Clean Energy Innovation Policy: A 10-Point Action Plan for the 116th Congress

David M. Hart January 17, 2019
January 17, 2019

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Democratic control of the House of Representatives and increasing openness among Senate Republicans creates new possibilities for meaningful action on climate and energy policy in the 116th Congress. While expansive versions of a “Green New Deal” have grabbed attention on the left and denial that climate change is human-caused remains a major obstacle on the right, a centrist, bipartisan legislative coalition is emerging. It’s time to get things done.

Innovation must be a central goal for this coalition. Today’s technologies have the potential to bend the carbon-pollution curve, but better and cheaper technologies will bend it more sharply and create a real prospect for achieving a net-zero-emissions economy by 2050, as the IPCC’s recent 1.5 degree report clearly shows would be in humanity’s best interests. Federal investment in clean energy innovation commands support from all segments of the public across both political parties.

ITIF therefore calls on the 116th Congress to take the following 10 actions to accelerate clean energy innovation immediately and lay the groundwork for more aggressive action in the future:

  1. Appropriate an additional $1.6 billion to federal energy research, development, and demonstration (RD&D) programs for fiscal year 2020. Federally funded RD&D provides foundational knowledge upon which a net-zero-emissions economy will be built and, importantly, enables new energy technologies to mature to the point that they can compete with incumbents. This appropriation would put the United States back on track to double energy RD&D spending by 2021.
  2. Expand appropriations for the Advanced Research Projects Agency – Energy (ARPA-E) to $500 million. ARPA-E is one of the most effective agencies accelerating clean energy technologies. It searches for challenging “white spaces” that others are not being tackling and funds the translation of promising ideas into working systems. This appropriation would enable ARPA-E to add about six new programs and mark an important step toward an eventual budget of $1 billion, as proposed by the National Academies.
  3. Authorize new federal RD&D programs aimed at deep decarbonization challenges, such as carbon-neutral fuels and direct air capture. The innovation agenda of the last 10 years has focused, with considerable success, on wind and solar power. But reducing carbon pollution to zero will require a broader set of technologies that cover all sectors of the economy, many of which are not yet being pursued by federal agencies.
  4. Direct the administration to provide well-vetted loan guarantees to high-risk, but technologically-proven, clean energy projects under its existing authority. Such projects provide valuable insights that allow follow-on projects to perform better and cost less, but they are usually too risky for private investors to undertake on their own. Federal loan guarantees helped utility-scale solar power and electric vehicle production transition to fully private funding, and they can aid other maturing technologies, such as advanced nuclear power and carbon capture, utilization, and sequestration.
  5. Reform federal energy tax incentives, so that they accelerate clean energy technologies down the learning curve, rather than supporting dirty energy or subsidizing mature technologies. Tax incentives for new technologies are well-justified when they reduce the risks of early adoption, so that bugs can be ironed out and economies of scale achieved. They should be phased out as technologies mature, creating fiscal space to provide incentives for the next generation.
  6. Unleash the brainpower of the national laboratories to tackle clean energy challenges by clearing away red tape that impedes technology transfer, strengthening private sector partnerships, and establishing a Department of Energy Foundation. Federal labs are extraordinary repositories of scientific and technical talent and stewards of unique facilities for discovery and demonstration. Fledgling programs, like Lab-Embedded Entrepreneurship and Energy I-Corps, have made a good start, but more aggressive action is needed.
  7. Convene elected, administrative, and regulatory officials from all levels of government to develop a collaborative plan to modernize the national electricity grid. Innovations in information technology and distributed power generation are creating opportunities for the grid to provide energy more affordably and effectively, while eliminating carbon emissions. Implementing these innovations will require the federal, regional, state, and local levels to work together.
  8. Build stronger bridges between the Department of Defense (DOD) and civilian clean energy innovators. DOD spends well over $1 billion on RD&D each year to advance a wide range of energy technologies to be used in its operations and facilities. Many of these technologies have civilian applications, but technology transfer is impeded by lack of knowledge, organizational mismatches, and bureaucratic barriers. Congress should break down these impediments, which can be done without detriment to DOD’s national security mission.
  9. Target clean energy in any infrastructure bill and set aside 10 percent of infrastructure funding to support innovative projects. The energy infrastructure of the United States is old and creaky, earning a D+ from the American Society of Civil Engineers. The effort should not merely replace dams, transmission lines, and the like but explore the potential to add new functionalities and make step-changes in performance.
  10. Establish the principle that a portion of the revenue generated by any economy-wide policy to reduce greenhouse gas emissions (such as a clean energy standard or carbon tax) be devoted to supporting clean energy innovation. Only innovation can reduce the cost of clean energy, so that economy-wide policies do not impose an unbearable burden and provoke a backlash. Although the 116th Congress may not be ready to enact ambitious measures, embedding innovation funding in every serious proposal would create momentum to include such provisions in the future.