NewEnergyNews: SPENDING MONEY ON INNOVATION WILL MAKE MONEY BACK ON NEW ENERGY/

NewEnergyNews

Gleanings from the web and the world, condensed for convenience, illustrated for enlightenment, arranged for impact...

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YESTERDAY

THINGS-TO-THINK-ABOUT WEDNESDAY, August 23:

  • TTTA Wednesday-ORIGINAL REPORTING: The IRA And The New Energy Boom
  • TTTA Wednesday-ORIGINAL REPORTING: The IRA And the EV Revolution
  • THE DAY BEFORE

  • Weekend Video: Coming Ocean Current Collapse Could Up Climate Crisis
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  • Weekend Video: More Facts On The AMOC
  • THE DAY BEFORE THE DAY BEFORE

    WEEKEND VIDEOS, July 15-16:

  • Weekend Video: The Truth About China And The Climate Crisis
  • Weekend Video: Florida Insurance At The Climate Crisis Storm’s Eye
  • Weekend Video: The 9-1-1 On Rooftop Solar
  • THE DAY BEFORE THAT

    WEEKEND VIDEOS, July 8-9:

  • Weekend Video: Bill Nye Science Guy On The Climate Crisis
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  • Weekend Video: A “Massive Global Solar Boom” Now
  • THE LAST DAY UP HERE

    WEEKEND VIDEOS, July 1-2:

  • The Global New Energy Boom Accelerates
  • Ukraine Faces The Climate Crisis While Fighting To Survive
  • Texas Heat And Politics Of Denial
  • --------------------------

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    Founding Editor Herman K. Trabish

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    WEEKEND VIDEOS, June 17-18

  • Fixing The Power System
  • The Energy Storage Solution
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    email: herman@NewEnergyNews.net

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  • The Virtual Power Plant Boom, Part 1
  • The Virtual Power Plant Boom, Part 2

    Thursday, June 17, 2010

    SPENDING MONEY ON INNOVATION WILL MAKE MONEY BACK ON NEW ENERGY

    American Business Leaders Call for Revolution in Energy Technology Innovation; Group urges scale-up in investment, systemic reforms to create jobs, address national security, solve environmental challenges
    June 10, 2010 (American Energy Innovation Council)

    THE POINT
    If somebody said he thought planting beanstalk beans would be good for the nation right now, he might not be taken too seriously. But if, a week later, the President of the United States made a 15-minute primetime speech from the Oval Office and a line from that speech mentioned that the nation needed to start planting beanstalk beans, it is likely the guy who mentioned the idea originally would get more attention.

    Last week, Microsoft founder Bill Gates appeared before a Congressional panel to emphasize the contention in A Business Plan for America’s Energy Future, from the Gates-led American Energy Innovation Council (AEIC), that the nation needs to dramatically boost its investment in New Energy and Energy Efficiency research and development.

    This week President Obama's speech from the Oval Office about the Gulf oil spill included this passage: "Some believe we should set standards to ensure that more of our electricity comes from wind and solar power. Others wonder why the energy industry only spends a fraction of what the high-tech industry does on research and development - and want to rapidly boost our investments in such research and development."

    Having won a place in President Obama’s speech, Mr. Gates' idea certainly deserves even closer scrutiny than would have been the case just on the strength of Mr. Gates’ own formidable recommendation. A Business Plan for America’s Energy Future lays out the case for increased New Energy and Energy Efficiency research, development and deployment (RD&D) spending in convincing detail. The U.S., it points out, leads the world in defense, health, agriculture, and information technology because of a commitment to intelligent federal investments in those sectors. In New Energy and Energy Efficiency, where it has failed to invest at competitive levels in innovation since the 1970s, it is falling behind world leaders, losing out on enormous economic opportunities and paying the high price of fossil fuel addiction.

