Tuesday, December 28, 2010

Thermoelectrics: Promise and Barriers of a Potential Breakthrough

By David Cohen-Tanugi | Originally published at Americans for Energy Leadership

The term 'energy efficiency' usually brings to mind better-insulated homes and smart power meters. But emerging thermoelectric technology could give energy efficiency a whole new meaning by tackling the huge energy waste that happens before the watts even reach our homes. Yet, to reach market, thermoelectics will have to overcome a number of technological and policy related barriers.

The Promise

Thermoelectric devices, which enable the conversion of heat into electricity, are still at an early stage in the energy innovation chain, but the principle behind how they work can help to highlight a crucial aspect of energy waste across the world that is often ignored in the policy realm.

You may have heard that homes in developed countries waste 25-35 percent of their energy due to insulation problems and inefficient devices. But the lion's share of energy waste actually comes at the early stages when the electric power is generated in power plants and carried across transmission lines.

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Tuesday, December 21, 2010

Belfer Center: Governments of Emerging Economies Out-Investing US in Energy Research

By Sara Mansur, originally posted at the Breakthrough Institute

The governments of six developing countries may now be investing more in energy research than the governments of twenty-one of the world's most developed economies, according to a new report by the Harvard Belfer Center for Science and International Affairs.

The report takes a close look at the federal energy innovation policies of Brazil, Russia, India, Mexico, China and South Africa - we'll call them the 'Big Six' developing nations here.

The Belfer Center researchers conclude that in 2008 the governments of the Big Six nations invested about $13.8 billion (measured in PPP) in energy research, development, demonstration, and deployment activities (RDD&D). This inches ahead of the roughly $12.7 billion in combined energy technology investments made by the governments of the 21 IEA member countries, each of which is also a member of the OECD bloc of developed nations.

In deconstructing this figure, however, $11.8 billion of the $13.8 billion in RDD&D funds deployed by the Big Six developing nations are investments by the Chinese government. Further, 90% of this total investment originated from state-owned enterprises (SOEs).

A similarity across energy innovation policies in the Big Six countries is that governmental investments in renewable energy and energy efficiency technology support mostly deployment activities, while national investments in nuclear energy, fossil fuels, and transmission, distribution and storage are mostly targeted towards R&D.

Despite this commonality, the researchers find that the structures of individual energy innovation systems differ substantially. In China and Russia, academies are largely responsible for allocating R&D funds to national labs and universities, while SOEs execute deployment projects. In Brazil, Mexico, and India, the opposite holds, with SOEs most heavily involved in coordinating R&D activities and governments chiefly responsible for deployment projects. In South Africa, in turn, the government is solely responsible for funding the RD&D that is conducted by universities and private industry.

As the study notes, the Big Six are increasingly significant players in the global energy domain, comprising 44% of the world's population, 32% of global energy consumption and 35% of the world's energy production. In 2010, China became the single largest energy consumer in the world, while by 2030 China and India alone are expected to comprise 30% of global primary energy demand.

Despite their rising importance in the international energy sphere, there has been little data available to date on national energy innovation investments made by developing countries. This report takes an important first step in measuring these policies and highlighting areas for cooperation between countries, albeit with difficulties noted by the researchers in gathering comprehensive data on innovation spending across countries and establishing a standardized categorization method amidst varying definitions of RDD&D across data sources.

The findings of this research bode well not only for the Big Six countries but for the global clean energy sector as a whole, as the participation of these developing countries is crucial to catalyzing a global clean energy transformation. At the same time, however, growing clean tech prowess in these big developing economies continues the globalization of technological leadership, putting greater competitive pressure on America's traditional 'comparative advantage' in innovation.

Ultimately, the Belfer Center report underscores the emerging global consensus around the importance of investing in energy innovation, and the need for the United States to step up its own clean energy investments or risk losing competitiveness to other emerging economies.

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Thursday, December 16, 2010

Governments Have Reached a Deal -- Now It's Our Turn

After two weeks of negotiations in Cancun, governments of the world have reached a global climate deal. More than 190 nations made collective decisions on adaptation, forestry, technology transfer, climate finance, and other issues. And although the "Cancun Agreements" fall far short of what is needed, they provide a road forward. Governments have reached a deal.

