Energy innovation something government can foster

With the continuing economic crisis dominating the news, a ray of hope that government funding can spur valuable energy innovation recently went largely unnoticed. The Department of Defense awarded three prizes for $1 million, $500,000, and $250,000 for creating a wearable energy system that fits on the vests currently worn by troops in Iraq and Afghanistan. The million-dollar winner: a methanol fuel cell battery with a longer charge life and less than half the weight of those often carried by troops today.

This is a good example of government doing things right. Erratic gasoline prices and even shortages in some states have driven home that the energy sector is in critical need of change. And on the security side, this election cycle has brought the concerns of Americans over sending billions of petrodollars abroad to the forefront of national debate. The nation’s reliance on oil for 96 percent of transportation fuel shifts power to governments unconcerned with or even hostile to U.S. interests, and its reliance on coal for half of the electricity produced is ravaging the environment and contributing to climate change.

Such problems —- dual national security and economic challenges —- are not solved easily. It is far less complicated and less costly to invest in cleaner, domestic energy sources.

Energy security has become a top national priority. But the question of the proper role of government —- what can the government actually accomplish? —- still looms large.

Despite the federal government’s bad track record at picking technology winners —- witness the boondoggle of the Synthetic Fuels Corp. in the 1980s —- it has seen great successes in advancing technology through demand. When leaders in Washington seek private-sector partnerships to meet critical needs, especially in military technology, the demand created pulls innovation along at a faster pace. Large government purchases of new technologies will not only drive the economy, much needed in today’s conditions, but will increase the rate of those inventions coming to scale for affordable public consumption.

As lenders are going under or tightening the purse strings, many new companies vital to increasing the use of solar, wind and other sustainable energy sources have wondered whether they will be able to research and design new products and increase production in the coming years. Large-scale energy projects such as continuing to increase renewable energy generation on the nation’s military bases can help create a demand signal in the market strong enough to build on the energy innovation momentum of recent years in spite of the nation’s financial difficulties.

Increasing the demand for new energy sources will create jobs and stimulate an economic recovery. We’ve heard much rhetoric declaring this point, but evidence is even better: In September 2008, a solar company announced plans for a new plant in Oregon that will create about 200 new jobs, many almost immediately. By the U.S. government’s own calculations, producing 20 percent of the nation’s energy with wind power by 2030 could directly create at least 150,000 new jobs. Companies participating in the Pentagon’s wearable energy contest ranged from big corporations to small businesses to two brothers tinkering in their garage, showing that government investment can have a positive impact on American businesses of all sizes.

Efforts such as the Pentagon’s wearable energy prize do not guarantee that new energy technologies will be commercialized, but the evidence shows clearly that government demand can indeed increase the rate of private-sector innovation: 169 teams originally entered the contest. Indeed, the winning fuel cell was an improved, lighter-weight combination of energy technologies already commercially available. In one small program, the government showcased that it can improve the lives of its troops and inspire the private sector to innovate at the same time. With government leveraging its demand signal potential, American businesses are clearly willing to innovate and produce —- and boost the economy in the process —- to solve them.

> Christine Parthemore is a researcher on energy and environmental security issues at the Center for a New American Security in Washington, D.C.