    The American Energy Innovation Council (AEIC) is made up of some of the corporate world’s heaviest hitters: Norm Augustine, former chair/CEO, Lockheed Martin; Ursula Burns, CEO, Xerox; John Doerr, partner, Kleiner Perkins; Bill Gates, chair/former CEO, Microsoft; Chad Holliday, chair, BofAmerica and former chair/CEO, DuPont; Jeff Immelt, chair/CEO, GE; and Tim Solso, chair/CEO, Cummins Inc. These are people who know what the word “investment” means. Their message is clear: Investment leads to innovation, innovation leads to economic achievement and economic achievement leads to everything everybody wants.

    The nation’s failure to invest even one-half of one percent of its total energy expenditure for New Energy and Energy Efficiency RD&D has left it dependent on fossil fuels price vagaries, has it sending ~$1 billion out of the country daily for oil, and continues to cost it blood and treasure in the protection of energy supply lines and sacrificed human health, lives, livelihoods and ecosystems to pollution and climate change.

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    The motivation behind the report turns out to be patriotic but in its essence is self-interest: Realizing the enormous opportunites will make energy cheaper and more secure and allow every U.S. business to compete more successfully. But the opportunities can only be realized if the federal government leads.

    It was a shift in federal support for defense, aviation, and health care – to name only 3 instances – that led to engagement by the regulated free market. Energy especially needs such support because policies and subsidies now support the Old Energies. These drivers must be shifted to the New Energy opportunities before the private sector can or will commit itself.

    In addition to vastly increased RD&D, the business leaders call for that most evasive of all policies, a comprehensive national energy plan. It would, they say, entail a public-private collaboration and supply the 3 prerequisites to energy innovation: (1) a pipeline of new inventions; (2) a set of policy reforms to stimulate market demand; and (3) a highly skilled workforce to invent and deploy.

    The AEIC paper addresses only the pipeline of inventions through its argument on behalf of RD&D investment. The policies that compliment RD&D investment and sustain the market, the leaders say, must (1) replace on-again, off-again policies with long-term price/market signals that give private sector investors confidence; (2) encourage competition among technologies with performance standards that allow the market to choose the most effective, lowest-cost technological innovations; and (3) reward research advances, performance improvements and continued innovation.

    The paper emphasizes that the nation must create and nurture a science and engineering workforce to do the innovation. It must (1) vastly improve K-12 science and mathematics education; (2) strengthen its commitment to long-term basic research; (3) make the U.S. the best place for the world’s students to study and do research and award a green card with every foreign student’s higher education diploma in science, technology, engineering or math; and (4) make the U.S. the best place in the world to innovate, invest in manufacturing and marketing, and create high-paying jobs.

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    THE DETAILS
    Examples of federal programs responsible for game-changing technologies: (1) unmanned aircraft systems, (2) the Internet, (3) many medical breakthroughs

    The 1970s oil embargoes cost the U.S. more than a trillion dollars in recessions but it has failed to end oil dependence, it now spends $1 billion a day on foreign oil and though it spends no more than $689 million a year (the cost of 16 hours of oil) for research on advanced vehicles and alternative fuels.

    Blackouts can cost the economy $1+ billion but the U.S. spends only $170 million per year on electricity delivery and reliability.

    The AEIC calls for spending 1.5% of the present U.S. energy bill to spur innovation. Many other high tech industries spend ten times as much (as a fraction of sales).

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    The AEIC premises: (1) The nation’s energy system is deficient in ways that cause serious harm to the economy, national security, and the environment. (2) Modernizing the energy system with New Energy and Energy Efficiency requires robust, public investments in innovative energy technologies and policy reforms to deploy the technologies at scale. (3) The nation’s entrepreneurial spirit and tradition of leadership in technology innovation can do the rest. (4) The energy status quo poses significant risk to the present way of life.

    2 reasons the federal government must lead:

    (1) Energy innovation creates “significant, quantifiable public benefits” (cleaner air, improved public health, enhanced national security and international diplomacy, reduced climate change risk, protection from energy price shocks and related economic disruptions) that are not rewarded by the market so the private sector gains little from funding it.
    (2) The required scale of capital investment (beyond the acceptable risk for most private investors) and existing market structures (supporting the Old Energies) limit energy infrastructure turnover and block investment in new ideas, sustaining the energy status quo.

