Alternative Energy and Innovation

Wasted Energy

A interesting article in the Times this morning on the complex problem of reducing our use of fossil fuels got me to thinking about the nature of innovation in America. One of the biggest problems is that our current technologies waste so much energy (graphic above). The problem is posed starkly.

The economist Jeffrey D. Sachs, head of the Earth Institute at Columbia University, stated the case bluntly in a recent article in Scientific American: “Even with a cutback in wasteful energy spending, our current technologies cannot support both a decline in carbon dioxide emissions and an expanding global economy. If we try to restrain emissions without a fundamentally new set of technologies, we will end up stifling economic growth, including the development prospects for billions of people.”

So what would it take for us to create that new set of technologies? I found my answer in a book called The Dream Machine, Mitchell Waldrop’s epic tale of the creation of the computer revolution. In 1949, right after the Soviets had tested an atom bomb, the Pentagon decided it needed a comprehensive radar network that could detect Soviet bombers attacking the U.S. There was some elementary radar technology, no real time computers and no networks capable of moving digital data between radar stations. So the Pentagon sent General Albert Shiely to MIT and asked them to invent the system and within five years they had succeeded. How did this happen so fast?

For whatever reason–the perceived urgency of the task, perhaps, or the good sense of General Shiely and his oversight team–the researchers had remarkable freedom to make decisions without being second guessed from the top. They simply paid for (needed components) out of their “advanced research” budget, which they could dip into for whatever they considered needful–with no committee meetings, no studying the question to death and nobody’s pointing out a thousand ways they ought to do it differently.

We have discussed before on these pages some of the amazing new technologies that could take us away from our addiction to oil and coal. What is missing is the bottom up energy and freedom that the scientists at MIT had in their “Project Whirlwind”. But more importantly what is missing is the urgency on the part of the government to provide the needed research funding without strings or bureaucratic impediments. Why is it that we can only get these big projects done under the aegis of the military and with the threat of annihilation at our door?

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0 Responses to Alternative Energy and Innovation

  1. Morgan Warstler says:

    No need. Simply make investment losses from alternative energy start ups tax deductible.

    The real brains in the private sector, and a few at university will have endless funds to work from, and their own greed to drive them.

  2. Hugo says:

    Interesting. Several of the states compete to see who can do this more strenuously for Biotech, where the gestation before market is so long. So you wouldn’t have to look abroad for models. (Though Biotech jealously guards its carve-outs against the political fear of pile-on from other sectors, and this break for the Stogey-Chomping Plutocrats (as all business tends to be seen by Democrats) is a tough sell in Democratic quarters.) But very interesting.

  3. dc says:

    Another way that energy is wasted is all the radium and thorium released into the atmosphere by existing coal plants. Finding a way to collect that, and use it in a nuclear plant would be a huge boost.

  4. Jon Taplin says:

    Morgan and Hugo- I think there is a role for the Universities in this. Some of the technological breakthroughs will come from pure science research.

    Hugo- I think Democrats can see business as a great partner in this effort. Clearly, efforts to stimulate start-ups in the green-tech field such as Morgan suggests would be a big help.

  5. Morgan Warstler says:

    I’m aggressive about it I know, but I think it is best not to put IP ownership into the hands of the state. Too much conflict. It causes taxpayers to feel entitled.

  6. Ed says:

    I couldn’t agree with you more, before this election, the only presidential candidate to even mention having a formal plan to address alternative energy was Al Gore, wow did we screw up by not electing him!

  7. adrian williams says:

    The Dream Machine- a must for my library as well, to add to a story about its’ predecessor “The Victorian Internet” by Tom Standage which makes the same point about leaps in technology and performance (the only way of sending messages before was using direct vision!).
    Keep the thoughts coming

  8. antripathy says:

    We are beating about the bush.Alternate energy is so simple and yet it does sink into our minds.Just fix a turbine in front of a vehicle and when the vehicle moves the turbine will produce electricity!Yes,it is that simple!Anyone can try it on a bicycle.The atmosphere is a huge resorvoir of energy and we measure the level of this energy in degrees of centigrade and we can tap this energy too.Nobody listens.

