Bingaman on Investments in Clean Energy Technology

While the Senate is currently focused on our nation’s challenges with healthcare, later this year it will turn to another issue with profound ramifications for economic and human health: transitioning to a secure energy future that avoids catastrophic climate change. The market’s failures to appropriately value climate protection, and our longstanding underinvestment in clean new energy technologies, are dangers to both our economic security and our environmental future.

Putting an appropriate price on greenhouse gas emissions is one way to make market forces work better for both energy and environmental goals. But even with a corrected market, the scale of clean energy investments needed to set a course that is sustainable for future generations is daunting.

I’ve heard people say we need a new Apollo Project or a new Manhattan Project to produce the clean energy technologies America needs. These analogies have some use, as both projects represented a national commitment to achieving a technological goal more quickly than anyone thought possible. But both analogies are also quite incomplete. The Manhattan Project and the Apollo Project were relatively focused projects. Our climate-related energy challenges are multifaceted and will require a commitment greater than either project. We can’t simply develop one or a few technological breakthroughs. We’ll have to develop multiple technologies across many economic sectors and deploy them at a pace that is nearly unprecedented. Our clean energy technology challenge is more like undertaking 9 or 10 simultaneous Apollo projects.

The immense promise of new energy technologies being developed in America’s labs, universities, and high-tech start-ups is up to this challenge. But these technologies encounter major barriers when it comes to obtaining sufficient support in private financial markets for their transition to commercially proven products that can be widely embraced by energy investors. People in the clean technology industry call this the “valley of death” — a place where good ideas wither for lack of sufficient capital.

The federal government can make a big difference by facilitating significant and sustained investment to bring these new technologies to a point where they can be deployed on the scale necessary to meet our energy needs. This deployment “at scale” represents an investment challenge that is even greater than the challenge of commercializing the information technologies that brought us the Internet. A new information technology might be brought into the marketplace with an investment of hundreds of thousands, or millions, of dollars; deploying a new energy technology might easily require investment that is hundreds of times greater. The federal government cannot fill this need through its own spending. It can, however, use its ability to make focused, “patient” investments to leverage and unlock private capital markets, where the billions of dollars of necessary funding can more readily be found.

Last month, the Committee on Energy and Natural Resources reported a comprehensive energy bill, the American Clean Energy Leadership Act of 2009, whose first title establishes a Clean Energy Deployment Administration (CEDA) to make the key investments to accelerate the technology revolution we need. This provision is a bipartisan achievement, building on a bill I introduced with Sen. Lisa Murkowski (R-Alaska) and incorporating input from leaders in energy finance across the spectrum. CEDA will move a wide range of clean energy technologies from the laboratory to the marketplace, by combining the technological expertise of the Department of Energy with a new, and independently overseen, cadre of business professionals who can craft the financial support that entrepreneurs need to negotiate the “valley of death.” Most importantly, in crafting its proposal for CEDA, the Energy Committee has stepped back from trying to micromanage which clean technologies it would be able to fund, or to lock in on some sort of “flavor of the month” approach to technology support. Instead, CEDA is being given a broad mandate and methodology to identify, on an ongoing basis, the technologies with the best potential to deliver sustainable energy technologies with the most efficient use of federal dollars. CEDA will also be empowered to aggregate smaller projects that might have trouble attracting capital investment for that reason (examples of this problem abound in the realm of energy efficiency) into larger initiatives that can more readily attract financing.

I believe that the investments we need in clean energy technology deployment cannot wait. Most of the energy infrastructure that we build today will still be operating in the year 2050, when our carbon dioxide emissions need to be substantially reduced. The investment choices we make now will dramatically shape the world in which our children and grandchildren will live. The longer we wait to address our clean energy challenges, the higher the hill they will have to climb. With an immediate need for jump-starting clean energy investment, the Energy Committee’s proposal for CEDA is the sort of timely response that I hope can be enacted into law this year as a cornerstone of energy and climate legislation.

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