MIT physics professor Dr. Ernest Moniz has yet to receive Senate confirmation to serve as the nation’s next Energy Secretary, let alone begin his tenure. This hasn’t stopped speculation about what a Moniz-led Department of Energy (DOE) might look like. National Journal quotes one Brookings Institution scholar as saying “I think it will be a very different agency than it was in the first term. Ernie knows climate change, but also unconventional oil and gas and coal and nuclear. He will push the president towards a more balanced policy.” But if Dr. Moniz’ comments during his confirmation hearing yesterday are any indication of what would come from a department under his leadership, clean energy innovation has a good chance of remaining a top priority for the DOE.

Although the hearing covered a host of topics, ranging from cybersecurity to nuclear waste cleanup, the importance of public investment in research and development emerged as a topic of discussion at several points. Moniz’ opening statement actually started with a strong defense of a continued DOE role in research: “More than a hundred Nobel Prizes have resulted from DOE-associated research. DOE operates an … Read the rest

Swimming With Sharks: Part 1

Imaging for a moment you are a portfolio manager, say, managing a mutual fund. You have mandate and rules to follow that are designed to keep you close to your mandate. Now, let’s add to this the fact that you are what is known as a “bottom-up” investor, meaning that your investment decision-making process is one that requires that you (a) rely on your economist(s) for views regarding the overall economy, (b) rely on your investment strategist(s) for overall market views, and, above all, (c) you analyze companies and make investment decisions on them based on the companies growth and profitability and how these data make their way from the company’s financial statements to your financial model and then, ultimately, to your valuation model.

Question: Where in the above scenario does something like the recent (and on going) Cyprus crisis fit?
Answer: It doesn’t – at least not as it pertains to what you are charged to do.

This description is how one facet of what we call the financial markets’ structure is how our trusty bottom-up portfolio manager operates. His/her’s scope is narrow and … Read the rest

Last week, the Australian government announced the merger of two cabinet-level departments, the Department of Climate Change and Energy Efficiency and the Department of Industry, Innovation, Science, Research and Tertiary Education. Unfortunately, moving the stand-alone department on climate change has raised concerns that Australia is taking the climate change challenge less seriously. But the merger is actually a welcome sign of growing international recognition that innovation policy and climate change mitigation are inescapably linked and it should further mitigation efforts, not hinder them.

On the one hand, Australian Prime Minister Julia Gillard describes the creation of the new Department of Industry, Innovation, Climate Change, Science, Research and Tertiary Education as “inevitable, natural, logical.” On the other hand, the leader of the Australian Greens, an opposition party, criticizes the move as a “retreat on addressing global warming.” But the Gillard government has already demonstrated a firm commitment to combating climate change with the recent creation of entities like the Climate Commission, an independent source of information about the science of climate change, and the Climate Change Authority, which provides expert advice to the Australian government on climate change mitigation … Read the rest

I recently sat down with Dr. Cheryl Martin, the Deputy Director of ARPA-E, the federal government’s premier program for investing in high-risk, high-reward energy research and development. The interview covered a lot of ground and touched on different aspects of America’s energy innovation ecosystem, so it’s being published as a multi-part series, lightly edited, and broken up into cohesive topics.

In part 1 of the interview, Dr. Martin took a deep-dive into the lessons ARPA-E has learned in its few short years of existence. In part 2, we covered ARPA-E’s efforts to link research and emerging technologies to the marketplace. In particular, Dr. Martin discussed the independent path ARPA-E is traveling by building relationships with potential end-users of emerging energy technologies, like companies, the Department of Defense, and utilities such as Duke Energy.

But one potential partner often not discussed at length in national energy policy discussions is states. States are in many ways more active in the clean energy space than the federal government, in particular on technology deployment policies. Over 20 states have created clean energy trust funds supported by dedicated revenue streams like public benefit charges. … Read the rest

I recently sat down with Dr. Cheryl Martin, the Deputy Director of ARPA-E, the federal government’s premier program for investing in high-risk, high-reward energy research and development. The interview covered a lot of ground and touched on different aspects of America’s energy innovation ecosystem, so it’s being published as a multi-part series, lightly edited, and broken up into cohesive topics. In part 1 of the interview, Dr. Martin took a deep-dive into the lessons ARPA-E has learned in its few short years of existence.

