U.S. Urged to Lift Energy Spending Sixfold, to $25 Billion; Drop Subsidies

The U.S. should boost spending on energy research and new technologies by more than sixfold, to $25 billion, rather that pay subsidies for solar and wind projects that aren’t innovative, three institutes said.

The American Enterprise Institute and the Brookings Institution in Washington, and the Breakthrough Institute in Oakland, California, released a report today that said political disputes over “cap-and-trade” climate legislation, nuclear power and oil production have left U.S. energy policy at a standstill.

The report aims at winning support of Republicans and Democrats by encouraging an investment strategy used by the defense and aerospace industries in the 1960s that helped make the U.S. a technological leader. It recommends abandoning “today’s mess of subsidies” for clean energy and increasing federal research spending from $4 billion a year.

“My concern is that other nations are moving ahead swiftly to begin reorienting their energy systems,” said Mark Muro, a senior fellow and policy director of the Metropolitan Policy Program at Brookings who helped write the report. Muro called the recommendations a "pragmatic assemblage of ideas" that could attract broad support and help transform the economy.

The report faults lawmakers and critics who dismiss climate change as a “United Nations-inspired conspiracy” and instead advocate “drill, baby, drill” as an energy strategy.

Supporters of legislation that would limit emissions blamed for climate change have “oscillated incoherently” between demanding sacrifices to avoid apocalyptic scenarios and asserting that today’s renewable energies can replace fossil fuels without significant cost, according to the report.

Diseases, Defense

The U.S. spends $30 billion a year seeking cures for diseases and $80 billion on military innovations to defend its borders, according to the report. Similar commitment should be made to energy initiatives, the report concludes.

The Energy Department’s Advanced Research Projects Agency for Energy would benefit from a shift in investment. The research arm, modeled after a Defense Department agency that helped to create the Internet, should get $1.5 billion a year for innovative projects. The administration requested $300 million for the agency in the 2011 budget, the report states.

The U.S. can spend more without adding to the deficit by phasing out “unproductive energy subsidies,” increasing fees on imported oil, imposing a “small surcharge” on electricity sales, and imposing a “very small carbon price” on fuel sources, the report states.

To contact the reporter on this story: Jim Snyder in Washington at jsnyder24@bloomberg.net.

To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net.

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