Ideas. Action. Results.

Top Business and Tech Leaders Urge Greater U.S. Commitment to Breakthrough Energy RD&D in New Study

Tuesday, February 24, 2015

Washington, D.C. – Six top business and technology leaders who comprise the American Energy Innovation Council (AEIC) today released a new study showing that U.S. government and private investment in energy technology breakthroughs has stagnated in recent years, risking long-term U.S. economic competitiveness, leadership in vast new global energy technology markets and environmental impacts.

AEIC—whose members are Norman Augustine, retired chairman and CEO of Lockheed Martin; John Doerr, partner, Kleiner Perkins Caufield and Byers; Bill Gates, co-chairman of the Bill and Melinda Gates Foundation; Charles Holliday, former chairman and CEO of DuPont; Jeffrey Immelt, chairman and CEO of GE; and Tom Linebarger, Chairman and CEO of Cummins—issued new analysis showing that the federal government has largely failed to address critical long-term energy research, development, and demonstration (RD&D) goals, even as markets for new energy technologies are burgeoning and other major nations have begun making larger economic investments relative to the size of their economies

“To solve the world’s energy and climate challenges we need to hundreds of new ideas and hundreds of companies working on them,” said Bill Gates. “That is not going to happen without the U.S. government’s continued tradition of leadership in R&D. Everyone has a role to play – from the private sector, to philanthropy, to the academy – but we will not be able to find the type of energy miracle we need without investing in the programs that support that innovation.”

“We believe it is deeply in America’s economic and security interests to double or triple long-term R&D investments,” said Norman Augustine. “But these investments simply aren’t happening right now. We urge this to become a critical priority for the new Congress, the president and leaders of both parties.”

The new study, Restoring America’s Energy Innovation Leadership, includes a report card on federal actions in the last five years since AEIC released its original recommendations in 2010 urging a tripling of U.S. energy R&D investments. The group also sent a letter to Members of Congress with the report pledging to work with Congress to find ways to increase funding. The AEIC report card finds:

  • Federal policymakers are failing when it comes to overall energy RD&D investment levels: “The federal commitment to energy RD&D is less than one-half of one-percent of the annual nationwide energy bill,” the report said. “This is insufficient, and it condemns future generations to fewer options. Since our initial report in 2010, investments have not grown. … Congressional appropriations for DOE’s RD&D activities peaked in FY 2009 and FY 2010—reaching roughly $6 billion in each of those years, as well as approximately $8 billion in 2009 stimulus funds—and has since dropped back to the funding levels of previous years, within a range of $5-5.7 billion per year.” (all amounts in 2014 dollars)
  • Policymakers failed to “establish a New Energy Challenge Program for large-scale demonstration projects or develop a first-of-a-kind technology commercialization engine.” “Some technologies require serious investments to become commercially viable—because of their sheer scale,” the report said. “Advanced nuclear power and carbon capture and storage will not flourish in America without this sort of commitment, and this recognition was at the heart of the AEIC recommendation for a New Energy Challenge Program. Today, we are essentially foreclosing, or at best delaying, those options.”
  • The new report commended the government for creating Centers of Excellence in Energy Innovation AND for developing and implement a comprehensive, government-wide Quadrennial Energy Review (QER). In 2011, DOE released its first Quadrennial Technology Review (QTR), which aimed to guide DOE’s RD&D priorities,” the report said. “The QTR found that DOE had underinvested in accelerating innovation in existing technologies in the near- to medium-term, relative to its long-term research portfolio. DOE is currently preparing a follow-up Quadrennial Energy Review, whose first report is expected to focus on energy transmission, storage, and distribution infrastructure. We strongly support these efforts, as they contribute to a more effective RD&D portfolio and contain the seeds of a comprehensive national energy strategy.”
  • The AEIC report noted Congress has not funding ARPA-E at $1 billion per year, or at a minimum, $300 million per year. While the report authors appreciate that the program has received steady funding, “the Advanced Research Projects Agency – Energy was funded at $180 million in FY 2011; $275 million in FY 2012; $250 million in FY 2013; and $280 million in FY 2014 and FY 2015 — all below our recommendation,” the report said.

“America can lead the world in addressing the biggest energy hurdles if we have the vision and foresight to do so,” said Charles Holliday. “But to bring down the costs of clean energy technologies and create robust domestic supply chains that venerate economic growth and new jobs, the country needs to scale clean energy technologies here at home. Achieving rapid growth in clean energy will require constructive partnerships that enable the public and private sectors to work together effectively and leverage the unique strengths of each.”

More broadly, the new AEIC analysis found that:

  • U.S. RD&D investment has flat-lined in last 5 years, not keeping up even with inflation, let alone double or triple investments as the AEIC group has called for;
  • Chinese energy RD&D is more than triple that of the U.S. as percentage of GDP; more than 10 major nations are investing more as a percentage of their economies than the U.S.;
  • About 19 percent of ARPA-E funding goes to energy storage R&D, but because baseline is so low progress has been fairly slow;
  • To date, DOE has committed loan guarantees of $32 billion to 31 projects. Successes include U.S. all-electric vehicle production plant, first solar thermal molten storage in U.S., first cellulosic plant. Promising projects include generation 3+ nuclear plants, and first coal with CCS plant.
  • Loan failure (default) rate of loan guarantees was 4 percent very low – just 1/8th of that Congress expected.
  • While there have been cost and performance advancements in wind and solar energy technologies, progress is uneven across the entire clean energy technology portfolio.

“The world needs much more investment in and commitment to energy innovation to meet to issues of economic growth, poverty alleviation and sustainability,” said John Doerr. “American must suit up, step up and get serious about energy RD&D if we’re going to be a winner in this race. Other nations including China are making much larger investments relative to GDP and will beat us to new markets unless we act.”

The study noted that past U.S. RD&D investments “together with critical private sector innovations and commercialization, have created dozens of technologies vital to our economic growth, competiveness and environment, such as unconventional gas extraction, advanced seismology, efficient clean engines, high-capacity batteries, natural gas turbines and photovoltaic solar technology, among others.”

“Key elements of today’s energy boom—in oil and gas, efficiency, natural gas turbines, renewable energy and much else—are based on technology advances that were pioneered initially by federal research programs,” Augustine said. “These research investments have paid tremendous economic dividends to America, and can do so again today, if we make the investments.”

“Cummins has seen firsthand how public private research and development partnerships lead to short and long-term technology leadership,” said Tom Linebarger.” By working with the Department of Energy and National Labs, we developed some of the cleanest, most efficient diesel and natural gas engine systems which are helping to address energy and environmental challenges worldwide. It is critical that we invest as a nation today in our energy future to ensure long-term viability.”