Note: Synopsis based on OurEnergyPolicy.org review of report’s executive summary. Synopsis intended solely for purposes of generating discussion.
A Business Plan for America’s Energy Future
By the American Energy Innovation Council
In the defense, health, agriculture, and information technology industries, the United States has used intelligent federal investments to unleash profound innovation, resulting in leadership in those realms. In energy, however, the United States has failed the grade, and is paying a heavy price for that failure.
Government must play a key role in accelerating energy innovation for two reasons. First, innovations in energy technology can generate significant, quantifiable public benefits that are not reflected in the market price of energy, including cleaner air and improved public health, enhanced national security and international diplomacy, reduced risk of dangerous climate change, and protection from energy price shocks and related economic disruptions. Second, the energy business requires investments of capital at a scale beyond the risk threshold of most private-sector investors. A slow turnover rate for energy equipment, and existing market structures, limits investments in new ideas and creates a vicious cycle of status quo behavior.
We feel that the following five recommendations to government can unleash the nation’s technology potential.
Recommendation #1: Create an independent national Energy Strategy Board
The United States does not have a national energy strategy. Without one, there is no framework for the development or assessment of energy policies driving new technologies.
We recommend the creation of a congressionally mandated Energy Strategy Board charged with (1) developing and monitoring a National Energy Plan, and (2) oversight of a New Energy Challenge Program (see Recommendation #5). The Board should be politically neutral, external to government, and populated by energy experts.
Recommendation #2: Invest $16 billion/year in clean energy innovation
To maintain our competitive edge, America needs large and sustained investment in energy innovation. We believe that $16 billion/year is the minimum level required.
Funding should be set with multi-year commitments, managed by well-defined performance goals, focused on technologies that can achieve significant scale, and free from political interference and earmarking.
Recommendation #3: Create Centers of Excellence with strong domain expertise
Technology innovation is most effective and efficient if institutions are located in close proximity to one another, share objectives, and are accountable to each other. We recommend the creation of national Centers of Excellence in energy innovation, with an annual budget of $150 – $250 million each.
Recommendation #4: Fund ARPA-E at $1 billion/year
The creation of the Advanced Research Projects Agency-Energy (ARPA-E) has provided a significant boost to energy innovation. The program has high potential for long-term success, but only if given the autonomy, budget, and clear signals of sustained support to implement needed projects.
Recommendation #5: Establish and fund a New Energy Challenge Program to build large-scale pilot projects
We recommend a program to fund, build and accelerate the commercialization of advanced energy technologies. The Program should focus on the transition from pre-commercial, large-scale energy systems to integrated, full-size system tests.
The program should a partnership between the federal government and the energy industry and should report to the Energy Strategy Board (see Recommendation #1).
Full report available here.
Option 2:
1. Install foam wall insulation in(to) every empty cavity of every building in a climate of 2500 HDD or more and/or 500 CDD or more.
2. Fine every electrical or natural gas utility and every oil or other energy company every time they supply an inefficient building with fuel. (After 35 years of trying, we still can’t get our energy companies to deal with the demand side).
3. Take 80% of the public money currently going to consultants and program administrators for large scale energy retrofit projects and use it to buy and install modern refrigerators.
4. Outlaw large scale energy program M&V (voodoo) and calculate only energy reductions that that show up at the meter.
5. Outlaw smart meters until all players in the national grid can prove they have fixed up their buildings.
6. Both the science (energy “audits”) and the financing advice must be delivered to consumers by independent 3rd parties. (How many times do we have prove that contractors and vendors only have bias to offer?)
7. The National Energy Labs need to be better coordinated but they have the goods to be our energy innovation centers – use them.
This was a plan drafted in 1978 and which I have attempted to execute every minute since. The idea of precious fossil fuels being burned to warm (and cool) buildings with holes in the walls and no thermal resistance to heat (and cooling) flows makes me sick. I think of the people around me that have resisted this necessary war on crappy structures as energy felons, including the consumers (unwitting), and the utilities and others who long since should have enlisted (witting?).
I calculated that 23 organizations, consultants, advisors, companies, contractors, and assorted others have something to say about every single ratepayer-funded blower door test in Connecticut. In this program, “savings of 12%” is calculated by M&V companies, 2 years later, and no one is keeping a list of which houses have been tested. Wow.
It is encouraging to see American business leaders taking the initiative to put forth a plan for the federal government to spur innovation in clean energy technologies. There is no doubt the United States must place a high priority on development of clean energy technologies to transition the economy to a sustainable long-term economic growth path. The federal government clearly has an important role to play in supporting such investments to capture benefits for the country not accounted for by energy markets such as preventing global warming, reducing oil import costs, creating new export opportunities for clean-energy products/services, decreasing military costs for defending Persian Gulf oil, and enhancing national security.
The American Energy Innovation Council calls for new federal government funding for energy innovation, centers of excellence, and pilot commercialization projects. These are all solid recommendations to support technology innovation and development. However, it would be wise to identify the areas of highest priority and greatest likelihood of significant impact before committing funding. They suggest establishing a National Strategy Board but do not specify a clear role for this Board in identifying priority areas for funding. This would seem to be a critical function of the Board to ensure funds are spent most effectively and provide results in a timely manner. The country already has organizations like the National Science Foundation that fund research on a variety of areas. The National Strategy Board needs to keep the focus on the highest-priority areas for near-term major impacts and monitor effectiveness in reaching objectives.
The Energy Innovation Council’s recommendations are directed at development of new technologies. I believe energy innovation must extend beyond technology development to large-scale infrastructure investment. It will not be sufficient to create smart grid technologies if the federal government has no strategy to roll out new electric power infrastructure. It will not be sufficient to invent new battery technologies if the government has no strategy to deploy new transportation infrastructure. The energy innovation strategy of the federal government and country must be an end-to-end integrated plan for technology development, infrastructure investment, and regulatory policies. In the article, “Creating an American Infrastructure Investment Strategy” (posted under Resources/Policy Principles), I suggest the establishment of an American Infrastructure Investment Corporation in which the federal government partners with the private sector to invest in the new national clean-energy infrastructure. The estimated benefits for the country are quantified to be on the order of $1 trillion per year.
The Energy Innovation Council proposes the National Energy Strategy Board develop a National Energy Plan. A National Energy Plan is critical but it cannot be developed solely by a group of experts on this Board. The National Energy Board should administer a process where alternative policy options are evaluated by a range of objective experts with input from various interest groups in open forums. The goal would be to devise a national energy strategic plan that best meets the overall national interest and has been properly vetted with relevant interest groups and the general public. This approach would create a national energy plan that is truly objective and overcomes political barriers to implementation.
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