With China Leading the U.S. in Clean-Energy Technology, Tech Policy Think Tank Urges Trump Administration to Prioritize Energy Innovation to Create Jobs, Improve Trade Balance

WASHINGTON—China and other Asian nations have vaulted past the United States to the forefront of the global clean-energy technology market, according to a new report from the Information Technology and Innovation Foundation (ITIF). But if the Trump administration and new Congress prioritize energy innovation, America can wrest back its market leadership and in doing so, create thousands of jobs in advanced manufacturing while improving its trade balance, argues ITIF, the leading U.S. science and tech policy think tank.

“China is beating the United States in many segments of the clean-energy sector because it’s out-investing us and thus often able to flood the market with lower-cost products,” said David Hart, the report’s co-author and ITIF’s senior fellow. “But the race isn’t lost yet. If the incoming Trump administration invests in energy innovation and infrastructure and gets more bang for the buck from our current efforts, we can build on the foundation being laid by U.S. universities and national labs, as well as American companies such as Tesla, GE, and First Solar that have successfully commercialized innovative products. Prioritizing energy innovation would fulfill President-elect Trump’s campaign promise to create well-paying advanced-manufacturing jobs, bolster U.S. energy security, and mitigate climate change at the same time.”

The report explains that U.S. federal funding for energy research and development lags 11 other countries as a percentage of gross domestic product, with China spending three times more relative to its economy than the United States. Private investment in energy innovation has also been weak, with venture capital and private-equity investment in American renewable-energy companies peaking at $5.4 billion in 2008 and since slipping to only $2.2 billion in 2015.

If the United States wants to keep up with its competitors and stretch limited federal dollars further, Hart and his co-authors urge President-elect Trump and the 115th Congress to maximize taxpayer return on investment by reforming federal agencies, especially the U.S. Department of Energy, to:

• Connect basic science with technology priorities;
• Reorient the national labs to pursue commercially relevant research, development, and demonstration;
• Encourage more private investment in energy innovation;
• Support demonstration projects; and
• Complement supply-side investment with policies that stimulate demand.

In addition to institutional reform, the report urges policymakers to focus the government’s efforts on technologies that will fill the gap between short-term energy goals and very long-term ones. Specifically, it calls on the Department of Energy to prioritize nuclear power; solar energy; energy storage; carbon capture, utilization, and storage; advanced cooling and thermal energy storage; and smart energy management and connected vehicles.

To fund energy R&D, including the United States’ pledge as part of the international “Mission Innovation” to double public energy R&D investment by 2020, the report outlines potential new revenue streams including a carbon tax, electricity wires fee, proceeds from sale of petroleum reserves, oil and gas extraction royalties, and a fossil-fuel export fee.

“Obstacles to bringing innovative clean-energy technologies to market are formidable,” concluded Hart. “Institutional reforms are sorely needed to focus the federal government on contributing to technology commercialization as well as basic research and to support innovation through all stages of development. By organizing the energy-innovation effort around technology missions, the administration and Congress will be able to demonstrate to taxpayers a superior rate of return on the public’s investment. And dedicated and expanded federal funding will help to induce private investment, so that the United States not only has clean, affordable, reliable, and safe energy for its own needs, but also becomes a much more effective player in the burgeoning global advanced-energy market. To be sure, this agenda is a substantial undertaking, but the new jobs, increased security, enhanced environmental quality, and bolstered competitiveness are worth the fight.”

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