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Federal R&D support needed for energy innovation, AEIC report says

Innovation has been the principal driver of economic growth over the last century in the U.S., especially in the energy sector, largely due to support from the federal government, the American Energy Innovation Council maintained in a new report.

Access to reliable, affordable energy has had a significantly positive impact on people’s lives "as to nearly defy calculation," said the April 5 AEIC report, but it said that unlike other technology sectors, the energy sector has experienced underinvestment in research and development.

The council, which includes members such as Microsoft founder Bill Gates and Norm Augustine, former chairman and CEO of Lockheed Martin Corp., is part of the Bipartisan Policy Center, a nonpartisan Washington-based think tank. The council is advised by a technical review panel made up of energy and innovation experts and is staffed by the BPC, according to the organization's website.

Scientific and technological innovation has created new industries and jobs and helped maintain the competitiveness of a growing number of companies that rely on technology to succeed, "and ultimately made American lives better," the report said.

Energy, like other sectors, has faced many challenges, according to the AEIC. "As a generally low-cost commodity, it is often difficult for an energy supplier to differentiate itself and charge a premium, the way products in other markets like communications hardware or biomedical technologies might," the report said.

Energy infrastructure and technologies also generally come with a high price tag and have a long life span, which leads to large amounts of inertia and, sometimes, risk avoidance. The AEIC maintained that the challenges are further complicated by highly fragmented energy markets and regulatory uncertainty, forcing energy innovators to "cross not one, but two valleys of death before bringing a promising new technology to market."

The challenges are both technical and commercial. The report said that even once a technology has been shown to be successful, "developing manufacturing processes and supply chains can have prodigious costs and projects are generally too far removed from commercialization to attract private investors." Federal funding, however, can lessen risks for those technologies, AEIC said, pointing to several steps that could be taken to prompt more energy innovation.

For instance, the AEIC recommended that the government should invest $16 billion annually in advanced energy innovation. "The private sector continues to be a driving force in developing and commercializing new energy technologies, but without public investments at key stages of the innovation cycle, many of these technologies will never attract private sector interest," the report said. It added that such a result will lead to economic, security, and environmental consequences.

The report also said the government should provide the U.S. Department of Energy's Advanced Research Projects Agency-Energy with a minimum of $300 million annually, but that $1 billion would be more ideal.

Additionally, the report said many of ARPA-E's best business practices could be used to improve performance at DOE's technology offices, including reorganizing the offices by sector instead of by technologies. It said this approach should help the offices obtain project funding more easily and shift the focus to the technology itself, instead of remaining on "incremental advances or deployment activities which are more likely to receive support from the private sector."

AEIC also recommended establishing a new energy challenge program for high-impact pilot projects, such as advanced nuclear power and carbon capture, which face unique obstacles. The group said the challenge should be funded with $20 billion deployed over a 10-year period.

These actions are crucial to reaching the country's innovation capacity and realizing the economic, security and environmental benefits advanced energy technologies can provide, the report said.