WASHINGTON (Reuters) -- The U.S. Energy Department wants to devote more of its $3 billion research budget to get more electric vehicles on the road, a strategy it sees as making the biggest difference in reducing oil imports and cutting pollution.
Energy Secretary Steven Chu is due to unveil the results of a major review of research spending on Tuesday, one that could shift research dollars away from clean electricity and biofuels towards electric vehicles and modernizing the power grid.
The first-ever "Quadrennial Technology Review" prioritizes research that can be commercialized within 10 years, and research that could make a substantial dent in oil use and greenhouse gas production in the next two decades.
"The stakes are high for our country, and I am optimistic that we can still lead the world in technological innovation," Chu, a Nobel-winning physicist, said in an introduction to the 168-page report.
Chu, who ran one of the Energy Department's national laboratories before his appointment, has come under scrutiny for his "clean energy" advocacy after a failed government investment in a solar company that filed for bankruptcy.
The review does not address loan guarantees that the Energy Department uses to help private-sector companies sell clean energy technology -- a program that was worth $180 million in fiscal 2011 and which ends on Friday.
The review said the Department of Energy needs to make sure it does not get too far ahead of the private sector in its research spending, which totaled $3 billion in fiscal 2011.
"Currently DOE focuses too much effort on researching technologies that are multiple generations away from practical use," said the review, which gathered ideas from more than 600 people in industry, academia and government.
But the department will reserve up to 20 percent of its funding for "out-of-the-box" research that private sector companies shy away from, the review said.
In fiscal 2011, the Energy Department "underinvested" in transportation with only 26 percent of its spending geared to the research, the review said.
Only 9 percent of its research spending went to electric vehicles, and 4 percent to making vehicles more fuel efficient, with the remainder spent on alternative fuels.
The DOE will focus on technology that does not require new fuel-station infrastructure, and hone in on advanced biofuels for heavy-duty trucks rather than the "mature" ethanol industry, the review said.
Clean electricity accounted for 51 percent of the department's spending, but the DOE in future will instead invest a greater proportion of its budget on projects that help modernize the aging power grid, and make buildings and factories more energy efficient, the review said.
The department will continue to fund carbon capture and storage research because its fits with existing power infrastructure, and will focus on engineering support for licensing a new type of nuclear reactor known as the small modular reactor.
"The Department will give priority to research on technologies that can be operated economically with low water consumption, including solar photovoltaic and wind," the review said.
The review is designed to provide longer-term planning for budgets, which must go through annual negotiations between the executive branch and Congress, and is modeled on similar efforts by the Defense Department.
Chu and top Energy Department officials led the review, and are using its results to guide its planning for fiscal 2013 -- a budget proposal that will be released early in 2012.