From Transition to Transformation: Meeting the Energy Challenges of Today and Tomorrow

Tuesday, September 16, 2008
Financial Times-World Energy Council Conference

It’s hard to imagine a group more central to the urgent question of how to transform our energy landscape, and I’m pleased to join you in this vital conversation. Given the topic of your conference, “Investment Opportunities in Clean Energy Businesses,” it may seem odd that a university president was asked to speak. But as many of you may know, the Massachusetts Institute of Technology (MIT) is different from most universities. MIT has always been intensely concerned with solving real world problems. We have a long track record of developing breakthroughs that spur revolutionary change and a long history of moving ideas from the mind to the marketplace.

Today, I want to talk about how we see the energy challenge, some of the directions we are pursuing, short-term and long-term, and how we can join forces with people in both traditional and alternative energy businesses to chart the path ahead.

First, however, I want to start with a story. Exactly 100 years ago, in 1908, the same year that his revolutionary Model T reached full mass production, Henry Ford gave his wife, Clara, a present that was the height of fashion: not a hat, but an electric car. It was the first of three she would acquire over the next ten years. Though its battery charge carried it only 40 miles, Clara Ford’s beloved car beat the Model T in every other way, except its price tag. It was clean. It was quiet. It started up every time without the difficult, dangerous and unreliable business of cranking the engine. For all those reasons, electric cars were wildly popular with society women like Clara Ford. At last they had an elegant, independent way to motor about town paying calls, without having to drag their husbands along. In addition, because electric cars were also very expensive, they became a huge status symbol.

Today, of course, we long for a clean, quiet, reliable, mass-produced way to wean ourselves from fossil fuel and the internal combustion engine. So why haven’t the intervening 100 years produced 100 years’ worth of electric car innovations? In the United States, at least, the electric car was doomed by three developments: first, policy – a 50% funding match for state highway construction, which spawned hundreds of miles of navigable roads – more than electric cars could handle; then, technology – the invention of the electric starter motor, which allowed you to drive away with the turn of a key, not the athletic feat of crank-starting the engine; and finally, sociology – the simple fact of the association of the electric car with women. Because early electric cars appealed so much to women, they didn't appeal to men, and at the time, women didn’t have the economic power to sway the market in cars, a factor that might not have applied today.

Ultimately, of course, all the momentum in transportation technology shifted to internal combustion. And in the long era of cheap gasoline, now just a memory, automakers had very little incentive to invest aggressively in the one strategy that could overcome the electric car’s limited range: the long, unpredictable process of basic research, in search of better batteries.

Today, however, the incentives run distinctly the other way, and the vital importance of that kind of basic research is what I want to talk about. Let me begin with an MIT perspective. Almost two years ago, MIT launched an ambitious, broad-based Energy Initiative, an effort we call MITEI. MITEI unites the best talent from across the Institute to tackle energy issues – from basic science, to new technologies, to new designs for buildings and cityscapes, to policy and economics. Importantly, MITEI also links us to industry, through sponsors and allies ranging from established energy suppliers to alternative energy firms.

Our guiding idea is that no one knows what the whole answer on energy will be. That’s especially true given the vexing question of scale – how to make new technologies work at, say, the scale of a billion households. Yet, if most experts are predicting a doubling of worldwide energy use by 2050 or sooner – we obviously can’t wait until we know the perfect answer. We cannot let the perfect be the enemy of the good. We have to pursue a portfolio of options: transitional strategies that will buy us time in the short-term and transformational technologies that will alter the landscape down the road.

At MIT we're working on both transition and transformation. Let me give you an example, starting with a transitional issue. Let’s say we wanted to make electric cars viable on a national scale. But to stabilize the climate, we still need a way to produce the electricity for those cars, without increasing the production of CO2.

What are the options? Let’s look at some transitional ideas. We can pursue nuclear power, and I believe we must. MIT helped give birth to the field of nuclear engineering, and we continue to be nuclear pioneers. But the challenges – in terms of safety, cost and waste disposal, not to mention public resistance – remain daunting. We’ve embarked on a new study on the fuel cycle, to lay out a path to more efficient, safer ways to deal with nuclear waste.

Another option is coal, if we can find an affordable way to make it clean. Given its sheer abundance, it is going to be used, so it is imperative that we find ways to mitigate its release of CO2. The atmosphere has a limited capacity to absorb CO2, and we are exhausting this finite resource.

