The U.S. wants to spend more of its $3bn energy research budget on electric vehicles to help reduce oil imports and pollution.
A major review of Energy Department research spending is due to be unveiled and is expected to move research funding away from clean electricity and biofuels towards electric vehicles and modernising the power grid.
The first-ever "Quadrennial Technology Review" prioritises research that can be commercialised 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," said Energy Secretary Steven Chu, a Nobel-winning physicist, 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 $180m in fiscal 2011 and which ends this week.
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 $3bn 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 per cent 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 per cent of its spending geared to the research, the review said.
Only 9 per cent of its research spending went to electric vehicles, and 4 per cent 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 per cent 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.