The Breakthrough Institute

Breakthrough Energy and Climate Policy Director Headed for MIT

Fri, 25 May 2012 15:05:51 -0800

Jesse Jenkins, Breakthrough Institute's Energy and Climate Policy Director, will pursue graduate studies in the Technology and Policy program at the Massachusetts Institute of Technology this fall, bringing to a close a four-year tenure as Breakthrough's lead climate and energy analyst.

"Jesse has gone from being one of the brightest climate policy analysts of his generation to becoming an analytical giant in the field in less than four years," Breakthrough Institute President Michael Shellenberger said.

Jesse said he wanted the "ability to continue a lifelong career of policy research, advocacy, and education," and decided a PhD through MIT's Engineering Systems Division was the best path. There, he will focus on the role of innovation in manufacturing processes and the importance of manufacturing to advanced economies.

Jesse has been awarded a National Science Foundation Graduate Research Fellowship and was named an Energy Fellow through MIT's Energy Initiative. He will also serve as a research assistant for the Production in the Innovation Economy program.

Jesse hopes to gather insights from manufacturing and innovation in non-energy sectors that can be used for energy policy making, furthering much of the work he did at Breakthrough.

Ted Nordhaus, Breakthrough's Chairman, said Jesse's "fingerprints are all over" the institute's policy work.

"This is the work that has helped us move from being the 'bad boys of environmentalism' to running an institution that is widely respected analytically and has become much larger than the two of us," he said, referring to co-founder Shellenberger.

Jesse is lead author or co-author of numerous Breakthrough Institute reports, including "Beyond Boom and Bust: Putting Clean Tech on a Path to Energy Independence," "Bridging the Clean Energy Valleys of Death," "Climate Pragmatism," "Energy Emergence: Rebound and Backfire as Emergent Phenomena," "Where Good Technologies Come From," "Post-Partisan Power," "Strengthening Clean Energy Competitiveness," and widely cited analysis of Congressional climate change legislation. His work and analysis has been featured in major media outlets including the New York Times, the Wall Street Journal, the Washington Post, Time magazine, and Newsweek.

This week, Jesse testified before the Senate Energy and Natural Resources Committee on the role of government in energy innovation. The invitation followed the release of the recent report, "Beyond Boom and Bust," which was co-authored with scholars at Brookings Institution and World Resources Institute and garnered widespread media coverage as well as a Sunday editorial endorsement by the New York Times.

Jesse also served for four years as Associate Director of Breakthrough Generation, the Institute's annual young leaders fellowship program.

When Jesse first came to Breakthrough, his role was undefined, Nordhaus recalled.

"It took us close to a year to figure out that Breakthrough wasn't supposed to be training organizers and that Jesse wasn't supposed to be one. And I think that was basically the moment that we all really figured out what it was that we were actually supposed to be doing here," Nordhaus said.

"In a very essential way, I would suggest that Jesse's transition really prefigured the transition that we were all making and pointed the way to what Breakthrough has become today," he said. "And what an amazing ride it's been."

Hailing from Forest Grove, Oregon, Jesse is a graduate of the Robert D. Clark Honors College at the University of Oregon. He will be married on June 3.

Mr. Jenkins Goes to Washington

Tue, 22 May 2012 16:37:04 -0800

In Senate testimony yesterday, Breakthrough Institute Energy and Climate Policy Director Jesse Jenkins urged lawmakers to adopt innovation-centered reforms that will drive advanced energy technologies to subsidy independence.

Appearing before the Senate Energy and Natural Resources Committee, Jenkins called for changes to national energy policy on two fronts.

Congress should first reform its suite of deployment subsidies to "better drive and reward innovation" so that clean tech segments can become cost-competitive with fossil fuels without subsidy "as soon as possible," Jenkins said.

Despite important recent gains in performance and cost reduction, most advanced energy market segments - also referred to as "clean tech" - remain dependent on federal policies. "That policy support is now poised to turn from boom to bust," Jenkins warned.

Total annual federal spending supporting advanced energy industries surged to $44.3 billion in 2009, but is now poised to decline 75 percent to $11 billion by 2014, according to the recent report, "Beyond Boom and Bust: Putting Clean Tech on a Path to Subsidy Independence," authored by experts at the Breakthrough Institute, Brookings Institution, and World Resources Institute.

Lawmakers should also enact policies that will drive long-term innovation and growth in advanced energy technologies - as well as American leadership in the multi-trillion-dollar energy markets of the 21st century, Jenkins said. Investments in research, development, and demonstration (RD&D) and policies that accelerate the commercialization of clean tech will pay dividends in the years to come.

Congress should boost federal spending on energy research, development, and demonstration (RD&D) to at least $15 billion annually, expand and modernize innovative government offices such as the Energy Frontier Research Centers and Advanced Research Projects Agency-Energy, support institutional arrangements that help advanced energy technologies overcome the technological and commercialization "valleys of death," and harness advanced manufacturing and regional industry clusters, Jenkins said.

Jenkins said the historic role the federal government played in driving shale gas extraction technologies to market - which led to the current natural gas boom - was a "parable for what we can and should do with new energy technologies."

The role of government in driving markets and innovation for advanced energy technologies should be "limited and direct," he concluded. "The goal should be to help develop robust industries that can stand on their own and thrive without public subsidies as soon as possible."

Read Jesse Jenkins' complete written testimony here, or watch him provide Senate testimony on C-SPAN here.

While Japan turns away from nuclear power, South Korea sticks to its path

Mon, 21 May 2012 16:58:02 -0800

By Mark Lynas, author of The God Species: How the Planet Can Survive the Age of Humans. Originally published at the Guardian.

The traffic lights are still blinking in Odaka town, north-western Japan, but few cars pass through these deserted intersections. Frozen in time after being hit by the triple disaster of earthquake, tsunami and meltdowns in the nearby Fukushima Dai'ichi nuclear plant, tables are still laid in partially-collapsed restaurants and cars are stacked up against railings where they were deposited by the retreating wave. When I visited last week, a deathly silence reigned, the only noise the chirruping of frogs in uncultivated rice paddies on the edge of town, and the bleeping of my dosimeter.

Radiation readings in Odaka are well below anything that could be considered a health risk, but people are still not coming back. Indeed, the long shadow cast by Fukushima has extended over a much wider area than any scientific assessment of radiological hazard would argue is necessary. In Minamisoma, 20km north of the stricken reactor, a community centre above the town is decked out for indoor play because no one wants to let their children venture out of doors. The parents refuse to believe that radiation readings are low enough - barely above normal background, on my dosimeter - that their children's health would be improved by letting them play outside in the fresh air. Watching the kids cooped up in a big wooden hall, I could only conclude that unnecessary fear of radiation is just as much a hazard as the real thing.

On a wider scale still, unnecessary fear of radiation now presents a serious hazard to the world's climate. Japan's precipitous exit from nuclear power generation - the day I arrived in Tokyo was the first non-nuclear day in Japan for 42 years - has pushed the country's fossil fuel demand through the roof, with imports of oil and gas up by more than 100% since last year, their ballooning cost driving a record trade deficit of $32bn. As carbon emissions rise in lockstep, Japan's leaders are now backing off from their international climate change commitments, which the country has no chance of meeting. Given that wind, solar and geothermal account for less than 1% of Japan's electricity generation, the country will be massively dependent on fossil fuels for decades to come if the reactors stay switched off. The only alternative is blackout.

Given the trauma of the March 2011 tsunami disaster, Japan's nuclear shutdown is understandable - if regrettable from a global warming perspective. But a flight across the Sea of Japan to its neighbour South Korea shows a very different model in evidence.

In the same week that Japan mothballed its very last reactor, Korea broke ground on two new-build nuclear power stations - a pair of APR-1400 units now being constructed at Shin Ulchin, on the east coast. They are two of eight new stations planned to add to the country's existing nuclear fleet of 23, currently supplying 45% of the nation's electricity. To mark the occasion the country's president, Lee Myung-bak, paid a visit to the site, praising a "huge milestone" for South Korea's engineers, who had helped the country achieve "the dream of independent nuclear technology".

It is not that South Korea is not green. In fact the mantra of "green growth" has been a central component of President Lee's policy platform since 2008, and this month - even as Japan backed away from its own climate commitments - Korea's legislature unanimously passed a new climate act which will enforce carbon caps and an emissions trading scheme among its heavy industry and electricity sector. The country's international carbon emissions target is for a 30% cut below "business as usual" emissions by 2020, a commitment its leaders say they intend to deliver on. It also spent a higher proportion of its post-economic crash stimulus package on environmental initiatives than any other country.

South Korea is anxious to export its green growth model to other countries. Last week President Lee spoke at a landmark summit held by the Seoul-based Global Green Growth Institute, reiterating his view that there need be no automatic trade-off between rapid economic growth and environmental sustainability. In respect of Japanese sensitivities, he refrained from addressing the centrality of nuclear to Korea's green growth plans, but tension between the competing visions for what counts as "green" were evident throughout the two-day meeting. The president was immediately followed by the Japanese telecoms billionaire Masayoshi Son, who - having reinvented himself as head of the new Japan Renewable Energy Foundation - dramatically declared that there should be "no nuclear for mankind anywhere in the world, for the sake of the future, for the sake of our children, for the Earth".

The Korean hosts clapped politely, but did not appear convinced - hardly surprising given that Masayoshi Son's only proposed alternative to nuclear generation was a scheme for a pan-Asian supergrid linking Japanese cities with thousands of solar and wind plants supposedly to be built across the Gobi desert in faraway Mongolia. The plan would cost trillions and take decades to implement - and would leave Japan dependent on power lines crossing its energy-hungry and often less-than-friendly neighbour China. Koreans know that their economic miracle has been built on practical engineering success, not magical thinking.

