The Department of Defense has become one of the biggest drivers of energy innovation in the government. Every branch of the military has set ambitious goals to change the way they use energy.

Their motivation is straightforward: reducing our dependence on oil, and eliminating the root causes of climate disruption, keep America safe. The United States uses 22% of the world’s oil but only control 1.5% of the supply, and there’s no question this leaves us vulnerable to price volatility and supply constraints. [http://www.politifact.com/truth-o-meter/statements/2011/may/05/gerry-connolly/gerry-connolly-says-us-owns-3-percent-worlds-oil-c/] And the Department of Defense (along with the State Department, CIA, and other government agencies) recognizes the volatile effects of climate change as a threat to global stability—and our security.

Taking on these challenges is a mission the military is taking very seriously. At sea, in 2009, the Navy launched the USS Makin Island, an amphibious assault ship powered by a hybrid-electric engine expected to save $250 million over the course of her active service. On land, 3^rd Battalion 5^th Marines, nicknamed “Dark Horse,” used solar arrays at some of their forward operating bases in Afghanistan that cut their fuel use by about 90%. Generating power from renewable sources meant fewer vulnerable fuel convoys snaking through to forward operating bases, and fewer batteries weighing down marines deployed on foot to hostile areas. [http://www.popsci.com/technology/article/2011-01/solar-panels-help-marines-cut-fuel-use-90-percent]

It’s not just deployed units that are focusing on new ways to cut non-renewable energy use. The military’s stationary assets, too, are cutting their energy use. The Air Force has installed vegetative roofs on some of their buildings to keep them cool, and aims to have its facilities getting 25% of their electricity from renewable sources by 2025. The Army, meanwhile, aims to have five facilities that have net-zero energy use—that is, they generate as much power as they use—by 2020. Even the Pentagon—the actual, five-sided building in Northern Virginia—has been ambitiously addressing its energy use. The facility has undergone extensive renovation in the past few years to cut its energy use, upgrading the building to LEED standards.

Histor shows that victors have often those most willing to try new strategies to secure victory. In the fight for America’s energy security and independence, and it is reassuring to see our military playing so effective and substantial a role.

Q: What are the "white spaces" where government investments in R&D can have the most impact?

A: These would be the areas having medium to long-term promise. These would be projects with risks and uncertainties that are likely too high for the private sector to take on. These would be the sorts of potential inventions and innovations that could focus on the applications of basic sciences -- or just a step or a few steps above basic sciences—that could be driven into technological and other applications in industry and so forth with the right leadership and creative thinking. One obvious example of this would be the many applications of nanotechnology to alternative energies and to energy efficiency applications. The nanotubes concept could be a real winner, but may take a long time to perfect and with great risk. Another possible would be the small-sized, but big ideas that could be applied to transportation engineering. One of the biggest sources of energy inefficiency is the way we move things and people. Clearly, the technologies we use to move things and people need great improvements. However, as I state below the issues go well beyond just one or a few sections of the overall energy problems we face.

Q: Access to environmentally friendly and affordable energy will be at the core of sustainable economic growth in the 21st century. An intense global race is under way to create these energy technologies and make them affordable worldwide.

As a country, we have a choice to make: We can buy the technologies of tomorrow from abroad or we can invent locally, make locally, and sell globally. It is now more important than ever to invest in game-changing ideas that will build the technological infrastructure for a new energy economy and ensure that America stays competitive in the global market.

To compete in this global energy race, we need to use our biggest American renewable resource - our ingenuity - to invent and manufacture cutting-edge technologies here in the United States. In his State of the Union Address, President Obama emphasized the importance of supporting American innovation and expanding U.S. exports. He laid out a blueprint for an economy that is built to last - an economy built on American manufacturing, American energy, skills for American workers, and a renewal of American values.

Just as President Eisenhower's created DARPA in 1957, President Obama launched Advanced Research Projects Agency - Energy, or ARPA-E, in 2009 to seek out transformational, breakthrough technologies. ARPA-E's role is to focus on funding projects that are too risky for private-sector investment but have the potential to translate science into quantum leaps in energy technology, form the foundation for entirely new industries, and have large commercial impacts. We are focusing on what we call "white spaces," which are undeveloped areas where technology could revolutionize the way we use and produce energy to secure our economic prosperity and national security for future generations.

