Book Launch: Structuring an Energy Technology Revolution
On April 27, 2009, the Program on Science, Technology, America, and the Global Economy Program (STAGE) invited the authors of Structuring an Energy Technology Revolution to present their new book at a public event following a smaller meeting the week before. The two authors, Charles Weiss, a distinguished professor of Science, Technology, and International Affairs at the Edmund A. Walsh School of Foreign Service at Georgetown University, and William B. Bonvillian, Director of the MIT Washington D.C. Office, presented an approach to stimulating technological innovation in the field of energy, confronting the high environmental and geopolitical costs of our fossil fuels dependency.
Weiss started the presentation by explaining that a major federal research and development (R&D) and implementation program, including market-based incentives, to stimulate energy innovation is both urgent and essential. However, R&D spending on energy research has actually declined by about $3.5 billion in 2007 to a level which is not even half the amount spent on R&D by the largest U.S. pharmaceutical company. Overall, U.S. private R&D investment averages just 2.6% of sales; the energy sector in particular invested, on average, less than 1% of annual revenue for R&D from 1988 to 2003.
Weiss emphasized that R&D in the energy sector at the level needed to either stabilize or reduce CO2 emissions will require a huge upfront investment. According to the International Energy Agency (IEA) 2008 report, stabilizing CO2 emissions at current levels from now through 2050 will require a total worldwide investment of $17 trillion ($400 billion per year) in R&D and implementation. Reducing emissions to 50% below 2005 levels, which is the goal that the G-8 leaders committed to in July 2008, will require a total worldwide investment of $45 trillion ($1.1 trillion per year) in R&D and implementation.
Weiss further explained that the U.S. has typically focused on innovation in pioneering sectors. Energy, however, is an established and complex sector. As such, innovation in this field will pose particular challenges. One difficulty is that energy use pervades the entire economy and affects every sector. Energy costs are more than 1.5 trillion dollars per year in the United States alone. Another difficulty is that fossil fuels are convenient and cheap, if externalities are not taken into account. Finally, legacy technologies are entrenched, backed by enormous subsidies and tax advantages, public investments in infrastructure, politically powerful companies, and a prevailing public expectation of low-cost energy.
Bonvillian pointed out that a cost-of-carbon measure with market-based incentives will be necessary, but not sufficient. Public investment is also crucial. The need for new technologies is urgent; fast and efficient innovation in the energy field will require public support and coordination. On the other hand, it will be hard to impose a strong carbon charge in a struggling economy. Congressional action is likely to be slow given the deep recession. The first laws to be passed are likely to have loopholes, escape clauses, and exit ramps.
Ideally, a public strategy for energy technology should be very large in scale and scope, public-private partnerships are critical and should be driven by the private sector, and the current subsidies backed by powerful lobbies will have to be phased out.
Bonvillian and Weiss have set forth in their book a new four-step analysis in order to confront these many challenges and drive energy innovation forward: first, categorize technologies based on the way they will move from design to the marketplace; second, tie policy packages to those 'launch' categories; third, identify the gaps in the existing energy innovation system; and fourth, strengthen or develop institutions to fill those gaps. Bonvillian insisted that a program commensurate with the scope of the energy problem can be realized only with strong leadership. Ultimately, change will require a supportive public attitude toward the urgency of energy innovation.
Following the presentation, several questions were asked by audience members.
One participant asked where the leadership for such an energy movement will come from. Weiss and Bonvillian explained that a top-down approach would not be enough. Rather, collaboration must occur between the government and the private sector. Weiss continued, saying that a significant drawback is that there is no industry-wide energy association, so it can be difficult to organize leadership in the energy sector. In addressing energy challenges in the 21st century, strong coordination between the industry, universities, and new and existing institutions will be essential.
Drafted by Yoon-hee Rho, STAGE Program
Kent H. Hughes, Director, STAGE Program