In part 2, we cover a pervasive issue in innovation policy: linking research and emerging technologies to market. In particular, a major concern of ARPA-E is that doesn’t have a dedicated end-user that’s going to procure emerging technologies, like DARPA has at the Department of Defense (DOD). DARPA is ARPA-E’s kindred spirit and many opine that until it gains a large-scale early adopter, its impact won’t reach that of its defense brethren because it won’t be able to bridge the technology “valleys-of-death” that plague many new innovations from reaching commercial scale.

Of course, ARPA-E’s agency home — the Department of Energy — doesn’t procure energy technologies … Read the rest

Dr. Cheryl Martin is the Deputy Director of ARPA-E, the federal government’s premier program for investing in high-risk, high-reward energy research and development. She’s the heir apparent to Arun Majumdar, the first Director of ARPA-E who departed last year after helping spin-up the program and bring it to national prominence.

She assumes leadership less than four years into ARPA-E’s existence at an inflection point for the program as well as U.S. climate and energy policy. On one hand, government investments in energy innovation are declining and gridlock makes crafting a new comprehensive national energy policy a pipedream. On the other hand, ARPA-E recently hosted its fourth widely attended Energy Innovation Summit, a number of early investments are starting to show signs of success, and its bipartisan support continues to grow. It’s one of the few bright spots in an increasingly contentious energy policy debate.

I recently sat down with Dr. Martin and talked extensively about her unique take on ARPA-E, its potential legacies, and the evolving U.S. energy innovation ecosystem. The interview covered a lot of ground so it will be published as a multi-part series, lightly edited, and … Read the rest

This year’s budget process has been complicated by a number of factors: confusion surrounding the sequestration cuts, the absence of the President’s FY2014 budget proposal, an expiring Continuing Resolution (CR), and Congress reviewing budget proposals for FY2014 and appropriations bills for FY2013 at the same time. While the FY2014 budget is yet to be decided, last week the House approved the Senate’s version of the Full-Year Consolidated and Further Continuing Resolution Act of 2013, which funds the federal government for the remainder of the 2013 fiscal year. Since the current Continuing Resolution is set to expire on March 27, the bill, which now heads to President Obama’s desk to be signed into public law, avoids a government shutdown by a matter of days.

As shown in the figure, the new CR is not very different from the old CR in terms of investments in energy innovation. The previous CR was based on FY2012 funding levels, and the new CR lowers investments in energy R&D by less than one percent from FY2012 levels.

The table below shows the recent appropriations legislative history in relationship to FY2012 funding levels. The new … Read the rest

Amidst the furor over the Sequester there is another critical policy issue being debated and it concerns the U.S. government’s role in the International Monetary Fund (IMF). The Obama administration is seeking Congressional authority to change the voting process at the IMF, and in particular, to give China a much larger role. But the last thing the U.S. government should be doing is strengthening the ability of China to shape IMF policy, especially given its unrepentant, mercantilist practices.

Established after WWII, the IMF was charged with overseeing the international monetary system and encouraging member countries to eliminate exchange restrictions that hindered trade. As a result, under IMF rules, each member country has agreed not to engage in “protracted, large-scale intervention in one direction in the exchange market.”

These are nice words but in practice they have been rendered largely meaningless. The IMF has proven unwilling to take action to curtail currency manipulation or similar egregious actions China and other nations have engaged in to distort global trade, hurt the U.S. economy and advance their domestic economic interests.

Case in point, the IMF’s Executive Board concluded its 2010 Article IV consultations … Read the rest

Today, the Advanced Research Projects Agency-Energy (ARPA-E) announced funding opportunities for two new programs, each with $20 million, aimed at reducing greenhouse gas emissions from cars and trucks. The first, Reducing Emissions Using Methanotrophic Organisms for Transportation Energy (REMOTE), is focused on developing improved biological technologies to convert natural gas to liquids for transportation fuels, while the second, Modern Electro/Thermochemical Advancements for Light-Metal Systems (METALS), is geared towards improving the manufacturing and recycling of light metals for use in vehicles. (No one can fault the agency’s efforts to create clever acronyms). The move signals emerging government recognition of the importance of transportation decarbonization and the need for a range of innovative transportation technologies to facilitate that endeavor.

Cutting transportation sector emissions is critical to mitigating climate change. The ITIF report Shifting Gears notes that more than 20 percent of U.S. greenhouse gas emissions can be attributed to cars and light trucks. Furthermore, the report observes, the number of those vehicles on the road globally is estimated to grow more than 47 percent from 750 million in 2010 to 1.1 billion in 2039.

Fittingly, the federal government … Read the rest