Innovation vs. Deployment
One of the continuing debates among climate and energy analysts and advocates is whether public policy should emphasize innovation or deployment. A hardy round of wonky discussion brought to light the nuances of each point of view, but it still leaves one lingering issue: how do we make energy innovation part of advocates’ climate policy pitch?
There are two levels to the debate between innovation analysts and deployment advocates. The most significant debate is over policy nuance and is what has been in the blogging spotlight recently. The debate logic chain typically plays out broadly this way:
- Mitigating climate change requires cutting global carbon emissions to near zero, which requires no less than a transformation of the global energy system from fossil fuels to clean energy. For its part, the United States has set a goal of 80 percent carbon reductions by 2050 and a midterm goal of 17 percent reductions by 2020.
- Innovation analysts argue today’s technology isn’t enough to get us to 80 percent global (or US) carbon reductions. Cheaper and better technologies are needed to fully address climate change, which requires looking at the full innovation ecosystem and aggressively strengthening through policy. Today’s policy approach is woefully lacking because it underinvests in research, development, and demonstration, and provides limited deployment incentives that don’t drive innovation. As a result, innovation analysts (for example, myself) typically focus on boosting R&D budgets, bridging the valley of death, and reforming deployment policies to drive technological improvements as the best path to addressing climate change.
- Deployment advocates argue today’s technologies are enough to at worse meet our midterm climate goals and at best get us much closer to our 80 percent goal than innovation analysts argue. Most commonly, this extends to deployment advocates arguing that big innovations really aren’t necessary. In other words, we need to do everything we can to push deploying today’s technologies by using policies including subsidies, carbon pricing, and mandates. By no means is funding research not important, but it’s not a high policy priority. As a result, deployment advocates (for example, Climate Progress Editor Joe Romm) champion clean energy subsidies and incentives to accelerate the deployment of existing technologies and as the best path to addressing climate change.
As Dave Roberts at Grist argues, there is in fact a lot both “camps” agree on at this level. Cheaper and better clean energy technologies will make deep carbon reductions less and less “difficult, expensive, and politically contentious” than if we relied solely on today’s technologies. The agreement only breaks on the policy implementation side.
Solar energy entrepreneur Jigar Shah took to the site Greentech Media to criticize U.S. energy policy leaders for failing to champion deploying today’s clean energy technologies. Shah’s focus on ways to better deploy competitive clean energy underscores the critical need to re-frame the clean energy debate in terms of innovation and have a healthy discussion on building better policy solutions for deployment that drive innovation and support the growing clean energy industry.
Assessing the Character of U.S. Energy Policy
According to ITIF’s Energy Innovation Tracker, the United States invested $68.3 billion in clean energy innovation (in addition to $35.6 billion in loan guarantees) since 2009, 67 percent of which went towards clean energy deployment policies. This included deploying existing technologies through Stimulus policies like the loan guarantee program, energy efficiency grants, advanced manufacturing, and almost single handedly saving the solar and wind industry through the 1603 cash grant program at the height of the recession. Even in FY2012, which is absent Stimulus funding, 63 percent of the $14 billion in clean energy innovation investment went to deployment projects and programs.
The Electric Highway
The New York Times reporter John Broder recently published his account of an East Coast road trip he took with the Tesla Model S electric vehicle (EV). It marked an important development: Tesla has opened two new public “supercharging” stations some 200 miles apart in Delaware and Connecticut that can fully replenish the Model S battery in an hour and potentially provide consumers the ability to drive the well-traveled Interstate 95 corridor at near-zero carbon emissions. Unfortunately, Broder’s test results came up short, showing the limitations of existing EV technology, the need for more innovation, and the division of opinions on how the United States should decarbonize transportation.
The set-up was simple: Broder was to travel from Washington D.C. to Milford, Connecticut in the souped-up Model S. But according to Broder, he faced a host of inconveniences as the Model S fell short of its projected 300 mile range, resulting in the car losing charge mid-drive and the need to re-route to find additional charging stations. Since then, he and Tesla CEO Elon Musk have traded accusatory statements, (Musk, Broder, Musk, Broder), with even the New York Times Public Editor chiming in with an investigation.
