This morning, the Advanced Research Projects Agency for Energy (ARPA-E) announced its latest round of funding, the fifth since the program was first funded by the American Recovery and Reinvestment Act in 2009. ARPA-E is awarding $156 million to 60 projects around the nation, investing in innovative research in biofuels, battery and thermal storage, solar technology, the electrical grid, and other clean energy technologies.
This brings total ARPA-E investment to $521.7 million in awards to 180 different projects, many of which are already showing strong results. According to the Department of Energy, 11 of these ARPA-E projects have already attracted a cumulative $200 million in additional private capital investment.
Modeled after DOD's Quadrennial Defense Review, the new QTR proposes long-term, comprehensive strategies for clean energy technology research and investment.
Today the Department of Energy released the first Quadrennial Technology Review (QTR), a new report that recommends many of the same investment and competitiveness strategies presented by the Breakthrough Institute. Modeled after the Defense Department's Quadrennial Defense Review, the QTR was commissioned last year by the President's Council of Advisors on Science and Technology and represents what Energy Secretary Steven Chu calls "the necessary first step of a multi-agency Quadrennial Energy Review that could dramatically improve the integration and effectiveness of the government's energy policy."
The QTR establishes six categories for modernizing and improving our energy portfolio:
A new ballot proposal is circulating around California to shut down the state's two remaining nuclear power plants in San Onofre and Diablo Canyon. The players and circumstances of this campaign are reminiscent of the 1989 closure of the Rancho Seco nuclear plant in Sacramento, California.
The Rancho Seco nuclear power plant, shuttered in 1989, had the capacity to provide power to 916,000 homes. This is 3000 times as much electricity as is provided by the 2-MW solar power plant that has replaced it, which occupies approximately the same footprint by area.
There remains a startling unawareness of the role government has played in game-changing technological innovations. Expert scholars have weighed in recently on this "submerged state" phenomenon.
I recently engaged in a discussion with David Zetland, a former economics professor of mine, on the value of public investment in technology (NB: I feel authorized to re-publish his and my comments because they were originally published on his public blog). It's worth noting that his blog, Aguanomics, is spectacular and I enjoy reading it every day.
Compelled by his assertion that the Solyndra case proved government investment is a failure, I pointed out that without government investment in technological innovation, we wouldn't have jet engines, cell phones, the Internet, any major forms of energy generation, and many other game-changing technologies as they exist today. He gave a thorough response, which I will summarize by pulling out this key quote:
Republican Senator Lisa Murkowski's recent endorsement of innovation-focused federal policy resonates strongly with the framework outlined by the Breakthrough Institute in the 2010 report "Post-Partisan Power."
In a recent speech at the Renewable Energy Technology Conference & Exhibition, Senator Lisa Murkowski (R-AK) outlined a thoughtful and well-reasoned energy policy strategy built on a limited but targeted role for government, with self-funded programs rationalized around an innovation-focused strategy to make America's energy system "clean," "diverse" and "affordable." Her words strongly recall the proposals outlined in "Post-Partisan Power," a collaborative report by scholars from the Breakthrough Institute, American Enterprise Institute and Brookings Institution, which argued for "a limited but direct approach to energy innovation" that strongly resonates with Sen. Murkowski's remarks.
As the ranking Republican on the Senate Committee on Energy and Natural Resources, Murkowski's words carry great weight. Instead of echoing the familiar Republican attacks on federal technology investment as "picking winners and losers," she brings a historical literacy and an intelligent policy framework to the debate.
Before job creation, stimulus, or even direct emissions reduction, innovation should be the primary directive of national climate and energy policy, and is essential to achieving these economic and environmental goals.
Originally posted at the Innovation Policy Blog. By Matthew Stepp, Clean Energy Policy Analyst at ITIF and Breakthrough Generation 2010 Fellow.
The national energy and climate policy debate is broken. If it doesn't get fixed, any new policy at the city, state, or national level may very well fail to address America's energy challenges in any meaningful way.