Now, it is our turn.

Announcing "Climate Deal Day," a day for businesses and individuals to make deals that fight climate change and improve our lives. Mark your calendar: on January 26th, six weeks after COP16, we will make deals with the goal of eventually reducing pollution by one gigaton of carbon dioxide. (This goal is audacious and probably won't be reached on the first Climate Deal Day, but we prefer to think big.)

The idea for Climate Deal Day was born during COP16, where Hub Culture, the organization I work with, spent the two weeks speaking with business leaders, learning about the opportunities to solve climate change. We spoke to Sir Richard Branson, who is investing a hundred million dollars into new energy sources, hoping to make a profit. We met with members of the Carbon War Room, who explained that there are gigatons of carbon savings that can be achieved at a profit if the right barriers are broken down. We met the leader of the energy and environment team at Phillips Lighting, who told us that his company was pressuring governments around the world to phase out incandescent light bulbs, thus forcing his company to innovate. And we spoke with Lord Nicholas Stern, who explained that we are on the cusp of a new industrial revolution.

What we saw is that many of the solutions to climate change are deals: win-win collaborations between people and organizations. From an even bigger standpoint, solving climate change is an enormous deal -- investing in new technology will pay off several-fold by creating a new economy and avoiding climate change.

All are encouraged to join this event, which is being coordinated by the social network Hub Culture and Christensen Global Strategies. All we ask is that you or your company do a climate deal by January 26th. The deal can be with another person, with an organization, or with yourself. The only rule is that it has to be both good for the planet and good for our standard of living.

Events held in Davos, London, and New Orleans during the World Economic Forum -- all hosted by Hub Culture -- will announce deals reached by businesses. These deals will be posted on the website, where we will also document deals reached by individuals. To share your commitments and agreements, send an email to cdd@hubculture.com or fill out our webform here. (Note that the website is still under construction -- a full update will take place on January 1).

To give you an idea of what we are talking about, the following climate deals were announced during COP16: Muhtar Kent, The Coca-Cola Company's CEO, revealed that the consumer goods forum would achieve no net deforestation by 2020 and begin to phase out HFCs from refrigeration by 2015, reducing pollution and increasing efficiency; The Carbon War Room announced the first ever universal energy index for the shipping industry, allowing companies to more easily choose more efficient boats; and OPIC announced that it will provide at least $300 million in financing for new private equity investment funds that could ultimately invest more than $1 billion in renewable resources projects in emerging markets.

For individuals, deals could include performing an energy retrofit of your house, an action that almost always saves money. It could involve buying a more fuel-efficient car or eating food that is both better for you and lighter on the environment. Be creative -- send us your ideas.

Climate Deal Day is a statement of hope: a belief that we can collaborate and improve our lives as we solve one of the greatest challenges of this century.

What is your deal?

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Thursday, December 09, 2010

The Importance of Extending the 1603 Treasury Grant Program

Written by Lon Huber with contributions from Alex Christensen

Anyone working in renewable energy will tell you that when it comes to getting a project off the ground, financing is key. Treasury Grant 1603, found in the American Recovery and Reinvestment Act, was designed to address the front loaded costs to entrepreneurs of installing renewable energy. Otherwise known as the Treasury cash grant, this program has been a lifeline for an industry that has had to depend on a complicated tax code and the likes of Lehmann Brothers and AIG for financing. At midnight on December 31st of this year, the 1603 Treasury Grant Program is set to expire, and unless Congress renews it, the young renewable energy industries will be forced compete in a tax system designed to the advantage of fossil fuels.

Without Treasury Grant 1603 the clean energy industry would not be enjoying the success it is today. To effectively compete against a fossil fuel industry that is heavily subsidized by the federal government, the renewable energy industry has needed federal help to level the playing field.

