By Teryn Norris & Clifton Yin
When President Obama and key Senate leaders meet today to reach a compromise on energy and climate legislation, they should strongly consider increasing federal investment in clean energy technology to at least $15 billion annually. This is a comprehensive third-way strategy to improve U.S. energy independence, economic competitiveness, and climate security, and it deserves bipartisan support.
We are a Democrat and Republican. One of us campaigned for Barack Obama in 2008, the other was a delegate for John McCain. One of us worked on energy and climate policy for the progressive Breakthrough Institute, while the other worked on similar issues for the conservative American Enterprise Institute. We disagree on a wide range of issues, and we hold different economic philosophies.
Despite our differences, we are strongly united behind a serious federal agenda for clean energy innovation. Regardless of the future of cap-and-trade, robust federal investment in clean energy technology can effectively tackle both energy and climate policy reform. In addition to reducing our oil addiction, it can help build new export-oriented and manufacturing-intensive industries, seize global market share, drive down the price of clean energy technologies, and accelerate the transition to a cleaner, low-carbon economy.
When the United States aims to overcome a challenge — be it defeating fascism, leading the space race, or winning the Cold War — we make a national commitment and invest the necessary resources. The federal government invests $30 billion per year in health R&D through the National Institutes of Health, and $80 billion per year in military R&D. Energy currently receives $3-5 billion — less than our national expenditure on potato chips.
Unfortunately, current Senate proposals such as Kerry-Lieberman fall far too short by only investing $2-4 billion per year, and a utility-only cap would reserve even less. As Mark Muro of Brookings Institution writes in the National Journal, “The trouble with the new utility-only approach to emissions reductions, however, is that none of its proponents are saying anything that makes it seem likely that an adequate slice of the potential revenue the narrower system might generate will be reserved for technology innovation.”
After decades of energy stalemate, in the midst of yet another oil crisis, it is time to make a real national commitment to technology innovation and secure America’s energy leadership once and for all. A new target of at least $15-20 billion per year represents a national “energy innovation consensus” supported by a large and growing number of prominent U.S. business leaders, think tanks, university associations, and dozens of Nobel Laureates.
The American Energy Innovation Council (AEIC) is the latest group to support this approach. Led by business titans Bill Gates and Jeff Immelt, and backed by the Bipartisan Policy Center, the organization is calling for $16 billion annually in federal investment. “Underfunding RD&D is an exercise in gross fiscal irresponsibility,” they wrote. “The country sends $1 billion overseas every day to purchase oil, but publicly funded research in advanced vehicles and alternative fuels totals just $680 million annually – about 16 hours worth of oil imports.”
Federal investment in energy technology can also be a political winner for Congressional Democrats, Republicans, and the White House alike. Even before the Gulf oil spill, a poll by Pew Research in March found that 78% of the public favors increased government funding for research into clean energy technologies. When compared to alternatives such as carbon pricing, technology investment fairs as the most popular energy policy proposal.
For Democratic leaders, this strategy would allow them to meet general public demand for reform while still satisfying their environmental base with a major achievement on clean energy. It would allow Republicans to offer a serious, pro-business alternative to cap and trade and “drill baby drill” that would boost the economy. And it would allow the White House to declare victory on President Obama’s original campaign promise to invest $15 billion per year in this sector.
Of course, Republicans tend to shy away from any proposal to increase government spending, but clean energy is a strategic national resource with too much risk for the private sector to bear alone. Republicans should also remember the strong conservative precedent for these types of public investment. President Eisenhower oversaw the initial science R&D surge after Sputnik and the construction of interstate highways. President Reagan made enormous investments in military technology to maintain U.S. competitiveness.
More recently, it was Newt Gingrich who in 2008 called for the National Science Foundation’s budget to triple from $6 to 18 billion to foster green technologies. Last year, Senator Lamar Alexander (R-TN) introduced the Clean Energy Act of 2009, which would invest $750 million annually for ten years in clean energy RD&D and provide $100 billion in clean energy loan guarantees. And Senator Richard Lugar’s Practical Energy and Climate Plan of 2010 would similarly offer $36 billion in loans for nuclear power plants.
Without cap and trade, the government will need an alternative revenue stream. The AEIC proposes several possibilities worth debate, such as a wires fee on electricity, reduced fossil fuel subsidies, fees on offshore oil and natural gas production, an oil import fee, or increasing the gas tax. Regardless, their report notes, “The essential requirements, though, are that we make the basic investment, and that we commit these funds, steadily, over the long term.”
The moment is urgent. As this week’s Time magazine cover story states, “Clean power could be to the 21st century what aeronautics and the computer were to the 20th, but the U.S. is already falling behind. China, South Korea and Japan are set to invest more than $500 billion combined in clean technology over the next five years, while the U.S. is likely to invest less than $200 billion, and that’s assuming [current] clean-energy legislation makes it into law.”
Federal investment in energy innovation is in line with America’s great tradition of technological achievement, and it can finally tackle our fossil fuel addition, accelerate the transition to energy independence, and boost our economic competitiveness, all in one bold step. This is a bipartisan strategy for energy leadership, and it deserves the support of Democrats, Republicans, and Independents alike.
Teryn Norris is Director of Americans for Energy
Leadership and Senior Advisor at the Breakthrough Institute. Clifton Yin recently worked for the American Enterprise Institute and is a Policy Fellow at Americans for Energy Leadership.