And these private sector titans ask for... government help.
Seriously. They're members of what's called the American Energy Innovation Council. Its new report argues the government under-invests in energy innovation, relative to other sectors such as defense, health care, and technology. Their show-and-tell examples of how government investment did well include GPS, Internet, humane genome, and Teflon.
Listen here for Marketplace Morning Report's full interview with Gates.
And here's a cool word-cloud chart from Gates' blog today on energy R&D versus the rest of the federal budget. It's a Where's Waldo challenge to find the word energy. That's the point.
Two brief observations from yesterday's roundtable:
Doerr, whose list of successful venture investments includes Google, Amazon and Sun, argued today's IT sector would not be where it is today without initial investment by Uncle Sam.
And, like any conversation on U.S. competitiveness worth its salt, the presentation included a requisite China bullet point: How Beijing's energy R&D investments dwarf those of America's. No mention of well-known shortcomings acknowledged throughout China: a teach-to-the-test education system, lack of critical thinking, risk-averse environment for young people, top-down emperor management model, financial system weak on channeling capital to entrepreneurs. And don't get me started on intellectual property protections -- scary China plays better.
The obvious challenge for this council: pushing government investment in, well, anything in today's fiscal and political environment. Everyone's federal loaf of bread is at risk of shrinkage, including the energy department's prized program for swing-for-the-fences breakthroughs, ARPA-E.
Some bullet points from the report:
â€¢ Although we agree that the private sector is and will continue to be an important source of innovation, we believe the federal government has an integral role to play in advancing energy innovation.
â€¢ The U.S. government has a long and successful history of supporting publicly-funded research and development (R&D) projects that foster the development of new technologies.
â€¢ History shows that support for innovations that serve a fundamental national interest cannot be left to the private sector alone for two primary reasons:
Private markets generally do not exist for certain benefits, such as providing for a strong military, improving public health, and protecting the environment.
The private sector has tended to systematically under-invest in R&D relative to the potential gains to societyâ€‰--â€‰even where a market for the desired technology existsâ€‰--â€‰because it is difficult for any individual firm to monetize all the benefits of these types of investments.
â€¢ The energy sector in particular has suffered from under-investment in research, development and demonstration (RD&D), for three main reasons:
Energy is not valued in and of itself, but rather for the goods and services it provides. This means that product differentiation does not drive innovation in energy supply options in the same way that it would for other types of products and services.
Many energy technologies are capital-intensive and long-lived, with the result that many require significant up-front cash with a slow return. Slow turnover of capital assets combined with the need for large up-front investments mean that the sector as a whole is subject to a high degree of inertia, a tendency to avoid risk, and domination by incumbent firms.
Energy markets are not perfectly competitive, due to regulatory uncertainty, market fragmentation, and distortions introduced by past policies-all of which generally slow the adoption of innovative technology.
â€¢ Government-funded R&D programs in a number of areasâ€‰--â€‰such as defense, health, agriculture, and information technology (IT)â€‰--â€‰have enabled the United States to lead not just in specific technologies but in entire industries. Unfortunately, federal efforts thus far in support of clean energy R&D have been inadequate to the task and paltry in comparison with other sectors.
â€¢ We strongly recommend increased government support and leadership to develop and demonstrate new energy technologies to meet this century's challenge.
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