  9. Sabeke says:

    Under Clinton, DARPA was changed back to ARPA and its focus shifted to technology in general, as opposed to technology for defense.

    A similar shift in focus, directed by the next administration, may be called for. DARPA is the perfect organization to coordinate energy research between the universities and the commercial sector.

  10. Dan says:

    The one thing I would not like to see is a new Archer Daniels Midland of the energy industry, one that claims to hold all patents and copyrights, and therefore if you generate electricity, you owe them money. Especially if new technologies have been developed using huge taxpayer-funded subsidies.

    But I’m pretty sure that’s how it will play out.

  11. rhb says:

    Any system that rewards Cheney and Rumsfield can’t be that bad can it? See DARPA coins, that is.

    Anyway, my question is why does this type of discussion always have to be broken down into political stereotyping? How more urgent does the situation have to be before we stop taking sides and realize we are all on the same side in this question?

    The same Sunday times that got Jon to thinking also had a supplement advertising Cheverolet’s new entries in the automotive green race. Dreamware, but still isn’t it time we stopped dreaming and started doing?

    And while I’m asking, what about trust in this process? I don’t trust the DOD to evidence the altruism that this kind of research calls for, I don’t trust the politicians that will earmark the funds, I don’t trust the top down mind set that controls the freedom of information that this kind of energy research demands. So how do we get beyond this point? Could this be something that should be developed across national boundaries through the UN (I know, who trusts them?) or some other international energy researching body? ? ?

  12. Hugo says:

    This is done by the U.S. Department of Energy. The National Renewable Energy Laboratory, the National Energy Technology Laboratory, and Sandia National Laboratories take point on these matters. All three are driven by CRADAs (Cooperative Research and Development Agreements) with academia and with business. The emphasis of these National Energy Laboratories is technology transfer. Two of them are operated by private-sector contractors.

    The National Labs that do basic science are all operated by universities, and they, too, are engaged in technology transfer and partnership with academic institutions and business. Fermilab is itself a consortium of more than 90 universities. The science developed at these laboratories is often packaged into applications by the engineers and partners working with the other National Labs.

    The USDOE acts in concert with DOD (ARPA) and NASA.

  13. Jon Taplin says:

    Hugo- But I don’t have any sense of urgency from these CRADA’s. Whats up?

  14. Josh C says:

    Dan: You’re totally right! This is what stifles innovation these days. It’s not lack of government funding. It’s that all the government funding goes to completely undeserving industries that have built up lobbies over the past fifty years. Universities are already pledged to these industries through the same channels. There aren’t many *free* thinkers out there anymore, I’m ashamed to say.


  15. Dmitri says:

    There are lots of good free market solutions, but the market has missing signals in it–the obvious one is the subsidy for current technologies that makes new ones comparatively worse, and the other is the lack of costs per citizen borne by pollution. If the market had those signals in it and the costs were born by those who created them, the tech would develop just fine.

    Since that’s unlikely in the near term for political reasons, there are lots of less efficient paths to follow. They are of course better than nothing, but not optimal.

  16. Hugo says:

    John, the honest answer is that the lack of urgency comes straight from the top. With two hours’ work from the President, envirotech R&D would be shifted to front-and-center for all the lab units not working on e.g. countermeasures viz the Chinese and Russians, and even the Star Wars people and the particle physicists (which may be redundant by now) would be having to repackage their stuff as somehow related to civilian energy breakthroughs. It’s Bush’s fault. The facility in Golden CO should be the epicenter of the nation’s R&D right now. It’s plainly not.

  17. Hugo says:

    Sorry for misspelling your name, Jon. Must’ve been Hurting there…

  18. John Hurt says:

    Exactly, Hugo.

    You are profligate with your stuff.

    At any rate, exactly.

  19. Hugo says:

    Profligate, John? Only with Public Domain stuff.

    Did you happen to notice that in the Fall MIT began publishing, and continuously updating, its entire syllabus on its open website?

  20. Morgan Warstler says:

    Dimitri, I think the market does have the signals, it just takes a while to establish a connection.

    Take littering, for my generation, it was I think a crying Indian ad, and some level of social shame – that eventually changed our attitudes. No law, or threat of punishment.

