Summary

As a result of human activity, greenhouse gas emissions are increasing so rapidly that climate disaster is imminent. To avoid catastrophe, all economic sectors––industry, agriculture, transport, buildings, and electricity––require immediate energy and climate policy solutions. Only with a resilient and renewable, bipartisan, clean, and reliable partner can America fully decarbonize its economy and avert the devastating effects of climate change. As America’s clean energy transformation proceeds, there is one energy technology up for the task across all these sectors––geothermal. 

Geothermal is the energy source naturally produced by the Earth. It is a proven technology with decades of utilization across the United States, including New York, Idaho, North Dakota, California, Arkansas, New Mexico, and everywhere in between.

Government agencies and academic institutions have already identified more than enough untapped Earth-powered energy in the United States alone to meet the nation’s energy needs while also achieving its emissions goals. In fact, the total amount of heat energy in the Earth’s crust is many times greater than the energy available globally from all fossil fuels. 

Despite these benefits, geothermal represented just 0.4% of total U.S. utility-scale electricity generation in 2021 and only 1% of the residential and commercial building heating and cooling market. What is holding geothermal back is a lack of policy attention at both the federal and state levels. Geothermal has been drastically underfunded and continues to be left out of energy, climate, and appropriations legislation. By acting as the primary facilitator and coordinator for geothermal technology policy and deployment, the U.S. government can significantly accelerate the clean energy transformation. 

Our Empowering the Geothermal Earthshot proposal is a multibillion dollar interagency effort to facilitate the energy revolution America needs to finally solve the climate crisis and complete its clean energy transformation. This top-down support would allow the geothermal industry to fully utilize the power of the free market, commercialize innovation into mass production, and scale technologies.

Challenge and Opportunity

Geothermal energy––clean renewable energy derived from the unlimited heat in the Earth––is a proven technology that can contribute to achieving aggressive climate goals but only if it gets much-needed policy support. Geothermal urgently requires the same legislative and executive attention, policy momentum, and funding that all other energy technologies receive. The Biden Administration as well as Republicans and Democrats in Congress need to lift up the profile of geothermal on par with other energy technologies if we are to reach net-zero by 2050 and eventually 24/7 carbon-free energy.

On day one of his administration, President Biden charged his National Climate Task Force to utilize all available government resources to develop a new target for reductions in greenhouse gas (GHG) emissions. As a result, in April 2021 the Biden Administration announced an aggressive new GHG target: a 50% reduction from 2005 levels by 2030. To meet this challenge, the administration outlined four high-priority goals:

Figure 1.

Pie chart showing Total Greenhouse Gas Emissions by Economic Sector in the U.S. in 2020. Transportation is responsible for 27%; Electricity, 25%; Industry, 24%; Commercial; Residential, 13%; Agriculture, 11%.

1. Invest in clean technology infrastructure.
2. Fuel an economic recovery that creates jobs.
3. Protect our air and water and advance environmental justice.
4. Do this all in America.

Geothermal energy’s primary benefits make it an ideal energy candidate in America’s fight against climate change. First, geothermal electricity offers clean firm, reliable, and stable baseload power. As such, it easily complements wind and solar energy, which can fluctuate and produce only intermittent power. Not only does geothermal energy offer more resilient and renewable energy, but––unlike nuclear and biomass energy and battery storage––it does so with no harmful waste by-products. Geothermal energy does not depend on extractive activities (i.e., mining) that have a history of adversely impacting the environment and Indigenous communities. The underlying energy source––the literal heat beneath our feet––is local, is 100% American, and has demonstrated gigawatt-scale operation since the 1980s, unlike every other prospective clean energy technology. Geothermal energy offers a technology that we can export as a service provider and manufacturer to the rest of the world to reduce global GHG emissions, increase U.S. energy independence, and improve the country’s economy and national defense. 

Additionally, climate change continues to change outside air temperatures and weather patterns impacting building energy consumptions (e.g., heating and cooling), which are expected to increase. Geothermal heating and cooling meets these demands by providing reliable and distributed electricity generation, winter heating, and summer cooling. Geothermal heating and cooling offer solutions to other economic sectors that produce harmful carbon and methane emissions. 

Getting to net-zero by 2050––and eventually to 24/7 carbon-free energy––is a community problem, a public sector problem that affects America’s public health, economic survival, and national security. We can get here if geothermal is provided the same opportunities that the government has afforded all other energy technologies.

Geothermal Energy: The Forgotten Energy Technology

Today, geothermal power production is at the same developmental stage that oil production was 100 years ago. Geothermal power production has been proven at gigawatt scale, but in a limited range of locations where conventional hydrothermal systems are easily accessible. Petroleum drilling in the United States began in 1859 and expanded first in places where oil was visible, easily identifiable, and quickly accessible. In the 150 years since, continuous market support from governments and societies has allowed the fossil fuel economy not just to continue but to expand through technology innovation. Fossil fuel technologies have matured to the point where engineers regularly drill seven to eight miles underground, drill in deep ocean water, and utilize efficient recovery technologies such as steam-assisted gravity drainage.

Geothermal carries the same potential to drive new technologies of energy production and enable huge increases in energy recovery and output. However, unlike the petroleum industry, geothermal energy has never received comparable and effective policy support from the federal and state governments to drive this needed technology development, innovation, and deployment. As a result, the geothermal industry has been left behind in the United States. 

Figure 2.

Pie chart of Federal Energy Subsidies between 1950 and 2010, showing a plurality of subsidies going to oil, while only a small sliver to geothermal.

Ironically, the fact that geothermal technologies have a long and successful track record has kept them out of the “new technology” focus that has been central to clean energy transition policy discussions.

Other technologies (e.g., hydro, solar, hydrocarbons, nuclear, biofuels, and wind) receive tens of billions of dollars each year to develop a path to continued, preferred, and widespread use, which generates commercialization, scalability, and profit. However, similar investment strategies have not been dedicated to geothermal energy infrastructure development. 

The United States needs critical capital investments to reach the vast amount of untapped Earth energy scientists have identified, expand the range of places where geothermal resources are possible, and lower the cost of geothermal drilling and production. Public investment will promote technologies such as heating and cooling systems that use individualized geothermal heat pumps (GHP) or district thermal systems. Significant public investment is needed in electricity generation technologies such as closed-loop, deep super hot rock, and enhanced systems (EGS). And of course, public and private investments are needed to help manufacturing and agricultural processes switch from fossil fuels to geothermal.

Investing in Our Future: Empowering the Geothermal Earthshot

Thankfully, investing in America’s energy infrastructure is a priority of our current presidential administration. As indicated in the April 2021 White House Fact Sheet and supported by Executive Order 14057 and the Department of Energy (DOE) Enhanced Geothermal Earthshot announced in September 2022, the Biden Administration realizes the need to marshal federal resources in a coordinated effort.

However, to fully realize and build upon the administration’s clean energy objectives, this proposal urges a holistic approach to empower geothermal deployment. The Enhanced Geothermal Earthshot falls short of the effort required to empower geothermal and scale a solution to draw down the climate crisis because it focuses on a single geothermal technology and involves just one federal agency. Instead, a whole-of-geothermal approach that harnesses the power of the entire federal government is necessary to create ambitious, positive, and widespread changes in America’s energy landscape and subvert the current fossil fuel status quo. The following action plan will usher in the geothermal era and ensure the United States meets its climate objectives and completes the clean energy transformation.

Plan of Action

The Biden Administration must set the targets and the agenda, propose policy and tax support, negotiate for appropriations, and issue regulatory support that allows commercialization and deployment of every possible Earth-powered technology solution. These steps will set up the market conditions for the private sector to commercialize and scale these proven technologies and new innovations. 

Creating policies and programs to support geothermal applications and technologies will accelerate the clean energy transformation and end our dependence on hydrocarbons. The U.S. government can usher in a new age of clean, renewable, and local energy through a combination of innovation, programs, and institutionalization. These are outlined in the recommendations detailed below.

Recommendation 1. Empower a Holistic Geothermal Earthshot

The Biden Administration should build upon and broaden the Enhanced Geothermal Earthshot to reduce the cost of EGS by 90% to $45 per megawatt hour by 2035. The administration should set a target for geothermal heat pumps and district thermal systems to reach 35% of U.S. energy consumption by 2035 and electricity generation to reach 10% of energy consumption by 2035. These objectives are in response to the administration’s carbon reduction goals for 2030 and 2050. To begin this initiative, President Biden––joined by the Secretaries of Energy, the Interior, Commerce, Defense, and Agriculture, as well as special climate and environment envoys and advisors and the Environmental Protection Agency (EPA) administrator, among others—should formally usher in a reimagined and holistic Geothermal Earthshot that leverages a whole-of-government approach.

Recommendation 2. Institutionalize and Coordinate Earth Energy Support

Create the Office of Earth Energy (OEE) at DOE through the president’s annual budget proposal. The OEE’s mission will be to coalesce federal and state governments, familiarize the public, and support all types of Earth-powered energy technologies. 

• Model the OEE after the DOE’s Office of Nuclear Energy (ONE) and Office of Fossil Energy and Carbon Management (OFECM)
• Inaugurate an Assistant Secretary for Earth Energy to oversee OEE who will report to the DOE’s Undersecretary for Science and Innovation
• Establish three deputy assistant secretaries (DAS) for:
  • Low temperature (i.e., direct heat/GHP-GSHP/agriculture/industry)
  • Power generation (i.e., enhanced, advanced, conventional)
  • Technology R&D (i.e., super hot rock)
• Structure OEE to have branches promoting and supporting Earth-powered systems and solutions by economic sector: industry, agriculture, transport, buildings, and electricity
• OEE annual appropriations of no less than $1.78 billion for operations, research, development, demonstration, and deployment (this funding level is on par with the other energy offices at DOE on which the OEE is modeled)
• Sharpen the focus of the existing Geothermal Technologies Office to be an EGS-specific branch of the power generation DAS within the OEE

Existing DOE offices such as ONE and OFECM offer a proven template from which to model OEE. Geothermal’s potential to address the climate crisis and become a significant part of the cooling/heating and electricity mix in the United States requires significant growth of support within the federal government. The organizational structure of the federal government is imperative to spearhead geothermal development. Raising the awareness and profile of geothermal within the government requires higher-level offices and more senior-level personnel supporting, evaluating, and studying the industry. The three DAS subject-matter designations represent the three overarching applications of geothermal technologies.

Interagency coordination should be led by a Senior Director for Earth-Powered Energy within the National Security Council (NSC). Programs and initiatives involve executive agencies and offices, including DOE, Department of Defense (DOD), Department of Agriculture, Department of Commerce, Department of the Interior (DOI), Office of Science and Technology Policy, Office of Management and Budget, NSC, Domestic Policy Council, Department of State, and EPA, among others.

Recommendation 3. Accelerate Geothermal Innovation

The following innovation accelerator concepts can help unlock technical hurdles and unleash private sector thinking to expand the reach of geothermal energy applications. The needed primary research fits into three broad categories: streamlining existing geothermal energy development and reducing risk, technology innovations to support massively scaling the potential range and total energy available from the Earth, and technical refinements to optimize every Earth energy application.

For example, work is needed to reduce technical risk and predictability in siting geothermal wells to make drilling a geothermal well as predictable and repeatable as it is for oil and gas wells today. Reduced risk and greater predictability is critical to private sector investment support. 

Commercial and residential heat pumps and district heating systems need R&D support to improve deployability in urban settings and to maximize both heating and cooling efficiency.

Enhanced geothermal systems—those that expand traditional hydrothermal power generation to less permeable locations—have received modest public sector support for several decades but need greater and more focused application of technologies that were developed for oil and gas during the fracing expansion.

Achieving massive scalability for geothermal power means developing technologies that can operate well beyond traditional hydrothermal system locations. Closed-loop and other advanced geothermal technologies promise access to energy anywhere there is heat, but all are currently at the earliest stages of their technology lifecycles and operating without major public sector research support 

All of these use cases would benefit from a concerted, government-funded research effort, shared access to innovation and best practices, and a clear path to commercialization.

(A) Propose in the president’s annual budget a geothermal bureau, program, or focus area within the Advanced Research Projects Agency-Energy (ARPA-E) dedicated to promoting all types of geothermal innovations, from low- to high-temperature cooling/heating and electricity applications. ARPA-E “advances high-potential, high-impact energy technologies that are too early for private-sector investment.” Use this program to support research into new or expanded ways to use Earth energy that are too early or speculative for private sector investment and bring them to the point of commercialization.

(B) Create a new venture capital entity to accelerate commercialization of geothermal innovations by aggressively investing in geothermal-related technologies. Model it on the existing In-Q-Tel organization that has been very successful in driving national security technology development. This would be a new venture capital funding entity focused on commercializing Earth power technology innovation from U.S. government-funded research and development initiatives (e.g., the ARPA-E projects described above) and on exploring technology solutions to problems that remain unsolved across government, industry, and society yet are critically important for dealing with climate change. 

(C) Create a public-private Geothermal Center of Excellence (GeoExcel) at a DOE national lab. A sustained and robust public-private research program is essential for innovation, and many agencies leverage private sector investment through publicly funded centers of excellence. Currently, geothermal research is conducted haphazardly and incoherently across U.S. government agencies and DOE national labs such as Idaho National Lab, Sandia National Labs, Lawrence Berkeley Lab, U.S. Geological Survey, National Renewable Energy Lab, Brookhaven National Lab, Argonne National Lab, National Energy Technology Lab, and many more. To augment research within its national lab apparatus, DOE should establish GeoExcel to develop the technology necessary to produce low-cost geothermal power, cooling/heating, and mineral recovery such as lithium, manganese, gold, and silica. GeoExcel would also conduct education outreach and workforce development. GeoExcel would be a multibillion-dollar public-private partnership competitively awarded with multiyear funding. It would interact closely with one or two DOE national labs as well as federal, state, regional, and municipal government agencies, research universities, community college, nonprofits, and the private sector.

