Tamar Hallerman
GHG Monitor
10/25/13
Environmentalists focus far too much of their time on deploying current clean energy technologies and should instead advocate more for an innovation-based agenda that emphasizes RD&D funding, according to a report this week from a nonpartisan D.C. think tank. The Information Technology and Innovation Foundation (ITIF) says in an Oct. 23 report that basic science RD&D work could provide more of a payoff for clean energy innovation in the long term than regulation and subsidies alone for current technologies. “While deployment policies can incrementally lower costs of existing technologies, obtaining the dramatic cost declines necessary to make clean energy as cheap as fossil fuels requires an innovation strategy that invests throughout the innovation ecosystem, with a particular focus on significantly more funding for applied clean energy research,” according to the report.
The assessment challenges what it calls the ‘clean energy deployment consensus,’ a school of thought that argues that the world has all of the low-carbon technologies it needs to adequately address climate change and that all that’s lacking is the political will to mandate and subsidize their deployment. ITIF says that view is flawed, glossing over major challenges like the “significantly higher costs” of clean energy technologies, scale-up challenges and issues related to grid integration and energy storage. It says that too much emphasis is placed on the idea that governments will invest in expensive technology to mitigate climate change strictly on moral grounds. “The world will not widely adopt more expensive energy sources or the policies needed to implement them, regardless of how loud the climate alarm bells are. Rather, the key to mitigating climate change is to make clean energy cheap enough to replace conventional energy without mandates, subsidies, or carbon taxes,” according to the report. “And the key to making this ideal a reality is to strategically invest in a comprehensive clean energy innovation ecosystem in the United States and internationally.”
Report Says U.S. Must Triple RD&D Investment
Governments like the U.S., according to the report, have prioritized policies supporting regulation and subsidies—which the report says could provide some incremental benefits in lowering the costs of existing technologies—above supporting an innovation agenda with R&D work that could find the leapfrog technologies that could be game-changers in ultimately lowering costs. The report said that between fiscal years 2009 and 2012, 71 percent of direct federal investments in clean energy went to deployment via energy efficiency grants, alternative fuel credits and energy production and investment tax credit programs for wind and solar. During that same post-American Recovery and Reinvestment Act period, public investments in RD&D projects decreased by 30 percent to $5.1 billion, according to the report. “Public investment in deployment and procurement nearly tripled, while investment in research, development, and demonstration projects either remained steady or declined,” the report says.
ITIF says in the report that only when clean energy is cheaper than fossil fuels will it be deployed on a wide scale, “not out of civic mindedness, but out of self-interest.” “And the only way for that to happen is through a robust global clean energy innovation strategy,” the report adds. ITIF contends that environmental groups and others should put their political weight behind an innovation-heavy energy policy strategy, pushing policymakers to increase public investments in energy RD&D globally. Specifically, the report says the U.S. needs to triple its RD&D investment to $15 billion annually, as well as create a source of dedicated revenue streams to support public investment in energy innovation using mechanisms like a carbon tax or redirecting revenue from oil and gas drilling on federal lands. The report says that the national lab system should also be reformed to better support clean energy innovation, as well as better address the so-called “valley of death,” the bridge the gap between initial research and commercialization.
Climate Investment ‘Plateaued’
Meanwhile, another study published this week by the nonprofit the Climate Policy Initiative has found that global climate change investment “plateaued” in 2012 at $359 billion worldwide—roughly the same as the year before. The report, “The Global Landscape of Climate Finance 2013,” says that clean energy investment is “falls far short of what’s needed” and “falling further behind each year.” The study says the amount of investment is far behind pace of the additional $5 trillion needed globally by the end of the decade in order to limit global average temperatures to two degrees Celsius above preindustrial levels, the max for minimizing the impacts of climate change, according to the International Energy Agency.
The report said the public sector played a key role in that investment, but that the private sector provided the “lion’s share” of that investment. Public sources provided $135 billion, or 38 percent of global funding, to fight climate change and played a “critical role” in enabling private finance through incentives, low-cost loans, risk coverage mechanisms, direct project investment and technical support. The report said that the public money helped facilitate an additional $224 billion, or 62 percent, of private investment to address climate from project developers, manufacturers, corporations and households. “Investment to combat and adapt to climate change is happening around the world, but it’s short of where it needs to be and efforts to grow it have not been successful enough,” Executive Director of Climate Policy Initiative Thomas Heller said in a statement. “Leveling the playing field can help unlock significant additional finance.” It said that money spent on clean energy was also “dwarfed” by government spending on fossil fuel energy consumption and production, which the study put at $523 billion worldwide in 2012.