Energy: Research Vs. Deployment

  • Share
  • Read Later

It’s become fashionable among energy and climate thinkers to call for greatly boosted government investment in energy research, to face up to what Energy Secretary Steven Chu has called America’s “Sputnik moment.” Certainly that was the overriding message from yesterday’s Energy Innovation 2010 conference in Washington that I attended—though it wasn’t the only message. There are a lot of reasons to try to recharge government involvement in basic energy research, and one of the best is expressed neatly in the chart below, which tracks government R&D in various sectors over the past half-century:

As you can see, aside from a brief period in the aftermath of the oil crisis in the 1970s, energy has been just a tiny sliver of the overall U.S research budget, while both health (and especially) defense take up massive chunks. Although spending was bumped up recently thanks to the stimulus—which channeled money into innovative new centers like the Energy Department’s Advanced Research Projects Agency (ARPA-E)—that’s just temporary, and with the growing mania over budget deficits, there’s no guarantee that funding would become permanent. (You can explore our energy research spending—or lack of it—on the neat new tool called the Energy Innovation Tracker.)

In their Post-Partisan Power paper, the Breakthrough Institute, along with representatives from the Brookings Institution and the American Enterprise Institute called for increasing the federal investment on energy from $4 billion to $25 billion annually. This wasn’t just about averting climate change, although that was an important goal. It was about preparing the U.S. for the next great war over innovation and technology leadership—one we’re not well-positioned to fight right now. At the conference yesterday, Rob Atkinson, the head of the Information Technology and Information Foundation (ITIF) noted that a recent report ranked the U.S. 40th out of 40 countries its “rate of progress on innovation.” “The U.S. economy is at an inflection point,” he said. “We’ll have continued decline in competitiveness or we can turn it around. The only way we’ll get there is through innovation.”

But some green analysts have criticized groups like ITIF and the Breakthrough Institute for what they say is focusing on the research side of the energy innovation question at the expense of deployment and energy markets. In a post from yesterday called “Leading in the Clean Energy Deployment Challenge,” Bracken Hendricks and Lisbeth Kaufman of the progressive think tank Center for American Progress note that the effort to expand clean energy technologies won’t be solved by much research funding alone:

The problem with overemphasizing R&D is that it encourages an overly simplistic solution to the very real market barriers slowing the clean energy economy’s development. Simply put, R&D boosters have the right diagnosis but an incomplete prescription for the cure. Building a low-carbon economy depends first and foremost on making clean energy cheap. But clean energy’s cost won’t be cut solely by breakthroughs in the lab.

Hendricks and Kaufman go on to discuss the need to dismantle the barriers to clean energy in the market, the lack of demand and reliable access to capital. That means helping to deploy clean technology in the market now, rather than waiting for the labs to create the perfect solar panel. And they believe that can be done in part by normalizing the politically skewed energy subsidies in the U.S., which saw fossil fuels receive some $72.5 billion in help form the government between 2002 and 2008, while renewables received $12.2 billion. (Of course, the U.S. consumed 57 quadrillion BTUs of energy from fossil fuels in 2009, compared to 5 quadrillion BTUs of biomass and renewables, so maybe that’s not so bad a deal.) But ultimately, Hendricks and Kaufman appear to believe that clean technology can compete on its merits in a fairer, more balanced energy market than we have today, and that it’s important to deploy emerging technology now as a way to force improvements:

The economics and politics associated with clean tech will improve as the clean energy industry matures and more technologies are deployed on a larger scale. Clean energy can more closely follow the example of the PC industry if we recognize the real barriers to industry growth in today’s energy markets. The PC industry did not wait for the smallest, fastest chip. It deployed early stages of the computer to grow a market, and it improved the chip as market demand increased. Using today’s technology we can make tremendous strides. New industries will be born as new technologies are deployed, markets grow, and market risks decline.

In reality there’s a lot more overlap between writers like Hendricks and Kaufman and the prescriptions coming from groups like the Breakthrough Institute than the sometimes combative back-and-forth might reveal. Both call for a surge in neglected basic energy research, along with a reexamination of subsidies and energy taxes, which are too often skewed by politics. (Hello, corn ethanol industry!) Hendricks and Kaufman put a lot of focus on deploying clean tech, but then so do the authors of Post-Partisan Power, which called for billions of dollars for the procurement and development of new energy technology, often through the actions of the Defense Department. It doesn’t have to be research versus development—you can’t have one without the other.

But there are real differences over whether clean technology is ready to be moved into the market now—and just what qualifies as clean technology. The deployists (a word I just made up) believe that by smoothing market entry through innovation “pull” policies like a carbon price or subsidies, you can help wind and solar and similar technologies get the benefit of scaling, which then helps drive the price down over time. Researchists (yes, completely made up) see most clean technology as not really ready for prime time, and they view the dependence of wind, solar and biofuels on subsidies as evidence of that. Nor do they think that the way to spark innovation in these technologies is by getting them out into the private market now—rather, they worry that subsidies could actually end up locking in inferior technologies while squeezing out tech that has more room to grow, but which can’t yet compete with more mature renewables that are aided by those subsidies. So corn ethanol (supported by a powerful political lobby) and on-shore wind (a mature technology that may not have much more room to grow) benefit from billions in government subsidies and through renewable energy standards, but potential longer-term winners like enhanced geothermal remain largely on the sidelines.

So how do we actually move clean tech into the market—assuming we’ve given it enough push from the research end? It’s an open debate. At the conference yesterday, I moderated a panel that discussed just what kind of public policy tools needed to be used to speed the transition to a cleaner energy economy. We need “pull” factors as well as “push” ones. But a carbon price—perhaps the ultimate “pull” factor, evening out the market for low-carbon technologies—isn’t going to happen any time soon, and subsidies and standards can be politically skewed. Yet at the same time, energy isn’t like other areas of innovation where government research has helped lead to new products and new markets, like information technology. Energy is a commodity and one electron is the same as the other if there’s no price on carbon, so there’s little appetite from the market to pay for more expensive clean tech—while computers and cell phones, even when they were initially costly, represented something entirely new. There are good public policy reasons to encourage innovation in energy—climate change, reducing dependence on foreign oil, cutting pollution—but little reason for any consumer to make the change. That’s an enormous challenge for both researchists and deployists.

The Post-Partisan Power folks would have the federal government step in as a customer for new energy technology, not just an investor through research, following the model of the Department of Defense. (For more on that, see a new report called Case Studies in American Innovation by Jesse Jenkins of the Breakthrough Institute, and find out the role the military played in developing your iPhone.) But the Defense Department has been given a wide latitude to fund lots of technologies and pay top dollar for them initially (and been given a ridiculously huge budget) in part because since World War II there’s been a pretty wide public agreement that national security was a major priority that demanded major funding. (There’s a word for this—it’s called the military-industrial complex.) There’s no such consensus yet on energy, although there’s always hope we could create what one speaker yesterday called an “energy-industrial complex.”

Just by believing that energy and climate are pressing problems for the U.S. that need to be addressed by aggressive action, CAP and the Breakthrough Institute and all the rest are carving out political positions that put them on the opposite side of most of the Republican Party, at the very least. (Which, as David Roberts of Grist has pointed out many times, sort of takes the “post” out of Post-Partisan Power.) Giving our energy researchers the money they need to do the work of saving the planet is a necessary first step we all should be able to agree on, even in tough financial times. After that, however, it gets a little more cloudy—and you can bet that politics will be part of the problem and the solution.