[Editor’s note: Scott Wolfe wrote this article with Edward W. Correia, counsel in Latham & Watkins’ Washington, D.C. office.]
On February 17, 2009, President Barack Obama signed into law the largest funding bill in the history of the United States, the American Recovery and Reinvestment Act of 2009. The law provides almost $800 billion in spending to stimulate the recovery of the U.S. economy, a large portion of which is directed toward encouraging the development of energy in ways that protect the environment. The recovery act expands upon a number of existing programs and creates some new ones. Startup companies that are focused on cleantech, as well as venture capital firms that are interested in investing in cleantech companies, should explore the opportunities created by this highly significant legislation.
The federal government has always been an attractive supplemental funding source for cleantech technology, particularly because of the long-standing public interest in developing manufacturing and energy-producing technology that protects the environment. The federal government administers a number of research grant programs through various agencies. Most federal funds are provided to universities and other non-profit research institutions. However, some programs make research funds available to for-profit entities. That has been true, for example, in the case of Small Business Administration research and development grants to small businesses developing cutting-edge technology. These types of programs have been expanded by the economic stimulus package and now include, for example:
—$3.4 billion for the Department of Energy (“DOE”) to fund R&D on fossil energy, clean coal and carbon capture projects
—$2.5 billion for DOE to fund R&D on energy efficiency and renewable energy
—$2.0 billion for manufacturers to develop advanced batteries
—$400 million in additional funding for the projects to reduce foreign imports of energy
The recovery act also includes $6 billion in new funds for
