When President Obama and key Senate leaders meet today to reach a compromise on energy and climate legislation, they should strongly consider increasing federal investment in clean energy technology to at least $15 billion annually. This is a comprehensive third way strategy to improve U.S. energy independence, economic competitiveness, and climate security, and it deserves bipartisan support.

We are a Democrat and Republican. One of us campaigned for Barack Obama in 2008, the other as a delegate for John McCain. One of us worked on energy and climate policy for the progressive Breakthrough Institute, while the other worked on similar issues for the conservative American Enterprise Institute. We disagree on a wide range of issues, and we hold different economic philosophies.

Despite our differences, we are strongly united behind a serious federal agenda for clean energy innovation. Regardless of the future of cap and trade, robust federal investment in clean energy technology can effectively tackle both energy and climate policy reform. In addition to reducing our oil addiction, it can help build new export-oriented and manufacturing-intensive industries, seize global market share, drive down the price of clean energy technologies, and accelerate the transition to a cleaner, low-carbon economy.

When the United States aims to overcome a challenge — be it defeating fascism, leading the space race, or winning the Cold War — we make a national commitment and invest the necessary resources. The federal government invests $30 billion per year in health R&D through the National Institutes of Health, and $80 billion per year in military R&D. Energy currently receives $3 to $5 billion — less than our national expenditure on potato chips.

Unfortunately, current Senate proposals such as Kerry-Lieberman fall far too short by only investing $2-4 billion per year, and a utility-only cap would reserve even less. As Mark Muro of Brookings Institution writes in the National Journal, “The trouble with the new utility-only approach to emissions reductions, however, is that none of its proponents are saying anything that makes it seem likely that an adequate slice of the potential revenue the narrower system might generate will be reserved for technology innovation.”

After decades of energy stalemate, in the midst of yet another oil crisis, it is time to make a real national commitment to technology innovation and secure America’s energy leadership once and for all. A new target of at least $15-20 billion per year represents a national “energy innovation consensus” supported by a large and growing number of prominent U.S. business leaders, think tanks, university associations, and dozens of Nobel Laureates.

The American Energy Innovation Council (AEIC) is the latest group to support this approach. Led by business titans Bill Gates and Jeff Immelt, and backed by the Bipartisan Policy Center, the organization is calling for $16 billion annually in federal investment. “Underfunding RD&D is an exercise in gross fiscal irresponsibility,” they wrote. “The country sends $1 billion overseas every day to purchase oil, but publicly funded research in advanced vehicles and alternative fuels totals just $680 million annually – about 16 hours worth of oil imports.”

Federal investment in energy technology can also be a political winner for Congressional Democrats, Republicans, and the White House alike. Even before the Gulf oil spill, a poll by Pew Research in March found that 78% of the public favors increased government funding for research into clean energy technologies. When compared to alternatives such as carbon pricing, technology investment fairs as the most popular energy policy proposal.

For Democratic leaders, this strategy would allow them to meet general public demand for reform while still satisfying their environmental base with a major achievement on clean energy. It would allow Republicans to offer a serious, pro-business alternative to cap and trade and “drill baby drill” that would boost the economy. And it would allow the White House to declare victory on President Obama’s original campaign promise to invest $15 billion per year in this sector.

Of course, Republicans tend to shy away from any proposal to increase government spending, but clean energy is a strategic national resource with too much risk for the private sector to bear alone. Republicans should also remember the strong conservative precedent for these types of public investment. President Eisenhower oversaw the initial science R&D surge after Sputnik and the construction of interstate highways. President Reagan made enormous investments in military technology to maintain U.S. competitiveness.

More recently, it was Newt Gingrich who in 2008 called for the National Science Foundation’s budget to triple from $6 to 18 billion to foster green technologies. Last year, Senator Lamar Alexander (R-TN) introduced the Clean Energy Act of 2009, which would invest $750 million annually for ten years in clean energy RD&D and provide $100 billion in clean energy loan guarantees. And Senator Richard Lugar’s Practical Energy and Climate Plan of 2010 would similarly offer $36 billion in loans for nuclear power plants.

Without cap and trade, the government will need an alternative revenue stream. The AEIC proposes several possibilities, such as a wires fee on electricity, reduced fossil fuel subsidies, fees on offshore oil and natural gas production, an oil import fee, or increasing the gas tax. Regardless, their report notes, “The essential requirements, though, are that we make the basic investment, and that we commit these funds, steadily, over the long term.”