Recommendation 4. Create Earth Energy-Specific Programs and Policies

The following programs, funding, and regulatory suggestions should be proposed in the president’s budget and funded or authorized through congressional appropriations or moving authorization legislation. Some recommendations can be achieved through updating rules and regulations.

Programmatic: DOE Demonstration Projects

The Infrastructure Investment and Jobs Act (IIJA) appropriated $20 billion for demonstration projects, including those for hydrogen, direct air capture, and large-scale carbon capture. This funding provides vital capital to incentivize, commercialize, and scale public-private partnerships using the benefits of the free market to build major infrastructure projects that will expand clean energy and advance the energy transformation. The IIJA did not direct any funding specifically for geothermal technologies; yet geothermal provides the critical clean firm and renewable baseload energy that complements intermittent technologies, can be coupled to produce green hydrogen, and empowers direct air capture infrastructure. As part of its criteria for selecting applications for demonstration project funding, Congress should clarify and/or DOE should expressly include and announce that geothermal technology will receive significant demonstration appropriations funded through the IIJA.

Funding: Risk Mitigation and Management

Commercial investment in new technology hinges on risk assessment. Removing risk from new geothermal ventures will facilitate faster commercial-scale deployment and, in turn, lower risk as more projects are completed. Propose a $2 billion risk mitigation fund within the DOE’s OEE specific for district cooling/heating and electricity drilling and exploration projects. This geothermal risk mitigation fund would provide loans to cover a portion (i.e., 60%) of the drilling cost that can be converted into grants if development of the geothermal field is unsuccessful. To minimize losses, a premium can be charged to ensure a positive return based on risk and set limits on total wells covered and monetary claims to limit losses. 

This risk mitigation and management structure has been successfully implemented for geothermal projects in Kenya, Iceland, and Costa Rica, countries in the top five of geothermal energy production per capita. To further reduce risk, the OEE should only consider projects that have already completed some exploratory drilling. Before administering commercial debt financing, the OEE should also require these projects to receive concessional risk mitigation support prior to advancing with additional drilling, district cooling/heating system construction, or power plant construction.

Funding: Rural Development

Propose a $450 million Department of Agriculture Rural Development grant program to transition agricultural and industrial cool/heat applications from burning fossil fuels to Earth energy generation. This funding can be used to decarbonize over two million cooling and heating systems used in the agricultural sector in rural America. Agricultural activities such as food processing, pulp and paper manufacturing, vegetable dehydration, dairy processing, aquaculture, greenhouses, processing sugar, and much more can transition to the clean energy economy.

Funding: Community Development

Propose a $750 million grant program to be implemented by the Department of Commerce Economic Development Administration. Grants will be made for high- and low-temperature geothermal developers to partner with municipalities, electric or energy cooperatives, community choice aggregators, and public utilities servicing America’s communities to develop geothermal resources. This funding level could generate between 375 and 500 megawatts of electricity to power between 280,000 and 375,000 households or over 3,500 megawatts of cooling/heating energy and decarbonize two to three million households and commercial businesses around the country. It is important that the clean energy transition equitably and justly empower rural American communities along with urban and suburban communities.

Funding: Tribal Development

Fund a $275 million grant program through the proposed OEE at DOE or the Bureau of Indian Affairs (BIA) at DOI to support tribal nations to develop geothermal resources on their lands, such as electricity generation, industrial and agricultural decarbonization, residential and commercial GHPs or district cooling/heating installations, and recreation. This funding could be used to generate up to 183 megawatts of electricity or 1,375 megawatts of thermal energy for use on tribal lands. Native Americans used geothermal resources for thousands of years before European settlement. Today, tribal lands are the backbone of mineral exploitation, agriculture, industry, and power production in America. These OEE or BIA funds will facilitate the clean energy transition on tribal lands using geothermal resources.

Funding: Military Construction

Propose a $2.6 billion program for distributed geothermal power and cooling/heating projects on military installations across the United States and abroad. The Air Force recently selected two military installations to deploy geothermal energy. In an increasingly contested clean energy economy, we should build secure and resilient military infrastructure using local Earth energy technologies directly on military installations. DOD can use the funding to generate a combination of up to 1,733 megawatts of electricity or 13,000 megawatts of thermal energy to offset its massive carbon footprint from 500 fixed installations, which includes 300,000 buildings. This investment will help all service branches and DOD reach the Biden Administration’s renewable energy generation goals. This funding begins the vital transformation to secure the energy infrastructure of military installations through energy independence and protect our national security interests at home and abroad. Energy and mineral security are paramount for our national security. 

Funding: Smithsonian Institution

Geothermal energy is a story of the forgotten energy technology. Propose $25 million for the Smithsonian Institution to memorialize and narrate the history and future of geothermal energy in the United States. Museums familiarize and educate policymakers and the public about the past, present, and future of America. Permanent exhibitions in museums along the National Mall in Washington, DC, will help promote the potential of geothermal resources to policymakers as is already done with other energy technologies featured by the Smithsonian Institution.

Funding: Workforce Development and Community Colleges

The future of the clean energy transformation rests in the education of Americans and a smooth workforce transition of oil and gas professionals into the clean energy economy. Community colleges play a vital role in this transition. Allocate $300 million for the Department of Education to award grants to technical and vocational programs to develop and build geothermal-specific skill sets and needs into curriculums. These geothermal programs will build upon and expand existing programs such as drill rig crew member training programs like that at Houston Community College in Texas or cooling/heating apprenticeship programs like those at Mercer Community College in New Jersey or Foothills College in California. The objective of these grants is to amplify the capabilities of geothermal technologies and deepen the knowledge of professionals who install, sell, market, or manufacture products that could transition to geothermal technologies and away from burning fossil fuels.

Funding: Convert Abandoned Oil and Gas Wells

Expand the authorities of the Leaking Underground Storage Tank (LUST) Trust Fund within the EPA to include the conversion of existing and abandoned oil and gas fields into geothermal wells. The LUST Trust Fund is financed by a 0.1 cent tax on each gallon of motor fuel sold nationwide. Oil and gas wells can be retrofitted or reworked to provide geothermal cooling/heating for low-to-no-carbon direct use opportunities or generate power. Due to the years of development at these sites, the reservoir is well understood, thereby lowering risks and cost of exploration. Alternatively, this program could be a direct grant program funded through the proposed OEE within DOE or through EPA.

Regulatory: Geothermal Permitting Application Processing

Applications to conduct geophysical exploration are currently reviewed by the district office within the Bureau of Land Management (BLM) at DOI that has geographic jurisdiction over the specific geothermal project. Yet many district offices are unfamiliar with the technical aspects of geothermal development, causing significant delays in the review process. Fund $15 million for a national office with a dedicated geothermal team to develop training materials and standard operating procedures and to provide technical support to district offices to ensure timely review of geothermal power and cooling/heating projects on federal lands. Programs that cross-train staff will also improve the ability to coordinate between different agencies and offices.

Regulatory: Categorical Exclusions for Geothermal Projects

Several activities involved in geothermal resource development have no significant environmental effects yet lack an existing categorical exclusion under the National Environmental Policy Act. BLM’s regulations include only one categorical exclusion for geophysical exploration when no temporary or new road construction is required (43 CFR 4 3250); however, it does not cover resource confirmation activities. As a consequence, federal agencies take several months to approve what could be done in a matter of days via a categorical exclusion. Congress has recognized the need to improve the permitting process for geothermal production and introduced several bills to authorize categorical exclusions (i.e., S. 2949, S. 2824, and H.R. 5350).

Tax Support: Cooling and Heating

Propose a 40% tax incentive for residential and commercial building installation of geothermal heat pumps and extend the lifespan of these incentives through 2050, the date set to reach net zero emissions economy-wide. Additionally, the Biden Administration should publicly clarify or amend Presidential Determination No. 2022-18 of Section 303 of the Defense Production Act to include geothermal heat pumps.

Tax Support: Power

Geothermal electricity generation has traditionally been capital-intensive, and investment decisions depend in part on the predictability of tax incentives. This trend is best illustrated by the 1978 passage of the Public Utility Regulatory Policies Act (PURPA). This legislation’s tax consequences created more favorable conditions and a more robust market for renewable-energy suppliers. As a result, PURPA allowed the United States to rapidly increase its geothermal capacity throughout the 1980s.

Rapid deployment and growth after the passage of PURPA illustrates the impact of public policy on geothermal innovation and investment. However, renewable energy tax incentives provided in the Inflation Reduction Act of 2022 had intermittent energy and battery storage in mind when drafted. These tax incentives do not adequately support geothermal power development due to sunset clauses. The president’s budget as well as congressional appropriators and authorizers should extend the availability of the 30% Investment Tax Credit (ITC) and 2.6 cents per kWh for the Production Tax Credit (PTC) using a market approach akin to that proposed in the bipartisan Energy Sector Innovation Credit (ESIC) Act authored by Senators Whitehouse (D-RI), Crapo (R-ID), Barrasso (R-WY), Bennet (D-CO), and Hickenlooper (D-CO) as well as Representatives Reed (R-NY) and Panetta (D-CA). 

Figure 3.

Chart showing eletricity generation capacity from geothermal development in the U.S. from 1970 to 2020. In that time, geothermal generation capacity has grown from 0 megawatts to nearly 4,000 megawatts.

The ITC and PTC are written with intermittent energy technologies in mind. Geothermal requires a tax incentive structure that does not sunset after two or 10 years but rather automatically scales down credits as geothermal technologies’ market penetration ramps up. The ESIC scale down should begin when geothermal reaches 10% market penetration instead of 2%. This empowers the free market to play a major role in commercialization and scaling geothermal technologies and provides much-needed predictability and planning for the geothermal industry. It also ensures taxpayer dollars do not subsidize market-mature technologies as they currently do for all other energy technologies such as hydrocarbon, solar, wind, and nuclear projects.

Conclusion 

We can find geothermal energy just below our feet, literally everywhere. It provides 24/7 carbon-free power, cooling, and heating that is safe, resilient, local, and American. A public-private partnership that leverages public-sector investment with private-sector know-how can make geothermal technology a viable replacement for hydrocarbons and a powerful solution to reducing greenhouse gas emissions. We must empower and broaden the Enhanced Geothermal Earthshot through the programs and recommendations listed in this plan of action. In doing so, a reimagined and holistic Geothermal Earthshot can leverage the position and influence of the federal government through a whole-of-government approach, allowing the free market to seize on this momentum to scale and commercialize geothermal energy solutions. This will expand the rapidly emerging technologies that make widespread Earth-energy harnessing possible. As the need for firm, scalable, renewable, stable baseload energy only becomes more urgent, these geothermal innovations make the possibility of continuous, reliable, global clean energy a reality.

The news on the earth’s climate can feel unrelentingly depressing. And increasingly often, headlines and reports focus, correctly, on tipping points.  The IPCC first introduced the idea of climate tipping points decades ago; the concept is that once certain climate thresholds are reached, it could force life on earth to contend with long-term, irreversible changes. 

From the collapse of the Greenland ice sheet to the Labrador Seas Convection Collapse to the dieback of the Amazon Rainforest, these tipping points will send earth systems into a catastrophic tailspin. They are forecasted to unleash progressively as we approach the warming thresholds of 1.5°C.

But tipping points don’t have to be negative. What if, instead of envisioning every tipping point as the edge of a cliff overlooking an ecological abyss, we can start to think about positive climate tipping points, leading communities, countries, and yes, the globe to a more sustainable, cleaner and livable future?

This is not a utopian pipedream – a growing body of research suggests that positive tipping points, such as thresholds in electric vehicle adoption, or changes in food markets and consumption habits, could just as rapidly accelerate transitions to a more sustainable way of life. 

In fact, this week, experts are convening at the University of Exeter in the United Kingdom, for the first ever Global Tipping Points Conference. This event will bring together a growing alliance of partners working together on tipping points and seeking to co-develop new approaches for triggering positive tipping points for a socially just transformation.

Thus far, the idea of positive climate tipping points remains largely academic – and researchers are still working on how to identify enabling conditions for these positive tipping points before they occur.  But the goal of operationalizing positive tipping points is well within reach, and some of our counterparts in the UK and Europe have already begun applying this concept in thinking about policy intervention.

What does this mean for the United States? Given the window of opportunity provided by the Inflation Reduction Act (IRA) and the Infrastructure Investment and Jobs Act (IIJA), we have an opportunity to drive real transformative change. Positive tipping points might  jumpstart recovery and accelerate our return on investment. For example, what if we could map the penetration and distribution of electric vehicle (EV) charging infrastructure required to cause electric vehicle use to take off — and then target infrastructure subsidies to optimize that result? Or if in planning for implementation of the Federal Sustainability Plan, the government could sequence the transition of its operations, toward 100% zero-emission vehicle acquisitions for example, to achieve results faster and more economically by capitalizing on positive tipping points? 

The Federation of American Scientists and our collaborators at Metaculus, a forecasting community and platform dedicated to generating accurate predictions about future real-world events, will be watching this week as the Global Tipping Points Conference kicks off across the Atlantic. Our hope is to harness this energy to inspire policymakers back home, to make the most of this moment to drive toward a sustainable future.

Summary

The Biden-Harris Administration has made revitalization of U.S. manufacturing a key pillar of its economic and climate strategies. On the campaign trail, President Biden pledged to do away with “invent it here, make it there,” alluding to the long-standing trend of outsourcing manufacturing capacity for critical technologies — ranging from semiconductors to solar panels —that emerged from U.S. government labs and funding. As China and other countries make major bets on the clean energy industries of the future, it has become clear that climate action and U.S. manufacturing competitiveness are deeply intertwined and require a coordinated strategy.

