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As business leaders, the American Energy Innovation Countil (AEIC) feels that America’s current energy system is deficient in ways that cause serious harm to our economy, our national security, and our environment. To correct these deficiencies, AEIC believes America must make a serious commitment to modernizing our energy system with cleaner, more efficient technologies.Such a commitment should include both robust, public investments in innovative energy technologies as well as policy reforms to deploy these technologies on a large scale. By tapping America’s entrepreneurial spirit and longstanding leadership in technology innovation, AEIC believes America can set a course for a prosperous, sustainable economy—and take control of our energy future.

AEIC notes: The need for government involvement in energy

Bill Gates
There are two reasons the government must play a key role in accelerating energy innovation. First, innovations in energy technology can generate significant, quantifiable public benefits that are not reflected in the market price of energy. These benefits include cleaner air and improved public health, enhanced national security and international diplomacy, reduced risk of dangerous climate change, and protection from energy price shocks and related economic disruptions. Currently, these benefits are neither recognized nor rewarded by the free market.

Second, the energy business requires investments of capital at a scale that is beyond the risk threshold of most private-sector investors. This high level of risk, when combined with existing market structures, limits the rate of energy equipment turnover. A slow turnover rate exacerbates the historic dearth of investments in new ideas, creating a vicious cycle of status quo behavior.

The government must therefore act to spur investments in energy innovation and mitigate risk for large-scale energy projects. By heeding the following five recommendations, we feel the government can unleash the nation’s technology potential.

Full descriptions of Recommendations

Recommendation 1:

Create an independent national Energy Strategy Board

Recommendation 2:

Invest $16 billion per year in clean energy innovation

Recommendation 3:

Create Centers of Excellence with strong domain expertise

Recommendation 4:

Fund ARPA-E at $1 billion per year

Recommendation 5:

Establish and fund a New Energy Challenge Program to build large-scale pilot projects

AEIC Summary

In the defense, health, agriculture, and information technology industries, this country has made a deliberate choice to use intelligent federal investments to unleash profound innovation. As a result, the country leads in all those realms. In energy, however, the United States has failed the grade, and is paying a heavy price for that failure. We are optimistic about the potential for dramatic change in the energy realm. To seize this opportunity, America must put aside partisan interests and make a strong, bold commitment.