The Power of Innovation: Inventing the Future
Innovation has been the predominant driver of U.S. economic growth over the last century. Scientific and technological innovations have produced new industries and the jobs that accompany them, helped maintain the competitiveness of a growing number of companies that rely on technology to succeed, and ultimately made American lives better. Throughout this history, the federal government has played a vital role in catalyzing innovation across a number of key, strategic sectors—such as defense, health, agriculture, energy, and information technology. In every instance, these sectors provide invaluable contributions to the United States while facing their own distinct sets of challenges. This is especially true in the energy sector.
Access to reliable, affordable energy has such a profoundly positive impact on people’s lives as to nearly defy calculation. Yet unlike many other technology sectors, the energy sector in particular has suffered from underinvestment in research and development (R&D) for a number of reasons. As a generally low-cost commodity, it is often difficult for an energy supplier to differentiate itself and charge a premium the way products in other markets like communications hardware or biomedical technologies might. Energy infrastructure and technologies are also generally high-cost and long-lived, leading to large amounts of inertia and, in some cases, risk avoidance. Further complicating these challenges is the fact that energy markets are highly fragmented and often face a significant amount of regulatory fracturing and uncertainty.
These difficulties mean energy innovators are forced to cross not one, but two “valleys of death” before bringing a promising new technology to market. The first valley is technical: Innovators must leave the lab and create a viable product, which means confronting high technical and management risks that can compound the need for large amounts of patient capital. The second valley is commercial: Even once a technology has been demonstrated to be viable, developing manufacturing processes and supply chains can have prodigious costs, and projects are generally too far removed from commercialization to attract private investors. In both instances, targeted federal support can serve a critical role by reducing risks for promising technologies. In fact, such investments have a long and distinguished track record in providing important returns to the public in the form of job creation, economic growth, enhanced security, and environmental progress.
“An investment in a true energy transformation requires governments, research institutions, businesses, and private investors to work together. And it’s hard to overstate how important this public commitment is.” – Bill Gates, Co-Chair, Bill and Melinda Gates Foundation
It is also important to note that the technology development process is not always linear. The consensus that innovation follows a linear process from basic to applied research and then to deployment has persisted in the postWorld War II era. While research can obviously be purely basic or purely applied in nature, what may be less obvious is that a significant amount of research is a blend between the two. What’s more, the flow of information across the innovation process is often not one-directional. The development of new technologies can open up entirely new fields of research that seek to answer fundamental questions of science sparked by observations in applied settings. That is not to argue against the value of differentiating between various types of research, but rather to encourage policymakers to understand the importance of interactions across various stages of a technology’s development, as well as the role that crossdisciplinary and interdisciplinary teams have to play in advancing the nation’s scientific and technological interests.
A few decades ago, the United States found itself in the midst of an energy crisis. The response was a step change in U.S. investment in energy research that helped lay the foundation for an energy renaissance. Today, those investments have greatly increased U.S. energy security while creating good-paying jobs for Americans and bolstering the domestic manufacturing sector. Further, as global demand for energy continues to rise, these investments have helped to put the United States in a position to expand its global leadership in the energy sector, while reaping the economic benefits that come with doing so. The global energy market attracted $1.8 trillion worth of investments in 2015 alone in what should be a clear signal to the nation’s leaders that advanced energy technologies represent a multitrilliondollar opportunity for American businesses and workers. Americans should embrace the nation’s unique abilities to innovate as a way to create jobs, revitalize the economy, and enhance security while helping U.S. industry play a stronger role in providing clean, affordable, and reliable energy to the billions around the globe who currently lack it.