In the wake of Solyndra, innovation policy remains critical.
So it's time for a recalibration that makes innovation the driving goal of our default energy and climate policy choices. In doing so, the policy debate would become a more cohesive discussion on what correct, targeted long-term public investments should be made; whether our deployment policies are correctly aligned with our technology development policies, and whether there is synergy among our energy policies that creates a competitive U.S. energy market without long-term policy support. To be clear, this is not saying R&D is the only policy needed. Making innovation the default choice ensures that our suite of policy choices - from basic science through market creation - are correctly working together and are receiving the right amount of support to boost innovation, thus affordable clean technologies and economic growth. But doing do isn't straightforward.
With global energy intensity on the rise, investing in a portfolio of clean energy technologies is the clearest path to a prosperous clean energy future.
New analysis from the WorldWatch Institute shows that energy intensity of the global economy has been on the rise for the past two years, reversing a decades-long trend of increasing energy efficiency. As computerized and digital services have paved the way towards technological innovations and the "knowledge economy," global economic energy intensity has declined an average of 0.8 percent per year since 1981. However, since the economic crisis of 2008, the energy inputs required to produce the same level of economic output has been increasing, by 1.35 percent in 2010 alone.
In the debate over climate legislation in 2009 and 2010, it was conventional wisdom that a price on carbon was the sine qua non of effective climate policy. All Very Serious People knew that you could not reduce carbon emissions or drive clean energy innovation without a price on carbon, either through a carbon tax or a cap and trade system.
Textbook Economics: Increase the tax, reduce the quantity. See how simple it is?
Indeed, leading venture capitalist John Doerr used to travel around the country hammering home the three top things that the government needed to do to catalyze a clean energy revolution. In order, they were: 1) put a price on carbon, 2) put a price on carbon and 3) put a price on carbon.
How the times have changed. In a piece posted over the weekend, Tyler Cowen, a prolific blogger and card- carrying economist at George Mason University, writes that there are a number of reasons--10, in fact--why the case for a carbon tax is not as airtight as its advocates claim:
1. Other countries won't follow suit and then we are doing something with almost zero effectiveness.
2. It may push dirty industries to less well regulated countries and make the overall problem somewhat worse.
3. There is Jim Manzi's point that Europe has stiff carbon taxes, and is a large market, but they have not seen a major burst of innovation, just a lot of conservation and some substitution, no game changers. Denmark remains far more dependent on fossil fuels than most people realize and for all their efforts they've done no better than stop the growth of carbon emissions; see Robert Bryce's Power Hungry, which is in any case a useful contrarian book for considering this topic.
4. Especially for large segments of the transportation sector, there simply aren't plausible substitutes for carbon on the horizon.
5. A tax on energy is a sectoral tax on the relatively productive sector of the economy -- making stuff -- and it will shift more talent into finance and other less productive sectors.
6. Oil in particular will become so expensive in any case that a politically plausible tax won't add much value (careful readers will note that this argument is in tension with some of those listed above).
7. A carbon tax won't work its magic until significant parts of the energy and alternative energy sector are deregulated. No more NIMBY! But in the meantime perhaps we can't proceed with the tax and expect to get anywhere. Had we had today's level of regulation and litigation from the get-go, we never could have built today's energy infrastructure, which I find a deeply troubling point.
8. A somewhat non-economic argument is to point out the regressive nature of a carbon tax.
9. Jim Hamilton's work suggests that oil price shocks have nastier economic consequences than many people realize.
9b. A more prosperous economy may, for political and budgetary reasons, lead to more subsidies for alternative energy, and those subsidies may do more good than would the tax. Maybe we won't adopt green energy until it's really quite cheap, in which case let's just focus on the subsidies.
10. The actual application of such a tax will involve lots of rent-seeking, privileges, exemptions, inefficiencies, and regulatory arbitrage.
