Don’t get mean on green energy innovation, Bill Gates warns Congress

Microsoft founder Bill Gates is urging senior lawmakers to buck the current zeal for budget cutting and boost federal investment in clean-energy research and development.

Gates — joined by a number of private-sector titans — took to Capitol Hill on Tuesday to argue that a far more muscular role is needed to expand innovation.

Their group, called the American Energy Innovation Council, wants to boost what it argues have been anemic federal investments in a sector vital to U.S. economic competitiveness, security and other goals.

“This group are all big believers in innovation, and we are all big believers in the importance of energy innovation,” Gates said at a briefing for reporters Tuesday. 

Gates is the latest high-profile businessman to push Congress on a White House priority — the energy group’s message is a close cousin to President Obama’s call to “win the future” with innovation in areas including energy.

He follows famed investor Warren Buffett, who has called for higher taxes on the wealthy. Like Buffett, Gates and the other members of the energy innovation group face a tough battle.

They’re pushing for wider investment at a time when Republicans are pushing to cut spending as far as they can — and cutting the deficit is front and center.

“Even though the budget challenges are very tough, we think this is an investment that has a very strong payback,” Gates said.

The energy group has identified a range of revenue streams to pay for federal energy investment it would eventually like to see reach $16 billion annually.

This includes tapping some of the billions of dollars in annual federal oil-and-gas revenues, cutting or ending subsidies to “mature” industries such as oil-and-gas, enacting a new federal fee on electricity delivered to consumers, adding a few cents to the federal gasoline tax (the report conceded this is “politically challenging”) and even levying a fee on carbon emissions in the long term.

Such proposals are certain to face Capitol Hill headwinds, and the report also comes shortly after the high-profile collapse of California-based solar company Solyndra, which had received $535 million in Obama administration loan support.

The company’s bankruptcy has prompted a wave of GOP attacks on Obama administration efforts to boost green energy.

But Bank of America Chairman Chad Holliday, another member of the group, said they were well-received in meetings Tuesday with members of Senate GOP and Democratic leadership, centrist House Republicans, members of the Senate Energy and Natural Resources Committee and others.

The group issued a major report Tuesday, which it is circulating in Congress, that lays out its goals.

The report makes the case for expanding funding for programs including the Energy Department’s Advanced Research Projects Agency-Energy (ARPAE), which funds so-called high-risk, high-reward research into breakthrough green technologies.

In addition to calling for expanded investment, the report recommends certain internal reforms at the Energy Department and calls for a federal “Clean Energy Deployment Administration” — sometimes called a “green bank” — that would provide various financing tools to help energy technologies bridge the gap from demonstration to commercialization.

Overall, the group notes, federal energy R&D spending has declined sharply since the late 1970s, and the roughly $5 billion in 2010 is far lower than support for medical and defense research.

“There is a need for government to be involved in funding research. We have seen this in the medical sector and the IT sector. The benefits to society of research are broad enough that if you just count on the private sector alone, you have very dramatic underinvestment,” Gates said from the headquarters of the Bipartisan Policy Center, the think tank that supports the energy innovation council.

The group’s report argues that federal efforts thus far to support clean-energy R&D have been paltry in comparison with other sectors. This is especially worrisome, they say, because when it comes to energy, the private sector has underinvested for various reasons.

“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 upfront 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,” the report notes.

Overall, it makes the case that a strong federal role in spurring energy innovation is vital.

“If the U.S. fails to invent new technologies and create new markets and new jobs that will drive the transformation and revitalization of the $5 trillion global energy industry, we will have lost an opportunity to lead in what is arguably the largest and most pervasive technology sector in the world. However, if the U.S. successfully innovates in clean energy, our country stands to reap enormous benefits,” the report states.

Gates said he recognizes the political challenges.

“We came here more because we believe in what we are saying than that we can run the political calculus better than people who live here,” Gates said.

“Right or wrong, we think there is some chance that the research budget will be increased, maybe not to the level we would like, [but] at least when people are setting priorities they ought to know that buried inside that [Energy Department] budget is some basic research and support for ARPA-E and centers of excellence that we think are key investments in the future,” he said.

This story was updated at 10:34 a.m. and 4:47 p.m. on Sept. 14.

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