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Freeing our economy from its dangerous addiction to fossil fuels and averting the calamitous risks of climate change will require a major technological transformation in the way we produce, transmit, and consume energy. Inventing, developing, building, and deploying these new technologies will require a new era of American technological innovation. The result will be new industries and jobs, along with more clean energy and less pollution.
The good news is that we know that innovation is a fundamental driver of economic growth, and America has led the world in innovation for the past two centuries—from the mechanization of textile manufacturing in the late 18th century to the invention of the Internet in the late 20th century. Innovation is America’s first and greatest competitive advantage—or, as President Obama said “it’s in our DNA.” Twenty-first century clean energy technologies are already being designed, built, marketed, and installed to replace more than a century’s worth of entrenched fossil fuel infrastructure, and a recent report by the Department of Commerce indicates that there are nearly 2 million clean energy jobs in our economy today, with more on the way.
The bad news, however, is this: the United States lags behind many other countries in these emerging technology sectors because our public policy does not fully recognize the central role that innovation plays in sustaining quality economic growth and job creation. Part of the problem is a lack of understanding about exactly what innovation is, how it works, and more importantly who is involved (see box). Policymakers in particular need to understand how different public and private sector players interact to form innovation networks, and how these networks change over time, which is why we’ve put together this primer on the energy innovation lifecycle.
We’ll first define the different stages of the innovation lifecycle, then describe the network of players engaged at each stage of the process. This “network lifecycle” approach can help us better understand who does innovation, the processes that drive it, and the opportunities for public policy to aid it at various points in the process. As you’ll see, our innovation economy in the energy arena needs some key reforms to perform at its peak again.
Defining innovation: new ideas that create value
“Innovation” is a broad and often vague term, and its meaning varies in different policy circles. But no matter what the context, innovation is fundamentally the process of inventing, introducing, and adopting a new product, practice, system, or behavior.
An innovation can be a new product, machine, policy, business model, administrative structure, managerial system, or even a new cultural or social norm that benefits society. But regardless of whether an innovation affects social processes, economic process, or physical and technological processes, what distinguishes an innovation from an idea or a principle is that it creates value and improves society.
This paper focuses on clean energy technology innovation—the invention and propagation of new machines that generate, save, or transmit energy. But as we will show, producing these new devices also requires the use of new modes of manufacturing, which can be thought of as technologies themselves, as well as new business models that can finance, produce, market, and sell these new machines.
Creating a clean energy economy is just as much about “process innovation”—incremental improvements to the materials and manufacturing process of technologies we already know about—as it is about finding new or undiscovered “breakthrough technologies.” Understanding the five phases of energy “innovation lifecycles” and the five kinds of participants in “innovation networks” will help show how these seemingly separate goals are actually related.
Sean Pool is the Special Assistant for Energy Policy at the Center for American Progress.
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