The Need for New Technology

The challenges to achieving a secure and sustainable energy future are both
large and urgent. An energy future that continues recent trends is projected
to result
in global demand that’s four times today’s level, entailing high
consumer costs for energy, greater oil-import dependence, worse local and regional
air pollution, and higher risks of climate change. Moreover, in the next two
decades, over half of global energy growth will be in developing and transitional
economies as these nations continue to improve their standard of living.

These realities call for changing the course of world energy development through
technology innovation. Without significant and global technology innovation,
such rapid growth in total world energy use will further compound the energy-linked
problems and challenges already of great concern today.

Therefore, we have before us a critical window of opportunity to move the world
off its current path and to embark on a trajectory that will at once enhance
energy security and economic growth, while significantly improving the environment.
Clearly, the choices that we make today relating to technology innovation and
policies to promote more efficient and cleaner technologies in the marketplace
will greatly influence energy security, energy costs, greenhouse gas emissions,
oil dependence, and public health and environmental impacts for the balance of
this century.

To address these realities and challenges, the United States has placed great
emphasis on technology innovation and deployment through international cooperation
and effective public-private partnerships. Over the last year, the US initiated
a number of major alliances that are structured to accelerate the development
and deployment of advanced energy systems through public-private engagement.

Innovation Is Critical

As a leader in technology innovation, the US is committed to develop and deploy
a continuum of breakthrough transforming technologies over time, informed by
better science and based on a diverse portfolio of energy sources. Over the last
year, President Bush’s administration initiated, as well as stepped up
participation in, several key international technology efforts that are dedicated
to revolutionizing the way we produce, deliver, and use energy.

The administration’s new Carbon Sequestration Leadership Forum (CSLF) has
brought together 14 countries and the European Commission to collaborate on developing
cost-effective methods to capture, store, and sequester carbon from coal, which
for many countries remains an abundant, economical energy option. The CSLF will
coordinate data gathering, R&D, and joint projects to advance the development
and deployment of carbon sequestration technologies worldwide. The related FutureGen
program is a $1 billion demonstration project to create the first coal-based,
zero-emissions electricity and hydrogen power plant.

To realize the promise of hydrogen, the US launched the International Partnership
for the Hydrogen Economy (IPHE) through which more than a dozen developed and
developing countries will advance cooperative R&D and commercial uses of
hydrogen production, storage, transport, and distribution. This multilateral
alliance also will facilitate the establishment of common codes and standards
and undertake activities to promote hydrogen and fuel cell programs. The US participation
in the IPHE will be advanced by the administration’s groundbreaking $1.7
billion Hydrogen Fuel Initiative that aims to commercialize hydrogen-powered
fuel cell vehicles and supportive infrastructure technologies by 2015.

With respect to nuclear energy, the 11-member Generation IV International Forum
is working on the next generation of safe, economic, emissions-free, and proliferation-resistant
nuclear reactor designs and fuel cycle technologies that could play a significant
role in hydrogen production. The US also rejoined the International Thermonuclear
Experimental Reactor Project. If successful, this $5 billion, internationally-supported
research project will further progress toward producing clean, renewable, commercially
available fusion energy by the middle of the century.

These major technology efforts are part of a wider array of cutting-edge technologies,
including bio-energy and nanotechnology, that the US is actively developing.
They comprise a portfolio of new 21st century technologies that hold out the
promise of offering all people access to affordable and abundant sources of energy
while lessening human impact on the environment.

International Cooperation

These major international initiatives that the US launched last year markedly
confirm the need and opportunity for enhanced international cooperation between
producing and consuming countries. Only through such multinational collaboration
between both developing and developed countries on energy technology innovation
and deployment can we expect to meet the concurrent challenges of economic growth,
energy security, and environmental quality.

The global dimensions of our 21st century energy challenges call for cooperative
efforts to:

  • Develop and deploy technologies that increase efficiencies in the production,
    delivery, and use of energy; increase the use of cleaner, lower carbon or no-carbon
    fuels, processes, and products; and that capture, store, and sequester carbon
    gases from energy systems;
  • Strengthen capacities for energy technology innovation through promoting
    institutional and market reforms, innovative financing, and pre-commercial
    private sector sponsored
    demonstrations of cleaner and more efficient energy technologies; and
  • Scale up demonstration projects to large-scale projects capable of providing
    cleaner energy to millions of people.

