Stimulus and the Silent Green Revolution

Ross Anderson has a great interview at The Atlantic with Michael Grunwald, author of The New New Deal. In his book, Grunwald details the history of ARRA, including extensive research on its impact on clean energy research and development. We’ve advocated strongly for government investment in clean energy research and Grunwald’s reveals just how beneficial government investment has been. Through the development of a new agency, ARPA-E, the DoE has been investing and developing cutting edge technologies. ARPA-E was modeled after DARPA, the successful Defense Department research and development unit whose research, among many other innovations, helped developed the Internet.

ARPA-E invests in cutting edge clean technologies, as well as important pieces of energy infrastructure, like smart grids. Its investment portfolio ranges from ways to improve batteries and air conditions to alternatives to rare-earth materials to futuristic biofuels that are not made from crops or other food sources. More than a dozen companies that received ARPA funding have attracted follow-up venture capital funding.

The ARPA model is a great example of smart, forward-thinking government investment. ARPA provides money for initial research to explore new, innovative areas that then attracts private capital to push the research into commercialization. But, without the government investment, these technologies are unlikely to be developed. Grunwald details how the Energy Department’s budget had dropped 85 percent over three decades. Despite conservative rhetoric, the private sector did not step in to provide initial research seed funding. Instead, there was little innovative research occurring, likely because, as we’ve pointed out before, there is no private market incentive for certain benefits, like a clean environment.

As Grunwald’s book shows, stimulus money saved the renewable electricity industry. As soon as the stimulus passed, a Spanish wind developer announced a $6 billion investment in U.S. wind farms. Currently, wind power provides 50 gigawatts of energy, far exceeding the goal of 40 gigawatts by 2030. ARPA’s potential is so strong that it has genuine bi-partisan support, receiving follow-up funding at a time when everything else attached to the stimulus came under attack. Part of me hesitates to bring attention to ARPA’s achievements in order to shield it from right-wing attacks that would force it to become a partisan target. But, ARPA’s potential and record are so strong, I think it can handle it.