R&D Cuts Jeopardize Chemical Industry Innovation

The chemical industry didn't build itself on quarterly thinking — it was built on patient capital and long-term R&D investments. The fluoropolymers revolutionizing electronics, the advanced catalysts enabling cleaner processes and the specialty materials making electric vehicles viable all trace back to funded research.

At last week's Chemical Innovation Exchange (CIEX) in Indianapolis, Executive Editor Jonathan Katz reported that industry leaders shared impressive stories of AI cutting R&D timelines from years to months. But these breakthroughs depend on a foundation that's under threat—federal research funding.

Government-funded research at universities identifies new possibilities and solutions. Industry then invests in applied research and development to commercialize these discoveries. This symbiotic relationship has made American chemistry globally dominant for decades.

That dominance is in danger.

In May, the Trump administration proposed significant cuts to R&D spending. The American Chemical Society raised concerns about the cuts, warning that East Asia will soon surpass the U.S. in federal support of research, especially in the critical development phase, which has steadily decreased.

"Taken together, these point to a significant threat to American scientific leadership, competitiveness and innovation," ACS stated.

Additionally, Environmental Protection Agency Administrator Lee Zeldin has dismantled EPA's Office of Research and Development (ORD), which served as the agency's scientific research arm. The impact on chemical industry innovation could be significant, as Chemical Processing columnist Lynn Bergeson noted. The agency's R&D office played a critical role in identifying safer chemical production practices and chemical safety evaluations under the Toxic Substances Control Act.

"Certain functions ORD was supporting are uniquely impactful for the chemical community. ORD was, for example, a leader in the New Approach Methods (NAM) area, identifying alternatives to the use of animals in the testing of chemicals. EPA may continue this work by outsourcing it, as NAMs hold considerable promise in accelerating health hazard assessment, but this is unclear," she said in her column.

While the Trump administration pushes to roll back R&D, the GOP proves it does understand that R&D is essential. The One Big Beautiful Bill Act delivered a quiet but significant win for businesses investing in innovation via tax breaks. Under the bill, businesses can immediately deduct R&D expenses in the year they're incurred rather than spreading the deduction over multiple years.

Pushback Provides Hope

In July, the Senate appropriations committee resisted President Trump's request to slash the budgets of the National Science Foundation (NSF) and NASA science programs, among others.

According to an article in Science, the committee's preliminary vote on the Commerce, Justice, Science and Related Agencies (CJS) Appropriation bill "is the latest indication that Congress doesn't plan to simply rubber-stamp Trump's proposal to cut federal research budgets in 2026."

Instead, the committee developed its own funding framework. Under their bill, NSF's budget would decrease by only $60 million to $9 billion, rather than facing Trump's proposed 57% cut to $3.9 billion. The committee's funding level would likely allow NSF to maintain a new directorate focused on applied research partnerships with nonfederal entities, avoid cuts to other research directorates and preserve popular programs, including graduate research fellowships and funding for 26 states whose grantees receive relatively few NSF dollars.

Funding Deadline Looms

Congress is still debating federal research budgets for 2026 and has not finalized them. The outcome of the final budget remains uncertain, especially with a potential government shutdown on Oct. 1, 2025.

What is certain is that R&D funds are crucial. The chemical industry has thrived for decades because smart people made smart investments. Whether it's maintaining NSF funding levels or ensuring EPA's research capabilities don't disappear into bureaucratic reshuffling, we need to stay engaged. The next breakthrough in catalysis, the next game-changing polymer, the next leap in sustainable chemistry — they're all sitting in labs right now, waiting for the funding to make them real.

While the industry must lead on sustainability and innovation, it also must become vocal advocates for the research infrastructure that enables future breakthroughs. Chemical manufacturers should work through industry associations to make the case that federal research funding isn't just an academic luxury—it's the foundation for American competitiveness.

To be sure, MIT's William Green warned chemical manufacturers against waiting for government mandates to drive innovation. "If you're a research leader in your company, you're supposed to be seeing the future and doing the research now to create the solutions for the problems that you're going to address in the future," he told the CIEX audience.

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