Investing in climate innovation

This week, the president for the fourth time proposed a budget that, if enacted, would dramatically reduce clean energy research and development programs that are key to our long-term success in heading off the worst impacts of climate change. The budget proposes, for instance, shutting down the Advanced Research Projects Agency-Energy (ARPA-E), which has already led to the creation of 76 new companies and more than $2.9 billion in private sector investment, all in service of developing transformative, low-carbon technologies.

It’s reassuring that in previous years the bipartisan response in Congress has been to instead boost funding for these vital programs.

As we lay out in a recent report, Getting to Zero: A U.S. Climate Agenda, our progress thus far in decarbonizing the U.S. economy has been enabled by innovations in renewable energy and natural gas technologies. Fully decarbonizing the U.S. economy—let alone the global economy—will require an unprecedented pace and scale of innovation across all the key sectors. Increased federal support won’t solve this challenge on its own, but is critical to ensuring cost-effective pathways to carbon neutrality.

Successful innovation, especially in the energy sector, doesn’t really fit the popular conception of the “garage entrepreneur.” Pushing new technologies into the market that can compete with incumbent technologies requires significant investments of time and capital. It requires both technology push (research and development) and market pull (such as regulations) to accelerate a technology through the innovation cycle and mobilize private investment.

Diminishing federal innovation support would not only undermine climate progress but weaken the ability of U.S. companies to compete. Working together, the public and private sectors have succeeded many times in the past in leveraging U.S. technological prowess into U.S. jobs and exports. Stronger federal support provides a critical foundation for the homegrown technology advances that can position U.S. firms to take a lead in the growing global clean energy market.

In Getting to Zero, we articulate three key strategies for building a more robust and integrated innovation ecosystem that can help deliver a decarbonized future: setting the low-carbon agenda, funding low-carbon innovation, and optimizing the innovation ecosystem.

Setting the Low-Carbon Agenda

To achieve our long-term decarbonization goals, we have to be explicit about what they are and orient all relevant work toward concrete objectives. That’s why we recommend that Congress explicitly establish decarbonization as part of the research mission of all relevant federal agencies. Requiring the Department of Energy (DOE) to regularly conduct a Quadrennial Technology Review will also help to assess gaps and opportunities in ways that can better target federal resources. The federal government should establish innovation strategies for each key economic sector and should leverage programs like the Office of Technology Transitions to build relationships with the private sector that can speed commercialization.

Funding Low-Carbon Innovation

The president’s budget suggests a nearly 29 percent reduction in funding for climate-related research and development programs at DOE, as well as cuts to other key programs that could help drive down emissions. Decarbonizing the U.S. economy is going to require significant increases in investments that target clean electricity; carbon capture, utilization, and storage; energy storage; advanced clean fuels; advanced manufacturing; renewable thermal energy; advanced computing; and advanced agriculture. In Getting to Zero, we urge Congress to scale up investments in climate-related research and development to $20 billion a year by 2030, including $2 billion a year for ARPA-E. But early stage research won’t be enough either—we have to make investments that can mitigate risks that often keep projects from breaking ground. That’s why we also recommend Congress invest $50 billion to $100 billion in high-impact demonstration projects by 2030.

Optimizing the Innovation Ecosystem

Of course, throwing money at innovation won’t deliver the necessary results if the agencies administering the programs aren’t at their best. Luckily, the U.S. has a world-class set of research institutions, including national labs, universities and businesses. To rapidly accelerate innovation, we must fine-tune this system to reach its full potential. Scaling up administrative capacity to manage the increase in research funding and projects will be crucial, as will the prioritization of technology transfer efforts. New institutional models like energy innovation hubs and USDA’s Agriculture Advanced Research and Development Authority can help facilitate the kinds of interdisciplinary, collaborative work that we need.

Since the president’s first budget, and despite his proposals to dramatically reduce or eliminate these critical research programs, Congress has continued to support innovation on a bipartisan basis. For example, funding for energy-related research at DOE increased more than $1.3 billion from 2016 to 2019. In this year’s appropriations debate, Congress should continue to build on this bipartisan consensus to strengthen the foundation for the innovations we so vitally need to meet the climate challenge.