    When I spent a bunch of time in India, it actually struck me as weird to see people just drop trash where they stood, even though I remembered it from my childhood. I’m told even now, things are changing there.

    I personally, don’t believe social consciousness is something people are against learning. But people resent authority, witness Iraq, “yes come help us, ok we don’t need your help, ok stay, but we don’t want you here.”

    Liberals would do well to stick with spending their money on ad campaigns – it’ll get them a lot further quicker, because it carries no force of law.

    “Civilization is the progress toward a society of privacy. The savage’s whole existence is public, ruled by the laws of his tribe. Civilization is the process of setting man free from men.”

    -Ayn Rand

  21. Azmanon says:

    I’m with rhb on this one. Energy only fits into a political line when there’s money to be made from it. I don’t call that a free market system, but rather one of political control. Doesn’t anyone know the stories of the light bulb and how the more efficient designs were buried under the campaigns by Westinghouse and others for less efficient ones? Industry leaders quickly realized that without an energy market there would be no market for everything else they produced. In this light, the energy market was also created out of “innovation”. That “innovation” has been tied to nearly every major political battle of the last century and certainly defines the current agenda.

    Necessity is the mother of… oh yes, I remember when cars went from 15mpg to 35mpg almost over night in the late 70s. That response was not only based on a market necessity but also a real need to change to keep society going. The legislation change was right there along with the “innovation”.

    For me the greatest innovation right now would simply come out of how we perceive and define “energy” since our views are out dated by a century old view of a market based energy model.

  22. Hugo says:

    Now to me that’s damned fascinating, Azmanon, your radical reframing and redefinition of what “energy” means. What a grand social project that would be! What might it look like?

  23. Jon Taplin says:

    Dimitri-Would a BTU tax along with dropping the current oil drilling subsidies supply the missing market signal?

    Morgan-You are right about changing behavior on littering, but that is a very public act that can be shamed. There is no concommitant public act in filling your gas tank–though driving a Hummer in California comes close. :)

  24. Jon Taplin says:

    Hugo- What is the Golden CO facility you refer to?

  25. Zhirem says:

    Morgan: Couldn’t let this one go:

    “Civilization is the progress toward a society of privacy. The savage’s whole existence is public, ruled by the laws of his tribe. Civilization is the process of setting man free from men.”

    So, by Ms. Rind’s logic, we are resolutely moving in lock-step towards the post-civilization future? I posit this because of the established fact that we are becoming far less private, with much greater surveillance coming online each day?

    I understand how opaque walls kept our knuckle-dragging ancestors from watching each other excrete and fornicate, but I wonder how Ms. Rind’s stance evolves with technology? If our modern societal monitors do not have streaming video of every aspect of our lives, what is the level of privacy currently, when they can reconstruct our existences and make accurate educated guesses at the holes, simply from the data being collected on us every day? From credit cards, to CCTV cameras, to Ip addresses, browser logs and server logs, etc.

    So, I take it Ms. Rind has already established a colony on some South Pacific island somewhere with a lead-shielded roof to guard against unwanted satellite intrusion?

    – Zhirem

  26. Zhirem says:

    ok, back to topic:

    I just completed reading a short post where one is interviewing an author who recently completed: “Energy Victory: Winning the War on Terror by Breaking Free of Oil”. The author’s name is Robert Zubrin.

    Mr. Zubrin makes a good argument for bio-fuels, and moving to an ‘open source fuel market’. He posits that the US (and the rest of the planet), can break the back of the OPEC cartel and get oil back down to a somewhat reasonable level, merely from competition.

    He suggests that the government should mandate as quickly as possible, that all autos sold in the US from this point on *must* be flex-fuel capable. This will mean that Japan, Korea and the US will all switch their production to flex-fuel, because no one wants to give up any of the US auto market. This will have an associated effect of bringing the rest of the planet into alignment with the flex-fuel standard, relatively quickly populating the planet with vehicles capable of taking bio-fuel mixes or petro-mixes.