What are the most pressing white spaces you see for developing domestic energy technologies and industries?

A: There are so many of them that one’s mind could be boggled just thinking about them. For the sake of keeping the answer within a limited space, we could look at the massive electricity losses that this country faces every time we generate electricity. Please see http://205.254.135.24/totalenergy/data/annual/diagram5.cfm for an example of these losses. For overall energy losses, this is even more overwhelming for many. See https://flowcharts.llnl.gov/. There are trillions of dollars of potential energy efficiency gains to be made from thinking differently and invention.

The other sources of energy use improvements can be found in the potentially path-breaking new ways of looking at how we use energy at all end uses and within a systems-within-systems framework. The end use changes are clearer than the systems-within-systems ways of looking at these issues. We can simply make more efficient autos and trucks.

There are many ways to get there. There are also many fuel choices to get there. The CAFÉ standards we are applying are way behind the curve of such standards applied by the Chinese, the Japanese and others. These are more policy choices and technology changes. However, as anyone who has looked at energy issues long enough can see policy choices are closely tied to potential technology changes and choices.

Taking a systems-within-systems approach whilst at the same time thinking about energy as a portfolio of choices of systems within systems may open up new ways of thinking about how we can exploit our energy threats and opportunities.

Consider the manifold and huge number of technological, economic and other systems that connect into getting oil from the ground and into the car and trucks. Consider the complexity of the systems within systems of getting natural gas out of shale and into the cars of the future using CNG, GTL, methanol and the like. Consider the near super computer thinking needed to improve the overall production of electricity from wind, solar, geothermal, ocean energy, and more in a system-within-systems approach. Consider just about every energy system we have and then find the linkages with other systems, such as our economic system, transport systems and more. Then you can see that some of the best places to work to improve things are in the linkages within and across such systems.

If we think only about gas or coal or solar or whatever as each being sui generis then we are missing some very important opportunities. Change and invention can be leveraged across many energy systems when we notice and exploit the synergies, recursiveness, and networked nature of all of our energy and other systems as an organically changing and changeable whole.

Invention and innovation at the linkages could be keys to our future. Invention and innovation in the connectedness across systems could open up new ideas.

The best ideas to focus on are not those specific to one or the other pet energy systems of one company or lobby or another, but those inventions and innovations that can cut across many such systems.

One could think of this as “cloud” thinking in a systems-within-system framework.

The opportunities are huge once one looks beyond the obvious.

It is the nature of economies that choices are based on scarcity and a certain amount of risk-induced stress.

It would be rather bad judgment for us to focus on the pedestrian and not see the big picture ideas that need to be developed. This is particularly valid in a world which will see increased competition in energy and other systems improvements in the coming decades. This will not be just from China, but also from India and many other places as they rev up their systems-within-systems invention machines.

Q: How do government and private industry complement each other's efforts in bridging the gap between the discovery of a breakthrough technology and its mainstream adoption?

That complementarity has been clear in the spillover applications of some of the inventions out of DARPA. ARPA-E could also do this. Those great ideas that can come out of taking on high-risk projects in ARPA-E could translate into huge changes in the US economy and the systems associated with it.

DOD, DOE, and many other agencies and departments could also add much to this complementarity between the government and the private sector. However, we also need to bring universities and others into the picture.

There are also great opportunities for positively disruptive technologies and ideas to arise out of joint activities with our “energy allies” and other allies. Working alone on the really big, “wicked” problems we face as a country may not be the best way to proceed given the potentially massive costs (with also potentially massive returns) involved.

If anything, ARPA-E as it exists today is a significantly undersized version of what it should be.

We are facing down a potentially very demanding and competitive energy, security, economic, diplomatic, military and informational future. We had better get moving on this.

Baby steps are not the way. We need to be bold, inventive and creative at so many levels. However, we also need leadership to help arrange, administer and incentivize for the better ways to move to a much better energy future. So far, the combined leadership should be putting efforts toward a move to this future seems to be sorely lacking in the skills, nuances, and creative thinking required.

