Energy Innovation: Fueling America’s Economic Engine

Technological innovation can improve productivity across industries and create entirely new ones. This is one among many reasons why economists agree that innovation is a driver of long-term economic growth and stability—and why at least 50 percent of U.S. annual GDP growth can be traced to increases in innovation. Advances in energy technology deserve particular attention since energy underlies virtually every facet of modern life, and without a sufficient, reliable, and affordable source of energy, the U.S. economy would grind to a halt. The significance of energy to the economy and national security is why the United States has spent decades investing significant amounts of time, money, and resources into developing advanced energy technology, propelling the nation to a position of global leadership in many sectors. Ongoing research and development (R&D) will be crucial to enabling the United States to continue developing game-changing energy technologies, seize billion-dollar economic opportunities in the global energy markets of tomorrow, and maintain America’s global leadership and competitiveness.

Recognizing the importance of energy innovation to long-term economic growth and competitiveness, a group of business leaders formed the American Energy Innovation Council (AEIC) in 2010 to support strong federal investments in energy R&D. Drawing on the collective experience gained from leading successful businesses engaged in R&D, the AEIC principals have long recognized the necessary and complementary roles of the public and private sectors across the innovation cycle as well as the role of federal investments in key areas that strengthen the entire system. The council has published numerous reports, white papers, and case studies exploring this topic and are in firm agreement that staunch, targeted federal investments in energy R&D are crucial to bolstering America’s long-term economic health and competitiveness. In support of this mission, the council supports the following set of recommendations to maintain and strengthen U.S. energy technology leadership.

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Recommendations

  1. Build on efforts to develop comprehensive assessments and a strategic direction for the nation’s energy sector.

  2. Invest $16 billion per year in advanced energy innovation.

  3. Fund ARPA-E at $1 billion per year. At a minimum, ARPA-E should receive $400 million per year in fiscal year (FY) 2020, a $34 million increase over FY 2019, which would allow one additional high-impact R&D program to be released by ARPA-E in that year.

  4. Support and expand new and innovative institutional arrangements, such as energy innovation hubs, energy frontier research centers, the Manufacturing USA program, and the Energy Materials Network.

  5. Make the Department of Energy (DOE) work smarter—along the ARPA-E model where appropriate.

  6. Establish a New Energy Challenge Program for high-impact pilot projects.

  7. Establish regionally centered innovation programs.

  8. Have the federal government support creative efforts to incentivize private-sector investment in energy R&D.

Building on the core recommendations AEIC has touted for years, this report lays out the current state of U.S. and global R&D investments and outlines both the challenges and impact of making robust federal investments in energy R&D to America’s long-term prosperity and well-being. This report also includes new data from a recently launched survey of recipients of federally funded energy R&D that explores the impact of institutional practices and features at DOE on R&D outcomes.

“The United States must work to maintain a leadership position in the global market for cleaner, lower-cost energy technologies. A strong, focused, and well-funded Department of Energy effort in clean energy technologies is critical—from basic research to pilot demonstration.” – Jay Faison