By Jim Hurd, Director, GreenScience Exchange
The United States is at a critical crossroads in its energy policy and the Obama administration is promising to completely reshape our energy objectives.
We’re in a global race to develop renewable energy technologies – to compete with leading countries in Europe and with dynamic initiatives in China and Asia. New York Times columnist Tom Friedman makes this clear in his newest book, Hot, Flat and Crowded, as he warns that the US must be a leader in “ET” or Energy Technologies – the next multi-hundred billion dollar creation of global wealth.
To compete, the US has to be strong in each of the four stages of the energy innovation ecosystem:
1) Research; 2) Development; 3) Commercialization; and 4) Scale-Up and Job Creation
In the last stage of “scale up and job creation,” we will see extensive green projects in the economic stimulus package. These will create jobs through the building of wind, solar and other renewable energy projects. But another critical place for the incoming administration to focus funding is that first stage of the energy technology continuum – research.
We also need to make sure that we are strengthening near-term home run technologies that may be two to six years away from scale-up and job creation. This is where the investments of corporations and venture capitalists are key. The buy-in and added expertise of these two groups is needed to successfully mainstreaming a technology.
Example: Cellulosic Ethanol
One example of a technology in this stage is cellulosic ethanol – clearly a home run technology that the US could quite possibly export to great profit. Cellulosic ethanol is currently moving from the development stage towards commercialization. The US must maintain its leadership position regarding this technology now that its full economic potential is coming into view.
Also, the federal government is currently paying its farmers not to farm 50 million acres of land – a vast resource that could be used to grow grasses for cellulosic ethanol while simultaneously improving the soil.
A great example to watch here is Mascoma Corporation, which has raised about $100 million in equity investments, and brought in even more in state and federal grants. Mascoma has developed a partnership with Michigan Governor Jennifer Grandholm, whose state is developing a major cellulosic fuel production facility that uses non-food biomass to convert woodchips into fuel. The company has received $26 million from the US Department of Energy and $23.5 million from Michigan to build a plant.
What is significant about this project is that it is a rare example of a leading start-up technology company that is working with state and federal government agencies and major corporations to scale-up and build major projects. The Obama administration should be looking to foster more of this kind of initiative.
We also need to do a better job of bringing promising new technologies through the “Valley of Death,” the fraught path from laboratory to the beginning of the search venture capital or other forms of private investment. Normally, private investors need to be paid back on this kind of investment within six or seven years, and usually much sooner.
Some of the leading technologies in use today took 10 years or more to commercialize successfully. Renewable energy technologies often take longer than most to mature. On Capitol Hill, Republicans have often avoided funding the Advanced Technology Program, which focused on helping technologies cross the Valley of Death, insisting that government should not be picking winners and losers in the private sector.
Kelly Carnes, former Assistant Secretary of Commerce for Technology Policy, and current President of TechVision21–an innovation policy consulting firm, says:
“The Valley of Death for renewable energy technologies is particularly deep and wide. Government funding and policies to promote prototyping, scale-up, and large scale pilot and demonstration efforts are essential to moving the US toward the twin goals of energy security and competitiveness.”
We need to wrestle with the challenges that the Valley of Death causes or we will begin to lag in ET. If we don’t move forward sharply – including even if we have to pick winners – we will lose out to more agile counterparts.
The US must come first in the race to transition to new energy technologies. As John Doerr, the leading Silicon Valley venture capitalist, warned in his testimony before the Senate on January 8th, 2009, we have already lost our leadership position. Mark my words, this transition will not be easy!
Jim Hurd is Director of nanotechnology thinktank GreenScience Exchange.