Capitalizing on Federal R&D Investment With a New Energy-Tech Foundation
Clean energy is one of the great business opportunities of the 21st century. Tesla’s market capitalization is not only bigger than GM and Ford combined – it’s bigger than Exxon-Mobil, too. Orsted – formerly the Danish state oil company, which leads the world in wind energy projects – is bigger than oil “supermajor” BP and is well on its way to becoming the first green supermajor.
There is much more to come in the future. To make the transition to a global energy system that is consistent with widely-held environmental and economic goals, the International Energy Agency projects that annual investment on the order of $3 trillion annually will be needed for the next three decades.
The U.S. Department of Energy’s (DOE) world-leading support for research and development (R&D) has created the potential for American entrepreneurs to lead the energy transition and reap many of its rewards. But, Tesla notwithstanding, the United States is not yet capitalizing on this opportunity as it should. Too many promising, home-grown clean energy technologies are falling into the fabled “valley of death,” where companies fail because they cannot turn great ideas into products or services that someone is willing to pay for.
This gap in the nation’s innovation system has opened the way for other countries, notably China, to capitalize on U.S. investments, and it could slow the energy transition as a whole.
A new, non-profit Energy Technology Commercialization Foundation (ETCF) that works closely with DOE could help fill the gap. Drawing on precedents set by other congressionally-authorized agency-related foundations, ETCF would help DOE to create partnerships with the private sector and philanthropic organizations to power new clean energy technologies through the “valley of death.”
The notion of a private foundation that is closely associated with a government agency is well established. The National Park Foundation was set up in 1935. Our research for the Information Technology and Innovation Foundation turned up many others, with missions ranging from agricultural research to public land stewardship to advancing military medicine. This year alone, the CDC Foundation (CDCF) has raised $110 million from the public to fight COVID-19.
Such foundations allow agencies to advance their missions in flexible and collaborative ways. They receive Congressional authorization to solicit private donations to support research, education, and other activities that aid the agency and its stakeholders. They can carry out these activities with less burdensome red tape than their parent agencies. The agency-related foundation is a successful model that has helped develop new pathways to cancer drugs, a better understanding of rare diseases, new agriculture practices, human vaccines, and expanded coastal resilience efforts.
In its 2019 “green paper” on technology transfer across the federal government, the National Institute of Standards and Technology (NIST), recommended the creation of agency-related foundations as one way to maximize the innovation outcomes from federal investments in R&D.
If Congress authorized an ETCF, it would have unique access to the world’s largest network of energy researchers and entrepreneurs, centered on DOE’s “crown jewels,” its 17 national laboratories. ETCF donors would be able to leverage this tremendous intellectual and physical infrastructure to accelerate the commercialization of technologies to respond to national challenges that cut across sectoral, regional, and disciplinary borders and confound our current innovation system.
One example is the decarbonization of maritime transportation. This sector is responsible for about 3 percent of global carbon emissions. Eliminating these emissions will require an array of new technologies for shipboard power, port operations, and other functions. But the many government agencies involved in working with this sector are hamstrung by cumbersome rules and turf battles. A new foundation could create a platform to coordinate the key actors and mobilize investment rapidly and effectively. China is already moving aggressively to seize global leadership in this industry, while the United States lags. Agriculture, mining, construction, and manufacturing are just a few of the other sectors that pose similar cross-cutting challenges while facing stiff international competition.
DOE spends about $8 billion per year on energy R&D. This investment is producing great science. Recent reforms, like programs that provide national lab scientists with entrepreneurship training and give non-DOE entrepreneurs access to the national labs’ expertise and facilities, have helped it begin to narrow the “valley of death.” But we need to move faster. Neither our international competitors nor global environmental challenges will wait.
The American Energy Innovation Council, a group of 12 current and former CEOs and investors, is among the many business, academic, and research organizations that has endorsed the establishment of a non-profit, private foundation to work with DOE to accelerate technology commercialization, noting that it could “attract significant private capital.” Bipartisan legislation has been introduced in both chambers to this end, which has gained the support of at least 24 scientific and energy organizations. That legislation is scheduled to receive a hearing from the House Science, Space, and Technology Committee on July 17, 2020.