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Don’t Get Ahead of Yourself: The U.S. Needs a Comprehensive Long Term National Energy Plan

Matthew Stepp's picture
Center for Clean Energy Innovation

Matthew Stepp is the Executive Director for the Center for Clean Energy Innovation specializing in climate change and clean energy policy. His research interests include clean energy technology...

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A Response to the Coalition for Green Capital

By Matthew Stepp

In a previous post, I critiqued the Coalition for Green Capital/Center for American Progress comprehensive energy proposal titled Cutting the Cost of Clean Energy.  I made two key arguments.  First, the U.S. does not have all the clean technology it needs and simply creating a market for already mature technology through deployment and financing measures is not a long term solution to making clean energy cheap enough for widespread adoption.  Second, any comprehensive, national energy plan must include policy support at all stages of innovation, not just deployment, if we are to benefit from affordable, unsubsidized clean technologies.  The Coalition for Green Capital (CGC) has responded.

The bulk of their response is a misrepresentation of my argument.  CGC writes that I am presenting a false choice between supporting the development of breakthrough technologies and deploying already existing technologies.  This couldn’t be farther from the truth.  Instead, I explicitly argue that any comprehensive national energy policy must support the entire spectrum of innovation including basic science, RD&D, scale up, education, infrastructure, manufacturing, and deployment.

To a degree, CGC agrees with my analysis.  They recognize the critical role breakthrough clean technologies play in a clean energy economy.  And I applaud them for supporting Senator Bingaman’s Clean Energy Deployment Administration proposal that would provide a dedicated source of financing for high risk clean energy projects.  But ultimately their argument that breakthrough energy innovation is fully supported by existing or proposed institutions and that the only gap in support is for the deployment of existing technologies is not supported by the evidence.

The main goal of a national energy plan should be to actually cut the real cost of clean energy, not its price through prolonged public subsidies.

As it stands, the CGC plan doesn’t do this.  The mature technologies that CGC wants to deploy aren’t affordable without government support.  So on one hand, artificially reducing the cost of these mature technologies through deployment measures like low cost financing is good policy because it keeps supply chains intact for future technology innovations, but on the other hand it is strictly a short term fix.  Deploying mature technologies will not spur breakthrough innovation in the long term, but instead result in incremental change.  If the opposite were true why aren’t Duracell and Energizer pioneering the next generation of advanced battery storage technologies?

Long term, innovation will be the driver of real clean energy cost reductions. But while the U.S. does have some institutions in place to do this additional policy support is needed to ensure that early stage developments will emerge.  The wide gap in what the U.S. currently invests in energy innovation and what is needed is the most prominent example.  Most recently, the President’s Council of Advisors on Science and Technology (PCAST) recommended that the U.S. invest an additional $16 billion a year on advanced technology research, development, demonstration, and deployment.  Recognizing a lack of support for innovation, PCAST recommended that 75% of those funds be directed to research, development, and demonstration.

Given the significant need for greater funding of clean energy innovation, it’s confusing that the CGC plan is branded as a “comprehensive” proposal for making clean energy cheap when in fact it leaves out (or assumes that they are already in place) the very innovation policies that will make clean energy cost less than coal and oil. 

Even their main example of a technology that will benefit from a deployment-only approach – nuclear energy – raises this disparity.  The U.S. nuclear manufacturing industry moved to foreign countries because of the moratorium on new nuclear power plant construction in the 1970’s, effectively drying up the domestic consumer base for large scale nuclear technology.  But broadly citing nuclear energy’s decline because of the moratorium doesn’t tell the whole story or drawing an important lesson.

Let’s recognize that nuclear power plants were pushed to the market by significant federal R&D support and the government acting as an early adopter of the technology (e.g. procurement policy for submarines).  Nuclear energy is actually an example public support for breakthrough energy technology (which nuclear was in the 1950’s) and is a model for how the U.S. should advance and deploy next generation clean energy.

An example of this more effective innovation strategy can be seen in the development of new small modular nuclear reactors (SMRs), which the federal government is playing a similarly critical role.  For instance, Babcock & Wilcox’s mPower SMR demonstration and scale up project is being supported by the federally-funded Tennessee Valley Authority.  The NuScale SMR was a spinoff of a Department of Energy funded partnership with the University of Oregon.  The GE-Hitachi Hyperion SMR prototype will be developed and tested at the DOE funded Savannah River Site.  In fact, many if not all next generation SMR designs are being supported through government innovation support.  It can be argued that the customer base for these cheaper, more easily manufactured and customizable nuclear plants will be much larger than their big box brethren.

To conclude how I finished the first post – the CGC/CAP plan is a good start, but just one part of a much larger energy innovation agenda.  It will take a multifaceted approach to make unsubsidized clean energy cheap.  If CGC and CAP want to present a real comprehensive energy plan, they would do well to address the other two-thirds of the innovation equation.

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Matthew Stepp's picture
Matthew Stepp on Dec 6, 2010

DG –

Good catch on Oregan State.  For some reason, the RSS feed didn’t pull in the final edits I made to the post.  Meant no disrespect to Oregan State!

As for government support for nuclear energy – I couldn’t agree more.  A thorough review and reform of public nuclear energy support – starting at funding of breakthrough technology from basic science through deployment and through the liscensing process – is absolutely needed.  This need is more acute when thinking about SMR’s, which in the future could be produced in a factory line style (reducing construction time and cost), but if it still takes years and years to go through the review process, then what?.

Now much of the problem is staffing – the NRC is considerably under staffed to handle any big uptick in new plant applications.  And the NRC has recently reformed their application process to combine liscensing and construction applications (instead of going through two explicit processes).  NRC has also made it so plant applications can be expidited if an already approved plant design is used in sequential new power plants (reducing the app process).  So, it seems the application-to-power generation timescale should decrease in the coming years. 

Though more needs to be done of course.  It will be interesting to see how the NRC’s new Office of Advanced Reactors comes together in the coming year.  They were fairly recently created to deal with SMR’s.

Matt Stepp
Clean Energy Policy Analyst
Information Technology and Innovation Foundation

Matthew Stepp's picture
Matthew Stepp on Dec 6, 2010

Andrew_W –

You are absolutely right, many “comprehensive plans” – be that the one I critique here (Coalition for Green Capital/Center for American Progress) or the cap and trade bills debated the last few years – just don’t understand that clean energy is a technology innovation problem.

At ITIF, we advocate policies that have this reality in mind.  Check out the Senate Testimony given by ITIF President  Dr. Robert Atkinson on this very subject (http://www.itif.org/files/2010-testimony-clean-tech-tax-credits.pdf).  Also at www.itif.org, we have released a number of reports on the ened for clean energy innovation.

The fundamental issue is that the U.S. must develop clean energy technologies that are lower cost than coal (for electricity generation) and cheaper than driving a gasoline powered vehicle (though infrastructure and other vehicle characteristics play an important role here as well).  And these cheaper technologies need to be cheap without being subsidized by the government. 

Now some “X-prize” like initiatives have been implemented at DOE – the one that comes to mind is the prize for developing a 100 mpg non gasoline vehicle.  But prizes in my opinion are deficient in that some of the technology barriers are capital intensive and those costs far outweight the prize itself. 

Another way forward is to learn from the past.  The U.S. history of technology development provides a way forward and that is through public-private partnerships, government acting as a first customer for new technologies in need of a market (e.g. procurement policy), and for government providing support across the full innovation spectrum.  Doing this, we will develop affordable options to coal and gasoline.

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