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$15 billion: The New Energy Target

Now Google is in. In compelling testimony to the Energy and Public Works Committee last week, the director of climate change and energy initiatives for the company's philanthropy (, Dan Reicher, mounted a powerful argument that the federal government should invest at least $15 billion a year of climate bill revenues in clean energy research and development. Declared Reicher:

Putting a price on carbon, while absolutely necessary, is not sufficient to address the climate problem and importantly, will not put the U.S. in the position to seize the extraordinary opportunities that will come with rebuilding to global energy economy.

And he continued:

Unfortunately, no matter how you measure it, U.S. government investment in clear energy R&D is woefully inadequate… Chairman Boxer, it is essential that Congress address this serious energy R&D short-fall by incorporating President Obama’s goal of $15 billion per year in federal energy R&D spending in final climate legislation.

This is good. The U.S. energy innovation community is a potentially powerful political force, populated as it is by entrepreneurs, leading-edge entrepreneurs, corporations, scientists, inventors, and VCs. And yet, until recently this community has remained diffuse and under-organized—nearly AWOL in Washington. But now that may be changing, with the accumulation of a series of strong recent statements supporting a high target for energy innovation investments. In addition to Google, the nation’s leading public and land grant universities recently supported this investment goal, as did a group of 34 Nobel laureates in an open letter to President Obama. Among think tanks, the Metro Program here at Brookingsthe Breakthrough Institute, and Third Way are among the organizations that are also behind this target.

Such a convergence is overdue and welcome politically, as the need for new clean energy technologies has been overshadowed by the strong focus of the environmental movement on a cap-and-trade regulatory response to greenhouse gas emissions. But the agreement on a new, big goal for federal research responses is also important simply for further clarifying the scale of the work ahead and strengthening fact-based analytic arguments for greater national investment.

The $15 billion goal is not arbitrary, after all,  and parallels arguments mounted here and elsewhere that we need a new federal paradigm for energy research that moves aggressively to bring total U.S. energy R&D spending closer to the research intensity levels of other advanced industries as a percentage of company sales. Along those lines, while the huge energy industry spends just 1 percent of its sales on research, the corresponding figures for health care and agriculture are around 2 percent and 2.4 percent respectively, and upwards of 10 percent for pharmaceuticals and information technology--a target eyed by Energy Secretary Chu himself. By this measure, total public and private resources for energy research should come to at least $25 to $30 billion annually at the low end. So a federal “ask” of $15 billion a year is not unreasonable and actually quite modest.

As for where we are in climate-bill discussions on this front, we are not where we need to be. To be blunt, the Kerry-Boxer starting point on energy R&D remains far, far below Google’s target and woefully inadequate. Most notably, the current bill would reserve just 1.9 percent of cap-trade revenues (an estimated $1.4 billion per year) for energy research activities such as those through the Advanced Research Projects Agency-Energy (ARPA-E) and a newly proposed regional network of commercialization-oriented Clean Energy Innovation Centers. That means the Senate needs to get at least another zero behind its initial offering. 

Maybe now that Google is engaged, with its famous two “O’s,” we’ll get them.