Unfortunately, the lack of a strong national energy policy has required the renewable energy industry to become cost effective through tax credits. The problem with trying to stimulate an emerging industry with tax credits is that it fails to eliminate two central problems facing small businesses, large up front costs and lower initial profits meaning lower initial tax credits. Many new clean energy businesses did not have enough income to fully utilize these tax credits, forcing them to turn to large financial institutions like Lehmann Brothers for assistance in realizing the advantages of such credits. After the financial meltdown and the resulting lack of finance, it became next to impossible to take advantage of the tax credits in the same way.

The Treasury cash grant program provided a lifeline by transitioning the unfavorable tax credits to upfront payments not tied to a particular company's income. This was huge help to renewable energy developers and did not cost taxpayers any additional money – since it merely shifted the tax credit to an upfront subsidy.

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Tuesday, December 07, 2010

A Better Voice for Environmentalism: Sir Richard Branson (VIDEO)

Cross posted on Hub Culture.

During the World Climate Summit, a conference for businesses leaders during COP16 in Cancún, Sir Richard Branson sat down with me for a four-minute interview.

Branson is one of the world's ultimate success stories. Born with unbounded charisma, he founded his first company at the age of 16 in 1966, selling records out of the back of his car. He grew the business into Virgin Records, a leader in the industry, and then launched Virgin Airlines in 1984 and Virgin Mobil in 1999. He is also famous for his world record attempts: an attempted round-the-world balloon ride, a fastest sail across the Atlantic, and a fastest air-balloon journey across that same ocean. In his autobiography, he wrote "My interest in life comes from setting myself huge, apparently unachievable challenges and trying to rise above them... from the perspective of wanting to live life to the full, I felt that I had to attempt it." Today he is worth four billion dollars.

About seven years ago, Al Gore showed up uninvited at Sir Richard's doorstep. Gore knocked and asked Branson if he could show him a climate presentation. Two hours later, Branson, the world's 212th richest man and chairman of the Virgin Group, was convinced that he should use his wealth and talents to fight climate change.

Branson is clearly committed to solving the challenges of global warming. He has made significant pledges to reduce emissions from his airlines and he has invested all of the profits from Virgin Airlines into fighting climate change, including $100 million into an algae biofuel company. He has offered the "Virgin Earth Challenge Prize," a $25 million prize for anyone who discovers how to take carbon out of the atmosphere. He has founded the Carbon War Room, an organization that is working with businesses to find innovative ways to reduce emissions, and he also helped found the Gigaton Awards. During the interview, Branson struggled to remember everything that he was doing to fight climate change.

Perhaps the swagger and ambition of Branson should be adopted by more environmentalists. Too often solving climate change is framed as sacrifice, as "cutting pollution," implying a lower quality of life. Branson's message is the opposite -- he is one of the world's most successful individuals, and his ventures speak to ambition and economic growth. His brand is that of risk-taking followed by limitless success. We could use more of that inspiration in our fight against climate change.

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The Gigaton Awards: A Race to the Top

Cross posted on Hub Culture.

What if solving climate change were a race to the top?

What if companies were in competition to win the next industrial revolution, with the winners being those who most reduced their greenhouse gas pollution?

That is the idea behind the Gigaton Awards, which were conceived by Sunil Paul and implemented by the Carbon War Room and the Gigaton Throwdown, both projects of Sir Richard Branson. The idea is to award companies that have reduced carbon emissions by the greatest amount. The scale of this challenge is immense, as a "gigaton" of carbon is a billion metric tons: human activity currently adds more than 30 gigatons of carbon dioxide to the atmosphere per year through the burning of fossil fuels.

I interviewed Sunil Paul to learn more about the Gigaton Awards. Here is what he had to say:

I attended the awards ceremony, a gala with chicken with asparagus and carrots soaked in red sauce, accompanied by a bottomless glass of wine. The event was hosted by Andrew Winston, the author of Green to Gold, and speakers included Jose Maria Figueres, the former president of Costa Rica, and Sir Richard Branson, the billionaire Chairman of the Virgin group.

Companies were nominated based not only on the total amount by which they reduced their pollution, but also on how much they reduced their emissions relative to their revenue. All the companies that were nominated were, as Sunil said, large corporations. That makes sense, as only large corporations have emissions that are large enough to make a big reduction in emissions. Because it would be unfair for a renewable energy company to compete with a telephone company, for example, several categories were established.

