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New Evidence in Favor of Government R&D Funding

A new policy research working paper from the World Bank has combed through recent evidence on government funding for Research and Development, and finds that government funding significantly increases R&D investment. Paulo Correa, Luis Andres, and Christian Borja-Vega’s paper, “The Impact of Government Support on Firm R&D Investments: A Meta-Analysis” analyzes nearly 40 papers published worldwide from 2004-2011.

Although there is a large variation in the type of R&D funding examined, the study methodologies, and location of the studies, the results are clear: government funding boosts R&D spending. The paper tackles another important question as well—whether government spending “crowds out” private sector spending. (Crowding out is the idea that private companies will not invest if the government is doing it for them.) The paper finds evidence of the opposite, however, with data that shows public funding actually incentivizes firms to invest more in R&D.

(photo credit Idaho National Laboratory)

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IEA Report Cover

Finding a New Direction in Climate Change Policy

It’s clear that the world is losing the race against global climate change. The International Energy Agency put numbers to this fact in a new report, Tracking Clean Energy Progress 2013, which finds that, “the amount of CO2 emitted for each unit of energy supplied has fallen by less than one percent since 1990.” In other words, for all of the global growth in renewable energy in the last decade, the world continues to rely on fossil fuels to the detriment of more global warming. Of course, this has to change and change fast.

This past weekend, I participated in a day-long symposium at Villanova University aimed at discussing what kind of changes need to be made. The conference hook was brought on by Rutgers Law Professor Howard Latin who provided the keynote address based on a book he published late last year titled Climate Change Policy Failures that argues conventional climate policy approaches fought for during the last twenty years such as cap-and-trade, international negotiations, and emission regulations won’t successfully produce deep carbon reductions. Latin contends that these “incremental” policy approaches simply kick the emission reduction can

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Obama’s Budget Boosts Support for Energy Innovation

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

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What’s Wrong with This Picture?


(Source: OECD)

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Policymakers Share Common Ground on Energy Revenue, But Can They Deliver?

Yesterday, Senators Lisa Murkowski (R-AK) and Mary Landrieu (D-LA) introduced the Fixing America’s Inequality with Revenues (FAIR) Act, which would allow coastal states to collect a portion of the revenues of offshore energy production. Specifically, it provides royalty revenues from offshore oil and gas development to coastal states. States would automatically receive 27.5 percent of royalty revenues, but be eligible for an additional 10 percent provided they “establish funds to support projects relating to clean energy or conservation.” Today, coastal states outside of the Gulf of Mexico don’t receive any royalty revenue at all. While it is unclear what exactly these funds would entail, the emergence of the FAIR Act and President Obama’s recent Energy Security Trust Fund proposal reflects growing interest in linking energy production to energy innovation.

The FAIR Act is motivated in large part by a desire to financially empower coastal states and is only the latest attempt to expand state revenue sharing from offshore fossil fuel development. In 2006, The New Orleans Times-Picayune noted that a bill by Senator Landrieu “gave Louisiana, Alabama, Mississippi and Texas 37.5 percent of proceeds from fuel production in the Gulf,

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Energy Security Trust Fund an Important Policy Pilot for Supporting Innovation

Last Friday, President Obama reiterated his support for the creation of an Energy Security Trust Fund during a speech at the Argonne National Laboratory, something he first proposed in his 2013 State of the Union address.  Specifically, according to a fact sheet released by the White House, the fund would provide $2 billion over ten years for research on cleaner transportation alternatives such as advanced biofuels and advanced batteries for electric vehicles, derived from royalty revenues from federal oil and gas development. The Energy Collective’s Jesse Jenkins and Brookings Institution senior fellow Mark Muro have already provided thoughtful commentary on the proposal (here and here, respectively), but here are a few important takeaways.

Tying next-generation transportation energy R&D to a dedicated revenue source is a welcome step towards consistently funding energy R&D overall. Federal energy research and development is severely underfunded. For years, energy policy experts and stakeholders have advocated for an annual federal energy R&D budget of $15 billion or more. Yet according to the Energy Innovation Tracker, federal funding for energy R&D totaled just $3.6 billion in fiscal year 2012. In comparison, the Defense

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On Moving Towards Innovative Solutions to Deploying Clean Energy Technologies

Solar energy entrepreneur Jigar Shah took to the site Greentech Media to criticize U.S. energy policy leaders for failing to champion deploying today’s clean energy technologies. Shah’s focus on ways to better deploy competitive clean energy underscores the critical need to re-frame the clean energy debate in terms of innovation and have a healthy discussion on building better policy solutions for deployment that drive innovation and support the growing clean energy industry.

Assessing the Character of U.S. Energy Policy

According to ITIF’s Energy Innovation Tracker, the United States invested $68.3 billion in clean energy innovation (in addition to $35.6 billion in loan guarantees) since 2009, 67 percent of which went towards clean energy deployment policies. This included deploying existing technologies through Stimulus policies like the loan guarantee program, energy efficiency grants, advanced manufacturing, and almost single-handedly saving the solar and wind industry through the 1603 cash grant program at the height of the recession. Even in FY2012, which is absent Stimulus funding, 63 percent of the $14 billion in clean energy innovation investment went to deployment projects and programs.

In other words, deployment has represented a significant focus

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scientists in research lab

U.S. is Falling Further Behind in Research and Development Funding

Yet another study has highlighted the United States’ expanding investment deficit and our growing innovation disadvantage compared with our global competitors. Battelle’s 2013 Global R&D Funding Forecast indicates that, even before accounting for the looming sequester, total U.S. R&D investment in 2013 is expected to decline in real dollars, with growth of only 1.2 percent compared with an inflation rate of 1.3 percent. This continues a long period of U.S. underinvestment in R&D, which has been particularly acute in stagnating federal research investment. According to the National Science Foundation, federal R&D investment grew at just 1.3 percent annually from 1989 to 2009, while gross domestic product rose an average of 2.4 percent over that time. In fact, to restore federal support for research as a share of GDP to 1987 levels, Congress would have to increase federal research funding by almost $110 billion—per year.

Meanwhile, the world’s greatest growth in R&D investment in 2013 will come from China, which is expected to increase its R&D investment by $22.9 billion in 2013.Through its Innovation 2020 strategy, China plans to invest $1.5 trillion over the next seven years on seven “strategic emerging

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Scale-Up of Military Biofuels Could Generate Significant Economic Activity

The Department of Defense's role in energy innovation and the development of clean energy technologies from basic science through procurement and commercialization has come to the front of policy discussion. This conversation is particularly centered around DOD’s interests in using drop-in biofuels to reduce the department’s significant, costly, and sometimes dangerous reliance on petroleum-based fuels. According to the Energy Innovation Tracker, DOD investment in basic science, R&D, and procurement of advanced biofuels peaked in FY2010 at $155 million (including ARRA investment) and has fallen to $37 million in FY2012. Ninety-two percent of FY2012 biofuel investment was for research and development. A November 2012 report prepared by Environmental Entrepreneurs titled, The Economic Benefits of Military Biofuels, finds that meeting DOD’s biofuel utilization targets will generate significant economic activity — between $9.6 and $19.8 billion — and create between 14,000 and 17,000 new jobs by 2020. The report calculates the economic impact of DOD’s scale-up of biofuel usage by starting with the commitments ... Read the rest