The chair of the Green Growth Institute, Dr Han Seung-soo, himself a former prime minister of Korea, told me later: "Once the safety aspect is guaranteed there is no cleaner source than nuclear. It is clean energy because the amount of emissions created is almost nil." When I asked if Korea had a target for wind and solar deployment, he shook his head. Looking out of the window, from the centre of an Asian megacity with impressive skyscrapers in every direction as far as the eye could see, the idea of powering Seoul with renewables did seem nonsensical.

The truth is that, as in Japan, the proportion of solar and wind on the Korean grid is tiny, about 0.25% - most of the country's power comes from coal, and the only way to reduce its carbon emissions significantly is to continue to replace coal plants with nuclear. Yet as the post-Fukushima anti-nuclear hysteria continues to drag many countries - from Japan to Germany to Switzerland - back towards the fossil fuels age, South Korea is quietly getting on with reducing its carbon emissions while continuing its growth miracle.

Where the Shale Gas Revolution Came From

Mon, 21 May 2012 12:11:57 -0800

The ongoing shale gas boom has expanded domestic energy production, pushed wholesale electricity prices to record lows, and accelerated the closure of America's aging coal plant fleet, lowering national power-sector carbon emissions. This revolution in natural gas -- unleashed by a flood of recently accessible shale gas reserves, once thought to be unrecoverable -- is the product of over 25 years of federal agencies and programs driving technology development in collaboration with private gas companies.

In a new fact sheet, we have compiled the long and impressive history of shale fracturing (or "fracking") development in the United States. Through a series of investigations and interviews with gas industry executives and federal researchers, we uncovered the path that shale fracking took towards full commercial maturity.

Click here to download the new Breakthrough Institute fact sheet, titled "Where the Shale Gas Revolution Came From: Government's Role in the Development of Hydraulic Fracturing in Shale."

The history of shale gas fracking in the United States was punctuated by the successive developments of massive hydraulic fracturing (MHF), microseismic imaging, horizontal drilling, and other key innovations that when combined made the once unreachable energy resource technically recoverable (see infographic below for details). Along each stage of the innovation pipeline -- from basic research to applied R&D to cost-sharing on demonstration projects to tax policy support for deployment -- public-private partnerships and federal investments helped push hydraulic fracturing in shale into full commercial competitiveness.

Today, next-generation advanced energy technologies -- including wind, solar, advanced batteries, nuclear power, and others -- face many of the same scaling and cost challenges that shale fracking faced in the 1970s and 1980s. But significant progress has been made, and if policymakers use the shale history as a model for a smart and efficient public clean tech investment portfolio, then policy support can accelerate clean tech's march towards subsidy independence and full commercial maturity.

Interview with Alex Crawley, Former Program Director for the Energy Research and Development Administration

Thu, 17 May 2012 15:32:59 -0800

Federal agencies played a leading role in the development of shale gas fracturing technologies, according to former head researcher Alex Crawley. Crawley, the former Program Manager at the federal Energy Research and Development Administration (ERDA, a precursor to the Department of Energy), oversaw a significant portion of the federal research that went into the development of shale gas fracturing technologies. As a Breakthrough Institute investigation has uncovered, federal agencies like the Department of Energy and the National Energy Technology Laboratory led a sustained effort to adapt conventional hydraulic fracturing techniques to shales, where the geology is much more complex and difficult to tap.

Crawley discusses the contribution of diamond-studded drill bits, microseismic imaging, and other advanced gas extraction technologies that were the products of smart public-private research and commercialization efforts.

Click here for to download our history of the government's role in shale gas fracturing development.

The Breakthrough Institute: What was your role at the Department of Energy?

Alex Crawley: In '74 I moved to Washington for a development program within the Department of Interior. While I was there ERDA [the Energy Research and Development Administration, a precursor to the DOE] was formed. The Bureau of Mines was moved into ERDA and they offered me the job of program manager in the gas program.

From there I became the Associate Director of the DOE's National Petroleum Technology Office in Tulsa.

BTI: What sort of research did you oversee?

Alex Crawley: One of the parts of ERDA was the Eastern Gas Shales [Project]. The shale program was run out of Morgantown. I shepherded the Advanced Research program because it had very little support.

We formed a partnership with the nine multipurpose National Labs, with an industry partner proposal each year. We had 15-20 industry guys running fracturing research within their companies come together one or twice a year.

We pushed basic research into the demonstration part of the program -- rock mechanics, seismic detection, all that.

BTI: What sorts of technologies did your team develop?

Alex Crawley: The first directional well cost about 10 times as much as the straight vertical well because the technology wasn't there -- you had to put your survey tools down the well, which cost a lot of time and money. ERDA funded TeleCo, a small startup, which was the first government work done on downhole monitoring. We used things like pulsing and frequencies up the drill pipe to know where the drill bit was at all times.

One of the biggest things for directional drilling was polycrystalline drill bits. GE had the diamonds, and it was a matter of ERDA getting GE together with the gas industry so GE could attach the diamonds to studs on the drill bits. Those drilled much faster than rotary bits.

The other was telemetry at the bit as it was drilling to know its location. 3D seismic was eventually used so that when they fractured they would know where the drill bit was the entire time.

BTI: What are the technical challenges to shale fracturing?

Alex Crawley: Knowing where the fractures go, what's going to control them, the fluids you can use to interact with shales in a specific area. Most of these shales have clays in them, so with just straight water they tend to junk up rather than remain competent rock. How to prevent spores from getting in and creating algae in the formation. What type of propant is best to use -- we used everything from water to liquid CO₂ to you name it trying to find the propants that would best keep the fractures open. It's basically an understanding of how rocks react. If you're gonna fracture vertical or horizontal, could you keep the fractures within the productive shale? All the basic research on rock mechanics added to the work that had been done. Gradually over the years we pieced it together.

BTI: So it was a matter of combining different technologies and techniques?

Alex Crawley: To make any of these technologies economical you had to maximize your yield. Until we had the technology where we could do the surveys and draw a map where the bit was in the shale, you couldn't get these wells economical. All that technology coming together -- massive hydraulic fracturing, diamond-studded drill bits, 3D seismic imaging, directional drilling -- it wasn't until the 1980s that it became economical enough to repeat it. [Before that] they were drilling through shale to get to sandstone reservoirs.

BTI: Do you think this research would have been done with the government's involvement?

Alex Crawley: As far as shale is concerned, I don't know that industry ever would have taken a look at it without the federal program because it didn't look like it had the porosity to be reachable. The technology for the drilling and completion of those wells, that would have possibly eventually come along because they were interested in maximizing production. The research departments in these companies were not looking at advancing the technology. They would look at specific things like drill rigs and blowout preventers and the things that were absolutely needed for the industry to solve a problem: applied research. But when we started there was absolutely nothing going on in research to understand rock mechanics.

The partnership we formed between the Labs and industry was an example of government and private companies working together.

I really feel that there is a role. Government's not going to step in and develop anything all the way through, but working with industry you have a different set of eyes. If you keep an open mind the government can become a real catalyst.

National Journal Highlights "Beyond Boom and Bust" in Weekly Forum

Wed, 16 May 2012 16:19:26 -0800

The findings and recommendations of our new report "Beyond Boom and Bust" continue to generate a healthy discussion.

The report, widely acclaimed and recently endorsed by the New York Times, is the feature of this week's Energy Experts forum at the National Journal. The forum, hosted by Journal reporter Amy Harder, posed the question "Boom and Bust: Renewable Energy's Future?" The report, which we co-authored with experts at the Brookings Institution and the World Resources Institute, has prompted a lively and diverse exchange, with insightful input coming from industry representatives, policy analysts, and government officials, including "Beyond Boom and Bust" co-authors Alex Trembath and Mark Muro, Pew Clean Energy Program Director Phyllis Cutino, and Department of Energy Loan Program Director Richard Kauffman.

Below we've pasted the contribution from Breakthrough energy and climate policy analyst Alex Trembath, who argues that the clean tech sector's recent successes combined with the looming subsidy cliff demand a reform of federal clean energy policy that prioritizes innovation, cost declines, and competitive markets.

Click here to view the entire National Journal Energy Experts Forum "Boom and Bust: Renewable Energy's Future?"

Clean Tech's Growing Pains
By Alex Trembath

The US clean tech sector has been on a roll. Rapid growth in the last few years has been powered by expanding demand for low-carbon energy and falling prices for key technologies, including solar panels, wind turbines, and advanced vehicle batteries. But these advances bring along mounting burdens for government budgets, with clean tech deployment subsidies ballooning with every new megawatt installed. Meanwhile, the plummeting cost of natural gas, precipitated by the ongoing American shale boom, has pushed back the goal posts for low-carbon power technologies.

Most critically, clean tech's key support policies are on the verge of en masse expiration. As documented in a report we released last month with Mark Muro at the Brookings Institution and Letha Tawney at the World Resources Institute, a majority of federal clean tech subsidies will expire before 2014. By that year, the sector will suffer a 75 percent decline in federal spending, from a high of $44.3 billion in 2009 to only $11 billion in 2014. Our report, titled "Beyond Boom and Bust: Putting Clean Tech on a Path to Subsidy Independence," chronicles this sharp draw-down, and proposes a policy reform platform that will more efficiently drive clean energy technologies to unsubsidized commercial maturity.