Economists like to say that a carbon tax would "maximize economic efficiency," but this is only true if we could somehow institute a harmonized global carbon price. Such an outcome was always a fantasy but is especially so today given the cantankerous state of international climate negotiations.
As readers of this blog know, the Breakthrough Institute has long argued that there are political limits to raising the price of carbon, especially in the developing world. Yet in order to have any significant effect on demand for low carbon energy technologies, the price of carbon would need to be higher than any political economy has been willing to bear. Moreover, a strictly price-based comparison between clean and dirty energy ignores many of the other non-market barriers that must be solved for clean energy to adopted on a meaningful scale, such as regulatory and infrastructure hurdles, issues with intermittency, technology risk, and other barriers. A carbon price may encourage a switch to already available mature technologies, but it won't do much to encourage the development of new innovations that will be necessary to displace fossil fuels.
What's the alternative? As Cowen notes, "maybe we won't adopt a green energy until it's really quite cheap." For the last seven years, the Breakthrough Institute has articulated, and continues to enhance, a strategy that is focused explicitly on making clean energy cheap by driving radical innovation in clean energy technologies. And that innovation, as history shows us, is catalyzed first and foremost by epic public investments.
Fortunately, energy innovation has moved into the mainstream. Even John Doerr, the carbon price devotee, has become a proselyte to the energy innovation agenda, and as part of the American Energy Innovation Council (AEIC) has called for a tripling of federal investment in energy innovation to $16 billion per year.
To be sure, the old guard will continue to clamor on about the immutable centrality of a carbon tax. Witness New York Times Columnist Tom Friedman's incoherent broadside against federal investment in clean energy in favor of carbon price fetishism.
Yet with leading economists and business leaders openly discussing the inadequacy of carbon pricing and the need for major investments in clean energy R&D, demonstration, and deployment, it's clear that while carbon pricing will undoubtedly be revived in the future, the energy innovation agenda is here to stay. After years of failed efforts with regulation-centered energy policy, many more groups are shifting their intellectual capital toward the difficult work of structuring energy innovation policies to catalyze a clean energy revolution. And that's something that any serious climate advocate should support.
India is at a political, environmental, and economic impasse -- and the common denominator is coal. According to recentreports, India simultaneously has too much coal and not enough, a problem that results from the collision of a variety of factors: rising energy demand, greenhouse gas emissions, and environmental degradation; environmental regulations on coal productions, bureaucratic red tape, and poor infrastructure that appear to be motivating coal producers to import; and limits to the potential for clean energy deployment to keep pace with the demands of an emerging economy.
While the crisis is largely political, one thing is clear: over the long term, an intensifying coal shortage is likely to drive the cost of electricity up and India's energy poor are likely to suffer the most.
India's dependence on coal will continue to grow for 30 years, experts say. Proposed nuclear power reactors will take many years to complete, and renewable-energy sources can, at best, light up rural homes and streetlights but not power factories, said Jaiswal, the coal minister.
"We have solar energy for six hours a day. But it can light only two bulbs. If the coal can bring 24 hours of electricity to our homes, my children can study better, and I can buy a television," said Amme Lal, from Morga village in Chhattisgarh, who was taking home on his bicycle logs from the forest for cooking fire. "But I have also seen how sad coal mines look -- all black, no trees, fumes rising."
Following the Fukushima-Daiichi crisis in Japan, the German government announced plans to abruptly shut down all of its nuclear power capacity by 2017, claiming that it could still achieve its low-carbon energy goals without its installed nuclear power plants. But...
Following the Fukushima-Daiichi crisis in Japan, the German government announced plans to abruptly shut down all of its nuclear power capacity by 2017, claiming that it could still achieve its low-carbon energy goals without its installed nuclear power plants. But new analysis from Spiegel Online shows that Germany is now relying on imported nuclear power from France, the Czech Republic, and other neighboring states to replace its prematurely retired capacity. From Spiegel's analysis:
The German government's 180-degree turn in nuclear policy has helped breathe new life into Europe's energy industry -- though not always to Germany's benefit. The country has gone from being an energy exporter to an energy importer practically overnight, which brings along with it a number of negative consequences for its economy, consumers and security.