The truth is that while carbon capture and sequestration are fine ideas, we all know that the technology is simply not ready. CO2 capture today is neither efficient nor economic. Sequestration is being done on a small scale in a few places, but nowhere at a scale that approaches what’s necessary. Let me explain what I mean by scale. Just to produce the electricity we need, the average American unwittingly consumes about 20 pounds of coal a day. In aggregate, as we know from a landmark MIT study on the future of coal, “The United States produces about 1.5 billion tons per year of CO2 from coal-burning power plants. If all of this CO2 [were] transported for sequestration, the quantity is equivalent to three times the weight … of the annual volume of natural gas transported by the U.S. gas pipeline system.” Moreover, while the US is burning all this coal, China already burns more than twice as much. That is what I mean by the challenge of scale.

Given the scope of the energy challenge, we need to work all of our transitional options, including clean coal, safe nuclear power, and improved efficiency of cars, buildings, and transportation. These technologies can help move us part way to the goal. To achieve a bright, clean, low-carbon energy future, however, we will also need bold transformational approaches.

At MIT, among many new technologies, we have a particular focus on the transformational power of solar. Why the sun? It’s like what Willie Sutton said when they asked him why he robbed banks: “Because that’s where the money is!” We are betting on the sun because that is where the energy is: the amount of sunlight that reaches the Earth’s surface in an hour contains enough energy to meet the world’s current energy needs for a year. At MIT, a significant cadre of faculty members is using the cutting-edge tools of nanotechnology, materials modeling and biotechnology to make solar a realistic competitive choice. One promising recent development came this summer from Professor Mark Baldo, who has developed a breakthrough solar concentrator that increases the power obtained from solar cells by several factors without needing to track the sun.

Now, let’s take another look at the electric car. From Clara Ford’s day right up to the present, the core weakness of electric cars has been their batteries: too big, too heavy, too expensive, too dangerous, and they only carry you 40 to 50 miles. However, that story may be about to change, thanks to recent groundbreaking research into the nature of materials, conducted at MIT. These discoveries are already powering a whole new generation of safe, high-power, quick-charging lithium ion batteries, now on the market for power tools and other applications. In a few years, we should see an automotive version that could turn the electric car from a quaint, pricey, boutique option to an affordable, mainstream solution.

A quick aside: of course, the challenge of storing electricity is not just about cars. Storage is the rate-limiting technology for all alternative technologies. At MIT, we’re working on several leading-edge battery technologies, from carbon nanotube-based ultracapacitors, to benign viruses that self-assemble into battery components. We’re pursuing new-generation fuel cells, and we’ve recently had success with artificial photosynthesis, with the development of an inexpensive catalyst to cleave water into hydrogen and oxygen.

At a time when the world is hungry for energy answers, it’s easy to get excited about such new technologies, the transitional and the transformational. However, turning any of these laboratory possibilities into practical marketplace answers, in time to make a difference, will depend on broad, sustained investment in basic energy research on a scale that we’ve never seen before. At least in the United States, we’re not making that kind of ambitious investment, and I believe most other countries are in the same position.

In the U.S., over the last several decades federal funding for energy research has dwindled to the point of near irrelevance. In 1980, 10 percent of federal research dollars went to energy. Today it is an embarrassing two percent. Nor can we count on private industry to take up the slack. In 2004, corporate energy R&D stood at just $1.2 billion in today’s dollars, representing less than one quarter of one percent of revenues. That is wildly out of step with any industry that depends on innovation. Just for comparison, pharmaceutical companies invest 18% of revenues in R&D. Semiconductor firms invest 16%. Even the U.S. auto industry invests 3.3%. Investment by energy companies in R&D of less than one quarter of one percent will not produce an energy revolution. In addition, while we welcome a 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.

Needless to say, at MIT we are working hard to reverse this troubling decline in federal commitment; I have been in Washington a great deal lately, making this same case to Congress. However, we also recognize that much progress can be made with other partners, through visionary private philanthropy and through sponsored research relationships with a range of companies. MIT’s energy initiative is largely based on industry partnerships, which will accelerate the translation of great new ideas into the marketplace.

Like you, at MIT we know what it takes to change the game on big, complex problems. We have an innovation ecosystem that is second to none. And we know there is no time to lose. If the world had spent a century improving Clara Ford’s electric car, we might all be in a different, brighter place today; to arrive at a brighter tomorrow, together we must do everything we can to increase public and private investment in fundamental energy research. Speaking for MIT, we look forward to the challenge, and we welcome the opportunity to learn from and work with industry leaders like you.