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The Imperative to Accelerate Energy Innovation

The first session of the workshop focused on the status of innovation in the United States and laid the foundation for the workshop’s upcoming discussions. Paul Dabbar, U.S. Department of Energy (DOE), opened the workshop, setting the scene of DOE’s current efforts and programs related to clean energy innovation. David Turk, International Energy Agency (IEA), provided an overview of the U.S. and international energy landscape, describing the impact of the COVID-19 crisis on energy systems as well as the role of innovation in reaching climate change commitments. Arati Prabhakar, Actuate, reflected on the major influences to accelerate innovation, not just including technological advances, but also the interaction of policy, manufacturing, markets, and supply chains. Ellen Williams, University of Maryland, emphasized the importance of orthogonal technologies and regional inclusiveness in improving clean energy innovation outcomes. Following the presentations, David M. Hart, George Mason University, directed questions and moderated discussion between the presenters.

PAUL DABBAR

Undersecretary of Energy for Science, U.S. Department of Energy

Dabbar opened by reflecting on DOE’s strong support for innovation, describing robust levels of financing and support. Dabbar stated that the United States is the largest federal funder globally of basic discovery of new energy technology, including carbon utilization and storage, battery storage,

hydrogen power, next-generation solar and wind, waste heat capture, and advanced fuels. He highlighted the potential in several areas, including lithium-based batteries, nuclear fusion, and renewable natural gas.

DOE is undertaking a variety of activities to aid the deployment of these new energy technologies and improve the innovation pipeline, Dabbar said. He cited the establishment of a chief commercialization officer within the Office of Technology Transitions (OTT) to champion the department’s commercialization and technology transfer activities. DOE has also taken steps to enhance the ability of third parties to utilize the national laboratories’ research capabilities. Dabbar explained that the necessary security precautions required of national laboratory facilities can impede collaboration and outside engagement and that DOE has sought to reduce the physical and bureaucratic barriers to third-party collaboration by streamlining both access to the national laboratories and the necessary legal agreements. Dabbar emphasized that DOE has focused on building out a community through promotion campaigns intended to increase the visibility of the department’s activities. In collaboration with several laboratories, OTT designed the InnovationXLab summits to expand the commercial impact of the substantial investment in the national laboratories’ innovation portfolios. These summits facilitate exchange of information and ideas between industry, universities, manufacturers, investors, and end-use customers with innovators and experts from across the national laboratories and broader DOE research and development (R&D) complex. Dabbar also mentioned the Lab Partnering Service (LPS), an online portfolio enabling access to experts, innovations, and patents from across DOE and the national laboratories. The LPS serves as a conduit between investors, researchers, and innovators, by providing third parties with an index across numerous technology areas and principal investigators (PIs) at the laboratories.

DOE is also looking to proven innovation pathways to inform its efforts, Dabbar said. Drawing from lessons learned from the highly successful SunShot Initiative,¹ in 2020 DOE launched the Energy Storage Grand Challenge² to accelerate the development, commercialization, and utilization of next-generation energy storage technologies. Importantly, its focus is not only on the science and chemistry of technology development but also on the development of a secure domestic manufacturing supply chain, explained Dabbar. DOE is also considering the creation of its own foundation—similar to the Foundation for the National Institutes

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¹ For more information on the Sunshot Initiative, see https://www.energy.gov/eere/solar/sunshot-initiative.

² For more information on the Energy Storage Grand Challenge, see https://www.energy.gov/energy-storage-grand-challenge/energy-storage-grand-challenge.

of Health (NIH)—to raise private-sector funds and create and manage alliances with public and private institutions.

In closing, Dabbar emphasized the importance of regional ecosystems. DOE sees a gap between the innovation it funds in its laboratories and the potential regional impact on those developments. Dabbar said DOE’s focus is to better engage with regional communities by tapping into local universities, governments, capital, and manufacturing capabilities.

DAVID TURK

Acting Deputy Executive Director, Head of the Strategic Initiatives Office, International Energy Agency

Turk began by reviewing the IEA’s latest analysis of global energy systems, with particular focus on the impact of COVID-19. Turk stated that global energy demand in 2020 is set to decline in all major regions as a result of the COVID-19 crisis. The projected 6 percent global decrease is the largest decline since World War II. All fuels, with the exception of renewables, are projected to experience their greatest contractions in demand for decades, Turk said (Figure 1.1).

The IEA projects that disruption from COVID-19 will push 2020 energy investment down by almost $400 billion, Turk said. All parts of the world are affected, but major producers of oil and gas have seen the largest falls. In comparison, clean energy investment has been relatively resilient, Turk continued, but absolute investment in energy transitions remains far short of what would be required for a more sustainable pathway.