The challenges facing clean tech are not harbingers of failure, but growing pains faced by maturing domestic industries. Solar panel prices have dropped 75 percent while annual installations grew 10 times between 2008 and 2011, but American manufacturers are feeling the squeeze of declining margins. The nation's wind turbine manufacturing base has grown with the impressive surge of wind-generated electricity, but the expiration of the federal Production Tax Credit for wind (PTC) at the end of 2012 threatens the industry with factory closings and stunted growth. Electric vehicles have made headway with the release of the Chevy Volt and the Nissan Leaf, but these models have been slow getting to market. And though the Nuclear Regulatory Commission recently approved the first new nuclear reactors in decades, the projects have been plagued by delays and high costs.

The same policies that kick-started these low-carbon energy technologies will not suffice to carry them through to broad market competitiveness. With the looming expiration of federal support programs comes an opportunity to reform American clean energy policy. Our report recommends a set of broad criteria for a national clean energy policy focused on innovation and subsidy independence for low-carbon technologies.

First, clean tech deployment subsidies should prioritize innovation and cost declines. Instead of simply incentivizing production of current technologies, federal support should be indexed to technological improvement and continual innovation. Smart deployment policies will establish competitive markets among technologies at similar maturation stages, avoid technology lock-out to promote a diverse energy portfolio, and maximize the impact of taxpayer dollars by unlocking private investment. Above all, policies will provide sufficient business certainty, and scale down in line with achieved technology improvements.

Second, we must apply the full strength of America's energy innovation system. Annual funding for clean energy R&D should at least triple, and public research institutions should align with regional markets and partner in clusters with clean tech manufacturing and financial entities.

Our federal policy platform has been successful at getting clean tech sectors off the ground, and state-level policies like the popular renewable portfolio standards (RPS) have been effective at driving the deployment of the most mature low-carbon technologies. But as the prices for natural gas have plummeted, even the combination of these policies will prove insufficient to push clean tech to full market competitiveness.

But if clean tech developers look with envy at low natural gas prices, they should also take a lesson from the path the shale gas industry took to achieve commercial maturity. As documented in a Breakthrough Institute investigation, the development of hydraulic fracturing and other critical shale drilling technologies relied on smart and sustained federal government investment, from early basic research and applied R&D to tax incentives for unconventional gas and cost-sharing with innovative gas companies. After 30 years of incubation, shale drilling has become an emergent sector in the American economy, fueling job growth, lower energy prices, and the retirement of America's aging coal power plants.

Decades of government support for shale gas have been relegated to history; with shale drilling at full technological maturity, the shale gas boom continues without the prop of federal subsidies. The shale gas success is a parable for clean tech going forward. Federal policies will work best when they foster competitive markets, drive cost declines and performance improvements, and ultimately expire as industries reach cost-parity with conventional energy technologies. If smart and effective policy reforms are enacted, the growing pains of these young markets will give way to vibrant and competitive 21st century American industries.

Germany Returns to Coal

Fri, 11 May 2012 16:39:48 -0800

Coal use will rise an estimated 13.5 percent in Germany this year, resulting in at least 14 million metric tons of additional carbon dioxide (CO2) emissions, even as the nation continues to idle two-fifths of its nuclear power fleet.

The major reduction in European energy demand and industrial output caused by the global recession has led CO2 emissions to slide faster than the emissions reductions mandated by either the Emissions Trading Scheme or the EU's commitments under the Kyoto Protocol. Yet instead of accelerating emissions cuts, the ironic economics of the carbon trading system have justified a return to coal in Germany and elsewhere, as a glut of emissions permits drives down the cost of carbon pollution and makes coal highly profitable once again.

The odd logic of the emissions targets and timetables has even been used by German greens (and their defenders internationally) to justify trading zero carbon nuclear for greater coal combustion. Germany's decision last year to power down eight of its 17 nuclear reactors leaves idle enough zero carbon power to drive down the country's CO2 emissions another 21 percent from 2008 levels. Yet instead of sounding the alarm at this huge missed opportunity as the nation instead turns back towards coal, some German greens have gone so far as to claim Germany literally "has the right" to eschew nuclear in favor of much greater emissions levels than necessary.

So much for the extreme urgency of climate mitigation...

Rather than Accelerate Carbon Cuts, Recession Leads to Resurgence of Coal

Europe's economic slump has reduced total electricity demand and cut output at industrial facilities across the Eurozone. Both factors have reduced demand for emissions permits under the EU's Emissions Trading Scheme, a cap-and-trade system covering major sources of CO2 emissions in industrial and power generation sectors. The recession has helped push down EU emissions in sectors covered by the ETS by just over 2 percent last year, Reuters reports, creating several hundred million tons of excess emissions permits.

Instead of accelerating total CO2 reductions, however, the glut of emissions permits caused by the recession is leading to a resurgence of coal burning in Europe.

As demand for emissions permits has slumped, permit prices have cratered, falling to around 7 euros (or $9.13) per metric ton of CO2 emitted, 60 percent below 2011 levels, according to Reuters.

Low permit prices have meant increased profitability for coal-burning power plants across European markets, particularly in Germany, where profits for coal-fired power plants are up 30 percent since the beginning of the year, reaching the highest levels since 2008, Reuters reports.

"If you have anything that's coal-fired in your generation park at the moment - be it lignite or hard coal - you will take advantage of the high margins and burn the stuff," a trader with a major German utility told reporters.

Utilities in Germany, the largest power market and economy in Europe, have increased their use of coal-fired power plants continuously since the beginning of the year, Reuters reports. Analysts now project annual coal-fired power generation in 2012 will increase to 130 million megawatt-hours (MWhs), an increase of 15.5 million MWhs or 13.5 percent over 2011 levels.

All that additional coal combustion means about 14 million metric tons of CO2, assuming utilities burn hard coal, according to estimates from Matteo Mazzoni, an energy and carbon analyst at Nomisma Energia. Emissions would be higher if German power plants turn to lignite, or brown coal, a dirtier variety with lower energy content that is plentiful in the country.

Even assuming utilities burn hard coal, the increased emissions would be the equivalent to about 6 percent of total German emissions in 2008, or the average annual emissions of 2.8 million U.S. cars.

Emissions Trading Scheme Acts as Effectively as Floor on Emissions as Cap

The up-tick in coal-combustion is an odd byproduct of the European Emissions Trading Scheme (ETS), designed to cap emissions from industrial and power sector polluters in 30 EU nations.

The trading scheme issues permits to emit CO2 in several year phases, to allow for variances in weather or industrial demand. The most recent phase extends from 2008 to 2012.

But when emissions fall faster than expected, as they have following the impact of the Great Recession and the Eurozone crisis, emissions permits quickly become oversupplied, providing incentive for power plants to turn back towards coal or to bank emissions permits, allowing higher emissions in future compliance periods. Either way, utilities have incentives to use up cheap permits while they last, increasing CO2 output now or (if permits are banked) in the future.

In this manner, the ETS can act just as effectively as a floor on total emissions in covered sectors as it can as a cap.

German Nuclear Capacity Idles as Coal-burning Increases

Even as German utilities burn more coal, eight of the nation's 17 nuclear reactors have sat idle since the March 2011 tsunami and accident at the Fukushima Dai-ichi nuclear power complex in Japan.

When all 17 German reactors were operating, they supplied 133 million MWhs of electricity. The idled reactors total 12.3 gigawatts (GW) of capacity, or 41 percent of Germany's total nuclear capacity of 20.3 GW. Assuming the shuttered reactors produce the same share of total nuclear electricity generation, they represent the capability to produce 54.4 million MWhs of zero-carbon electricity annually.

In other words, even as Germany increases their coal-use by 15.5 million MWh, they are idling enough capacity to instead drive down total-fired power generation by 54.4 million MWh. Assuming the combustion of hard coal, that would slash the nation's total CO2 emissions by 49 million metric tons, or an additional 20.8 percent reduction below 2008 levels. Emissions reductions would be even greater assuming nuclear generation displaced the combustion of lignite rather than hard coal.

What Happened to Dire Climate Warnings?

While the ETS can ensure total covered EU emissions will not rise higher than the emissions trajectory planned prior to the recession, it has clearly done nothing to turn the recession into an accelerating force for further CO2 cuts.

Instead, both the incentives created by the ETS and Germany's decision to idle almost half its nuclear fleet have led to an increase in coal combustion while squandering an opportunity to more rapidly reduce CO2 emissions and accelerate the transition away from fossil fuels.

Even as climate scientists counsel ever-more-urgent action to reduce greenhouse gas emissions and arrest climbing global temperatures, policy makers and green activists in Germany and elsewhere in Europe have decided that they are doing enough to reduce CO2 already.

Germany, and the EU at large, have certainly been aggressive at deploying renewable energy, improving efficiency, and otherwise cutting carbon emissions. For these efforts they should be lauded.

Yet Germany's total emissions from fossil fuels were already 11 percent lower than 1990 levels when the Kyoto Protocol was negotiated in 1997, and 20 percent lower when the ETS first went into effect in 2005. Germany's emissions declines were aided substantially by Reunification in 1990 and the subsequent modernization of the East German economy, which saw the closure of countless inefficient, outdated Soviet-era factories and power plants. More recently, the Great Recession and the Eurozone Crisis further slashed German and EU emissions.

Whatever the cause, should Germany's emissions reductions to date be used as an excuse to slow further carbon cuts to the minimum levels mandated by the ETS or the Kyoto Protocol? Do they justify leaving much greater emissions reductions opportunities sitting on the table? How urgent do European greens take their own dire warnings about impending climate catastrophe? Shouldn't climate activists sound alarm bells whenever coal use rises, rather than falls?

