With new funding, NSF’s Regional Innovation Engines are attempting to expand emerging clusters

Over the last month, the National Science Foundation (NSF) has begun the process of extending awards for its inaugural cohort of Regional Innovation Engines, a three-year-old competition designed to secure U.S. leadership in key technologies and bring innovation-led economic growth to more places across the country. While final award negotiations are still ongoing, eight regions are currently set to receive an additional $45 million over the next three years, representing a collective investment of $360 million in new funding.¹

With an average annual budget of $15 million, the third year of the program will double annual funding (up from an average of approximately $7.5 million over the first two years), creating a real inflection point for each Engine and enabling them to expand their activities with some degree of certainty after a two-year trial period.

With each Engine receiving a total of $60 million over its first five years, the program has now become one of the largest federal investments in place-based innovation ever. (The Economic Development Administration’s Regional Technology and Innovation Hubs program, for comparison, awarded an average of $42 million over five years to its first cohort of Tech Hubs.) And as Fiscal Year 2026 obligations appear below the $200 million set aside in January’s Commerce, Justice and Science funding bill, the NSF looks likely to further expand the Engines portfolio with new awardees selected from the 15 finalists announced in September 2025.

At this moment of expansion for the program, it’s critical to understand how Engines are putting the NSF to work. With that in mind, Brookings Metro is launching a project, with funding from the NSF, to document the impact and execution of Engines awards and refine the understanding of the program’s role in the U.S. innovation system.

Driving leadership in key technologies through more regional innovation hubs

The CHIPS and Science Act (CHIPS) of 2022, which created the Engines program, was animated by a bipartisan sense that the United States is losing its leadership position in key emerging technologies and advanced industries, creating both near- and long-term risks for national and economic security.

That shared urgency has only been strengthened through recent experience. The COVID-19 pandemic revealed fragile supply chains for critical high-tech components in manufacturing and pharmaceuticals. Modern warfare playing out in Ukraine and now Iran is demonstrating the need for a reinvigorated defense supply chain that can compete in new technology markets with speed, scale, and efficiency. And the capital investment boom in artificial intelligence signals a new “space race” for superiority, with unknown consequences for the global economy.

There’s also growing consensus that where technology is discovered, commercialized, and produced matters. Brookings’ 2019 report “The Case for Growth Centers” and Jonathan Gruber and Simon Johnson’s “Jump-Starting America” both tie America’s competitive position to the costs of overconcentration. More recently, researchers Craig A. Chikis, Benny Kleinman, and Marta Prato argue that the geographic concentration of innovative firms is reducing the number of places that could benefit from knowledge spillovers.

To that end, “expanding the geography of innovation” is one of the founding mandates for the NSF’s Directorate for Technology, Innovation and Partnerships, which administers the Engines program. The White House’s Office of Science Technology and Policy recently solicited recommendations for the “scaling of regional innovation ecosystems” designed to drive stronger domestic technology innovation and commercial translation in a broader set of places. And similarly, a bipartisan taskforce at the Council on Foreign Relations highlighted the economic security costs of current underinvestment in critical and foundational technologies such as AI, quantum computing, and biotech. Among other recommendations, the taskforce calls for four to six new biomanufacturing hubs to be incubated with federal funding, given how concentrated the sector currently is in a few regions.

Simply put, if we want a more secure economic future, we need more places in the United States where innovation and production happen side by side.

How Engines are intended to accelerate cluster activity and economic opportunity

The NSF’s investments in Regional Innovation Engines are one answer to the challenges of both geographic hyper-concentration and declining global competitiveness in critical industries. They are intended to accelerate the commercialization of new technologies by increasing industry clustering in different regions and putting regional economies in a position to become self-sustaining. More than just investments in “ecosystem building,” Engines are platforms for market making—sitting at the middle of researchers, startup founders, companies, investors, and potential first customers, while designing interventions that increase and accelerate the push and pull forces that drive commercialization.

Unlike past programs designed to spur technological innovation at the national level, the Engines program comes with a unique dual mandate: to accelerate technology commercialization while also creating economic growth in regional economies that have “not fully participated in the technology boom of the past few decades.” By balancing innovation potential with existing need, the Engines program relies on two key assertions: 

• First, that where there is the right mix of potential and capacity, place-based innovation policy can accelerate the development of new hubs of activity. Indeed, in many of today’s innovation hubs, there was an early catalytic investment (often from the federal government) that created the initial center of gravity that eventually became self-sustaining.
• Second, that expanding the geography of innovation means investing in places that the private sector has historically overlooked. By de-risking investments in technological innovation in places on the cusp of competitiveness (where assets exist but commercialization of a key technology is not yet self-sustaining), federal dollars can achieve national technology goals by empowering regional leaders to articulate their own visions for growth.

The original Engines solicitation did not set specific criteria for gauging this balance between existing innovation capacity and local economic conditions (i.e., need). However, each stage of the Engines competition has demonstrated increasingly strong alignment with these core principles. Among the concept proposals submitted, the universe of potential Engines included regions with extremely high levels of innovation capacity and/or extremely low levels of economic need. The selected portfolio showed significantly more balance between these two domains at every subsequent step of the application process, so that the proposals ultimately selected for implementation awards represented regions with medium existing levels of innovation capacity and some degree of true economic need.

It’s too early to identify long-term outcomes from these investments, but there are emerging signs that an Engines designation is driving new activity within their ecosystems. The Future Use of Energy in Louisiana (FUEL) Engine, for instance, has already successfully leveraged its award to support more than $8.5 million in investments toward carbon capture utilization research, translation, and entrepreneurship initiatives across its state; and the Advanced Sensing and Computation for Environmental Decision-making (ASCEND) Engine has awarded more than $3 million in grants toward resilience projects across Colorado and Wyoming. These investments are expected to increase substantially with the new round of Engines funding, as the program’s initial awardees move into the third year of their grant.

Where the Engines are headed and what it means for US innovation policy

With the NSF’s expansion of the Engines program, it’s increasingly important for regional leaders and federal policymakers to understand how it has already seeded and supported U.S. innovation clusters throughout the first two years of implementation.

In that spirit, Brookings Metro will document the Engines’ progress in real time. Over the next year, we’ll be observing the design and execution of new programs from four Engines. In the process, we aim to increase the national understanding of how emerging technology hubs work and how federal funding can help them develop. Ultimately, delivering the long-term goals of the program will require new approaches in funded regions and new appropriations from Congress.

This project adds to a growing body of research on large federal place-based programs. Over the past three years, we’ve documented how regions organize themselves in response to competitive pressure, from Detroit’s adoption of electric vehicle manufacturing to West Virginia’s transition from coal to clean power. As with these past assessments, our work will focus on informing data-driven decisionmaking by mapping Engines’ early implementation and design decisions to begin to answer the core challenges of the program:

• To what extent can place-based funding accelerate the commercialization of key technologies?
• To what extent can those investments lead to sustained competitiveness for a region?
• To what extent can that lead to broad-based opportunity and job growth?

These questions drove the design of the Engines competition, and in turn, awardees are largely tasked with designing and executing programs that deliver across each priority. There’s an inherent sequence here (technology commercialization drives the rest), but the program will fail to achieve its goals if the awardees fail to deliver across all three measures.

These new awards come with new opportunities to learn what works and understand how public investment can accelerate the commercialization of new technologies and expand the geography of innovation in the country.