Oil executives testifying before Congress in May.

Oil executives testifying before Congress in May.

Reporting on BP’s imbroglio in the Gulf of Mexico, Peter Coy of Businessweek finds that energy companies are neglecting long-term investments in research and development at the price of technological breakthroughs:

“Energy companies worldwide are far less science-oriented than one might expect from an industry that is heavily dependent on technology for safety and profit. In the U.S., energy companies’ spending on research, development, and deployment amounts to just 0.3 percent of sales. That’s barely more than a tenth what the auto industry spends as a share of sales and is dwarfed by the pharmaceutical industry, which spends nearly 19 percent of sales.”

He goes on to ponder the shortcomings of public investments in innovation:

“But government R&D spending on energy has been scarce, too. It was less than 0.03 percent of U.S. gross domestic product as of 2007, about one-third the share in Japan. The dearth of investment in energy R&D helps explain why the world is still getting its energy by punching holes in the sea floor rather than from safer, renewable sources such as the sun and the wind.”

Coy cites attempts by Republicans to cut funding from the America COMPETES Act, which only narrowly passed the House last month despite the gimmickry of some Members, as some of the “formidable obstacles” public innovation investments face in Washington:

“Representative Ralph Hall, the ranking Republican on the House Science & Technology Committee, tried in May to cut about $40 billion from the $86 billion sought by House Democrats for the America COMPETES Act, which funds federal research and math and science education. ‘We must be mindful of our spending if America is to continue to compete globally,’ Hall said then. The House eventually voted to reauthorize the act without Hall’s cuts, while the Senate hasn’t yet acted. Even if Congress agrees to authorize the full $86 billion, funding could still be cut in the appropriations process.”

As the American Energy Innovation Council (AEIC) announced earlier this week, and as the Breakthrough Institute and Americans for Energy Leadership have concluded, at least $16 billion of annual federal investments in clean energy technology research, development, and demonstration is needed to spur breakthrough innovations.

An energy proposal is due in the Senate this July, and President Obama is scheduled to meet with Senate leaders next week to focus those discussions.


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