Nuclear physicist Ernest Moniz and his famous wavy hairdo have headed the Department of Energy since 2013.
In that time, they have led successful negotiations on Iran’s nuclear program, helped sell the Iran deal to a skeptical Congress, boosted energy performance standards for a wide range of products, and spearheaded an aggressive push for clean energy research and deployment — all while retaining respect on both sides of the aisle in Washington, DC. That is no mean feat these days.
For all his diminutive size (he is 5-foot-7), idiosyncratic coiffure, and penchant for self-deprecation, in person Moniz radiates an easy confidence and command of the issues. I spoke with him in Seattle, and again in his office in Washington, DC, about everything from electricity rate design to aging nuclear plants, but mostly we focused on innovation — what the US government is (and ought to be) doing to prepare for the steep cuts in carbon pollution targeted for midcentury.
He described how the international community is organizing around the challenge, how investors are rethinking their approach, and how "cleantech 2.0" will differ from the first round. It is quite easy to picture him in a classroom, where he may well return in a few short months.
Our conversation has been edited for length and clarity.
There’s a longstanding debate in the energy world between those who believe the overwhelming priority should be deployment of existing clean energy technologies and those who say we don’t have what we need for real decarbonization yet — we need "energy miracles" before we can pull it off.
Where do you fall on that spectrum?
It really is not either-or. Both are correct, especially when looked at in different timescales.
Just for the sake of argument, let’s make a fairly arbitrary division of the future: up to 2030 and beyond 2030. I say 2030 because that is the horizon of most of the national commitments made in Paris; the United States has a 2025 commitment.
But in that 10- to 15-year time frame, there’s no question that we have the tools to meet the targets — the United States’ 27 percent reduction [from 2005 levels] by 2025, for example. I didn’t say it’s easy, but I think the tools are there, following the initiatives put forward in the president’s Climate Action Plan — efficiency standards, Clean Power Plan, continuing with CAFE standards, etc.
I might add that the Department of Energy does work across the entire innovation chain. On the deployment side, one of the most visible activities is the loan program. Utility-scale photovoltaics was basically started by the loan program. So that’s very important.
However, if we look beyond 2030, to 2050, we are then in a deep decarbonization world, and there, I agree with Bill Gates that we need more new innovation and technology.
People often focus on electricity, and there we are making tremendous progress. I can see how we can continue progress. [Next year’s Quadrennial Energy Review will be entirely focused on the electricity system.] Every credible model of meeting deep decarbonization targets has two common elements: an essentially decarbonized electricity sector and great success on the demand side. You don’t get there without those two.
But we have to get buildings much more efficient. We still haven’t got the [energy] storage side. We still have not got a lot of the integration of [information technology] in a meaningful way. We do not have negative-carbon technologies, which we very well may need to get to 80 percent.
Transportation is harder. We can see a pathway where electricity can play a much bigger role, but we’re also going to need liquid fuels. And what about decarbonizing industry? We’ve got to be able to maintain an industrial sector, a manufacturing sector.
We also have enormous innovation challenges in delivery systems like the electric grid. We can have zero-carbon sources, but we gotta be able to move them around and manage the grid in the appropriate way.
And there are the technologies that don’t fit neatly into any of those boxes. Can we make progress greatly enhancing terrestrial carbon sinks? Can we make progress on negative carbon technologies? Can we get to drop-in fuels for airplanes? Can we get to liquid fuels from sunlight, CO2, and water? Yeah, physics says you can do it. But we are a long, long way from getting that as a scalable technology.
So again, I think it’s not either-or.
People often talk about national innovation in terms of a "moonshot." That analogy doesn’t work very well for tackling climate change. So what’s the right analogy? What does a national innovation effort look like?
We’ve proposed what’s called Mission Innovation, where we are looking to double our R&D [spending over five years]. It’s more money, yes, but the money has to be coupled with a revised portfolio including emphasis on some of those things I mentioned: big carbon sinks, negative carbon technologies, etc. We’ve got to broaden the aperture of the portfolio.
Secondly, we worked in parallel with Bill Gates putting together something called the Breakthrough Energy Coalition — 28 investors from 10 countries with patient, high-risk capital being put on the table, ultimately prepared to follow technologies through to scale-up, which is a big problem in the typical investor world.
For Mission Innovation, 20 countries signed up at the announcement; we have subsequently added the EU as an organization. Those 20 countries plus the EU represent a baseline of just about $15 billion, doubled to $30 billion over a five-year period. And there are other countries clamoring to get in.
What’s the carrot? What’s the benefit of joining?
It’s partly reputational, but there’s also the link with the Breakthrough Energy Coalition investors who have said that they will focus their investments on the countries that are part of Mission Innovation. There’s something of an incentive there.
But more broadly, it’s the idea that this is the right agenda. A very important feature of COP21 [the Paris climate agreement] was the fact that innovation was put front and center.
I don’t want any confusion: As a member of Mission Innovation there is no commitment to pool money in any way. These are nationally determined portfolios.
But our expectation is that it will naturally lead to more collaborative opportunities. I don’t mean among 20 countries, I mean bilateral.
Are there efforts to avoid duplication?
There’s no formal exercise [to avoid it]. I’ll give you an example of one of the things we are proposing.
If you go back roughly a decade, maybe a little bit more, the department organized a whole set of workshops with 1,500 scientists and engineers. In the end, they did around 10 volumes that addressed the scientific barriers to future clean energy technology breakthroughs.
