Last week, the Senate Appropriations Committee advanced its version of next year’s budget for the Department of Energy. Senators limited the damage that would have been done to clean energy innovation by their counterparts in the House, which in turn had somewhat reduced the devastation that would have been wrought by the administration’s initial budget proposal. As the appropriations process lurches toward a slow-motion conclusion, it’s a good time to imagine what a federal budget that really had the potential to transform America’s energy system would look like. (Spoiler alert: we won’t get one this year.)
Such a budget would be much bigger than the one we have now. A group of CEOs led by Bill Gates recently called for federal spending on advanced energy innovation to rise to $16 billion, two and a half times the current level, to meet the many challenges of this century, including avoiding the worst effects of climate change. A major 2016 study of the United States energy system by the National Academies of Science, Engineering, and Medicine, similarly, called for a significant increase in the federal innovation investment. The United States government itself promised to join nineteen other major nations in doubling energy research, development, and demonstration expenditures just two years ago.
Such a budget would seek to accelerate a wide array of technological and energy management options, so that they are mature enough for the private sector to scale them rapidly when the need and opportunity arise. Energy markets, environmental dangers, and security risks are all so unpredictable, and the stakes of the transition to low-carbon resources are so high, that a diverse portfolio is the only prudent approach to energy innovation policy. Fracking, Fukushima, Tesla – these were virtually unknown a decade ago. More surprises are surely in store in the 2020s and beyond. We need to be able to respond to them without losing momentum and without imposing draconian regulations or taxes. Investments in clean energy innovation will help us to be ready.
{mosads}Such a budget would drive the energy innovation system toward practical results. It would generously support academic researchers and government laboratories but systematically link them to energy technology users who can nudge their projects toward real-world requirements. It would nurture entrepreneurial start-ups and stop protecting legacy incumbents. It would reflect a keen awareness of the affordability and reliability constraints that face any new method of supplying or managing energy. It would take into account the global strategic situation by supporting promising cooperative initiatives as well as responding to competitive threats.
Such a budget would incorporate public-private partnerships that are calibrated to the opportunities being pursued. Promising blue-sky ideas that are too risky for even the craziest venture capitalist to invest in would get full public support. By contrast, clean energy systems that are more mature, but have not yet been proven in full-scale operation should be funded mainly by the private sector, but with some federal funding to compensate for the significant risks that such first-of-a-kind ventures entail. (In a new paper for the Information Technology and Innovation Foundation, I show that this first-of-a-kind demonstration component of the clean energy innovation portfolio has shriveled to nearly nothing.) Mature technologies should be ruthlessly weaned from their dependence on the government and put to the test in the market.
Such a budget would take greater advantage of regional diversity. Different parts of the country have different energy resources, attitudes about energy production and use, and scientific and economic assets, including DOE’s national laboratories. In building a portfolio, as savvy investors know, diversity provides resilience in the face of risk. Federal clean energy innovation policy can work with states, regions, and localities to better leverage the Midwest’s industrial heritage and windy locales, California’s entrepreneurial culture and year-round sunshine, and other diverse features of the nation’s energy system.
Despite the good work of the Senate, the energy innovation budget for the coming year will fall short. DOE is being shrunken, narrowed, and stripped of creativity. The department, including its labs, will experience a brain drain, as many ambitious and dedicated experts find their chances of contributing to real solutions to energy challenges to be far more promising outside of government than within it. The inevitable result is that the national portfolio of options for dealing with future energy risks and uncertainties will shrink.
David M. Hart is a senior fellow at the nonprofit Information Technology and Innovation Foundation and professor of public policy and director of the Center for Science, Technology, and Innovation Policy at George Mason University’s Schar School of Policy and Government.
The views expressed by contributors are their own and are not the views of The Hill.