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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

be deeply suspicious of such a trust fund, since many oppose coal and nuclear power, and would want funds invested primarily in renewables and conservation. They also will want a seat at the table.

• Other Models

Garman suggests consideration of the Propane Education and Research Council (PERC) as yet another alternative model. PERC was created by an Act of Congress in 1996. It was established when subjected to a referendum requiring two-thirds approval from the propane industry.

The council is composed of 21 non-compensated members, 18 from industry and three public members. The council is empowered to impose a mandatory assessment of 1 cent per gallon of odorized propane initially, and not more than one-half cent per gallon thereafter unless approved by a majority in a referendum of producers and retail marketers. In 2007, PERC projected collecting $45 million. The council may be terminated after a referendum on a petition of 35 percent of the industry if more than 50 percent of industry approves. The council approves research projects, and does not conduct research.

With Congressional support and public members, the council may have broad political support for long-term operation. It is too early to evaluate the effectiveness of the program.

Additionally, Bob Catell at National Grid points to the recently launched Advanced Energy Research and Technology Center at the University of Stony Brook on Long Island as a potential model, which is jointly funded by the government and industry. The New York State Energy Research and Development Authority partially finances the center, which is controlled by a board of directors from industry and academia.

Politics and Regulation

Key to action on clean-energy investments is a regulatory mandate to drive investments in RD&D. At present, the industry is frozen because investor-owned utilities can’t get approvals from regulatory commissions to add sufficient RD&D funds into their asset base, and invest in unproven new technologies. EPRI’s budget reductions illustrate this problem. However, public utility commissioners received a strong message at the DOE-NARUC National Electricity Delivery Forum in late February 2008 that the nation is facing urgent energy needs, and the situation calls for a new approach.

Beyond lifting regulatory constraints on new investments in RD&D, many industry stakeholders broadly agree that a federally mandated cap-and-trade system is critical, and the sooner the better. Yet there are major differences of opinion among industry leaders on the shape of that legislation, particularly over emissions-credit distribution formulas. In short, the industry is telling Congress, “Do something quickly,” but then is disagreeing on exactly what Congress should do.

Further, some argue that without an international agreement, which caps emissions in such developing countries as China, India and Brazil, a U.S. program would be a huge waste of dollars that might severely disrupt the economy, while producing little impact on global warming.

Such new international agreements might emerge early in the next administration, but most likely will be contingent on U.S. adoption of climate regulations first to set the example for other nations.

In the context of a complicated climate-change policy debate, the idea of a clean-energy institute