Transforming U.S. Energy Innovation

The United States and the world need a revolution in energy technology—a revolution that would improve the performance of our energy systems to face the challenges ahead. A dramatic increase in the pace of energy innovation is crucial to meet the challenges of: Energy and national security, to address the dangers of undue reliance on dwindling supplies of oil increasingly concentrated in some of the most volatile regions of the world, and to limit the connection between nuclear energy and the spread of nuclear weapons; Environmental sustainability, to reduce the wide range of environmental damages due to energy production and use, from fine particulate emissions at coal plants, to oil spills, to global climate disruption; and Economic competitiveness, to seize a significant share of the multi-trillion-dollar clean energy technology market and improve the balance of payments by increasing exports, while reducing the hundreds of billions of dollars spent every year on importing oil. In an intensely competitive and interdependent global landscape, and in the face of large climate risks from ongoing U.S. reliance on a fossil-fuel based energy system, it is important to maintain and expand long-term investments in the energy future of the U.S. even at a time of budget stringency. It is equally necessary to think about how to improve the efficiency of those investments, through strengthening U.S. energy innovation institutions, providing expanded incentives for private-sector innovation, and seizing opportunities where international cooperation can accelerate innovation. The private sector role is key: in the United States the vast majority of the energy system is owned by private enterprises, whose innovation and technology deployment decisions drive much of the country’s overall energy systems. Efficiently utilizing government investments in energy innovation requires understanding the market incentives that drive private firms to invest in advanced energy technologies, including policy stability and predictability.