Global energy-related CO₂ emissions are on track to fall nearly 8 percent in 2020, to their lowest level in a decade, owing to the COVID-19 crisis. Turk explained that despite these substantial reductions, a sustainable energy pathway calls for continuous efforts and commitment. The unprecedented decline in emissions in 2020 may be only temporary without structural changes. Governments will play a major role in shaping the energy sector’s recovery from the crisis—in particular, through economic stimulus packages. Turk emphasized the major opportunity to link economic recovery efforts with clean energy transitions and steer the global energy system onto a more secure and sustainable path.

The IEA has produced two reports addressing the clean energy path. Tracking Clean Energy Progress is the IEA’s latest assessment of clean energy transitions.³ In 2020, IEA found that only 6 of 46 technologies are currently on track to meet sustainable development goals (Figure 1.2).

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³ IEA, 2020, Tracking Clean Energy Progress, https://www.iea.org/topics/tracking-cleanenergy-progress.

The second report, Sustainable Recovery Plan, describes actions that can be taken over the next 3 years to support economic recovery and jobs while improving the resiliency and sustainability of the energy system.⁴ Turk explained that this plan sets out policies and targeted investments in six key sectors: electricity, transportation, buildings, industry, fuels, and technology innovation. If followed, the plan would make 2019 the definitive peak in global emissions, reducing greenhouse gas (GHG) emissions by 4.5 billion tons and putting nations on a path toward achieving long-term climate goals.

Public energy R&D spending in technology areas that are key priorities for achieving net-zero emissions—including electrification, carbon capture, utilization, and storage, bioenergy, and hydrogen—are well below that of other technologies. Turk reported that 35 percent of the emissions reductions that are needed to reach net-zero will come from technologies that are only at a prototype or demonstration stage; this indicates a need to significantly and rapidly drive innovation. In conclusion, Turk listed the following five key principles to fast-track clean energy innovation: (1) prioritize, track, and adjust; (2) raise public R&D and market-led private innovation; (3) address all links in the value chain; (4) build enabling infrastructure; and (5) work globally for regional success. Turk summarized his remarks, saying, “The best time to have prioritized innovation investment was 10, 20, 30 years in the past. The absolute worst time is years in the future. The second-best time to make investments is now.”

ARATI PRABHAKAR

Founder and CEO, Actuate

Actuate was launched out of a concern that U.S. R&D and innovation systems are not fully addressing some of the critical societal challenges ahead, Prabhakar began. The mission of Actuate is to catalyze the necessary innovations to address those essential challenges, including mitigating climate change. Prabhakar explained that “some parts of the innovation system [for addressing climate change] are working but are not at full scale, and other parts are not.”

Prabhakar presented two examples to illustrate the scope of the climate change challenge. Over the past decade, renewables have scaled much faster than anyone predicted but currently mitigate less than 5 percent of global emissions. Emissions avoided through electrification of transportation accounts for significantly less than that—almost nothing to date. These are considered success stories, but we have barely starting to

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⁴ IEA, 2020, Sustainable Recovery Plan, https://www.iea.org/reports/sustainable-recovery.

move the needle, Prabhakar said. To achieve net-zero emissions, many advances across multiple sectors are required, and those solutions need to be scaled at an unprecedented rate.

In the past decade, the United States has made some essential progress in clean energy innovation. Prabhakar listed two premier examples of important additions to the energy innovation ecosystem: the Advanced Research Projects Agency–Energy (ARPA-E) funding agency and the commercialization fellowship program Activate (formerly Cyclotron Road). Climate solutions are also moved forward by a wave of clean energy-related venture capitalism, led by Breakthrough Energy Ventures, Prime Coalition, and a growing collection of others. However, these encouraging examples are all at the front end of the maturity spectrum and alone will not address an extremely slow innovation pipeline, Prabhakar said. The interactions of manufacturing, supply chains, markets, policy, and finance are the factors that will contribute to technologies reaching scale. Herein lies an opportunity to explore and experiment with these major factors in scale-up to accelerate innovation. Because time is of the essence, the United States cannot wait for solutions to simply bubble up from laboratories and start-ups. Prabhakar closed by stating that while there is much work ahead that must be done well and at a meaningful scale, mitigating the worst damages of climate change will be well worth the journey.

ELLEN WILLIAMS

Distinguished University Professor, University of Maryland

Federal support for clean energy innovation involves incentivizing clean energy R&D at the early stages, recognizing promising discoveries, and moving technology through the pathway to commercial development, opened Williams. The variety of clean technology under development encompasses many growing areas of opportunity, including solar and wind, energy efficiency, advanced materials, energy storage, biotechnology, carbon capture storage and utilization, and advanced fuels. This diversity of technology is a great strength of our energy innovation system, explained Williams.

