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2. Reboot: Framework for a New American Industrial Policy
- Author:
- Martijn Rasser, Megan Lamberth, Hannah Kelley, and Ryan Johnson
- Publication Date:
- 05-2022
- Content Type:
- Special Report
- Institution:
- Center for a New American Security (CNAS)
- Abstract:
- This paper presents an initial framework for a new American industrial policy, a blueprint for what is needed to ensure the United States has the vision, goals, plans, and resources for an era of sustained strategic competition. The concept, informed by an overarching national technology strategy and a supply chain resilience strategy, is the initial contribution in a larger effort to provide policymakers with a comprehensive toolkit to navigate competition with China and engage with countries around the world, friend and foe alike.4 To provide tangible real-world examples of a new sensible American industrial policy and to illustrate how policies would vary by sector and over time, subsequent reports will detail what a new American industrial policy would look like in action for three key sectors: biotechnology, semiconductors, and green technologies.
- Topic:
- Economy, Green Technology, Strategic Competition, Industry, Biotechnology, and Semiconductors
- Political Geography:
- China, North America, and United States of America
3. Reimagine: Clean Energy Technology and U.S. Industrial Policy
- Author:
- Jonas Nahm
- Publication Date:
- 09-2022
- Content Type:
- Special Report
- Institution:
- Center for a New American Security (CNAS)
- Abstract:
- Historically, the United States has been the largest public investor in clean energy research and development (R&D). U.S. research institutions and private firms continue to hold a technological lead in many next-generation technologies that could make the transition away from fossil fuels cheaper and more efficient. Such technologies include next-generation solar photovoltaic technologies, advanced battery chemistries, and software to manage complex energy systems, including those with high penetrations of wind energy. Although the United States was an early leader in clean energy R&D and continues to make major technological advances, it has, over time, fallen behind in the commercialization and manufacturing of the technologies developed domestically. This study reviews U.S. industrial policy for clean energy sectors and argues that other economies have more frequently used proactive industrial policies to support the development of domestic clean energy technology industries. Too often, the United States has not mounted an equivalent industrial policy response. The U.S. government has instead focused more narrowly on funding the invention of new technologies and, intermittently, supported domestic markets for clean energy technologies through federal and state programs. Such policies have included, for instance, federal R&D grants for universities, research institutes, and the private sector, as well as subsidies and regulations to support the growth of clean energy markets at the federal and state level. This U.S. approach to encouraging the growth of domestic clean energy industries has assumed that market failures primarily exist in innovation. Since firms cannot in all cases reap all the gains from investments in the development of new technologies, they are likely to underinvest in innovation, creating a need for governments to supplement private-sector investments in R&D. The U.S. approach to clean energy industrial policy also assumes that investments in R&D will eventually spur the growth of domestic industries if combined with sufficient market demand. Yet U.S. industrial policy has not addressed key institutional shortcomings in segments of clean energy supply chains that are not well supported domestically, particularly in scaling new technologies to mass manufacturing. As a consequence, many technologies developed with public R&D funding failed to reach domestic mass production, as firms were unable to make the investments required to bring the technologies to market domestically. The report develops four recommendations to improve the competitiveness of domestic clean energy industries. First, the United States should establish a state development bank that could fund domestic manufacturing projects in sectors, such as clean energy, that have struggled to raise financing from U.S. financial institutions. The scarcity of capital for clean energy manufacturing has prevented domestic startups from raising the financing required to commercialize and produce their technologies domestically. Second, the U.S. government should ramp up investments in vocational training programs that would meet the workforce needs of growing clean energy manufacturing sectors. Third, the federal government should set stable regulatory requirements and binding targets for clean energy markets as part of a national strategy for competitiveness in clean energy sectors. This would reduce uncertainty injected by the intermittent and fragmented nature of current government support for clean energy sectors and create incentives for the private sector to invest in domestic supply chains for clean energy technologies. Fourth, the United States should limit the use of trade restrictions as industrial policy tools and instead focus on improving the competitiveness of domestic clean energy firms through proactive industrial policies. Trade restrictions can limit the ability of domestic clean energy firms to source materials, parts, and components through global supply chains; may lead to increased prices in ways that can harm domestic clean energy service industries; and obstruct the climate diplomacy needed to meet the goals of the Paris Agreement. At the moment, geopolitical shifts, strategic competition with China, and the ripple effects of the war in Ukraine provide a political opening for the consistent deployment of more ambitious industrial policies. The United States should use this opportunity or risk falling behind other economies, including those in Europe, that have made the development of domestic clean energy supply chains central elements of their response to climate change.