By Alex Trembath. This post was originally published at Energetics.
The last few weeks have been pretty cool, if your definition of cool, like mine, involves a bevy of new reading materials extolling the benefits of public investment in technology innovation.
New report from the American Energy Innovation Council (already blogged about here and here), featuring the wisdom and research of Bill Gates, John Doerr, Jeff Immelt, and other titans of American industry. The report refutes the notion that deficits require paring back our investments in science and technology, and explicitly calls for increased federal funding for energy innovation as well as the creation of new public-private partnerships to bring clean energy technologies to commercial scale.
Matt Hourihan explains how Tom Friedman's "quasi-market fundamentalism" leads him to incomplete clean energy solutions and blinds him to the energy innovation investments that are key to catalyzing breakthrough innovation and creating a clean energy future.
By Matt Hourihan, Clean Energy Policy Analyst at the Information Technology and Innovation Foundation. This article was originally published at the Innovation Policy Blog.
New York Times columnist Thomas Friedman is a frustrating guy. He has been a stalwart, welcome advocate for clean energy and for the need to deal with climate change. Further, he gets the fact that clean energy represents a major front in the battle for international competitiveness, and has even recognized the need for some big breakthroughs in the past. As he wrote inHot, Flat and Crowded:
All the advances we have made so far in wind, solar, geothermal, solar thermal, hydrogen, and cellulosic ethanol are incremental, and there has been no breakthrough in any other energy source. Incremental breakthroughs are all we've had, but exponential is what we desperately need. That's why the green revolution is first and foremost an innovation challenge - not a regulation challenge.
So he's a green evangelist, and he wants clean energy innovation, and that's good. But he, like many others, also has some persistent misconceptions about how to drive the innovation he wants, or how to make sure it boosts the U.S. economy and jobs while closing the trade deficit. And that's bad, because it means he - and others who share his view - remains stuck on partial fixes that won't solve the energy problem if that's the only policy set we get to choose from. He showed as much yesterday, in a fittingly-titled piece on climate change, energy policy and Solyndra:
There is only one effective, sustainable way to produce "green jobs," and that is with a fixed, durable, long-term price signal that raises the price of dirty fuels and thereby creates sustained consumer demand for, and sustained private sector investment in, renewables. Without a carbon tax or gasoline tax or cap-and-trade system that makes renewable energies competitive with dirty fuels, while they achieve scale and move down the cost curve, green jobs will remain a hobby.
This is echoed in his recent book, and is not a new argument from him (he made similar arguments in his earlier cleantech-focused book). And many others have made and are still making the argument, even now when they're on the outs politically. What's strange is that he's writing this in the same week the American Energy Innovation Council - headed by the kinds of business luminaries Friedman highly respects - released their major new report that completely diverges from this price-signal paradigm, by calling for major and direct public investment in research and innovation (more here and here).
A new report from the American Energy Innovation Council recalls the long history of federal support for technological innovation and calls for increased federal investment in clean energy technology.
In the wake of the high-profile bankruptcy of California solar company Solyndra, government critics are attacking federal investment in clean energy innovation, arguing that such decisions should be left to the "free market." But in their new report, these business leaders and entrepreneurs argue that government investment in energy innovation is key to realizing a clean energy future.
CBO Director Doug Elmendorf urged the new spending to support the economy in the short-term, even as lawmakers look to reduce the federal budget in the medium-to-long term. But in order to lay the foundation for long-term growth, lawmakers need to better distinguish between productive public investment and other forms of consumptive spending.
Doug Elmendorf, Director of the non-partisan Congressional Budget Office charged with assessing the costs of congressional policy actions, suggested yesterday that Congress increase federal spending to boost the economy in the short-term, even as it eyes fiscal consolidation in the medium-to-long term.
