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Rush to deploy clean energy tech is costly recipe for failure -- report

Environmentalists' push to rapidly deploy existing clean energy technology instead of focusing on innovation will be an expensive and possibly failed path for reducing heat-trapping carbon emissions, according to a report released today by a nonpartisan Washington, D.C., think tank.

The Information Technology and Innovation Foundation report calls for emphasizing five phases of innovation -- not just deployment -- to bring about energy breakthroughs that countries will want out of "self-interest."

The five phases of the "innovation ecosystem" are research, development, demonstration, market formation and, finally, deployment.

The "deployment consensus," the report says, has ruled recent clean energy policy.

In the past three years, 71 percent of direct federal investments in clean energy went to deployment and public investment tripled in deployment and procurement, while R&D and demonstration projects were steady or declined.

Since the expiration of the 2009 stimulus act, public investments in research, development and demonstration projects fell 30 percent to $5.1 billion, while investments in tax expenditures for clean energy almost tripled to $10.9 billion in fiscal 2011 before falling to $6.5 billion in fiscal 2012, the report says.

The difference, the report says, is that deployment tends to emphasize "incremental" innovation that lowers the cost of existing technologies, while transformational innovation that would advance the reductions in carbon emissions is paid "lip service" and is underfunded.

Launched in 2006, ITIF promotes federal innovation policy on a wide range of fronts -- from environmental protection to defense, health care and telecommunications. The report released by the group today tries to explain the "deployment consensus" problem by comparing it to a push to colonize the moon with Apollo-age technology.

"Achieving widespread renewable energy adoption with existing technologies is technically feasible -- the United States achieved multiple moon landings over the course of the Apollo program -- and given enough funding, a colony could conceivably be established," the report says. "But the amount of investment required for realizing this future would be astronomical and the performance of such a colony would not meet high standards of health, food, water, and safety, similar to renewable energy intermittency not meeting the reliability standards of energy consumers."

Policies supporting deployment, the report says, "can help support innovation, particularly if these policies tie the deployment of next-generation, breakthrough technologies to cost and performance improvements, called 'smart' deployment. In short, advancing globally cost-competitive clean energy solutions to climate change requires a shift from a Deployment Consensus to an Innovation Consensus."

Deployment advocates, overall, underestimate the storage and integration issues of clean energy on the grid; focus too much on just wind, solar and water; argue that regulations will sufficiently spur innovation; and focus too much on just what will work in the U.S. when it is a global issue, the report says.

Instead, what is necessary is a substantial boost in global investment in research, development and demonstration -- $15 billion annually in the United States alone; dedicated revenue streams for innovation; improved government procurement of next-generation technologies; reformation of the national laboratory system; and revised deployment policies so that cost reductions and performance improvement are tied to the objectives, the report says.

Joseph Romm, a fellow at the Center for American Progress -- whom the report highlights as a key figure in the "deploy, deploy, deploy" environmental policy -- said the report presents a false choice.

"The ITIF report is pure nonsense," Romm said in an email. "Analysis by the International Energy Agency makes clear that key clean energy technologies have an experience curve or learning curve whereby growth in the marketplace inevitably drives down prices. While the 'majority of clean energy advocates' support continued R&D -- contrary to the false choice ITIF seems to present -- we understand that achieving the goal of lower prices for clean energy is best done through a combination of policies that include R&D, but emphasize deployment."

'More than one way to skin this cat'

In a panel discussion on the report at ITIF's office in Washington, Armond Cohen, executive director of the Clean Air Task Force, said the wind industry is facing a plateau in cost reductions because of the skewed emphasis on deployment.

Companies would rather just use current technologies to get the investment tax credits rather than employing newer wind technology that could start to address the issues of dispatching the wind generation at the right time and integration onto the grid -- both key issues for the adoption of higher amounts of wind.

Cohen agreed with the report's idea of having "smart deployment" that linked deployment to innovation. For example, he said, the recent California mandate that utilities use 1.3 gigawatts of energy storage by 2020 does not have any focus on innovation, and utilities will instead just use the current less-efficient technologies "off the shelf."

"My guess is what they come up with is a lot of big battery packs," he said. "It might get us to how to better mass-produce it, but there isn't going to be a lot of innovation."

It is important to acknowledge the success of the traditional deployment policy but perhaps prepare policymakers to be open to the next generation of programs or additional ways of spending money, he added.

"Political conversation can open up a lot of ways to see that there is more than one way to skin this cat," he said.

Margot Anderson, executive director of the Energy Project at the Bipartisan Policy Center, said the key fear about eliminating policies like the production tax credit for renewables is that "nothing replaces them."

"Having the kind of conversation you are trying to push is important," she said. "Is it better to keep the PTC or try to change it around the edges, or hope to pick up something else at a later date," especially in the current political environment?

But, she noted, states have a great opportunity to work with and think about smart deployment as they try to meet upcoming U.S. EPA requirements for emissions from power plants.

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