Each of our companies achieved prominence because we invested heavily and steadily in new ideas, new technologies, new processes and new products.
Indeed, innovation is the essence of America’s economic strength. It has been our nation’s economic engine for centuries. Our leadership in information technology, medicine, aviation, agriculture, biotech and dozens of other fields is the result of our enduring commitment to innovation.
But in one realm central to America’s economic, national security, and environmental future, our commitment to innovation is sorely lacking: energy. Investment in energy innovation, from both the public and private sectors, is tiny—less than one-half of one percent of the national energy bill. This neglect carries serious consequences.
Due to our lack of energy options, our economy is vulnerable to price shocks—in oil, natural gas, and even electricity. The United States sends about $1 billion overseas every day for imported oil, an expenditure that represents the biggest part of the trade deficit and often causes hardship for American consumers and businesses.
Our foreign oil reliance undermines national security by enriching hostile regimes, while our military forces are often deployed to protect access to oil. And the environmental costs are steep and growing, with both conventional pollution and climate change harming human health, threatening lives and livelihoods, and imperiling the natural systems upon which we rely for food, water, and clean air.
As business leaders who have constantly faced competitive threats, we see a clear and compelling need for a vigorous response to these energy challenges. The nation must not sit back and let these problems grow. America must take control of its energy future with the right combination of smart investments and smart policy.
If this nation gets serious about energy innovation, we are optimistic about the prospects. There are dozens of opportunities in the energy field where a serious commitment to technology is very likely to reap great rewards. Solar cells, dropping in price, can become an affordable, mainstream power source. The next generation of nuclear power has the potential to be safer and less expensive. Advanced biofuels could provide a viable alternative to oil. And energy efficiency—in devices and whole systems—can reduce waste and cut demand by half, or even more, in many sectors.
But if the nation is to succeed, the government must help lead the way. We remain convinced that a free-enterprise system led by the private sector is by far the most powerful driving force for innovation. But in energy, as in defense, aviation, and health care, the nation needs a coordinated effort between business and the government if it is to accelerate the innovation engine and create real options for our energy future.
Today, the U.S. has no comprehensive national energy strategy.
There are many well-known precedents for this kind of public-private collaboration. Federal programs have been responsible for a wide range of game-changing technologies: new unmanned aircraft systems save the lives of American soldiers serving overseas; the Internet was born from military programs; and many of the most important medical breakthroughs of the last century came from our world leading investments in medical science research at our universities and laboratories.
Conditions for success in energy innovation
Successful energy innovation has three prerequisites: the first is a pipeline of new inventions; the second is a suite of policy reforms that will stimulate market demand for these new inventions; and the third is a highly skilled workforce with the ability to create and deploy these inventions.
This plan addresses the first. Ours is a strategy to fill the American energy innovation pipeline with new technologies designed to deliver a more secure, sustainable future.
But we recognize that research, development and deployment (RD&D) needs complementary energy policies to advance innovation and drive market adoption of new technologies.
Innovation without implementation has no value. A strong market signal will increase the intensity of energy research, add large private-sector commitments, reduce barriers between the lab and market, and ensure technologies perform better and cost less over time. Those policies may include some combination of a price or cap on CO2, a clean energy or renewable energy portfolio requirement, and technology performance standards.
Regardless of the specific mechanisms that are chosen, successful energy policy will share three main characteristics:
- It will provide long-term price or market signals. On-again, off-again policies hinder progress and scare away private sector investors.
- It will encourage competition among technologies. Performance standards that allow the market to choose winners based on good technology and low cost are very powerful drivers of innovation.
- It will reward steady improvements in performance. Credible, predictable and periodic adjustments in performance requirements will stimulate research and ensure continued innovation. The effect of such policies would be to create a large, sustained market for new energy technology. Our nation cannot succeed without it.
Finally, it is clear that to succeed in energy, the nation needs a workforce with deep grounding in science and engineering.
We refer to the educational recommendations outlined in the National Academies’ Rising Above the Gathering Storm report to provide guidance on how to revitalize our science and technology education system in the United States. A few of us were involved in the writing of the Gathering Storm report, and many of us have been involved in the political progress that stemmed from its call to action. That report made four pointed recommendations:
- Vastly improve K-12 science and mathematics education. • Sustain and strengthen the nation’s commitment to long-term basic research that has the potential to be transformational.
- Make the United States the most attractive setting in which to study and perform research. Attach a green card to the diploma for international students who pursue higher education in science, technology, engineering or math in the United States.
- Ensure that America is the premier place in the world to innovate; invest in manufacturing and marketing; and create high-paying jobs based on innovation.
Complementary market policy and education reform are vital to the energy innovation ecosystem. This report focuses on America’s immediate opportunity to invest in energy innovation—and how to seize it.