By: Bryant Cannon, Legal Researcher
“In America, innovation doesn’t just change our lives. It is how we make our living.” – President Obama, 2011 State of the Union Address.
With the 2011 State of the Union followed by “Innovation Week” at the White House, the Obama Administration has made innovation, with a special emphasis on clean energy, central to its agenda and political fortunes. But to know the true measure of governmental support, and assess whether clean energy innovation will indeed flourish, it is necessary to take a probing look at the financial and policy tools deployed to usher in the highly touted clean energy revolution. Broadly, the policies promoted by the White House reaffirm what have been identified as the key to economic success for years – educating children and supporting advanced research will improve the supply of talent and ideas, facilitating market-driven mechanisms will incent entrepreneurs, and investing in infrastructure will promote the synergistic flow of people and ideas.
Thus, what will define success is not the ingenuity of the policies but the skill of execution. And on this front, the Administration’s ambitious goals might be poised to revolutionize clean energy — from solar, wind, electric car and lithium-ion battery makers, to building efficiency in the commercial sector. Two broad approaches have been adopted: driving innovation with targeted research investments and identifying clean energy goals capable of incentivizing private sector growth.
The 2012 budget possesses strong commitments to spurring innovative energy development. These include significant support for DOE’s Advanced Research Projects Agency-Energy (ARPA-E), long term Energy Innovation Hubs, and the nearly four dozen Energy Frontier Research Centers. These efforts draw upon a history of success and represent global best practices in governmentally facilitated innovation.
For promoting clean energy business growth, the Administration has identified several robust policies. For example, lithium ion battery makers such as A123 Systems and Ener1 stand to benefit with Obama’s plan for one million electric cars on the road by 2015. By the end of 2011, nine gigawatts of clean energy projects on federal lands will be permitted by developers such as First Solar, MEMC Electronic Materials, and SunPower. Building efficiency goals, one of the least expensive ways to reduce environmental impacts will support companies such as Hubbell, Acuity Brands, and Cooper Industries.
While the current policies clearly facilitate early stage governmental research and growth by established companies, two elements that have proven vitally important in developing ground breaking innovation are not currently part of federal policy. The first element missing is a clear path to commercializing governmental research and the second is facilitation of startups seeking to scale their operations. Thus, while DOE’s programs build upon an established “cluster based approach” to innovation (think Silicon Valley or Boston) they do not provide easy conduits to commercialization. Second, startups drive the majority of innovation and job growth, yet still face the tough slog they always have.
In response, the White House has begun to address these gaps with its launch of Startup America, an initiative aimed at providing a specific and scalable model for facilitating technology transfer, commercialization, and success of high-growth enterprises in the U.S.
We think that Startup America represents a bold step but that its success will require strong commitments and real metrics. First, Startup America does not provide a convincing financing model for the many startups confronting challenges as they seek to access of capital. Second, innovation is a highly localized phenomenon and Startup America will need to recognize this and target each region’s unique challenges as they relate to talent, ideas, capital, or customers. Lastly, Startup America must have urgent deadlines for it to ensure measurable results. While many of these requirements might develop organically with the program, this Apollo moment in clean energy requires that greater substance be paired with an otherwise attractive veneer.
In other words – while we like what we see, we need to make sure that what we see is what we get.