Energy Innovation at Nanoscale
Case Study of an Emergent Industry
We are in a “Sputnik moment,” the president said in his second official State of the Union address in January. Energy Secretary Steven Chu also likes to invoke this historical metaphor to add an atmosphere of portent to his talks. To be sure, this favorite parable of American technoscientific rout and redemption, beloved by generations of politicians and pundits, has lost most of its power to shock, awe, and inspire through overuse. Still, the fact that this red flag is being waved as frantically as ever these days means we should probably pay attention.
The antagonist de jour, of course, is China. Rapidly building advanced energy plant, grid, and end-use infrastructure that will outclass their creaky U.S. counterparts, the Asian giant, remarked Chu, is winning the “energy race.” Worse, more and more Americans worry that China is on the verge of surpassing the United States in science-and-technology innovation, even though the authoritarian nation faces a host of problems in its own innovation ecosystem.
Secretary Chu’s prescription? Increased federal investment in “scientific R&D.” In short: Remember the Sputnik moment.
Aerospace history has become a stock American folk syllogism recalling a fall from, and challenging a return to, grace. If we can put men on the moon, surely we can build a better mousetrap, or close the gap in the energy race. But is the problem really a crisis of American innovation?
If so, it does not stem from a lack of trying. Nuclear and photovoltaic power are American inventions, fuel cells were first made practicable in this country, and, for a time, electric cars and hydrogen power seemed just around the corner. The last 40 years have witnessed booms and busts in all of these systems. Yet American researchers do not appear to be running short of new ideas, as research in high-efficiency batteries, polymer photovoltaic systems, and artificial photosynthesis shows.
The issue instead seems to be the relationship between innovation and national industrial recovery and job creation. To the energy secretary, the broader federal science-and-technology policy establishment, and legions of private-sector R&D contractors, innovation policies and industrial policies are virtually one and the same. China, held Chu, had progressed industrially by taking a page from the U.S. playbook, using the state as a “slight rudder” to guide the private sector in taking the dominant role in R&D.
Actually, the Chinese government does quite a bit more to shape its energy economy than simply keeping a light hand on the tiller of national R&D. In fairness to Chu, he might have found those sorts of issues beyond his purview. Department of Energy Science Undersecretary Steven E. Koonin was a bit more forthcoming about the relationship between science, technology, and industry in an address at the University of California, Santa Barbara, in January 2010. He pointed out that change occurs much faster in IT than in the power source industry partly because it is physically less difficult to shift bytes than molecules, but also because in the United States there has been a disjunction between academic research and commercial manufacturing in the latter sector.
Koonin did not elaborate, but the reasons for this gap stem from the deep-seated belief of U.S. policymakers that government-supported science and technology can supplant regulation and planning in stimulating industrial growth. As it emerged after the Second World War, federal science-and-technology policy attempted to reconcile statism with free-market principles. This hybrid approach—call it American-style quasi-planning—assumed that the private sector and government had similar interests and, hence, that government-sponsored advanced science and technology could simply be injected into the economy much like a vaccine, with near-immediate salutary effects.
“Partners” in name only
This approach worked well in certain sectors, particularly in cases when the government was the sole or major customer for certain novel and otherwise unobtainable products that it asked industry to produce. In these cases it could bolster existing industries such as aviation and help incubate new ones such as electronics that readily spun off technologies into the civilian market without seriously disrupting existing interest groups. Business and state interests also meshed in the established fossil-fuel-based energy and ground transportation systems, with the federal government funding development of the interstate freeway system and prosecuting policies that secured plentiful supplies of cheap crude oil.
Where power sources were concerned, however, these interests frequently clashed for a mix of physical, political, and economic reasons. During the zenith of the Cold War, the federal government promoted work on photovoltaic cells, fuel cells, hydrogen, and nuclear power for special-purpose military and semimilitary roles. It also encouraged civilian applications of these technologies, largely, as in the case of nuclear power, for reasons of prestige and national security. But this was not easy and manufacturers had no strong incentive to try owing to the abundance of primary energy sources of various types in this period. They had to be plied with generous subsidies and even then they were not always enthusiastic.
Such conflicting imperatives were no better illustrated than in the Clinton administration’s Partnership for a New Generation of Vehicles, or PNGV. Styled by Vice President Al Gore as the automotive equivalent of the Apollo project, this cost-shared program in automobile R&D was initiated by the federal government on the false premise that automakers would welcome its efforts to encourage the modernization of the industrial base and increase fleet fuel efficiency through advanced systems like hybrid and fuel cell electric drive as politically acceptable alternatives to higher CAFE standards. The idea was to encourage voluntarism as an alternative to regulation, which Detroit regarded as forced technological change. But American manufacturers did not brook even this minimal interference in their affairs. They chose not to commercialize the supercar demonstrators they produced with government assistance and successfully resisted California’s efforts to legislate battery electric power.