The moment is urgent. As this week’s Time Magazine cover story states, “Clean power could be to the 21st century what aeronautics and the computer were to the 20th, but the U.S. is already falling behind. China, South Korea and Japan are set to invest more than $500 billion combined in clean technology over the next five years, while the U.S. is likely to invest less than $200 billion, and that’s assuming [current] clean-energy legislation makes it into law.”

Federal investment in energy innovation is in line with America’s great tradition of technological achievement, and it can finally tackle our fossil fuel addition, accelerate the transition to energy independence, and boost our economic competitiveness, all in one bold step. This is a bipartisan strategy for energy leadership, and it deserves the support of Democrats, Republicans, and Independents alike.

–
Teryn Norris is Director of Americans for Energy Leadership and Senior Advisor at the Breakthrough Institute. Clifton Yin recently worked for the American Enterprise Institute and is a Policy Fellow at Americans for Energy Leadership.

Apollo Alliance: “Winning the Race: How America Can Lead the Global Clean Energy Economy,” March 2010

Center for American Progress: “Out of the Running? How Germany, Spain, and China Are Seizing the Energy Opportunity and Why the United States Risks Getting Left Behind,” March 2010

The Breakthrough Institute and Information Technology & Innovation Foundation released a major report in November 2009 on this topic called “Rising Tigers, Sleeping Giants,” which provides more analysis on China, South Korea, and Japan compared to the United States.

(However, as previously noted by this blog, the Senate bill in its current form has far less federal investment in clean energy technology development and deployment than what many experts, and the White House, have called for.)

Some of the reasons Congressional action cannot wait? In addition to concerns about climate change (which only continue to mount in severity), the editorial cites issues of national competitiveness at stake:

• China is “moving aggressively to create jobs in the clean-energy industry. Beijing not only plans to generate 15 percent of its energy from renewable sources by 2020, but hopes to become the world’s leading exporter of clean energy technologies. Five years ago, it had no presence at all in the wind manufacturing industry; today it has 70 manufacturers. It is rapidly becoming a world leader in solar power, with one-third of the world’s manufacturing capacity.”
• The U.S. faces a “question of credibility.” At COP15, the US pledged to “meet at least the House’s 17 percent target. Success in the Senate is essential to delivering on that pledge. Failure would undo many of the good things [Obama] achieved in Copenhagen, and it would give reluctant powers like China an excuse to duck their pledges.” [Not sure about this last sentence with regard to China, which agreed to a voluntary carbon intensity reduction unilaterally ... and they probably mean to keep it.]
• Finally, the editorial notes, “the ‘jobs argument’ should impress the Senate … The climate change bills pending in the Senate would not begin to bite for several years, when the recession should be over. The cost to households, according to the Congressional Budget Office, would be small. A good program would create more jobs than it cost.”

Unfortunately, things look a bit hazy, despite Harry Reid’s earlier announcement that the climate bill was on the agenda for March. The editorial worries that “many Democrats as well as Republicans seem willing to settle for what would be the third energy bill in five years—loans for nuclear power, mandates for renewable energy, new standards for energy efficiency. These are all useful steps. But the only sure way to unlock the  investments required to transform the way the country produces and delivers energy is to put a price on carbon.” (This presumably refers to investment from private capital markets and not government-sponsored programs or federal investment.)

A couple other relevant notes:

1) Tree Hugger asks: Could Scott Brown’s Victory Be Good for Clean Energy Reform?

2) As we saw at COP15, international action on climate often seems to hinge on U.S. domestic politics.

As Reuters AlertNet reports, “It’s hard to imagine an upset in one U.S. Senate race could derail plans for a new international climate change treaty.” But “the U.S. Democratic party’s loss of a long-held Senate seat in Massachusetts this week, to Republican Scott Brown, means getting key climate change legislation passed in the United States just got a lot harder. And without willingness by the U.S. — the world’s historically largest carbon emitter — to commit to ambitious cuts in emissions, few other nations will feel pressure to be ambitious in their own plans.”

Canada, for example, is concerned about the legislative stall in its southern neighbor and what it will mean for their own energy system.

There are real worries that a minority in the Senate – 41 people — can simply hold the entire world’s efforts hostage, either by preventing action at home by the world’s second-largest emitter (reduces incentives for others to act, makes agreement harder to reach by not living up to “common but differentiated responsibilities”) or simply refusing to allow the U.S. to take part in an international regime.

It should be noted that those 41 senators would not all be from the same political party, as support for climate action is coming from both sides of the aisle. John Kerry (D), Lindsey Graham (R), and Joe Lieberman (I) recently visited the White House to discuss a bipartisan climate bill, and a coalition may be in the works that will be able to pass it. (Boston Globe)