--- title: "U.S. May Need New Agency to Bridge Gap Between Clean Energy R&D and Commercialization, Says ITIF" date: "2017-07-26" issues: ["Clean Energy Innovation"] content_type: "Press Releases" canonical_url: "https://itif.org/publications/2017/07/26/us-may-need-new-agency-bridge-gap-between-clean-energy-rd-and/" --- # U.S. May Need New Agency to Bridge Gap Between Clean Energy R&D and Commercialization, Says ITIF WASHINGTON—To build an adequate portfolio of clean-energy options that have the potential to be deployed on a mass scale, the U.S. government must improve how it shepherds new technologies through the critical “demonstration” phase that comes between early research and development and full-scale commercialization, according to a new analysis by the Information Technology and Innovation Foundation (ITIF), the country’s leading science and tech policy think tank. ITIF assessed the performance of more than 50 clean-energy technology demonstration projects and called for reforms in how the federal government selects, funds, and manages them. “Technology demonstration projects pose one of the most difficult challenges in energy innovation policy,” said David M. Hart, the report’s author, who is a senior fellow at ITIF and director of the Center Science, Technology, and Innovation Policy at George Mason University’s Schar School of Policy and Government. “Demonstration projects are essential to build an adequate portfolio of clean-energy options that have the potential to be deployed on a massive scale. They require public investment, because private investors, quite rationally, aren’t willing to take on all the risk by themselves. The problem is that the federal government’s track record of selecting, funding, and managing clean-energy demonstration projects is not encouraging. The Obama administration made progress in some respects. But the need remains to significantly reform the Energy Department’s approach—and Congress should consider setting up a new agency to run some of these projects instead of DOE.” ITIF evaluated 53 clean-energy technology demonstration projects that were initiated between 2009 and 2011 and reached the following conclusions: - **The United States should build and sustain a robust, diverse portfolio of technology demonstration projects as part of a comprehensive clean-energy innovation policy.** Its current portfolio is not robust, and it is rapidly dwindling. - **The federal government should continue to co-invest with private partners in clean-energy demonstration projects, because they yield public benefits and private investors lack adequate incentives to bear their full costs.** The 2009 stimulus package, which funded the most recent round of projects, was a good investment mechanism because it imposed a sunset date on project completion but did not require annual appropriations to sustain projects. - **Private sector partners, especially technology end-users, should continue to take leadership roles in implementing clean-energy demonstration projects.** The operational experience gained by these partners is a key benefit that motivates their investment in the demonstration and enables full commercialization of the technology after it has been demonstrated. - **Federal policy for private co-investment in demonstration projects should become more flexible in order to accommodate varying risk profiles, resulting in a wider range of cost-sharing ratios across projects.** These ratios have clustered in the past around arbitrary levels established by Congress. - **Federally funded clean-energy demonstration projects should make information-sharing among all potential users of the demonstrated technology a higher priority than it has been and incorporate it into project metrics and evaluation criteria.** Although such information-sharing may reduce the incentive for private partners to invest in demonstrations, it accelerates diffusion and enhances competition as the technology is being commercialized. - **Initial selection of clean energy demonstration projects should avoid excessively rapid scale-up of unproven technologies and overly optimistic assumptions about the economic and policy environment for follow-on investments.** The Obama administration’s record was uneven in both respects. - **Federal policymakers should remain prepared and willing to terminate unsuccessful demonstration projects.** The experience of the past decade suggests that the “technology pork barrel” syndrome, in which unsuccessful projects lived on because they provided local economic benefits, is not inevitable, but it remains a real possibility for large projects. - **Although the Department of Energy improved its performance in designing and managing demonstration projects, policymakers should continue exploring alternatives, such as the proposed Energy Technology Corporation and Regional Demonstration Innovation Funds.** The factors that facilitated termination of unsuccessful projects in the Obama period may be short-lived, and DOE has not put questions about its management capability to rest. - **Federal agencies other than DOE, such as the departments of Defense and Transportation, as well as regions and states, should consider making their own co-investments in clean-energy demonstration projects.** “As each year passes, the urgency of carrying out low-carbon energy demonstration projects grows,” said Hart. “Successful demonstrations may take years or even decades for their impact to be fully felt, as they slowly reshape long-lived infrastructure like power plants and electrical grids. The 2050 endpoint of the Paris Climate Agreement is only a bit more than three decades away. Failure to sustain the momentum created in the early 2010s may well be more profound than any failure to learn the right lessons from that experience.” [Read report summary](/publications/2017/07/26/across-second-valley-death-designing-successful-energy-demonstration). | [Read full report](https://cdn.sanity.io/files/03hnmfyj/production/d6f048e72e2dfe0f096baf09bdcc3c8a37596aa6.pdf). (PDF) --- *Source: Information Technology & Innovation Foundation (ITIF)* *URL: https://itif.org/publications/2017/07/26/us-may-need-new-agency-bridge-gap-between-clean-energy-rd-and/*