Fact Sheet

R&D Funding Essential for Clean Energy Innovation

More than $53 billion was invested globally in clean energy technologies in the second quarter of 2013, and countries are taking action to secure new financing and create jobs in the production and export of these technologies.1 To ensure that the United States is well-positioned to attract investment, the Department of Energy held its first Clean Energy Manufacturing Initiative roundtable in June in Toledo, OH. Joined by businesses, policymakers, and other stakeholders, Assistant Secretary of Energy David Danielson framed the critical decision the United States faces: whether to adopt national policies that spur investment in energy innovation and help American businesses to compete in this growing global sector, which is expected to reach nearly $7 trillion over the next two decades.2

Fast Facts: Who's Winning the Clean Energy Race? 2012 Edition

  • In 2012, $269 billion was invested globally in clean energy technologies.
  • Asia, led by China, emerged as the leading destination for investment.
  • South Africa realized a 20,500% increase in investment due to a policy change.
  • The United States led in venture capital financing, attracting $4.3 billion—78% of the global total.
  • Deployment of clean energy increased and prices fell.
Innovation can lower the price of technologies, increase demand for products and services, and position U.S. businesses to win a larger share of growing markets,” said Phyllis Cuttino, director of Pew's clean energy program. “The Department of Energy's Clean Energy Manufacturing Initiative helps make connections and foster new research and development. But we also need national policies that unleash the full potential of the private sector and position the United States for success in the global clean energy race.”

There are many challenges to capturing this market potential, however. In early July, the U.S. House of Representatives voted to reduce the nation's budget for energy research-and-development by 81 percent, including successful programs such as the Advanced Research Projects Agency-Energy. The Senate has not acted on its annual energy appropriations legislation. If the House cuts were to stand, this could stymie future private investment and weaken U.S. advantages in clean energy. President Barack Obama has indicated he will veto these excessive spending cuts, in part because the budget reductions would affect energy innovation and hamper competitiveness.

Pew and other organizations are working to preserve research-and-development funding—and in the long term seek to increase the federal investment for energy innovation. The United States currently dedicates $5 billion annually to energy R&D, significantly less than the approximately $80 billion in defense and $32 billion in health R&D. There is bipartisan consensus that a stronger commitment to clean energy technologies is needed. Experts at the American Energy Innovation Council, Brookings Institution, and American Enterprise Institute have repeatedly called for federal investment of $16 billion to $25 billion a year in energy R&D to spur new private financing.3

Innovation is strengthened with government support, and the Department of Energy's Clean Energy Manufacturing Initiative seeks to build partnerships that allow U.S. businesses to continue to advance new energy technologies. In the past, these businesses, in collaboration with national laboratories, have made breakthroughs that led to significant deployment of solar photovoltaics and a surge in hydraulic fracturing, or fracking, to name two examples. If U.S. businesses are to continue developing and exporting breakthrough energy technologies, national policies must support partnerships with the private sector and foster new R&D opportunities.

Top 10 countries in investment

1 “US, China, South Africa lead rebound in clean energy investment,” Bloomberg New Energy Finance, July 11, 2013, http://about.bnef.com/press-releases/us-china-south-africa-lead-rebound-in-clean-energy-investment/
 “Spending on new renewable energy capacity to total $7 trillion over next 20 years,” Bloomberg New Energy Finance, Nov. 16, 2011, http://bnef.com/PressReleases/view/173.
  “American Energy Innovation Council, A Business Plan for America's Energy Future,” American Energy Innovation Council, http://www.americanenergyinnovation.org/wp-content/uploads/2012/04/AEIC_The_Business_Plan_2010.pdf. “Post-Partisan Power,” American Enterprise Institute, Oct. 13, 2010, http://www.aei.org/papers/energy-and-the-environment/post-partisan-power.

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