That led to a program called the Energy Frontier Research Centers, which was funded in 2009. We’ve had about 60 of these EFRCs, most of them at universities They are funded typically at a few million dollars per year, initial five-year commitment, and some have been renewed for five years or more.
They are use-inspired, basic-research-focused. Use-inspired means they are all targeted toward addressing the barriers. Even though they are basic research, it’s led to a whole set of startup companies, spinouts from the universities, etc.
So one of the things we’re going to propose is, why don’t we, in Mission Innovation, update those? See if some things need to be added?
So that’s not actually doing the research, but it’s defining the research directions. We are proposing that as an example of a commons activity; we collectively put it out there, but then what portfolio you invest in, it’s up to you.
How are national research priorities determined? Clean energy is very political.
There’s no set of 1-2-3-4-5.
Look, we’re a big player. The DOE baseline for Mission Innovation is $4.8 billion in our budget to Congress.
That’s what you’re intending to double?
Correct. So we have substantial scale. And that’s on innovation, not including things like deployment activities, the loan program, or big demonstration projects.
That’s just DOE. There is some [research] throughout the rest of the government. We’re probably 75, 80 percent of the total.
If you look at our organizational structure, we have one program in the energy space that stands out for its magnitude. EERE — [the Office of] Energy Efficiency and Renewable Energy — is roughly a $2 billion program. It’s actually three programs: energy efficiency, renewable energy, and sustainable transportation.
The $2 billion has got a significant amount of non-research funding in it — for example, the weatherization program, providing support through states to weatherize houses of less affluent people. That’s hundreds of millions in that budget.
My point is when you look at our research budget in efficiency, in nuclear, in fossil [fuels], in renewables, in transportation, and in electricity systems, they all look to be rather similar, within a few hundreds of millions of dollars — except electricity, which is smaller. That’s about $150 million in research; the others are typically in the $600, $700 million range.
So the real message is, we have a broad portfolio. Some countries will not have that broad portfolio, because they make various choices. I think you can assume the German portfolio in advanced nuclear technologies will be vanishingly small, for example. But our term has always been "all of the above."
So how do you double the funds, then? Isn’t it going to have to come from Congress?
Congress has been pretty supportive in terms of the R&D innovation agenda, broadly speaking, and specifically on Mission Innovation.
The president’s 2017 budget proposal to Congress did a reprioritization that included a 21 percent increase in the Mission Innovation space. Do we think we’re going to get 21 percent when the budget is finally put together? Not this year. This is a five-year effort, not a one-year effort. It’s a big lift.
In a completely blue-sky scenario, do you think that double the research budget is the right number? If you were emperor, in an advanced economy like ours, how much should we be spending on energy research?
I’m going to give you a completely, absolutely rigorous quantitative argument. [laughs]
Two or three decimals, please.
First of all, if you go to the American Energy Innovation Council (AEIC), they say, "Triple it." I was co-chair of the President’s Council of Advisers on Science and Technology (PCAST), a group that did a study in 2010, first term, that also said, "Yeah, tripling is a good number."
I’ll go through the arguments. The benchmark, historically, for federal spending on R&D is 1 percent of GDP — all R&D, not including private sector, which raises it into the 2.5 to 3 percent range for the United States. But 1 percent is the benchmark for federally sponsored research.
What fraction of the GDP is energy?
I don’t know that off the top of my head.
Eight or 9 percent. And as you know, the private energy sector has been very weak in its R&D investments.
It’s easy to understand. Pharmaceuticals, say, is a strongly IP-based activity. If you aren’t developing new IP, you aren't going to be around for very long. And so they have 15 percent of revenues going to R&D.
Whereas the electrical utility industry, one of the historical benchmarks is, it has had a lower rate of investment in R&D than dog food companies. And the reason is that a) it’s a commodity business, and b) it’s a highly regulated business. That’s not a pejorative statement; that’s because of what it means to society. There’s lots of reasons why it’s lower, but it’s way too low.
So a benchmark to keep in your head is: The federal energy R&D budget should be roughly 8 to 9 percent of 1 percent of GDP. Okay, so now calculate that!
I was told there would be no math.
Take 8 percent [of 1 percent] — that would be roughly $13 to 14 billion per year.
DOE is 4.8 [billion]. The entire government is 6.4 [billion] — times two, that’s 12.8 [billion]. It looks like 2.1 [times the current budget] should be the exact right number.
Now, I want to make it very clear, I’m not saying, "We’ve got a number." What I am saying is that these kind of simple, heuristic arguments tell you that’s a reasonable ballpark. It’s not the way I would build an R&D portfolio, obviously — that’s more of a bottom-up thing — but the message is, as you design the R&D portfolio, $10 billion leads you to a different way of thinking.
More ambition, presumably?
More ambition, more risk. That’s a different way of thinking, and we are doing that thinking right now as part of an exercise, something to leave the next administration — ideas about a portfolio structure that is more in that $10 billion range than the $5 billion range.
Some people have argued that venture capital funding is not well suited to the energy space — there are lower margins, you need much more patient capital. Energy in particular needs public money. Do you find that convincing?
As AEIC said, the federal role in energy R&D is often denigrated, incorrectly. It’s always been critical, and remains critical, and increasing it, along the lines we discussed, is critical.
Bill Gates has been very clear in saying cleantech 1.0 was a learning experience. They’ve learned. The Breakthrough Energy Coalition says three characteristics are critical. One is patience; they now understand 20 years is probably their return horizon, not 20 months. Two, they cannot be risk-averse. And three, a willingness, when the time comes, to scale.
So that’s very explicitly part of the mentality. This is going to cleantech 2.0, with both sides of the equation, public and private.