An argument for a major federal program to stimulate innovation in energy technology and a proposal for a policy approach to implement it. America is addicted to fossil fuels, and the environmental and geopolitical costs are mounting. A public-private program—at an expanded scale—to stimulate innovation in energy policy seems essential. In Structuring an Energy Technology Revolution, Charles Weiss and William Bonvillian make the case for just such a program. Their proposal backs measures to stimulate private investment in new technology, within a revamped energy innovation system. It would encourage a broad range of innovations that would give policymakers a variety of technological options over the long implementation period and at the huge scale required, faster than could be accomplished by market forces alone. Even if the nation can't make progress at this time on pricing carbon, a technology strategy remains critical and can go ahead now. Strong leadership and public support will be needed to resist the pressure of entrenched interests against putting new technology pathways into practice in the complex and established energy sector. This book has helped start the process.
The US national innovation system has a dual structure: part suited to rapid innovation, and part stubbornly resistant to change. The complex, established 'Legacy sectors' that resist change, particularly disruptive innovation, share common features that obstruct the market launch of innovations, over and above the 'valley of death' and other obstacles that have been the traditional focus of innovation policy. Innovations in Legacy sectors must penetrate a wellestablished and well-defended technological/economic/political/social paradigm that favours existing technology, characterised by (1) 'perverse' subsidies and price structures that create a mismatch between the incentives of producers and broader social goals, such as environmental sustainability, public health and safety, and geopolitical security; (2) established infrastructure and institutional architecture that imposes regulatory hurdles or other disadvantages to new entrants (3) market imperfections beyond those faced by other innovations: network economies, lumpiness, economies of scale, split incentives, needs for collective action, and transaction costs (4) politically powerful vested interests, reinforced by public support, that defend the paradigm and resist innovations that threaten their business models (5) public habits and expectations attuned to existing technology and (6) an established knowledge and human resources structure adapted to its needs. Beyond these obstacles, more socially desirable technologies that are driven by environmental or other non-market considerations must overcome the lack of agreed replacement standards against which putative alternatives can be judged. We have developed a new, integrative analytic framework for categorising the obstacles to market launch faced by Legacy sectors, and earlier applied this method to energy, health delivery, the long-distance electric grid, building, and air transport. In energy especially, the requirement for innovation is sufficiently urgent that large-scale domestic and collaborative international research should take place even at the cost of possible competitive disadvantage and even if it is some time before the USA adopts carbon charges and thereby puts pressure on the prevailing paradigm of fossil fuel use. We now extend this method to sustainable agriculture. American paradigms in agriculture and in energy are exported worldwide, delaying the development and spread of needed innovations that are not consistent with them. Foreign manufacturers wishing to enter US markets must suit their products in these sectors to American paradigms, while American exports of technology may be insufficiently cost conscious or respectful of environmental sustainability. Developing countries are technology takers and suffer from asymmetric innovative capability. They need to choose sources of technology best suited to their situation. India and China constitute new competitive threats, but also represent 'innovative developing countries' that have large domestic markets in which they are launchin...
U.S. innovation is heavy on early-stage R&D; it requires additional focus on manufacturing stages.
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