Those who want to cut back on ARPA-E or shut down the national labs are missing a very big part of what is needed for the future of this country in its efforts to move to a better energy future. We need to do more, not less.

With backing from DOE research and development grants, advanced biofuel companies have moved toward commercial readiness at an accelerated pace. But as they build out commercial facilities, these companies need to continue research and development and find additional products and value streams for biorefineries.

With the price of oil seemingly stuck above $100 per barrel, these value streams can be significant. While about 70 percent of each barrel of oil is used for transportation (and more than 94 percent of U.S. transportation is fueled by petroleum), the other 30 percent of the barrel provides oil refineries more value and exports, through products such as chemical feedstocks and lubricants. Achieving energy security will require finding viable alternatives to the whole barrel.

Energy security is an urgent issue and one the United States can’t drill its way out of. It costs more to produce oil in the United States than most other parts of the world, so as long as our economy remains dependent on oil it’s likely that we’ll import foreign oil. But worldwide demand continues to grow and drive oil prices upward.

Any consumer filling up at the pump today should readily recognize that America is still addicted to foreign oil. In 2011, consumers spent a record $481 billion on gasoline. That record amount came despite the fact that overall gasoline consumption was down – consumers spent about $0.78 more per gallon, while using several billion fewer gallons of gas.

Federal R&D must focus on areas that will benefit consumers most – in reducing U.S. reliance on foreign oil. Ongoing R&D in biofuels should be coupled with R&D for biomanufacturing of additional products that provide alternatives to petroleum. Additional programs, such as the Grow It Here, Make It Here initiative from Sen. Debbie Stabenow (D-Mich.) can provide complementary market development support to biobased products and biomanufacturing.

ARPA-E certainly has many important and exciting programs underway. Dr. Majumdar gave NARUC members a preview of many of these technologies when he spoke to us last July at our Summer Committee Meetings in Los Angeles.

Rather than predict future technologies, I’d like to highlight a slightly less sexy, but perhaps even more important, need: Utility workforce training.

Through its 40-year and counting relationship with the Electric Power Research Institute, NARUC has long championed research and development in the energy space. The gains we’ve seen through our investment in EPRI have and will continue to produce innovative new technologies that we believe will bring the utility industry into the 21^st Century.

While NARUC has supported expanded R&D into renewable energy, new gas technologies, small-modular nuclear reactors, and much more, the most important investment we can make is in our workforce.

U.S. government statistics over the last few years are predicting that almost 50 percent of utility line workers are expected to retire over the next five to 10 years. Industry officials estimate that upwards of 400,000 employees are eligible for retirement within the next five years.

Compounding this problem is that the number of engineers graduating from U.S. colleges is decreasing as well, leaving the utility industry with a significant challenge in the not-too-distant future. Certainly the weak economy has prevented workers from retiring in siginficant numbers, but as the economy continues to improve this will become a real, potentially dramatic problem.

Efforts such as the Center for Workforce Development seek to identify best practices and solutions for future utility workforce needs. NARUC has also endorsed the Troops to Energy Jobs program that is attempting to help military veterans find work in the utility industries. These programs will become more important as the economy slowly recovers and utilities modernize their systems.

Although many of the research projects under development at ARPA-E are truly innovative and exciting, without a properly trained utility workforce, we won’t be able to keep the lights on. I hope we can continue funding these kinds of efforts.

Thank you Director Majumdar for this thoughtful question.

America is a country of pioneers, entrepreneurs and innovators. The Advanced Research Projects Agency – Energy (ARPA-E)supports this innovative spirit and pushes us to answer the world’s energy challenges with transformational clean energy technologies. By doing so, we will not only ensure our security as a nation, but we will also ensure that the United States maintains a technological lead in the energy world. However, if we lose our innovation edge, we will lose the prosperity of the future. The choice is ours.

As we sit paralyzed by debate and obstructionism in Washington, Europe and China are leading the way in the global renewable energy market. There’s a global competition going on right now and the longer we wait to enter the race, the tougher it will be to compete.

