Bigger Thinking, Bigger Investments Needed for U.S. Energy Innovation Leadership

A group of prominent American businessman recently issued five recommendations on how the federal government should address the nations need for energy innovation. The American Energy Innovation Council, which includes Bill Gates from Microsoft, Jeff Immelt from General Electric, Ursela Burns from Xerox, Norm Augustine formerly with Lockheed Martin, John Doerr from Kleiner Perkins Caufield & Byers, and Tim Solso from Cummins Inc., proposes a national oversight board for energy technology policy and billions in funding for energy research, commercialization and pilot projects. These recommendations would help increase U.S. economic competitiveness, mitigate the environmental toll of energy production and improve national security, according to the report.

The council's recommendations include:

• Creating an independent, national Energy Strategy Board — The board would develop and monitor the progress of a national energy plan. It would include directors of related federal programs, technology experts and agency heads.
• Investing $16 billion per year in clean energy innovation — Federal investment in basic and applied energy research should be increased by $11 billion per year, according to the council. The report includes a model budget for energy investment.
• Creating Centers of Excellence with strong domain expertise — These centers, located within American universities and national labs, could join with private sector partners to drive innovating in strategic technology areas and bolster local cluster development.
• Funding ARPA-E at $1 billion per year — The kind of projects targeted by ARPA-E have the potential to be revolutionary, but the program needs more funding and autonomy to fulfill its mission.
• Establishing and funding a New Energy Challenge Program to build large-scale pilot projects — This program would fund a Technology Demonstration Initiative, providing support for large-scale energy demonstration projects. It also would create Technology Assessment Working Groups, which would develop commercialization plans in strategic areas. These public-private collaborations would be based on the SEMATECH model.

This kind of large-scale federal intervention is necessary because the private sector has underinvested in energy technologies, according to the authors. Energy differs from other sections in the long timeline for R&D, the slow turnover in the electrical generation systems and the massive capital expenditure needed for development and implementation. These issues have discouraged investors and businesses from properly pursuing energy innovation. Declining corporate R&D budgets have made the private sector even more reluctant to invest in large energy projects. The federal government must increase its investment if the country is to reduce its dependence on fossil fuels, the council urges.

By targeting energy research, seed-stage companies and pilot projects, the council hopes to create a sustainable pipeline of new inventions. The authors, however, suggest that addition investment would still be needed to stimulate market demand for new energy technologies and to develop a properly-skilled workforce.

The report does not provide a detailed set of recommendations to achieve these goals, but does offer some hints as to what an effective policy would look like. Several members of the council also were involved in the National Academies' Rising Above the Gathering Storm report, which urged reform of K-12 STEM education in the U.S., investment in university research and a stronger campaign to retain international students. These points are reiterated in the new report. Clean and renewable energy portfolio requirements, technology performance standards and CO2 caps are mentioned as possible strategies to spur market demand for innovative energy technologies.

Read A Business Plan for America's Energy Future at:http://www.americanenergyinnovation.org/full-report.