Nor were American consumers then much interested in the new technologies, preferring massive, relatively unsophisticated gas guzzlers with improved safety features. But they changed their minds after Toyota and Honda introduced the hybrid electric passenger car in the early 2000s and the price of fuel skyrocketed around mid-decade. Belatedly, U.S. carmakers realized alterative products could be profitable, yet they lacked the capacity to produce them cost-effectively. The episode was something of a comedy of errors. In the 1990s Detroit spurned the mild medicine offered by the paternal hand of the state, only to collapse, atrophied, into the arms of government after a decade of brutal competition in the 2000s.
Nanotechnology: An energy revolution on the cheap?
So is nanotechnology the answer? A form of materials research emerging in the 1990s, nanotechnology was touted as another free-market solution to our energy problems. Its advocates believed that special nanoscale materials could make batteries, fuel cells, and photovoltaic cells cheaper, more durable, and more powerful by exploiting the high surface area and quantum properties of existing substances produced as nanoscale particulates and novel materials like carbon nanotubes and quantum dots.
Accordingly, an initial nudge by the federal government in the form of a relatively small R&D investment was expected to spawn a special materials industry that in turn would “self-assemble” (a favorite rhetorical flourish of nano-advocates drawn from utopian visions of molecular engineering) an industrial revolution on the cheap. Thus would the social and environmental collateral damage that had always attended such events in the past, and hence the need for government regulation, be obviated. The lobbying of nano-advocates prompted the Clinton administration to establish the National Nanotechnology Initiative, or NNI, in 2000.
Such assumptions cocked skeptical eyebrows in some parts of the science community but were generally tolerated, at least in quarters dependent on federal cash, if only because of worries of the effects of criticism on the money flow. Today there are a number of U.S. startup companies engaged in commercial development of nanomaterial-enabled power source technologies, including Konarka, a maker of organic photovoltaics, and battery component manufacturers Envia and Nanosys.
Probably the best known is Massachusetts-based A123. Its lithium-ion rechargeable battery uses nanostructured iron-phosphate electrodes to achieve what many observers regard as superior performance. Supported at every stage of its growth by the Department of Energy, A123 would, if successful, become the first American company to compete in the global market for rechargeable lithium-ion batteries, one U.S. battery makers dabbled in but then abandoned in the early 1990s, when it amounted to only a few hundred million dollars. Today it is worth anywhere from $10 billion to $14 billion.
In the mid-2000s A123 set its sights on electric automobility, potentially the richest market of all, collaborating with General Motors in developing the Chevrolet Volt plug-in hybrid. The denouement revealed the paradoxes and limits of nanotechnology. Ultimately, GM selected South Korea’s LG Chem Ltd. to supply the Volt battery for a number of reasons that probably boiled down to a belief that its lithium manganese spinel technology, parts of which contained materials developed by the DOE’s Argonne National Laboratory, posed fewer manufacturing and operating unknowns than A123’s more radical design.
The deal, which helped set up LG Chem in this emerging sector, will see batteries produced overseas until the firm opens a U.S. factory in 2012. Its manufacturing base hitherto located in Asia, A123 opened its first American plant in September 2010 using stimulus money intended to attract battery industry to the United States. For the time being, the company must make do servicing niche markets.
In essence, the various branches of the U.S. state worked at cross-purposes. With one hand, the DOE stood up a promising American company that was promptly punished for its inexperience by an auto company part-owned by the U.S. taxpayer; with the other, it indirectly helped a foreign company profit by the first American mass-produced hybrid electric passenger auto.
The battle of the electric automobile batteries is only the latest example of the hazards of quasi-planning. Tasked by the Obama administration to stimulate a job-rich sustainable energy industry, the DOE can conceive and gestate firms but is ill-equipped to bring them to maturity. It has virtually no power to alter industrial relations in the domestic market, much less in the global economy, especially the odd, asymmetrical system of codependency evolved by the United States and China that incentivizes American manufacturers to relocate abroad to exploit cheap labor in producing goods destined for the U.S. market but largely bars them from competing in the host country.
As A123 founder and MIT professor Yet-Ming Chiang explained to me at the Nanotechnology Innovation Summit last December, at a certain point in his company’s growth, the issue became one of industrial policy as much as research and development. Asian automakers, he remarked, would never dream of using batteries not produced in their home countries. An industrial pioneer brought to, but not yet quite over, the threshold of success, A123 faces challenging years ahead.
