The Need for New Technology by Chris Trayhorn, Publisher of mThink Blue Book, March 11, 2004 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: Achieve cost-effective GHG reductions; Facilitate the development of effective tools for calculating and reporting emissions; Develop strategies to enable non-industrial sectors to reduce their GHG impacts; and 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. Filed under: White Papers Tagged under: Utilities About the Author Chris Trayhorn, Publisher of mThink Blue Book Chris Trayhorn is the Chairman of the Performance Marketing Industry Blue Ribbon Panel and the CEO of mThink.com, a leading online and content marketing agency. He has founded four successful marketing companies in London and San Francisco in the last 15 years, and is currently the founder and publisher of Revenue+Performance magazine, the magazine of the performance marketing industry since 2002.