Eileen Claussen, President of C2ES
Opening Remarks for Low-Carbon Innovation Forum
Washington, D.C.
April 24, 2012

Thank you very much. On behalf of the Center for Climate and Energy Solutions, I want to welcome you to our latest forum on low-carbon innovation. As we gather here to talk about the role of innovation in addressing the twin challenges of energy and climate change, I am reminded of the story of the first-grade teacher who was reading the story of Chicken Little to her class. She comes to the part of the story where Chicken Little approaches the farmer and says to him, “The sky is falling, the sky is falling!” The teacher then asks her students, “And what do you think the farmer said next?”

One little girl in the front row of the class raises her hand and answers, “I suppose he said, ‘Holy cow! It’s a talking chicken!’”

In today’s political environment, it’s hard sometimes not to feel like that talking chicken when we bring up the important issues of energy and climate change. Sometimes it seems that no one really wants to pay attention to what we’re saying. It’s hard to get past the posturing and the politics to a place where there’s a possibility of real attention to these issues and real action.

Well, I am here to tell you this morning that we have to get to that place where people pay attention to us … and we have to get there as soon as possible. Spurring low-carbon innovation must be a national priority and I want to use my remarks to set the stage for the three excellent panels that will follow, dealing with the respective roles of business and government in this work.

Most of what we hear in Washington these days about public-private collaboration to advance low-carbon technologies revolves around a single example where things did not turn out well. I’m speaking, of course, of Solyndra. But whatever the truth ultimately proves to be —whether Solyndra is a case of undue political influence, or simply a casualty of a market shakeout — this one, overblown example hardly tells the full story. As we will hear in the course of the morning, both government and business have vital roles to play at every stage on the path to commercialization. And to ignore or undermine the role played by government is to risk losing the fight against climate change and our competitive positioning in the growing clean energy market.

It’s important to remember first and foremost what this work is about: it is about addressing two of the most important challenges facing our country and the world in the years ahead — the twin challenges of energy and climate change. And, even if you are an ardent skeptic of the science of climate change or of our ability to reduce emissions to a level where we can actually have a discernible impact on global temperature trends, the case for addressing our energy challenges should be motivation enough.

Innovation in low-carbon technologies isn’t crucial solely because it will reduce greenhouse gas emissions, as important as that is. It is also crucial because it will reduce our dependence on fossil fuels, contribute to our energy security and our national security, and drive economic growth and U.S. competitiveness in the years ahead.

When we do a full accounting of the environmental and the economic and national security costs of our energy status quo in this country, we see that the old ways of doing things just aren’t sustainable. So what’s the solution?

Well, in the short term, there are steps we can take right now to conserve energy, switch to low-carbon fuels and deploy more efficient technologies. But over the long term, achieving change on the scale that is needed will require new technologies. And we need to seed the technologies of tomorrow by investing right now in low-carbon innovation.

This is not just a necessity; it is also a huge opportunity. Business leaders from Bill Gates to Jeff Immelt to Andrew Liveris agree that energy innovation is the next great global industry. With world energy consumption expected to grow by 40 percent in the next two decades alone, this is a growth opportunity that could rival what we’ve seen in recent decades with the growth of computing and the Internet.

But our research at C2ES shows that innovation in the energy industry doesn’t come easy. It takes time and one of the keys to success is making sure you have the right industries and the right partners working together.

Our research also shows that forward-thinking companies, including some of the companies you will hear from today, are developing innovative technologies that could be part of the long-term solution to our energy and climate challenges. Last October, we released a report called The Business of Innovating: Bringing Low-Carbon Solutions to Market, which was developed with members of the our Business Environmental Leadership Council (BELC) and included a survey of leading companies, a series of BELC workshops, and in-depth case studies of eight low-carbon innovation projects from four multinational companies. Here were some of the key findings:

• First, companies emphasized the importance of business leaders or internal champions highlighting the strong contribution that low-carbon innovation can make to the bottom line and to future growth.
• Second, business executives stressed that reductions in carbon emissions alone will not make low-carbon innovations successful in the marketplace; the innovations must also bring bottom-line value in terms of total cost reduction, enhanced performance, or competitive edge.
• And third, the report notes the importance of balancing long-term vision and short-term profitability. Companies that are able to successfully commercialize low-carbon innovations have a constant focus on core competencies and customer needs today, while also studying the changing technical, market, and policy landscape of the future.