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    5 recommendations through which federal investment can unleash technology innovation:

    (1) Create an independent national Energy Strategy Board:
    The board would create a national energy strategy. It would continuously assess the effectiveness of energy policies and lay out a framework for the development of New Energy and Energy Efficiency technologies. Such a national strategy would end oil-driven recessions, fossil fuels’ devastation of the nation’s environment, reverse the trade deficits that are produced by a billion dollars a day going out for foreign oil, end the sacrifice of blood and treasure to protect oil and resolve the national security risks from it, turn back greenhouse gas emissions (GhGs), and drive the energy innovation that will spawn economic recovery.

    A congressionally-mandated Energy Strategy Board should (1) develop and monitor a National Energy Plan for Congress and the executive branch, and (2) oversee a New Energy Challenge Program (see #5, below). The board should be (a) made up of experts in energy technologies and associated markets, (b) politically neutral and (c) outside the government.

    (2) Invest $16 billion per year in clean energy innovation:
    Investment must be sustained and at a scale that will impact existing infrastructure. A minimum of $16 billion per year, an annual increase of $11 billion, is needed. It must be allotted (a) in multi-year commitments, (b) with well-defined performance goals, (c) for scalable technologies, and (d) free from political interference and earmarking.

    All other recommendations will be covered by $16 billion a year and no other recommendations matter if there is not a significant sustained increase in funding. Incrementalism will fail.

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    (3) Create Centers of Excellence with strong domain expertise:
    Innovation centers provide the hardware with which innovators work. Funded centers turn trained scientists into innovators. Centers allow innovators to work the hardware over the multi-year periods in which failures lead to success. Innovation institutions close to one another allow for stimulation, cooperative ventures and keep one another honest.

    Resources should be effectively allocated across institutions working on the same problem. The Department of Energy’s newly created Energy Innovation Hubs are moving toward such energy innovation Centers of Excellence but are not adequately funded. An annual budget of $150-to-$250 million each is necessary to pursue potentials and eliminate dead-ends.

    (4) Fund ARPA-E at $1 billion per year:
    The creation of the Advanced Research Projects Agency-Energy (ARPA-E) is for the high-risk, high pay-off, game-changing energy innovation technologies. It is intended to change the way energy is generated, stored, and used. Such work requires unique autonomy. That means unique funding and long time-horizons. The current federal stimulus that created ARPA-E is completely inadequate. A $1 billion annual commitment is the minimum necessary.

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    (5) Establish and fund a New Energy Challenge Program to build large-scale pilot projects:
    This New Energy Challenge Program is a mechanism through which large-scale ideas or prototypes can be taken to commercial-scale. It accelerates commercialization by creating an independent corporation outside of the federal government composed of a partnership between the federal government and the energy industry. It should report to the Energy Strategy Board and focus on entirely on deployment. It requires a single federal appropriation of $20 billion over 10 years.

    Though the federal deficit makes funding innovation difficult, underfunding RD&D “is an exercise in gross fiscal irresponsibility.”

    3 reasons the energy system should finance its own innovation: (1) Investment by the systems that generate social costs is sound economics; (2) Funding RD&D from sales makes the cost of building new technologies a user fee instead of a tax; and (3) RD&D pays off in lower energy bills that pay for the investment.

    Financing the necessary long-term investment in energy innovation:
    (1) Any system to cut GhGs (cap&trade, tax, etc.) will generate revenue. The first $16 billion of such revenues should go for energy RD&D. This will further cut the cost of GhG reductions, creating a “virtuous cycle.”
    (2) User fees such as the wire fees that pay for electricity transmission or the gas taxes that pay for transportation infrastructure could pay for the RD&D.
    (3) Shifting existing subsidies away from the Old Energies could also pay for the needed RD&D.

