Republican Study Committee proposes unilateral disarmament to China in innovation, clean energy

Energy Secretary Steven Chu has explained why China’s bid for clean energy leadership should be our “Sputnik Moment.” The Center for American Progress and ClimateProgress have proposed a variety of common sense strategies for responding to China’s innovation and competitiveness policies.  But the conservative movement is hell-bent on forever ceding leadership in the most important job-creating industries of the next several decades, as Kate Gordon, CAP’s VP for Energy Policy explains in this cross-post.

On Thursday, the Republican Study Committee unveiled its Spending Reduction Act, a broad swath of recommendations aimed at cutting trillions of dollars out of the budget. The committee, which includes the vast majority of Republican House members (175 out of 242), claims these cuts are necessary so government does not “rob our children of the opportunity to reach for the American Dream.”

But the American Dream depends on American prosperity and leadership. And several of the committee’s cuts explicitly undermine our future prosperity, especially in the area of clean energy technology.

The global clean energy sector is booming. Global markets in renewable energy and energy efficiency solutions reached more than $240 billion in 2010. So far, America has been a leader in this space: The Next10 Venture Capital Association found that more than 40 percent of all venture capital investment in clean energy happened in the United States last year. But without continued investment across the technology innovation cycle””from invention at the federal labs and publicly sponsored universities, to public-private partnerships aimed at commercializing and licensing new technologies, to technical assistance to make our manufacturers the most advanced and efficient in the world””we will forfeit whatever leadership we have managed to gain.

The Republican Study Committee’s recommendations undermine each of these areas of critical investment. The recommendations go after the Applied Research program at the Department of Energy, cutting $1.27 billion from this core set of activities designed to identify which new innovations in America’s labs and universities is primed for actual commercialization and market-readiness. This is the kind of research that turns theories into profitable ideas, and it is where most innovative American companies are born.

The recommendations slash a further $70 million per year from the Department of Commerce’s Technology Innovation Program, aimed at fostering public-private partnerships to develop high-risk technology””the kind of technology investment rarely made by the private sector””in areas of national interest. Last summer, the program awarded a grant to three companies working on a new way to coat steel “faster, cheaper, and greener” by replacing traditional coatings made of degradable heavy and toxic metals. The technology will make the steel less toxic, less of a health hazard, and less prone to constant (and costly) repair. It is the kind of investment in early-stage, high-risk technology that most private steel companies have no incentive to make, since it affects long-term maintenance costs more than short-term profits.

The committee doesn’t stop at cutting basic research and development. It goes after one of the foundational pieces of America’s economic strength: our advanced manufacturing sector. The Manufacturing Extension Partnership program works with a tiny $125 million budget to help small and midsize manufacturing firms across the country become more efficient and more competitive, including helping firms realize key energy efficiency gains. The U.S. industrial sector consumes about one-third of all our country’s energy, and efficiency gains can be the difference between a manufacturing firm’s survival or demise. The MEP program can also help firms that have been part of traditional supply chains””for instance, in the auto sector””retool to tap into new markets, such as electric drive trains or wind turbine production. The health of our manufacturing sector, so central to our country’s current middle class and our long-term innovation and competitiveness, depends on this kind of targeted assistance.

But the Republican Study Committee doesn’t care. It would slash the MEP budget entirely, saving $125 million each year. The MEP’s current work creates or retains more than 50,000 manufacturing jobs per year according to the Apollo Alliance. The RSC would rather jettison these jobs to save what is, in the context of the overall deficit, a drop in the federal budget bucket.

Last but not least, the RSC goes after the Economic Development Administration. The committee cuts $293 million from this Department of Commerce program responsible for working with states and cities across the country to develop smart, accountable economic development plans that will help America’s regions create jobs today and foster tomorrow’s seeds of innovation. The EDA has many functions but one critical piece of its mission is to leverage scarce public dollars by strategically investing in regional “race to the top” programs that encourage existing firms, universities, and government entities to pool resources and knowledge, and collaborate around shared innovation agendas. One such program, the Energy Regional Innovation Cluster program, focuses on fostering new breakthroughs in invention, commercialization, and deployment of clean energy technologies. This same general strategy brought us Silicon Valley and the Research Triangle’s biotech advances. If the RSC is interested in making federal dollars go further, this is exactly the program to fund, not cut.

