By Alex Trembath and Devon Swezey.
On Tuesday, the American Energy Innovation Council (AEIC) -- composed of industry titans like Microsoft Chairman Bill Gates, Bank of America Chairman Chad Holliday and leading venture capitalist John Doerr -- released a follow-up to their 2010 report "A Business Plan for America's Energy Future." The new report, "Catalyzing American Ingenuity: The Role of Government in Energy Innovation," doubles down on the Council's earlier calls for increased and sustained public investment in clean energy technology, and offers new ideas about how greater energy innovation investment can be paid for in a new era of fiscal austerity.
In the wake of the high-profile bankruptcy of California solar company Solyndra, government critics are attacking federal investment in clean energy innovation, arguing that such decisions should be left to the "free market." But in their new report, these business leaders and entrepreneurs argue that government investment in energy innovation is key to realizing a clean energy future.
In addition to Gates, Holliday and Doerr, the AEIC boasts membership from former Lockheed Martin CEO Norm Augustine, Xerox CEO Ursula Burns of Xerox, General Electric CEO Jeff Immelt and Tim Solso, CEO of Cummins Inc. In the report, these executives highlight the tremendous impact that federal investment has had on technological innovation and economic growth throughout American history:
The federal government has played a central role in catalyzing and driving innovation and technology deployment throughout the history of the United States -- often with strong results. This kind of support took a variety of forms. In the 19th century government scientists mapped out natural resource endowments and Army officers surveyed routes for railroads, including helping to plan and sometimes manage their construction. In the early and mid-20th century, programs such as rural electrification and massive public works projects, such as the construction of the Interstate Highway System, enhanced mobility and connectivity and directly or indirectly contributed to the development of new technologies and industries... government efforts to develop guidance systems for the military played a role in the development of digital computers and microchips. Navy support for aviation technology led directly to Boeing's 707 -- one of the first major commercial jetliners. The Defense Advanced Research Projects Agency (DARPA) created a distributed network of computers called ARPANET, which laid the early foundation for the internet. The U.S. government played a direct and indispensable role in launching the commercial nuclear power industry.
Indeed, as the Breakthrough Institute has documented in "Where Good Technologies Come From," the federal government has made key investments in most of the technologies we take for granted, including the personal computer, the Internet, the jet engine, GPS, cell phones, the biotechnology industry, and countless blockbuster pharmaceutical advances. Today, as the AEIC report makes clear, such investment is urgently needed to catalyze breakthrough innovation in clean energy technologies in order to make them cheaper, more reliable, and therefore more widely adopted around the world.
Critics tend to ignore this history, claiming that innovation is solely the domain of the private sector. Following Solyndra's bankruptcy, these critics have insisted that "the government should not play venture capitalist." AEIC member John Doerr, perhaps the nation's most well known venture capitalist, sees things differently. Doerr writes, "America must embrace risks in innovation and invest heavily in R&D to create a full pipeline of good ideas." Echoing what we wrote after Solynda closed its doors, the report recommends that federal energy innovation investment "focus more on overall program success than on individual project success and emphasize the value in calculated risks."
In addition to issuing a robust defense of federal investment in energy innovation, the AEIC report also presents smart suggestions for strengthening some energy technology programs and reforming others. They support the federal energy loan guarantee program (which is under increasing scrutiny after Solyndra's bankruptcy), and call for boosting the budget of ARPA-E, the government's innovative, high-risk energy research agency, to $1 billion annually from around $200 million today. They also support a new Clean Energy Deployment Administration to aid the commercialization of first-of-their-kind innovations and mobilize significant private-sector capital in scaling up advanced energy technologies.
The Council also urges reform of the inefficient process by which the government conducts national energy policy, warning that "uncertain annual appropriations, short-term tax credits, and one-time spending injections are all unsuited to creating the sustained, predictable funding stream needed to bolster the country's innovative infrastructure." Moreover, as Breakthrough wrote recently in the National Journal, many of the federal programs supporting clean energy industries are set to expire in the next few years, which will likely precipitate a crash in the industry.
In order to avoid the perpetual boom-bust cycle in clean energy, the U.S. government must increase the kinds of energy innovation investments outlined in the AEIC report. These investments must be rationalized around driving innovation and cost declines to make clean energy cost-competitive without subsidy.