    Corn ethanol has replaced about 4% of our nation’s gasoline supply, and might go as high as 8%. But with the advent of new technologies and other plants coming online that can make use of just about any high-sugar or starchy crop, more options will be available for the creation of the alcohol necessary.

    The author suggests that a replacement of 20% of the gasoline by bio-fuels might be enough to break the cartel’s fix on ridiculous prices.

    The whole interview is only about 10 questions, and it is quite good. I highly recommend perusing it:

    – Zhirem

  27. Morgan Warstler says:

    Yes to FFV.

    But Iraq’s oil is the best way to break the back of OPEC.

  28. Zhirem says:

    Iraq’s oil breaking the back of OPEC?

    Hmmm… OPEC member countries:
    Algeria, Angola, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, Venezuela, and Ecuador (which rejoined OPEC in November 2007).

    So, assuming that the Shiites continue to (largely) dominate the political stance of Iraq. And assuming that they will tend to promote policies and politics with a keen eye towards Iran’s interests…

    How, short of US saying “Do This.”, do you expect that Iraq will break the back of OPEC? Wouldn’t that assume also, that they will act in a non-rational actor manner, voting and acting against their (*gasp*) economic self-interest?

    – Zhirem

  29. Jon Taplin says:

    Zhirem-Your notions about the surveillance society are spot on. Here is Sci fi author Bruce Sterlings take on 2026.

    As usual Ayn Rand was clueless about the import of the future she was advocating

  30. Zhirem says:

    Very interesting Jon.

    Reminds me of another post, a while back:

    Hackers are the freedom fighters of our future. Only those with the means and the knowhow will operate with any semblance of normalcy.

    – Zhirem

  31. Morgan Warstler says:


    “SAN FRANCISCO: Today more than three-quarters of the world’s oil is owned and controlled by governments. It wasn’t always this way.

    Until about 35 years ago, the world’s oil was largely in the hands of seven corporations based in the United States and Europe. Those seven have since merged into four: ExxonMobil, Chevron, Shell and BP.

    They are among the world’s largest and most powerful financial empires. But ever since they lost their exclusive control of the oil to the governments, the companies have been trying to get it back.

    Iraq’s oil reserves — thought to be the second largest in the world — have always been high on the corporate wish list.

    A new oil law set to go before the Iraqi Parliament this month would — if passed — go a long way toward helping the oil companies achieve their goal. The law would take the majority of Iraq’s oil out of the exclusive hands of the Iraqi government and open it to international oil companies for a generation or more.”

    “The international oil companies could also be offered some of the most corporate-friendly contracts in the world, including what are called production sharing agreements. These agreements are the oil industry’s preferred model, but are roundly rejected by all the top oil producing countries in the Middle East because they grant long-term contracts (20 to 35 years in the case of Iraq’s draft law) and greater control, ownership and profits to the companies than other models. In fact, they are used for only approximately 12 percent of the world’s oil.

    Iraq’s neighbors Iran, Kuwait and Saudi Arabia maintain nationalized oil systems and have outlawed foreign control over oil development. They all hire international oil companies as contractors to provide specific services as needed, for a limited duration, and without giving the foreign company any direct interest in the oil produced.

    Iraqis may very well choose to use the expertise and experience of international oil companies. They are most likely to do so in a manner that best serves their own needs if they are freed from the tremendous external pressure being exercised by the Bush administration, the oil corporations — and the presence of 140,000 members of the American military.”

  32. Hugo says:


    Sorry for the lag. I’m traveling. I’d referred to the National Renewable Energy Laboratory, in Golden. It’s the lead National Lab for this, though at least five others are working on some pretty gee-whiz stuff.


    And if the reincarnated Simon Bolivar (or was it Frederick the Great?) had taken the bait and moved against Colombia last month, the companies might well have retrieved some of their stolen property.

  33. Jon Taplin says:

    Morgan- I find it so ironic that you quoted an op-ed from the IHT in which the author was protesting the Bush administration’s attempt to capture Iraqi oil–to support your cynical position that we fought the war to capture their oil.

    Sometimes I think you take this stance just to provoke–but then a voice tells me you are serious. Which one is it?

