In this thoughtful, comprehensive book, Weiss and Bonvillian argue for a coherent, long-term approach to U.S. energy policy that balances market/demand pull and technology push. The former, they insist (embodied in a carbon tax or cap-and-trade system) is not sufficient to fundamentally change either U.S. energy independence or GHG emissions. They call for “a new integrated analytic framework.” The framework would need to be technology neutral; it must stimulate private sector competition, not promote or require any particular technology. It must also take into account that new technologies don’t face an open, new market, but rather one saturated with cost-effective, politically supported, popular incumbent technologies; we should think of this competitive space as an “anti-commons.”
The authors’ sophisticated analysis of energy innovation includes a discussion of three innovation theories, which they believe must be synthesized in order to effect a fundamental transformation in energy technology: the “pipeline” or “linear” model (investment in basic research leads linearly to invention and then to market), the “induced innovation” model (whereby innovation responds to economics, seeking to fill new markets with whatever is cheaper–existing technology redeployed or new technology), and the “innovation organization” theory, whereby innovation is furthered or impeded based upon the organization structure of the institutions doing the innovating. The authors argue that all three must be taken into account in developing long-term energy policy: we must fund basic research, but also change the market to induce innovation, while creating and restructuring organizations optimized for energy innovation.
Their four-step analytic framework:
1. Analyze promising energy technologies based on likely bottlenecks in their launch path (i.e., isolate barriers to their market competitiveness).
2. Classify innovation policies into technology-neutral packages, aimed at generalizable bottlenecks (from step 1).
3. Identify which of these innovation bottlenecks fail to receive sufficient federal support.
4. Design new institutions to fill the gaps identified in step 3.
Most of the book is devoted to carrying out these analyses. This seemingly pragmatic and commonsensical approach is, in fact, they claim, far from today’s legislative process, which seeks to promote individual technologies with targeted incentives instead of assessing the real barriers to energy innovation (including bringing it to market competitively) and institutionally addressing the problem as a coherent whole. In this way, the authors’ “integrated framework” is more significant than their specific findings. Some of the latter include:
LED lighting: Government efforts to mandate lighting efficiency is touted as a technology-neutral approach that has significantly spurred R&D in LED technology, which is advancing rapidly and already occupies niche markets, even though it isn’t yet competitive in the mainstream market. This is exactly the model the authors wish to see in other potentially disruptive technology innovation.
Geothermal energy is poised to become a major primary renewable energy source over the next several decades, with modest ($40 to $80M per year) but well-placed federal investment and incentives.
Many promising technologies could be significantly helped along by the formation of a new “translational” R&D entity within the Department of Energy, focused on bringing many technologies to market. This entity would need to work intimately with the private sector, rather than on the current model, which assumes that it will carry out only basic research, or that the government will be the only customer. This entity should be modeled after DARPA.
Also needed, argue the authors, is a government corporation that can share costs with industry for large-scale, risky technology demonstrations, providing the last link in the chain between ARPA-E R&D and prototyping to commercialization. The authors acknowledge that such institutional changes, as well as the leadership necessary to convert current short-term, technology-specific initiatives into long-term, technology-neutral ones will require not only a broad political consensus within Congress, but also coordinated executive-branch vision and spearheading.
-ZHARPA-E • CCS • commercialization • DOE • energy innovation • energy policy • public research • solar • valley-of-death