American scientists are the world’s energy pioneers. For the past century, their research has positioned us to lead on virtually every energy technology, from solar panels to clean coal. We can cement this legacy with commonsense reforms that enable and inspire American ingenuity.
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Learn the basics of Innovation
Innovation 101
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A Vision For Clean Energy Dominance
Jay & Rich’s Take
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Follow a conservative model for an innovation prize Ambitious innovation prizes have a conservative precedent. In 2006, Republicans in both the House1 and Senate2 sponsored bills that would have established up to $100 million in awards for hydrogen energy breakthroughs. The prizes were designed to foster wide public participation, run outside the government, and leverage industry expertise. These bills should be emulated to advance a broader clean energy agenda.
Conduct a study on the challenge.gov process Over 80 federal agencies solicit innovation prizes to the public on Challenge.gov. Past challenges range from the Air Force’s vehicle stopper challenge for military security checkpoints3 to NASA’s challenge for a more efficient way of doing laundry in space.4 Yet, the Department of Energy has been slow to use the site. It only has one significant prize in the works: a $2.25 million dollar prize for wave energy development.5 Once the winner is chosen in November 2016, a study should be conducted to identify ways to improve the process for future energy awards.
The Solyndra bankruptcy gave us 535 million reasons why government should not play an active role in clean energy commercialization.6 If taxpayers needed any more reasons, other companies receiving millions in federal assistance also suffered the same fate: Abound Solar ($70 million)7, Fisker Automotive ($139 million)8, A123 Systems ($132 million)9. Despite the bankruptcies, the Obama Administration has unilaterally moved forward with more bureaucratic solutions.
Next-generation energy technologies should be driven by American inventors, not a bureaucrat’s pen. Innovation prizes, modeled after the successful X-Prize10, provide a more conservative way of accelerating clean technologies. A single prize can encourage hundreds of inventors to develop new and creative ways to solve a problem. They can also spur private investments multiple times the prize amount. For example, the $10 million award for the flagship X-prize for private spaceflight generated over $100 million in private investment. The innovation stimulated by the competition did not end after the prize was awarded.11 The winning spacecraft’s sponsor, Richard Branson, created Virgin Galactic to continue developing the technology for commercial use.12
The Orteig Prize, the inspiration for the X-Prize, spurred Charles Lindbergh’s famed 1927 flight across the Atlantic13 Source: Flickr/San Diego Air and Space Museum Archive14
Today, the X-prize Foundation is setting the table for better batteries15, electrified roads16, and carbon capture.17 The carbon capture competition alone holds large promise. Cosponsored by NRG, America’s largest owner of coal power plants, the competition will give $20 million to teams that can turn carbon pollution from power plants into valuable products.18 The government should capitalize on this momentum with its own prizes.
Fueling the Push for a Better Car
Edwin J. Feulner Former President, Heritage Foundation
Basic Research and the Innovation Frontier
Mark P. Mills, Senior Fellow
Empower the heads of the national laboratories
Individual national labs should be given the authority to independently engage in select private-sector partnership agreements. Currently, this authority is reserved by the Department of Energy officials. Reducing unnecessary overhead would decrease approval times and barriers to commercialization.
Facilitate private sector access to national laboratory resources
Opening our national lab resources to companies and inventors could significantly lower commercialization barriers. The labs already have secure facilities, high-tech equipment, and thousands of expert scientists. The heads of the national labs should be given more discretion to rent their resources to the private sector.
Implement the blue ribbon commission recommendations
Over 50 reports have proposed solutions to the deeply strained relationship between the national laboratories and the Department of Energy.19 One of the most recent, a 2014 report by a blue ribbon panel commissioned by Congress, made over 30 targeted recommendations that should be implemented.
Our national laboratory system is one of America’s crown jewels. Run out of the Department of Energy, it boasts thousands of our nation’s brightest scientists, including 113 Nobel Laureates. Formed out of the Manhattan Project, the national laboratories are now tasked with translating basic scientific research to real life applications. The labs serve as a coalescing point, with over 30,000 academic and industrial scientists using major lab equipment each year.20
Caption: The national labs employ over 55,000 Americans at 17 different locations across the country
Source: Wikicommons21
Since their rise to national prominence during World War II, virtually all the national labs have been government owned and privately run.22 The combination is a potent formula. Armed with the robust resources of a government agency and the agility of a private company, the national labs historically enjoyed volumes of success. For example, lab scientists discovered 17 new elements on the periodic table23, contributed in mapping the human genome, and laid the foundation for fracking technologies.24
The national labs serve as a critical bridge between academic research and private sector commercialization. Source: DOE National Laboratory Director’s Council, “The DOE National Labs: A Vital Network in the U.S. science and Technology Ecosystem”
Unfortunately, privately run means little today. The Energy Department, responding to poor performance of a few contractors, has adopted a heavy-handed management approach. National lab management, contractors themselves, are now constrained by a mountain of government rules. The “privately run” labs even take cues from the Energy Department down to the project level.25
Certainly, the Energy Department has a responsibility to hold its contractors up to high standards when dealing with nuclear and other high-risk research. The Department of Energy, however, micromanages low-risk activities as well, from human resource modules to small partnership agreements. Unnecessary layers of bureaucracy increase costs, waste time, and increase laboratory overhead. For example, some partnership contracts between national laboratories and industries take 3 to 6 months to iron out. These delays make our companies less competitive in today’s global economy.
INNOVATES Act Creates a More Effective National Lab System
Nicolas Loris Fellow at the Heritage Foundation
Breaking the Silos
David Garman & Samuel Thernstrom Energy Innovation Reform Project
Restoring American Energy Innovation LeadershipImmelt, Doerr, Gates, et. al American Energy Innovation Council
Boost basic scientific research
Companies have little incentive to make large investments in basic research because of high risks and unclear benefits. Often, decades are needed before the fruits of research are realized. Public investments are needed to support the American legacy of innovation — and yet, we’re falling behind China, South Korea, and many other countries. China spends more than twice as much as the United States on government energy research as a percentage of GDP.