Additional legislative action, such as proposals in the Build Back Better Act that passed the House in 2021, will be necessary to fully execute a comprehensive manufacturing agenda that includes clean energy and industrial products, like low-carbon cement and steel. However, the Department of Energy (DOE) can leverage existing authorities and assets to make substantial progress today to strengthen the clean energy manufacturing base. 

This memo recommends two sets of DOE actions to secure domestic manufacturing of clean technologies:

1. Foundational steps to successfully implement the new Determination of Exceptional Circumstances (DEC) issued in 2021 under the Bayh-Dole Act to promote domestic manufacturing of clean energy technologies.
2. Complementary U.S.-based manufacturing investments to maximize the DEC’s impact and to maximize the overall domestic benefits of DOE’s clean energy innovation programs.

Challenge and Opportunity

Recent years have been marked by growing societal inequality, a pandemic, and climate change-driven extreme weather. These factors have exposed the weaknesses of essential supply chains and our nation’s legacy energy system. 

Meanwhile, once a reliable source of supply chain security and economic mobility, U.S. manufacturing is at a crossroads. Since the early 2000s, U.S. manufacturing productivity has stagnated and five million jobs have been lost. While countries like Germany and South Korea have been doubling down on industrial innovation — in ways that have yielded a strong manufacturing job recovery since the Great Recession — the United States has only recently begun to recognize domestic manufacturing as a crucial part of a holistic innovation ecosystem. Our nation’s longstanding, myopic focus on basic technological research and development (R&D) has contributed to the American share of global manufacturing declining by 10 percentage points, and left U.S. manufacturers unprepared to scale up new innovations and compete in critical sectors long-term.

The Biden-Harris administration has sought to reverse these trends with a new industrial strategy for the 21^st century, one that includes a focus on the industries that will enable us to tackle our most pressing global challenge and opportunity: climate change. This strategy recognizes that the United States has yet to foster a robust manufacturing base for many of the key products —ranging from solar modules to lithium-ion batteries to low-carbon steel — that will dominate a clean energy economy, despite having funded a large share of the early and applied research into underlying technologies. The strategy also recognizes that as clean energy technologies become increasingly foreign-produced, risks increase for U.S. climate action, national security, and our ability to capture the economic benefits of the clean energy transition. 

The U.S. Department of Energy (DOE) has a central role to play in executing the administration’s strategy. The Obama administration dramatically ramped up funding for DOE’s Advanced Manufacturing Office (AMO) and launched the Manufacturing USA network, which now includes seven DOE-sponsored institutes that focus on cross-cutting research priorities in collaboration with manufacturers. In 2021, DOE issued a Determination of Exceptional Circumstances (DEC) under the Bayh-Dole Act of 1980¹ to ensure that federally funded technologies reach the market and deliver benefits to American taxpayers through substantial domestic manufacturing. The DEC cites global competition and supply chain security issues around clean energy manufacturing as justification for raising manufacturing requirements from typical Bayh-Dole “U.S. Preference” rules to stronger “U.S. Competitiveness” rules across DOE’s entire science and energy portfolio (i.e., programs overseen by the Under Secretary for Science and Innovation (S4)). This change requires DOE-funded subject inventions to be substantially manufactured in the United States for all global use and sales (not just U.S. sales) and expands applicability of the manufacturing requirement to the patent recipient as well as to all assignees and licensees. Notably, the DEC does allow recipients or licensees to apply for waivers or modifications if they can demonstrate that it is too challenging to develop a U.S. supply chain for a particular product or technology.

The DEC is designed to maximize return on investment for taxpayer-funded innovation: the same goal that drives all technology transfer and commercialization efforts. However, to successfully strengthen U.S. manufacturing, create quality jobs, and promote global competitiveness and national security, DOE will need to pilot new evaluation processes and data reporting frameworks to better assess downstream impacts of the 2021 DEC and similar policies, and to ensure they are implemented in a manner that strengthens manufacturing without slowing technology transfer. It is essential that DOE develop an evidence base to assess a common critique of the DEC: that it reduces appetite for companies and investors to engage in funding agreements. Continuous evaluation can enable DOE to understand how well-founded these concerns are.

Yet, the new DEC rules and requirements alone cannot overcome the structural barriers to domestic commercialization that clean energy companies face today. DOE will also need to systematically build domestic manufacturing efforts into basic and applied R&D, demonstration projects, and cross-cutting initiatives. DOE should also pursue complementary investments to ensure that licensees of federally funded clean energy technologies are able and eager to manufacture in the United States. Under existing authorities, such efforts can include: 

• Elevating and empowering AMO and Manufacturing USA to build a competitive U.S. workforce and regional infrastructure for clean energy technologies.
• Directly investing in domestic manufacturing capacity through DOE’s Loan Programs Office and through new authorities granted under the Bipartisan Infrastructure Law.
• Market creation through targeted clean energy procurement.
• Coordination with place-based and justice strategies. 

These complementary efforts will enable DOE to generate more productive outcomes from its 2021 DEC, reduce the need for waivers, and strengthen the U.S. clean manufacturing base. In other words, rather than just slow the flow of innovation overseas without presenting an alternative, they provide a domestic outlet for that flow. Figure 1 provides an illustration of the federal ecosystem of programs, DOE and otherwise, that complement the mission of the DEC.

Figure 1

Programs are arranged in rough accordance to their role in the innovation cycle. TRL and MRL refer to technology and manufacturing readiness level, respectively. Proposed programs, highlighted with a dotted yellow border, are either found in the Build Back Better Act passed by the House in 2021 or the Bipartisan Innovation Bill (USICA/America COMPETES)

Figure 1Programs are arranged in rough accordance to their role in the innovation cycle. TRL and MRL refer to technology and manufacturing readiness level, respectively. Proposed programs, highlighted with a dotted yellow border, are either found in the Build Back Better Act passed by the House in 2021 or the Bipartisan Innovation Bill (USICA/America COMPETES).

Plan of Action

While further Congressional action will be necessary to fully execute a long-term national clean manufacturing strategy and ramp up domestic capacity in critical sectors, DOE can meaningfully advance such a strategy now through both long-standing authorities and recently authorized programs. The following plan of action consists of (1) foundational steps to successfully implement the DEC, and (2) complementary efforts to ensure that licensees of federally funded clean energy technologies are able and eager to manufacture in the United States. In tandem, these recommendations can maximize impact and benefits of the DEC for American companies, workers, and citizens.

Part 1: DEC Implementation

The following action items, many of which are already underway, are focused on basic DEC implementation.

• Develop and socialize a draft reporting and data collection framework. The Office of the Under Secretary for Science and Innovation should work closely with DOE’s General Counsel and individual program offices to develop a reporting and data collection framework for the DEC. Key metrics for the framework should be informed by the Science and Innovation (S4) mission, and capture broader societal benefits (e.g., job creation). DOE should target completion of a draft framework by the end of 2022, with plans to socialize, pilot, and finalize the framework in consultation with the S4 programs and key external stakeholders.
• Identify pilots for the new data reporting framework in up to five Science and Innovation programs. Since the DEC issuance, Science and Innovation (S4) funding opportunity announcements (FOAs) have been required to include a section on “U.S. Manufacturing Commitments” that states the requirements of the U.S. Competitiveness Provision. FOAs also include a section on “Subject Invention Utilization Reporting,” though the reporting listed is subject to program discretion. By early 2023, DOE should identify up to five program offices in which to pilot the data reporting framework referenced above. The Office of the Under Secretary for Science and Innovation (S4) should also consider coordinating with the Office of the Under Secretary for Infrastructure (S3) to pilot the framework in the Office of Clean Energy Demonstrations. Pilot programs should build in opportunities for external feedback and continuous evaluation to ensure that the reporting framework is adequately capturing the effects of the DEC.
• Set up a DEC implementation task force. The DEC requires quarterly reporting from program offices to the Under Secretary for Science and Innovation. The Under Secretary’s office should convene a task force — comprising representatives from the Office of Technology Transitions (OTT), the General Counsel’s office (GC), the Office of Manufacturing and Energy Supply Chains, and each of DOE’s major R&D programs — to track these reports. The task force should meet at least quarterly, and its findings should be transmitted to the DOE GC to monitor DEC implementation, troubleshoot compliance issues, and identify challenges for funding recipients and other stakeholders. From an administrative standpoint, these activities could be conducted under the Technology Transfer Policy Board.
• Incorporate domestic manufacturing objectives into all technology-specific roadmaps and initiatives, including the Earthshots. DOE and the National Labs regularly track the development and future potential of key clean energy technologies through analysis (e.g., the National Renewable Energy Laboratory (NREL)’s Future Studies). DOE also has developed high-profile cross-cutting initiatives, such as the Grid Modernization Initiative and the “Earthshots” initiative series, aimed at achieving bold technology targets. OTT, in concert with the Office of Policy and individual program offices, should incorporate domestic manufacturing into all technology-specific roadmaps and cross-cutting initiatives. Specifically, technology-specific roadmaps and initiatives should (i) assess the current state of U.S. manufacturing for that technology, and (ii) identify key steps needed to promote robust U.S. manufacturing capabilities for that technology. ARPA-E (which has traditionally included manufacturing in its technology targets and been subject to a DEC since 2013)and the supply chain recommendations in the Energy Storage Grand Challenge Roadmap may provide helpful models.
• Support the White House and NIST on the iEdison rebuild. The National Institute of Standards and Technology (NIST) is currently revamping the iEdison tool for reporting federally funded inventions. The coincident timing of this effort with the DOE’s DEC creates an opportunity to align data and waiver processes across government. DOE should work closely with NIST to understand new features being developed in the iEdison rebuild, offer input on manufacturing data collection, and align DOE reporting requirements where appropriate. Data reported through iEdison will help DOE evaluate the success of the DEC and identify areas in need of support. For instance, if iEdison data shows that a certain component for batteries becomes an increasing source of DEC waivers, DOE and the Department of Commerce may respond with targeted actions to remedy this gap in the domestic battery supply chain. Under the pending Bipartisan Innovation Bill, the Department of Commerce could receive funding for a new supply-chain monitoring program to support these efforts, as well as $45 billion in grants and loans to finance supply chain resilience. iEdison data could also be used to justify Congressional approval of new DOE authorities to strengthen domestic manufacturing.

Part 2: Complementary Investments

Investments to support the domestic manufacturing sector and regional innovation infrastructure must be pursued in tandem with the DEC to translate into enhanced clean manufacturing competitiveness. The following actions are intended to reduce the need for waivers, shore up supply chains, and expand opportunities for domestic manufacturing:

