Comments to the House Select Committee on the Climate Crisis

Thank you for the opportunity to provide input on key considerations for U.S. climate policy. The Information Technology and Innovation Foundation (ITIF) is a non-profit, non-partisan research and educational institute focusing on the intersection of technological innovation and public policy. ITIF’s mission is to formulate and promote policy solutions that accelerate innovation and boost productivity to spur growth, opportunity, and progress. Innovation is central to addressing global climate change while increasing economic growth, boosting international competitiveness, and eliminating energy poverty. ITIF research in clean energy focuses on policies to encourage innovative energy research, development, demonstration, and deployment; clean-tech trade; and clean energy manufacturing.

ITIF previously provided comments in response to the House Energy and Commerce Committee’s request for input as they develop policies to reduce U.S. greenhouse gas emissions to zero by 2050. We believe the principles and recommendations from our comments would also be useful to the House Select Committee on the Climate Crisis as it seeks to identify a broader set of policy tools—across a wider range of committee jurisdictions—for mitigating greenhouse gas emissions by accelerating clean energy innovation, and provide a brief summary of key principles for developing comprehensive climate policy below:

1. Climate change is a global challenge that requires global action. That action will remain limited until clean energy is less costly and as reliable as carbon-intensive energy. U.S. climate policy should mobilize America’s innovation system and lead other nations in developing clean energy systems that are cheaper and better than dirty ones.
2. Today’s technologies are not sufficient to serve as the infrastructure of a low-carbon energy economy. Energy innovation should be a central pillar of U.S. climate policy.
3. Comprehensive climate policy should cover all sources of emissions and all sectors of the economy.
4. Markets will not produce the needed level of innovation on their own. Government must invest in clean energy innovation as well as create conditions under which firms will innovate.
5. Complement “supply-push” policies with “demand-pull” policies. “Demand-pull” policies such as government procurement and time-limited tax incentives that increase market demand for nascent clean technologies are valuable complements to the technology “supply-push” provided by federal research, development, and demonstration (RD&D) investments.
6. Invest in innovation at a scale that is commensurate with the climate challenge.
7. Congress should adopt a technology-inclusive portfolio approach to climate policy in order to manage risks and uncertainty.

These principles lead us to one overarching recommendation, which informs our response to all the questions:

• All climate policy should be viewed through an innovation lens. Energy innovation must be a central pillar of U.S. climate policy. An innovation agenda should lower the costs and improve the performance of existing clean technologies, and develop new clean energy options that address innovation challenges in harder-to-decarbonize sectors. But there is a tendency to equate innovation policy with research and development (R&D). In fact, all policy has the potential to accelerate or deter innovation. Technology-prescriptive codes and standards lock in incumbent technologies while reducing the incentive to innovate, whereas performance-based codes and standards open the door to new technologies. Tax incentives can create early niche markets that help pull technologies down the learning curve, but poorly designed incentives that last too long can subsidize deployment of mature technologies while freezing out further innovation. An innovation lens can avoid the negative consequences of otherwise well-intentioned policy, while accelerating innovation and enabling the adoption of new technologies. An innovation agenda should also encourage business-model and regulatory innovation that complements technological innovation.

The remainder of the comments focus on the innovation & competitiveness aspects in each of the policy areas outlined by the Committee.