Energy Innovation: Overhaul or Tweak? (11/3/11)

Energy Innovation: Overhaul or Tweak? Severin Borenstein, Co-director, Energy Institute, Haas School of Business, UC Berkeley Richard Lester, Director, MIT Industrial Performance Center Dan Reicher, Executive Director, Steyer-Taylor Center for Energy Policy and Finance, Stanford America’s innovation engine is the envy of the world, yet it struggles to deploy new technology at the scale commensurate with its economic might. This panel of experts from three of the nation’s leading universities says that the U.S. risks falling behind if it refuses to address the technical, financial, and political barriers slowing energy innovation. Richard Lester, Director, MIT Industrial Performance Center, lays out what he calls the three waves of energy innovation: energy efficiency in this decade; the scaling of low- or de-carbonized energy supply technologies beginning in 2020 and running through about 2050; and breakthroughs we don’t even know about today, or may know about but are in the lab stage, but that can take decades to mature. Dan Reicher, Executive Director, Steyer-Taylor Center for Energy Policy and Finance, Stanford University, is especially bullish on the promise of Lester’s first wave, energy efficiency. “It is the low-hanging fruit, and it’s also the low-hanging fruit that grows back. We don’t use it up,” he says. Reicher says that energy efficiency and other low-carbon technologies are needlessly held back because we ignore one or more critical criteria: technology, policy, and finance. And even when easy efficiency gains are there to be had, such as in new cars, says Severin Borenstein, Co-Director, Energy Institute, Haas School of Business, UC Berkeley, we are slow to act. “The technologies are getting better, but gasoline, for the most part, remains cheap. When you ask people how much they need to save to drive a smaller car, it’s a lot more than most people are willing to give up,” he says. These difficulties and more – think our broken political system – have convinced Richard Lester that a new approach, one not dependent upon raising the price of energy, is necessary. “It may be time for a shift in the policy debate to focus less on what is certainly the key requirement of increasing the price of energy to reflect these costs and focusing more on the other half of the equation, which is figuring out how to reduce the cost of the things that we actually want, which are low-carbon energy technologies and efficiency,” he says. Dan Reicher shares Lester’s concern about our broken politics, particularly as it is manifested in the GOP focus on the bankruptcy of Solyndra. “We may be demanding that anything that we put money into has got to show very reliable, very quick success. And not allow for what innovation requires, which is placing bets,” he says. Severin Borenstein urges policymakers to ramp up funding for basic science research, in part because he is pessimistic that existing renewable energy technologies will be sufficient. “The technologies that are going to solve this problem don’t exist yet,” he says, adding that “most of the technologies that exist don’t have the potential to be cost-effective with fossil fuels.” “We can’t take our eye off the price on carbon,” he says. This program was recorded in front of a live audience at The Commonwealth Club in San Francisco on November 3, 2011

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