Last week, the Advanced Research Projects Agency – Energy (ARPA-E) announced support for 33 new projects aimed at developing an affordable and scalable clean energy transportation sector. The projects are the latest round of public investment from ARPA-E in high-risk, high-reward low-carbon energy innovations that could be game-changing in the fight to address climate change. The projects are notable because Washington’s current fragile budget and policy environment – a dangerous combination of sequestration, budget cuts, and an overall negative view of energy innovation – puts ARPA-E’s funding at risk for the next fiscal year.
First, let’s look at the programs. ARPA-E takes investing in new sectors of energy innovation seriously – ARPA-E’s due-diligence includes a small, but dedicated government staff, interaction with industry to understand emerging research problems, and a constant influx of new program managers. Program managers are brought in on three year temporary terms to carry out their investments. ARPA-E’s Deputy Director Cheryl Martin explained this is important because the “three year cycle doesn’t allow us to drink our own cool-aide.” In other words, it prevents stagnation of investments and allows for fresh approaches to energy innovation.
Evidence of technological change is all around us—smartphones, self-driving cars, amazing drug discoveries, and even drone warfare. With all of this novelty many futurists and other pundits breathlessly proclaim that technological change is speeding up. In fact, some go so far as to claim that the pace of innovation is not only accelerating, it is accelerating exponentially (which, anyone with a rudimentary understanding of exponents can see, is utter nonsense). Peter Diamandis, author of Abundance: The Future Is Better Than You Think, argues that “Within a generation, we will be able to provide goods and services, once reserved for the wealthy few, to any and all who need them. Or desire them.”
But is the rate of technological change really getting faster? Other commentators, including some notable academic economists, actually think the opposite—that we have run out of the “easy” technological advances and new breakthroughs will take much more work.
Questions about the rate of technological change may seem trivial—will I get one hoverboard or two?—but getting a handle on an answer is critical because in economic terms, technological change equals economic growth. And growth has powerful implications for
Making Innovation Part of Climate Hawks Policy Pitch
In a previous article I argued that climate policy advocates should make energy innovation part of their policy elevator pitch. A good opportunity to start is now available through the debate on reforming and re-authorizing the America COMPETES Act.
Within the climate advocacy community there are those that argue for aggressive clean energy innovation policy (such as myself) and those that argue for aggressive deployment of existing clean energy technologies (such as Center for American Progress’s Joe Romm and 350.org’s Bill McKibben). Each provides different policy emphasis and nuance. Today, deployment policies receive higher priority, reflected in it dominating the narrative among advocates as well as dominating the portfolio of U.S. public investments in clean energy. As a result, conflict occurs over what policy changes should be made.
As Grist’s Dave Roberts argues (correctly to a degree), both “camps” agree on a lot and everyone should aggressively work for clean energy to be a national priority to “lift all boats,”—both innovation and deployment of today’s technologies alike. How then should this consensus be reflected in our pitches to policymakers?
The Smart Manufacturing Coalition recently conducted a survey of Americans to get their views of whether modernizing factories with advanced technology and automation was a good or bad thing for the economy.
Amazingly, nearly two-thirds of respondents said it either made no difference or actually hurt the economy. Half of those making $35K to $50K actually said it has hurt the economy.
Wow, have these people not taken economics? Do they want to go back to farms with mules and factories with hand files? Have they not read the newspapers about how our manufacturing sector has been decimated by overseas competition?
Well wait, they probably have not read those newspaper articles, not because most people no longer see that they have a civic responsibility to read the news, but because by and large, the media doesn’t write these stories. Rather, they almost always write that when it comes to explaining the decimation of U.S. manufacturing jobs, the cause is automation. In fact, as ITIF and others have shown, the loss of U.S. global competitiveness has accounted for over half of manufacturing job loss over the last decade.
President Obama released his long-awaited FY2014 budget request and while it’s unlikely the budget will be taken up by Congress in its entirety, it remains an important document. Namely, the proposal is significant because it steadfastly argues that America can continue to support next-generation industries like clean energy. In fact, the President’s proposal budgets for a number of high-profile, high-impact programs, including those aimed at growing the domestic clean energy manufacturing sector, reduce transportation fuel use, and calls on Congress to fund a new Energy Innovation Hub to transform the electricity grid.
Across the board, the FY2014 request boosts key energy innovation offices at DOE by about 15 percent compared to the FY2013 Continuing Resolution and seven percent higher than the President’s FY2013 request. The lion’s share of budget gains are aimed at the Office of Energy Efficiency and Renewable Energy (EERE), which would see a budget increase of 54 percent from FY2013 CR levels, and at the Advanced Research Projects Agency-Energy (ARPA-E), which would see a budget increase of 46 percent.
