AMMEX Response to Allegations of "Corporate Welfare"

Policy Brief

Description:
DOE's Industrial Technology Program - Co-Investing in Materials Manufacturing Innovation

The Industrial Technologies Program (ITP) at DOE is meeting its government-established goals [reduced dependence on foreign oil, reduced environmental impact, job growth and retention by advancing industrial competitiveness] by accelerating the rate of technological change in six sectors—glass, aluminum, steel, forest products, chemicals and metal casting. It is an investment shared jointly by government and industry and its benefits accrue to both. ITP should be alive and growing and the notion it is corporate welfare should be dead. Sadly, without drastic change, the reverse will be true.

Dating back through its predecessor programs, ITP was established by Congress in the late 1980's to address specific government objectives:

  1. To reduce US dependence on foreign oil [save energy]
  2. To improve the environmental performance of US materials manufacturers
  3. To increase the competitiveness of US materials manufacturers [job retention/growth]

Advances developed under ITP in all three of the areas above are penetrating deeply into the US economy, as examples later show. At a time when the program's successes should be compelling greater federal investment, the casual use of the term "corporate welfare" by the uninformed on Capitol Hill, has resulted in severe cuts. The purpose of this paper is to clearly explain all aspects of the program so it is no longer possible to associate the Industrial Technologies Program with corporate welfare.

DOE and Energy-Efficiency

The United States has a department of energy in part [some would say "in large part"] to develop technologies that are energy-efficient. This is seen through such programs as FreedomCar, ITP, Clean Coal and the various Hydrogen Initiatives and makes the point energy-efficiency is clearly in the public interest and important public policy. This is also clear in the specific ITP goals above—all of which benefit the public at large [and industry]. It stands to reason then, the development of energy-efficient technology, by definition, is appropriate for investment of federal funds.

The Myth of "Corporate" Welfare

Corporate welfare means companies are receiving the "welfare" [i.e., the federal money]. This is where corporate welfare and the ITP Program really part company. Under ITP, companies don't receive the money, they put money in! Companies are investors, just like DOE. Our industrial participants from steel, glass, metal casting, chemicals, forest products and aluminum share research and development costs with DOE and also are responsible for testing developed technologies in their plants. The research work is typically done in laboratories and universities around the country—would anyone consider a research project at a university which helps 5 students earn their degrees to be inappropriate? Are there exceptions where a company may be a subcontractor for a particular task? Yes, and there are strict rules requiring the sharing of such work with all project partners [ensuring no one company is a sole beneficiary—in fact such a project would never pass the most fundamental project screening criteria].

The key point here is companies put money into the research just like DOE. We are co-investors in projects the government has deemed appropriate for federal funding. We get out benefits at the same time DOE does—when a successful technology is deployed which meets our goals above.

Implementation

Under ITP, each sector has produced a roadmap or priority assessment of the technological advances that will save energy, emit less pollutants and enable competitive advantage, i.e., meet the government-established goals. The requirement that the proposed technologies need to be identified in the roadmaps compels any project funded to be of strategic importance to a sector [e.g., glass, aluminum, etc] and not the pet project of an elected official or one company's CEO. All projects under consideration are tested against rigorous criteria by DOE and industry experts and industry contributes 1/3 to