• Elevate and empower DOE’s AMO to serve as the hub of U.S. clean manufacturing strategy. Under the Obama administration, recognition that the U.S. was underinvesting in manufacturing innovation led to a dramatic expansion of the Advanced Manufacturing Office (AMO) and the launch of the Manufacturing USA institutes, modeled on Germany’s Fraunhofer institutes. DOE has begun to add a seventh institute focused on industrial decarbonization to the six institutes it already manages, and requested funding to launch an eighth and ninth institute in FY22. While both AMO and Manufacturing USA have proven successful through an array of industry-university-government partnerships, technical assistance, and cooperative R&D, neither are fully empowered to serve as hubs for U.S. clean manufacturing strategy. AMO currently faces bifurcated demands to implement advanced manufacturing practices (cross-sector) and promote competitiveness in emerging clean industries (sector-specific). The Manufacturing USA institutes have also been limited by their narrow, often siloed mandates and the expectation of financial independence after five years; under the Trump Administration, DOE sought to wind down the institutes rather than pursue additional funding. DOE should reinvest in establishing AMO and the institutes as the “tip of the spear” for a domestic clean manufacturing strategy and seek to empower them in four ways: 
• Institutional structure. AMO should be elevated to the Deputy Under Secretary or Assistant Secretary level, as has been recommended by recent DOE Chief of Staff Tarak Shah in a 2019 report, the House Select Committee on the Climate Crisis, the National Academies, and many others. This combination of enhanced funding and authority would empower DOE to pursue a more holistic clean manufacturing strategy, commensurate with the scale of the climate and industrial challenges we face.
• Mission focus. It is critical that AMO continue to work on both advanced manufacturing practices (cross-sector) and competitiveness in emerging clean energy industries (sector-specific), but this bifurcated mission does present challenges. As alluded to in a January 2022 RFI, AMO is attempting to pursue both goals in tandem. With the structural elevation proposed above, there is an opportunity for AMO’s clean energy manufacturing mission to be clarified, with a subset of staff and programs specifically dedicated to competitiveness in these emerging sectors. 
• Regional infrastructure and workforce development. AMO’s authority already extends beyond applied R&D, providing technical assistance, workforce development, and more. The Manufacturing USA institutes provide regional support for early prototyping efforts, officially operating up to Technology Readiness Level (TRL) 7. However, these programs should be granted greater authority and budget to foster regional demonstration and workforce development centers for low-carbon and critical clean energy manufacturing technologies. These activities create the infrastructure for constant learning that is necessary to entice manufacturers to remain in the U.S. and reduce the need for waivers, even when foreign manufacturers present cost advantages. To start, DOE should establish a regional demonstration and workforce development facility operated by the new clean manufacturing institute for industrial decarbonization (similar in nature to Oak Ridge’s Manufacturing Demonstration Facility (MDF)) to accelerate domestic technology transfer of clean manufacturing practices, and consider additional demonstration and workforce development facilities at future institutes.
• Scale. Despite accounting for roughly one-third of U.S. greenhouse gas emissions and 11% of GDP, manufacturing receives less than 10% of DOE energy innovation funding. Additionally, the Manufacturing USA institutes have roughly one-fourth of the budget, one-fifth of the institutes, and one-hundredth of the employees of the Fraunhofer institutes in Germany, a much smaller country that has nevertheless managed to outpace the United States in manufacturing output. To align with climate targets and the administration’s goal to quadruple innovation budgets, DOE manufacturing RD&D would need to grow to roughly $2 billion by 2025.
• Deploy at least $20 billion in grants, loans, and loan guarantees to support solar, wind, battery, and electric vehicle manufacturing and recycling by 2027. Not only is financial support to expand domestic clean manufacturing capacity critical for energy security, innovation clusters, and economic development, but it can also alleviate the barriers for innovators to manufacture in the U.S. and reduce the need for DEC waivers. Existing DOE authorities include the $7 billion for battery manufacturing provided in the Bipartisan Infrastructure Law and $17 billion in existing direct loan authority at the Loan Programs Office’s Advanced Technology Vehicles Manufacturing unit. DOE’s technology roadmaps can help these programs to be coordinated with earlier stage RD&D efforts by anticipating emerging manufacturing needs, so that S4 funding recipients who are subject to U.S. manufacturing requirements have more confidence in their ability to find ample domestic manufacturing capacity. The same entities that receive R&D funds also should be eligible for follow-on manufacturing incentives. The pending Bipartisan Innovation Bill and Build Back Better Act may also provide $3 billion for solar manufacturing, renewal of the 48C advanced manufacturing investment tax credit, and a new advanced manufacturing production tax credit. While these funding mechanisms have already been identified in response to the battery supply chain review, they should be applied beyond the battery sector. 
• Leverage DOE procurement authority and state block grant programs to drive demand for American-made clean energy. Procurement is a key demand-pull lever in any coordinated industrial strategy, and can reinforce the DEC by assuring potential applicants that American-made clean energy products will be rewarded in government purchasing. This administration’s Executive Order (EO) on federal sustainability calls for 100% carbon-free electricity by 2030 and “net-zero emissions from overall federal operations by 2050, including a 65 percent emissions reduction by 2030.” The Federal Energy Management Program (FEMP), noted in the EO and the federal government’s accompanying sustainability plan as one of the hubs of clean-energy procurement expertise, will play a key role in providing technical support and progress measurement for all government agencies as they pursue these goals, including by helping agencies to identify U.S. suppliers. For instance, in response to the battery supply chain review, FEMP was tasked with conducting a diagnostic on stationary battery storage at federal sites. DOE also delivers substantial funding and technical assistance to help states and localities deploy clean energy through the Weatherization Assistance Program and State Energy Program. These programs are now consolidated under a new Under Secretary for Infrastructure. DOE should build on these efforts by leveraging DOE’s multi-billion dollar state block grant and competitive financial assistance programs, including the recently-authorized State Manufacturing Leadership grants, to support states and communities in planning to strengthen local and regional manufacturing capacity to make progress on sustainability targets (see Updating the State Energy Program to Promote Regional Manufacturing and Economic Revitalization).
• Align the above activities with DOE’s place-based strategies for advancing environmental justice and supporting fossil fuel-centered communities in their clean energy transition. Throughout U.S. history, manufacturing has fostered rich local cultures and strong regional economies. Domestic manufacturing of clean energy technologies and clean industrial materials represents a major opportunity for economic revitalization, job growth, and pollution reduction. DOE also has a major role in executing President Biden’s environmental justice agenda, including as chair of the Interagency Working Group (IWG) on Coal and Power Plant Communities. As noted in the IWG’s initial report, investments in manufacturing have the potential to provide pollution relief to frontline communities and also retain the U.S. industrial workforce from high-carbon industries. Indeed, this is one reason why NIST’s Manufacturing Extension Partnerships played a significant role in the POWER Initiative under the Obama administration. The domestic clean energy manufacturing investments detailed above — including expansion of AMO, new grant programs, and procurement —should all be executed in close coordination with DOE’s place-based strategies to deliver benefits for environmental justice and legacy energy communities and to foster regional cultures of innovation. Finally, DOE should coordinate with other regional development efforts across government, such as the EDA’s Build Back Better Regional Challenge and USDA’s Rural Development programs.

Renewable energy technologies, such as advanced biofuels for transportation, are key for U.S. efforts to mitigate climate change

Climate change is bringing about rising temperatures, which have significant negative impacts on humans and the environment, and transitioning to renewable energy sources, such as biofuels, can help meet this challenge. One consequence of higher global temperatures is the increasing frequency of extreme weather events that cause massive amounts of harm and damage. As depicted in Figure 1, six of the 10 costliest extreme weather events in the U.S. have occurred in the last 10 years, amounting to over $411 billion in damages (in 2020 dollars and adjusted for inflation). The other four occurred between 2004 and 2008, and the costs of future extreme weather events are expected to keep climbing.

Figure 1

U.S. extreme weather events from 2000 to 2020 resulting in at least $1 billion in damages. Figure adapted from an interactive Center for Climate and Energy Solutions tool.

Moreover, the World Health Organization estimates that, globally, climate change is responsible for over 150,000 deaths per year. This is because in addition to extreme weather events, climate change contributes to the spread of diseases, reduced food production, and many other problems.

Transitioning to renewable energy, and reducing reliance on fossil fuels, is one way to help slow down the effects of climate change. While renewables used to be a more expensive option, new clean energy technologies are lowering costs and helping to move economies away from fossil fuels. For example, solar panel prices decreased 75 to 80 percent between 2009 and 2015. Due to similar trends in other renewables like wind and hydropower, renewable energy generation technology accounts for over half of all new power generation capacity brought online worldwide every year since 2011.

More must be done to ensure that renewable energy technologies are key contributors to the mitigation of climate change. As of 2018, solar and wind accounted for less than 4% of all the energy used in the U.S. (Figure 2). The amount of energy generated by solar panels has increased almost 46-fold since 2008, but still only amounts to about 1% of the total energy generated in the country. Unfortunately, renewables currently provide only a small fraction of the total energy produced, and to counter climate change, this contribution must drastically increase.

Figure 2

Sources of energy used in the U.S. during the year 2000 and the year 2018. Figure reproduced from DeSilver 2020, Pew Research Center.

Nonrenewable sources are still frequently used because they are very dense in energy. In the transportation sector, for example, gas or diesel fuels have about 40 times more energy, pound for pound, than the leading electric battery technologies. In order for an electric car to travel 360 miles, which is the average distance traveled on a full 12.4 gallon tank of gas, the car would need a battery weighing over 1,300 pounds.

To reduce reliance on petroleum-based fuels, particularly for heavy-duty vehicles and airplanes, one potential solution is biofuels. Biofuels are produced by breaking down plant material and converting it into usable fuels, such as ethanol or biodiesel. Corn ethanol is already added to gas to cut down on greenhouse gas emissions. However, creating ethanol is not a zero-carbon process, and supplementing with corn ethanol averages just under 40 percent lower carbon emissions than using only gasoline. Corn ethanol also relies on land which could be used for growing other food crops. Researchers are currently studying how to use invasive plants, as well as plants that require little water, fertilizer, or land to grow, to create the next generation of biofuels. Some promising plant feedstock options include hemp, switchgrass, carrizo cane, jatropha shrubs, and algae. New biotechnologies are also being studied to develop more efficient ways to break down biomass into sugars, which microbes then convert into biofuels. There is also ongoing research to create microbes that can directly convert plants to biofuels, and to enable microbes to produce long-chain, energy-dense hydrocarbons that could be used to fuel heavy-duty vehicles and airplanes.

The Information Technology and Innovation Foundation developed several recommendations which could bolster the implementation of biofuels. These recommendations include:

• Increasing investments in bioenergy and biomanufacturing research and development by 150 percent by the next five years;
• Engaging the Department of Energy and the Department of Agriculture to support the development of biofuels for aviation, shipping, and “other hard-to-electrify transportation sectors;” and
• Expanding research into gene-editing tools that can be used to improve biomass processing, increasing the diversity of plant feedstocks that could be leveraged for lower-cost biofuel production.

By improving the efficiency of renewable energy technologies like biofuels, wind, and solar, and further innovating in the renewables space, the U.S. science and technology community can help ensure that renewables are leveraged in the effort to counter the climate crisis.

This CSPI Science and Technology Policy Deep Dive expands upon a scientific exchange between Congressman Bill Foster (D, IL-11) and his new FAS-organized Science Council.

Grid modernization should be a major part of a national infrastructure-investment initiative. Effectively and efficiently modernizing the U.S. electric grid requires rapid deployment of innovative grid technologies. The next administration should establish a Grid Resilience Innovation Demonstration (GRID) Network, run in partnership between the Department of Energy (DOE) and the Department of Defense (DoD), to test and accelerate deployment of such technologies. The GRID Network would integrate and build on existing microgrids on federal installations and other relevant facilities, resulting in a group of geographically distributed test beds that can be managed and operated as a national user facility. The distributed nature of the network would allow test beds to ensure that solutions are compatible with a variety of grid technologies and operational structures and would also insulate the network from security threats, and other risks. Prioritizing establishment of the GRID Network early in the next administration will enable our nation to quickly realize the benefits of a modern electric grid, including enhanced resilience to natural disasters, entrepreneurship opportunities, and job growth. Failure to act will leave our national grid vulnerable to hostile actors, rob the country of needed shovel-ready construction projects and manufacturing jobs, and undermine U.S. leadership in electric sector innovation and the resulting impacts to our economy.

Challenge and Opportunity

The U.S. electric grid is a critical backbone of our nation’s economy, national security, health, and social interactions. Yet the current grid is ill-suited to modern demands. Our nation’s grid contains many critical components that were originally constructed in the early 20th century. The grid as a whole is based on an outdated structure that was not designed for today’s varying power demand requirements, such as for the internet data centers, or for the widescale integration of intermittent sources of electricity such as wind turbines and solar panels. The grid is also poorly equipped to withstand the many cyber, physical, and electromagnetic threats that exist today. 

These problems can cause extensive and expensive blackouts, such as the widespread outages across the Northeast in 2003 that cost $6 billion in damages. The possibility of foreign interference presents a threat multiplier. In 2015, a Russian assault on the Ukrainian grid cut power for six hours in the dead of winter. A similar attack on the U.S. grid is possible. In fact, the same malware the triggered the Ukraine attack has been found in US-based critical infrastructure facilities. 

There is a clear need to make the U.S. electric grid much more secure to thwart attacks, robust to withstand physical threats, resilient to ensure rapid and full recovery from adverse impacts, stronger to accommodate greater demands, and flexible to enable a broader deployment of clean-energy technologies.

Yet grid modernization is easier said than done. The U.S. electric grid is a massive, complex system that comprises various technologies for electricity generation, transmission, and distribution as well as multiple operators, regulators, and markets to ensure the continual flow of electricity. Few incentives or financially-attractive opportunities exist for grid stakeholders to demonstrate and deploy innovative models and technologies. And finally, the national-security benefits of a secure, robust, and resilient grid do not deliver direct, sufficient financial gains, creating a market failure that leaves the grid vulnerable to interference.

Plan of Action

The next administration should establish the Grid Resilience Innovation Demonstration (GRID) Network, a national-scale test facility designed to propel the nation toward a more secure, robust, and resilient grid that can strengthen economic and national security while enabling a clean-energy future. The GRID Network should comprise multiple, geographically distributed test beds that are widely accessible to institutions and researchers seeking to demonstrate technologies in prototypical environments. These test beds would be user facilities similar to those owned by the National Science Foundation (NSF) and the Department of Energy (DOE).

The overall goal of the GRID Network would be to support development, demonstration, and deployment of innovations in grid operation and technology, which are needed to address the evolving energy needs and expanding risks. The types of innovations could run from small to large scale, and from technical to operations, for example, components for high-voltage transmission or distribution, smart meters and associated cyber controls, direct current connects and disconnects, and microgrid operations with a variety of sources, loads and sizes.

The GRID Network would focus on innovations at mid- to high technology-readiness levels, i.e., innovations that have already been demonstrated successful at a limited level and seem like promising candidates for scale-up and commercialization. GRID Network test beds would provide the capacity to test at all scales from individual components in situ up to full end-to-end tests from the electricity generator to the final use. As modernization of the grid continues to occur, the anticipated outcomes will continue to evolve, and this facility will enable more innovations to be developed rapidly and tested such that the decision and risk of implementation can be reduced, which in turn should facilitate deployment. After all, utilities and investors want proven technologies, not science projects. As a result, we will see a more resilient grid that is both more secure and more robust (i.e., less blackouts, more value, savings and/or avoided costs).

GRID Network test beds could serve as official sites for the government to validate and certify any concept or technology intended for use in national-security applications. Through partnerships with community colleges, test beds could also offer workforce-development opportunities and vocational training to prepare technicians to install and operate next-generation grid technologies.

Implicit in the proposed action is that there are innovative technologies and strategies for operation that could be tested and rapidly deployed. While this has not been demonstrated through a survey or collection of data, it is a reasonable assumption based on our knowledge of the research and development (R&D) that is being done in this area as well as some general issues that impact the rapid, successful advancement from R&D to demonstration and deployment (i.e., crossing the so-called “Valley of Death”). Having a user facility aimed at helping bridge that gap that is available to companies and researchers widely would encourage innovators and innovations to surface, as has been demonstrated to work well in the past in the DoD and DOE. A minimally viable prototype will be needed for testing, which focuses the role of the facility between “development” and “deployment.” The costs for testing would be covered by the government, and like the existing user facilities, access to apply for time on GRID would be open to all ideas through a merit-review process. As a result, innovators should be motivated to develop their ideas to a product or operations model that can be tested given the low or zero cost of testing because the value of a having a government-tested and demonstrated device or operating model will be very high.

As is typical for federally-funded user facilities, the GRID Network would be run by a private entity (e.g., an objective management organization) through a public-private partnership with government agencies: in this case, likely DoD and DOE. The partnership could be managed by either agency or by an external entity, such as the National Resilient Grid Authority (NRGA) conceptualized in a 2020 report from the National Commission on Grid Resilience. Existing microgrids and other assets at DoD and DOE sites could provide the foundation for the GRID Network. The GRID Network will also build on and enhance the grid-resilience and modernization efforts that were established and have been pursued at both agencies.