Given the tight fiscal environment, the Council recommends a number of revenue streams that could fund innovation investment without adding to the budget deficit, including revenues from domestic oil and gas production, redirecting existing energy subsidies for mature industries, or small fees on electricity usage.
Ultimately, however, these leading business executives make a forceful case that America's current "budget dilemma," as they call it, is no reason to delay in boosting funding for energy innovation. "Supporting innovation," they write, "is an investment, not a cost." Indeed, given the country's economic malaise, there is no better time to make growth-enhancing investments that could catalyze a new era of American economic leadership in a key global industry. Critics of government investment in energy innovation would do well to listen to these titans of industry, and to heed their recommendations.
To read the full AEIC report, click here (PDF).
Follow Devon Swezey on Twitter: www.twitter.com/devonswezey
David Fenton: Solar Through the Looking Glass
Steven Cohen: The Green Economy Will Easily Overcome Solyndra's Bankruptcy
Sure, occasionally those interests dovetail when a product or service provides a larger societal benefit but ever since the railroad and mining eras, the system has been gamed to favor Robber Barons (you say "titans") which costs the rest of us a fortune, even though it's our money that funded the entire research process!
What is needed now in clean tech, contrary to what profiteering mercenaries claim, is the PROVEN solution of PACE loans and German-style generous feed in tariffs so that our BUILT environment, not our healthy natural environment, can form the centerpiece of a DEMOCRATICALLY-OWNED, affordable, reliable renewable revolution of micro-grids, efficiency upgrades, passive heating/cooling and point of use clean energy generation with storage solutions. The comparatively tiny nation of Germany managed to singlehandedly force the price of PV down 50% in 5 years by using this FIT tool and now every civilized country on earth uses a version of it EXCEPT US.
So sure, let's fund R & D, but let's simultaneously implement programs so that the R & D is directed in a way that WE benefit, not that we pay, then we pay again, then we pay again, which is the current model.
http://en.wikipedia.org/wiki/Feed-in_tariff
all the US programs have failed other than the microscopic Gainesville program, because the basic principle of "cost of generation" was ignored in favor of some pro-utility "market referent," which undervalues rooftop solar and discourages democratic, decentralized ownership in favor of monopoly-owned central-station generation which more often than not destroys functioning healthy open spaces. no surprise, but we need to get it changed.
Paul Gipe at WindWorks is obsessed with FITs, although, like many FIT people, does not mind (or even approves of) FITs being set for Big Solar, Big Wind, etc. I don't want to encourage projects that kill off wilderness, so I would restrict premium payments to projects within the built environment or sited on EPA Re-Powering America's Land sites (Superfunds, Brownfields, etc. near transmission).
http://www.wind-works.org/
http://www.epa.gov/renewableenergyland/
hope this helps - Germany has installed 15,000 MW of PV on rooftops alone in the past 6 years, and brought the price of PV to half what it was at the beginning of that period. imagine what the US could do with the same program!
The average American worker will spend about 16 cents of every spendable dollar on some form of energy expense.
SOLUTON; Our government should provide seed money, not over 1 million dollars, to any company that can rationally present a plan to create a stand alone, zero-polluting and affordable energy creating machine that isn't powered by any fossil fuels. We know that electromagnetic forces are powerful forces throughout our universe, can we create a machine to capture or create this energy?
In America we have come to be able to own all of our physical necessities: our homes, cars, TVs, computers, boats, water wells, farms,...everything but our own energy creating machine that could power everything....Our government was able to create the atomic bomb in less than three years, why not start moving seed money to create the energy machine project? This over 100-year rule by the carbon-combustion engine must come to an end, for in doing so, the average worker would have thousands of more dollars every year to spend on something other than fossil fuel energy. It's way past the time for our government to start planting small seeds for ideas to create somthing really BIG!
Bill Gates invests in green car tech:
http://mashable.com/2010/07/14/bill-gates-car-engine/
Bill Gates invests in algea fuel tech:
http://m.cnet.com/Article.rbml?nid=10043996&cid=null&bcid=&bid=-54
Bill Gates invests in green tech fund:
http://m.cnet.com/Article.rbml?nid=10439785&cid=null&bcid=&bid=-54
http://m.cnet.com/Article.rbml?nid=10043996&cid=null&bcid=&bid=-54