Devil is in the Details: Comparing the Candidates’ Energy Innovation Policies

Last week, ITIF released a side-by-side comparison of President Obama’s and Governor Romney’s technology and innovation policies. As with nearly all policy areas, on energy innovation, we see common goals but often dramatic divergence on how to achieve them.

At a very high level, there is some agreement between the candidates on climate and energy policy making. Specifically, there seems to be a broad level of agreement between the two candidates on the efficacy of implementing “no regrets” climate policies. In a recent side-by-side comparison of science policy issues on ScienceDebate.org, a website run by a coalition of premier science organizations, Governor Romney defines this approach as, “steps that will lead to lower emissions, but that will benefit America regardless of whether the risks of global warming materialize and regardless of whether other nations take effective action.” Similarly, the Intergovernmental Panel on Climate Change defines no-regrets climate policies as “greenhouse gas emissions reduction options that have negative net costs, because they generate direct or indirect benefits that are large enough to offset the costs of implementing the options.” And a report co-authored by ITIF, Climate Pragmatism, outlines fostering innovation and reducing non-carbon sources of pollution as key no-regrets policies that are critical to addressing climate change.

Governor Romney lends his approval for at least some of Climate Pragmatism’s no-regrets approach, stating that he believes “economic growth and technological innovation…is the key to environmental protection in the long run.” What’s more,  President Obama implicitly recognizes the need for energy innovation in the $90 billion allocated to clean energy under the Recovery Act, at least a third of which went to research and development (R&D). In fact, both candidates emphasize their backing for research; “I strongly support investments in research and development that help spur American innovation,” the president notes, while Governor Romney declares, “I am a strong supporter of federally funded research, and continued funding would be a top priority in my budget.” Also, the two candidates support ARPA-E in their energy plans, as well as call for implementing the ARPA management model elsewhere at DOE.

So at least on paper, they both embrace the concepts of “no-regrets” climate policy and energy innovation.

But, of course, the devil is in the details. For example, what kind of research would each candidate support and invest public dollars? We know what type of investments President Obama would make by looking at his FY2013 budget proposal, which includes boosted funding for high-risk, high-reward research at ARPA-E, collaborative research through the Energy Innovation Hubs, more funding for technology development at the National Labs, as well as significant funding for basic energy research. Governor Romney, on the other hand, pledges to make “energy research” – and more specifically very basic research – a priority, a shift in focus that ITIF has pointed out would be a serious mistake because it ignores the very real barriers to breakthrough technology development, such as piloting new ideas and developing technologies through first-of-kind demonstration. In other words, the President supports all types of energy research while Governor Romney would remain focused on only the most basic projects.

The stark differences over energy research also extend to later-stage technology deployment and commercialization. President Obama supports the existing suite of very limited, blunt deployment policies, like tax credits for wind and subsidies for solar, that don’t provide a strong link for emerging technologies to make it to market. On the other hand, Governor Romney states that he would shift public investments from deployment incentives to energy research, which could benefit the development of cheaper and better clean energy technologies instead of potentially locking in uncompetitive technologies. But the governor has yet to articulate a position on energy-related procurement and technology transfer – a key weakness of the existing national clean energy innovation ecosystem – while the President has set specific goals for federal government energy-use and greenhouse gas emissions reductions and supports an interdepartmental memorandum of understanding on facilitating technology transfer. And while some of the Governor’s statements have expressed support for public investments in energy demonstration and pilot-projects, it’s unclear how that would translate to policy or the federal budget.

Most importantly, neither candidate offers a policy alternative to support the deployment and commercialization of emerging clean energy technologies.  Instead the choice is a lesser of two evils: continue the limited smattering of tax incentives and subsidies or scale them back or eliminate them entirely.

If we stopped there the top-line narrative would be: both candidates agree on the role of government investing in basic energy research, but disagree on everything else. But the candidates also disagree on how much public investment in research government should make. For example, while President Obama supports increasing public investments in energy innovation programs and R&D by at least 7 percent in FY2013 alone, Governor Romney subscribes to the Pathway to Prosperity budget plan developed by Rep. Paul Ryan, which proposes an across-the-board 5 percent cut in discretionary spending, which would presumably include energy R&D. It’s hard to say whether Romney would fully implement the Pathway to Prosperity budget if elected, but his statements of support for the plan and his choosing Paul Ryan as his running mate put a spotlight on its potential impacts.

In closing, both candidates have almost polar opposite views on how to fund and structure energy innovation policy even while supporting the same no-regrets climate narrative. It’s clear that President Obama would continue supporting energy innovation programs like R&D, scale-up, and technology demonstration if re-elected, though questions remain as to whether much needed policy reforms, such as re-thinking clean energy deployment policies, would be a priority.  Governor Romney envisions a much more drastic break from the energy innovation policies of the past four years. He would potentially cut energy research across the board and focus on basic research and ARPA-E.  He also emphasizes eliminating public support for clean energy deployment rather than coming up with better ways of supporting emerging technologies and fails to mention technology transfer or government procurement.