Establishing and managing the GRID Network would cost the Federal Government an estimated $25–50 million per year at the low end to $200–300 million per year at the high end. This funding range is consistent with the funding levels for similar research and development facilities that DOE and DoD have supported over the last 15 years. Funding at the high end would support more sophisticated, comprehensive testing equipment, would permit users to take more time to test ideas, and would permit testing of more high-risk, high-reward ideas. Funding at the high end would also support efforts beyond just testing, such as development of national standards and protocols for grid operations, pursuit of collaborative technologies that would benefit niche applications, such as defense resilience pilot projects, and technology certifications.

The U.S. electric grid must be modernized to enable more use of renewable energy, deploy storage, and assure we improve the resilience. A test facility, such as the GRID facility described above, could help with modernization and entice investments toward deployment of new technologies. As a result, federal investment in the GRID Network would pay off directly or indirectly in four key ways:

1. Modernizing the U.S. electric grid will create shovel-ready construction jobs across the country. Since the GRID facility would be oriented toward rapid development and deployment of innovations, the facility could help enable aggressive and comprehensive modernization of the electric grid, which would involve construction jobs.
2. Grid components that are critical to U.S. infrastructure and national security—ranging from sensors to transformers—must be made through a trusted U.S. supply chain. Investments in the GRID Network hence represent investments in American manufacturing.
3. The GRID Network will support user generation of intellectual property and associated small business start-ups because some of the innovations that are tested and deployed will be manufactured, distributed and installed by start-ups, which will strengthen the U.S. supply chain. This new wave of business activity will propel the U.S. economy for years to come.
4. Grid modernization is a huge effort that will cost at least $500 billion and likely $1–2 trillion. Investing in technologies that could facilitate modernization will retire risks for grid modernization as the decisions by the various grid operators will be based on testing at an applicable scale. As a result, the GRID facility should help ensure the costs for grid modernization are in the middle of the range rather than at the higher end or above.

Conclusion

The U.S. electric grid is a crucial piece of the nation’s infrastructure. If it fails, critical sectors such as finance, healthcare, transportation, defense, agriculture, and manufacturing are at risk of failure as well. Yet the grid remains unacceptably vulnerable to threats large and small. There is a real danger of attacks on the grid by adversarial nations, and natural disasters can wipe out large sections of the grid for hours, days, or longer. Even factors as seemingly trivial as mylar balloons, small arms fire, and broken tree branches can cause costly damage when they interfere with critical grid components. It is past time to create a more robust and resilient system. Creating a testing ground for innovative solutions in grid operations and technology is an important step: one that will not only shore up a glaring weakness in our national security, but will also boost our economy through shovel-ready construction projects, creation of new and good-paying jobs, and development of intellectual property.

The next administration can achieve significant reductions in greenhouse-gas emissions by helping transition the commercial truck and bus industries to cleaner fuels like electric power and hydrogen. A key role for the Federal Government is to support the build-out of a nationwide network of zero-emission (i.e., alternative) fueling stations, including electric charging and hydrogen fueling stations. Achieving this goal will require federal leadership and significant collaboration with Congress, states, electric utilities, the private sector, and others. The amount of effort and time necessary for this effort means that it must be a day one priority to achieve meaningful progress within four years. A robust network of zero-emission fueling stations for trucks and buses will facilitate a significant and permanent reduction in greenhouse-gas emissions, improve air quality for communities nationwide, result in safer highways, and help create of hundreds of thousands of new jobs.

Challenge and Opportunity 

The threat of climate change demands immediate action. The transportation sector is the top emitter of greenhouse gas (GHG) emissions in the United States, outpacing the energy, agriculture, residential, and commercial sectors. Any serious effort to cut GHG emissions overall must therefore include serious efforts to cut transportation-related GHGs. 

GHG emissions from commercial trucks and buses contribute significantly to the transportation sector’s overall emissions. From 1990 to 2018, GHG emissions from commercial trucks and buses increased far more than emissions for passenger cars (emissions increased by 90.1% for commercial trucks, 158.8% for buses, and only 21.6% for passenger cars) despite the lower number of vehicle-miles traveled for commercial trucks and buses. In 2018, the collective emissions from medium-duty and heavy-duty trucks were the second-largest category of transportation-related GHG emissions.

Alternative fuels like hydrogen fuels, biofuels, and electric power present an enormous opportunity to cut transportation-related emissions while boosting the U.S. economy. Alternative fuels are gaining commercial acceptance in the freight and tourism industries. There is also an emerging U.S. industry around manufacturing alternative-powered vehicles that promises to create millions of new jobs in the years ahead. Domestic companies that have already seen success in this space include Workhorse, a company based in Lordstown, OH that is producing electric delivery vehicles for UPS, FedEx and DHL; Rivian has recently signed a contract with Amazon to provide 100,000 electric delivery vans; and Tesla, the world’s most valuable car company, is developing its own battery-powered long-haul trucks.

But there is a major barrier hampering wider deployment of these vehicles: fueling stations. Adoption of zero-emission trucks and buses will be slow until a robust, nationwide network of zero-emission fueling stations is available. Modest efforts are already underway in California and the northeastern United States to build new zero-emission fueling stations, but federal leadership is needed to accelerate and expand these efforts to a national scale. The Federal Government can facilitate build-out of the country’s network of zero-emission fueling stations by providing tax credits and other financial incentives for station construction and by providing the nationwide planning and coordination capacities that the private sector alone cannot.

Key considerations

The U.S. Department of Energy reports that there were 41 open retail hydrogen fueling stations in the United States in 2019, with an additional 36 stations in various stages of development. Most of these stations are in California and the northeastern states. Various electric-fueling stations—most designed for passenger cars—are scattered throughout the United States. The next administration should focus on building out the national network of zero-emission fueling stations in the Midwest and other parts of the United States that currently lack zero-emission infrastructure. The following considerations can guide this effort.

The commercial truck and bus industry. Most truck and bus companies are small businesses, utilizing fleets of seven to ten vehicles and operating on tight profit margins. Capital is limited for many of these companies, especially in the wake of the devastation that COVID-19 has wreaked on the larger economy and tourism industry. Therefore, it will be difficult for these companies to invest in new, alternative-powered vehicles. Moreover, the rate of fleet turnover for most trucking and bus fleets is slow – a company will typically retain their commercial trucks and buses for a decade or more, and often times these vehicles will then be sold to a secondary market where they will be utilized for several years longer. The next administration should work closely with stakeholders to craft financial incentives that allow commercial truck and bus companies to purchase new trucks and buses that run on alternative fuels.

Travel-plaza owners. Commercial travel-plaza owners are among the largest distributors of diesel fuel and gasoline in the nation. Travel-plaza owners also generate revenue by selling food and other items to truck drivers and other motorists. The deployment of zero emission fueling stations could represent an existential threat to many of these operators if handled poorly: for instance, if zero-emission fueling stations become direct competitors to existing travel plazas. But commercial travel-plaza owners could also be important champions of zero-emission fueling stations if deployment is handled well: for instance, if resources are provided to help travel-plaza owners incorporate zero-emission fueling infrastructure into existing facilities, or if operators who build out zero-emission fueling infrastructure are rewarded with grants to upgrade on-site food and retail establishments.

Congress. Congress must provide new tools for the federal government to accelerate deployment of zero-emission fueling stations. Specifically, Congress should amend title 23, United States Code (USC) so that federal dollars are eligible to support construction of zero-emission fueling stations, including at truck rest stops and via Community Mitigation and Air Quality (CMAQ) projects.

Alternative-fuel types. There currently is no “preferred” alternative fuel in the commercial truck and bus industries. While some think hydrogen fuel has the greatest potential, others are betting on natural gas and batteries. For now, most businesses are making decisions based on current advantages and limits of different alternative fuels. For example, battery cells are less attractive for long-haul trucking and bus trips because of the batteries’ weight and their limited range compared to motor fuels. But battery-powered vehicles are ideal for city deliveries, where many daily trips can be completed on a single charge. The next administration should therefore work to expand the nation’s network of zero-emission fueling stations in ways that support multiple alternative-fuel types.

Fueling technologies and costs. The reality is that zero emission technologies are relatively new. There is still work that must be done to understand the emissions-reduction and fuel-reduction technologies that are available, the challenges to wider adoption of these technologies, where these technologies effectively fit diverse geography and efficient supply-chain needs, and the potential emissions reductions. But doing this work will result in significant impacts on truck freight emissions and fuel usage.

Existing federal regulations. The commercial truck and bus industries are highly regulated. New fueling technologies will need to work within these regulations, not against them. For example, federal requirements limit the number of hours a truck or bus driver may work per day. If refueling an alternative-fuel truck takes longer than refueling a diesel truck, drivers will lose valuable driving time. Additionally, weight limits on commercial vehicles designed to prevent damage to road and bridge infrastructure also discourage the use of heavy batteries for long-haul trips, as the weight of the batteries displace the amount of freight a truck can haul. The next administration should be aware of issues like these, crafting policies to encourage development of alternative-fueling technologies that do not inadvertently hurt businesses or undermine other priorities like highway safety or infrastructure maintenance. Truck and bus drivers should also be included in these discussions, to better understand how to successfully integrate existing practices.

Truck and bus manufacturers and dealers. A handful of companies manufacture the majority of commercial trucks and buses sold and used in the United States. Most of these companies are not significantly invested in alternative-fuel vehicles. The next administration needs to be mindful that it is not pitting established manufacturers against the startups referenced above in supporting the expansion of zero-emission fueling stations, lest it encounter serious opposition among the business community and Congress. Finally, the U.S. Department of Transportation reports approximately 12.5 million commercial trucks and buses are currently registered in the United States. There will need to be significant manufacturing capacity to support the wide-scale adoption of alternative-powered trucks and buses, and these manufacturers could be a valuable partner for this effort, especially if they understand the market potential.

Plan of Action

Keeping the considerations above in mind, there are several concrete actions that the next administration can take to build out of a national network of zero-emission fueling stations. In its first 100 days, the next administration should: 

Prioritize passage of critical legislation

This legislation should provide the Federal Government the authorities and resources needed to support the build out of this zero-emission fueling network. Specifically, this legislation should

• Provide flexibility in title 23 USC to enable states to apply gas-tax dollars towards funding zero-emission fueling stations at truck parking stops and other places along highways – where such projects make sense.
• Allocate resources for financial incentives, including grants, tax rebates, and credits, to incentivize adoption of zero-emission fueling stations and vehicles.
• Utilize “Jason’s Law” surveys (a federal product that documents truck-parking capacity nationwide, including parking shortages) to identify truck-parking locations that could be used for fueling stations.
• Authorize pilot programs and public-private partnerships to provide flexibility in developing “best practices” and techniques with key stakeholders, including the private sector, for building out a commercially viable nationwide network of zero-emission fueling stations.
• Permit fast-track approval to site zero-emission fueling stations, in consultation with local utility regulators.

Strong White House coordination

The White House should work closely with key agencies to ensure coordination and eliminate redundancy with respect to federal efforts to advance zero-emission fueling stations. These agencies include the Department of Transportation (DOT) for its partnership with the states to maintain the nation’s major roads and highways, the Department of Energy (DOE) for its ongoing work to deploy alternative-fueling stations, and the Environmental Protection Agency for its regulatory work on clean air.

Gather stakeholder input

The business community recently has adopted a new level of urgency in confronting climate change. To discuss opportunities for building out zero-emission fueling infrastructure, the next administration should harness this energy by convening key stakeholders, including vehicle manufacturers, truck and bus companies, metropolitan planning organizations, port authorities, labor organizations, truck-stop owners, and owners of large freight-generating facilities (like hospitals, universities, airports, and convention centers). Opportunities may include the following: partnerships with local utilities to integrate new electric-charging stations with existing electric infrastructure; strategic plans for developing infrastructure tailored to specific routes, applications, and duty cycles in order to minimize refueling costs; and joint efforts that distribute capital expenses of infrastructure construction across private fleets as well as government agencies.

Establish pilot programs and public-private partnerships

Highly traveled truck and/or bus corridors along the National Highway System are natural places to pilot policies and public-private partnerships (PPP) designed to support construction of zero-emission fueling stations. Because there are relatively few examples of real-world experiences and limited opportunities to test emerging zero emission technologies and the strategies for their deployment, these pilots and PPPs will provide immense benefit in sharing information and developing best practices. Immense benefits towards wider adoption will come from understanding the emissions-reduction and fuel-reduction technologies available, the challenges to wider adoption of these technologies, and where these technologies effectively fit diverse geography and efficient supply-chain needs will have. The next administration should partner closely with states and the private sector on initiating and overseeing such pilots and PPPs.

Cumulatively, these activities and authorities will spur development of a nationwide zero emission fueling network because they provide stakeholders with a federal partner in navigating the risks and challenges of this effort while also providing necessary incentives to accelerate stakeholder investment in zero emission technologies and fueling stations. But the benefits of this effort may take years to fully realize, so it is critical that the next administration begin work on this effort on day one to see this through.

Conclusion

Commercial truck and bus volumes will only continue to grow in the future and with it their GHG emissions. While changing CAFÉ standards for commercial trucks and buses will make modest reductions in their GHG emissions, the reality is that the only way to significantly reduce these emissions is to accelerate the deployment and adoption of zero emission technologies. But because these technologies are relatively new and untested, the Federal Government must help stakeholders navigate the challenges and opportunities that these technologies present while also supporting the build out of critical infrastructure like fueling stations to improve confidence in adopting zero emission trucks and buses. The steps outlined in this proposal provide a roadmap to making that a reality.

