Yesterday, AEIC Principal and Microsoft Chairman Bill Gates addressed the challenges of our global energy future on its current trajectory. With global greenhouse gas emissions rising and energy demand growing worldwide, Gates concludes innovation is critical to make clean energy technology affordable enough for the whole world to use.
The U.S. government has made contributions to the pathway of innovation, but can do more to make energy sources cleaner, more reliable, and more affordable. Gates points to distressing statistics in relation to both public and private investments in energy research and development. In the private sector, energy R&D makes up only a fraction of a percent of the share of sales, due to a lack of private market valuation of the public goods that energy innovation investment provides and the long-term nature of that R&D. This lag in private technology R&D highlights the need for publicly-funded R&D, yet the government contributes only 2 percent of its spending on research and development to energy, a small percentage in comparison to both defense and health spending which make up 60 percent and 25 percent, respectively.
Gates recommends that the government promote and more sufficiently support energy research and development, particularly in basic energy science, advanced nuclear fission, renewables, efficiency, and improvements in the electricity grid. The government could do this by expanding research grants and improving regulations, and focusing on funding is a critical part of the equation–aspects covered in a report by the AEIC staff on unleashing private R&D.