Statement at the National Press Club on Energy R&D

Wednesday, September 17, 2008

All of us on this panel are here because we believe that America’s future depends on its ability to spark an energy revolution.

To power such innovation, our nation urgently needs to make a broad, coordinated commitment to energy research – a commitment of historic proportions – led by aggressive federal funding for basic energy research.

In the search for new energy answers, the scope of the challenge is so great that it demands intensive effort at every point along the research-and-development (R&D) spectrum, from the most fundamental scientific discovery research to the most applied pre-market development. From the Lawrence Berkeley Lab and MIT, to Dupont and Intersil, this panel exemplifies the breadth, intensity and unity of effort that the moment demands. I hope our presence here, as a united front, makes plain the urgency and obviousness of our message.

In any scientific or technical field, innovative solutions that reach the marketplace represent the flowering of research seeds planted years or even decades before. In the last quarter century, America has reaped the rewards of two innovation revolutions, in information technology and biotechnology. These revolutions launched entirely new industries, created millions of jobs, vastly improved our overall productivity and produced virtually all the technologies that account for our modern quality of life.

Where did those revolutions spring from? From the seeds of basic, federally funded research. Today, America badly needs an energy revolution, and funding basic research will once again pave the path to the goal.

To frame today’s discussion, let me describe America’s challenge in energy and energy research funding, and explain how we might transform that challenge into an opportunity.

We all know our tangled, triple knot of difficult problems: first, a shaky economy, battered by many forces including volatile energy prices; second, a geopolitical situation weighed down by issues of energy consumption and security; and third, mounting evidence of global climate change.

Each knot is daunting on its own, and the three are profoundly tied together. Fortunately, we have the power to loosen all those knots at once with a dramatic new level of federal investment in energy R&D. If one advance could transform America’s prospects, it would be having a range of clean, renewable, low-carbon energy technologies, ready to power our cars, our buildings and our industries, at scale, while creating jobs and protecting the planet.

If we want to own those future technologies, there is only one path: research.

Yet in the last several decades, federal funding for energy research has dwindled to the point of irrelevance. In 1980, 10%of federal research dollars went to energy. Today, when we really need energy answers, it is an embarrassing 2%.

Research investment by US energy companies has mirrored the drop in federally funded research. In 2004, the energy industry invested less than one quarter of one percent of revenues in R&D. This level is wildly out of step with any industry that depends on innovation. Pharmaceutical companies invest 18% of their revenues in R&D. Semiconductor firms invest 16%. Even the auto industry invests 3.3%. With current levels of federal and industry investment, we cannot expect an energy revolution. Moreover, while we welcome the recent surge in venture funding for “green” technologies, the fact is that venture money flows not to revolutionary research, but to near-market-ready ideas, the very last phase of the “D” in R&D.

While industry must support development and commercialization, only government can prime the pump of research.

In these uncertain times, why should taxpayers support increased investment in basic research? Because the same kind of research investment has paid off so spectacularly before. Let me give just two examples: Over the past 30 years, federal research funding allowed the National Institutes of Health to invest $4 per American per year on cardiac research. That investment has cut deaths from strokes and heart attacks by 63 percent. In those same decades, federal research funding also turned AIDS from a death sentence into a treatable chronic disease, with tremendous savings in health care costs and human suffering, and increased economic productivity from people remaining in the work force.

Now imagine the same payoff measured in electric cars, safe nuclear technology or a smart new grid. The potential here, from the economy to global security to the climate, is boundless.

Yet we are not the only ones who are in this game. If we fail to make major strategic investments in energy research now, we will swiftly forfeit the advantage to others, from China and India to Germany and Japan. Other countries have the money and motivation, and they are chasing the technology as fast as they can. We must make sure that in the energy technology markets of the future, we have the power to invent, produce and sell, not the obligation to buy.

How much should we invest in energy R&D? Let’s start with how much the federal government spends today. The total depends on which programs one counts, but recognized authorities put the number for 2006 at between $2.4 and 3.4 billion. For comparison, that is less than half of what our largest pharmaceutical company alone spends on R&D every year. In today’s dollars, it is about two percent of the total price of the Apollo program.

A range of experts, including the business-led Council on Competitiveness in a statement last week, recommends that federal energy research must climb to three or even ten times the current level.

In my view, the nation needs to increase energy R&D sharply, moving promptly to triple the current level, and then increasing further as the Department of Energy builds its capacity to translate basic research to the marketplace. To establish firm funding guidelines, industry, government and universities must come together to create a detailed energy R&D roadmap. Speaking for MIT, and I suspect for my fellow panelists, we would be honored to help in such a strategic plan.

Let me close with a little perspective from my seat at MIT.

For my generation of scientists and engineers, the Apollo mission was our inspiration, the galvanizing event that showed the vast power of science and technology to create change. Today at MIT, our students see energy as their Apollo, their generation’s new cause and driving mission. Our student-led Energy Club, with more than 700 members, is likely the largest, most active student group at MIT. Most of these students see energy as the path for their careers. But if federal research funding continues the roller-coaster course it has ridden since 1980, so that these young people see no hope for the level of investment and research that they know is required, they will set their sights on different paths.

MIT’s campus sits on a triangle of land in East Cambridge. Surrounding that triangle sit a couple of hundred companies, products of the last two innovation waves, IT and biotech – because MIT researchers played a crucial role in both.

Today, through the MIT Energy Initiative (or MITEI), our faculty members and students are pioneering breakthrough energy technologies. MITEI has a dual focus, first, transitional technologies, like second-generation biofuels, clean coal, and safer, more efficient nuclear power; and second, transformational technologies, including strategies to capture energy from the sun, wind and waves, and store energy in next-generation batteries.

Not surprisingly, now energy companies large and small are sprouting up in our neighborhood, too. In the Boston region, there are already about 70 new energy firms. The question is, will we give these new entrants, and those around the nation, the strength to grow and thrive, to create the kind of strong jobs and innovative energy answers the nation needs so badly?

Will America lead this global revolution and reap the rewards? Or will other countries with clearer vision lead the way?

Today, as we face the triple knot of economic insecurity, energy insecurity and global climate change, we should also see an opportunity, a profoundly hopeful, practical path to America’s future, through rapid, sustained, broad-based and intensive investment in basic energy research.