Powerful Partnerships: The Federal Role in International Cooperation on Energy Innovation - Letter to Neal Lane

EXECUTIVE OFFICE OF THE PRESIDENT
PRESIDENT'S COMMITTEE OF ADVISORS ON SCIENCE AND TECHNOLOGY
Washington, D.C. 20502

24 May 1999

Honorable Neal Lane
Assistant to the President for Science and Technology
The White House

Dear Dr. Lane:

I am pleased to transmit to you the final report from the PCAST Panel on International Cooperation on Energy Research, Development, Demonstration, and Deployment - Powerful Partnerships: The Federal Role in International Cooperation on Energy Innovation. This report is in response to your letter of September 8, 1998, in which you asked me to convene a PCAST panel to help you address the President's request for recommendations on "ways to improve the U.S. program of international cooperation on energy R&D to best support our national priorities and address the key global energy and environmental challenges of the next century." This new study complements and builds upon the November 1997 PCAST report on the government's overall energy R&D program, Federal Energy Research and Development for the Challenges of the Twenty-First Century.

U.S. participation in international cooperation on energy innovation lowers the cost and increases the pace of energy innovation in this country. Government support for such cooperation is also warranted by the economic, environmental, and security stakes for this country in how the energy challenges of the next century are addressed abroad. How the global energy system evolves in the decades ahead will determine the extent of world dependence on imported oil and the potential for conflict over access to it; the performance of nuclear energy systems on whose safety and proliferation resistance the whole world depends; the pace of global climate change induced by greenhouse-gas emissions from fossil-fuel combustion; and the prospects for environmentally sustainable economic development that will build markets for U.S. products and reduce the role of economic deprivation as a cause of conflict. U.S. participation in international energy-technology cooperation, in forms and degrees beyond what can or will be undertaken by the private sector alone, is also likely to be crucial in gaining and maintaining access for U.S. firms to many of the fastest-growing segments of the multi-hundred-billion-dollar-per-year global energy-technology market.

The Panel found that existing Federal activities in support of international cooperation on energy innovation - carried out by DOE, USAID, and a variety of other agencies and spending altogether about $250 million per year - are generally well focused and effective. But they are not adequate in scope and scale to the challenges and opportunities that the international energy arena presents, and they suffer from the lack of an over-arching strategic vision and corresponding coordination to link the activities within and across the agencies into a coherent whole. A particularly conspicuous gap in the government's energy-cooperation activities exists in the demonstration and cost-buy-down stages of the innovation process (between R&D, where DOE's efforts are mainly focused, and deployment, where the activities of the trade-promotion and development agencies are mainly focused). The dearth of activities in this category is substantially slowing the pace at which advanced energy technologies reach commercial viability.

The Panel recommends increasing Federal funding for international cooperation on energy research, development, demonstration, and deployment by $250 million per year in FY2001 and $500 million per year by FY2005, with strategic vision and coordination of agency efforts within the expanded program provided by a new interagency Working Group on Strategic Energy Cooperation, organized under the National Science and Technology Council. An advisory board to the Interagency Working Group with representation from the private, NGO, and academic sectors would facilitate improved coordination of the government's efforts with the critically important contributions of these sectors to international energy cooperation.

The Panel proposes specific initiatives for bolstering Federal efforts on international energy cooperation under four broad headings:

• foundations of energy innovation and cooperation, with emphasis on capacity building, energy-sector reform, clean-energy technology demonstration and cost buy-down, and financing;
• technologies for increased efficiency of energy end-use, with emphasis on buildings and appliances, small vehicles and buses, energy-intensive industries, and co-generation of electricity and other energy forms;
• technologies for cleaner and more efficient energy supply, with emphasis on biomass and other renewable energy forms, fossil-fuel-decarbonization and carbon-sequestration technologies, and nuclear fission and fusion; and
• management of the government's international energy-cooperation activities, emphasizing improved coordination, program development, monitoring, and evaluation, including mechanisms for terminating unsuccessful projects and for handing off successful ones to the private sector at the appropriate time.
  These programs go beyond spurring research and development; pursued with appropriate coordination with the efforts of the private sector, they will launch advanced energy technologies into sustainable international markets, free of the need for ongoing government subsidies.

We believe that by acting now the United States can bring about lasting change in the global energy system, to the economic, environmental, and security advantage of the citizens of this country and of all the world. But there is no time to waste; for a variety of reasons detailed in our report, the energy choices made in the next 10 to 20 years will substantially shape the character of the global energy system for much of the next century. The potential leverage of modest investments by the United States in this arena in the years immediately ahead is immense. Conversely, timidity and delay will lock in adverse outcomes that will be far costlier to reverse - if they can be reversed at all - than it would have been to prevent them.

This report was prepared by a panel of fourteen individuals - four PCAST members and ten more panelists chosen for their special expertise relevant to our charge - ably assisted by study executive director Sam Baldwin, others on your OSTP staff, my staff at Harvard, agency briefers and other presenters, commissioned-paper writers, invited commenters, and reviewers. I am most grateful to all who assisted in this effort. The full PCAST endorses this report and stands ready to assist you in promoting adoption of its recommendations.

Sincerely,

John P. Holdren
Chair
PCAST Panel on International Cooperation on Energy Research,
Development, Demonstration, and Deployment