Friday factoids time: The U.S. biomedical and pharmaceutical industry invests between 10-20 percent of revenues in research and development (R&D) and new product development, spending $58.8 billion on R&D in 2007. The U.S. government adds an additional $30 billion per year investment in biomedical R&D through the National Institutes of Health.
In contrast, the U.S. energy sector invests well below $3 billion annually in R&D in an industry with well over a trillion dollars in annual revenue. The energy sector’s R&D spending as a percent of revenues — call that figure the industry’s innovation intensity — is just 0.23 percent. That compares to a national average innovation intensity across all industries of 2.6 percent, or 10-times greater than the energy-sector’s innovation intensity. And it pales in comparison with the innovation intensity of leading technology and innovation-intensive sectors including biomedical technology (10-20 percent), information technology (10-15 percent), and semiconductors (16 percent).
This downright paltry private-sector energy innovation spending leaves a massive energy innovation gap that the U.S. government barely begins to fill, investing only about $5 billion annually in energy R&D. That’s barely more than half the levels spent on public research to pursue clean and affordable energy alternatives during the late 1970s and early 1980s. The scale and urgency of our national energy challenges have clearly grown since then, yet the national commitment to energy innovation has moved in the wrong direction. Public R&D spending on health care ($30 billion) and defense ($80 billion) signal the scale of true national innovation priorities and begs the question: when will the U.S. get serious about investments in clean energy innovation? When it does, a new National Institutes of Energy and a major increase in federal energy R&D investments are needed to fill the energy innovation gap and spur a clean energy revolution.
For more on a National Institutes of Energy, see our archives here or the following selected content:
- Jumpstarting a Clean Energy Revolution with a National Institutes of Energy – policy report from Breakthrough Institute and Third Way (September 2009).
- “National Institutes of Health: A Model for Jumpstarting Energy R&D”
- “Senator Brown, Leading Energy Think Tanks Push for More Research Investment and New National Institutes of Energy”
- “Jumpstarting a Clean Energy Revolution: A Gathering Global Consensus“
(All factoids and figures from either the BTI, Third Way report, Jumpstarting a Clean Energy Revolution with a National Institutes of Energy, or Charles Weiss and William Bonvillian’s excellent book, Structuring an Energy Technology Revolution) Originally at the Breakthrough Institute