PublicationJournal Article U.S. energy research and development: Declining investment, increasing need, and the feasibility of expansion

April 7, 2008
Publication Type:
Journal Article

Invest­ment in energy research and devel­op­ment in the U.S. is declin­ing despite calls for an enhance­ment of the nation’s capac­ity for inno­va­tion to address envi­ron­men­tal, geopo­lit­i­cal, and macro­eco­nomic con­cerns. We exam­ine invest­ments in research and devel­op­ment in the energy sec­tor, and observe broad-​​based declines in fund­ing since the mid-​​1990s. The large reduc­tions in invest­ment by the pri­vate sec­tor should be a par­tic­u­lar area of con­cern for pol­icy mak­ers. Mul­ti­ple mea­sures of patent­ing activ­ity reveal wide­spread declines in inno­v­a­tive activ­ity that are cor­re­lated with research and devel­op­ment (R&D) investment—notably in the envi­ron­men­tally sig­nif­i­cant wind and solar areas. Trends in ven­ture cap­i­tal invest­ment and fuel cell inno­va­tion are two promis­ing cases that run counter to the over­all trends in the sec­tor. We draw on prior work on the opti­mal level of energy R&D to iden­tify a range of val­ues which would be ade­quate to address energy-​​related con­cerns. Com­par­ing sim­ple sce­nar­ios based on this range to past pub­lic R&D pro­grams and indus­try invest­ment data indi­cates that a five to ten-​​fold increase in energy R&D invest­ment is both war­ranted and feasible.

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