The next administration should establish a national initiative built around ambitious goals to accelerate development and deployment of dramatically improved energy-storage technologies. Developing such technologies would help establish a strategic new domestic manufacturing sector. Deploying such technologies would expand the range of low-carbon pathways available to fight climate change—especially those relying on variable renewable energy resources, like wind and solar power. Deploying such technologies would also improve the performance of smartphones, drones, and other vital electronic tools of the 21st century.

Challenge and Opportunity

Electricity systems, no matter how big or small, must instantaneously balance supply and demand, generation and load—or suffer blackouts. This imperative has long motivated scientists and technologists to seek the holy grail of affordable, reliable, durable, and safe energy storage. Yet, despite many decades of efforts, batteries remain expensive, fickle, short-lived, and dangerous for many applications. Other forms of energy storage, like thermal and compressed-air storage, suffer from major drawbacks as well. 

Radically improved energy-storage technologies would help the nation and the world solve some of their most pressing problems. Most urgently, improved energy storage would expand the range of low-carbon pathways to fight climate change and reduce dependence on fossil fuels by allowing the electricity grid to accommodate higher levels of renewable energy. Improved energy storage would allow electric vehicles (EVs) to better meet drivers’ expectations for value and performance, thereby speeding up EV adoption and further helping to address the climate challenge. Better batteries would also let people stop worrying about whether their electronic devices are charged, improving security and strengthening the economy in a world where these and other connected devices are ubiquitous.

Given the importance and magnitude of these opportunities, energy storage has become a critical industry of the future—one that nations around the world seek to capture. China and the European Union, for instance, are making significant strategic investments to build domestic capabilities for development and manufacturing of energy storage technologies. These and other international competitors are challenging the U.S. energy innovation ecosystem—our research universities, national laboratories, start-up companies, and established technology firms to invent, commercialize, and scale-up next-generation energy-storage technologies.

Opportunities by sector

Electric power

The rapidly dropping cost of wind and solar power has opened major pathways to decarbonize electricity systems. But these power generation technologies are variable: that is, their output fluctuates by the hour, day, and season. As the renewable share of generation rises on a grid, such fluctuations make balancing supply and demand increasingly difficult, threatening brownouts and blackouts. Grid-scale energy storage has the potential to address this challenge. Although one energy-storage technology (lithium-ion batteries) has been improved to the point that it has begun to make a significant impact on the grid, major gaps remain. Fully solving the grid-storage problem requires technologies that are much cheaper and last much longer than current systems. Grid-storage technologies must be able to hold enough electricity to power a grid for a week or more at a cost of just a few cents per kilowatt-hour (kWh), while operating only a few times each year.

Transportation

Lithium-ion batteries are also kick-starting the electrification of transportation. Their declining cost is one of the key factors helping to bring EVs into the mainstream. EVs are cleaner than gasoline-powered cars if they are charged on low-carbon electricity grids. EVs are also easier to maintain and cheaper to operate. However, the ultimate triumph of EVs in the auto market is far from assured. Batteries that are safer, rely on more abundant materials, allow vehicles to go 500 miles or more on a charge, last for at least a decade, and are easily recharged and recycled would make the success of EVs more likely, with huge payoffs for the global climate.

Electronics

The suite of technologies sometimes lumped together as the “fourth industrial revolution” is another broad domain that would benefit from advances in energy storage. Robots, drones, sensors, and smartphones—and the systems by which they process and exchange information—have become essential tools in modern society.

Most of these electronics are more useful when they can operate without having to maintain a constant connection to the grid. Although batteries are becoming lighter and more efficient, the demands being placed on them are also rising, straining the limits of lithium-ion technology. An order-of-magnitude leap in the energy density of batteries— the amount of electricity stored in a given mass or volume—would unlock a diverse array of valuable new applications for a wide range of electronic devices. For instance, drones, whether they are being used by combat forces, farmers, or utility crews, would be able to stay aloft for days and carry more sophisticated payloads, such as weapons or sensors.

Domestic manufacturing

Paradigm-shifting improvements in energy storage technologies would also create opportunities to build domestic manufacturing capacity in a growing industry of the future. The supply chain for making lithium-ion batteries migrated to East Asia years ago. The largest battery factory for EVs in the United States, Tesla’s “giga-factory” in Reno, NV, is run by a joint venture with the Japanese-headquartered firm Panasonic. Tesla has been unable to fully master the finicky methods used to make battery cells. Other U.S.- based EV assembly plants rely on Asian-headquartered battery contractors as well. 

Nonetheless, the United States continues to generate new energy storage technologies, including some that could supplant the current generation of lithium-ion batteries. For example, Sila Nanotechnologies, founded in 2011 and based in the San Francisco Bay Area, raised $215 million in 2019 to scale up its manufacturing activity. A half-dozen other U.S.-based battery start-ups have also raised large funding rounds in the past year. Investors include not only venture-capital firms, but also big companies based in Europe and Asia as well as North America. It remains to be seen where the battery supply chain of the future will be located.

Plan of Action

The next administration, building on the Department of Energy’s (DOE) recently announced “Energy Storage Grand Challenge,” should establish a National Energy Storage Initiative (NESI) built around ambitious goals to accelerate development and deployment of dramatically improved energy-storage technologies. These goals should include widespread adoption of:

• Grid-scale systems that can provide at least 500 megawatts (MW) of power for a week at a cost of three cents per kWh or less.
• Vehicle-scale energy-storage systems with performance, safety, and cost characteristics as good as or better than internal-combustion systems (including lifespan and recharging speed).
• Batteries for small devices exhibiting energy density an order of magnitude greater than current lithium-ion batteries.

The NESI should also seek to achieve economic and international goals such as:

• A positive international trade balance in energy-storage technologies and components.
• Global adoption of energy-storage technologies invented and commercialized in the United States across major application domains.

The NESI will require deep collaboration among key federal agencies and with the private sector, academia, and states and localities. This initiative would galvanize the still-thriving energy-storage science and technology community in the United States, spurring the development of better energy-storage technologies and ensuring that the next generation of storage devices are built here. The case for the NESI is two-fold. First, expanded research, development, and demonstration (RD&D) funding is needed to address market failures in the energy-storage domain. Expanded funding would enable scientific and mission agencies to pursue a diverse array of promising opportunities that have gone un- or under-explored. The result would be new energy-storage materials and concepts, breaking through barriers that have limited current technologies. Second, federal resources and leadership—as well as deep engagement with the private industrial and financial sectors and with key states and localities—are crucial for domestic scale-up and manufacturing made possible by this expanded RD&D portfolio. International competition surrounding energy storage is already fierce. China, in particular, has made no secret of its plan to dominate the global battery and EV industries. The United States must assert leadership on energy storage or risk being left behind.

Implementation

The NESI should include four key components: (1) White House leadership and coordination, (2) a federal RD&D budget commitment, (3) increased agency participation and use of an array of policy tools, and (4) mobilization of non-federal actors to undertake aligned actions.

White House leadership and coordination

An Executive Order (EO) from the White House, implemented by the Office of Science and Technology Policy (OSTP) and the National Science and Technology Council (NSTC), would be the foundational action to launch the NESI. White House leadership and attention would catalyze implementing agencies to identify lead units and staff members for the interagency initiative and to undertake internal coordination among their component units (e.g., the science and applied energy offices within DOE). OSTP, NSTC, and agency staff would spearhead the initiative, driving its progress throughout the executive branch and mobilizing support in Congress, industry, science, and the public.

Budget

Delivering on the aforementioned goals would require, at a minimum, tripling current spending on energy storage RD&D programs over five years. The most comprehensive estimate of federal RD&D spending on energy storage comes from a 2015 OMB interagency “crosscut”: $300 million. Increasing spending to $900 million or more per year would allow participating agencies to take the following actions:

• Accelerate fundamental research on promising energy-storage materials and systems.
• Create and expand centers of excellence in RD&D on energy storage at universities and government laboratories.
• Build academic-government-industry partnerships to create energy-storage prototypes and pilot projects.
• Conduct large-scale energy-storage demonstration projects in collaboration with end users, such as urban and rural electricity systems and military bases.
• Establish regional manufacturing innovation centers that facilitate technology development, worker training, and small- and medium-enterprise (SME) engagement related to energy storage

Increased agency participation and use of other policy tools

In addition to DOE, the Departments of Agriculture (USDA), Commerce (DOC), Defense (DOD), Health and Human Services (HHS), Housing and Urban Development (HUD), and Transportation (DOT) as well as the National Science Foundation (NSF) and National Aeronautics and Space Administration (NASA) should be mobilized to accelerate innovation in energy storage. DOC, DOD, HHS, and NSF should collaborate with DOE in expanding the energy storage RD&D enterprise. The other agencies, along with DOE and DOD, should use policy tools such as procurement, regulation, and investment support (e.g., loan guarantees) to help “pull” nascent energy-storage technologies into markets and to assist in establishing domestic production capacity. Tax incentives, legislated by Congress and administered by executive agencies, may also be helpful to accelerate market growth and drive down costs for particular technologies.

Mobilization of non-federal actors

Academia and industry are critical to the success of energy-storage RD&D, manufacturing, and adoption. The vast scope of energy-storage applications amplifies the importance of engaging with a wide variety of end-user industries—especially power-system vendors, utilities, electronics manufacturers, and automakers—as well as producers of storage technology. States and localities, many of which have announced ambitious goals for grid-scale storage, should also be incorporated into the NESI. A few states could house federally supported manufacturing and innovation “clusters” for energy-storage solutions. All states could accelerate adoption of improved energystorage technologies by fostering receptive markets: for instance, by reforming electricity regulation.

Precedents

The proposed NESI is similar to successful efforts such as the Clinton administration’s nanotechnology initiative and the Obama administration’s advanced manufacturing initiative. Such initiatives mobilize and coordinate multiple agencies in pursuit of technological capabilities that will contribute significantly to a set of broadly agreed national goals. Success depends on strong presidential commitment at the start and cultivation of stakeholders across partisan, regional, and sectoral lines over time. Effective technology initiatives have major on-the-ground impacts and ultimately become self-sustaining. Two keys to success are (1) White House leadership and attention to foster interagency cooperation, and (2) increased agency budgets to limit resistance from incumbent programs.

Federal funding for energy-storage science and technology has a long track record, particularly with regard to basic research. The American Recovery and Reinvestment Act (ARRA) expanded federal energy-storage funding considerably in the 2010s. ARRA funding supported establishment of the Advanced Research Projects Agency—Energy (ARPA-E), which has become a major source of funding for applied research and prototype development in energy storage. ARRA funding also supported the Joint Center for Energy Storage Research (JCESR) at Argonne National Laboratory; a collaborative demonstration program within DOE’s Office of Electricity that worked with utilities, states, and local governments; and loan guarantees for battery manufacturing and grid-scale storage projects. 

Many of these investments have paid off handsomely. For instance, an evaluation by the National Academies found that ARPA-E’s funding of energy-storage technology has been “highly productive with respect to accelerating commercialization” and led to the formation of at least six new companies in the field. JCESR was renewed for an additional five years in 2018. However, the demonstration and manufacturing elements of the ARRA-funded push were not sustained, primarily due to ideological objections by the Congressional majority that came in after the 2010 midterm elections. 

The Department of Energy announced an Energy Storage Grand Challenge on January 8, 2020. This initiative is a welcome step toward the broader initiative outlined in this paper. It seeks ambitious advances in technology, rapid commercialization, and the creation of a domestic manufacturing supply chain. But it does not extend beyond DOE, and whether it will be implemented with the appropriate resources and presidential support is uncertain.

International context

Many countries have made energy storage a priority. The European Union has embarked on a multi-billion-dollar battery initiative that led to the establishment of Northvolt, a European-owned battery cell manufacturing start-up. Volkswagen bought 20% of Northvolt and is working with it to build a second cell factory. Energy storage and EVs are among the sectors targeted by China in its Made in China 2025 program. Massive subsidies from all levels of the Chinese government have flowed through a variety of channels to energy storage projects and companies to fulfill this program, helping China become the world’s largest EV market (with more than 50% market share). Korea, Japan, and India are among the other countries undertaking national energy storage initiatives.

Although the global race to advance energy-storage technology is intense, the United States possesses many strengths that would allow a domestic energy-storage effort to succeed. These strengths include outstanding research capabilities at universities and national laboratories, a vibrant start-up ecosystem, and a strong industrial sector. The NESI would provide the leadership, funding, and coordination needed to realize the full potential of these assets. It is also important for the United States to foster international cooperation around science underlying energy-storage technology. Scientific knowledge is a global public good that will be under-provided without the leadership of the world’s top scientific nation.

Stakeholder support

The NESI has a wide range of potential champions and advocates on both sides of the aisle. Congressional Republicans have expressed their support for energy storage through expanded RD&D funding and more ambitious authorizations. The administration’s new grand challenge taps into this legislative support. Environmental advocates on the left of the political spectrum are also supportive, perceiving limited energy storage as the biggest technological barrier to expanded deployment of renewables. Similar enthusiasm may be expected from the research community and investors, as well as from states seeking to build a domestic energy-storage industry. These interests have been frustrated by the “invent here, produce there” outcomes of past breakthroughs, such as lithium-ion batteries.

Technology end users may be less enthusiastic or indifferent. Low prices in the short term may be more important to them than innovation in the long run. They may also see the location and ownership of production facilities as irrelevant or argue that the current global division of labor, in which Asian factories built with cheap public-investment capital supply U.S. needs, is favorable for the United States. Other skeptics may argue that when it comes to supporting expanded deployment of renewables, investing in demand response, larger grids, or other forms of low-carbon electricity generation, such as nuclear power or natural gas plants with carbon capture systems, are better options than energy storage.

Goals and metrics

The overarching (e.g., within 10 years) goal of NESI is to make the United States a major center for energy storage innovation and production. 

One essential short-term step towards achieving this goal is establishing key organizational components of the NESI, such as an interagency working group and a mechanism to engage with non-federal stakeholders, including industry, academia, and states. A second critical step is expanding budgets for relevant federal agencies to put them on a pathway to triple federal funding for energy-storage RD&D. 

