third Way’s full analysis of FY25 energy innovation funding here.