From the innovation perspective, there was a lot to like in last night’s State of the Union. But particularly encouraging was his take on energy innovation. It wasn’t just part of a laundry list of priorities, and nor was it about curbing emissions alone, but rather it was a central component in achieving his goals for national competitiveness and growth. This is exactly the direction in which the energy debate needs to move, and at exactly the right time.
The significance of this rhetorical pivot shouldn’t be underestimated. The energy debate has for years been hitched to climate change, which for many advocates has meant treating dirty energy like a pollution problem. Even the President’s preferred policy vehicle – cap and trade — was derived from previous regulatory efforts to eliminate acid rain in the 1990s, a problem on a much smaller scale than that which we currently face.
Misguided from the start, this kind of thinking led to a limited vision for our energy future, and consigned Congress to focusing on controversial half-measures that wouldn’t have gotten at the real problem even if they’d succeeded. In reality, while climate change remains a motivator for action, the energy sector requires a far more transformative agenda: it’s not just about stopping emissions, but about fundamentally changing the way we as a nation harvest, generate, and use energy.
This means substantial investment in clean technology development: from basic and applied R&D, to demonstration support, to early market support via procurement and other such policies, and to policies that spur deployment while continually driving new technology performance. Encouragingly, the President’s speech broadly spoke to this need, signaling a key shift. Just as encouraging are the Administration’s bundle of specific proposals, issued concurrently with the speech last night. These include:
Doubling Funding for ARPA-E. The “little program that could” is critically important to driving early-stage, high-risk, high-reward research that could have enormous payoffs in commercial application. It has also been hanging by a thread in budget terms. Doubling funding will give a boost to translational research efforts and help the program grow towards the necessary scale.
Doubling the Number of Energy Innovation Hubs. The hubs are mission-oriented programs that leverage large teams with scientific or engineering expertise to solve technical challenges fundamental to resolving our energy challenge. The Department of Energy originally proposed eight, and to date has launched three: for building efficiency, nuclear energy, and solar power. As ITIF, the Breakthrough Institute, and Brookings have argued, authorization for additional hubs would help to accelerate the quest for key energy breakthroughs.
Reauthorizing the Advanced Energy Manufacturing Tax Credit (48C). The 48C program provided a critical boost to clean manufacturing and leveraged billions in private investment in 183 manufacturing facilities in 43 states. The Department of the Treasury was initially authorized to award $2.3 billion in tax credits, for which requests totaling over $8 billion were received. As ITIF has said in past testimony, boosting this program provides a much-needed shot in the arm to domestic manufacturing competitiveness.
The clean energy proposals don’t end there. The President also called for renewed collaborative public-private endeavors in advanced clean manufacturing and additional boosts to R&D programs at DOE, NIST, and NSF, in addition to the rollback of all fossil fuel subsidies and an aggressive clean energy standard referenced in his speech.
By moving away from the false rhetoric of the past to focus correctly on energy innovation the President is signaling a major shift in the debate and one he appears set to lead. And if others will follow, it will mean a forward-looking discussion about U.S. leadership in a growing economic sector, and about ensuring competitiveness, jobs, and prosperity in the years ahead.