ARPA-E is one of the best tools we have to drive American innovation and compete on the global clean energy stage. As you know, ARPA-E was originally created after an elite group of scientists warned that America was falling behind as an energy innovator. In 2010, the program was reauthorized to focus on “creative, ‘out-of-the-box’ transformational energy research that industry by itself cannot or will not support due to its high risk, but where success would provide dramatic benefits to the nation.”

One area in which such “creative, ‘out-of-the-box’ transformational energy research” is needed most is in offshore wind development. Offshore wind is clearly one of the “white spaces” you’ve described because initial cost is a major impediment to its success. Programs like ARPA-E allow us to develop advanced technologies that will drive down those costs for offshore wind and other burgeoning clean energy industries.

Not only is offshore wind power a clean and limitless energy source, but because it is a new industry in the U.S., it will create hundreds of thousands of American jobs and bring tremendous benefits to our nation. Oceana predicts that building offshore wind on the East Coast would create at least 160,000 direct jobs. As we begin to build offshore wind, we will create a demand for its entire supply chain. Shipping parts for offshore wind turbines across the ocean simply will not be an option as offshore wind scales up.

Since offshore wind could help to transform and revolutionize our energy paradigm, which is critical if we are to make the needed shift from fossil fuels to clean energy, it is a perfect focus for ARPA-E. It is essential that the ARPA-E program is fully funded so that it can continue to develop and implement cleaner, and cheaper, energy. DOE’s dedication to developing transformational energy technologies like offshore wind will catapult America into the lead in the global clean energy race.

(These comments were written by Jennifer Morgan and Letha Tawney, a senior associate at WRI.)

Innovation in breakthrough energy technologies is notoriously challenging, despite having potentially large rewards. Individual innovations are embedded in larger systems where change is very hard. These innovations often carry significant capital costs to demonstrate, commercialize, or reach economies of scale. Unlike the latest cell phone, consumers are often unwilling to pay more for a new energy innovation, especially when the rewards are in the future.

ARPA-E presents one model for how public-private partnerships can overcome some of these challenges. Sometimes tools, like a renewable portfolio standards, are by themselves not enough to pull high-risk, high-reward breakthroughs into the market, and ARPA-E has provided another means of support to entrepreneurs. With a careful, professional vetting process and clear focus on the specific technical barriers that currently stand between new technologies and mainstream use, ARPA-E has picked ‘potential winners’ to give them an opportunity to commercialize game-changing technology solutions. Overall, this care has paid off in terms of the very significant levels of private sector capital that has followed ARPA-E into these technology companies. The ARPA-E endorsement is proving valuable, in and of itself, because their selection process is credible.

Even so, not all investments will succeed— this is the inherently uncertain nature of innovation and partly why it is so hard for the private sector to invest. But even if not all will succeed, the potential for cheap, clean energy and to secure the position of an American company in the global sector will bring economic and other benefits that make the overall investment very worthwhile.

The key to success for ARPA-E and other agencies that place bets on specific technical solutions is to continue to be very careful in their vetting process. Innovators and entrepreneurs often overestimate their chance of success. They do best when their optimism is balanced by realistic managers who can help them focus, push them to abandon dead ends, and maintain a clear vision of the end goal (see Andrew Van de Ven, et al. The Innovation Journey). By continuing to engage experts in technology, in markets and supply chains, and in finance, ARPA-E can avoid being swept away by innovators’ enthusiasm and maintain a hopeful but fundamentally cold-eyed perspective about how likely success really is for each investment. Both ARPA-E and the companies they invest in will do better as a result.

In the case of clean energy, there are clear reasons for the government to work with the private sector to develop breakthrough technologies and help them gain a foothold in the mainstream. Greater economic opportunities, increased energy security, and reduced health impacts all provide evidence that stepping into this role is economically efficient, but it can be politically difficult.

Especially with the current political dialogue, it is important that the public understands the necessary role that energy innovation plays in driving economic growth. In order to meet today’s energy challenges, we need to expand public support for government’s role in taking some of the risks, so that we can all reap the rewards.

