November 30, 2010

The Obama administration yesterday called for higher energy R&D funding -- both in a report from the President's Council of Advisors on Science & Technology and in a speech on the topic from Energy Secretary Steven Chu.  Speaking at the National Press Club, Chu called the embrace of clean energy technology in China and elsewhere as a "Sputnik moment" for the US.

          When the Soviet Union became the first country to launch a satellite into orbit with Sputnik, it sparked a massive investment here in science and engineering that helped Chu and others of his generation get an education in the sciences, he noted.

          "When it comes to innovation, Americans don't take a back seat to anyone -- and we certainly won't start now," said Chu.  "From wind power to nuclear reactors to high speed rail, China and other countries are moving aggressively to capture the lead."

          "Report to the President on Accelerating the Pace of Change in Energy Technologies Through an Integrated Federal Energy Policy" was released earlier in the day and urged the adoption of a government-wide federal energy policy that should be updated every four years as defense policy is.  It calls for significantly boosting funds for energy R&D and was written by a group of mostly academics.

          The stimulus provided a huge shot in the arm in R&D funding for energy but that money is coming off the books and Chu told the audience that he does not want to see funding return to the old trend of declines.

          Without the stimulus, the government spends about $5 billion/year on energy research.  The report suggested that amount should rise to about $16 billion/year and that the new funds come from new revenue streams such as small charges on energy production, delivery and/or use.

          The private sector invests very little in R&D for energy since the returns are limited and changes can overthrow existing and profitable ways of doing business, reported Chu.

          To get game-changing developments in technology such as slashing the price of solar to be grid competitive and making car batteries than can go 500 miles on one charge will require government funding.

          But some of the technologies being debated now rely heavily on a cost on carbon and carbon capture and storage is the best example.  No large emitter will pay for the extra equipment needed to cut carbon without that externality being priced, said Chu.