In the medium term, metrics such as growth in scientific publications and patents, formation of new energy-storage companies, equity and project investment, product introduction, and manufacturing-cost reduction will provide insights on progress. 

In the long term, success of the NESI should be assessed by the level of market penetration of new energy-storage storage products across application domains including electric power, transportation, and electronics in the context of a growing overall storage market. Success of the NESI should also be assessed through consideration of the international trade balance related to energy storage and adoption of U.S.-developed energy-storage technologies.

Proposed initial steps

The next president should sign an EO establishing the NESI and directing the White House Office of Science and Technology Policy to convene a federal interagency task force. The task force should prepare a strategic plan and develop a budget for the initiative in consultation with key stakeholders. The plan should identify technological needs and opportunities and set specific objectives, taking into account global competition and cooperation with respect to energy storage. Congress should support the NESI by appropriating funding needed to implement the strategic plan, and by providing additional authorization as required.

Implementing agencies should pursue energy-storage RD&D as it relates to their respective missions, while collaborating to manage overlaps and avoid gaps. RD&D activities should strengthen the intramural and extramural research and industrial communities. As innovative storage technologies reach maturity, DOC, DOD, and DOE should work with states and regional economic-development agencies to foster markets and develop manufacturing capabilities. Congress should provide tax incentives that help to pull these technologies into the market, thereby driving down cost and expanding deployment.

Conclusion

Energy-storage technologies in widespread use today are not good enough to meet fundamental 21st-century challenges, including climate change, economic growth, and international security. A national initiative to accelerate domestic development and deployment of dramatically improved energy-storage technologies would position the United States to lead the world in addressing these challenges while building its economy. Although global competition in energy storage is fierce, our nation has strong capabilities that—if used strategically—position the United States to catch up with and ultimately surpass its rivals in this vital emerging industry. The NESI provides a pathway for the next president to translate this vision into reality.

Climate solutions and nuclear energy

The full House Science, Space, and Technology Committee discussed climate hurdles and solutions in a January 15 hearing titled, “An update on the climate crisis: From science to solutions.” Interestingly, the main point of debate during this hearing was not whether climate change was occurring, but rather the economic impacts of climate change mitigation. As predicted, the debate was split down party lines.

While the Democrats emphasized the negative consequences of climate change and the need to act, several Republican members insisted that China and India rein in their greenhouse gas emissions first.

Congressman Mo Brooks (R, AL-05) asked the most heated series of questions during the hearing, related to India and China’s carbon emissions. He asked if there was a way to force both to reduce their emissions, which, according to a report by the European Union, have seen increases of 305% and 354%, respectively, between 1990 and 2017.

Democrats focused their questions to highlight the science behind climate change. Chairwoman Eddie Bernice Johnson (D, TX-30) asked each witness about the biggest hurdles in their fields. Richard Murray, Deputy Director and Vice President for Research at Woods Hole Oceanographic Institution, said that more investments in large-scale ocean observations and data are needed. Pamela McElwee, Associate Professor of Human Ecology at Rutgers, said that a lot of advances in land conservation can be made with existing technology, but that investments in genetic modification of crops to restore nutrients to the soil, for example, could be developed. Heidi Steltzer, Professor of Environment and Sustainability at Fort Lewis College, encouraged the inclusion of diverse perspectives in climate research to develop the most creative solutions. Congressman Paul Tonko (D, NY-20) summed up the Democrats’ views on climate change by stating that the climate science performed by researchers like the witnesses should inform federal action and that inaction on this issue is costly.

While committee Republicans expressed concerns over the impact of climate regulations on business, members of the committee did emphasize the importance of renewing U.S. leadership in nuclear power, pointing to competition from Russia and China. Nuclear power continues to be the largest source of carbon free electricity in the country.

One of the witnesses, Michael Shellenberger, Founder and President of Environmental Progress noted that the US’ ability to compete internationally in nuclear energy was declining as Russia and China rush to complete new power plants. Losing ground in this area, he added, negatively impacts the U.S.’ reputation as a developer of cutting edge energy technology and dissuades developing countries interested in building nuclear power plants from contracting with the U.S.

As the impacts of climate change take their toll in California, the Caribbean, Australia, and elsewhere, the U.S. Congress remains divided on how to address it.

We thank our community of experts for helping us create an informative resource and questions for the committee.

Supercomputing a high priority for DOE Office of Science

While last week’s House Science Subcommittee on Energy hearing about research supported by the Department of Energy (DOE) Office of Science touched on a range of issues, competition with China on high-performance computing took center stage.

The big milestone that world powers are competing to reach in the high-performance computing field is the development of the first-ever exascale computer. An exascale computer would greatly enhance research areas like materials development for next-generation batteries, seismic analysis, weather and climate modeling, and even clinical health studies like “identifying risk factors for suicide and best practices for intervention.” It would be about a million times faster than a consumer desktop computer, operating at a quintillion calculations per second. The U.S., China, Japan, and European Union are all working to complete the first exascale system.

In the competition to develop faster and faster supercomputers, China has made rapid progress. In 2001, none of the 500 fastest supercomputers were made in China. As of June 2019, 219 of the 500 fastest supercomputers had been developed by China, and the US had 116. Notably, when the computational power of all these systems is totaled up for each country, China controls 30 percent of the world’s high-performance computing resources, while the U.S. controls 38 percent. In the past, China had asserted that it would complete an exascale computing system this year; however, it is unclear if the country will meet its goal.

A U.S. exascale system due in 2021 – Aurora – is being built at Argonne National Lab in Illinois, and hopes are high that it will be the world’s first completed exascale computer. During the hearing, Representatives Dan Lipinski (D, IL-03) and Bill Foster (D, IL-11) both raised the issue of progress on the project. According to DOE Office of Science director Dr. Christopher Fall, the Aurora project is meeting its benchmarks, with headway being made not only on the hardware, but also on a “once-in-a-generation” reworking and modernization of the software stack that will run on the system, as well as developing high-speed internet for linking generated data with the computation of that data. DOE believes that the U.S. is in a strong position to complete the first-ever exascale computing system, and that our holistic approach to high-performance computing is something that is missing from competitors’ strategies, giving the U.S. even more of an edge.

In addition to the Aurora project, two more exascale computing projects are underway at U.S. National Labs. Frontier, at Oak Ridge National Laboratory in Tennessee, is also projected to deploy in 2021, while El Capitan, based at Lawrence Livermore National Laboratory in California, should launch in 2022. El Capitan will only be used by individuals in the national security field.

In addition to research in high-performance computing, the diverse and impactful science supported by the DOE Office of Science is truly something to protect and promote. To review the full hearing, click here.

The JASON scientific advisory panel cautiously endorsed further research into what is known as Magneto-Inertial Fusion (MIF) as a step towards achieving fusion-generated electricity.

“Magneto-Inertial Fusion (MIF) is a physically plausible approach to studying controlled thermonuclear fusion in a region of parameter space that is less explored than Inertial Confinement Fusion (ICF) or Magnetic Confinement Fusion (MCF).”

“Despite having received ~1% the funding of MCF and ICF, MIF experiments have made rapid progress in recent years toward break-even conditions,” the JASONs said in a report to the Advanced Research Projects Agency-Energy (ARPA-E) late last year.

Even so, “Given the immaturity of the technologies, the future ability of fusion-generated electricity to meet commercial constraints cannot be usefully assessed. Rapidly developing infrastructures for natural gas and renewable energy sources and storage will compete with any future commercial fusion efforts.”

See Prospects for Low Cost Fusion Development, JASON Report JSR-18-011, November 2018.

The fusion report is one of two unclassified reports prepared by the JASONs in 2018. (Release of the second is pending.) The other twelve reports from last year are classified.

The New York Times recently provided an overview of fusion research in Clean, Abundant Energy: Fusion Dreams Never End by C. Claiborne Ray, January 11, 2019.

Meanwhile, the Federation of American Scientists warned that the current shutdown of federal agencies threatens many aspects of U.S. science and technology.

“The partial government shutdown is compromising the very research that is important to the health and security of our nation. Important scientific breakthroughs could be compromised or lost with each and every day that the shutdown continues,” FAS said in a January 16 letter to the White House and Congress.

“We therefore urge you to open the federal government, send researchers back to work at their agencies, and allow science to flourish throughout the United States.”

The Trump Administration budget request for FY 2018 would “severely reduce” Energy Department funding for development of carbon capture and sequestration technologies intended to combat the climate change effects of burning fossil fuels.

The United States has “more than 250 years’ worth of clean, beautiful coal,” President Trump said last month, implying that remedial measures to diminish the environmental impact of coal power generation are unnecessary.

Research on the carbon capture technology that could make coal use cleaner by removing carbon dioxide from power plant exhaust would be cut by 73% if the Trump Administration has its way.

“The Trump Administration’s approach would be a reversal of Obama Administration and George W. Bush Administration DOE policies, which supported large carbon-capture demonstration projects and large injection and sequestration demonstration projects,” the Congressional Research Service said this week in a new report.

“We have finally ended the war on coal,” President Trump declared.

However, congressional approval of the Administration’s proposal to slash carbon capture and sequestration (CCS) development is not a foregone conclusion.

“The House Appropriations Committee’s FY2018 bill funding DOE disagrees with the Administration budget request and would fund CCS activities at roughly FY2017 levels,” the CRS report said.

“This report provides a summary and analysis of the current state of CCS in the United States.” It also includes a primer on how CCS could work, and a profile of previous funding in this area. See Carbon Capture and Sequestration (CCS) in the United States, July 24, 2017.

Other new and updated reports from the Congressional Research Service include the following.

Methane and Other Air Pollution Issues in Natural Gas Systems, updated July 27, 2017

The U.S. Export Control System and the Export Control Reform Initiative, updated July 24, 2017

Base Erosion and Profit Shifting (BEPS): OECD Tax Proposals, July 24, 2017

Oman: Reform, Security, and U.S. Policy, updated July 25, 2017

Lebanon, updated July 25, 2017

Aviation Bills Take Flight, but Legislative Path Remains Unclear, CRS Insight, July 25, 2017

Military Officers, CRS In Focus, July 3, 2017

Military Enlisted Personnel, CRS In Focus, July 3, 2017

Transgender Servicemembers: Policy Shifts and Considerations for Congress, CRS Insight, July 26, 2017

Systematic, authorized publication of CRS reports on a government website came a step closer to reality yesterday when the Senate Appropriations Committee voted to approve “a provision that will make non-confidential CRS reports available to the public via the Government Publishing Office’s website.”

As I write this president’s message, the U.S. election has just resulted in a resounding victory for the Republican Party, which will have control of both the Senate and House of Representatives when the new Congress convenes in January. While some may despair that these results portend an even more divided federal government with a Democratic president and a Republican Congress, I choose to view this event as an opportunity in disguise in regards to the important and urgent issue of U.S. energy policy.

President Barack Obama has staked a major part of his presidential legacy on combating climate change. He has felt stymied by the inability to convince Congress to pass comprehensive legislation to mandate substantial reductions in greenhouse gas emissions. Instead, his administration has leveraged the power of the Environmental Protection Agency (EPA) to craft rules that will, in effect, force the closure of many of the biggest emitters: coal power plants. These new rules will likely face challenges in courts and Congress. To withstand the legal challenge, EPA lawyers are working overtime to make the rules as ironclad as possible.

The Republicans who oppose the EPA rules will have difficulty in overturning the rules with legislation because they do not have the veto-proof supermajority of two-thirds of Congress. Rather, the incoming Senate majority leader Mitch McConnell (R-Kentucky) said before the election that he would try to block appropriations that would be needed to implement the new rules. But this is a risky move because it could result in a budget battle with the White House. The United States cannot afford another grinding halt to the federal budget.

Several environmental organizations have charged many Republican politicians with being climate change deniers. Huge amounts of money were funneled to the political races on both sides of the climate change divide. On the skeptical side, political action groups affiliated with the billionaire brothers Charles and David Koch received tens of millions of dollars; they have cast doubt on the scientific studies of climate change.  And on the side of wanting to combat climate change, about $100 million was committed by NextGen Climate, a political action group backed substantially by billionaire Tom Steyer. Could this money have been better spent on investments in shoring up the crumbling U.S. energy infrastructure? Instead of demonizing each side and just focusing on climate change, can the nation try a different approach that can win support from a core group of Democrats and Republicans?

Both Democratic and Republican leaders believe that the United States must have strong national security. Could this form the basis of a bipartisan plan for better energy policy? But this begs another question that would have to be addressed first: What energy policy would strengthen national security? Some politicians, including several former presidents, have called for the United States to be energy independent. Due to the recent energy revolution in technologies to extract so-called unconventional oil and gas from shale and sand geological deposits, the United States is on the verge of becoming a major exporter of natural gas and has dramatically reduced its dependence on outside oil imports (except from the friendly Canadians who are experiencing a bonanza in oil extracted from tar sands). However, these windfall developments do not mean that the United States is energy independent, even including the natural resources in all of North America.

Oil is a globally traded commodity and natural gas (especially in the form of liquefied natural gas) is tending to become this type of commodity. This implies that the United States cannot decouple its oil and gas production and consumption from other countries. For example, a disruption in the Strait of Hormuz leading to the Persian Gulf will affect about 40 percent of the globe’s oil deliveries because of shipments from Iran, Iraq, Kuwait, Qatar, Saudi Arabia, and the United Arab Emirate. Such a disruption might occur in an armed conflict with Iran, which has been at loggerheads with the United States over its nuclear program. Moreover, while the United States has not been importing significant amounts of oil from the Middle East recently, U.S. allies Japan and South Korea rely heavily on oil from that region. Thus, a major principle for U.S. national security is to work cooperatively with these allies to develop a plan to move away from overreliance on oil and gas from this region and an even longer term plan to transition away from fossil fuels.

