U.S. Will Fail to Hit Paris Climate Commitments Unless Policymakers Get Beyond ‘Magical Thinking’ About Easy Solutions and Double Down on Clean-Energy Innovation, New ITIF Analysis Finds

WASHINGTON—With the Paris climate agreement coming into force next week, U.S. policymakers will need to get beyond the magical thinking that there are easy solutions to reach the ambitious targets the country has committed to, according to a new report from the Information Technology and Innovation Foundation (ITIF). If the United States is to fulfill its commitments, then policymakers must advance a more comprehensive policy agenda to drive low-carbon energy innovation, argues ITIF, a leading science and tech policy think tank.

“It won’t be easy to shift the entire U.S. economy away from its dependence on petroleum and other fossil fuels and toward a much less energy- and carbon-intensive system,” said David Hart, the report’s author and a senior fellow at ITIF. “Given the enormity of the challenge and the dire consequences of failing, it is not surprising there is so much magical thinking about the energy transition we need to achieve. Easy answers alleviate stress, avert jarring change, and attract followers. But wishing doesn’t make something real. U.S. policymakers need to face the fact that without a smart, aggressive innovation strategy, we will never reach our climate goals.”

As part of last year’s global climate agreement, the United States committed to reduce greenhouse-gas emissions by 80 percent or more by 2050. In recent years, substituting natural gas for coal has driven emissions reductions, but Hart points out that natural gas will need to be replaced by even lower-carbon resources in the not-too-distant future if the United States is to reach its lofty goal.

The report describes four prevailing arguments about the coming energy transition. The first, climate-change denial, wishes away the need for any transition at all. This will have to be overcome for any low-carbon policy to succeed, Hart says.

The other three arguments focus on partial solutions to the energy transition, which on their own won’t be enough to tackle the problem:

• A “science-push” argument sees the transition as a simple matter of making adequate investment in R&D. But this ignores the profound advantages of some incumbent energy technologies and the pervasive barriers to commercializing R&D results in this field.
• A “premature triumphalism” assumes that the necessary technology is available today and that the only barrier is willpower. But deployment policy by itself will impose high costs and is unlikely to stimulate the innovations needed to complete the transition.
• A “carbon-price obsession” fixates on a single policy to drive the transition. However, the public is unlikely to accept a carbon tax any time soon. Innovation policies that lead to lower prices for low-carbon energy over the long run will make a carbon tax more palatable by pushing down fossil fuel prices, and they would also stimulate far more radical and ambitious technologies than a carbon tax could.

Hart argues that to reach U.S. emissions targets, none of these easy solutions will work on their own. Instead, the report outlines a more comprehensive framework for the federal government, including:

• Establishing a dedicated funding source for federal low-carbon energy-innovation investments.
• Steadily expanding federal investment in basic research fields that have the potential to dramatically accelerate low-carbon energy innovation.
• Dramatically expanding federal co-investment in applied research, demonstration, and infrastructural technologies for low-carbon energy.
• Enhancing connectivity and strengthening user pull along the low-carbon energy-innovation chain.
• Fostering regional collaboration for innovation in large-scale, low-carbon energy systems.
• Reforming low-carbon energy tax incentives, so they are permanent and technology-neutral, and phasing out support for each generation of technology as it matures.
• Using federal procurement strategically to build momentum for early deployment of low-carbon energy innovations.
• Encouraging business-model and regulatory innovation in conjunction with technological innovation in the electricity and transportation sectors.
• Tightening energy efficiency and carbon-control regulations in a predictable, innovation-inducing manner.

“Those who try to simplify the energy transition down to one silver bullet are trying to force certainty on an issue that is anything but certain,” said Hart. “No one technology nor policy nor behavioral adjustment is guaranteed to work. We need to generate innovative options, explore them in practice, gauge their value, and scale those that work as rapidly as possible. Without a more comprehensive approach, the only thing that is certain is that the United States will fail to reach its climate goals.”

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