Washington, DC – Congress can more effectively spur private sector innovation in energy technologies by taking a new approach that better utilizes federal dollars, according to Advanced Energy Economy (AEE), the voice for a strong U.S. advanced energy industry.

In testimony before the U.S. House of Representatives Subcommittee on Energy Science, Space and Technology, AEE called on Congress to utilize a core set of principles to reorient federal financial support to more effectively encourage private sector innovation and promote a secure, clean and affordable energy future.

“New energy technologies face a series of structural market barriers to entry. As such, the federal government needs to continue to play a vital role in supporting new energy technologies, products and services,” Malcolm Woolf, AEE senior vice president for policy and government affairs, told the subcommittee. “Just as the Internet economy transformed society in ways we did not expect, the advanced energy economy is creating dramatic new opportunities for economic growth in the United States and around the world.”

Advanced energy is a vital part of America’s 21st century growth story. In 2011, global revenue from advanced energy reached nearly $1.12 trillion, according to a landmark survey commissioned by Advanced Energy Economy Institute, AEE’s educational and charitable affiliate. The global advanced energy industry is larger, by revenue, than pharmaceutical manufacturing, and roughly two-thirds the size of telecommunications.

In his testimony, Mr. Woolf outlined the key principles that policymakers should consider as they develop energy policies that drive new domestic energy production.

  • Be targeted: limit federal funds to where innovation is needed to build a more secure, clean and affordable energy future. Federal energy programs should only be provided where there is an essential public purpose. Rather than providing permanent support to mature technologies that already have significant market penetration, the federal government’s role should be limited to driving innovation and commercializing the next generation of technologies, products and services that promise public benefits.
  • Sunset or automatically update provisions when market-based objectives are achieved. No company or technology should be entitled to permanent subsidies or investments. When left in place too long, tax incentives distort price and market signals and ultimately create barriers to entry for new technologies. Therefore, such incentives should remain in place only long enough to achieve a measurable, market-based objective that represents a point at which emerging technologies have reached sufficient maturity that they should stand on their own.
  • Provide stability and certainty for businesses and investors. Businesses and investors need certainty to make the investments and set the plans necessary to grow. Rules that change frequently or unpredictably are disruptive to markets and harmful to the businesses, investors, and consumers participating in them.
  • Be technology neutral to support all forms of advanced technology. Many of today’s energy policies were written by Congress with one sector in mind, even favoring a single technology. Such an approach distorts market signals and puts the weight of Congress behind investment decisions. This is inefficient and imposes unnecessary risk to taxpayers.

“The bottom line is different forms of government support and tools are needed to help overcome different market hurdles,” Mr. Woolf told lawmakers. “AEE suggests a fresh approach whereby we refocus the federal energy outlays on a core public purpose – promoting innovation to give the United States energy that is secure, clean and affordable.”

For a full copy of the testimony, please visit http://www.aee.net/news/press-releases.

About Advanced Energy Economy  

Advanced Energy Economy is a national association of businesses and business leaders who are making the global energy system more secure, clean, and affordable. AEE’s mission is to influence public policy, foster advanced energy innovation and business growth, and provide a unified voice for a strong U.S. advanced energy industry. For more information, please visit www.aee.net.

Contact:         Kelley Vendeland, Advanced Energy Economy


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