As the German green think tank, Heinrich Boll Stiftung, admits with honesty, shuttering the nation's nuclear plants will most certainly increase carbon emissions. But according to a pamphlet from the think tank, "Germany actually has the right to increase its carbon emissions since it completely blew past its Kyoto target of a 21 percent reduction [below 1990 levels by 2012]."

There you have the odd logic of emissions trading. And an unfortunate missed opportunity for much deeper carbon cuts.

Time to Move Beyond Clean Tech Boom and Bust: NYT

Mon, 07 May 2012 16:22:52 -0800

In yet another sign of a growing consensus in support of energy policies that prioritize innovation, the New York Times on Sunday endorsed the recommendations of "Beyond Boom and Bust," a recent report by experts at the Breakthrough Institute, the Brookings Institution, and the World Resources Institute.

The Times urged Congress to reform federal energy subsidies to "reward lower costs and better performance" in order to drive low-carbon technologies towards unsubsidized cost competitiveness and end the cycle of boom and bust that threatens the vital clean tech sector.

"The idea is not to prop up clean tech industries forever. It is to get them to a point where they can stand on their own," the paper said. The Times called the report "a timely effort to attach real numbers to an increasingly politicized debate over energy subsidies."

Federal support for clean tech is headed for a cliff. Without congressional action, funding is set to drop 75 percent from its 2009 peak of $44 billion to just $11 billion in 2014, according to the report.

Public investments have paid off - and garnered massive private investments to grow the sector. Clean tech was one of the few sectors to add jobs during the Great Recession, and significant gains were made in the cost and performance of clean energy technologies, especially in wind and solar generation.

In an analysis of the clean tech investment horizon, also on Sunday, Ed Crooks of the Financial Times writes:

Although renewable energy - not derived from fossil fuels - still accounts for less than a tenth of total US energy use, it has been growing fast. Between 2006 and 2011 renewable electricity generation, excluding hydro power, doubled to 195m megawatt hours: enough to power 17m American homes, roughly one in every seven.

Nevertheless, Crooks notes, clean tech remains dependent on policy support:

Most of these technologies are unable to stand on their own commercially, particularly in competition with a resurgent natural gas industry that has created a supply glut and driven prices to 10-year lows. Without a change of direction in Washington, the US renewable energy industry faces shrinking markets, business failures and tens of thousands of job cuts.

The debate over clean energy has become highly politicized. But some Republicans - including Senators Lisa Murkowski, Richard Lugar and John Thune - have suggested that the path forward may lie with innovation-centered reforms.

Policy makers should see the increasing maturation of clean energy technologies and the impending drop in federal investment as an opportunity to enact smart reforms that drive technological progress, create jobs, and use taxpayer resources wisely.

Click here to download the full report "Beyond Boom and Bust: Putting Clean Tech on a Path to Subsidy Independence."

Golden Goose Award to Honor 'Breakthrough' Government Research

Wed, 02 May 2012 14:25:20 -0800

The Breakthrough Institute has joined with a group of leading congressmen and public policy, business, and academic organizations to sponsor the new Golden Goose Award, which will "highlight the often unexpected or serendipitous nature of basic scientific research."

Recognizing that new scientific or technological advances can come from unexpected places, the award will honor federally funded researchers whose projects initially sounded odd or obscure but contributed to important breakthroughs.

Quirky sounding research funded with taxpayer money has long been caricatured as government waste, perhaps most prominently by the "Golden Fleece Awards," created in 1975 by the late Senator William Proxmire (D-WI).

But scientific research has been the spine of American economic growth. "As much as half of US economic growth since World War II has been the result of advances in science and technology," according to Alan Leshner, CEO of the American Association for the Advancement of Science.

And some peculiar projects have led to important gains. Federally funded research into dog urine helped scientists understand how hormones affect the human kidney, which has been useful for treating diabetes patients. A study of acoustic trauma to guinea pigs helped advance treatment for infants with early hearing loss.

And research into the reproduction of the screwworm -- a deadly parasite that targets cattle -- cost the government $250,000 but may have saved the cattle industry more than $20 billion.

"We've all seen reports that ridicule odd-sounding research projects as examples of government waste," Representative Jim Cooper (D-TN), who first proposed the award, said in a statement. "The Golden Goose Award does the opposite. It recognizes that a valuable federally funded research project may sound funny, but its purpose is no laughing matter. I hope more of my colleagues will join us in supporting, not killing, the goose that lays the golden egg."

The Golden Goose Award is sponsored by the Breakthrough Institute along with representatives Cooper, Charlie Dent (R-PA), and Robert J. Dold (R-IL), as well as the American Association for the Advancement of Science, the Association of American Universities, the Association of Public and Land-grant Universities, the Progressive Policy Institute, the Science Coalition, and the Task Force on American Innovation.

A panel of outside experts is expected to select the first Golden Goose Award winners in September 2012. Panelists include:

Bruce Alberts, editor-in-chief, Science;

Wendy Baldwin, President and CEO, Population Reference Bureau and former Deputy Director for Extramural Research, National Institutes of Health;

Mel Bernstein, senior vice provost for research and graduate education, Northeastern University;

Steve Fluharty, senior vice provost for research, University of Pennsylvania;

Dennis Hall, vice provost for research and dean of the graduate school, Vanderbilt University;

Sharon Hays, Vice President, Office of Science and Engineering at CSC and Associate Director for Science in the Office of Science and Technology Policy under George W. Bush;

Burton Richter, Nobel Prize-winning physicist and Breakthrough Institute Senior Fellow; and

Leslie Tolbert, senior vice president for research, University of Arizona.

Anyone who wishes to nominate a scientist or research team for the award should request a nomination form by sending an email to info@goldengooseaward.org.

Gas Boom Poses Challenges for Renewables and Nuclear

Mon, 30 Apr 2012 14:23:00 -0800

The ongoing shale gas boom and the advent of low natural gas prices has pushed back the goal posts for clean energy technologies like wind, solar, and nuclear power, according to a new fact sheet released by the Breakthrough Institute. While significant progress has been made in low-carbon technologies in recent years, continued innovation and cost declines will be necessary for clean tech to become broadly competitive with natural gas on an unsubsidized basis.

As documented in a new and widely acclaimed report co-authored by experts at the Breakthrough Institute, the Brookings Institution, and the World Resources Institute, the impending collapse of federal support policies for clean tech present fierce challenges to the sector going forward. The report, "Beyond Boom and Bust," offers a platform for policy reform that would accelerate innovation and cost declines, pushing clean tech to broad competitiveness with conventional fossil energy technologies.

As we show in the new fact sheet, the challenges now posed by low-cost natural gas are particularly daunting for low-carbon power technologies. Efforts to reform federal clean tech subsidies must engage these challenges by supporting clean energy innovation and making unsubsidized cost parity for clean tech the top priority.

Click here to download the fact sheet "Gas Boom Poses Challenges for Renewables and Nuclear."

From a recent high of over $13 per mmBTU in 2008, natural gas prices have plummeted to under $2.50 per mmBTU. These cost declines have been paralleled by similar drops in prices for wind- and solar-generated electricity, but the improvements for clean tech have not yet achieved full cost-parity with natural gas.

While gas prices are not expected to remain at these markedly low levels, experts project them to hover in the $4-6 per mmBTU range for at least the medium-term, still very low by historical standards. By our calculations, natural gas prices at these levels yield a levelized cost of energy (LCOE) of between $52-72 per megawatt-hour (MWh) for a combined cycle gas plant. Wind power, which competes directly with combined cycle peaking gas plants, ranges between $60 and $90 per MWh in the best wind sites. The federal Production Tax Credit (PTC) brings wind's LCOE down to $33-65 per MWh, but this credit is scheduled to expire at the end of this year.

Solar power doesn't compete directly with combined cycle gas plants. Utility-scale solar plants instead compete with combustion turbine gas plants, which have an LCOE range between $72 and $104 per MWh. We estimate levelized costs for utility-scale central-station solar photovoltaic range from $111 to $289 per MWh. The federal Investment Tax Credit (ITC) brings this range down to an estimated $81 to $131 per MWh, helping solar compete in select markets. But the ITC, like the PTC, is temporary, and even with its support the broad market for utility electricity generation favors combustion turbine-generated electricity from natural gas.

Residential and commercial rooftop solar have to contend with a broad range of retail electricity prices, from $80 to $193 per MWh. Residential rooftop solar, in comparison, ranges between $213 to $345 per MWh. The ITC brings this range down to $153 to $248, making rooftop solar competitive in some markets with high local electricity prices and high solar irradiance, including California, New Jersey, and Arizona. Residential rooftop solar is already competitive without subsidy in Hawaii, which has the nation's highest residential electricity prices and bountiful solar resource.

There are line-of-sight cost reductions ahead for wind and solar. Analysts project the cost of wind turbines to decline between 10 and 30 percent over the next three years, pushing wind into wider cost parity with combined cycle gas. Solar too can achieve significant cost declines, with $1.00 per watt total installed costs possible by 2020, compared to over $3.50 per watt today. But these improvements will require sustained commitments to technological innovation, as well as improvements in transmission, balance-of-systems, and financing costs.

Nuclear power faces perhaps the biggest challenges of all low-carbon power. Although nuclear has proven itself the most scalable source of zero-carbon baseload power, providing 20 percent of America's electricity generation, high capital and financing costs combine with high public risk perception and regulatory burdens that make new nuclear power comparatively expensive. Projected levelized costs for new nuclear power going online between 2016 and 2020 range between $112 and $130 per MWh. A federal Production Tax Credit for nuclear brings this down to $94 to 102 per MWh. With gas prices expected to remain well below these levels for the foreseeable future, the outlook for new nuclear power in the United States remains challenging.

