Looking to the Future at Energy Innovation 2013

Energy Innovation Debate Panel

The purpose of Energy Innovation 2013 – a half-day conference co-hosted by my organization, the Information Technology and Innovation Foundation, and the Breakthrough Institute – was to discuss the possibility of developing and deploying all of the cheap, high-performing zero-carbon technologies necessary to meet 40 terawatts of projected global demand by mid-century.  Most importantly, the conference spurred debate on how the need for clean energy innovation should influence the climate and energy policy debate.

Over the course of three stellar panel discussions as well as follow-on debate via twitter (check out #EI13), a number of themes emerged that merit further debate amongst advocates, thinkers, and policymakers:

It’s Global Warming, Not American Warming

ITIF President Rob Atkinson set the stage for why energy innovation needs to be a policy priority by presenting a straight-forward logic chain: climate change is real and man-made, it’s about developing clean energy technologies that are cheaper than fossil fuel alternatives to drive down carbon emissions, and it’s globally pervasive. Clean energy technologies need to be affordable to all nations, and particularly emerging economies with growing populations that will consume more energy in the coming decades than the United States.

From a global carbon emission perspective, our policy choices cannot be made in a vacuum. This is particularly important because many countries are simply trying to provide access to energy in the first place (vs. providing new access to clean energy), so cost and performance are even more acutely important.

Of course, this doesn’t mean America shouldn’t act. On the contrary, America should act aggressively even if other countries don’t. What the global perspective tells us though is that we have to be smart about what aggressive policies we choose to pursue.

For instance, aggressively pursuing an energy innovation strategy would produce cheap technologies that developing countries could deploy on a large scale. Pursuing a regulation-first strategy would not, and other countries would be hesitant to head down this path because of higher energy costs.

Clean Energy Policy Advocacy is Often Only 20% Deep

The first panel debating the state and future of solar and wind technology clearly brought to surface the major disconnect between today’s energy policy advocacy and our climate challenges.

Over the last few years, both wind and solar technologies have seen significant growth and with continued subsidies and regulations, solar and wind technologies can potentially reach 20 percent market penetration.

Unfortunately, efforts to increase penetration to more than 20 percent of market share result in significantly higher costs; integration costs resulting from intermittency greatly limit how far existing technologies can carry the world to zero carbon.

Panel 1: The State of Clean Energy Technologies: Solar and Wind

As Jesse Jenkins, writing for The Energy Collective, reported from the conference:

“Tackling this integration challenge will thus be key to taking wind and solar to scale in the longer-term. That will require changes in the way the grid currently operates, including different compensation for providers of flexible backup power and expanded ability to modulate demand as wind and solar output changes. In the long-term, new grid-scale energy storage technologies may be essential to achieving high penetrations of wind energy, although panelists differed on the feasibility of these technologies, 8888888a variety of which are in development.”

As conference panelists Minh Le (Director of the DOE SunShot Program), Fort Felker (Director of the NREL National Wind Technology Center), and Armond Cohen (Executive Director of the Clean Air Task Force) agreed by the end of discussion, considerably more innovation is necessary to develop the technologies capable of moving wind and solar past the 20 percent threshold, meaning both industries need alternative policy approaches that emphasize innovation.

And the shift in policy emphasis is significant. Cohen mentioned the disparity between global investments in the two technologies: “Global spending on wind and solar deployment was $250 billion, according to Bloomberg New Energy Finance. Global R&D spending is roughly $12 billion. Something is out of whack.”

This need to shift to energy innovation policy continued during the second panel. Ambri’s Phil Giudice underscored the need for advanced energy storage technologies, which have the power to “separate power demand from supply, eliminate the intermittency challenge, and to stabilize power prices.” The panel left the audience with a solid understanding that while we’ve come a long way towards integrating clean energy technologies into the U.S. economy, we need investment in innovation to drive us the rest of the way there.

We Need Nuclear Energy Innovation to Solve Climate Change

Leading nuclear energy thinkers Venrock venture capitalist Ray Rothrock and author Gwyneth Cravins also spoke during the second panel about the need to remove emotional, regulatory, and technological barriers to advancing safer and cheaper nuclear energy. Nuclear power is not only an available, low-carbon, base load power source, but its current up-front costs and often time burdensome Nuclear Regulatory Commission (NRC) oversight limits the potential for innovation.

To overcome the technical and political barriers to nuclear as a base load power source, Rothrock called for a new institution or entity separate from NRC and DOE to support next-generation nuclear technologies. In addition to more institutional support, additional investment is necessary as well. As it stands today, DOE is investing roughly $450 million in one set of small modular reactor demonstration plants while other countries in the Middle East as well as China and South Korea are quickly accelerating their investments and research to become world leaders in nuclear.

Panel 2: The State of Clean Energy Technologies: Nuclear and Energy Storage

Rejecting Technology Tribalism

As keynote speaker and Breakthrough Institute President Michael Shellenberger noted, “technology tribalism has plagued energy policy since the 1970’s.” On one hand, many clean energy advocates believe little technological innovation is absolutely required (though it wouldn’t hurt) to mitigate climate change because existing technologies are more than enough to power the world. On the other hand, many other advocates with myopic free-market ideologies believe there are no justification for government support of innovation beyond basic science and subsidies for fossil fuels and nuclear energy.

Rhetoric like this holds the country back from leading in energy innovation, competing in the emerging global clean energy marketplace, and implementing a cohesive policy to mitigate climate change.

Universal Agreement “Energy Innovation” is Good, But Not Where it Comes From

The most discussed topic of the conference was how to spur energy innovation.  During the last panel, Environmental Defense Fund (EDF) President Fred Krupp argued that carbon pricing and regulation would spur innovation.  On the other hand, Breakthrough Institute Chairman Ted Nordhaus argued that the overwhelming evidence from the “induced innovation” literature has found that notion to be false.

As history shows – most recently through the shale gas revolution – innovation comes about from direct investments and public-private partnerships from research through early deployment, and to say otherwise is to assume innovation emerges magically. So in a way, Krupp is right, “There’s no silver [policy] bullet. But we need to get emissions down fast. That should be the test of any policy proposed.” It’s just that when we stack up the dominant policy proposals from the last 20 years, as Nordhaus points out, “we’re not going to price, cap, or regulate our way to a low-carbon future.” In the near-term, policy options focused on directly innovating the cheap technologies we need potentially guide us to the path of fastest emission reductions.

Panel 3: Debating the Future of U.S. Clean Energy Policy

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About the author

Matthew Stepp is a Senior Analyst with the Information Technology and Innovation Foundation (ITIF) specializing in climate change and clean energy policy. His research interests include clean energy technology development, climate science policy development, transportation policy, and the role innovation has in economic growth.