This tableau highlighted the complexities and contradictions of basing the revivification of one ailing heavy industry (automobile) on another (electrochemical energy storage) that was even more moribund. In a sense, given these complexities, the decisions of GM and the DOE were rational. The quickest way for American manufacturers to access advanced battery technology on an industrial scale was to ally with those foreign firms with advanced battery-manufacturing capabilities. If the objective of industrial rejuvenation is jobs, as U.S. politicians frequently claim, the strategic dependency that will result from such arrangements is less of a problem (where it involves staunch friends like South Korea and Japan) than the fact that much of the economic benefits are likely to remain abroad.
So while great strides have been made in nanotechnology, it is no free-market elixir. As a compound neologism, wrote former National Science Foundation chief Neal Lane in 2001, nanotechnology expressed, in a general sense, both current basic research (nano) and deep-future application (technology). But there has been a programmatic gulf between the two within the DOE. The third-most important federal sponsor of nanoscale science, engineering, and technology, or NSET, DOE has contributed $2.14 billion of the $12 billion spent thus far in the National Nanotechnology Initiative. Most of this has been spent through the DOE’s Office of Basic Energy Science, work conducted separately from the Office of Energy Efficiency and Renewable Energy and its Industrial Technologies Program. Here, far less—only about $7 million in 2009—has been devoted to nanomanufacturing, although this figure is set to triple by the end of fiscal year 2011.
To be sure, this cleavage will probably have little immediate effect on long-term projects like the DOE’s ambitious effort in artificial photosynthesis, which aims to develop cheap single-crystal silicon nanowire semiconductors coated with cheap earth-abundant nanoscale metal catalysts to produce hydrogen and oxygen from sunlight and water. Researchers hope such systems can meet an expected doubling of current annual global energy consumption of around 15 terawatts by midcentury.
Last July the DOE’s Office of Science launched the Joint Center for Artificial Photosynthesis, investing $122 million in a Caltech-led partnership under the banner of Secretary Chu’s new “Energy Innovation Hubs” initiative. Berkeley Lab Director Paul Alivisatos opined that such work requires sustained support rather than a “pulse of money” and then stepping back to see the results, as has happened in other science fields in the past. And there are serious engineering, organizational, and economic issues entailed in building the auxiliary systems of a hydrogen economy that go far beyond the scope of the DOE.
So what of the “Sputnik moment” and Chu’s formula for America’s energy calculus? This crisis is not a discrete, galvanizing event amenable to a quick fix, but part of a broader historical process of adapting an economy based largely on the technology and social relations of the previous century to rapidly changing circumstances in the new one. One can’t fault the secretary for demanding more money for “scientific R&D.” We expect him to do that as chief of an agency dedicated to such activities. But “scientific R&D” and the patents that are its proximate product cannot by themselves form the basis of national recovery because the great ideas that inform technological innovation and industrial manufacturing, like, say, giant magnetoresistance or lithium manganese spinel energy storage, can originate anywhere in the world (France, Germany, and South Africa, respectively). The historian David Edgerton has long argued this point, one recently illustrated by W. Patrick McCray in his history of the commercialization of giant magnetoresistance.
And so it is unrealistic to shoulder the DOE with the lion’s share of the burden of easing energy innovations into the marketplace. True, there is a long record of and justification for federal intervention in the American economy. But students of history might point out that if U.S. business and government leaders were serious about creating millions of new high-tech jobs in green energy, they would augment science and technology policies by protecting manufacturing. After all, they would only be playing by rules followed by all countries in achieving industrial liftoff, including Japan, China, and, back in the day, Britain and the United States of America.
There are, however, no easy answers. Up to 60 percent of Chinese exports to the United States are actually produced by American companies. Yet some form of protection combined with long-term federal countercyclical spending are likely the most effective ways to spur a national energy renaissance. Of course, such options aren’t likely to be pursued anytime soon. In the United States, the chief instrument of industrial policy appears to devolve from currency manipulation. Encouraged by the Obama administration, the Federal Reserve has maintained interest rates near zero and flooded the market with cheap credit, resulting in a decline in the value of the dollar that some believe will allow the United States to export its way out of the recession. Given the understandable reluctance of Asian governments to open their markets any more than necessary, this seems wishful thinking.
In America’s current political climate, boosting science spending will be far cheaper and simpler than dealing with such complexities. For that reason, it will likely be the default response in the energy race.
Matthew N. Eisler is a postdoctoral fellow at the Center for Nanotechnology in Society at the University of California, Santa Barbara.
This material is based upon work supported by the National Science Foundation under Grant Nos. SES 0531184 and SES 0938099. Any opinions, findings, and conclusions or recommendations expressed in this material are those of the author and do not necessarily reflect the views of the National Science Foundation.
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