Most of the winners were companies that had aggressively pursued energy efficiency, which makes sense because there are so many opportunities in energy efficiency. But as Sunil said in his interview, this is just the first year, and he hopes that the competition will get tougher as we develop more and more ways to cut our pollution.

Categories and Winners are...

Consumer Discretionary
Winner: Nike for an aggressive energy savings program aimed at reducing its global greenhouse gas emissions.
Runners up: Toyota Motor, Panasonic, Walt Disney Company, Sony Corporation

Consumer Staples
Winner: Reckitt Benckiser Group for demonstrating its leadership in mitigating risk from climate change and sustainable practices.
Runners up: The Coca-Cola Company, Anheuser-Busch InBev, Kimberly Clark, General Mills, Reckitt Benckiser Group

Winner: Suzlon
for its achievement in managing its emissions and overall sustainability milestones.
Runners up: Vestas, GE Wind, Goldwind, Gamesa, Siemens Wind

Winner: 3M
for its leadership in improving energy efficiency and sustainable practices.
Runners up: MTR Corporation, Alstom, Boeing, Raytheon

Winner: Vodafone Group
for its new business which provides carbon reducing connections.
Runners up: American Tower, Verizon Communications

Winner: GDF Suez
for its demonstrated leadership by emitting among the lowest CO2 per KWh produced in Europe.
Runners up: Chubu Electric Power (Japan), Snam Rete Gas (Italy), Kansai Electric Power (Japan), Électricité de France (France)

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PISA Confirms: U.S. Education in Need of Moonshot

By Daniel Goldfarb at Americans for Energy Leadership

In conjunction with today's "Innovation for Education: A Digital Town Hall" hosted by ITIF, PBS, and the Aspen Institute, the Organization for Economic Cooperation and Development released findings for 2009's Program for International Student Assessment (PISA). The results are hardly shocking to anyone who has followed the decline of American STEM education or competitiveness policy. Compared to the 65 countries in the study the United States ranks 14th in reading, 17th in science and a below-average 25th in math. The best educated students - those in Korea, Finland, Shanghai-China, and Hong Kon-China - by age 15 are a year ahead of their American counterparts in math and science.

The report's results come at a time of heightened attention to America's competitive posture. Recently Secretary of Energy Chu and President Obama have warned of a "Sputnik moment", a parallel which was again invoked by Secretary of Education Duncan. Just as Sputnik symbolized the U.S.S.R.'s lead in the space race, the Administration is looking to frame China's economic and education triumphs as calls to action. During the town hall, Secretary Duncan framed the results as such a challenge to America, "We have to see this as a wake-up call," that, "maintaining [the] status quo is effectively losing ground.”

America's STEM education woes could provide an ideal topic for bi-partisan efforts to improve America's competitiveness. In the past education has been a subject of cooperation between the two parties, as was the case with No Child Left Behind, and it seems that both sides are willing to recognize the urgency of PISA's findings. Chester E. Finn Jr., who served in President Ronald Reagan’s Department of Education and has visited schools all across China, said of PISA's result,"'Wow, I’m kind of stunned, I’m thinking Sputnik. I’ve seen how relentless the Chinese are at accomplishing goals, and if they can do this in Shanghai in 2009, they can do it in 10 cities in 2019, and in 50 cities by 2029.'"

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Monday, December 06, 2010

Energy Innovation 2010: Rethinking Energy Innovation

Leading think tanks sponsor day-long conference rethinking energy innovation in the United States: getting to scale, making clean energy cheap, securing American leadership.

After two years of often-tumultuous debate in Congress, the national debate over energy and climate change policy has now been altered: cap and trade policy efforts have run aground in Congress, perhaps fatally, and Republicans are ascendant, reshaping the national political landscape. Meanwhile, with economic recovery the top priority for the public and policymakers alike, America’s clean tech competitors are surging ahead, raising the stakes for energy policy.