The United States has been a leader in innovation and entrepreneurship in the clean energy sector, as in so many industries before it. But our global leadership rests on our continued commitment to strategic public support for research, development, production, and deployment of these technologies. By undercutting the programs that most efficiently and effectively invest in these building blocks of innovation, the RSC will consign America to the role not of global leader but of global consumer. That doesn’t sound like the American Dream to me.

— Kate Gordon

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17 Responses to Republican Study Committee proposes unilateral disarmament to China in innovation, clean energy

  1. Wes Rolley says:

    Alas, the good Republicans are gone… Congress members like Pete McCloskey, Sherwood Boehlert, Lincoln Chaffee, Wayne Gilchrest. Even Barry Goldwater, who had the conscience of a conservationist, must be crying in his grave.

  2. George Ennis says:

    It seems the GOP has 24/7 economic plan.

    The short term plan runs to 24 hours and the long to 7 days.

  3. Leif says:

    The GOBP wants us to continue to build buggies when everyone else is learning to build warp drives.

    The “Awakening Economy” has left the gate I say we have given them enough of a head start. It is time to get it on.

  4. Bill W says:

    Not that this will be an argument that would sway conservatives, but the RSC also wants to eliminate all US funding for the IPCC.

  5. Dan King says:

    If clean energy is such a great business, then why does it need government subsidies?

    [JR: Why does oil, coal, nuclear?]

  6. Leif says:

    Dan King, @ 5: If fossil fuel is such a great business, why do we have to give them free dumping and ~ 10X more subsidies than Solar. The fact is that if “Fossil” had to compete “straight across” renewable would win hands down.

  7. Cass says:

    Dan, many of the products we take for granted were once costly endeavors that required some kind of public assistance. The public sector actually has a strong role in both regulating markets and encouraging new sectors.

    Markets, as we are now well aware, are not ultimately self-correcting, and fail to take into account externalities. Dirty power sources produce externalities in the form of carbon emissions, to name one. Clean power sources produce far, far less.

    Besides for the obvious health and planet concerns, there is of course the national security concern. Just as we cannot afford an unsustainable debt, we also can’t afford to pay hundreds of billions a year to import oil. And no matter what people say, no reasonable geologist will tell you that the US has anything close to the amount of proven reserves needed to sustain our oil thirst.

    But all this is beside the point. Clean energy subsidies are minimal. Instead, ask yourself, why do highly profitable dirty energy companies need government subsidies?

  8. Mulga Mumblebrain says:

    Dan #5, the parasites don’t invest in manufacturing any more because the reward, ie the return on capital, is insufficient to sate their greed. Far easier and more personally lucrative to outsource to a slave wage regime or invest your money in ‘financial services’ ie financial speculation (gambling) in the casinos of commodity and other markets. Blow up a nice bubble, get the mania running hot, but do make sure you exit early, or you’ll be trampled in the inevitable panic when the bubble bursts. It’s been the capitalist way ever since the South Sea Bubble or the Dutch Tulip Mania, unless restrained by enlightened government. China has that, and you once had it to some degree, when the economy grew and so did popular welfare, but since the 1970s the parasite class has slowly been dismantling it. Why do they act so destructively and imbecilically. Because that is their nature.

  9. Jim Eaton says:

    Once upon a time, there were Republicans who cared about the environment. The Wilderness Act of 1964, for example, was a bipartisan effort.

    Pete McCloskey is pro-choice, supports stem cell research, and Oregon’s assisted suicide law. He was a co-chair of the first Earth Day in 1970. He ran against anti-environmentalist Richard Pombo in the 2006 primary — he lost, but Pombo was weakened enough that he lost to Democrat Jerry McNerney. In 2007, McCloskey finally gave up on his lifetime affiliation as a Republican and registered as a Democrat.

    He and his wife Helen live on a farm in the Capay Valley, Yolo County, California. Helen and I both serve on the board of the conservation organization Tuleyome. They are good folks.