In testimony before the Joint Select Committee on Deficit Reduction--the new "supercommittee" responsible with coming up with $1.2 trillion in budget cuts by the end of November--Elmendorf argued that "there is no inherent contradiction between using fiscal policy to support the economy today, while the unemployment rate is high and many factories and offices are underused, and imposing fiscal restraint several years from now, when output and employment will probably be close to their potential."
As the Washington Post's Sarah Kliff writes, it won't be easy for the bipartisan supercommittee to find ways to increase spending given their mandate to cut it by over $1 trillion. Yet according to Elmendorf and a number of other economists that is clearly the best approach for the economy.
In his remarks, however, Elmendorf didn't specify what type of spending Congress should be boosting. Indeed, one of the major problems with the current budget debate is that too many policymakers fail to distinguish between different forms of spending. In particular, policymakers need to distinguish between productive public investments that spur innovation, productivity, and competitiveness in the long-term and other forms of spending that may produce some short-term benefit but have less of a lasting impact on economic growth. Still other spending programs are clearly wasteful, and their elimination would have very little impact on either economic recovery or future prosperity.
Increasing productive public investments is key to putting the U.S. economy on the path toward long-term prosperity, and understanding the difference between investment and spending will help policymakers make growth-enhancing investments even as they cut spending elsewhere. Stay tuned for a new report by Breakthrough and other colleagues outlining ways for policymakers to think about this difference, and why a successful strategy for restoring U.S. prosperity requires that we maintain and increase key productive investments today.
By Michael Shellenberger, Ted Nordhaus, and Nick Adams.
After 9/11, many Americans came to believe that everything had changed, that America had entered a permanent state of war against terrorism. Radical new tactics were needed to contain the new threat, officials argued -- tactics like preventative detention, pre-emptive war, ethnic profiling, and much harsher interrogation methods.
But over time, America's security agencies came to largely reject the War on Terror as ineffective and even counter-productive. Top agents and officials increasingly spoke out and sought reforms. Agencies re-learned lessons about effective security they had gradually internalized over hundreds of years. The threat itself turned out to be less new than it had appeared, using tactics and strategies similar to other terrorist groups, from the Baader Meinhoff gang to the IRA.
Mitt Romney's new economic plan, released yesterday, places him in the company of a growing club of conservative innovation hawks who support public investment in energy technology and an innovation agenda.
In an effort to distinguish themselves from the pack, and in anticipation of tonight's debate, the various Republican presidential candidates are stepping forward with their own well-tailored plans to spur economic recovery and "renew American greatness." In the process, Mitt Romney stands out in favor of federal investment in innovation, particularly in the clean tech sector, joining a growing cadre of influential conservative "innovation hawks" who advocate sensible and bipartisan policies for growing the economy.
Mitt Romney, former Massachusetts governor and leading Republican candidate for president, released his economic plan yesterday. The hefty report, "Believe in America," (PDF) comes in at 160 pages and describes Romney's 59-point plan to "revitalize our economy and to reignite the job-creating engine of the United States." One of his seven central areas of focus is energy, and his proposed policies go beyond the boilerplate "drill, baby, drill" and "cap-and-tax" GOP rhetoric. Indeed, Romney's energy plan adopts an encouraging agenda centered around innovation, R&D, and limited direct public investment.
Now, new studies .. are again suggesting that modern efforts to improve energy efficiency could lead to big rebound effects; they're touching a nerve and prompting debate in energy and climate circles. Governments and think tanks have launched studies of the paradox, and stories in the New Yorker and New York Times have even suggested that energy efficiency, far from being a savior, could actually be bad for the environment. "The stakes are actually pretty high," says Roland Geyer, professor of industrial ecology at the University of California, Santa Barbara, and coauthor of a recent review of the rebound literature.
Dr. Geyer is right: the stakes are quite high.