  34. Morgan Warstler says:

    I was answering Zhirem’s observation that Iraq is part of OPEC. The article quoted explains clearly there is a real difference in how this oil will come out of the ground. It will be in the obvious interests of Western companies to maximize production under the terms of these agreements. Said another way, to break the back of OPEC.

    Jon, the oil contracts and deals with the Western Oil companies are being done right now.

    The Iraqi Parliament just requested General Petraeus contact the Western Oil companies and get them to invest more in the Iraq. Why would they ask a general to do this? Obviously, because he is assuring the Western Oil companies that our armed forces will protect the oil zones, so more money flows into the state recovery.

    Now, you say you want to get to -it is INCREDIBLY important. And I agree.

    Do we have a crisis on our hands? Yes. Sure. You got me. Ok now what?

    Oh, you say we trust OPEC’s machinations will fail? Sorry, no can do.

    The path to, is hard enough, it certainly requires a free market in the energy space, atleast one not facing a cartel. A cartel could kill our path to, money in their pocket, means money not in ours, money we can’t invest in

    Beyond that, money in their pocket, not in ours, means an empowered set of enemies.

    OPEC just announced they don’t need to increase production. Why don’t they? Didn’t they get your to save the world memo?

    If we can trust them to be in the world’s interest and not their own, why aren’t they maximizing production? And if they aren’t in the world’s interest, why are we?

    You contradict yourself every time we get to this point, because you say “oh trust the market” in the face of the one thing we need an army to solve for, maximum production of oil flow, anything else is weaponized energy. You don’t trust insurance companies, you don’t trust doctors, you don’t trust corporations, but you trust OPEC. WTF? My side makes sense. Trust us more than them.

    We’re going to get to maximum production. Why can’t we just all agree that is the world policy? Get out much as possible, sell it on the open market, and we’ll put our resources to finding an alternative.

  35. Ian Masters says:

    The most interesting analysis of our economic troubles and the portent of a looming depression come from Michael Greenberger, former Director of Trading and Markets at the Commodity Futures Trading Commission (CFTC), was interviewed by NPR’s Terry Gross this past Thursday, April 3. He explained that the sub-prime mortgage crisis was caused by financial derivatives, and that there are more crises coming, because there are many more financial derivatives out there. He notes that the one act of deregulation most to blame – even more to blame than the 1999 repeal of the Glass-Steagal Act (the law passed in the First Great Depression to separate commercial banking from investment banking) is the Commodities Futures Modernization Act of 2000, introduced on the sly by then Senator Phil Gramm (R-TX), who is now the top economic advisor to John McCain:

    And Greenberger warns that we are at the beginning of the financial crises, not the end. He explained that the sub-prime mortgage crisis was caused by financial derivatives, and that there are more crises coming, because there are many more financial derivatives out there. Greenberger notes that there is now more money invested in these unregulated financial derivatives than in stocks and bonds. He explains that the financial system today is focused not on actual investment in the economy, but on booking bets, just like a Las vegas bookie. He and interviewer Terry Gross use a sports team analogy: with stocks and bonds, you are actually putting money into the team. But with derivatives, instead of investing in the team, you’re just betting on whether the team is going to win or lose.

    Moreover, Phil Gramm’s Commodities Futures Modernization Act of 2000 prohibited the federal and state governments from regulating financial derivatives, so nobody really knows how big the problem is.

    Greenberger warns that the securitization Wall Street applied to sub-prime mortgages to allow these bets to be placed was also applied to all other types of debt. “We are soon going to find out that it’s not just mortgages, but it’s all kind of loans: credit card loans, auto loans, student loans, are all going” to become problems in the very near future.

    Greenberger has an implicit condemnation of the role Bush has failed to play:

    “It all goes back to these credit default swaps. The American people don’t understand that. If Franklin Delano Roosevelt were President right now, we would understand that: there would be a fireside chat; we would make it so that the American public understand it. And it’s important that the American public understand it, because even as we speak, the Wall Street interests, who have all the money in the world to hire lobbyists, the lobbyists are lobbying 24 hours a day, seven days a week, 365 days a year … to keep this market, a shadow market, that nobody understands.”