Williams underscored the value of a broad definition of clean energy technology that encompasses supply-chain components and net reduction of GHG emissions. For every “big-picture” carbon-mitigation technology, hundreds of innovative technologies are needed in its development, deployment, operations, performance improvements, and cost reductions. These types of technology are typically faster to produce and essential in supporting large-scale transitions. Williams also drew attention to technologies that have the potential to significantly impact GHG mitigation

but that are not traditionally considered energy technologies. Many of these technologies involve replacing greenhouse gas-intensive products such as steel, aluminum, fertilizer, concrete, and chemicals. For example, there are chemical and physical processes under development that enable high-strength wood to replace building materials such as steel and concrete. “This is a different, almost orthogonal way of looking at energy innovation. Innovation of innovation itself,” Williams observed.

Williams also noted that orthogonal technologies are typically represented by smaller companies. The rocky road from R&D to clean energy impact for start-up firms is well recognized. In addition to funding for early stages of innovation, Williams described how developmental support including incubation, access to research tools, business mentoring, and networking is a clear differentiating factor in the success of start-up firms. Increasing regional inclusiveness by including clean energy goals linked to regional resources and technology strengths is also essential to improving clean energy innovation outcomes. Williams explained that regional choices provide opportunities for a broader population to both participate and benefit. The impact of these efforts is expanded when actions of state agencies, universities, federal laboratories, nonprofit innovation organizations, utilities programs, and local industry are coordinated. She concluded by emphasizing the importance of coordinating environmental, societal, and economic-development goals.

DISCUSSION

Following the speakers’ remarks, David M. Hart, George Mason University, moderated a discussion session that covered cooperation and competition, priority setting, entrepreneurship and scale, and regional development.

Cooperation and Competition

Asked about the main challenges DOE faces in the commercialization space, Dabbar responded that DOE must work cooperatively with industry partners in the final development stage of technologies that are proven but not ready for mass deployment. Helping to scale technologies is key. Dabbar pointed toward the scaling bioreactor at the National Renewable Energy Laboratory’s (NREL’s) Energy Storage Integration Facility resulting from a partnership between Southern California Gas Company and Electrochaea as a recent example of cooperative development.

When asked to reflect on the role of the United States in global innovation, Turk responded that U.S. leadership on clean energy innovation is critical. The United States has exceptional resources and expertise

embedded in its national laboratories, universities, and public-private partnerships. With that in mind, there is competition to take advantage of the global clean energy marketplace, and other countries are catching up. Hart asked about opportunities for cooperation. Turk emphasized the importance of accurate and timely information to inform smart investment decisions. He also stressed the opportunity to learn from each other and to cooperate on the modalities of innovation. Turk advocated for a model of friendly competition, “Innovation happening one place is good for innovation globally.”

Prioritization

One of Turk’s principles to fast-track innovation is to prioritize and adjust, Hart recalled. How do governments, venture capitalists, and industrial firms make choices on which technologies to prioritize and how do they abandon those technologies that are not succeeding, he asked. Williams responded that setting incentives, such as feed-in tariffs, that align with established priorities pulls forward effective technologies, as opposed to pushing technologies that have not demonstrated a competitive edge. Prabhakar added that in order to set incentives that align with priorities, the federal government must explicitly prioritize tackling climate change, a goal backed by widespread public opinion. Speaking to unsuccessful technologies, she said failure is an intrinsic part of innovation. Prabhakar advocated for professionalizing demonstrations, deployment, and experimentation in the same way early-stage R&D is often conducted in a more formalized and consistent manner. Doing so will allow us to “take bold bets, stop them when they don’t work, and move on.” Turk added that prioritization requires good data and tracking to inform decisions.

Entrepreneurship and Scale

Hart questioned whether small companies can reach an impactful scale on a relatively short timeline. Prabhakar stressed the need for a sectoral approach that takes into account the role of big and small firms, finance, and supply chains—as opposed to the firm-specific approach that venture capitalists take. Williams noted the “food-chain” of companies, where small companies partner with or become acquired by a larger company with complementary assets necessary to scale products.

Regional Development

Hart asked the panelists to elaborate on the role of regions in the innovation ecosystem and on ways the federal government can enhance that

relationship. Williams explained that impressive innovation is occurring in states that have recognized clean energy as an economic development opportunity. The government can help regions discover their natural areas of economic development, she said, and support them by establishing incubators, mentoring systems, and providing seed funding to allow small companies to access venture capital funds and Small Business Innovation Research (SBIR) and ARPA-E grants.

Prabhakar added that massive sectoral shifts occurring quickly can translate into disruptive changes to workforce, land use, and lifestyle. These issues can be resolved only by working in communities, discovering local impacts, and addressing them equitably.

In the international context, Turk said, we need a range of innovation solutions that fit in a variety of geographies and cultural contexts. More attention should be directed toward discovering and sharing lessons from countries using specific models that fit regional needs and strengths, said Turk.