Government, private sector need to invest in clean energy
IN 2010, the American Energy Innovation Council, composed of CEOs from multiple industries, called for the tripling of energy research and development, or R&D, citing the need for a dramatic expansion of the energy innovation pipeline to meet critical national priorities. That same year, I helped lead an energy task force of President Obama’s Council of Advisors on Science and Technology with the central message of accelerating the pace of technology innovation to meet economic competitiveness, environmental, and energy security needs. It’s no coincidence that industry and government groups, both with key roles in shaping energy markets, reached virtually identical conclusions.
Now, as secretary of energy, I have the opportunity to help shape a national response to this common goal to accelerate innovation. There has already been remarkable progress in driving down the cost of key clean energy technologies. Over the last six years, costs have fallen by 40 percent to 90 percent for land-based wind, rooftop and utility solar, electric car batteries, and LED lighting. Unsurprisingly, technology diffusion has grown over that period. Wind generation capacity has tripled, solar 20-fold, and LEDs 200-fold.
These impressive gains are still insufficient to meet our long-term climate goals while providing affordable, reliable, and secure energy supplies. The national greenhouse gas reduction commitments made prior to the Paris climate negotiations that begin Monday are very important, but increased ambition will still be needed in the years and decades ahead to limit global temperature rise to two degrees Celsius. Innovation-driven lower clean energy costs will underpin increased ambition on climate, while enabling life-changing energy services to the poor and enhanced global energy security. We can’t afford to wait.
Today, there is good news to report. At the start of the Paris conference, leaders of 20 countries are giving a ringing endorsement of “Mission Innovation,” an initiative that is singularly focused on accelerating clean energy innovation and cost reduction. The president and 19 other leaders from countries with diverse energy needs and interests will seek to double their national clean energy R&D budgets over five years. Collectively, these countries represent about 80 percent of the world’s current national investments in clean energy R&D, so doubling is significant. At the Department of Energy, this translates into an additional $4 billion by the end of 2020.
While essential, smart investment by governments will need to be matched by smart investments from the private sector. That is why a parallel private sector initiative is vital. On the same Paris stage, 28 significant private capital investors from 10 countries — the “Breakthrough Energy Coalition,” or BEC — are committing to investing billions of dollars in the clean energy project pipelines in Mission Innovation countries. Bill Gates led the formation of the BEC and pledged to personally invest at least a billion dollars over five years.
In their own words, the BEC offers “a different kind of private investor with a long-term commitment to new technologies who is willing to put truly patient flexible risk capital to work. These investors will certainly be motivated partly by the possibility of making big returns over the long term, but also by the criticality of an energy transition.”
How will Mission Innovation and the BEC make a difference? The Energy Department’s Advanced Research Projects Agency provides a case in point. Since 2010, it has established a remarkable track record advancing novel technologies toward commercialization. Half of its 141 completed projects have received substantial follow-on funding and 30 new companies have formed. Last week, I announced 41 new agency awards. This good news was tempered by available funding — less than one-third of levels recommended by the National Academy of Sciences — that limited awards to only 2 percent of the proposals received. Fewer options from public sector investment mean fewer targets for private sector commercialization. Mission Innovation is about increasing the options for investment, drawing upon the immense innovation potential in our universities, national labs, and companies.
So far, 20 Mission Innovation countries agreed on the need for dramatic clean energy funding investment increases, irrespective of their current energy mixes. In addition to addressing climate and security challenges, governmental and private participants also recognize that the global clean energy marketplace is rapidly developing and growing and will be given a further boost after the Paris climate talks. New energy supply, demand and infrastructure technologies will generate expenditures at the trillion-dollar scale. Benefits will surely accrue to the early innovators.
Mission Innovation and the Breakthrough Energy Coalition are synergistic initiatives that establish clean energy innovation as a foundation for environmental stewardship, prosperity, security and social responsibility. Strong American leadership in these initiatives has provided a tremendous global leveraging opportunity, and innovation has remained common ground in our political discourse. It is my hope that we can transcend political divisions at home with a commitment to American innovation.
Ernest Moniz is the US secretary of energy.