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CEOs to Washington: Spend on Energy R&D!

<p>A group of America's most powerful capitalists -- including Bill Gates, Jeff Immelt, John Doerr and others -- is calling for $16 billion a year in government investments on new energy technologies.</p>

Can a massive government spending program bring us closer to a clean energy economy and help fight climate change?

Absolutely, say some of the America's most powerful CEOs and ex-CEOs, capitalists all.

Microsoft's Bill Gates, Jeff Immelt of GE, Ursula Burns of Xerox, Tim Solso of Cummins and former CEOs Chad Holliday of DuPont and Norman Augustine of Lockheed Martin, along with venture capitalist John Doerr, came to Washington earlier this month to release a new report calling for the government to invest in energy innovation.

They're calling for $16 billion a year to be spent on energy R&D. That's more than three times the current Department of Energy research budget -- although last year's stimulus package included a one-time boost of about $37 billion for the DOE.

Yes, it's a lot of money, but as John Doerr put it: "Americans today spend more money on potato chips than we do on energy R&D." Yikes.

The CEOs held a press conference at the Newseum and then took their message to the White House, where they were scheduled to meet with President Obama. They were also headed for Capitol Hill, which energy-and-climate legislation has been stalled for months.

"Our job is to keep agitating and be a force for positive change," Immelt said at the press event.

If America doesn't get its clean-energy industry going, the GE chief said, "everybody else around the world will. This is a primary pillar of national competitiveness."

Now let's be clear -- there is obviously some self-interest at work here. GE and Cummins, which makes diesel engines, would both benefit if the government helps research and finance clean energy. (See GE and Washington: Too cozy?) The same is true for Kleiner Perkins, which has invested in startups that need financing to get to the next level, companies like the biofuels firm Amyris and Bloom Energy, which makes fuel cells.

But this group was brought together by Gates, who is spending more time focusing on energy and climate, and it includes retired CEOs like Holliday and Augustine, who have no stake in government handouts or guarantees. Call me naïve if you like, but I think they they're putting their time into this because they are worried about the future. As they write in the report:

the energy challenge is much worse than most people realize. The problem is already imposing a heavy burden on our nation -- a burden that will become even more costly. The economic, national security, environmental and climate costs of our current energy system will condemn our children to a seriously constrained future unless America makes significant changes to current policies and trends.

Or, as Immelt put it at today's event: "It's really easy to be cynical about whether something can actually be done. But I'd say status quo for this country is a losing hand, right now. We're falling behind some of our global competitors."

To push their agenda forward, the business people formed a group called the American Energy Innovation Council. You can download their 32-page "business plan for America's energy future" here, and watch them talking about energy. Here's a short video in which their make their case:



Because I'm a skeptic about the ability of government to spend that much money smartly -- my preference would be to find market mechanisms to invest capital in a variety of technologies, and keep politics out of it, or simply to put a steep price on carbon and let the chips fall where they may -- I asked several of the CEOs why they had confidence that a centralized approach made sense.

Immelt noted that GE is in the health-care business as well, and said the National Institutes of Health has been very effective. That NIH spends about $30 billion a year, most of which supports research done at universities. "The NIH is a pretty good model," he said. Partly because of work done at NIH, he said, the U.S. is the world's leader in health care, at least when it comes to innovation and technology. The report notes that Gleevec, a cancer drug, came out of work done by an NIH-backed researcher. Presumably there are many more examples.

I also talked with John Doerr after the event. Naturally, being a venture capitalist who made his fortune from information technology (Kleiner funded Google, among others), he cited the Defense Advanced Research Projects Agency (DARPA), where the Internet got its start, as an example of successful, government-backed R&D.

"So much of America's prosperity can be traced back to those investments," Doerr said. "ARPANET essentially created the discipline of computer science. ARPANET funded radar. ARPANET created the computer-assisted design industry."

There's no reason, he said, that the DOE can't do as well. "The national labs are already doing some really good work," he said. They just need more sustained support. Government loans, he said, can play a key role in bringing proven technology to scale.

One final note: When I saw the names of climate scientist Ken Caldeira and geoengineering expert David Keith listed on the AEIC's "technical review committee," I asked Gates whether he thought some government funding should be used to research geoengineering. Gates has made small grants of his own to Caldeira and Keith to fund research into ways that humans can deliberately manipulate the climate to deal with the threat of global warming. (See Is Geoengineering Inevitable?)

While geoengineering isn't mentioned in the report, Gates said it's worth researching. "Fortunately," he said, "we're a long ways away from anyone would have to look at deploying" geoengineering technology. "But you'd want to be fully informed," particularly if, as seems likely, other countries that fear climate change do their own geoengineering research.

There's lots more at the American Energy Innovation Council website, including a model budget on how the $16 billion could eventually be spent -- basic energy science ($2.6b), nuclear fission ($1.0b), nuclear fusion ($400 million), efficiency ($2.1b), renewables including solar, wind, bioenergy, geothermal and hydropower ($2.4b), fossil energy including clean coal ($1.3b), electricity transmission and distribution ($1.2b), as well as large-scale pilot and demonstration projects.

Said Chad Holliday: "We don't see a better investment that our country can make in future generations."

People will, of course, argue about the priorities. But isn't it time that we get going? Senior Writer Marc Gunther is a longtime journalist and speaker whose focus is business and sustainability. Marc maintains a blog at You can follow him on Twitter @marcGunther.

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