Zero-carbon power sources require continued improvements in technology costs and performance to achieve full market competitiveness. These challenges are amplified by astonishingly low natural gas prices in the wake of the ongoing shale gas revolution. However, lessons for zero-carbon power advocates can be found in the history of shale gas itself: just as the sustained public and private research and commercialization efforts drove breakthrough innovations in hydraulic fracturing and microseismic mapping technologies that enabled the shale revolution, so must the nation initiate smart and strategic public-private partnerships to drive technical improvements and cost declines in solar, wind, nuclear, and other zero-carbon energy technologies.

For more, download our fact sheet, "Gas Boom Poses Challenges for Renewables and Nuclear."

The Royal Society Gets It Wrong on People and the Planet

Thu, 26 Apr 2012 11:24:08 -0800

By Mark Lynas, author of The God Species: How the Planet Can Survive the Age of Humans. Originally published at "High Tides" weblogs.

The Royal Society - Britain's premier scientific institution - has just released a major report called People and the Planet, arguing that per capital resource consumption in the richest parts of the world needs to come down dramatically if the poorest 1.3 billion are to be lifted out of extreme poverty whilst protecting the Earth's environment from irreparable harm. (Do join Leo Hickman's debate on the Guardian site here, and my thanks to him for prompting this piece.)

I wouldn't argue with most of the data underpinning this report, but I do have problems with some of the assumptions. The first is that population growth is necessarily a bad thing, and that there is therefore a pressing need to reduce the rate of growth in developing countries. The report states early on:

"At a time when so many people remain impoverished and natural resources are becoming increasingly scarce, continued population growth is cause for concern."

What it fails to acknowledge however is that population growth is correlated with economic growth - and therefore if developing countries are to continue to escape from poverty then reducing their rate of population growth should not be the initial priority. In a recent blogpost the World Bank's Wolfgang Fengler starts by reminding us:

Africa's population is rising rapidly and will most likely double its population by 2050. Depending on the source of data, Africa will soon pass 1 billion people (and it may already have) and could reach up to 2 billion people by 2050 [ I am using the UN's 2009 World Population Prospects, which projects Africa to exceed 1.7 billion by 2050 based on sharply declining fertility rates]. This makes it the fastest growing continent and Africa's rapid growth will also shift the global population balance.

Sounds scary. But what no-one mentions is that in terms of population density Western Europe is far more over-populated than Africa:

If we look at Western Europe - where I come from - there are on average 170 people living on each square km. In Sub-Saharan Africa there are only 70 today. This gap will narrow in the next decades but even by 2050, Western Europe is expected to be more densely populated than Africa.

He then concludes:

...population growth and urbanization go together, and economic development is closely correlated with urbanization. Rich countries are urban countries. No country has ever reached high income levels with low urbanization. And this is critical for achieving sustained growth because large urban centers allow for innovation and increase economies of scale. Companies can produce goods in larger numbers and more cheaply, serving a larger number of low-income customers.

Population growth may therefore put us on the edge of a "golden age of development" for Africa - hardly the message from the gloomy Royal Society report. As the excellent book Emerging Africa, by Steven Radelet, shows, seventeen sub-Saharan African countries have seen sustained economic growth since 1995, vastly improving their prospects and - I suspect - further reducing fertility rates in the process.

Whilst using a lot of dark language about increasing numbers of humans globally, the report nowhere acknowledges that the current median level of total worldwide fertility has fallen dramatically from 5.6 in the 1970s to only 2.4 today. In other words we are already close to natural replacement levels in terms of total fertility - the reason that the absolute population will continue to grow to 9 billion or more is that more children are living long enough have their own children. To my mind a reduction in infant mortality and an increase in life expectancy are self-evidently good and desirable - and their impact on world population levels should be celebrated, not bemoaned.

Secondly, the report seems to be largely predicated on a neo-Malthusian version of economics, where resource use is a zero-sum game, and therefore the rich need to get poorer if there is to be any increase in comsumption for the poorest. It states:

Human impact on the Earth raises serious concerns, and in the richest parts of the world per capita material consumption is far above the level that can be sustained for everyone in a population of 7 billion or more. This is in stark contrast to the world's 1.3 billion poorest people, who need to consume more in order to be raised out of extreme poverty.

Therefore:

The most developed and the emerging economies must stabilise and then reduce material consumption levels...

This redistributive model has been shown in the real world to be completely wrong: China, India and now many African countries have seen rapid and sustained economic growth (and the concurrent lifting out of poverty of hundreds of millions of people) not because we have had to reduce our own wealth and consumption in an absolute sense, but through trade and other globalisation-related liberalisation benefiting both parties (and the poorest most).

Moreover, a dramatic decline in inequality is already actually happening, because the richest countries are either not growing now (due to the post-2008 economic crisis) or are growing very slowly, whilst the emerging economies and even many sub-Saharan African countries are growing at 5% or more per year. The big Malthusian error - which was repeated by the Limits to Growth approach of the 1970s, and many times afterwards - was to see 'natural resources' as some kind of absolutely-limited cake which would have to be shared equally if all were to exit from poverty.

In actual fact the stock of natural resources (natural capital) change both both because of consumption patterns and technology. Take fisheries - it is often assumed that because many are over-exploited at the moment then there will never be enough fish for everyone's wants to be satisfied. However, as a scientific report only last week showed, if fisheries and aquaculture are properly managed there can be at least the same levels of per capita fish consumption by 2050 as today (for a 9.5 billion population). There is no reason to assume collapse is inevitable.

Similarly for energy - if we deploy sufficient clean energy resources (renewables, nuclear and gas with carbon capture) there is no fundamental limit on human potential energy consumption. Energy is essential for water supply (increasingly with desalination), agricultural production, urbanisation and so on - and here the Limits to Growth assumptions are both anti-development and nonsensical.

To conclude: I would love to see a much more positive approach from scientists on these issues, one acknowledging human development as a much more positive prospect, and treating environmental resources not as a fixed quantity but as a dynamic part of a rapidly-changing (and in many ways improving) world. This does not mean denying biophysical limits ('planetary boundaries') insofar as they can be scientifically determined, but it does mean taking a radically-different, and much more human-centred, approach to tackling them.

How We Made Clean Energy Cheaper

Mon, 23 Apr 2012 12:59:59 -0800

Over the last five years, the world's largest nations collectively engaged in a massive policy experiment: what happens when governments triple the historic rate of public investment in clean energy?

In the U.S., taxpayers will have spent $150 billion between 2009 and 2014, three times more than we did between 2002 and 2007, according to a comprehensive new report, Beyond Boom and Bust, coauthored by Breakthrough Institute with scholars from World Resources Institute and the Brookings Institution.

The U.S. wasn't alone. China increased its clean tech spending to $80 billion per year. Europe has had high levels of investment in clean energy since before the recession. And rather than crowding out, these public investments attracted a huge amount of private investment -- $774 billion between 2008 and 2011, up from $320 billion between 2004 - 2007.

The two of us have been critical of how some of the green stimulus money was spent. Big investments to weatherize homes ended up creating few jobs and didn't have much impact on the nation's energy demand. Patchwork and overlapping subsidies and regulations allowed some rent-seeking firms to double-dip. Too much was spent on deployment and too little (less than 20 percent) was spent on energy R&D, which at under $5 billion a year is grossly underfunded compared to NIH's $30 billion and DOD's $80 billion R&D budgets.

But as blunt as many of the renewables subsidies were, they still helped cause an astounding 75 percent decline in the price of solar panels, and a 27 percent decline in the price of wind turbines, from 2008-2012. By contrast, from 2002 to 2008, the price of both solar panels and wind turbines was flat.

The progress with renewables was not the first time big increases in public investment for new energy technologies accelerated technological innovations that in turn resulted in steep price declines. From the U.S.-led shale gas revolution beginning in the mid-70s, to France's standardization of nuclear reactors in the '80s, to the deployment of large, off-shore wind turbines by the Danish government in the '90s, history is replete with such examples.

The episode challenges the assumption that pricing carbon is the key to technology innovation. Europe has imposed a carbon price on much of its economy for almost a decade, but Germany's solar boom, and the dramatic declines in the cost of solar panels that it helped cause, was driven by subsidies, not carbon pricing. The carbon price equivalent of Germany's solar feed-in tariff is a whopping $680 per ton, 36 times higher than the EU carbon price.

And had we made coal slightly more expensive through carbon pricing back in the 1970s, it would not have resulted in today's shale gas revolution. Real world barriers, like the need for complicated new mapping and fracking techniques, and the risk of not being able to capture one's investment, would still have existed.

But if some liberals are obsessed with carbon pricing, much of the right has a double standard when it comes to renewables.

Conservatives are correct that some amount of the decline in price of solar and wind is likely due to over-production in China, and that the fundamental obstacles to scaling up renewables remain. While in some sunny and windy places renewables are cost-competitive without subsidies, they still remain more expensive than fossil energy in most places. Their growth is constrained by their intermittency, the cost of new transmission, and other real world barriers. Developing nations in particular still need a lot of new baseload power in to grow.

Still, it's hard to take House Republican objections to the wind production tax credit very seriously. In the one breath they condemn the wind production tax credit and in another they sing of the gift of today's cheap shale gas -- gas that exists in no small measure due to a federal production tax credit that lasted over two decades.