    Greenberger goes on to argue, “I don’t think there is any effective proposal on the table. First of all, Phil Gramm’s surprise legislation that prevented regulation of derivatives is far more important than the repeal of Glass-Steagal. . . . [We] need to eliminate the ability of banks and all other lenders not to worry that the loan they are making will be paid back or not. Derivatives have removed financial discipline from the market.”

    Greenberger explains why the Paulson plan is actually less regulation, not more: because it gives all the responsibility for oversight to the Fed, but does not give the Fed the power to prevent problems from developing. It only gives the Fed power to deal with problems as they occur. And it takes regulatory powers away from the states, which is why the state attorneys general and state insurance commissioners came out in opposition.

    At the end of the interview, Greenberger asks the question that get to the heart of America’s failing capitalist system.

    “Should we have an economy that’s based on whether people make good or bad bets? Or should we have an economy where people build companies, create manufacturing, do inventions, advance the American society, make it more productive? This economy is based on people sitting at their computers and making bets all day long. They call it credit default swaps, OTC derivatives, asset backed securities, etc. etc, – makes it all very complicated, but we are rewarding people for sitting at their computers and punching in bets. That’s not the way our economy is going to be built, and India and China, with their focus on science and industry and building real businesses, are going to eat our lunch, unless the American public wakes up and puts an end to an economy that praises and makes heroes out of speculators.”

    You may have seen the recent fluff piece that “60 Minutes” did on Carl Icahn, a speculator lavished with praise like a hero.

  36. Hugo says:

    It was over-reliance on derivatives that caused the largest “municipal” bankruptcy in U.S. history, that of Orange County, California. It very nearly bankrupted the entire State of California. The U.S. Treasury Department reported 48 hours after the bankruptcy that they were finding species of derivatives never before seen.

  37. Dmitri says:

    Sorry for the slow reply here. When I say market signals, what I’m referring to are the costs created by the use of oil. Right now, the users and producers of oil do not bear those costs in proportion to their use and production. So, for example, those of us in LA use oil and create smog, but it’s those in San Bernardino who bear the costs of smog disproportionately because winds blow west to east. San Bernardino probably has higher rates of emphysema, asthma, etc., but not of their own creation. If the users in LA who created those costs bore the costs of treatment, we’d have a more accurate market signal. We’d pay more for gas, and that money would go to health care to our east.

    It’s that logic in a thousand instances that I’m referring to. If we users and the oil companies had those many costs built in–and then transferred to those impacted, the price would reflect the actual market with costs and benefits and clear information signals.

    Those kinds of market signals are of course both socially just and very difficult to legislate and coordinate. Taxes are easier to coordinate, but are less efficient signals. A BTU tax, for example, probably takes a good estimate at creating the correct costs for oil producers and users, but is unlikely to be used to help those affected by that same use (our San Bernardinans in this case).

    Of course, our current policy of subsidizing oil is a market signal in precisely the opposite direction. It’s both inefficient at allocating costs correctly and provides a disincentive to think in a more market-accurate way.

    In the long run, markets do a very good job–far better than politicians from any faction–but they require perfect information flows and perfect coordination. Most of what we see is simple vying for advantage. In that sense, we’re all creating a tragedy of the commons by looking out for our own interests, or those of our allies’ as our President has clearly done. Conservatives talk a lot about free market mechanisms, but subsidies as much enemies of that approach as taxes are. A true fiscal conservative doesn’t go for trickle-down any more than they go the tax route.

    Personally, I favor a cap-and-trade approach since it can take advantage of market mechanics and more or less splits the difference between the pareto optimal pie-in-the-sky scenario I laid out and the reality of politics for group benefit.

  38. Morgan Warstler says:

    Dmitri, why do you think the property values / cost of living in San Bernardino are so low by comparison? Don’t pretend the market signals haven’t been built into it already. If you, Dmitri can see it, then it is “perfect information” because everyone else sees it too.

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  40. Dmitri says:

    Not necessarily, Morgan. Just because the current cost of living there is at LA’s cost -x (where x is made up of social desirability, access to capital and opportunity, or whatever), it doesn’t mean the true value isn’t actually LA-x- some y also.

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