Business heavyweights, think tank thinkers on the right and left, and even climate contrarian Bjorn Lomborg spent the better part of 2010 calling for significant increases in energy research R&D to stir up the fires of technological innovation, drive economic growth, and reduce pollution.
Now, along come House Republicans, lumbering into the budget china shop and battering the crockery in a ham-handed attempt to appear fiscally responsible.
Their proposed budget resolution, setting spending levels for the remainder of fiscal year 2011, has knives out for energy science and technology research – for example, a 35 percent chop from 2010 levels for energy efficiency and renewables, and a 15% cut for nuclear R&D.
Yes, a fair argument could be made that all federal programs need to share the pain, but energy science and technology research doesn’t amount to a teaspoon in a hurricane. All of the some $5 billion allocated to energy R&D each year could be zeroed out and the accountants at Treasury would hardly notice.
More importantly, energy R&D is long-range tech development that likely would not be picked up by private sector CFOs seeking more near-term returns for their risk capital. Once promising lines of inquiry are bunged up by federal budget politics, innovations that might have spawned new industries and smarter ways to use America’s energy resources would fall by the wayside.
That would be a false savings. Academic studies have found that technological innovation was responsible for about half the economic growth that the U.S. experienced in the second half of the 20th century. Energy technologies could play the same role in the 21st century, especially if they cut pollution, create product export opportunities, and wean the U.S. off the OPEC sauce.
The federal government could drive energy technology innovation forward with research, demonstration, and procurement that forces down costs and encourages adoption, similarly to the migration of health and telecommunications innovations from federally supported labs to marketplace.
Energy has been an R&D stepchild. As a percentage of domestic sales, energy research amounts to 0.3 percent. Equivalent percentages are 7 percent for computers, 12 percent for pharmaceuticals, and 26 percent for communications.
Supporting energy R&D doesn’t mean splashing out funds on poorly focused projects that fail to move technologies to market. In a thoughtful report published last fall, three think tanks occupying diverse habitats on the ideological spectrum – American Enterprise Institute on the right, Brookings on the left, and the category-defying Breakthrough Institute – proposed upping federal R&D funding by a factor of five, and coupling the extra support with technology-neutral reforms that would put public and private-sector researchers together in clusters that shape technology ideas into real products.
Under the think tanks’ blueprint, promising technologies could be deployed with the help of incentives that ratchet down over time, so that technologies aren’t stuck on a never-ending subsidies treadmill. Technologies that become cost-competitive would be ready to fight it out in the market. Those that don’t would become useful learning opportunities.
There would be an important role for the armed forces to demonstrate technologies at the realistic scale that only defense installations are capable of. Military demonstration would not be a feel-good favor that detracts from the defense mission. The armed services have a strong interest in adopting more efficient, less tactically dangerous ways of supplying deployed forces with energy.
The think tanks’ recommendations might or might not be exactly the right formula for federal energy R&D. At least, however, they put some careful thought into balancing the strong public interest in technological innovation with the equally critical need to correct fiscal imbalances.
Unlike the bulls cavorting around the china shop at the House Appropriations Committee.