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Energy Technology: Cultivating Clean Tech

New Models for Energy RD&D: A new ‘Clean Energy Institute’ could lead the industry’s war on climate change.

Fortnightly Magazine - May 2008

strategy for achieving a comprehensive clean-energy program for the nation.

Each of these initiatives contributes a unique perspective, and as a whole, their visions and plans provide a broad private-sector mandate.

Funding Stability

Additional funds, funding consistency and sustainable new sources of funds all are key to the clean-energy future. Environmental advocates such as the Pew Center for Climate Change also argue that much greater funding is urgently required to support energy RD&D, particularly for the advanced coal combustion and carbon and capture sequestration (CCS) technologies. Both EPRI and Pew call for at least the doubling of current DOE funding for advanced coal options. Pew sets forth an even more aggressive program in its large-scale development scenario (see Table 1) .

Where will a sustained source of funds come from? The FutureGen cancellation dramatizes that an ambitious RD&D program subject to the variability of annual Congressional appropriations, and political rather than commercial leadership, will have neither the proper commercial focus, nor the year-to-year staying power required to sustain the development of a broad spectrum of the new technologies needed. The explosion of Congressional earmarks in recent years only heightens the concern that parochial rather than long-term national interests command first priority in federal budget processes.

As a result, new funding approaches will be necessary to provide both year-to-year consistency, as well as sufficient funding levels, to execute the robust RD&D program needed to complement current DOE programs. Eileen Claussen, president of the Pew Center on Global Climate Change, suggests a surcharge based on kilowatt-hours of coal generation to pay for the program. Professor Ernest Moniz, chairman of the MIT Coal Study, proposes a surcharge of 1 mil/kWh to be imposed on the utility industry by the Federal Energy Regulatory Commission (FERC). This would be modeled after the revenue stream for the Gas Research Institute (GRI), which was initially funded by a FERC-approved surcharge. Such a surcharge on coal-generated electricity alone would generate about $2 billion annually, an amount sufficient to support clean energy RD&D for new coal initiatives.

Bob Catell, chairman of National Grid (U.S.), was chairman of the American Gas Association (AGA) in the 1970s when AGA asked Congress and FERC’s predecessor, the Federal Power Commission, to create the GRI model funded by a modest surcharge on interstate gas sales. These funds were invested in R&D managed by the private sector. At that time, pipeline companies could not fund adequate R&D because their regulatory model did not permit recovery of such costs. When the OPEC oil boycott created a natural gas shortage, the industry became acutely aware of the need to greatly expand R&D funding to expand resources and maximize their effectiveness.

Today, Catell says the need for new technology is much more critical than it was in the ’70s. He argues the debate about global warming is over and that new models are needed to fund and manage R&D at the necessary levels. He points out that government funding for clean energy must compete with health care, education and many other political priorities, whereas a directed surcharge could fund energy