The back and forth ignited a mini-Internet firestorm. The Atlantic Wire, for example, heavily scrutinized Musk’s rebuttal while Chelsea Sexton at Wired defended Tesla by characterizing EVs as being different from gas cars and thus deserving of different expectations. “The day-to-day experience EVs offer is so much better than gas cars for 95% of driving. Long-distance road trips are among the last 5% of usage scenarios,” Sexton writes, before concluding that “it’s ridiculous to expect EVs to deliver the same experience as the incumbent product.”
President Obama aggressively called for addressing climate change in his fifth State of the Union address, but ultimately came up short of outlining a clear and compelling vision with the necessary policy scope to address the significant technological challenges impacting clean energy.
Here are my five top take-aways:
1) Demanded Action to Address Climate Change
It is indicative of the sad state of the U.S. climate debate when a mere mention of support for addressing climate change elicits celebration. Nonetheless, the President deserves credit for calling on Congress to take action against climate change and using about 10 percent of his speech to discuss what he would like to see.
“But for the sake of our children and our future, we must do more to combat climate change. Yes, it’s true that no single event makes a trend. But the fact is, the 12 hottest years on record have all come in the last 15. Heat waves, droughts, wildfires, floods – all are now more frequent and more intense. We can choose to believe that Superstorm Sandy, and the most severe drought in decades, and the worst wildfires some states have ever seen were all just a freak coincidence. Or we can choose to believe in the overwhelming judgment of science – and act before it’s too late.”
2) Aggressively Called for Increasing Public Investments in Energy R&D
One of the biggest issues impacting clean energy innovation is declining public investments. Of particular concern are stagnant energy R&D programs, which are a fraction of what is necessary to aggressively develop breakthrough clean energy technologies. According to the Energy Innovation Tracker, federal funding for energy R&D totaled $3.6 billion in fiscal year 2012. In comparison, the Defense Department’s R&D budget that year was $72.3 billion, or more than 20 times as much.
This is the 5th and final post in a series analyzing and detailing federal investments in clean energy innovation. Part 1 defined “clean energy innovation.” Part 2 broke down the federal clean energy innovation budget. Part 3 took a look at federal investments in clean energy demonstration projects. Part 4 took a deeper dive into clean energy deployment policies.
In the first post of this series, I called attention to the eminent need for supporting a well-developed and funded clean energy manufacturing sector as part of a robust innovation ecosystem. The feedback loops between manufacturing and research is explicitly linked. Even with all the R&D, demonstration, and deployment of clean energy, the United States could lose its competitive advantage over production resulting in the industry (and future innovation) to move overseas without strong policy support for advanced manufacturing. But like many other parts of America’s energy innovation budget, support for advanced manufacturing is rapidly declining.
The figure below shows that investment in clean energy manufacturing has fallen from nearly $9 billion to only $700 million between FY2009 and FY2012, or a 92 percent decrease. Direct spending in FY2009 and FY2010 was directly supported by the distribution of the Recovery Act’s 48 advanced battery manufacturing grants, which the Department of Energy awarded to a range of electric-drive, battery component, and battery recycling facilities. The grants were all devoted to accelerating the development of U.S. battery and electric vehicle manufacturing (a full list of grantees is available here).
The purpose of Energy Innovation 2013 – a half-day conference co-hosted by my organization, the Information Technology and Innovation Foundation, and the Breakthrough Institute – was to discuss the possibility of developing and deploying all of the cheap, high-performing zero-carbon technologies necessary to meet 40 terawatts of projected global demand by mid-century. Most importantly, the conference spurred debate on how the need for clean energy innovation should influence the climate and energy policy debate.
Over the course of three stellar panel discussions as well as follow-on debate via twitter (check out #EI13), a number of themes emerged that merit further debate amongst advocates, thinkers, and policymakers:
It’s Global Warming, Not American Warming
ITIF President Rob Atkinson set the stage for why energy innovation needs to be a policy priority by presenting a straight-forward logic chain: climate change is real and man-made, it’s about developing clean energy technologies that are cheaper than fossil fuel alternatives to drive down carbon emissions, and it’s globally pervasive. Clean energy technologies need to be affordable to all nations, and particularly emerging economies with growing populations that will consume more energy in the coming decades than the United States.
This is Part 4 of a series of posts analyzing and detailing federal investments in clean energy innovation. Part 1 defined “clean energy innovation.” Part 2 broke down the federal clean energy innovation budget. Part 3 took a look at federal investments in clean energy demonstration projects.
