While biomedical research receives nearly $60 billion in private investment and $30 billion in public investment through the National Institutes of Health, investment in energy R&D leaves a huge innovation gap. Private sector spending is less than $3 billion annually with the government contributing just $5 billion per year more. A National Institutes of Energy and massive increase in federal clean energy spending is needed to fill the energy innovation gap and jumpstart a clean energy revolution.
Friday factoids time: The U.S. biomedical and pharmaceutical industry invests between 10-20 percent of revenues in R&D and new product development, spending $58.8b on R&D in 2007. The U.S. government adds an additional $30 billion per year investment in biomedical R&D through the National Institutes of Health.
In contrast, the U.S. energy sector invests well below $3 billion annually in R&D in an industry with well over a trillion dollars in annual revenue. The energy sector's R&D spending as a percent of revenues - call that figure the industry's innovation intensity - is just 0.23%. That compares to a national average innovation intensity across all industries of 2.6%, or ten-times greater than the energy-sector's innovation intensity. And it pale sin comparison with the innovation intensity of leading technology and innovation-intensive sectors including biomedical technology (10-20%), information technology (10-15%), and semiconductors (16%).
This downright paltry private-sector energy innovation spending leaves a massive energy innovation gap that the U.S. government barely begins to fill, investing only about $5 billion annually in energy R&D. That's barely more than half the levels spent on public research to pursue clean and affordable energy alternatives during the late 1970s and early 1980s. The scale and urgency of our national energy challenges have clearly grown since then, yet the national commitment to energy innovation has moved in the wrong direction. Public R&D spending on health care ($30b) and defense ($80b) signal the scale of true national innovation priorities and begs the question: when will the U.S. get serious about investments in clean energy innovation? When we do, a new National Institutes of Energy and a major increase in federal energy R&D investments are needed to fill the energy innovation gap and spur a clean energy revolution.
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For more on a National Institutes of Energy, see our archives here or the following selected content:
(All factoids and figures from either the BTI, Third Way report,
Jumpstarting a Clean Energy Revolution with a National Institutes of Energy, or Charles Weiss and William Bonvillian's excellent book,
Structuring an Energy Technology Revolution)
The R&D budget for clean tech is small because the economic model of capitalism basically fails when there is no profit motive, and clean tech does not improve the bottom line. A groan, not a cheer, would greet a breakthrough because the industry would have to spend money to install it, and rate hikes to cover the increased cost of electric power would face stout resistance. The Senate has already voted that any climate legislation cannot result in a rate hike.
Posted by: Wilmot McCutchen at October 12, 2009 6:17 PMEveryone wants to play make believe with forest offsets (e.g. the Kyoto Clean Development Mechanism and Waxman-Markey) which just happen to offer a swindling opportunity to bail out Wall Street.