As Breakthrough Institute documents in our comprehensive review of the academic literature on energy efficiency and rebound effects, "Energy Emergence" (February 2011), most climate mitigation strategies and national energy policies assume that significant gains can be made in reducing greenhouse gas emissions and national energy imports at little to no cost or even positive economic gain, chiefly by pursuing "below-cost" energy efficiency measures -- improvements that more than pay for themselves through energy savings over time. The International Energy Agency, for example, counsels global policy makers that energy efficiency can accomplish more than half (58 percent) of all global greenhouse gas emissions reductions needed by 2050 in order to put the world on track to a stable climate (see image at right).
Yet rebound effects mean that for every two steps forward we take towards climate mitigation via below-cost efficiency measures, we take one or more steps backwards through rebound effects. And conventional climate mitigation scenarios, including the IEA's and IPCC's, ignore or incompletely and improperly consider rebound effects in their analysis.
If we follow such a course, and ignore rebound effects, the globe will be dangerously over-reliant on energy efficiency to reduce greenhouse gas emissions. Even if rebound effects erode just one-third to one-half of the initially expected savings, the globe could fall 20 to 30 percent short of needed emissions cuts, if the IEA's mitigation plan is followed. Further, such a shortfall means the time available to devise additional remedies is reduced, increasing the urgency of the clean energy supply-side challenge.
Wednesday's news that California solar manufacturer and DOE loan guarantee recipient Solyndra will be declaring Chapter 11 bankruptcy has government critics grumbling about clean tech boondoggles and failed government programs and has analysts worried about the ability of American clean tech companies to compete with subsidized Chinese solar exporters.
Amidst this week's dismal news that U.S. job growth is at a standstill, KQED's Forum hosts Breakthrough Institute Director of Energy and Climate Policy Jesse Jenkins to discuss Solyndra's failure and the future of U.S. energy and manufacturing policy. Listen to the program below...
The failure of Solyndra, while unfortunate for the company, its investors and employees, is not an indictment of federal energy technology policy. Indeed, judged by its whole portfolio of investments, the Department of Energy's Loan Guarantee Program has been a remarkable success. As global clean energy competition continues to heat up, the United States must double down on its efforts to drive innovation and support America's clean energy entrepreneurs by making critical investments in our nation's future.
Wednesday's news that the California solar cell manufacturer and DOE loan guarantee recipient Solyndra will be declaring Chapter 11 bankruptcy has government criticsgrumbling about clean tech boondoggles and failed government programs. But Solyndra's failure, while unfortunate, is hardly an indictment of federal energy technology policy. Failure is to be expected with emerging, innovative companies, whether they are financed by the government or the private sector. The success of the Department of Energy's Loan Guarantee Program (LGP) should thus be judged not by any one investment but by the performance of the entire portfolio.
Critics have seized on the news of Solyndra's bankruptcy to condemn the Department of Energy's Loan Guarantee Program, which provided a $535 million loan guarantee in 2009. The National Review's Greg Pollowitz writes that Solyndra's failure shows "why the government should not play venture capitalist." Yet the fact is that, when judged by its entire diverse portfolio of investments, the LGP has performed remarkably well. Indeed, with a capitalization of just $4 billion, DOE has committed or closed $37.8 billion in loan guarantees for 36 innovative clean energy projects. The Solyndra case represents less than 2% of total loan commitments made by DOE, and will be easily covered by a capitalization of eight to ten times larger than any ultimate losses expected following the bankruptcy proceedings.
The broad success story of the LGP shows why federal investment in clean energy is necessary to help early-stage clean energy technologies achieve scale and reach commercialization. The inherent uncertainty in investing in novel technologies, coupled with the high capital costs and long time horizons, prohibits most venture capital funds from investing in large-scale clean energy projects. Financing tools and direct investment from the federal government can help bridge this well-known "Commercialization Valley of Death," and the LGP is an effective way of doing that.
ARPA-E Director Arun Majumdar
In the wake of Solyndra, innovation policy remains critical.
Textbook Economics: Increase the tax, reduce the quantity. See how simple it is?
