First Up -- The Next Great Global Industry

To catch up in the critical energy field, a new report urges, we need new or expanded federal agencies and billions in public funds. What will those business leaders think of next?

John Doerr has provided venture capital for companies such as Amazon.com, Google and Intuit. He certainly qualifies as an expert on the subject of investment, so it's disturbing to see him warn that the United States is missing the mark badly with regard to investment in new energy technologies, which he calls "the next great global industry."

"If you look at today's top companies in clean energy technology -- in wind, solar and advanced batteries -- only four out of 30 are American. Comparing to IT, it's as if Microsoft, Apple, Google and Intel were headquartered in Asia or Europe, and only Amazon was in the United States."

Doerr's comments are part of a recent report, "A Business Plan for America's Energy Future," that once again paints a grim picture regarding the United States' energy situation. The report is the product of the American Energy Innovation Council (AEIC), created by Doerr, Bill Gates, Jeff Immelt, Tim Solso and other industry leaders to create jobs and new industries through "robust" public investments in innovative, clean-energy technologies.

The report cites economic, national security and environmental threats to the nation from its dependence on foreign oil and its failure to invest in new energy technology. The United States sends about $1 billion overseas every day for imported oil. Doerr points out that while the country spends $1 trillion a year on energy, it only spends $5 billion on new energy research and development.

Innovation, say these leaders, is the key to creating a more secure and profitable energy future. But to create those innovations, the report says government involvement is needed not only because of the public benefits but because the energy business "requires investments of capital at a scale that is beyond the risk threshold of most private-sector investors." While it might cost $10 million to develop new microwave technology and build it on existing assembly lines, the report explains, "a new electric power source can cost several billion dollars to develop, yet still will carry risk of technology failure or regulatory changes."

The report makes five recommendations:

1) Create an independent national Energy Strategy Board. This board would develop and monitor a National Energy Plan for Congress and the executive branch. Without a plan to follow, the report warns, there is no way to assess the effectiveness of energy policies.

2) Invest $16 billion per year in clean energy innovation. The report calls this more than tripling of current investments the "minimum level required."

3) Create Centers of Excellence with strong domain expertise. Innovation in the energy field requires expensive equipment, well-trained scientists and engineers, strong leadership, flexibility in the allocation of research funds, and multiyear time horizons, the
report states, in urging concentrations of research around major universities, national laboratories and the Department of Energy's newly created Energy Innovation Hubs.

4) Fund ARPA-E at $1 billion per year. The Advanced Research Projects Agency -- Energy (ERPA-E) is modeled on the Defense Advanced Research Project Agency and is designed to focus on high-risk, high-payoff energy projects. But in its first year of operation, the agency only had funds to support 37 of the 3,700 proposals it received. The AIEC proposal calls for a multiyear funding commitment of more than three times the current budget request.

5) Establish and fund a New Energy Challenge Program to build large-scale pilot projects. This program would operate as a publicly owned, private corporation and focus "on the transition from pre-commercial, scalable energy systems to integrated, full-size system tests."

As our article this month, "Energy's New Class of Innovators," demonstrates, U.S. manufacturers are more than willing to lend their creativity and skills to the challenge of providing our nation with clean, plentiful energy. But they need a coherent, nurturing framework in which to operate. The ideas in the AEIC report could go a long way to providing that much-needed help.

Steve Minter
Editor-in-Chief
[email protected]

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