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Breakthrough Institute's mission is to accelerate the transition to a future where all the world's inhabitants can enjoy secure, free, prosperous, and fulfilling lives on an...

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  • Dec 14, 2010

By Rob Atkinson, Ted Nordhaus, and Michael Shellenberger

For forty years, presidents and policymakers have promised and planned for a new energy future just over the horizon. While the rationales have varied – reducing dependence on imported oil, stopping global warming, reducing air pollution, creating clean energy jobs – the song has largely remained the same: America has most, if not all, of the the technologies needed today to make a quick and relatively painless transition away from fossil fuels.

Yet America is more dependent upon fossil fuels than ever before. U.S. oil consumption rose from 15 to 20 million barrels a day between 1970 and today, while coal still provides about 50 percent of our electricity. U.S. carbon emissions continue to rise unabated, as efforts to cap them have repeatedly foundered in the face of daunting political, economic, and technological obstacles. And renewable technologies like wind and solar only meet a tiny fraction of America’s energy needs despite several decades of efforts to subsidize their deployment.

When experts convene in Washington next week to discuss energy policy, they will do so in the wake of yet another failed federal effort to pass legislation to support a transition away from fossil fuel-based energy.

Just a few short years ago, prominent venture capitalists and technology companies promised to unleash an energy technology revolution, claiming that they were developing new technologies that would transform the global energy economy in the same way computers, microchips, and the Internet had transformed information and communications just a decade earlier. Wall Street analysts were talking up clean tech as the next major growth sector of the global economy. And policymakers promised millions of new “green” jobs and tens of billions of dollars in net exports.

Things did not turn out as planned. Federal stimulus investments, which saved the renewables industry during the financial crisis, are set to expire. Clean tech firms are in trouble, with Wall Street rushing to short clean tech stocks. Carbon pricing in Europe has failed to unleash the expected revolution in the continent’s energy economy. And both international and domestic efforts to cap or price carbon emissions are in shambles. Clean energy advocates should be chastened at the consequences of counting on a two-year stimulus program and carbon pricing from cap and trade to suffice as an innovation program. Innovation demands public support for investment and takes anywhere from years to decades, not months.

The promise of a clean, secure, and prosperous energy future continues to disappoint because it has been, for four decades, premised on the notion that the technologies necessary to deliver that future are close at hand. They are not. And until U.S. policymakers come to terms with that reality and reconfigure U.S. energy policy centrally around energy technology innovation, such hopes will remain pyrrhic.

An Honest Appraisal of Costs and Benefits

Now that sky-high clean tech promises have fallen back to earth, we can paint a more accurate and nuanced picture of the potential national security, economic, health, and safety benefits for the United States and the world. Fossil energy has provided wondrously cheap energy to power human civilization, but not without significant negative consequences, including roughly two million air pollution deaths, 2,000 coal mining deaths, and hundreds of oil and gas deaths annually. And for the United States, its heavy reliance on imported oil has acute economic and security costs.

Transporting and defending fuel for the military conflicts in Afghanistan and Iraq costs America every day in both dollars and lives. Energy is thus already a big area of concern for the DoD. New energy sources would enable our defense forces more flexibility and less risk on the battlefield and off.

Cheaper, cleaner energy at home and abroad will also help the U.S. economy. At home, over $250 billion of America’s $380 billion trade deficit in 2009 was from imported oil. If Beyond displacing oil imports, if the United States could lead in the production of clean energy products and services, we would create more good jobs and exports.

Abroad, fossil energy is too expensive for about two billion humans, who still rely on wood and dung as their main sources of energy. Billions more consume far too little energy. Rising energy consumption is strongly correlated with longer life spans, improved health, and higher incomes. That wealth is in America’s interests, as it creates demand for American products and reduces low-wage competition.

Energy innovation is also in our environmental interest. There are many environmental benefits that include, but also go well beyond, reducing global warming and air pollution. Coal mining, for example, devastates mountains, many have been destroyed entirely. Meanwhile, parts of the Nigerian Delta, the Ecuadoran rainforest, and the Gulf of Mexico have been harshly impacted by oil spills.

In fact, one need not believe that global warming poses any risk at all in order to support an energy innovation agenda in the United States and elsewhere.

Real World Innovation

How, then, can we get it done? The new conversation about energy innovation begins from the recognition that the cost and functionality gap between today’s fossil energy and its alternatives remains wide, and that any serious effort to move away from fossil energy requires closing it – not through unsustainable subsidies to reduce prices, but through innovation that will drive down the real cost of clean energy.

Fossil fuels are dense, dispatchable, and widely available. Renewables are intermittent, less dense, and expensive. The latest Energy Information Administration (EIA) numbers show that electricity from new on-shore wind remains about 50 percent more expensive than coal. Electricity from new utility-scale solar photovoltaic (PV) power plants and solar thermal power plants are five and three times more expensive, respectively, than new natural gas power plants. Battery powered cars cost more to produce than those fueled by gasoline. Nuclear plants offer base-load power and provide relatively low-cost power in other countries, but the industry has stalled in the U.S. as big new plants have proved to be unacceptably expensive, requiring more affordable alternative models.

