Accelerating Energy Innovation

Jonathan Ortmans, President, Public Forum Institute

President Obama has made it a priority to address one of America’s greatest challenges, meeting energy demand in a sustainable way by transforming the ways we produce and consume energy. He assembled a team that could help him in this task, such as science adviser John Holdren, Energy Secretary Steven Chu and energy adviser Carol Browner. Congress in turn is working on climate change legislation that could foster a new wave of energy innovation. Senators John Kerry and Joe Lieberman have recently unveiled their new energy bill that would introduce fees on carbon emissions. Other recent developments in Washington have included entrepreneurs, which signals a government push to leverage their risk-taking behavior and the power of individual innovators.

Last month, I joined over 140 participants at a White House Energy Innovation Conference sponsored by the Kauffman Foundation to discuss how to accelerate energy innovation, and support entrepreneurs and small businesses in the energy sector. I encountered many entrepreneurs and innovators among leaders from the federal and state governments, academia, the private sector and the nonprofit sector. Given the nature of the energy challenge, the ability of our nation to innovate in energy requires the risk-taking, ingenuity and determination of entrepreneurs.

As Kristina Johnson, Under Secretary of Energy, put it the morning of the conference: “Where larger firms and corporations provide the heft to help energy technologies reach global markets, small businesses thrive at the other end of the spectrum, in the innovation of new energy products and services... The challenge is one of staying power, or ensuring that small businesses have the resources to graduate to each stage in the development process—from idea to marketplace.” It is therefore critical that entrepreneurs participate in designing the foundation upon which they are expected to build by innovating and creating the jobs of the future.

Among the concerns cited by the attendees included near- and long-term limitations, such as short-term costs, restricted financing options, and the lack of a straightforward way to know if and when new technologies can be deployed due to regulations that vary from state to state. Participants agreed that all challenges should be addressed in a strategic, integrated way, leveraging the opportunities offered by each of the sectors represented at the conference (for more detail I recommend Howard W. Buffett’s post on the White House blog). For example, the government can create the legal and policy conditions for energy prosperity. The public sector is also able to draw on large-scale resources. As such, Department of Energy Under Secretary Kristina Johnson announced that $60 million of the American Recovery and Reinvestment Act funds will be channeled toward supporting clean tech small businesses that are participating in the Small Business Innovation Research/Small Business Technology Transfer (SBIR/STTR) program. Third sector organizations, such as the Kauffman Foundation, in turn offered to contribute with their strategic thinking about innovation commercialization and ability to build relationships between multiple stakeholders.

We will hear more about energy innovation and cross-sector partnerships in the coming months. At the May conference, it was also announced that a series of regional follow-on meetings would take place over the next few months, beginning in Omaha, Nebraska on June 16, 2010. The challenge now is to figure out how to achieve progress in developing and commercializing green technologies without turning the government into an obstacle to the entrepreneurial innovation needed to successfully address the climate change and economic crises. Throughout American history, entrepreneurial innovators have driven the solution to the great challenges that confront us. Clean energy is no different.  Entrepreneur Desh Deshpande reminded us that the same accidental innovations that transform markets can be found in this traditionally big business sector by breaking big problems up into small pieces and focusing on fostering innovation in local markets. With a $150 billion R&D budget, the Obama Administration has plenty of leverage to usher in a new approach to technology transfer that incentivizes moving innovations into the marketplace faster. Government must be consistent in messaging around its stated policy to encourage faster market entry and new firm formation.  It must also be cautious about where it deploys federal dollars in an effort to avoid creating businesses dependent on federal dollars.  If government though continues to focus on keeping a clear path for the easy implementation of new ideas from the new smaller players in the sector, I think America can be bullish about the future of clean energy.

 

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Jonathan Ortmans is president of the Public Forum Institute, a non-partisan organization dedicated to fostering dialogue on important policy issues. In this capacity, he leads the Policy Dialogue on Entrepreneurship, focused on public policies to promote entrepreneurship in the U.S. and around the world. In addition, he serves as a senior fellow at the Kauffman Foundation.

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