represent what we believe are some of the most crucial issues that must be addressed to create an effective policy environment for innovations needed to reduce GHG emissions. Many of these items also have been identified in other recent studies (e.g., NSB, 2009). The following section presents a number of recommendations based on the findings and conclusions of this chapter.

KEY CONCLUSIONS AND RECOMMENDATIONS

A critical component of any climate change limiting policy is technological change that replaces current GHG-intensive technologies with low-GHG technologies. In many cases this requires advanced technologies that have not yet been invented, commercially developed, or adopted at a significant commercial scale. Given the magnitude and rate of technological changes needed to limit future climate change, there is an immediate need to adopt policies to accelerate technological innovation throughout the U.S. economy. Such policies also will enhance the competitive position of the United States as a developer and marketer of technologies to address climate change.


The process of technological change involves the stages of invention, innovation, adoption, and diffusion. The first two stages encompass the traditional domain of R&D, while the latter stages require markets for new or advanced technologies. Because these stages are highly interdependent, policies to promote technological innovation need to be comprehensive and not focused solely in one area.


Direct federal support for R&D and the training of a skilled R&D workforce are especially critical for fostering technological innovation. The Federal Budget is a powerful and tangible statement of the nation’s priorities. Comparing across different policy areas, we find that federal R&D spending on energy in FY 2008 was approximately one-twentieth of federal R&D spending on health, one-sixth of federal R&D spending on space, and one-fifth of federal R&D spending on general science. Comparing across time, we find that energy R&D spending in FY 2008 accounted for approximately 2.6 percent of total federal (nondefense) R&D spending, a 10-fold decline from its peak of approximately 25 percent in FY 1980. Comparing internationally, we find that U.S. spending on energy R&D as a share of GDP is considerably lower than that of several other leading industrialized countries.


The 2009 American Recovery and Reinvestment Act provided a significant one-time increase in federal energy R&D expenditures, but we have not yet seen the type of sustained changes in federal R&D spending that would indicate energy to be a high national priority. While recommendations for desired levels and priorities for federal energy R&D spending are outside the scope of this study, we do find that the level and



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