Actually, this long term plan is not really that far into the future. According to optimistic estimates (for example, from Cambridge Energy Research Associates) for when global oil production will reach its peak, the world only has until at least 2030 before the peak is reached, and then there will be a gradual decline in production over the next few decades after the peak.¹ (Pessimistic views such as from oil expert Colin Campbell predict the peak occurring around 2012 to 2015.² We thus may already be at the peak.) Once the global decline starts to take effect, price shocks could devastate the world’s economy. Moreover, as the world’s population is projected to increase from seven billion people today to about nine billion by mid-century, the demand for oil will also significantly increase given business as usual practices.

For the broader scope national security reason of having a stable economy, it is imperative to develop a nonpartisan plan for transitioning from the “addiction” to oil that President George W. Bush called attention to in his State of the Union Address in January 2006. While skepticism about the science of climate change will prevail, this should not hold back the United States working together with other nations to craft a comprehensive energy plan that saves money, creates more jobs, and overall strengthens international security.

FAS is developing a new project titled Sustainable Energy and International Security. FAS staff will be contacting experts in our network to form a diverse group with expertise in energy technologies, the social factors that affect energy use, military perspectives, economic assessments, and security alliances. I welcome readers’ advice and donations to start this project; please contact me at cferguson@fas.org. FAS relies on donors like you to help support our projects; I urge you to consider supporting this and other FAS projects.

Legal and illegal power connections in Lahore, Pakistan

A stable and thriving Pakistan is the key to preserving harmony and facilitating progress in the broader South Asia region. Afghanistan, which is to the west of Pakistan, has a long border that divides the Pakhtun people between the countries. As a result of this border, Pakistan not only has a significant role in the Afghan economy, but instability in the loosely governed Pakistani frontier region spills across the border into Afghanistan. Because of this relationship, Pakistan has a direct impact on the outcome on the 13 year U.S. led war in Afghanistan.  On the other hand, an unstable Pakistan would not only shatter budding trade relations with India, but could also spark conflict between the two nuclear armed rivals.

From frequent attacks by Islamic militants across the country to a slowing economy, it is clear that there are many issues that threaten Pakistan’s stability. However, the most pressing issue that Pakistan faces today is its deteriorating economy. In particular, a crushing energy shortage across the country significantly constrains economic growth. This fiscal year, Pakistan’s Gross Domestic Product (GDP) is forecasted to grow by measly 3.4 percent. At the same time, the country’s population is expected to grow by 1.8 percent adding to the 189 million people living there today. If there aren’t jobs available for the millions of young Pakistanis entering the work force, not only will poverty increase, but there is a strong possibly that some of these youth could vent their frustrations by joining the countless Islamic militant groups active in the country.

To build a more prosperous economy, Pakistan needs to address its energy problems. Without a reliable source of electricity or natural gas, how can Pakistani businesses compete on the global market? Large parts of the country today face blackouts lasting an average of 10 hours each day because of the electricity shortage. The current gap between electricity generation and demand is roughly 2500 MW, a shortage large enough to keep a population of 20 million or the city of Karachi in the dark.

These power shortages are only expected to become worse in the coming summer months. This is because demand for electricity peaks in the sizzling heat, while hydroelectric generation decreases as the water flow in the rivers drops due to seasonal fluctuation. This article will focus on the causes of the country’s energy problems involving the electricity sector and explore possible directions Pakistan can take to improve its energy situation, building its economy in the process.

How Does Pakistan Generate its Electricity?

Figure 1: Pakistan’s Electricity Generation by Source

Figure 1 breaks down Pakistan’s electricity generation by source. Thermal power, which includes natural gas, oil, and coal generated electricity, accounts for 70 percent of Pakistan’s total electricity generation, while hydroelectric generation is roughly responsible for the remaining 30 percent.

Electricity generated from furnace oil accounts for slightly over a third of Pakistan electricity. In the early 1990s, the country faced a power shortage of about 2000 MW when there was a peak load on the electricity grid. To resolve the growing crisis, the Pakistani government implemented a new policy in 1994, which was designed to attract foreign investment in the power sector and as a result there was construction of oil based power plants. These power plants were cheaper and faster to construct compared to other electricity generation plants such as hydroelectric dams. At the same time, the relatively low prices (below $17 a barrel) of crude oil meant that these plants generated electricity fairly cheaply. Fast forward to present times, the price of crude oil has risen to hover roughly around $100 a barrel. Unlike nearby Saudi Arabia, Pakistan is naturally not well endowed in crude oil reserves. This means that Pakistan must ship increasing amount of valuable currency abroad to secure the oil it needs to keeps these power plants running.

Along with furnace oil power plants, natural gas is used to generate about another third of electricity; it is provided by domestic reserves, thereby helping Pakistan’s economy and energy security. According to the U.S. Energy Information Administration, Pakistan has proven natural gas reserves of 24 trillion cubic feet (Tcf) in 2012. These reserves will last Pakistan an estimated 17 years based on the country’s annual consumption rate of 1.382 Tcf in 2012. At the same time, consumption rates are estimated to increase four fold to nearly 8 Tcf per year by the year 2020, further reducing the size of the domestic reserves.

The Pakistani government in 2005 under President Pervez Musharraf promoted the conversion of cars to run on compressed natural gas (CNG) instead of gasoline. The rationale was that this conversion would reduce the amount of money spent on purchasing and importing oil abroad. At the same time, CNG is cleaner for the environment than burning gasoline. As a result of this policy, more than 80 percent of Pakistan’s cars today run on CNG.But because of this surging demand for its limited natural gas, there is a critical shortage of it which has adversely impacted the country’s ability to use this fuel source to generate electricity. Essentially Pakistanis are forced to decide whether to use natural gas to fuel their cars, cook their food, or generate electricity.

Power Theft and the Circular Debt Issue

The reliance on oil and natural gas to generate electricity is incredibly inefficient, but these inefficiencies alone are not responsible for the crippling power shortages. The other source of tension involves the accumulation of circular debt in the electricity sector over the past few years. Circular debt is a situation where consumers, electricity producers and the government all owe each other money and are unable to pay. By June 2013 when the new government led by Prime Minister Nawaz Sharif took control, this circular debt had ballooned to $5 billion.

There are several reasons for the accumulation of this debt; the largest problem stems from power theft. Many Pakistani elites and even parts of the government do not pay their electricity bills. The law and order situation also prevent power companies from collecting bills in certain parts of the country. As a result, Pakistani electricity companies currently recover only 76 percent of the money that electricity consumers owe them. In fact, the Pakistani Minister for Water and Power, Mr. Khwaja Muhammad Asif, has acknowledged that the Pakistani government is one of the country’s largest defaulters of electricity bills. As part of recent crackdown, the power ministry cut supplies to the Prime Minister’s home and the Parliament House (among many government offices) because they were delinquent on their electricity bills. While many Pakistanis don’t pay their electricity bills, others steal power by illegally hooking into the power grid. This theft coupled with an inefficient electricity grid and the associated transmission loss means that Pakistan’s electricity generators are left with huge financial losses.

All these losses accumulate to form the circular debt and it places power producers in a position where they are unable to purchase enough fuel from abroad to operate power plants at full capacity. With an installed generation capacity of 22500 MW, Pakistan currently has more than enough installed capacity to meet peak demand levels today. The power producers are in reality only able to generate between 12000MW and 15000MW because of both inefficient energy infrastructure and circular debt. This actual amount of electricity generated is far less than the 17000 MW of demand nationwide during peak hours of electricity usage.

The circular debt also makes it more difficult for power producers to invest in upgrading existing electricity infrastructure. If power producers don’t have the money to operate oil based power plants at full capacity, they certainly do not have enough capital to build newer, more efficient power plants. Even when the lights are on, the inefficient electricity system takes an additional toll on the country’s economy. Pakistanis today pay more than double their Indian neighbors for electricity (16.95 Pakistani Rupees vs. 7.36 Pakistani Rupees per KWh respectively), putting Pakistani firms at a further disadvantage compared to regional competitors.

Fixing Pakistan’s Electricity Problems

One of Prime Minister Nawaz Sharif’s first actions after taking office was to pay off the $5 billion in circular debt that had accumulated by July 2013. Unfortunately, this step alone will not solve the power woes as it does not fix the underlying causes of the country’s power crisis. In fact, the circular debt has accumulate again, and stood at $1.8 billion by January 2014.  To sustainably address the power crisis, Pakistanis need to change their attitude towards power theft by forcing the government and those delinquent to clear outstanding bills. At the same time, Pakistan must improve the efficiency of its electricity sector as well as expand and diversify its electricity generating capacity in order to ensure that the country can handle the expected growth in demand over the coming years.

Hydroelectric Generation

Pakistan has tremendous potential to expand its electricity generating capacity by developing its renewable energy resources. At nearly 30 percent, hydroelectricity is already a major source of electricity generation, but according to the Pakistani government, this reflects only 13 percent of the total hydroelectric potential of the country. There are several drawbacks of major hydroelectric projects including that they are capital intensive and require extensive time to build. Furthermore, hydroelectric dams are harmful to the local ecosystem and can displace large populations. The U.S. government is actively investing in helping Pakistan develop its hydroelectric resources; in 2011, USAID funded the renovation of the Tarbela Dam. In the process, this added generation capacity of 128 MW, which is enough electricity for 2 million Pakistanis.

Solar Energy

Figure 2: Pakistan’s Solar Generation Potential

According to the USAID map of solar potential in Pakistan, the country has tremendous potential in harnessing the sun to generate electricity.  Pakistan has an average daily insolation rate of 5.3 kWH/m², which is similar to the average daily insolation rate in Phoenix (5.38 kWH/m²) or Las Vegas (5.3 kWH/m²), which are some of the best locations in the United States for solar generated electricity. So far, Pakistan has begun construction on a photovoltaic power plant in Punjab that will begin to produce 100 MW by the end of 2014.According to the World Bank some 40,000 villages in Pakistan are not electrified. Tapping into these solar resources could easily electrify many of these off the grid villages, while avoiding an increase in demand on the national electricity grid.

Nuclear Energy

Pakistan has three currently active nuclear power plants: two located in Punjab and one in the southern port city of Karachi. The two Chinese built nuclear power plants in Punjab each have a net generation capacity of 300 MW. The Karachi power plant, which was built with a reactor supplied by Canada in 1972, has a net generation capacity of 125 MW, enough to provide power to 2 million Pakistanis. China has been a key supplier and investor in Pakistani nuclear energy, but there are some concerns regarding the transfer of nuclear technology to Pakistan, where A.Q. Khan’s nuclear network was headquartered. Specifically, China argues that its alliance with Pakistan predates its joining of the Nuclear Suppliers Group (NSG), which has restricted nuclear sales to Pakistan, so this justifies its desire to supply Pakistan with the technology. The Chinese are helping construct four more nuclear power plants, the first of which is expected to be online starting in 2019. While these plants will add 2,200 MW of generation capacity, these nuclear power projects are expensive; the current nuclear power plants under construction are said to cost about $5 billion per plant, an investment that China is helping finance.

Coal Power

There is a large amount of coal located in the Thar Desert in the southeastern part of the country. While the quality of the coal isn’t the best, Pakistan has a lot of it, nearly 175 billion tons, which is enough to meet current electricity demands for more than 300 years. However, Pakistan currently only has one operational coal power plant.

Pakistan is taking steps to develop this resource. In January 2014, Prime Minister Nawaz Sharif and former President Zardari broke ground on a $1.6 billion coal power project in the Thar Desert. This particular project is expected to be operational by 2017.

Pakistan has taken some clear steps such as developing its renewable resources and tapping its coal reserves, which can help expand and diversify where and how it generates its electricity. Further harnessing these resources will help alleviate the electricity shortfall. However, these steps alone will not solve the energy crisis. The more difficult solution involves changing the country’s attitude toward power theft, both by private citizens and the government. Convincing people to pay their electricity bills is difficult when even the government itself doesn’t pay its fair share. At the same time, there is less incentive to pay when citizens don’t even have access to a dependable source of electricity when they need it. As long as this attitude is prevalent among Pakistanis from all walks of life as well as the government, the country cannot sustainably solve its energy woes. Circular debt will continue to accumulate and large sections of the country will face hours of darkness each day.

Tackling the energy problem is the first step to strengthening the economy; over time, a growing economy will attract greater investment in the energy sector. Pakistan’s sensitive geographic location could become a strategic asset as it would serve as a bridge linking the economies of Afghanistan and Central Asia with the broader Indian subcontinent. Not only does the population provide Pakistan with a large domestic market, but it also empowers the country with a young, entrepreneurial workforce. This gives Pakistan tremendous potential, but can only be unleashed if the country figures out a way to keep the lights on and the factories humming.

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Ravi Patel is a student at Stanford University where he recently completed a B.S. in Biology and is currently pursuing an M.S. in Biology. He completed an honors thesis on developing greater Indo-Pakistan trade under Sec. William Perry at the Center for International Security and Cooperation (CISAC). Patel is the president of the Stanford U.S.-Russia Forum. He also founded the U.S.-Pakistan Partnership, a collaborative research program linking American and Pakistani university students. In the summer of 2012, Patel was a security scholar at the Federation of American Scientists. He also has extensive biomedical research experience focused on growing bone using mesenchymal stem cells through previous work at UCSF’s surgical research laboratory and Lawrence Berkeley National Laboratory.

Nelson Zhao is a fourth year undergraduate at University of California, Davis pursuing degrees in economics and psychology. Nelson is the Vice-President at the Stanford U.S.-Russia Forum and the Program Director at the U.S.-Pakistan Partnership. At the U.S.-Pakistan Partnership, he aims to develop a platform to convene the brightest students in order to cultivate U.S.-Pakistan’s bilateral relations.