CFO of DOE talks finance

Credit: Theodore Teichman/Photo Editor Credit: Theodore Teichman/Photo Editor

The Chief Financial Officer (CFO) of the U.S. Department of Energy (DOE) Joseph Hezir spoke at Carnegie Mellon on Nov. 11 as part of the Scott Institute for Energy Innovation’s Distinguished Lecture Series. As the president-appointed head of the Office of the Chief Financial Officer, Hezir is responsible for the management and financial integrity of all of the DOE programs, resources, and activities. This includes determining how to distribute the yearly budget that is tentatively proposed to be $32.5 billion for the 2017 fiscal year. His presentation last week aimed to describe the need for innovation in the energy field, to define the Mission Innovation program, and to show the tentative process for the appropriation of the upcoming DOE budget.

Ed Rubin, Alumni Chair Professor in the environmental engineering department and professor in the engineering and public policy department at Carnegie Mellon, introduced Hezir, explaining their close connection as former professor and student, and mentioning Hezir’s many achievements since attending Carnegie Mellon. Hezir received his undergraduate degree in chemical engineering (CIT ‘72) and a master’s degree in public policy from the Heinz College (HNZ ‘74) and then transitioned into a career focused on policy.

Hezir spoke first about the value of innovation and the benefit of government-funded research. His case-study for this point was the adoption of clean energy technologies such as solar power and LED lights. The issue is not that the technologies aren’t beneficial or that they aren’t being adopted; the issue is that the adoption of current technologies alone will not shift the country to what he labeled “deep decarbonization.” Hezir called for an aggressive technology innovation program as the solution to move the country closer to that clean energy goal.

He then moved on to a discussion about what he hopes the policy approach for this task will be: Mission Innovation. This global initiative, signed in 2015 at the United Nations Climate Change Conference (COP21) in Paris, France, is an agreement between twenty countries to increase funding in clean energy research two-fold by the year 2021. This group of countries comprises 60 percent of the world’s population and two-thirds of the world’s greenhouse gas emissions. The doubling, he explained, would add roughly $35 billion to the development of newer and more efficient energy techniques in the United States over the next five years.

One of the points Hezir focused on here was the faith that the administration would be placing in the financial investments. He acknowledged that many clean energy technologies will take more than a typical short-term horizon on the investment. They will often require many years to materialize and then be applicable.

Hezir then transitioned to the topic of categories within the DOE, attempting to answer the question: how do we appropriate a doubling in funding? He explained that the increases wouldn’t be consistent across the department. For example, on one hand, the Energy Efficiency & Renewable Energy office will receive a significant amount of new money, while on the other, the Fossil Energy office will receive less.

He explained that some of the current categories are unnecessarily difficult to work with. There is a current push within the DOE for a rearrangement of departments from categorizing based on energy source to a system with offices organized around applications.

Hezir also touched on the format of funding, discussing some of the more novel ideas for funding techniques. An example he described was an innovation ecosystem in which multiple facets such as a university, a national lab, and energy companies are all close together. The regional focus would provide increased funding in the block format for areas that have such development in an effort to improve growth more naturally. Throughout Hezir’s presentation, a single question permeated: “How can the DOE most effectively spend a dollar of investment?” It is Hezir’s hope that aggressive investment in more precise fields is a broad idea that will improve clean energy within the United States.

Hezir closed by taking some questions. In response to an audience member who asked the obvious question about the role of the DOE in a Trump administration, Hezir acknowledged the clear issues that may arise, but also provided some optimism. The CFO position, along with many other leadership positions within the DOE, is an appointed position, but he ended with the hope that the future leaders of the department, as well as President-elect Trump, will recognize the importance of government investment in energy research and continue with the proposed improvements.