Against this backdrop, support is growing on both right and left for new national investments in energy innovation that can help address some of the most urgent imperatives of our time – renewing the economy, improving energy security and public health, and overcoming key environmental challenges.

A growing chorus of voices thus counsels a renewed national commitment to develop breakthrough energy technologies – and to the reform of America’s energy innovation system itself.

In recent months, energy experts have advised policymakers to: take a page from the nation’s long history of successful military research and procurement; build on the success of agricultural research stations and the National Institutes of Health by establishing new innovation institutes and clusters nationwide; promote the right mix of both competition and collaboration to spur innovation and productive knowledge spillover; reform energy subsidies to reward innovation; and restructure business taxes to promote investment in the building blocks of an innovation economy.

On December 15th, a group of America’s leading policy think tanks will host a day-long conference in Washington D.C. to rethink energy innovation.

Energy Innovation 2010, held at the National Press Club, will bring together leading experts from government, think tanks, academia, and business to ask hard questions about how energy innovation efforts can be brought to scale, how the innovation system must be restructured and reformed, and how to renew the kind of active partnerships between the public and private sectors that were responsible for so much of America’s prior technological innovation and economic strength.

The free, day-long conference is sponsored by the Information Technology and Innovation Foundation and the Breakthrough Institute, with the American Enterprise Institute, Third Way, Clean Air Task Force, Consortium for Science, Policy and Outcomes, Securing America’s Future Energy, and the Brookings Institution. The conference organizers are pleased to welcome TheEnergyCollective.com and Yale Environment 360 as media sponsors for the event.

Registration for Energy Innovation 2010 is free, but required in advance as space is limited, so register now.

Head here to find more information, see the full conference agenda and register today.

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Thursday, December 02, 2010

Shorting America's Clean Energy Future

Originally Published at the Breakthrough Institute

Four months ago, we warned that while the stimulus bill had created considerable momentum in the domestic clean energy sector by funding clean energy research, manufacturing, and markets, a looming clean tech funding cliff threatened to send clean energy markets into a deep freeze as stimulus funds expired with no new investments in line to replace them.

Now it looks like that funding cliff is in sight, and Wall Street is threatening to push us over it. As Bloomberg News reports, hedge funds have increased their short selling of U.S. renewable energy stocks--essentially betting on their decline--to an annual high. The investment decisions follow widespread skepticism that the federal government will continue to invest in nascent clean energy industries.

As Daniel Goldfarb of Americans for Energy Leadership writes, in the short term, the move could advantage international competitors in the clean tech space:

In an increasingly globalized world such a flight of capital from U.S. clean energy companies will mean a distinct advantage for American competitors who are moving rapidly to corner the market. By failing to commit to these crucial industries we risk wasting the money already invested in making our clean energy companies competitive.

The impending funding cliff also imperils the thousands of domestic jobs tied to clean energy projects and manufacturing supply chains. If they disappear, there's no guarantee they'll return as other nations forge ahead with concerted efforts to build competitive clean energy industries and supply the growing global market.

Ultimately, the news from Wall Street exemplifies the precarious nature of a clean energy industry that still requires major public subsidies to survive, particularly in a time of budgetary constraint. Over the long-term, the only way to catalyze a global clean energy revolution and reclaim American leadership in the global clean tech industry is a national commitment to an energy technology innovation strategy that can make clean energy cheap.

Just this week the President's top science advisors called for such a strategy. Congress should listen before it's too late.

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Wednesday, December 01, 2010

China Builds on Lead in 4th Quarter

By Daniel Goldfarb
Originally Published at Americans for Energy Leadership

Just days after Secretary Chu's declaration that America is facing a "Sputnik moment", more proof continues to surface of China's widening lead in the clean energy race. Ernst and Young's quarterly "country attractiveness" index has confirmed that not only is China still the most attractive destination for clean tech investment, as we reported it became for the first time last quarter, its lead is growing.

The warnings of Secretary Chu and the recommendations of the President’s Council of Advisors on Science and Technology (PCAST) take on new urgency in light of the report's findings,"A new world is emerging in the clean energy sector with China now the clear leader in the global renewables market". At the same time the LA Times is reporting that clean tech investment in the U.S. fell 45% in the fourth quarter.

