(Ed. Note: The “Innovation Fact of the Week” appears as a regular feature in each edition of ITIF’s weekly email newsletter. Sign up today.)
The leadership of the House Energy and Commerce Committee today released an outline of their proposed CLEAN Future Act, which sets the bold goal of transitioning the United States to a net-zero emissions economy by 2050. This goal is consistent with the global effort to limit warming to 2 degrees Celsius or less. The bill would reestablish federal leadership in climate policy, complementing ongoing state, local, and private efforts, and take a much-needed comprehensive approach to address all sources of emissions within the committee’s jurisdiction.
While this effort by Chairmen Frank Pallone (D-NJ), Paul Tonko (D-NY), and Bobby Rush (D-IL) is welcome, it is imperative that Congress take additional steps to accelerate innovation in new clean energy technologies. Further and faster innovation is necessary, because existing clean energy technologies do not yet perform well enough, nor are they affordable enough, to achieve net-zero emissions globally. In this post, we highlight two important steps that could be incorporated into the CLEAN Future Act in the coming months: establishing emerging technology carve-outs in the proposed clean electricity standard and establishing a new Office of Major Demonstrations within the Department of Energy.
Emerging Technology Carve-Outs Are Key to Making a Clean Electricity Standard Successful
A nationwide clean electricity standard (CES) that would eliminate carbon emissions from the U.S. electricity system by 2050 is a centerpiece of the CLEAN Future Act. The bill is modeled on renewable portfolio standards (RPS) that have spurred many states to reduce their carbon footprints over the last decade. A key difference between a CES and an RPS is that all low-carbon resources qualify under the former, not just renewables. A CES could extend the lives of existing nuclear plants, which are the nation’s largest low-carbon electricity resource today, but often struggle to compete in power markets that assign no value for being clean.
However, the bill’s goals will not be achieved by simply preserving today’s resources and expanding well-established technologies like onshore wind and solar power using conventional panels. Substantial innovation is still needed to create an electric power system that is affordable, secure, reliable and low-carbon. Key innovation needs for electric power include generation and storage resources that can compensate for variations in the output of wind and solar systems, improved transmission and distribution, and digital systems to coordinate the diverse sources and loads that will make up the grid of the future.
Technology carve-outs within the proposed CES can help accelerate innovation in these areas. These provisions reserve a small slice within the CES for new types of electricity generation systems that are not yet competitive with the lowest-cost CES-eligible systems, but have the potential to become so through innovation made possible by early deployment. This approach has been well-proven through experience with state RPS’s, where it was critical for enabling solar power to grow. Early RPS’s encouraged utilities to procure only the cheapest renewable resources, which meant in practice that wind dominated their portfolios. States learned that if they reserved a modest share of the RPS for solar (often 10 percent), it would mature and scale, leading ultimately to the extremely low costs that benefit customers today.
Reforming How DOE Manages Large-Scale Demonstration Projects
A number of the provisions in the CLEAN Future Act, such as the establishment of a National Climate Bank and an Assistant Secretary of Energy for Manufacturing and Industry, have the potential to aid large-scale, complex energy innovations cross the “valley of death” that often blocks their transition to commercial viability. The addition of an Office of Major Demonstrations within the Department of Energy would significantly expand the bill’s impact in this respect.
Demonstration is a key stage in the innovation process, especially for large-scale, complex systems. Demonstration projects allow developers to identify and solve the technical challenges that arise as they make their first forays at a commercially-viable scale. They also help to build the confidence of stakeholders, including customers, regulators, and the public, that the technology being demonstrated will be safe, reliable, and affordable when it is fully deployed. Smart grids, advanced nuclear reactors, and next-generation carbon capture and storage systems are among the many technologies that may one day enable deep emissions reductions but have yet to be demonstrated at commercial scale in real-world conditions.
The federal government often helps fund large-scale clean energy technology demonstration projects, because they are too risky for the private sector to undertake on its own. These projects are expensive (often a billion dollars or more), and some are bound to fail. However, the federal government has lacked a coordinated energy technology demonstration strategy in the past, and its support of such projects has dwindled since the 2009 Recovery Act. Moreover, federal management of demonstration projects has been uneven at best.
The creation of a new Office of Major Demonstrations within the Department of Energy, separate from the technology-specific applied energy offices, would help the United States rebuild a robust portfolio of clean energy demonstration projects and accelerate the entry of new clean energy technologies to the commercial market. Its expertise in project management would raise the odds that projects are run in a timely and cost-effective manner. It would have the authority to impose rigorous criteria for the selection and continued support of individual projects, isolating them from political influences that have historically complicated project management. And it would improve coordination of DOE’s portfolio, providing stability and linking it to national and international goals.
The CLEAN Future Act and Beyond: An Energy Innovation Agenda for the 116th Congress
The CLEAN Future Act sets the right goal—net-zero emissions by 2050—and creates an important vehicle for strengthening the U.S. clean energy innovation ecosystem. But there is much more for Congress to do. A growing slate of worthy bills has moved through committee and await floor action, energy RD&D spending growth must be sustained in fiscal 2021, and an ambitious agenda must be built for the 117th Congress to usher in a new decade of concerted action on clean energy and climate change.