As such, a new energy policy needs to be based on driving down costs and improving the performance of these energy alternatives. Scientific and technological breakthroughs will likely be required before clean energy alternatives can compete, unaided by subsidies, with petroleum and coal.

But these breakthroughs will be insufficient without public-private partnerships for a national clean energy innovation policy. Numerous “market failures,” including high levels of uncertainty, technology path dependency, and spillovers from research, necessitate clean energy policy that must include larger, sustained, and strategic public investment to achieve critical breakthroughs.

Throughout American history, aggressive government procurement, research, and innovation efforts have delivered a pantheon of remarkable technologies, from the basic technologies of the iPhone, GPS, radar, the Internet, cancer-fighting drugs, and jet turbines. Against the widespread perception that American energy funding has been nothing more than an extended bureaucratic disaster, from Synfuels to ethanol, consider the critical role played by government-funded electrification, hydro-electric power, nuclear power, solar power, wind power and natural gas turbines.

How can we use military-style procurement to accelerate energy innovation? What can we learn from NIH’s funding of cancer research? What can we learn from over a century and a half of agricultural research? What’s the right mix of support for government research vs. private sector research?

A new energy innovation framework would also recognize that each low-carbon technology is on its own path and innovation policies should vary accordingly. For years the orthodoxy has been that “governments shouldn’t pick winners and losers,” and while there is important truth to this admonition, there is also danger in it. The truth is that we should not pick specific technologies and firms, i.e. choosing to support a particular kind of solar panel or battery technology. We should, however, be supporting broad technology areas, from nuclear to solar to batteries and biofuels, with specific investments. What do we need to accelerate the development of solar, batteries and biofuels — and what do nuclear and carbon capture and storage require?

Finally, the new energy conversation also raises questions about whether to invest in immediate deployment or longer-term innovation, as well as the relationship between the two. A focus exclusively or even largely on subsidizing the deployment of current technologies risks locking in existing suboptimal technologies while limiting innovation for both improved and breakthrough technologies. Deploying new technologies can improve their performance and drive down their cost — but not always. Subsidies for production — of corn ethanol, solar, nuclear, and wind — may in fact create an advantage for firms to produce more of today’s technologies, not invent tomorrow’s advanced new ones.

But likewise, an exclusive focus on the development of improved and breakthrough technologies risks separating the valuable link whereby development is informed by the challenges of deployment. A truly comprehensive energy policy is mindful of the need to keep this balance, to ensure a minimal private-sector industrial base in clean technology upon which a clean economy could be built in the future. Still, in many cases we would do better concentrating more federal support on incentives to create advanced technologies that have the potential to become much cheaper than today’s mass-produced ones.

Many energy advocates understandably focus on what can be done in the short-term, in the next Congress, but the important conversation is about what can be done over the long-term. Many of America’s most important technology projects spanned presidencies and Congresses, just as they crossed party lines. This was the case with armaments and agriculture in the 19th Century. In the 20th century, Eisenhower started and Kennedy continued microchip and other military procurement of advanced communications technologies. Nixon turned America’s biowarfare program into medical research program, and a Republican Congress in the late 1990s increased NIH funding with the cooperation of a Democratic president.


America is built around innovation. We expect innovation. We drive innovation. And we experience innovation. Everywhere that is, except in energy. For the most part, we still use the same fuels in our cars and our electricity generation that we did a century ago. In no other area of our economy would Americans accept such stasis.

It’s time to change that. It’s time to drive energy innovation. Even though fossil energy has been critical to security and prosperity for more than a century, during the 21st century we can and need to do better with newer, cleaner technologies. America has a longstanding commitment to moving toward cleaner sources of energy, whether natural gas and nuclear or solar and wind. But this commitment needs to be stronger, and more strategically built around particular technology pathways and policies focused on innovation. And this effort should be undertaken patiently, with an eye to create real bipartisan agreement that lasts for decades, not years.

Background papers:

ITIF, “Ten Myths of the Green Economy,” 2010
Breakthrough, “Where Good Technologies Come From,” 2010
AEI, Brookings, Breakthrough “Post-Partisan Power,” 2010
CATF/CSPO: “Four Policy Principles for Energy Innovation & Climate Change: A Synthesis,” 2010
Third Way, “Creating a Clean Energy Century,” 2010

Information on Energy Innovation 2010

The Energy Innovation 2010 conference aims to hit the restart button on energy policy and politics. The conversation will begin with an honest discussion of the advantages of moving away from fossil energy. What economic, security, health, safety, and environmental benefits can be reasonably expected from energy innovation? From there we will ask, what can we learn from past federal innovation successes with armaments, agriculture, transportation, medicine, energy, and communications? At noon we will explore what kinds of technological pathways must be pursued to make low-carbon alternatives much cheaper and more scalable. And in the afternoon the conversation will be framed around getting it done — innovation policy, the business community, and the bipartisan political consensus.