It is increasingly becoming clear that what is at stake is jobs. Ernst and Young recognize an increasing disparity in the job creation in those countries that are "in the fast lane" and those that are "hesitant". The focus in China and other emerging countries on their clean energy industries is already bearing fruit, "One striking feature of the post-credit-crunch world is the difference between the pedestrian pace of recovery in the West and the rapid turnaround in the new BRIC (Brazil, Russia, India, China)".

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Clean Energy Financing: First Steps Towards Post-Partisan Effort

Originally published at Americans for Energy Leadership.

Energy reform is headed quickly towards a hyper-partisan stalemate. As the Republican party takes control of the U.S. House, some advocates of a progressive energy agenda are calling for Congressional Democrats to regroup and “conduct guerrilla warfare” against the status quo. A consortium of climate scientists has recently rallied together to “to challenge disinformation and misinformation deployed in the policy wars over global warming.” All signs point to an intensifying battle between “climate hawks” and “climate zombies,” but little progress will be made if advocates continue to reinforce this hyper-partisan environment. Despite rampant cynicism, opportunities for bipartisanship exist, and the greatest potential for aisle-crossing probably lies in financing mechanisms for clean technology innovation.

Public funding and financing for technology-focused clean energy projects present unique political opportunities that other government efforts lack. Unlike pollution regulations and top-down industrial mandates, financing for business has long enjoyed broad support from both ends of the political spectrum. Various policy tools aimed at ramping up federal dollar flow towards clean energy projects include feed-in tariffs, loan guarantees, credit enhancement, direct grants and tax credits. Many of these policies carry the potential for bipartisan support in Congress.

The American Recovery and Reinvestment Act (ARRA) installed probably the greatest federal support for clean technology investment in history. However, as stimulus projects expire, clean technology innovation is approaching a funding cliff that will need to be replenished if Congress is serious about decarbonization. Hypothetical broad-based subsidies and renewable electricity standards will be insufficient in targeting the specific projects required for technological innovation. Vestigial targeting elements of the 2009 stimulus bill have received support from both sides of the aisle. Sec. 1603 of ARRA, for instance, has provided grants for specific clean energy projects in lieu of tax credits. Senators Jeff Bingaman (D-NM) and Olympia Snowe (R-ME) recently co-sponsored a bill (S. 3935) that would extend the tax code calibrations established by the stimulus act. The grants established by this legislation are diverse, but not broad; instead of blanketing industry with blank-check subsidies, they target projects in storage, solar, wind, fuel cell, and other clean energy technologies.

New programs based on tax credits and incentives could also attract Republican co-signers. Sander Levins, the Chairman of House Ways and Means, introduced alternative legislation to cap-and-trade that includes roughly $6.5 billion in tax credits for manufacturing of clean technologies, in addition to extending credits for other alternative fuels. Like S. 3935, Levin’s Domestic Manufacturing and Energy Jobs Act of 2010 would include extensions of stimulus programs, in this case Sec. 48C, another tax credit provision of ARRA. As Daniel J. Weiss reported recently, “the 48C programs is also included in S. 2857, co-sponsored by Bingaman, Hatch, Lugar, and Debbie Stabenow”--two Democrats and two Republicans. Unlike past efforts by Democrats such as health care, in which they crafted legislation and then courted Republicans, programs like S. 3935 and S. 2857 can trace bipartisan support to their original authorship.

These initiatives are certainly smaller-scale than the original and subsequent drafts of the American Power Act, this summer’s climate/energy effort spearheaded by Senators Kerry, Graham and Lieberman. Despite its “tri-partisan” coalition of authors, APA was a stark demonstration of the political intractability of cap-and-trade. Even with a high-profile Republican working on the bill for six months and concessions by Democrats on nuclear and clean coal technology, conservatives in the Senate dropped the bill before picking it up. Instead of pursuing an agenda built around cap-and-trade with ornaments for conservatives, advocates must encourage their lawmakers to draft innovation-focused legislation from the ground up, with across-the-board political support for various traditionally conservative and progressive financing mechanisms.

