What if the Government Stopped Investing in Energy Research?
Spoiler alert: it wouldn't end well. Part 1 of a series of the government.
Seeing Bright Spots are posts that unpack good news about the climate that you may have missed. This is the first in a series that will build up to explaining why the Biden Administration’s investment in climate is great news. But first, let’s talk about what would happen if the government didn’t invest in energy research.
If the government stopped investing in energy research, our climate would be screwed. End of article.
No, seriously – it’d be bad. Like, really bad. The energy sector is simply too physical, too big, too slow to change, and too important to be fully left to “the market.” Energy is all about moving atoms around in the real world, not bits of data (and even those require energy). We move a lot of atoms at great expense and impact: each year in the US, we spend one trillion dollars on energy and emit 6.3 billion metric tons of carbon. That's a massive system that we need to transform and decarbonize quickly.
Left to its own devices, I’m sure that companies would continue to refine existing energy technologies and make improvements on the margins. And that’d be nice. No company has enough money to do the level of basic research required to meet the challenge, but the federal government does.
Even if a company invests in basic research that leads to a breakthrough, could it turn that insight into a viable product at scale? Probably not.
Converting basic research into a proof of concept product that solves an actual problem takes time, money, and the patience to explore many dead ends. The government has all three; most private companies do not. That's why early concepts usually come out a government or a federally-funded university lab.
But let’s assume again that the company finds a near-term application for its breakthrough. The next step is proving that the concept works not only in the lab, but also in the real world and can interact with our electricity grid or drive down our streets. Making this happen requires time, money, and patience; once again, the federal government steps in to help fund the demonstration of new technologies.
If the demonstration is a smashing success, we're ready for primetime. The only problem is that demonstration projects can cost hundreds of times more than their conventional alternative. Uh-oh. Once again, it’s the government that helps out, providing subsidies to make the new technology more cost competitive and/or consumer rebates that make them attractive to folks.
While there are counterfactuals of companies that could/did all of this without the help of the government, they are the exception, not the rule. When it comes to energy, anywhere you think you see the invisible hand, know that Uncle Sam’s is right behind it, in the shadows.
The bottom line is: as a society, we cannot discover, test, and scale the mix of solutions we need to solve the climate crisis in the time we have without massive government investments.
This being Bright Spots, I’ll leave you with some good news: governments are stepping up to meet the moment. In the next article, I’ll share insights from an awesome database on global public investments in energy research. In the third article, I’ll explain how and why the Biden Administration’s investment in energy innovation will be transformative.