Rick Engebretson's picture
Rick Engebretson on Dec 14, 2010

My comments reflect my experience, nothing more. But, in my experience we must separate what politicians say from what they do.

About 1991 I was on Sen. Paul Wellstone’s energy and environment advisory group of interested citizens. As a Biophysicist I pushed hay crop agriculture and biofuels, brought attention to hybrid cars when others pushed some new car gizmo, and informed them of my efforts with fiber optics and the internet. Most wanted to protest and blame, I urged working with energy companies.

I fell from grace, became treated hatefully, found friends in the energy industry. Wellstone pushed corn ethanol and wind. Today hybrid cars, “next generation biofuels,” solar energy optics are called “innovation.” My current Democrat Senators think I’m a Republican when I’m just a scientist, and still treat me scornfully.

So I see a lot of important energy progress, no thanks to the politicians.

Jarret Adams's picture
Jarret Adams on Dec 14, 2010

This is great post! I look forward to more insightful thoughts from the Breakthrough boys tomorrow.

Nathan Wilson's picture
Nathan Wilson on Dec 14, 2010

More research, but until the breakthroughs start happening, utilities should just continue business as usual?

That would have been a fine idea thirty years ago.  But at some point we have to admit that maybe clean energy always will cost more than the dirty kind.  It’s time to press ahead with what we have.  The normal transition time for utility-scale power is 40-60 years (the life-time of a plant).  If we start now, a breakthrough still could happen in time to measurably reduce the cost.

The fear that we could lock-in the wrong low-carbon technology is non-sense.  It is true that high-priced natural gas in the short term made it easier to introduce variable renewables like wind (without the ruinous expense of large storage systems).  But in the long run, with no clear policy of de-carbonization, high priced gas just drives the market back to coal.

With today’s nuclear, desert solar-thermal, and geothermal power systems, we do have the technology we need to decarbonize our electrical grid.  Postponing deployment with the hope that a future price reduction will make it less painful is just another way of saying business as usual.

Rick Engebretson's picture
Rick Engebretson on Dec 14, 2010

“Fossil energy is too expensive for about two billion humans, who still rely on wood and dung as their main sources of energy.”

If someone digs with his hands, he needs a shovel. We can directly develop non fossil energy with atmospheric gain by helping improve these two global fuels. Very simple, very effective climate and poverty impact.

J Morton's picture
J Morton on Dec 15, 2010

The government has told us that climate change is a threat to humanity, although it refuses to seriously fund any “X-Prize” or R&D to find a full-time energy source to replace the carbon fuels blamed for the threat to humanity.  In the absence of a coherent national energy policy, government seems content to throw billions of taxpayer dollars at subsidies for wind, solar, and Ethanol… knowing that these technologies cannot replace carbon fuels.  Government steadfastly pursues enacting Cap and Trade (or by some name) to force anyone who uses carbon fuel to pay more for it, even after they switch to part time energy alternatives.  Cap and Trade, once established, would require that copious amount of carbon fuels to be used.  The enormous profit potential of carbon trading would guarantee this to happen.

 Nothing that government has done or proposes to do has ever been accompanied by an estimate on resulting C02 reduction and the concomitant global temperature reduction… the beneficial end effect of it all…  that their measures would achieve.  Like Don Quixote, tilting at windmills, government tries to somehow crush the carbon devil under the weight of billions of American dollars in part time energy subsidies.

 And through all of this, scientists are content to continue studying the changing climate to further document the physics of what changes the climate, and blaming use of carbon fuels as the culprit.  Nowhere can a scientist be found who has the guts to stand up and say:  The government has not prepared a plan, has not drawn a timeline, which shows the steps we must take to reduce global temperatures to an acceptable level.  For that matter, neither the scientists nor government has officially pronounced what the Earth’s temperature (the Goal) should be.  On this subject, who gets to decide? 

So here we are:  Charging ahead without a roadmap, a plan, or a Goal; with scientists and government throwing money at (manmade) climate change; and pretending that this will somehow solve the problem.  We’ve got nothing and we’re going nowhere, but at least the climate change industry is thriving.  Thank goodness that mankind’s use of carbon fuels isn’t really causing any harmful climate change, or at least the government’s actions tell us so.  The only real, sustainable harm being done is to our national wealth.  But because our national wealth is (obviously) a renewable resource, there’s no real harm being done.  Right?

Robert Hargraves's picture
Robert Hargraves on Dec 16, 2010

At risk of preaching to the choir, I would like to turn your attention to Aim High, a presentation about thorium energy cheaper than from coal. Carbon taxes will never be accepted by developing nations, and maybe not even US and OECD nations. the liquid fluoride thorium reactor is an innovative energy source that will undercut the economics of fossil fuels. The presentation is at

A bit more science is in the recent American Scientist article at

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