Oil has climbed to over $100 a barrel and there's historical unrest in oil-producing countries of the Middle East. Yet, at times it's hard to tell how strong this country's commitment to clean-energy technologies is.
A vivid example is the Advanced Research Projects Agency-Energy (ARPA-E), which was funded two years ago to research potential breakthrough energy technologies and determine their commercial potential.
The U.S. prides itself on its technology and many people believe that innovation will revitalize our economy. Economic competitiveness was perhaps the dominant theme at the ARPA-E Summit, a conference held last week. Yet in the continuing resolution budget, the House allocated $50 million for ARPA-E in fiscal year 2011, chopping the Energy Department's requested budget by $250 million.
It's another example of the zigzag nature of U.S. energy policy, which provides financial incentives to promote fossil fuel alternatives but the duration of the commitment is often in question. Another looming example: a program to provide grants instead of tax credits for renewable-energy projects was extended in the final moments of the last Congress, but only for one year. In a few months, that will create uncertainty for financiers just as it did last year.
I stumbled into another instance of short-term thinking at the MIT Energy Conference in Boston on Saturday while speaking with a venture capitalist. When I asked him what his mood was regarding clean-tech investing, he sighed and said investing in energy and materials can be a tough sell within his firm.
Imagine the scene: one investor touts a digital-media company that has the potential to mint millions in a few short years. By contrast, the field of green tech covering energy, materials, and water can be a long, hard slog. It may take years to develop the science and much more money to bring any product to market at a meaningful scale. Vacillating U.S. policy certainly doesn't help, this investor said.
What's the battle plan?
If you go to enough energy conferences, you will regularly hear the mantra that the U.S. needs a consistent, long-term energy policy. You didn't need to look too hard to hear that repeated at the MIT Energy Conference.
There was a session on strategic materials and energy, where a panel of experts discussed the importance of rare earth elements and other "energy-critical" materials. The supply of these materials, used in hybrid cars, efficient lighting, and defense systems, isn't an acute problem today. But mining new sources and technology research for alternatives and cleaner extraction methods typically takes five to 15 years, panelists said.
The U.S. was the primary global supplier of rare earth elements in the 1970s but now the world's focus has turned to China, which supplies some 95 percent of rare earths and last year restricted its exports to Japan. "China has done us an immense favor by raising the visibility of these issues before the supply constraints occur," said MIT physics professor Robert Jaffe, who chaired a recent study on energy-critical elements from the American Physical Society's Panel on Public Affairs. (Click for PDF.)
In a panel on the military and energy, oil was, not surprisingly, the top topic. The Defense Department is starting to experiment with renewable electricity and biofuels in an effort to lessen its dependence on transporting fuels to its bases and generally reduce oil imports.
Because military forces pay high energy costs, both in dollar terms and because of security vulnerabilities, the Defense Department is seen as a potential customer for many green technologies. The Navy has an ambitious program to cut its fossil fuel use in half by 2020.
Panelists agreed it's unlikely that the U.S. in the short term will pass legislation to limit carbon emissions to encourage development of low-carbon energy sources. But former CIA head James Woolsey argued that the national defense reasons for cutting OPEC's control are just as strong as environmental reasons.
"If you're moving away from oil, it kind of doesn't matter why as long as you're moving fast," Woolsey said.