Whatever one’s view of climate change, it makes economic sense for the United States to become a leader in clean energy. With a market expected to reach $2.2 trillion annually by 2020,1 clean energy technologies are rapidly becoming the preference of energy customers worldwide. The technologies that are on the market today are a good first step towards reducing greenhouse gas emissions and conventional pollutants. But on their own, they won’t be able to solve the global environmental problem while meeting the world’s growing energy needs.2 To do this, we need breakthrough technologies. True innovation in clean energy isn’t easy, requiring massive upfront investment and consistent political support.3 Maintaining our historic competitive advantage in innovation, however, will lead to new American industries and jobs, a stronger economy, and a more sustainable world.4
From cars to computers to the Internet, America has produced many of the world-changing innovations of the past century,5 creating billion-dollar industries6 from nothing and helping double the standard of living in the U.S. every 35 years.7 But we’ve been slipping. The U.S. is now ranked 10th on the Global Innovation Index behind countries like Singapore and the U.K.8 When it comes to clean energy innovation, we’re even further behind, ranking 12th on cleantech9 -specific innovation factors.10
Innovation, and particularly the big, fundamental innovation needed in clean energy, requires resources in three categories: investment, knowledge, and economic infrastructure.11 Each is complicated and difficult to address alone, but even more challenging simultaneously. Without smart policies in all three categories, the U.S. has no hope of catching up with other world leaders in clean energy, much less creating the breakthroughs we need.
First, investment, both from the public sector and the private sector, is the lifeblood of innovation. From funding basic research12 to serving as an anchor customer, the federal government has a long history of providing the capital needed to jumpstart industries.13 Unlike recent innovation booms spurred by the Internet, clean energy usually requires large amounts of capital and long timeframes that make traditional private investment insufficient.14 As a result, many promising cleantech companies find themselves in a “valley of death”15 between technology development (financed by venture capital) and commercialization (financed by income or public markets), with no access to the capital needed to keep innovating.16 In these cases, there is a role for strategic government investment to help get these potentially revolutionary technologies to scale.
Second, even with enough capital to fully develop and commercialize new technologies, the U.S. needs the right people with the right knowledge to create these innovations. Americans lack the strong science, technology, engineering, and mathematics (STEM) backgrounds to advance clean energy and opportunities to pursue these interests in top-notch research labs.17 Unfortunately, as the demand for clean energy has risen, the United States has fallen behind in producing engineers and encouraging foreign-born researchers to stay, leading to a lag in research in several relevant fields.18
Finally, creating the right economic infrastructure for innovation to thrive is complicated, covering a range of factors from law and market maturity to governance. While the U.S. generally ranks highly against other countries in many of these areas, such as providing strong protection for intellectual property, there are deficits in others.19 Of particular damage to clean energy innovation are the current unstable policy environment, domestic manufacturing decline,20 and marketplace uncertainty.21
To jumpstart American development of the clean energy technologies, the U.S. should implement some pragmatic policies in the near-term.