The New York Times reported today on a project from the National Renewable Energy Laboratory (NREL), which aims to re-engineer air conditioning systems on American cars. By improving AC efficiency by 33 percent, NREL hopes to cut back on the 7 million gallons of gasoline that go to running car air conditioners every year, thus increasing the fuel efficiency of American-made cars in accordance with Obama’s new fuel efficiency standards–standards which are projected to save 1.8 billion barrels of oil and reduce greenhouse gas emissions by 900 million metric tons.
This all sounds like good news, but let’s not forget that NREL research on renewable technologies like fuel cell, plug-in hybrid electric, and alternative-fuel vehicles remains in the early stages, and most of these technologies are far from being widely available or affordable to American consumers. Innovation of renewable-energy cars has lagged because NREL’s funding, which comes from the U.S. Department of Energy, has fluctuated widely over the years. So we’re stuck tinkering with the AC on the gas-guzzling cars we already have, instead of powering forward on the development of advanced cars that don’t run on fossil fuels at all. It’s an emission-reduction step in the right direction, but what we really need is an innovative green car technology leap in an entirely new direction.
The NREL project stands as an example of why economist Robert Atkinson argues we need to re-conceptualize our national economic system from a neoclassical (and sometimes Keynesian) framework to what he calls an “innovation economics” one. Neoclassical economics assumes that economic growth is incremental and linear. But as Atkinson describes in his book The Past and Future of America’s Economy, innovation economists argue that “technology does not advance incrementally, but rather bursts onto the scene irregularly with clusters of breakthrough technologies, and resultant transformations from one kind of society to another.” But in order for a burst of breakthrough technology to emerge, an old techno-economic system must be exhausted and replaced with a new one.
In energy tech terms, that means the fossil-fuel based economy has to go, and it has to be replaced with a wide variety of innovative, clean technologies–including those that NREL works on, like wind power and alternative vehicles. The particular ways that this transformation takes place will be a part of the wider techno-economic shift that Atkinson identifies–the rise of the digital, information technology, knowledge-based economy. As such, it could mean a shift in more than just the hard technologies of renewable energy, but also in the “soft technology”–the way we organize and operate society using these new technologies. But it won’t happen without the right funding, and the right set of spending priorities.
Even the funding that has been directed to research at NREL has been allocated in a way that fails to embrace the spirit of innovation economics. According to the Denver Business Journal, $68 million of the $110 million given to NREL as part of Obama’s stimulus package will go to renovating NREL’s Colorado office building in order to slash its operating energy use by half. Greens will no doubt cheer at the laudable prospect of a government-funded, super-energy-efficient facility. But the fact is, efficiency is no longer the real name of the game. By focusing time and funding on short-term energy-use reduction goals, the government shoots itself in the foot, effectively impeding the development of game-changing technological innovation that has long-term implications for America’s economic growth and prosperity.
Instead, America needs more public funding for labs like NREL, as well as private universities and research institutes working on both basic and applied science. A new capital budget system like the one Sherle Schwenninger recommends could help establish a dedicated, consistent R&D funding stream that isn’t subject to budgeting fluctuations. This direct investment must be one part of an explicit government innovation policy that prioritizes national growth, not piecemeal emissions cutbacks, as its objective. The way to prosperity is through breakthrough innovations that will secure the American competitive edge and ensure our country increased economic growth for the future. But to get there, the government must restructure, redirect, and scale up its spending to invest meaningfully in that future.