  10. Andrew DeWit says:

    This is probably bad news for Japan as well. Carbon-intensive industries (cement, steel and etc) dominate its peak business associations (esp, Nippon Keidanren) and work closely with the Ministry of Economy, Trade and Industry (METI) to gut low-carbon policies such as Kyoto, RPS rules, carbon trading, carbon taxes, the feed-in tariff, and etc. Since Japan remains very much a military and ideological colony of the US, what happens there shapes energy and environmental policy here. For example, in early 2001, desperate to curry favour with the Bushies, former PM Koizumi was ready to toss Kyoto. The current Democratic Party of Japan government was keen on strong green targets during the 2009 election campaign, but when the Obama people threw their “green new deal” into the garbage, it greatly helped METI and the vested interests to rollback the DPJ’s commitments. But maybe the combination of rising oil, coal (and soon) natural gas prices in addition to the China threat in cleantech markets will concentrate minds.

  11. riverat says:

    The Republicans are going to slash these funds and then wonder why the USA is becoming a second rate nation.

  12. Nick says:

    (1) Start by putting everything on the table.

    (2) Demand compromise.

    (3) Blast those who never wanted those programs on the table in the first place for not being cooperative (i.e., exploit voters’ desire for some semblance of bipartisanship).

    (4) Get your compromise.

    (5) Bask in your achievement of making the market more “free”, oblivious to the fact that America will just continue producing financial transformers and consolidating wealth in the hands of…the friends of those who put these programs on the table.

    Lazy politics. Terrible policymaking.

  13. BBHY says:

    I think the “free marketers” don’t understand what Adam Smith was talking about.

    When you are driving your car down the street, you don’t steer wildly in reaction to every little bump in the road. Mostly, you let the car’s natural stability keep the car going in the right direction. And in business, government shouldn’t get involved in the short term, day to day operation of business. That is where the “free market” does a good job.

    But you don’t rely on your car to navigate you home, you have to give it some steering input. And the general direction of the economy also can’t navigate on it’s own. The day to day free market forces will, when looked at on a larger scale, lead in random directions and many of those directions do not lead to long term economic prosperity or even stability. Some government steering input is required. That doesn’t mean giving up on the free market, just setting a general direction at the macro scale.

  14. Berbalang says:

    Leif @ 3: You are very right! I was dragged into a political mess caused by a technical mess caused by a conservative Republican ignoring those pesky laws of physics and logic. After sorting through all the technical issues I came up with a plan to sort the whole thing out providing nothing was changed and stated this very clearly. The conservative changed everything based on thinking that flew in the face of several thousand years of human progress. I told him so and walked away, since there was no hope for the project at that point.

    The conservative then held a press conference, announced he had done what he set out to do, said “My job here is through!” and took off.

  15. Mimikatz says:

    That Obama created a President’s Council on Jobs and Competitiveness and put Jeff Immelt of GE at its head indicates that he realizes he needs to mobilize the more forward-thinking part of the business community as a counterweight to the idiot ideologues in the RSC and GOP generally. People criticized Obama for this, but GE is one of the biggest new and green tech companies under Immelt, and he gets what needs to be done. The RSC will not get its way in this fight, whether it happens in the House or the Senate. The subsidies and initiatives will survive.

  16. Mulga Mumblebrain says:

    Andrew de Wit #10, thanks for the truth concerning Japan. People seem to think that Japan is a sovereign state, but it remains, as you say, a US colony. Its corrupt political system of one-party rule by the descendants of the war-time fascist regimes, is controlled, following the US model, by Big Business. Hence the ease of Obama’s contemptuous disposal of Hatoyama over Okinawa and Japan’s enthusiastic enlistment in Obama’s ‘get China’ campaign. The good news is that China doesn’t give a damn. It will co-operate with the US, Japan or that other, increasingly belligerent US protectorate South Korea, on business and technology until the economies of all these countries are so intertwined that war will be unthinkable. The next few years are the danger zone, and, given the hysterical vitriol aimed at Hu by the Republicans in Washington and the truly nasty ill-breeding and contemptuous bad manners of much of their behaviour, and the even more vicious ranting of the FoxNews Ltd rabble and the talk-back goons, it will certainly be a bumpy ride.

  17. Barry says:

    The Republican ideology has been hijacked completely by the “corporatist” agenda.

    Corporations these days are perfectly happy to move jobs and profits around the world looking for the maximum profit and minimum oversight.

    Through this lens it makes perfect sense that GOP leadership is indifferent to whether jobs and profits leave the USA for elsewhere. Why Americans support this at the voting booth is the real mystery.