AEIC Releases Report on Unleashing Private-Sector Energy Innovation

Unleashing Private-Sector Energy R&D

The American Energy Innovation Council just released a new staff report, Unleashing Private-Sector Energy R&D: Insights from Interviews with 17 R&D Leaders, by Jeffrey Rissman and Maxine Savitz.

The report investigates an issue that is central to technological progress in the energy sector: the role of private companies in researching and commercializing new technologies. Rissman and Savitz interviewed top R&D executives at some of the largest and most innovative companies in America, like IBM, Ford, BP, and Philips. Their insights shed light on how these companies integrate research and development into a successful business model. They also reveal how government and business can work together to accelerate innovation and solve America’s energy challenges.

The report has three chapters, the first of which discusses how R&D is funded and managed in private companies. The authors compare centralized vs. decentralized research structures and highlight factors that are driving companies to increasingly perform their R&D activities overseas. They also consider the “gating mechanisms” companies use to redirect funds away from poorly performing research projects to more fruitful options, and they discuss the benefits and challenges companies face when entering research partnerships with universities and national labs. The second chapter concerns interviewees’ views of public policies that effectively promote private-sector R&D. The most important such policies are grants and contract research, which account for 32% of all federally-funded R&D in the U.S. The last chapter discusses obstacles private companies face to greater R&D success in the United States. The most often-cited obstacle is a lack of access to talent, caused by insufficient science, technology, engineering, and mathematics education combined with the difficulty of securing green cards and visas for immigrants with technical skills. Inconsistent or insufficient tax credits, such as the R&D tax credit (which has been extended by Congress 14 times since its introduction in 1981), and difficulties associated with licensing intellectual property from universities were also major concerns.

The report offers a rare look at the management of R&D in successful corporations while elucidating the policy environment that is necessary to enable U.S. companies to make bold, transformative investments in R&D. If government and business can work together to foster a climate that promotes innovation, then private-sector R&D can help set us on a path to an affordable, secure, and clean energy future.

The report is posted on the AEIC site and can be read here.