- Topic:
- Green Technology, Industry, Research and Development, and Energy
- Political Geography:
- North America and United States of America
4. To Bring Emissions-Slashing Technologies to Market, the United States Needs Targeted Demand-Pull Innovation Policies
- Author:
- Varun Sivaram, Matt Bowen, Noah Kaufman, and Doug Rand
- Publication Date:
- 01-2021
- Content Type:
- Working Paper
- Institution:
- Center on Global Energy Policy (CGEP), Columbia University
- Abstract:
- President-elect Joe Biden has called climate change one of the four most important crises facing the country and pledged ambitious climate action.[1] At the heart of his strategy to slash US and global emissions is a focus on developing new and improved technologies to make clean energy transitions more affordable. During the campaign, Biden pledged a “historic investment in clean energy innovation.”[2] Indeed, boosting funding for energy research, development, and demonstration (RD&D) is widely popular among both Republicans and Democrats and represents a rare legislative opportunity for advancing climate policy under a razor-thin Democratic majority in Congress.[3] In December 2020, Congress passed the most sweeping energy legislation in a decade, attached to the $900 billion COVID-19 stimulus package, and authorized boosting clean energy RD&D funding.[4] Yet such investments alone may not be sufficient to successfully commercialize critical clean energy technologies. Today’s energy industry presents daunting barriers that impede the swift adoption of newer, cleaner technologies. As a result, the private sector underinvests in scaling up promising technologies and building out clean energy infrastructure.[5] Therefore, in addition to funding energy RD&D (“technology-push” policies), government policies should bolster market demand for clean energy to encourage private investors and firms to scale up and commercialize new technologies (“demand-pull” policies). Still, there are steep political obstacles in the way of many ambitious demand-pull policies. For example, President-elect Biden has called for economywide measures such as a clean electricity standard and $400 billion of public procurement of clean products such as electric vehicles.[6] These policies would create large markets for mass deployment of clean energy and speed a clean energy transition. But enacting them requires substantial new regulations and appropriations from Congress, a challenging feat even given the new Democratic control of both chambers of Congress. Fortunately, there is a set of targeted demand-pull measures that the Biden administration can immediately use—with existing statutory authority and without requiring massive new appropriations—to create early markets for promising clean energy technologies. These measures, which we call “demand-pull innovation policies,” fill a niche between RD&D investments that create new technology options and policies that support the large-scale deployment of clean energy. Demand-pull innovation policies focus narrowly on creating and shaping early markets for emerging technologies. For example, targeted government procurement, prize competitions, or milestone payments can provide early markets for clean energy technologies that have been developed with the aid of public RD&D funding. The government can also coordinate private procurement or otherwise catalyze private market adoption through certification and standard-setting processes. Such demand-pull innovation policies have extremely high leverage and have transformed limited public investment into flourishing private commercial markets across the space, medical, and energy fields.[7] Coherently pursuing demand-pull innovation policies will require coordination across the federal government. To this end, the incoming Biden administration should consider creating a new government office, the Energy Technology Markets Office (ETMO), to spearhead the scale-up and commercialization of promising clean energy technologies. The ETMO could be housed within the Department of Energy (DOE) to take advantage of the DOE’s deep expertise in energy technologies and markets. Indeed, in the recently passed Energy Act of 2020 (Division Z of the Consolidated Appropriations Act of 2021), Congress directed the DOE to build its capabilities to pursue demand-pull innovation policies.[8] In the same legislation, Congress also authorized the DOE’s Office of Technology Transitions, which could alternatively lead the demand-pull innovation agenda. Regardless of whether the administration creates a new office or augments an existing one, in order to maximize their potential impact, demand-pull innovation policies should not be the domain of only the DOE. Rather, the DOE should collaborate with a range of federal agencies—many of which, such as the Department of Defense, have sizable resources to invest in emerging technology procurement—to enact policies and pursue public-private partnerships to build market demand for the innovations critical to decarbonization. In concert with new RD&D investments in clean energy innovation, demand-pull innovation policies could be a powerful tool to speed the adoption of new technologies and cultivate advanced energy industries that can manufacture and export US innovations.
- Topic:
- Climate Change, Energy Policy, Environment, Science and Technology, Green Technology, and Carbon Emissions
- Political Geography:
- North America and United States of America
5. China vs. US: The Green Energy Race
- Author:
- Katharine Klačanský
- Publication Date:
- 08-2021
- Content Type:
- Policy Brief
- Institution:
- Europeum Institute for European Policy
- Abstract:
- In her policy paper, Katharine Klačanský, Research Fellow at EUROPEUM Institute for European Policy, discusses the role of climate in geopolitics and provides an overview of the Chinese and American green investment plan and its implications for the future of fossil fuels.
