Opinion

How the U.S. Can Keep Its Energy Innovation Edge

The United States has been the leader in energy technology innovation for over seven decades, creating an unparalleled ecosystem where the roles and contributions of governments at all levels, research universities, national laboratories, the private sector, nonprofits and philanthropies are effectively integrated.  

This intellectual and scientific foundation has helped sustain the United States as the world’s leader in clean energy innovation. It has served us well: supporting our security goals, creating global opportunities for domestic companies and addressing global warming.

Rapid changes in the global markets are, however, challenging our pre-eminent position. China stands out: In 2017, the country invested $98 billion in renewable energy, with another $41 billion for its electric grid, twice the amount invested in the United States.   

Recognizing the need for a strategic path forward to sustain U.S. leadership in low-carbon energy innovation, Breakthrough Energy asked Dan Yergin and me to co-lead an assessment of the current U.S. clean energy innovation landscape, spanning the private and public sectors, conducted by the Energy Futures Initiative and IHS Markit. This study, “Advancing the Landscape of Clean Energy Innovation,” offers strategies to help renew our global leadership and at the same time accelerate clean energy innovation in America.

Such progress is not easy — energy systems are highly capitalized and provide society with indispensable services. This combination leads to inertia and risk aversion and other complexities that underscore the inherent tensions between today’s energy landscape and the need for technology disruption. In the end, we need them both.

That’s where our study comes in. Its analysis and recommendations highlight the essential roles of all players — public and private — as well as key policies and programs in clean energy innovation needed to meet the challenges before us.

First, the study developed and used rigorous criteria to identify 23 key technology areas and seven breakthrough technologies, as essential for a decarbonized economy. Energy storage, advanced nuclear, modernized grids, smart cities and large-scale carbon dioxide utilization and management are high on the list. Capturing the value of new platform technologies — additive manufacturing, big data analytics, machine learning and robotics — can also help us meet clean energy innovation challenges.

Additionally, better-targeted public investment is needed across all innovation stages, from fundamental research through commercial scale demonstration.  

The American Energy Innovation Council, made up of chief executives from major American companies, goes even further and recommends tripling federal clean energy investments. This would be in line with overall research and development spending and reflect energy’s role in the economy.

But more than increased funding is needed. The federal portfolio — indeed the portfolio across the innovation chain — needs to be “all of the above” to match time scales and geographies.  History shows that we achieve better results when flexible innovation pathways are favored over planned, prescriptive outcomes.

Another focus of the study: the critical role played by states, cities and tribal governments.  Thirty-two states have renewable or clean energy portfolio standards. Many states have green banks and are part of regional cap and trade systems, positioning them for commercial uptake of clean energy technologies. Tribal governments have demonstrated renewable technologies in areas with widely dispersed populations and are poised to do more.

A related recommendation is to nurture regional energy innovation ecosystems. Regional energy resources, expertise and markets vary significantly, and innovation should be tailored to a region’s specific needs. Many energy innovation clusters have emerged and are evolving into fully integrated ecosystems, often centered around research universities.

Federal policies and programs should more actively support these developments, including their expansion in rural America. The Department of Energy’s National Laboratories and other federally funded research institutes should help catalyze these ecosystems.  

The study also finds that disciplined public-private partnerships are needed across the innovation value chain. It recommends that the private sector step up, using part of its windfall from 2017’s tax cuts to support testing facilities for clean energy technology demonstrations.

Finally, achieving better innovation outcomes requires improved institutional capabilities. Appropriately, the DOE funds 75 percent of all federal energy R&D — but the program organization needs a makeover. The study recommends that the DOE revise its fuel-centric organizational structure, an artifact of its establishment after the oil embargoes of the 1970s.

This structure of a bygone age has led to many gaps in the DOE’s R&D portfolio and distortions in its budget. Electricity is a core infrastructure supporting all other critical infrastructures and services in the United States — yet electricity system R&D was a structural orphan until an office was established just over a decade ago.

Within this office, grid-scale energy storage R&D, a critical enabler for integrating variable renewables into the electric grid, received an administration FY18 budget request of $8 million. Congress appropriated $41 million — still just a fraction of the total R&D budget of $5 billion.  

As Energy secretary, I made clean energy innovation a policy cornerstone of my tenure. We began changing the DOE’s structure, launched a grid modernization initiative, issued two installments of the Quadrennial Energy Review, and forged strategic partnerships with national labs. We encouraged regional innovation solutions and led Mission Innovation, a global effort launched alongside the Paris Agreement that placed technology innovation as central to climate change risk mitigation.

Importantly, there was bipartisan support in Congress for advancing these key areas of focus.  The DOE’s portfolio reinvention needs to be a continuous process, aligned with tomorrow’s needs.   

This study addresses these and many other issues. Its essential point — that the U.S. energy innovation system is facing increasing competition — deserves immediate and ongoing attention. Further alignment of players, policies and programs can help sustain the dividends the nation has received from its historical pre-eminence in clean energy innovation.

 

Ernest J. Moniz was the 13th Secretary of Energy and is the founder and chief executive officer of the nonprofit Energy Futures Initiative.

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