For the last couple of years, the lion’s share of debate on U.S. clean energy policy has focused on encouraging deployment – or large-scale construction and installation – of low-carbon technologies. By significantly deploying clean energy technologies, supporters say, the United States can encourage integration of emerging technologies in an energy market dominated by entrenched fossil fuel interests, spur cost-cutting economies of scale, and get started on lowering greenhouse gas emissions in the process. However, others argue that there is a necessity to designing well-constructed deployment incentives aimed at directly spurring innovation to address climate change.
A Quick Typology of Deployment Policies
Federal clean energy deployment incentives can be made available through grants and other annually appropriated programs. For instance, the State and Tribal Energy Programs at the Department of Energy (DOE) deploy building efficiency and renewable energy technologies within communities. The New Energy Frontier initiative at the Department of the Interior (DOI) deploys renewable and energy efficiency technologies on federal lands.
This is Part 3 of a series of posts analyzing and detailing federal investments in clean energy innovation. Part 1 defined “clean energy innovation” and Part 2 broke down the federal clean energy innovation budget.
Why Government Investment in Demonstration Projects Can Be Controversial
Transforming the U.S. (and global) energy system from fossil fuels to low-carbon technologies requires a healthy, publicly supported innovation ecosystem that invests in and supports research, development, demonstration, and deployment. But as discussed in Part 2 of this series, America’s energy innovation ecosystem is “hollowed out”, particularly because of reduced investment in technology demonstration projects.
At its very basic level, technology demonstration projects exhibit full-scale models of first-of-kind technologies and systems, as opposed to pilot projects (e.g. an ARPA-E project), which aim to simply prove a technical idea. Demonstration projects aim to prove a technology at commercial scale.
Clean energy demonstration projects are an area of extreme policy debate and controversy for two reasons.
First, clean energy demonstration projects are often capital-intensive projects that require significant investment and public-private collaboration, typically invoking considerable attention because of large budgets.
Second, clean energy demonstration projects are often viewed as too close to market and not an appropriate role of government investment. As such, it’s a turbulent area of clean energy innovation policy.
This is Part 2 of a series of posts analyzing and detailing federal investments in clean energy innovation. Part 1, defining clean energy innovation, can be found here.
Clean energy innovation encompasses more than any one policy, whether it is R&D, tax incentives, regulation, or an economy-wide carbon price. Well-designed public investments impact the entire energy innovation ecosystem and fill gaps in next-generation technology development and deployment. Using data from the Energy Innovation Tracker, this post takes a top-line look at the United States’ portfolio of clean energy investments between 2009 and 2012.
The figure below details federal investments in energy innovation since FY2009, which are divided into ‘technology development’ and ‘technology deployment’ categories. In this case, technology development captures all investments in basic science, research and development, demonstration; technology deployment investments facilitate the installation and procurement of clean energy technologies in commercial markets, along with supporting investments in siting and permitting and training and education.
During the past four years, the balance between development and deployment has evolved dramatically, driven in part by increased procurement of emerging and commercial off-the-shelf energy technologies by the Department of Defense, as well as expanded deployment initiatives and tax incentives through the Department of Energy and the U.S. Treasury Department.
This is Part 1 of a series of posts analyzing and detailing federal investments in clean energy innovation.
U.S. energy policy is only as good as its innovation-based goals, framing, and emphasis. This is particularly important for climate change policy, which at its core requires public investments in clean energy innovation to spur the development and deployment of cost and performance competitive low-carbon technologies.
Yet a pervasive problem persists in the clean energy policy debate: innovation policy is often misrepresented as only research, or largely ignored by advocates to support rigid economic doctrines or policy goals that divert attention from addressing climate change (e.g. short-term green job creation).
This type of clean energy policy fundamentalism de-emphasizes the need for cheap, new, clean energy technologies and muddles innovation’s foundational role in U.S. clean energy policy. By extension, this process inhibits America’s abilities to drastically cut carbon emissions as quickly as possible.
Providing clarity on what characterizes clean energy innovation policy is critically important. In an effort to do so, ITIF has developed the Energy Innovation Tracker – a detailed public database of federal investments in energy innovation across energy-related technologies, agencies, and innovation stages, down to the project-level if appropriate. It’s a useful tool that provides a comprehensive understanding of the relevant stages of energy innovation to inform better energy innovation policy in the future.