- Topic:
- Climate Change, Energy Policy, Geopolitics, Green Technology, and Fossil Fuels
- Political Geography:
- China, Asia, North America, and United States of America
6. Advancing Corporate Procurement of Zero-Carbon Electricity in the United States: Moving from RE100 to ZC100
- Author:
- Melissa Lott and Bruce Phillips
- Publication Date:
- 12-2021
- Content Type:
- Special Report
- Institution:
- Center on Global Energy Policy (CGEP), Columbia University
- Abstract:
- Corporate pledges to purchase renewable electricity have led to significant new solar and wind capacity investments and driven down the carbon intensity of the power sector in the United States. Participating companies have increasingly procured this power, many with a goal of procuring quantities that are equal or proportional to the amount of electricity that they consume at their facilities on an annual basis.[1] Corporate buyers can reap many benefits from renewables procurement, including hedging against power price fluctuations and enjoying positive brand association, helping them meet shareholder demands around climate or other environmental, social, and governance (ESG) goals. However, the reality is that commitments to buy 100 percent renewable electricity may not equate to a company actually reducing its power carbon footprint to zero. This report from Columbia University’s Center on Global Energy Policy quantifies the mismatch between companies’ contracted variable renewable electricity (VRE) and their actual use of electricity to highlight the degree to which these companies still rely on a partially fossil-fueled power grid to bridge the gap. A modeling exercise and analysis done in collaboration with The NorthBridge Group reveals a significant shortfall between electricity demand and VRE supply, leaving companies that contract for 100 percent renewables to in fact draw between 20 percent and 50 percent[2] of their annual electricity from the regional electric grid, depending on their location, demand profile, and mix of contracted renewable supplies. This disparity presents a number of challenges to corporations that wish to achieve deep decarbonization and are unable to curtail operations to match renewable energy supplies. There are several approaches to get closer to a true zero-carbon power footprint. Installing storage capacity either on-site or at the power plant to provide stored electricity when renewables are not sufficient, such as with a battery,[3] is one option. However, this only reduces the minimum shortfall by half, requiring a customer to continue to rely on electricity from the regional electric grid for 10 percent to 28 percent of its annual load.[4] Resolving the shortfall by procuring extra renewable power (e.g., to 150 percent of annual electricity demand with renewables) can drive costs up substantially without closing the gap.
- Topic:
- Climate Change, Energy Policy, Environment, Green Technology, Carbon Emissions, and Decarbonization
- Political Geography:
- North America and United States of America
7. Comparing a Clean Electricity Standard and a Carbon Tax
- Author:
- Peter Marsters, John Larsen, Ben King, Hannah Kolus, and Whitney Herndon
- Publication Date:
- 12-2021
- Content Type:
- Special Report
- Institution:
- Center on Global Energy Policy (CGEP), Columbia University
- Abstract:
- As the United States commits to accelerating decarbonization as part of global efforts to combat climate change, the policies it enacts will govern its chances of success. These international ambitions are balanced against domestic realities: the effect of net-zero greenhouse gas strategies on households and the broader economy. Comparing different policy options against one another in terms of specific outcomes, such as emissions abatement and financial impact on consumers, is a useful exercise for policy makers. Because US congressional proposals have focused on two potential policy routes—an economy-wide price on carbon dioxide and other greenhouse gas emissions, and a sector-by-sector approach that starts with a clean electricity standard—this report models outcomes for these scenarios. A carbon tax and clean electricity standard (CES) are similar policies in some ways. Both have the potential to drive large emissions reductions from the US power sector and beyond. If the CES is designed to be technology-neutral with tradable credits for clean electricity generation, both policies would operate as market-based mechanisms to encourage such generation. They also differ in significant ways, and this report, part of the Carbon Tax Research Initiative at Columbia University’s Center on Global Energy Policy, uses energy system modeling to zero in on those differences to enable policy makers to better understand the advantages and drawbacks of each policy tool. A variety of constructions even within a single tool—particularly a CES—can be employed. What type of generation is eligible for credit in a CES and how much credit each resource receives, for example, are in part products of political and policy trade-offs. For comparison purposes with an economy-wide carbon tax, this report primarily focuses on a single crediting approach that most closely resembles the incentives new and existing electric power generators could receive under a carbon tax (and is similar to the CES included in the Clean Energy Innovation and Deployment Act of 2020). And for CES comparison purposes, the authors construct a carbon tax pathway that closely approximates the annual and cumulative electric power CO2 emissions of the CES. Given the equal emissions-reduction ambitions of the two policies modeled in this report, the greatest trade-offs come down to price increases and revenues. The carbon tax raises consumers’ electricity price more than the CES does, but also raises significant revenues that could be used, among other purposes, to offset increases in consumers’ energy-related bills.
- Topic:
- Green Technology, Tax Systems, Electricity, Renewable Energy, Carbon Tax, and Carbon Emissions
- Political Geography:
- North America and United States of America