NATIONAL HARBOR, Md.—Every day the U.S. imports $1 billion worth of oil. Yet, the nation is no closer to weaning itself from such foreign oil than it was 40 years ago when President Carter called energy reform the "moral equivalent of war."

Enter ARPA–e, the Advanced Research Projects Agency–Energy, started in 2009 and tasked with taking scientific findings on alternative energy and turning them into deployable technologies. "The future of the U.S. depends on three securities: national, economic and environmental," said mechanical engineer Arun Majumdar and ARPA–e director at the agency's second annual summit in Washington, D.C., on March 1. "The foundation of all three is innovations in energy technology."

Majumdar came to ARPA–e and Washington, D.C., from Lawrence Berkeley National Laboratory, where he had run the Environmental Energy Technologies Division, leaving his wife and young daughters back in California. Nevertheless, the affable director maintains the enthusiasm and demeanor of Star Trek's Captain Kirk as well as that character's penchant for confrontation, exercised constructively on his agency's grantees and on stubborn facts like the tab for the U.S. dependence on foreign oil—more than $300 billion a year. "In my lifetime, I'd love to shave a few zeros off this number," he says.

So ARPA–e under Majumdar is investing its budget in projects like better batteries for electric cars that could further reduce U.S. demand for oil, cheaper photovoltaics to generate the electricity to store in those batteries, and even technologies dubbed "electrofuels" to turn CO2 back into liquid fuel—reversing combustion, extending oil supplies and limiting greenhouse gas emissions.

The goal is to invent a different future for energy, one that both enables the U.S. to continue to use energy abundantly and spreads it to the rest of the world. "We are bright and we need to make ourselves brighter in a sustainable way. But there are many parts of the world where people have not yet turned on the lights," Majumdar noted. "If we can enable them to turn on the right kinds of lights, that is the biggest business opportunity for the U.S."

Scientific American spoke with Majumdar about ARPA–e, innovation and education after the summit.

[An edited transcript of the interview follows.]

The U.S. government obviously has a large variety of energy research efforts, almost like a large ecosystem. How does ARPA–e fit into that?

If you have a major hurdle, you need assurance of funding to get the brightest people to come on board—scientists and engineers working together. That's the design of a hub, like the sunlight-to-fuels hub at the Joint Center for Artificial Photosynthesis [at Caltech]…. JCAP is trying to understand the science of how to split water…. ARPA–e is a different model. You're translating the science into technology and you have a quick hit. It doesn't mean that it's reaching the market right away after two or three years [of funding], it still will take scaling and all that. But at least you're trying out an idea. The National Academy report [Rising Above the Gathering Storm] that created ARPA–e, the wise thought-leaders behind it felt that a place to go and try out a new, high-risk idea did not exist. [That is] what ARPA–e was created for.

We are saying that if energy is the next Industrial Revolution, and if we are going to be competitive in this globally competitive world and we are falling behind right now—gosh, let's go for it. You need hubs for long-term problems, and you need ARPA–e to look for short-term translation of science into technology.

So what are some of the high-risk projects you are working on?

There's a project from Lawrence Berkeley National Laboratory where they've got a new catalyst for hydrogen production that is molybdenum-based as opposed to platinum-based—so it's cheaper. And that was proven in an inorganic setting. They are taking that catalyst and attaching it to a bug [a microbe]. I don't think they have any idea whether the catalyst will actually work when attached to the bug, because around a bug there are salt concentrations, other proteins and all kinds of things. You've got to just try it out. And that's supposed to produce the hydrogen that the bug will consume to produce electrofuels. Now that's risky. But there are slightly lower risk projects as well.

It's taken ethanol 30 years of subsidies to get to 10 percent of U.S. transportation fuel. How long before some of this high-risk research starts to deliver?

They all have different time scales, different industries, different supply chains, different channels of sales, different industrial costs, different economic factors, different regulatory hurdles. It's not going to happen in the next two or three years in terms of full global scale. It's likely to happen beyond 10 years, products actually in the hands of consumers or placed in the energy infrastructure. My most optimistic estimate is 10 years. But frankly, look at how long the Internet took—from 1968 and ARPANET to the late 1980s. That's 20 years. That's the sort of timescale we should be looking at. This is going to take some time.

Which programs can deliver fastest?

Electrofuels is really in an early stage. I don't think we should expect that anytime soon. I don't know, frankly, which ones will reach market first. Maybe power electronics [devices for regulating electricity supply] might. At the same time, power electronics have different power levels. There's consumer power electronics and consumer power supply, and that's very different from power electronics on the grid and transformers.

How does this help with climate change or other energy-related challenges?

It's environmental security. That's not just climate change, that's pollution…. We are doing things that will affect the climate in a positive way. If you can get solar electricity down at 5 cents per kilowatt-hour, and it scales without subsidies, gosh, I think that's pretty good for the climate. If you are doing carbon capture hopefully at a cost of $25 per ton of CO2, that could be good for the climate as well. And if you are creating electrofuels by grabbing CO2 and using CO2 as a feedstock, that could be good for the climate as well. But let's work on things we agree on, let's move. Otherwise it becomes a stalemate and nothing moves, whereas the rest of the world is moving fast.