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    The AEIC paper includes short, medium and long term measures of success for each of its 5 key recommendations.

    For (1) Create an independent national Energy Strategy Board:
    Short term: Is there a Board, is it independent and is it funded?
    Medium term: Is there a National Energy Plan with concrete and measurable goals, is there a New Energy Challenge Program, is the plan getting a response from DOE and Congress and is there innovation?
    Long term: Are the Plan’s goals being met and updated?

    For (2) Invest $16 billion per year in clean energy innovation:
    Short term: How much is being spent on energy RD&D?
    Medium term: Are energy costs falling and performance standards being met?
    Long term: Are key technologies being built and deployed at scale and competitive cost?

    For (3) Create Centers of Excellence with strong domain expertise:
    Short term: Are there enough Centers of Excellence and are they adequately funded?
    Medium term: Are innovations coming from the Centers through public-private cooperation at reasonable cost?
    Long term: Is the innovation from the Centers price-competitive, widely deployed and generationg new Research Triangles/Silicon Valleys for energy?

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    For (4) Fund ARPA-E at $1 billion per year:
    Short term: Is ARPA-E funded and supporting projects?
    Medium term: Is ARPA-E driving game-changing innovation cost-effectively?
    Long term: Same as medium term but moreso.

    For (5) Establish and fund a New Energy Challenge Program to build large-scale pilot projects:
    Short term: Is a New Energy Challenge Program funded, supported by Congress and the White House, working with experts on roadmaps and bringing in private sector resources?
    Medium term: Are roadmaps folding into the National Energy Plan, generating cost-effective, high-performance projects, creating public-private international partnerships and maintaining the right risk profile?
    Long term: Are projects operating as expected and evolving and are private sector participation and financial support strong?

    Energy innovation will lead to long-term prosperity. Not funding it will limit the nation’s options.

    The business leaders conclude their paper by insisting their proposals are “specific and affordable,” are "not especially difficult” and are "not partisan.” They are the consensus of private sector managers, seasoned scientists, academic leaders, government lab directors, and energy specialists.

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    QUOTES
    - From the prelude to the paper, signed by Norm Augustine, former chair/CEO, Lockheed Martin; Ursula Burns, CEO, Xerox; John Doerr, partner, Kleiner Perkins; Bill Gates, chair/former CEO, Microsoft; Chad Holliday, chair, BofAmerica and former chair/CEO, DuPont; Jeff Immelt, chair/CEO, GE; and Tim Solso, chair/CEO, Cummins Inc: “We are optimistic about the potential for dramatic change in the energy realm. To seize this opportunity, America must put aside partisan interests and make a strong, bold commitment.”

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    - From the introduction to the paper: “Ours is a strategy to fill the American energy innovation pipeline with new technologies designed to deliver a more secure, sustainable future…But we recognize that research, development and deployment (RD&D) needs complementary energy policies to advance innovation and drive market adoption of new technologies…Innovation without implementation has no value. A strong market signal will increase the intensity of energy research, add large private-sector commitments, reduce barriers between the lab and market, and ensure technologies perform better and cost less over time. Those policies may include some combination of a price or cap on CO2, a clean energy or renewable energy portfolio requirement, and technology performance standards.”

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    - From the paper’s conclusion: “Energy innovation is a commitment to long-term prosperity…If the United States invests in its clean energy future now, our nation can reap immense benefits…Americans developed the computer and the Internet, delivered air and space travel and decoded the human genome. Standing on their shoulders, we can see a clean energy future within reach…[I]f we starve energy research, there is no doubt that this country will have constrained future options. The national energy system is almost unfathomably large, and it will take many decades for its sunk investments to turn over. Today’s investment decisions on transportation systems, power plants, buildings, and factories have the effect of locking in long-term consequences for our economy, national security, and environment…The American way is to invent our future, to seize control of our destiny…[We] need to create new patterns in power, transportation, manufacturing, and housing that strengthen—rather than undermine—our national security and economic health…”

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