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An Innovation Reform Agenda

Innovation has done great things for America’s energy economy—and can do so again if we reform the nation’s innovation institutions and public policies to focus on accelerating research and demonstration of new technologies that will be able to genuinely compete in national and global markets without subsidization.

Some argue America should spend far more on innovation, while others say far less; EIRP advocates for policy reforms that would allow us to spend the resources we have more effectively. There are a wealth of opportunities to more effectively advance energy innovation in America and abroad. We are working to:

Reform American Innovation Policies

The US spends billions annually subsidizing the use of renewable sources of energy, but these policies are poorly designed. Typically, they incentivize mass adoption of economically uncompetitive, status quo technologies, not innovation itself.

  • We should reform these policies to focus more on R&D rather than maximizing adoption of uncompetitive technologies, and pay for performanceincentivizing innovation in price and performance, rather than underwriting adoption of status quo technologies. Effective innovation policies will improve the productivity, affordability, and reliability of our energy systems—not undermine them.
  • Policymakers should insist that mature technologies meet the test of an unsubsidized market, using reverse auctions and other policies to drive innovation in new technologies while phasing out subsidies.

Reform America’s Institutions of Innovation

The federal government’s most important innovation institutions—the Department of Energy and the Nuclear Regulatory Commission—were never properly designed to promote innovation, and in important respects, have actually become de facto obstacles to it. We believe the government has an indispensable role to play in advancing innovation in America—a role it cannot play effectively without reforming our institutions of innovation.

  • DOE should be restructured to make energy research and development its focus.
    • Move extraneous activities out of the department;
    • Free the national labs from micromanagement and give them new focus and accountability;
    • Link the department’s basic and applied research activities together in a coherent portfolio;
    • Break down the technology-specific silos within the applied energy offices; and
    • Evaluate advanced energy technologies objectively.
  • Reform the Nuclear Regulatory Commission and the nuclear innovation programs at the Department of Energy.
    • The NRC should be given the mission and capabilities to license advanced reactor designs in a timely and cost-effective manner, an essential prerequisite for creating competitive market opportunities for nuclear innovators in the United States.
    • The Department of Energy and the NRC should more closely coordinate their activities, and share resources, to promote rapid innovation and licensing in advanced reactor designs.

Drive American Innovation in Key Technology Areas

Government should not be in the business of picking winners among energy technology providers—but that doesn’t mean we can’t make judgments about the performance and strategic significance of key technologies and their role in U.S. energy systems. What we need are policy reforms that incentivize effective innovation in technologies that can legitimately compete in national and global markets.

Enhanced oil recovery is one example of a technology and resource opportunity that America should focus on: It is a proven, productive, and effective technology that produces oil and sequesters carbon dioxide safely and securely. Oil companies have injected a billion tons of CO2 in the U.S. since pioneering this technique in the early 1970s, producing approximately 2.5 billion barrels of oil in the process.

  • Federal support for this burgeoning industry could drive a dramatic expansion of domestic oil production as well as rapid innovation in a strategically significant clean energy technology, carbon capture and sequestration.
  • Jump-starting a rapid expansion of the domestic EOR industry doesn’t require federal regulations or market manipulations; a temporary, self-funding tax credit would drive an enormous expansion of the market for EOR and CCS technologies and significant investments in the infrastructure for such systems. Within five years, such a program would pay for itself and begin adding millions of dollars to the federal treasury, while producing millions of barrels of oil annually and sequestering millions of tons of CO2.

Advanced nuclear energy technologies are another example of a strategic energy technology that should be a national priority. America’s nuclear power plants are aging and outdated. They operate safely today but new reactor designs are vastly superior, and even with relicensing, the lifespan of our existing nuclear fleet is limited. Now is the time to plan for the future for nuclear energy in America.

Nuclear energy was invented in America, and the US still boasts extraordinary advanced nuclear energy research facilities and a highly trained nuclear workforce. But we are in danger of losing these strategic national assets. Whether one cares about climate change, national security, or the affordability and reliability of our electric supply, we should work to give America’s nuclear entrepreneurs the chance to compete in US markets as well as abroad.

Once the gold standard for nuclear energy innovation and deployment, nuclear energy research and development in the United States is falling behind while China, Russia, South Korea, India, and other nations plan to bring dozens of new reactors online in coming years and test various new designs. America’s nuclear innovators are still working on cutting-edge designs—but are forced to look to international markets for opportunities to build them. This is not in our national interest.

While we take heart from some recent progress, such as the current construction of two AP1000 at Southern Company’s Plant Vogtle in Georgia, we urge policymakers to examine opportunities to encourage the world’s leading nuclear innovators to design and build the next generation of nuclear reactors in the United States.

Small modular designs and Generation IV alternatives to traditional light water reactors offer the potential for significantly reduced costs and vastly improved (“passive”) safety features, as well as other advantages. But the obstacles to building first-of-a-kind nuclear reactors in the United States are daunting. The Nuclear Regulatory Commission has never been given the mission and resources necessary to license innovative reactors, particularly non-light water reactors, quickly enough to permit successful commercialization—and consequently, the government’s regulatory process has become a de facto barrier to innovation. For example, NuScale recently reported that it has spent $130 million over the last five years on an effort to license a small modular reactor design—and the process is far from complete.

It is in America’s national interest to maintain its status as a leader in nuclear energy research and development, and to give American companies the opportunity to build the world’s best nuclear reactors in the United States.