At the same time, intelligent conservatives do distinguish between what they view as worthwhile government funded research and demonstration projects -- true public goods -- and blanket deployment, which risks supporting rent-seekers and stifling innovation.
Whether or not the wind tax credit is renewed later this year, all governments need to get smarter about how they support clean energy. We need to reward innovation, not production. Energy innovation funding models should borrow more from the military's success in purchasing advanced microchips and jet turbines than from unending agricultural crop supports.

The positive response to Beyond Boom and Bust gives hope that subsidy reform focused on rewarding innovation could be bi-partisan.

"It's clearly against our national interest to engage in long-term subsidies where the moment you pull the subsidy, businesses fail," McKie Campbell, the Republican staff director for the Senate Energy and Natural Resources Committee, told the Wall Street Journal, "You basically have to make things cost competitive or they aren't going to work."

-- Michael Shellenberger and Ted Nordhaus

Support Grows for Clean Tech Subsidy Reform

Thu, 19 Apr 2012 17:32:52 -0800

Support is building for policies to encourage the growth of a globally competitive, subsidy independent clean tech sector in the United States, as moderate Republicans, industry insiders and analysts expressed keen interest in reforms that would drive production of cheaper, more innovative forms of energy.

"I think that there could be quite a lot of Republican support for a reform policy," Neil Brown, an aide to Senator Richard Lugar (R-IN), told National Journal. "It's really only a recent phenomenon that renewable energy has been seen to be a partisan issue. It's a much more regional issue at the base of it. There are going to be Republicans that are against any subsidy. The concern we have is corporate welfare -- the degree to which a program can be reformed and it can be shown that it will eventually phase out."

Pressure is on the industry to become cost competitive with fossil fuels and foreign-produced energy technologies as federal investment in clean energy is set to drop 75 percent between 2009 and 2014, according to a new report by analysts at the Breakthrough Institute, Brookings Institution and World Resources Institute called "Beyond Boom and Bust: Putting Clean Tech on a Path to Subsidy Independence."

The report - released this week to widespread media coverage, including in Time magazine, the Washington Post, the New York Times, the Los Angeles Times, the San Jose Mercury News, Nature, Grist, the Financial Times, Bloomberg, Forbes, and CNN - counsels the adoption of a suite of new clean tech deployment policies that will simultaneously drive both market demand and continual innovation.

McKie Campbell, the Republican staff director of the Senate Energy and Natural Resources Committee, signaled openness to re-tooling federal subsidies. "You basically have to make things cost competitive or they aren't going to work," the Wall Street Journal quoted him as saying. "It's clearly against our national interest to engage in long-term subsidies where the moment you pull the subsidy," businesses fail, he added.

Amid recent gains in clean tech sectors, business insiders also expressed interest this week in subsidy reforms that could make the industry more competitive.

Jon Goldstein, the director of public affairs for the American Wind Energy Association told ClimateWire that the industry is planning for a future that is not tethered to ongoing subsidies. "We just want to get to the point where we can finish the job we've begun," Goldstein said.

Ben Higgins, the director of public affairs for solar company REC Solar, said the report's authors were "simply proposing to do at the federal level precisely what many state governments are already doing -- and what the solar industry has actively supported in dozens of venues -- incentives which are high initially (to encourage investment and growth of industry scale) but then decline to account for (and encourage) cost reduction."

The recent comments follow earlier support expressed by some Republicans and industry groups for energy subsidy reform.

Senator John Thune (R-SD) voiced support last month for a gradual phase out of the production tax credit (PTC) for wind, a reform that would encourage the industry to bring down costs. "I think anybody that can come forward with a specific proposal that would have that sort of a wind-down in it is going to be well placed relative to those discussions about tax reform," he said. The American Energy Innovation Council, a group of business leaders, including former Microsoft Chairman Bill Gates and GE's Jeffrey Immelt, called last fall for robust public R&D investment paired with limited subsidies that would "allow new technologies to scale up while driving down costs."

The ideas are gaining traction among the environmental community as well. Cai Steiger, a policy analyst at the Natural Resources Defense Council, called the new report "insightful and thought-provoking," commending its efforts to explore "ways to boost deployment of renewables in the most cost effective and efficient manner." David Robert's, Grist.org's prolific climate and energy blogger, lauded the report's "welcome and much-needed attempt to put some numbers behind the debate over federal cleantech support."

Just as clean energy technology has achieved record setting cost improvements, federal support is headed for a cliff while global competition has intensified. The clean tech sector is at an inflection point, and now is not the time to walk away from these emerging industries, report co-authors Jesse Jenkins, Letha Tawney, and Mark Muro wrote in The Hill. If policy makers instead pursue smart reforms to federal subsidies that bring further improvements in cost and performance, a globally competitive, subsidy independent industry is within reach.

"Beyond Boom and Bust" recommends an integrated suite of policies, including expanded investment in research, development, and commercialization of advanced energy technologies as well as smarter deployment subsidies and policies designed to phase out over time while demanding - and rewarding - declining technology costs.

Click here to read an overview or download the full report, "Beyond Boom and Bust: Putting Clean Tech on a Path to Subsidy Independence."

Roundup of Press Coverage for "Beyond Boom and Bust"

"Subsidies for Clean Energy Get Fresh Look," Keith Johnson in the Wall Street Journal

"Clean-energy subsidies are vanishing. What should replace them?" Brad Plumer in the Washington Post

"Clean Technology on the Brink," John Broder in the New York Times

"Clean Tech Support Is About to Fall Off a Cliff. Here's One Way to Save It," Bryan Walsh in Time Magazine

"Federal spending on clean tech is 'falling off a cliff,'" Dana Hull in the San Jose Mercury News (syndicated at the Los Angeles Times, Miami Herald, and the Kansas City Star)

"Averting the clean tech bust," Jeff Tollefson in Nature

"Clean Tech Could Disappear - But Doesn't Have to," Sarah Laskow in GOOD Magazine

"U.S. Faces clean energy bust as subsidies expire, report warns," Matt Smith at CNN Online

"Renewable energy subsidies to shrink," Ed Crooks in the Financial Times

"Clean Energy Advocates Urge Overhaul as Aid Shrinks 75% by 2014," Jim Snyder in Bloomberg

"Green Power on the Brink, Think Tanks Warn," Coral Davenport in the National Journal

"Collapsing Federal Support Means More Trouble For U.S. Clean Energy, Says New Report," Keith Schneider at Mode Shift

"Think tanks warn of turbulent outlook for US renewables industry," James Murray in Business Green

"Projected Drop in Federal Spending Could Clip Cleantech's Momentum," Walter Frick in BostInno

"U.S. cleantech support about to fall off a cliff," David Roberts at Grist

"Moving from 'Boom and Bust' to 'Reform and Innovation,'" Matthew Stepp at the Innovation Files

"Subsidy reforms are necessary to end clean-tech boom-and-bust cycles--report," Daniel Cusick at ClimateWire

"Overhauling subsidies could boost renewables, think tanks say," Nick Juliano in Greenwire

"New Report Highlights Importance of Clean Energy Policy, as Well As Need For Reform," Cai Steiger at NRDC Switchboard

"How to Survive the Coming Clean Tech Crash," Todd Woody at Forbes

"The Pending Subsidy Cliff, and the Way Out," Steve Leone at Renewable Energy World

"Federal Clean tech spending to drop 75% to $11 billion in 2014," Mark Jaffe in the Denver Post

"What comes after the renewabubble?" Kenneth P. Green at the American

"Clean Tech Could Come Crashing Down," Ken Silverstein at the Energy Biz

"Clean Tech Industry Falling Due to Reduced Government Incentives, Study Says," at the Green Optimistic

"New Study Makes Good Points, but Why Focus Only on Clean Energy Subsidies?" at Scaling Green

"Report: Clean tech investments reach peak," at Power Engineering

"US subsidy boom and bust is 'a threat to green sector,'" by Benjamin Romano at Recharge

Beyond Boom and Bust: Summary of Recommendations

Tue, 17 Apr 2012 21:00:00 -0800

The recent gains made by clean tech sectors in the United States are shadowed by the looming collapse of federal subsidy support, which has been a powerful driver of expanding clean energy markets. As documented in a new report -- published by energy experts at the Breakthrough Institute, the Brookings Institution, and the World Resources Institute -- federal investment in clean tech is slated to drop 75 percent over 2009-2014. The only solution to the policy-induced cycle of boom-and-bust endured by clean tech is to optimize federal support programs to drive innovation and cost declines so that clean energy technologies can ultimately thrive on their own in American markets without subsidy.

Click here to read the report overview and Executive Summary.

Click here to download the full report, titled "Beyond Boom and Bust: Putting Clean Tech on a Path to Subsidy Independence."

Key Recommendations:

1. Reform Energy Deployment Subsidies and Policies to Reward Technology Improvement and Cost Declines

Expiring policies and programs are poised to wipe away the large bulk of today's clean energy deploy- ment regime. This creates a clear need for urgent policy reform to sustain market opportunities for advanced energy technologies, more effectively deploy limited public resources, and support innovative entrepreneurs and firms. Whatever form they take, a new suite of clean tech deployment policies must simultaneously drive market demand and continual innovation. In particular, clean tech deployment policies should:

ESTABLISH A COMPETITIVE MARKET. Deployment policies should create market opportunities for advanced clean energy technologies while fostering competition between technology firms.

DRIVE COST REDUCTIONS AND PERFORMANCE IMPROVEMENTS. Deployment policies should create market incentives and structures that demand and reward continual improvement in technology performance and cost.