The report also laid out the huge opportunities that are out there for businesses that embrace low-carbon innovation. By 2020, total investment in clean energy alone — that includes everything from renewable power to technologies that improve energy efficiency, such as the smart grid — is expected to reach $2.3 trillion. For the United States to sit back and allow other nations to assume a leadership role in meeting these needs would be, frankly, irresponsible.

Business is innovating, as we found in our report. But business cannot do this work alone. Our research confirmed that there are considerable barriers standing in the way of individual companies and industries as they try to move low-carbon solutions from the laboratory to full-scale commercialization.

Among the companies we studied, one of the biggest of these barriers is what we refer to as “policy uncertainty.” Climate policy is on the back burner, as all of us know very well, and the nation’s elected leaders also can’t seem to come to agreement on a comprehensive energy policy. The result is that companies are left to guess for themselves what type of policy environment they will be operating in five or ten years from now. The current state of affairs makes it a huge challenge for business to make strategic bets on what energy products and services to bring to market.

I will say it again: Business and government each play critical roles in the innovation process. And if we want to develop the low-carbon technologies that will help us protect our environment, our energy security and our economy in the years to come, government needs to be a part of the solution.

And so in today’s panels we are looking at three of the ways in which government plays a vital role alongside business in advancing low-carbon innovation in this country.

First … government must continue to support basic research, development, and demonstration. We need to keep evaluating and investing in the next generation of low-carbon energy technologies. Tools we rely on everyday — from the Internet to GPS — came out of research supported by the Department of Defense.

Some of the breakthrough technologies enabling the natural gas boom in the United States were made possible by investments in research, development and demonstration from the Department of Energy and national labs.  It is estimated that U.S. shale gas can now meet our domestic gas needs for the next 100 years — that’s a pretty good return on our taxpayer investments.

In 2007, Congress created ARPA-E — the Advanced Research Projects Agency for Energy — to help support the development of breakthrough energy technologies. It’s absolutely vital that government continue to invest in these types of efforts.

The second role of government that we will explore today is government procurement. Through its purchasing power, the government can help create a market for innovative technologies. The government’s operational needs provide a large, early market for scaling up newly commercialized low-carbon technologies, which can then be adopted for private-sector use as well. For instance, the Department of Defense is the single largest consumer of energy in the country, and is very quickly realizing how improved energy technologies can save taxpayers millions. Military bases are becoming important markets for energy efficiency and renewable energy technologies. Other federal and state agencies also are adopting low-carbon technologies that can ease tight budgets by reducing energy expenses. Government procurement can quickly move technologies up the learning curve and down the cost curve, helping these innovations become competitive in the broader marketplace.

And last but not least, we will have a panel today discussing the role of government standards and incentives in driving mass deployment. Time and time again, such public policies have driven the adoption of innovative technologies across the economy. Government plays a critical role as “standards-setter” for industries. Federal and state standards create incentives for companies to make long-term investments in innovation, and create demand for the resulting products.

A particularly strong example is the recent steps by the Obama Administration to significantly increase fuel economy and greenhouse gas standards for vehicles. In February, U.S. auto sales reached their highest level in four years, and the Big Three automakers all cite higher sales of smaller, fuel-efficient vehicles as a contributing factor. Two years ago, the Smart Car was the only conventional car available in the U.S. with a fuel economy rating of 40 miles a gallon or better. Today there are nine. The EPA estimates that the new standards will save the average driver $8,000 over the lifetime of a vehicle and reduce oil consumption by over 2 million barrels a day.

So those are three roles we will be exploring today as we talk about how government can help drive low-carbon innovation. Government as supporter of research, development and demonstration. Government as purchaser and market-creator. And government as a standard-setter driving mass deployment. It promises to be a very interesting and provocative morning, even though we don’t have any talking chickens on the agenda.

Thank you very much.