International cooperation clearly can help to accelerate global technology
innovation and deployment by reducing research, development, and deployment
(RD&D) costs, speeding and spreading knowledge and technology dissemination,
and increasing the economies of scale with respect to research and demonstration
efforts.

In joining forces, all of the participating countries have agreed to make substantial
long-term commitments to technology RD&D; shape well-defined visions and
national strategies to advance technology deployment and infrastructure development
in the marketplace; and undertake commitments to foster national policies that
will effectively attract, as well as address gaps in, private-sector investment.
These multilateral alliances also allow for collaboration that is more integrated,
systems-oriented, and responsive to market demands and values.

Agents of Change

Public-private partnerships are agents of change to leverage private resources
and share the risks of RD&D. All of the collaborative initiatives described
above are public-private partnerships that recognize the vital role of government
in mobilizing and leveraging critical private-sector investments through arrangements
that will capture the full range of public benefits. Public-private partnerships
can translate governmental policies into solid gains for sustainable development
by bringing together the skills and resources of the private sector and civil
society organizations with government resources and expertise.

As UN Secretary-General Kofi Annan has said, “The most creative agents
of change may well be partnerships – among governments, private business,
nonprofit organizations, scholars, and concerned citizens.” Secretary
of Energy Spencer Abraham has remarked, “Partnerships that leverage scarce
resources, develop technology standards, and foster public-private technology
and infrastructure collaboration can more easily overcome the technological,
financial, and institutional barriers that inhibit the development and deployment
of cost-competitive, standardized, widely accessible advanced energy technologies.”

The US has not only developed public-private arrangements for the longer term,
but also for the near term as part of our president’s energy security
and climate change strategy. For example, in February 2003, the Department
of Energy launched the president’s Climate VISION (Voluntary Innovative
Sector Initiatives: Opportunities Now) program.

This is a public-private partnership between the federal government and 13
trade associations representing all of the major energy-intensive sectors.
Each association has made a commitment to make voluntary reductions in response
to the president’s national goal to reduce greenhouse gas intensity by
18 percent by 2012. The objectives of this program are to:

  1. Achieve cost-effective GHG reductions;
  2. Facilitate the development of effective tools for calculating and reporting
    emissions;
  3. Develop strategies to enable non-industrial sectors to reduce their GHG
    impacts; and
  4. Develop strategies to speed the development and deployment of more
    advanced energy technologies.

The US also is developing government and private-sector partnerships for technology
transfer. At the World Summit on Sustainable Development in Johannesburg, South
Africa, the US launched its Clean Energy Initiative that seeks to improve access
to clean, reliable, and efficient energy services in the developing world.

Accelerating efforts for technology innovation and deployment will require
the public and private sectors to move in better step with one another. The
private sector by itself cannot assure the delivery of “public goods.” Nor
can government act by itself to provide technology deployment.

Because most of the investment in new technologies will be coming from the
private sector, it is important to engage them from the beginning. We are in
the process of working with industry to structure more effective public-private
risk-sharing arrangements that can address the high incremental capital costs
of longer-term advanced technology development. Together, we are identifying
the critical risks to investment and determining which risks are best left
to industry to manage and which pose the greatest problems for industry and
require a government response.

This clarification of risk management will underpin the fashioning of more
risk-targeted government assistance and policy tools and incentives – structured
and timed to facilitate private investment flows.

Finally, the major international public-private partnerships that the US has
launched create exciting opportunities to stimulate collaboration among a wide
array of stakeholders through new structures that can be replicated globally.
The possibilities are enormous, and these alliances can draw upon smaller-scale
endeavors that have developed successful track records. For example, the establishment
of the Icelandic New Energy Ltd. has provided a platform from which different
government and private players have conducted hydrogen projects in Iceland.
A majority of the shares of the company belong to an Icelandic holding company
composed of key players from the country’s investment community, main
energy companies, research institutes, academics, and government. The remaining
shares belong to three multinational corporations.

In the US, the Sunline Transit Agency and Sunline Services Group have significantly
leveraged government seed money through a consortia of public and private-sector
entities to develop a hydrogen and clean energy public transit fleet and
to maintain a public hydrogen fueling station.

Conclusion

Taken together, the US technology initiatives, carried out through international
cooperation and public-private partnerships, are aimed at fostering
a long-term revolution in energy systems that will put us on a path to
stabilizing
greenhouse gas concentrations and ensuring secure, reliable, affordable,
and clean energy
to power economic growth and development across the globe.