PROVIDE TARGETED AND TEMPORARY SUPPORT FOR MATURING TECHNOLOGIES. Deployment policies must not operate in perpetuity, but rather should be terminated if technology segments either fail to improve in price and performance or become competitive without subsidy.

REDUCE SUBSIDY LEVELS IN RESPONSE TO CHANGING TECHNOLOGY COSTS. Deployment incentives should decline as technologies improve in price and performance to both conserve limited taxpayer and consumer resources and provide clear incentives for continued technology improvement.

AVOID TECHNOLOGY LOCK-OUT AND PROMOTE A DIVERSE ENERGY PORTFOLIO. Deployment incentives should be structured to create market opportunities for energy technologies at different levels of maturity, including new market entrants, to ensure that each has a chance to mature while allowing technologies of similar maturity levels to compete amongst themselves.

PROVIDE SUFFICIENT BUSINESS CERTAINTY. While deployment incentives should be temporary, they must still provide sufficient certainty to support key business decisions by private firms and investors.

MAXIMIZE THE IMPACT OF TAXPAYER RESOURCES AND PROVIDE READY ACCESS TO AFFORD- ABLE PRIVATE CAPITAL. Deployment incentives should be designed to avoid creating unnecessarily high transaction costs while opening up clean tech investment to broader private capital markets.

Many of today's clean tech deployment subsidies and policies should be reformed with these criteria in mind. Examples of possible policies that could meet these criteria include competitive deployment incentives, steadily-improving performance-based standards, "top-runner" standards or incentives, demanding government procurement opportunities, and reverse auction programs. If structured to adhere to these criteria, a new era of clean tech deployment policies will neither select "winners and losers" a priori, nor create permanently subsidized industries. Rather, these policies will provide opportunity for all emerging clean energy technologies to demonstrate progress in price and performance, foster competitive markets within a diverse energy portfolio, and put clean tech segments on track to full subsidy independence.

2. Strengthen the US Energy Innovation System to Make Clean Energy Cheap

A new energy policy consensus to secure an internationally competitive, subsidy-independent clean tech sector must also harness America's strengths as an innovator. The United States is home to world-class universities, generations of trained scientists and engineers, potent centers of entrepreneurship, finance, and advanced manufacturing, and a creative culture capable of attracting talent from around the world. Yet when it comes to energy, America's innovation system falls short. Policy makers must strengthen the US energy innovation system to catalyze clean energy breakthroughs and support continual technology improvement. Along these lines, the nation should:

STEADILY INCREASE INVESTMENT IN RD&D WHILE REFORMING AND STRENGTHENING THE US ENERGY INNOVATION SYSTEM.

Policy makers should steadily scale-up investment in energy RD&D to triple today's levels to match the scale of other national innovation priorities.

America's energy innovation system must also be modernized to leverage regional innovation opportunities and strengthen new institutional models at the federal level, including the Energy Frontier Research Centers (EFRCs), the Advanced Research Projects Agency-Energy (ARPA-E), and the Energy Innovation Hubs. Efforts to build public-private partnerships responsive to both industry needs and regional strengths should continue to be encouraged across the Department of Energy (DOE) and particularly in the National Labs in order to ensure a maximum return on the federal investment in RD&D.

UNLOCK CLEAN ENERGY ENTREPRENEURSHIP BY IMPLEMENTING EFFECTIVE POLICIES TO ACCELERATE COMMERCIALIZATION OF ADVANCED ENERGY TECHNOLOGIES.

The DOE's Loan Programs Office, which funded Solyndra, should be replaced by a more flexible, independent, and sophisticated suite of financial tools and other mechanisms designed to draw private capital into cleantech projects through a variety of investment, credit, securitization, insurance, and standardization activities. Whether delivered through a Clean Energy Deployment Administration (CEDA) or other entities or programs, the clear mission of these activities would be to accelerate the commercialization and deployment of critical advanced energy technologies.

A National Clean Energy Testbeds program (N-CET) should be established to take advantage of public lands to accelerate technology demonstration and commercialization. This new program would provide access to pre-approved, monitored, and grid-connected public lands and waters ideal for demonstration of innovative energy technologies, thereby reducing the cost, time, and permitting challenges associated with technology commercialization.

The power of military procurement should also be leveraged to drive demanding early markets for advanced energy technologies that meet tactical and strategic military needs and may have later commercial applications. Energy technologies with dual-use military and commercial potential include advanced vehicle technologies, aviation biofuels, advanced solar power, improved batteries, and small modular nuclear reactors.
Similarly, federal agencies should work both independently and with the states to address infra- structure and regulatory challenges that may prevent the commercialization of new energy technologies.

HARNESS ADVANCED MANUFACTURING, REGIONAL INDUSTRY CLUSTERS, AND A WORLD- CLASS ENERGY WORKFORCE TO ENHANCE AMERICA'S INNOVATIVE EDGE.

Advanced manufacturing is an integral part of the innovation system and a key area for cost reductions and performance improvements in emerging technologies. Innovation thus suffers when divorced from manufacturing activities. US advanced manufacturing must play a key role in accelerating advanced energy innovation. Technical support programs, public-private research consortia, and other strategic policies can help domestic manufacturers of advanced energy technologies remain at the cutting edge.

Likewise, the nation needs to develop more potent, catalytic ways to leverage and enhance regional clean tech industry clusters. Such industry clustering has been shown to accelerate growth by promoting innovation, entrepreneurship, and job creation. Policy makers should increase investment in competitive grants to support smart regional cluster initiatives, designed not in Washington but on the ground close to the "bottom up" innovation that has broken out in numerous states and metropolitan areas.

Finally, American clean tech leadership will require a highly educated, globally competitive advanced energy workforce. The nation must make new investments in energy science, technology, engineering, and mathematics education and make smart reforms to immigration policies to ensure America remains the destination of choice for the world's best entrepreneurs and innovators.

Clean energy policy in America is at a crossroads. Federal support for clean tech is now poised to decline precipitously--unless policy makers and industry work together to enact smart reforms that can ultimately free clean energy from subsidy dependence and put clean tech sectors on a path to sustainable, long-term growth.

A business-as-usual strategy of perpetual policy expiration and renewal is no longer sustainable. Yet neither is the immediate cessation of clean tech subsidies in the national interest. Supporting the develop- ment of a new portfolio of cost-competitive, scalable clean energy technologies offers substantial opportunities for enhanced American energy security, new technology exports, and improved public health.

The time has come to craft a new energy policy framework specifically designed to accelerate technology improvements and cost reductions in clean tech sectors, ensure scarce public resources are used wisely to drive technologies towards subsidy independence as soon as possible, and continue the growth and maturation of America's clean tech industries. This report lays out the challenges facing policy makers and business leaders with the aim of sparking a national conversation on the route forward.

Beyond Boom and Bust: Report Overview

Tue, 17 Apr 2012 21:00:00 -0800

By Alex Trembath and Jesse Jenkins

Despite robust growth and recent improvements in price and performance, a boom in US clean energy technology ("clean tech") sectors could now falter as federal clean energy spending declines sharply, according to a new report published today by some of the country's top energy analysts.

To both sustain clean energy growth and put the United States' clean tech sectors on an accelerated path to subsidy independence and global competitiveness, analysts at the Breakthrough Institute, Brookings Institution, and World Resources Institute counsel a thorough revamping of American clean energy policies to prioritize innovation and cost declines.

The rewards for smart policy reform now are enormous: with global energy markets hungry for clean, affordable energy technologies and clean tech markets continuing to mature and improve, this is exactly the time for America to secure its leadership in clean tech.

Click here to download the full report, titled "Beyond Boom and Bust: Putting Clean Tech on a Path to Subsidy Independence."

Clean energy sectors have surged in recent years, driven by both private sector innovation and entrepreneurship and a historic expansion of federal support for clean tech sectors. Renewable electricity production has expanded; prices have fallen for wind, solar, advanced batteries, and other clean tech products; and construction has begun on the first US nuclear reactors in decades. Clean tech firms were among the few to add jobs during the depths of the great recession, with employment in the sector expanding 12 percent from 2007 to 2010.

Yet clean tech owes much of this growth to historic federal policy support, which the new report estimates will total $150 billion from 2009 to 2014 - a three-fold expansion from cumulative 2002-2008 totals.

Now, much of that support is set to decline, as stimulus funds dry up and a number of tax credits and other programs reach their sunset dates or volumetric limits. Without Congressional action, federal clean tech support is slated to plunge 75 percent from 2009 to 2014, the report estimates.

America is now at a key inflection point, with federal clean tech funding this year set to decline 50 percent from 2011 levels.

Clean tech segments examined in the report include renewable power, nuclear, carbon capture, energy efficiency, high-speed rail, smart-grid, biofuels, electric and plug-in vehicles, and advanced batteries. While the specific impacts of declining federal support on these clean tech segments differently, several sectors are likely to experience new headwinds.

Despite a 27 percent improvement in wind turbine prices from 2008 to 2011, the boom in cheap shale gas has moved the goal posts for wind power, which is now cost competitive without subsidy only at the best wind sites near existing transmission lines. Solar prices have plummeted in the last few years and are now within reach of "grid parity" with retail electricity prices in several sunny states with high-electricity costs. Yet rooftop installations are only fully subsidy independent in Hawaii, with its extremely high electricity costs, and without subsidy, central station solar PV and thermal plants cannot yet compete in wholesale markets against low-cost gas plants. An American renaissance for nuclear power will also be severely limited unless capital costs for new reactors fall significantly.

See Breakthrough Institute fact sheet, "Gas Boom Poses New Challenges for Renewables and Nuclear."

