Obama’s energy budget doubles down on innovation

Republican leaders in Congress are unlikely to help enact any of President Obama’s final clean energy budget proposals. Nevertheless, the new budget plan, released yesterday, merits attention if only as a philosophical statement. While every late-term budget is to an extent rhetorical, this one is noteworthy not just for its top-line numbers but for advancing a creative new model for progress.

The natural first takeaway from the budget is its scale, highlighted by its central proposal to double federal clean energy research and development (R&D) funding to $13 billion over five years as part of the global effort to fight climate change.

Scale matters, and as a series of Brookings and others’ analyses have argued, the United States has for decades grossly under-invested in energy innovation. In this regard, it is important to stress that the technologies needed to adequately reduce global carbon emissions do not exist. Doubling the nation’s energy R&D effort would represent a huge and long-deferred step in the right direction. That there is genuine bipartisan support for targeted spending on energy R&D may even mean that some the needed investment gets made.

Beyond their scale, though, what is equally noteworthy about Obama’s new proposals is that they embody a new view of how the nation should attack big problems.

In that vein, the Obama energy budget plays out a number of bold ideas about the role of the nation and the national government in the context of other nations, the appropriate division of labor between the public and the private sector, and the respective role of other layers of government.

To begin with, the budget’s proposed doubling of U.S. clean energy R&D comes in the context of the so-called Mission Innovation initiative, a landmark multi-nation commitment announced during the recent Paris climate talks to dramatically increase government’ investment in clean energy innovation. Through the initiative, 20 countries representing 80 percent of global clean energy R&D budgets agreed to double their government R&D investments in clean energy over five years. In short, U.S. action is being proposed as part of a voluntary, but systematic and coordinated, international push. That’s an important acknowledgement that no one nation can drive enough change alone to limit the rise in global temperatures to the acceptable target of 2° C.

In similar fashion, the proposed doubling of clean energy R&D also plays out important ideas about the necessary division of labor between government and the private sector. Here again the federal R&D investments have a parallel external context—the pledges of the private Breakthrough Energy Coalition, a group of 28 billionaire investors like Microsoft co-founder Bill Gates and Facebook CEO Mark Zuckerberg. In this regard, while the new budget calls for major government investments in basic and applied research, those investments are to be complemented by the coordinated deployment of billions of dollars of early-stage capital from private investors that will seek to take innovative technologies spawned by government R&D and commercialize them. Again, the budget proposes a new model for mobilizing unprecedented levels of investment in transformative energy solutions—in this case through a large-scale public-private partnership.

Finally, the new energy budget deserves enormous credit for complementing conventional national investments with an unprecedented focus on unleashing sub-national, “bottom-up” innovation. For years the Metro Program and others have called for more focus on the nation’s diverse clean energy innovation ecosystems, whether in East Tennessee or Chicago or Denver or the Bay Area. Often anchored by national laboratories or university institutes carrying out federally funded energy research, these ecosystems are critical focal points of technology transfer, information sharing, commercialization, and scale-up. Along those lines, the FY 2017 budget includes:

• Over $105 million for new innovation initiatives including through expanded partnerships involving the national laboratories and their surrounding communities
• Over $110 million for new Regional Clean Energy Innovation Partnerships reserved for unleashing the strengths of local regions’ innovation ecosystems
• Over $260 million for advanced clean energy manufacturing R&D projects and facilities, including for two new National Network for Manufacturing Innovation Institutes

In this regard, the energy budget goes farther than before in proposing a kind of “clean energy federalism” that seeks to tap and further stimulate the dynamism of the nation’s diverse cleantech clusters.

All of which is to say: President Obama’s last energy budget may not pass into law, but it could shape debate well into the future about the right policy architecture for addressing one of the world’s toughest problems.