Americans for Energy Leadership has already publicized an op-ed in Politico by Senators Stabenow (D-MI), Hagan (D-NH), and Udall (D-CO) calling for a new strategy on energy reform. Citing a report by Third Way, they note that “energy innovation is not a partisan issue--it’s an American imperative.” The path to a decarbonized economy cannot find success if either party adopts energy reform as a partisan agenda, used to re-elect their own members and wedge the ranks of the opposing party. Economic growth, energy security and the protection of our soliders are not partisan issues--they are core American goals.

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U.S. Must Triple Investment in Energy Technology: President's Science Advisors

Originally Published at the Breakthrough Institute

he United States should more than triple federal investments in the development of cutting edge new energy technologies to accelerate the transition to a low carbon energy system, according to President Obama's top science and technology advisors.

Joining an increasingly broad and consistent set of voices, from academia, policy organizations, business leaders and researchers, the President's science and technology advisors forcefully argue that accelerated energy innovation is critical to the nation's future prosperity for economic competitiveness, environmental, and national security reasons alike.

The report, "Accelerating the Pace of Change in Energy Technologies Through an Integrated Federal Energy Policy," was written by the President's Council of Advisors on Science and Technology (PCAST) and released Monday.

The PCAST report recommends a series of measures to strengthen the federal energy innovation system, including: a major increase in federal funding for energy research, development, demonstration, and deployment; a strategic energy plan to assess and evaluate energy innovation policy and priorities every four years; and new programs to train and inspire the next generation of energy scientists and engineers to tackle the nation's energy and climate challenges.

Funding should be increased to $16 billion annually, according to the report, with the majority--75 percent--of funds dedicated to research, development, and demonstration (RD&D) projects early in the technology life cycle.

In order to avoid adding to the federal deficit, PCAST recommends using new revenue sources to fund roughly $10 billion of the new investments while limiting negative impacts on consumers. The report notes that a gas tax increase of just two pennies per gallon of motor fuel sold would raise $4 billion annually for key investments in energy innovation, while a one-tenth of one cent per kilowatt hour surcharge on all electricity sales would raise an equivalent amount.

Beyond additional funding, PCAST also calls for better coordination of federal energy innovation strategies, recommending that the Obama Administration establish a Quadrennial Energy Review (QER), akin to the current Quadrennial Defense Review, to provide a multi-year roadmap for federal energy policy and energy technology objectives. A thorough review of federal energy subsidies is also advised, although the report does not delve into great specificity about which programs should be cut and which strengthened.

To train a new generation of scientists and engineers, PCAST recommends that the Department of Energy fund training grant programs and curriculum at universities around the country, aimed at undergraduates, graduates students, and post-docs. They also envision a new multidisciplinary social science research program geared towards understanding the energy innovation ecosystem and how new technologies succeed in the market place.

The Growing Energy Technology Consensus

The report is a high-profile endorsement of a technology-led clean energy innovation strategy, and adds to the momentum that has gathered over the past two years for major federal investment in energy R&D. Last year, 34 Nobel Prize recipients called on the President to commit $15 billion annually for energy R&D. This summer, private business leaders like Bill Gates and Norman Augustine, along with other members of the American Energy Innovation Council, advocated a similar scale of investment.

And most recently, the Breakthrough Institute, Brookings Institution, and the American Enterprise Institute released "Post-Partisan Power," a $25 billion a year, technology-led innovation strategy to secure America's clean energy future. That report called for reforming energy subsidies to drive innovation, ramping up investment in energy and science education, and paying for additional investment in energy research and procurement through small but broad revenue streams like electricity surcharges or fees on imported oil--all very consonant with PCAST's recommendations.

Speaking at the National Press Club on Monday, Energy Secretary Steven Chu spoke in stark terms about the imperative to invest in energy innovation, warning of a "Sputnik moment" as China threatens to eclipse the United States in clean energy technology:

"Innovation is the key to prosperity and progress...you're making an expenditure because, in the long run, it's the future economic health of the country. That's not 20 years in the future; we're talking one, two, three years. We've got to make these investments."

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