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Energy for Regional Innovation

DOE Programs Can Drive New Technology and Get the Most from Taxpayer Investments

U.S. Secretary of Energy Steven Chu, former director of the Lawrence Berkeley National Lab in California, talks about the future of energy research at a visit to to the Lab in October 2009. SOURCE: flickr/berkeleylab U.S. Secretary of Energy Steven Chu, former director of the Lawrence Berkeley National Lab in California, talks about the future of energy research at a visit to to the Lab in October 2009.

Congress this week takes important steps toward investing in applied innovation. We have known for decades, of course, that federal support for research and development can lead to scientific discoveries and new technologies that can solve some of the country’s most pressing problems. But as House members hear testimony tomorrow from innovation experts and consider a batch of bills that will fund important research at the Department of Energy on Thursday, they will have the opportunity to embrace a new approach to innovation championed by the Obama administration.

These new policies ensure that scientists, engineers, and taxpayers alike get the most out of those federal investments in basic research and development by taking what researchers know about the process of moving ideas from the lab to the market and linking universities, businesses, and the government in an effort to grow regional economies. The first steps begin on Wednesday, when the Subcommittee on Technology and Innovation of the House Science and Technology Committee will hold a hearing on “Supporting Innovation in the 21st Century Economy.” Then on Thursday, the full committee will markup bills authorizing the Advanced Research Projects Agency-Energy, R&D programs within the DOE Office of Science, and DOE’s Energy Innovation Hubs program.

This isn’t just a matter of pouring more money into R&D—though additional resources are important. The Hubs program in particular contains an experiment just underway that will create a new “Energy Regional Innovation Cluster,” or  E-RIC, which will develop technologies for energy efficient buildings. Grant recipients for this cluster will be announced this summer, pending funding, and Congress should ensure that money is available for FY 2011 to realize the potential of this project.

With $130 million in financing over five years, the E-RIC project is a partnership between seven federal agencies that will help build the regional cluster, advancing research, development, and commercialization of energy efficiency technologies and creating high quality jobs. Applicants for the grants must self organize themselves in regional groups to bid for the funds, promoting bottom-up collaboration to ensure the best ideas and best practices combine for the best outcomes. DOE is in the process of setting up two additional Hubs: one that focuses on Fuels from Sunlight, where researchers will investigate methods to produce clean fuels directly from solar energy, and another on Modeling & Simulation for Nuclear Reactors.

The E-RIC embraces the idea that sustained and targeted efforts can help grow “innovation clusters,” or geographic regions where dynamic interactions between university-based scientists and engineers, local businesses, and public sector institutions generate new technologies and economic growth. The approach aligns with proposals laid out in the Science Progress report, “The Geography of Innovation,” which argued that federal policy should support cluster building that both aligns with national priorities in areas like energy efficiency, but that also leaves leadership to regional communities. The agencies hosted an information session in Washington, D.C. in February to explain the application process in detail to the interested consortia from around the nation.

Cultivating new clusters around the country is an important component of the Obama administration’s strategy for boosting innovation in the United States and maintaining our competitiveness in the global marketplace. In 2010, for example, Chinese government investment in science and technology is expected to increase 8 percent, according to reports in Science. Our nation must meet this challenge.

The E-RIC project is the first pilot of the Interagency Regional Innovation Clusters Taskforce and brings together the Department of Energy, the Department of Commerce’s Economic Development Administration and National Institute of Standards and Technology/Manufacturing Extension Partnership, the Department of Labor, the Department of Education, the Small Business Administration, and the National Science Foundation.

Collaboration on the issue of building efficiency is a national priority because buildings consume almost 40 percent of the energy produced in the United States and account for some 40 percent of carbon emissions. Energy efficiency deployment is the low-hanging fruit of greenhouse gas reduction strategies, but expanding efficient technologies for commercial and residential building design and operation will reduce energy consumption and energy bills for citizens and businesses alike.

The regional anchor for this effort will be a new Energy Innovation Hub located at a university, a DOE national laboratory, a nonprofit organization, or a private firm. The hub will receive a $22 million grant in its first year from DOE, with up to $25 million a year for up to four years afterwards. Department of Commerce and EDA funding for economic development and economic adjustment assistance can total $5 million for up to five years. Along with additional funds from NIST/MEP and the SBA, the interagency partnership is significant because it will be the first such coordinated federal regional innovation effort. As the authors explain in “The Geography of Innovation”:

Never before has the U.S. government devoted a single penny to a comprehensive national program specifically dedicated to supporting regional innovation clusters and business incubators that fuse the geographically shared resources of universities and other research organizations, companies, research centers, governments, and workers.

The benefits of this approach can be manifold, which is why it is important that the proposal is a collaboration between seven federal agencies with dovetailing expertise. Research is the basic fuel of an innovation cluster, but like a car engine, there are many complicated moving parts necessary to capture the full ignition energy of those new ideas. Technology transfer offices within universities help scientists patent the most promising concepts and commercialize it by licensing the work to companies that use it to design new products. A regional cluster forms when those companies spring up in the vicinity of those research institutions, taking advantage of not only the intellectual property, but the talented workforce.

Building those businesses requires money and talent. In the most well known U.S. innovation clusters—places like Silicon Valley and metro Boston area—there is a wealth of skilled workers and investment capital. But in regions that lack that pre-existing pool of expertise, cash, and ready business leadership, economic development organizations can help forge relationships and lay the foundations for new enterprises. For instance, institutions can provide low-cost office space and legal assistance to start-up companies. Last year the National Economic Council and the Office of Science and Technology Policy explained in a strategy report:

In various regions of the U.S., entrepreneurs are collaborating with local researchers, educators and industry leaders to foster specialized knowledge, technical expertise, and cutting-edge products. This will help American businesses retain and achieve new levels of competitiveness.

The result is a virtuous circle that feeds new ideas, products, jobs, and economic growth.

Moreover, the federal investment in the cluster will not be the only money flowing in to support the effort. Instead, the federal money will support state-level economic development work that has suffered under the precipitous decline in revenues. It will also leverage private investments in the commercialization process. The process of developing new products that solve national problems in building system efficiency will further capitalize on some of the billions of dollars the government pours into basic energy research every year.

The congressional hearings this week on applied innovation through the new multi-departmental E-RIC program could be just the beginning of this new bottom-up federal funding model for innovative regional economic development. We at Science Progress would argue that it’s about time.

Andrew Plemmons Pratt is the managing editor for Science Progress.

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