What about failures? After all, this is high-risk research. How does that work?

They are not meeting the milestones. Something's not working. So our program directors are spending a lot of time on those to help them solve the problems. Sometimes it comes up to me, and I'm thinking—putting my science hat on—and I'm trying to think as to how to help these guys solve those problems. Our primary goal is to help them reach the milestones and move forward. But sometimes the technology just doesn't work for a variety of unforeseen reasons, because we don't know exactly what the issues are going to be. And so those red alerts, if they do not meet the milestones in the next two or three months—we give them a little window instead of just cutting them off—then we will have to terminate some projects. I would rather take that money and put it back in the treasury.

Are these projects high-risk enough?

Some of them will fail now. And we'll terminate them and put money where it either works or just put it back in the treasury. But some of the failures may happen beyond ARPA–e. It works now, but if you really try to scale the volume or the cost of fuel production, that's beyond ARPA–e. It may fail then and we may not know.

Even 1366 [Technologies, a solar photovoltaic company]—we may call it a success right now because they got private sector funding, they met their milestones, etcetera. But who knows whether that thing is going to be deployed everywhere in the world? That would be big success, producing tens of gigawatts of power using 1366 modules. That would be real success. Right now it's an early success. As I said in my talk these are early signs of success when the private sector comes in but that doesn't mean full success yet. From ARPA–e's perspective, at the end of the two years they will be a success, but there's a long way to go. So I would say we'll see how these red alerts go. There may be some terminations but there may be failures downstream [as well].

Is the ARPA–e timeframe too short to determine whether something is a success or failure?

That's possible. We tell our folks that, look, if something's not working and we terminate a project—don't take it personally. Come back again. We want to help innovators come back again with better ideas, and we will try to support you. Which is why we bring the finalists here [to Washington, D.C.,] and showcase them. These are people we could not fund. These are not failures.

Projects have two or three years with yearly go/no-go milestones. If some manufacturing process just does not work based off an air-conditioning cycle, then, gosh, there's no reason to pursue that until they come up with an idea that will overcome the barrier they are facing. When something's not working, they've faced a barrier that was unplanned. They were hoping to overcome another barrier, which they did, but they face another barrier and have no plans for it. Come back with another idea to overcome that barrier, and then we'll look at it again.

What about cost constraints?

In this case we are trying to create fuel. We know what the target price is. If you can get it at $2 per gallon you're in good shape…. The operational model is that of a Manhattan Project. You had Oppenheimer who was a deep scientist who [was] coordinating the different areas that need[ed] to be coordinated to get there. But there is a target out there in terms of cost [for ARPA–e]. Yes, we're not creating the bomb. We're taking the operational model, getting industry on board as a constraint on cost, and eliminating things that will not make the cut. If you have a catalyst based on ruthenium, that's not going to scale. You might as well get it out of iron then. Then focus on the iron…. The operational model is [also] like DARPA: We hire people, they're there for a limited amount of time, and then they have to leave. We create workshops. I've been funded by DARPA for more than a decade [in the past]. No one ever asked me how much it costs. No one—ever. You bet we ask that in ARPA–e, because it's a different ball game out here in the energy sector. Just because we take the operational model doesn't mean that we're going to create the bomb out there with no cost constraint. It's a different goal.

What's next for ARPA–e in terms of new programs, assuming you continue?

We have the world's largest reserves of natural gas so, yes, I want to go in that direction at some point. There's a lot of work to be done.

How can the U.S. government best drive innovation?

We have the best science and engineering infrastructure in the world—bar none. People still come here to do research and for higher education. Our university system is still the best in the world by a big margin. We just need to support that innovation ecosystem.

But the students in those universities are less interested in science and engineering.

I would love to see more kids go into science and engineering. I would love to see a post–Sputnik-like rise in interest in science and engineering. Post-Sputnik, "rocket scientist" became part of the jargon. I want to see the energy scientists and engineers in the jargon now. That will provide the national security, economic security and environmental security that will provide the security for our future.

How do we spur that interest?

It really starts at the middle school level. We need to promote as much science and engineering at that level. If you lose them at that level, then you have lost a good chunk of people. We need to get them aware of what is engineering and that they can have career—that this is fun. That this is something they can not only survive but thrive. They can actually change the world. That's really important. Those kids are really idealistic. They want to really help.

We had 60 kids in this conference. We made it a point to make sure that students show up from energy clubs across the nation—60 kids from 30 campuses. Last year was our first summit, and we put it together in two months. We didn't have all the planning. We found two or three students showed up. I said, "You have an energy summit without students?" It's unthinkable. This time we made it a point to bring in more students, and now these students will be our ambassadors—I think. They are forming a network of 20,000 students. That is huge. That's the future. These students, I don't have to convince them to get motivated. They're motivating me, they're energizing me. That's the real future. In that sense I'm really optimistic. If these students at colleges who are members of an energy club, if they can excite kids down in middle schools and high schools and make them energy-aware, and say their future is at stake out here and get them excited and make it fun, I think we'll be in good shape.