Stimulating U.S. Technological Innovation in Energy
In a time of increasing energy costs and the challenge of global warming, Charles Weiss and William Bonvillian presented a new framework for U.S. support of energy technologies. In their discussion of these issues on November 29th, 2007, they laid out a comprehensive plan for governmental and private sector cooperation to advance the commercial innovations that otherwise could take a few decades to reach market.
Charles Weiss, a Distinguished Professor at Georgetown University, began by emphasizing the huge effort that will be needed to confront the complex energy problem. Governmental investment should be of the same scale as the Manhattan and Apollo projects, but within a different structure. And, with the impossibility of seeing which technologies will be necessary, supportive policies should be as technology-neutral and broad as possible.
Left to the markets alone, innovation will not respond quickly to high energy prices, given the current commitment to fossil fuels in the form of existing infrastructure, public opinion, and government subsidies. Between the years of 1950 and 2003, government subsidies for oil, as an example, totaled $300 billion. Further, because there is a lack of political will at this time for demand-side policies – carbon taxes, cap and trade schemes, and strict regulatory initiatives – the best aim right now is supply-side government support – research, development, and the forging of public-private partnerships.
Weiss explained that this "multidimensional challenge requires huge investments," but clarified that the government can most effectively stimulate innovation through partnerships with the private sector, not through command and control. Drawing on past examples of governmental support, which furthered the 5 major 20th-century technology waves (aircraft, nuclear energy, computing, space, and the Internet), investment should be focused on pushing energy technologies from research to widespread use.
William Bonvillian, Director of the Washington Office of the Massachusetts Institute of Technology, outlined the detailed framework that he and Weiss have in mind. The first step is to describe energy technologies by their "launch paths" – the way that they will move from initial research to full market use. The categories include:
- Experimental technologies needing long-term research (fusion, hydrogen fuel cells)
- Disruptive innovations to be launched in niche markets (solar photovoltaic energy systems, wind for off-grid power)
- Technologies that face immediate competition, but are acceptable to manufacturers (batteries for plug-in hybrids, enhanced geothermal)
- Technologies that face immediate competition, and are unacceptable either politically or industrially (carbon capture and sequestration, biofuels, nuclear power)
- Incremental advances in terms of conservation and improved efficiency (improved internal combustion engines, building technologies, appliance standards)
- Advances in manufacturing technology and scale-up to lower production costs
The second step is to tie policy packages directly to these categories. The key in this stage is to avoid technology-specific policies. Bonvillian explains that currently each technology, like corn ethanol, for example, is trying to carve its own path, which will "jeopardize optimal advance" toward energy innovation. The policy packages he recommends are:
- Front End Support, such as direct research and development, education, training, and private-public partnerships.
- Back End Support ("carrots"), like tax credits and loan guarantees.
- Back End Regulatory and Related Mandates ("sticks"), such as standards and emission taxes, especially for contested technologies, which industries will have to be told to adopt.
The final step of the new supportive framework is to fill gaps in existing support, especially through the establishment or enhanced funding of:
- 1) The Advanced Research Projects Agency – Energy (ARPA-E) Act, which has already been passed and needs additional funding. Additionally, it can be improved by creating an island-bridge relationship – making it independent enough to avoid bureaucracy, but still be supported by the Department of Energy.
- 2) A Governmental Corporation, whose main role would be financial, supporting the scale-up of manufacturing and enhancing the flow of credit to conservation and efficiency (looking to the example of Fannie Mae).
- 3) A Roadmapping Think Tank, which would encourage many, varied technologies by updating categories of technology launch and correlating new government policies.
Bonvillian and Weiss recognized the challenges this framework faces, but reiterated that a comprehensive and broad-reaching plan is necessary to deal with the United States' complex energy system. Moving forward will require "generations of innovation" and the "simultaneous launch in several private sectors." To do it right, we will have to avoid relying on favored technologies ("silver bullets"), pork-barreling, and scaling up technologies before they are ready. A strong effort must be made to "confront the opposition of incumbent technologies."
Finally, this effort will require strong presidential leadership.
In further discussion with the audience, Bonvillian and Weiss acknowledged the challenge of gaining political support and the complexity of coordinating the private sector. They responded by noting the importance of using the example of past technology waves and organizing private support sector by sector. Optimistically, there are already political leaders and corporations moving in the direction of support for technological innovation. And, the energy challenge is an opportunity for the U.S. to provide global assistance and reap economic gain, as new and niche markets open up in other countries. Yet, we need an overarching framework to move forward successfully.
A final note from Bonvillian was that we are already behind in dealing with the energy problem. Difficult though it may seem, moving forward with a huge and comprehensive innovation framework is necessary.
Drafted by Jacqueline Nader