03/05/2012 05:18 pm ET Updated May 05, 2012

Next to Dysfunctionality, American Innovation at National Harbor, MD

"The ARPA-E story is the American story," comments Undersecretary of Energy Arun Majumdar. We are only hundreds of yard outside the Beltway -- I can see it from the hotel window. But this conference clearly prides itself on a very different conversation than the one which dominates the "national capital of dysfunctionality," as moderator and Center for American Progress Chair John Podesta dubs it.

If the United States is sitting out clean energy innovation, you wouldn't have known it at the ARPA-E Innovation Summit this week. The 2500 chairs in the meeting room are not enough -- scores of us are draped around the perimeter standing. For my money, Majumdar stole the show -- which is impressive given that he is up against Bill Clinton, Bill Gates, Fred Smith of Federal Express, congressional luminaries like Lamar Alexander and Nancy Pelosi, and former Walmart CEO Lee Scott. But Majumdar has the best of stories -- the U.S. government is investing in innovative risk-takers and they are creating breakthrough innovations.

On the opening day, for example, ARPA-E grantee Envia systems announced a major breakthrough in battery technology -- more than doubling the energy capacity of lithium-ion batteries. If the prototype can be scaled, in fact, the game is over -- electric cars will, within five years, be competitive with internal combustion engines even at gasoline prices much lower than most of the world will face.

Clinton summed up the situation, and closed with an appeal for movement building:

There are some hazards in the innovation enterprise... a lot of people are tempted to say 'well let's just go for (more domestic oil and gas drilling) and forget everything else'. We're the only country in the world with one political party that thinks it's a matter of faith to deny the reality of climate change.... Once people know the facts no one is against this.... But there are still too few people who understand that there are more people working in renewable energy than in traditional energy. There are still too few people who believe that the consequences of climate change can be serious and calamitous, but that there are wildly profitable ways to avoid it. The American people need to know this, so that the intensity of those who support the work of innovation can equal the intensity of those who still seem bent on denying these truths.

And although this is a thoroughly bipartisan crowd, serious work is being done here, challenging solutions are being proposed, and consensus forged. Energy Secretary Steve Chu is asked about the impact of Solyndra's bankruptcy. Chu tells the simple truth -- Congress expected the federal loan guarantee program to back both winners and losers, set aside $10 billion to cover the cost of the latter, and Chu is confident his ultimate charges will be only 1/3 of what was expected. When have you heard of a major government program coming in 2/3 UNDER budget -- but DOE's loan guarantees are poised to do exactly that.

But listening to Gates and Lee Scott, this doesn't sound like good news. Gates says that in a serious effort aimed at innovation 90% of the efforts would fail. He wants to double what we are currently spending. He thinks Chu and Majumdar have one hand tied behind their backs. And Scott makes mincemeat of the argument that you shouldn't pick winner and losers -- the heart of Big Carbon's assault on federal support for clean energy innovation. He tells the story of how Walmart backed Small and Mighty All, the first of the super-concentrated washing detergents. The company was worried that if Proctor & Gamble's TIDE kept selling diluted detergent -- costing Walmart more to ship and wasting fuel -- customers would flock to the bigger container. So Walmart made sure that customers understood just what a bargain the concentrated product was -- and TIDE had to follow suit. "We played favorites with the innovator," Scott said. Which of course, is exactly why the carbon lobby and their right-wing allies are fighting so hard to kill federal innovation programs that play favorites -- they want to slow innovation, whatever the cost to the nation.

After all, as Fred Smith, hardly a wild-eyed radical, points out, the $300 billion the US spends each year importing oil is not the result of market forces:

The oil trade is a cartel, and if you operated that way in the U.S. you would go to jail. So the US cannot solve the problem of oil dependence with market solutions because there is no market.

But this cartel makes a lot of money for folks like the Koch Brothers who don't even pay dues.

So, bluntly, there are solutions: the U.S. can lead; government needs to drive innovation from the top, as individuals and the private sector find solutions from the bottom; and serious people of differing perspectives can come together in the national interest.

In my next posting, we'll compare this approach with the one being advocated by the Come-Back Kid, Newt Gingrich.