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The Strategy for Energy Innovation

on November 24, 2009 Source: Policy Dialogue on Entrepreneurship

PDE staff attended a meeting on “Innovation and the Strategy for Renewable Energy” at the Woodrow Wilson Center. Our report of the event follows:

The Tuesday Innovation Policy Discussion Group of the Woodrow Wilson and MIT hosted last week a meeting with Henry Kelly, Principal Deputy Assistant Secretary for the Office of Energy Efficiency and Renewable Energy at the U.S. Department of Energy. Kelly discussed the pressing needs and challenges relating to innovation in the renewable energy sector, and discussed ways in which governments and businesses can tackle the task of crafting a sustainable approach to financing energy innovation.

The Obama administration has placed considerable emphasis on issues relating to climate change. However, according to Kelly, meeting the administration's proposed targets would require both technical and institutional innovation. For instance, in the U.S., buildings are responsible for 40% of overall energy use and 70% of electricity use. However, no sophisticated infrastructure exists in order to retrofit either residential or commercial buildings. Kelly discussed one possible way to encourage homeowners to invest in retrofitting:  improving and promoting the energy efficient mortgage program, which would incorporate the retrofitting financing into the property sale process. Institutional innovations will have to be in place to provide such incentive. Making changes in order to incentivize retrofitting would amount to a radical change in utility business models. Moreover, the diversity in utility regulations across the 50 states provides additional challenges to promoting widespread innovation and increased efficiency.

Kelly also pointed out the challenges for the transportation sector. Currently, there are three different alternate solutions that seem to be competing with one another – ethanol-based fuels, hydrogen fuel, and plug-in electric models. All three of these approaches would require independent infrastructures to be built. Kelly reported how there is a possibility that 2 or 3 parallel fueling structures could develop. He said that the challenge for government and for business is to figure out what to invest in, how the infrastructure will be built, and who will pay for it.

Overall, each sector – whether it be improving transportation, redesigning utilities, electrifying heavy industry or modifying urban design – has unique institutions and needs, and thus the creation of a universal energy efficiency solution is impossible. This multifaceted issue of innovation will require considerable collaboration between different sectors in order to craft effective solutions.

We hope entrepreneurs will have a voice.

[Reported by Marianne Sierocinski]

Category:  Capitol Hill 

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