The White House Strategy for Energy Innovation

February 9, 2011 | Sara Mansur,

On Friday, the White House released its 2011 "Strategy for American Innovation", cementing President Obama's State of the Union call for renewed federal investment in the building blocks of innovation, to "out-invest, out-educate, and out-build the rest of the world." The report lays out the White House's energy innovation agenda that includes initiatives across the energy innovation spectrum and plans to pursue renewed investments in research, infrastructure, and education.

The report embraces the innovation-based strategy for economic growth long advocated by groups like the Information Technology and Innovation Foundation and the Breakthrough Institute. As Breakthrough Senior Fellow Fred Block argued in yesterday's Innovation-Deficit Debate, federal government support of the innovation system is critical to ensuring continued economic progress and prosperity.

The report contends:

"Innovation- the process by which individuals and organizations generate new ideas and put them into practice- is the foundation of American economic growth and national competitiveness...The standard lesson from economics, and history, is that an innovation-friendly environment requires public support on specific dimensions. Thus, the true choice in innovation policy is not starkly between government management and no government involvement, but rather choosing the right role for government in supporting private sector innovation."

The government should act as a facilitator of innovation, the report explains, to both harness the ingenuity of American entrepreneurs and catalyze breakthrough innovations where market failures impede private sector progress. These market failures include underinvestment by private investors in basic science research, as well as the technology "valley of death" -- the frequently perilous gap between R&D and commercialization that many high-risk and high-impact technologies fail to overcome due to lack of financing.

Clean energy is highlighted as an area of critical national importance in the report, where the Administration's hope is to unleash a wave of innovation to make clean energy cheap, a Sputnik moment of the type long called for by the Breakthrough Institute. Obama's plan to spur this wave of clean energy innovation focuses on federal investments in R&D, markets, and manufacturing.

In the first step of the strategy, the President's 2010 Budget will propose significant increases in energy R&D, through a doubling of funding for the DOE's Office of Science (OS), and expanded funding for research in advanced breakthrough technologies through the Advanced Research Projects Agency (ARPA-E). (For a comprehensive catalogue of the energy-innovation projects currently underway through the DOE's OS and ARPA-E, visit the Energy Innovation Tracker). The Budget will also propose to broaden R&D investments in advanced vehicle technologies like batteries and energy storage.

The second step is the creation of three Energy Innovation Hubs, to bring together cross-disciplinary research teams and allow for partnerships across universities, national labs, and private organizations. This will build upon the three Energy Innovation Hubs already in existence through the DOE, in the fields of nuclear energy modeling, building energy efficiency, and the generation of fuel from sunlight.

Third, the Administration is proposing the establishment of a national Clean Energy Standard, aiming for a goal of generating 80% of national electricity from clean energy by 2035.

Finally, the White House is expanding its support for 48C clean energy manufacturing tax credits, which are provided to domestic firms wishing to expand or retool facilities to produce clean energy technologies.

This energy innovation strategy is welcome news amidst an ominous funding cliff faced by many energy-innovation-focused government agencies upon expiration of ARRA funds at the beginning of this year.

Further, the report elucidates the Administration's recognition of the very real difference between government spending and productive federal investments in science and technology. A growing chorus of policymakers and commentators, from liberals to conservatives alike, are recognizing that government investments have historically powered the American engine of innovation.

Now, it remains to be seen if conservative policymakers and fiscal hawks can get on board with Obama's innovation strategy and join a growing group of innovation conservatives who recognize that economic growth and balanced budgets come from innovation-driven growth, rather than across-the-board spending cuts.