Expanding Research Capabilities in Advanced Energy Manufacturing
The largest budget increase target at EERE – 22 percent to
Recently, I wrote about how the 2000s were a lost decade for U.S. manufacturing. Ensuring that the 2010s are not more of the same will require a robust national manufacturing policy to help producers in America become much more productive and innovative. Unfortunately, to date, Washington has not embraced such a policy.
The key question is why?
One reason is that there are three major camps in manufacturing policy and only one puts a national innovation agenda at the top of the list.
Camp 1: Manufacturing Doesn’t Matter, So No Need for a Manufacturing Policy
These advocates have a clear policy message regarding U.S. manufacturing. Don’t do anything specifically to help manufacturing. The reason? Manufacturing doesn’t matter. The members of this camp are numerous. Kenneth Green, a resident scholar at the conservative American Enterprise Institute (AEI), writes: “As long as China is selling us the products we need, the location of manufacturing isn’t really that critical for the economy.” Meanwhile, Columbia University’s Jagdish Bhagwati dismisses anyone who says manufacturing is important as suffering from a “manufacturing fetish,” while economic columnist Robert J. Samuelson writes that
On Capitol Hill yesterday, ITIF hosted an event making the social and economic case for autonomous vehicles. The event featured presenters from Toyota, Google, and Texas Instruments, as well as DC Councilmember Mary Cheh, who introduced the Autonomous Vehicles Act of 2012, which authorizes autonomous vehicles to operate on the District’s roadways. (Similar legislation has also been enacted in California, Florida, and Nevada and introduced in nine other states.) Collectively, the panelists made the case that the advent of automated driving (i.e. driver assistance) technologies—and ultimately fully autonomous vehicles—is poised to deliver tremendous safety, personal mobility, environmental, productivity and efficiency, and economic benefits.
Regarding safety, with human error the definite or probable cause of 93 percent of traffic accidents, autonomous vehicles could dramatically reduce accident incidence because they will obey all traffic laws, won’t speed, and won’t drive while distracted, tired, texting, or inebriated. This could significantly ameliorate the over 4 million traffic accidents which occur annually on U.S. roadways and which cause more than 35,000 traffic fatalities (almost 100/day) and an estimated $450 billion in economic losses. In the meantime, a range of automated driver assistance technologies,
Innovation is one of America’s most prized assets. If our country is going to successfully compete on the global stage over the course of the next several decades, we must develop the new technologies, businesses and industries that will allow us to keep pace. President Obama’s just-released budget for 2014 contains several key components that further this goal.
ITIF applauds the President’s $1 billion request to create a series of manufacturing innovation institutes that will help propel advanced manufacturing and rejuvenate a sector of our economy that has been hit especially hard over the past decade. The National Network for Manufacturing Innovation will create 15 advanced manufacturing centers across the country that will spur research, development and deployment of next generation technologies, products and processes. As ITIF has shown, improving manufacturing innovation is central to enhancing American competitiveness and furthering economic development and business creation.
On energy innovation, the President’s budget request continues to push for greater public investment in the development of new clean energy technologies. The budget proposes boosting clean energy research to nearly $5 billion, a 15 percent increase compared to the FY2013 Continuing Resolution (CR)
After already slashing R&D funding, the Sequester is about to deliver another kick in the teeth to American competitiveness: it’s going to sharply reduce our ability to measure it. This one comes courtesy of the Bureau of Labor Statistics, which announced last month that the sequestration has forced it to eliminate its International Labor Comparisons (ILC) program, a neat little database that adjusts foreign data to a common framework, allowing you to compare the traded sector health and competiveness of the United States against that of other countries.
This may not sound like much, but in the nerdy world of competitive analysis economics, it’s huge. No one else provides this data to the same extent as ILC. The OECD does a bit,[i] but their data are rife with warnings about the perils of cross-country comparison among their indicators. Moreover, the OECD has little-to-no data on the big boys such as China and India, which renders its data useless for any “big picture” comparisons of our competitive health. Other organizations, such as the UN Industrial Development Organization, provide limited competitiveness data that is vastly incomplete.
In contrast, the ILC
In my inaugural article I tried to make the case for why Washington should care about manufacturing (Reason: it’s the key traded sector for the U.S. economy.)
But once one accepts the importance of manufacturing, the next question is how is the manufacturing sector doing? Is U.S. manufacturing healthy and not in need of a national manufacturing policy or is it in trouble and in need of smarter policies?
One key indicator to answer this question is change in the number of manufacturing jobs.
America lost 5.7 million, or 33%, of its manufacturing jobs in the 2000s. This is a rate of loss unprecedented in U.S. history—worse than in the 1980s, when BusinessWeekwarned of deindustrialization and worse than the rate of manufacturing job loss experienced during the Great Depression.
While U.S. manufacturing has clawed back, regaining about half a million of those lost manufacturing jobs since 2010, there’s little doubt that the 2000s constituted the worst decade for manufacturing employment in the Republic’s history.
Moreover, the recovery of manufacturing jobs is actually worse than in most prior recoveries.
In response to these statistics,