Expand private-public partnerships
Tax credits are not the only way the government can support the private sector: national lab equipment, expertise and research can be better shared; local academics and companies can work together in cost-shared “innovation hubs”; or the government can experiment with completely new programs like the one modeled after the Department of Defense’s successful research program called DARPA.
Follow the X-Prize Model
Innovation prizes, modeled after the popular X-prize competitions, can also stimulate more private investment than conventional grants or tax incentives. Similar prizes were the inspiration for Charles Lindbergh’s famous flight across the Atlantic, and more recently, Virgin Galactic’s private space exploration venture. X-prizes could be established to spur on additional energy research.
America only dedicates 2% of its R&D budget to energy.26 According to chief executives from GE and others, this is only a fraction of what’s needed. Failing to invest in next-generation energy technologies risks America’s long-term competitiveness in the global economy because China, South Korea and others are prioritizing energy R&D ahead of the United States.27
At current rates, China will invest more in energy R&D than America by 2022.
Source: American Energy Innovation Council28
Our brightest companies and business leaders are working hard to fill the void. Bill Gates is personally investing $1 billion to make energy cleaner and more affordable.29 GE is putting $15 billion into its future energy division.30 Wells Fargo31, Citi32, and Bank of America8 have each pledged multiple times more.33However, the private sector is ill-equipped to take large risks on basic science research.
1. Boost basic scientific research
The government should pick up the slack where the private sector doesn’t operate, as it does in building bridges and roads. One lesser known public responsibility is incremental and basic scientific research. Only 5 percent of private-sector R&D funds are devoted to basic research.34
Basic research provides a foundation for American industry to innovative around. Like national defense and our highways, scientific research is a public good. The government should invest in public goods because we all benefit from that single investment.The private-sector alone tends to under-invest in innovation.
Companies are ill-suited to conduct basic research requiring significant, long-term investments with unclear commercial applications. The private sector excels at bringing products to market, which is typically improving on existing science.
Industry commercialization efforts are complemented by sustained, government investments in basic research. On the other hand, some government programs can crowd out private sector funding. These programs, such as the $7.5 billion Advanced Vehicle Manufacturing Program, should be phased out in favor of a larger commitment to the basic sciences.35,36
2. Expand public-private partnerships
You don’t need to look far back in history to see how the private sector and government can work together. Fracking, the drilling technique behind the recent U.S. oil and gas windfall, relied heavily on government research to reach commercialization.37
New drill bits, 3D imaging, and horizontal drilling technologies developed decades ago in America’s national laboratories were critical to fracking’s success.38
Source: US Department of Energy39
Many private sector options exist to jumpstart American research. Leaders from some of America’s largest businesses, from Lockheed Martin to General Electric, are calling for a doubling of our federal R&D budget.40
New initiatives, such as the Energy Department’s Innovation Hubs, are showing early promise. They bring the government, academics and industry together to develop technologies that reduce carbon pollution and our dependence on foreign energy. After being seeded with federal money, the progress and funding of each hub are systematically reevaluated every five years.41 Recent hubs are focused on themes ranging from energy storage and nuclear reactor design to artificial photosynthesis.42
The Advanced Research Projects Agency – Energy (ARPA-E) is another energy research initiative modeled after DARPA, the successful Department of Defense R&D program. It applies venture capital management techniques to potentially transformational technologies deemed too high-risk for industry-driven development. More than 45 of its projects have secured over $1.25 billion in additional private sector funding.43 Initial ARPA-e investments helped the technologies scale to the point where they attracted private capital.
3. Offer X-prizes for Innovation
The Solyndra bankruptcy gave us 535 million reasons why government should not play an active role in commercialization. If taxpayers needed any more reasons, other companies receiving millions in federal assistance also suffered the same fate: Abound Solar ($70 million), Fisker Automotive ($139 million), A123 Systems ($132 million). Next-generation energy technologies should be driven by American inventors, not a bureaucrat’s pen.
Innovation prizes, modeled after the successful X-Prize,44 provide a more conservative way of accelerating clean technologies. A single prize can encourage hundreds of inventors to develop new and creative energy solutions. They can also spur private investments multiple times the prize amount: the $10 million award for the flagship X-prize for private spaceflight generated over $100 million in private investment. The innovation stimulated by the competition did not end after the prize was awarded.45 The winning spacecraft was bought by Richard Branson, who created Virgin Galactic to continue developing the technology for commercial use.46
The Orteig Prize, the inspiration for the X-Prize, spurred Charles Lindbergh’s famed 1927 flight across the Atlantic.
Today, the X-prize Foundation is setting the stage for better batteries,47 electrified roads,48 and carbon capture.49 The carbon capture competition holds especially large promise. Cosponsored by NRG, America’s largest owner of coal power plants, the competition will give $20 million to teams that can recycle carbon pollution from power plants into valuable products such as fabrics, pharmaceuticals and advanced building materials.50 The government could capitalize on this momentum with its own prizes.
In 2006, conservatives in both the House51 and Senate52 sponsored bills that would have established up to $100 million in awards for clean energy breakthroughs. The prizes were designed to foster wide public participation, run outside the government, and leverage industry expertise. These bills should be emulated to advance a broader clean energy agenda.
Innovation Can Cut Global Carbon Emissions
Mark J. Perry, Scholar at American Enterprise Institute
Basic Research and the Innovation Frontier
Mark Mills, Senior Fellow at Manhattan Institute
