Tag Archives: Breakthrough Institute

Breaking the Climate Deadlock with R&D

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Thanks to David McMullen for this post…

You do not need to be all that alarmist about the climate impact of increasing CO2 emissions to want to see energy go carbon free or at least greatly reduced. The idea of doubling and then tripling annual CO2 emissions in the second half of this century would make just about anyone a bit queasy.

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It is beginning to sink in that there is not going to be a major transition away from fossil fuels until the alternatives become a lot cheaper and this requires a much greater research and development effort. The alternatives are still too expensive for widespread deployment. There is considerable reluctance to bare the extra costs particularly in the developing countries where CO2 emissions are growing the most such as China and India. Indeed most increased energy production by far in recent years has been from fossil fuel.

The American Energy Innovation Council headed up by various capitalist big shots including Bill Gates is leading the charge, calling for a tripling of US federal funding of energy related research and development (R&D) or more precisely research, development, demonstration and initial deployment (RDD&D). They remind us that private firms usually under-fund this sort of activity. They cannot capture the benefits, there is too much uncertainty and the results are too long term. Furthermore energy is a pure commodity with no room for businesses to develop a differentiated product for which they can charge a premium. It is not like an iPhone. Another outfit called the Breakthrough Institute is telling a similar story.

You do not need to be all that alarmist about the climate impact of increasing CO2 emissions to want to see energy go carbon free or at least greatly reduced. The idea of doubling and then tripling annual CO2 emissions in the second half of this century would make just about anyone a bit queasy. Besides coal is rather unhealthy stuff and oil and gas may well get more expensive as they require increasing extraction effort. So there is hope that the call for increased energy R&D can attract bipartisan support.

A whole range of technologies require a lot of work and it is not just the renewables. Even if your preference is for wind and solar, it would be unwise to rely on them entirely. Solar thermal electricity only works when the sky is cloud free and the sun virtually overhead. PV solar gives far more power in a sunny climate than a cloudy one. And of course there is no solar power at night and some places have very long nights during winter. This is an even bigger problem when you take into account that most electricity demand is in the evening. Wind varies greatly from place to place and moment to moment. Most energy demand will be in large dense cities which are likely to be some distance from the large available land areas required for wind and solar. You would need considerable over-build of capacity and some major advances in energy storage and long distance electricity transmission. For biomass to fill the breach, you would need to ensure it does not compete with food or environmental needs, and is truly carbon neutral after taking into account harvesting and transport.

Two other big options are enhanced geothermal and nuclear power. Enhanced geothermal relies on fracturing hot underground rock. It is a massive resource, however it has failed to get going even in quite favorable regions in Australia after $1 billion in government and private funding. More research and learning by doing is needed.

A range of various next generation nuclear reactors are at the conceptual stage. These would use the spent fuel of current reactors, have passive safety systems, be mass produced cheaply and have low running costs. However, to ensure that we have at least one good option ready for widespread deployment 15 to 20 years from now will require an extensive ramping up of R&D.

Another area for increased R&D is in carbon capture and storage (CCS). A trial facility has already opened in Canada and a few others are under construction, but costs need to come down a lot. It is important to keep in mind here that much of the world’s fleet of coal and gas power plants is still relatively new and many more are in the pipeline. You can imagine governments particularly in poorer countries resisting the closure of such facilities when they still had years of life ahead of them. In these cases retrofitting CCS has to be the solution. There are also a number of industrial processes such as concrete and steel production where it is the only option.

Once alternatives are a lot cheaper than they are at present, a carbon price might be worth reconsidering. It would not have to be at a crippling level to induce a change in technology.

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Capitalism Bad for Economic Growth

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Government funding of research, development, demonstration and initial deployment (RDD&D) needs to increase dramatically. We need real breakthroughs in a raft of areas. Energy, agriculture, medicine and new materials come immediately to mind.

The following post is from David McMullen* :

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The slowness of technological progress is an issue that a genuine left can grab and run with. This interview with Peter Thiel co-founder of PayPal in the MIT Technology Review entitled ‘Technology Stalled in 1970’ highlights some of capitalism’s failures in this regard. He believes that technological progress has been stagnant for decades, that we need technologies that take us to the next level. We need flying cars not just Twitter or Facebook.

He says that large successful companies benefit from things not changing:

“You have to think of companies like Microsoft or Oracle or Hewlett-Packard as fundamentally bets against technology. They keep throwing off profits as long as nothing changes. Microsoft was a technology company in the ’80s and ’90s; in this decade you invest because you’re betting on the world not changing. Pharma companies are bets against innovation because they’re mostly just figuring out ways to extend the lifetime of patents and block small companies. All these companies that start as technological companies become antitechnological in character. Whether the world changes or not might vary from company to company, but if it turns out that these antitechnology companies are going to be good investments, that’s quite bad for our society.”

Ted Nordhaus and Michael Shellenberger from the Breakthrough Institute in this article point to the overwhelming role that government has played when it comes to developing general purpose breakthrough technologies.

Examples include computers, the Internet, jet engines, satellite communications, fracking technology, nuclear power and gas turbines. Indeed, all the important feature of the Apple iPhone were the result of Department of Defense funded research. They also make the point that 80 per cent of economic growth comes from innovation.

They say that capitalists generally do research and development on the less important stuff:

“Firms still spend a lot on research and development in the aggregate, but it is mostly spent on incremental product or process innovations, not long-term research to develop new disruptive technologies with the potential to radically transform existing markets and create entirely new ones.”

Government funding of research, development, demonstration and initial deployment (RDD&D) needs to increase dramatically. We need real breakthroughs in a raft of areas. Energy, agriculture, medicine and new materials come immediately to mind.

Hammering this point should allow us to hit out at both the free-market utopian-capitalists who think that the market can deliver everything and the pseudo left who simply hate technology.

We can also point out how this extremely critical aspect of economic development and human progress is often undertaken wastefully in the current social order. There is always gaming and corruption among researchers as they scramble to get their slice of the funding cake and further their careers. Such important activity would be better performed in a society where people are sufficiently at one with the world to simply do the right thing.

* David’s blog is The Economics of Social Ownership.