Costs pose barriers to electric and plug-in hybrid vehicles and advanced biofuels as well. And smart grid, high-speed rail, and many energy efficiency technologies require policy support to overcome infrastructure, finance, and other barriers to adoption.

Yet this is exactly the wrong time for America to walk away from these clean energy technologies.

What's needed is renewed support for clean tech sectors that charts a new path toward subsidy independence. Policy makers should reform clean energy subsidies to reward innovation and help to develop a robust industry that can thrive without public subsidies.

The headwinds facing clean energy technologies are more the result of growth and success than a sign of mounting failure. Like any fast-growing sector, the boom in clean tech markets has attracted numerous new competitors. And as clean energy industries grow to become more substantial contributors to America's energy mix, the costs of the subsidies once necessary to jumpstart industry growth are mounting. A renewed focus on innovation and technology improvement is the key to overcoming both challenges.

What should a smarter deployment policy designed to spur both market demand and continual innovation look like?

The authors recommend policies that provide sufficient certainty for investment decisions, but also set expectations that subsidy levels will decline over time. They would promote a diverse energy portfolio and maximize the impact of taxpayer resources by limiting transaction costs and ensuring clean tech can efficiently access affordable private capital. And they would reward innovators who deliver better prices or performance.

Whether through tax credits or payments for clean power producers, consumer rebates for electric vehicle purchase, or performance standards for new vehicles, fuels, or power plants, a new suite of clean tech deployment policies must simultaneously drive both market demand and continual innovation.

But subsidy reform alone will not be enough. The United States must also leverage its strengths as an innovation leader and increase funding for energy research and development. It must support a robust innovation system that harnesses advanced manufacturing capabilities, regional industry clusters, and a high-skilled energy workforce.

In exchange for sustained support, policy makers should demand that industry focus laser-like on reducing costs through innovation. Cost-competitiveness with fossil fuels is achievable. But until that point, clean tech companies will remain under threat of subsidy-expiration and political uncertainty. Innovation is the only route beyond the policy-driven boom and bust cycles that imperil the industry.

The time has come for a new clean-energy framework, one that accelerates technology innovation and reduces costs, guarantees that scarce public resources will be used wisely, and continues the maturation of the nation's most competitive clean tech industries.

If industry leaders and policy makers alike make innovation their guiding principle, clean energy can both power America and fuel exports to energy-hungry global markets.

Click here to download the full report.

Read on for the Executive Summary of the report...

"Beyond Boom and Bust" - Executive Summary

In the absence of significant and timely energy policy reform, the recent boom in US clean tech sectors could falter.

Driven by private innovation and entrepreneurship as well as critical public sector support in the form of tax credits, grants, and loan guarantees, several clean energy technology (or "clean tech") segments have grown robustly in recent years while making progress on cost and performance.

Renewable electricity generation doubled from 2006 to 2011, construction is under way on the nation's first new nuclear power plants in decades, and American manufacturers have regained market share in advanced batteries and vehicles. Prices for solar, wind, and other clean energy technologies fell, while employment in clean tech sectors expanded by almost 12 percent from 2007 to 2010, adding more than 70,000 jobs even during the height of the recession.

Despite this recent success, however, nearly all clean tech segments in the United States remain reliant on production and deployment subsidies or other supportive policies to gain an expanding foothold in today's energy markets. Now, many of these subsidies and policies are poised to expire--with substantial implications for the clean tech industry.

This report aims to take stock of the coming changes to federal clean tech subsidies and programs (Part 1); examine their likely impact on key clean tech market segments (Part 2); and chart a course of policy reform that can advance the US clean tech industry beyond today's policy-induced cycle of boom and bust (Part 3).
Along the way, this report provides a comprehensive analysis of the spending trajectory of 92 distinct federal policies and programs supporting clean tech sectors over the 2009 to 2014 period. As this analysis illustrates, an era of heightened clean energy spending supported by the American Recovery and Reinvestment Act of 2009 (ARRA) is now coming to an end, coinciding with the expiration of several additional time-delimited tax credits and programs. As a result, key portions of the clean tech industry can now anticipate substantially reduced federal support (see Figure ES1).

At the same time, market subsidies are being cut in several European markets, reducing export opportunities for US clean tech manufacturers and leading to oversupply and declining margins, even as pressure mounts from both low-cost natural gas at home and foreign clean tech manufacturers abroad.

US clean tech sectors therefore face a combination of new challenges, despite the growth and progress achieved in recent years. The specific market impacts will vary by sector (see Part 2). But without timely and targeted policy reform, several sectors are likely to experience more bankruptcies, consolidations, and market contraction ahead.

And yet the demise of the current clean tech subsidy system need not be disastrous. In fact, it may provide an opportunity for needed reform and further industry growth, albeit one that must be carefully approached by both policy makers and business leaders.

Many of today's existing subsidies and clean energy programs, after all, are poorly optimized, characterized by a boom and bust cycle of aid and withdrawal, or in need of thorough revision thanks to either recent progress in the price and performance of subsidized technologies or the mounting fiscal burden imposed by some programs.

The end of the present policy regime therefore offers the opportunity to implement smart reforms that not only avoid a potential "clean tech crash" but also accelerate technological progress and more effectively utilize taxpayer resources. Well-designed policies that successfully drive innovation and industry maturation could provide US clean energy sectors a more stable framework within which to advance towards both subsidy independence and long-term international competitiveness.

Along these lines, this report finds that:

The US federal government will spend just over $150 billion on clean tech over the 2009-2014 period, a more than three-fold increase from the 2002-2008 period.6 We estimate that these investments will leverage an overall cumulative public and private sector investment of $327 billion to $622 billion in US clean tech segments during the 2009 to 2014 period.

Federal clean tech funding is now at a key inflection point however: absent Congressional action, annual clean tech support will be cut nearly in half from 2011 to 2012.

A portion of this scheduled drawdown in federal clean tech spending can be explained by the planned expiration of ARRA-funded programs: roughly a third of total spending over the 2009 to 2014 time period originates from one-time federal stimulus programs.

Including ARRA-funded programs, annual federal clean tech spending is poised to decline to $11 billion by 2014, a 75 percent decline relative to the high of $44.3 billion reached in 2009. Furthermore, by the end of 2014, 70 percent of all federal clean energy policies in place in 2009 will have expired.

Even excluding ARRA funds, a sharp decline in federal support for clean tech sectors is evident, with normal, non-ARRA annual clean tech funding scheduled to decline by more than half, from a peak of $24.3 billion in 2010 to $10.9 billion by 2014.

Nearly three-quarters of all clean energy spending over the 2009-2014 period is directed to subsidize clean technology deployment and adoption, yet this funding is poised to fall sharply. Absent policy action, annual funding for these deployment policies will drop nearly 80 percent from 2009 to 2014, wiping away the large bulk of today's current clean energy deployment regime.

Clean tech manufacturing receives just 8 percent of federal clean tech spending during the 2009- 2014 period. Nearly all of this funding is due to temporary stimulus-supported programs that have already expired, leaving little remaining direct support for US clean tech manufacturing.

US investment in clean energy research, development, and demonstration (RD&D) constitutes roughly 18 percent of federal clean tech spending over 2009-2014. While energy RD&D funding is relatively stable over this period, it averages just $4.7 billion per year, roughly one-half to one-third the optimal funding levels recommended by numerous business leaders, researchers, and national science advisors and far lower than annual investments in other key national innovation priorities, such as space research and exploration ($19 billion), health research ($34 billion), and defense- related research ($81 billion).

In light of these budgetary findings, this report concludes that policy makers and business leaders need to unite behind timely energy policy reform that supports US innovation, rewards continual improvements in clean tech price and performance, and secures subsidy independence for clean tech markets as rapidly as possible.

Click here for a full summary of policy recommendations.

The key implications of this report's analysis are:

The maintenance of perpetual subsidies is not a sustainable solution to the new challenges facing the US clean tech industry. Clean tech markets in America have lurched from boom to bust for decades, and the root cause remains the same: the higher costs and risks of emerging US clean tech products relative to either incumbent fossil energy technologies or lower-cost international competitors, which make US clean tech sectors dependent on subsidy and policy support.

Cost competitiveness is achievable, but until technological innovation and cost declines can secure independence from ongoing subsidy, clean tech segments will remain continually imperiled by the threat of policy expiration and political uncertainty. Continual improvement in price and performance is thus the only real pathway beyond the cycle of clean tech boom and bust.

Maintaining a viable US clean tech industry will require policy makers to reform the nation's myriad energy subsidies, which should be optimized to drive improvements in technology price and performance and ensure clean tech segments achieve subsidy independence as rapidly as possible.

Federal clean energy policies should reward firms for continually improving the performance and reducing the cost of their technologies, or for inventing and commercializing next-generation, advanced energy technologies, not simply for deploying current-generation technologies without advancing them towards subsidy independence.

Energy subsidies should be temporary and targeted to drive the maturation and improvement of emerging technologies. Just as subsidies for clean tech sectors should phase out as these sectors mature, it is long-past time to end subsidies for well-established fossil energy production methods and technologies as well.

The United States can leverage its strengths as an innovation leader and accelerate the pathway to clean tech subsidy independence by increasing funding for energy RD&D, accelerating advanced energy technology commercialization, and harnessing the advanced manufacturing capabilities, regional industry clusters, and high-skilled energy workforce that are crucial to a robust innovation system.

Establishing subsidy independent, highly innovative US clean tech markets will also position US firms to compete effectively in growing international markets for clean energy products. With the right reforms, the United States has the opportunity to be a leader in the invention and production of next-generation technologies for sale to an energy-hungry global market.