What are the “white spaces” – the underpinnings of breakthrough clean energy technologies – where government investments in R&D can have the most impact? The short answer: in the breakthrough technologies that hold the potential for cost and performance competitive clean energy without long-term subsidies.

Key government investments and public-private partnerships, many going back decades, have laid a strong foundation for an American clean energy industry. And many of the energy policy choices made in the last few years have greatly accelerated its expansion. Today, clean energy technologies like wind turbines and solar PV have moved from fringe energy choices to part of the household lexicon. For a small, but growing number of communities, the nascent clean economy represents development and growth.

One thing is for certain - the country has taken a great first leap towards energy, climate, and economic security, but now it’s time to take the clean economy to the next level.

The key factor in doing so is spurring clean energy innovation. The higher cost of clean energy technologies compared to fossil fuel alternatives will continue to weigh down the industry and stifle it from meeting its global potential. Sure, in some instances and geographies clean energy is already cost competitive. But for the lion’s share of the country (and the world), this is not the case. To get clean-less-than-fossil everywhere we need both incremental innovations as well as breakthrough advances that create entirely new technologies and cost curves that don’t rely on subsidies. This is where those “white spaces” reside.

There is a pressing need for next-generation battery chemistries that can make electric vehicles a reality for hundreds of millions of car owners and cost competitive energy storage options that make grid-scale intermittency a problem of the past. We also need fundamentally new solar architectures that double or triple the current efficiency of photovoltaics, new processes and materials to make small modular nuclear reactors deployable, and new ways to make sustainable, low-carbon biofuels. Finally, we need the development and deployment of innovative information and communication technologies (ICT) into our electric grid, businesses, and homes to make our energy infrastructure “smart” and capable of handling new clean technologies.

The scope and character of these advances is significant (and humbling). We’re talking about innovations and enabling technologies at the intersection of clean energy and nanotechnology, material science, advanced manufacturing processes, genomics, ICT, and biotechnology. Each by themselves is a national priority and in combination represents the future of the clean economy. Our energy policy choices and investment emphasis should clearly reflect this.

While the U.S. does not have an overarching clean energy strategy, many of the institutional pieces are in place to address these white spaces. Programs like ARPA-E, the Innovation Hubs, Energy Frontier Research Centers, and key investment in University projects and the National Labs are actively engaged on many of these issues. And in many cases, the best work is being done in partnership with industry, where new ideas have the highest potential of moving from discovery to market. For instance, the Hubs act like modern day Bell Labs by bringing in experts from many disciplines and industries to tackle key clean technology problems.

And it’s these efforts we need more of. We need more support for programs like ARPA-E and the Hubs to rapidly translate new technology solutions to market. We need more support for programs like the retooled Advanced Manufacturing Office that partners with industry to transition new process R&D work into plants across the country. All of these programs show the positive and complementary efforts of government working with industry. Simply put, we need more support for the institutional frameworks government energy innovation policy is doing best.

To take the clean economy to the next level, we need our policy focus to be on innovation and more specifically the white spaces like those listed above. We have many of the tools – now let’s finish the job.

If ARPA-E’s efforts are to have the greatest impact, there needs to greater attention paid to how ARPA-E funds and encourages investment, and not simply on the “white spaces” where investment in innovation is lacking. For too long the federal government has sought to encourage technological innovation in the energy sector through the awarding of ex ante grants and subsidies for identified technologies, industries, and companies. This approach has yielded relatively little, but has generated controversy due to waste and scandal. A more fruitful approach would involve focusing on a different set of tools to encourage innovation. Technology inducement prizes, in particular, offer substantial promise for the encouragement of the next generation of energy and environmental technologies.

The patent system encourages technological breakthroughs by holding out the promise of substantial rewards to those who can develop viable innovations. It does this by guaranteeing a monopoly right for a set period of time, which enables the successful innovator to obtain super-competitive returns. The patent system is insufficient in the environmental context due to the commons problem. In the case of climate change, for example, there is no market for greenhouse gas emission-reducing technologies because such emissions are not priced, and the emissions are not priced because the atmosphere is a global commons. Unlike traditional R&D grants, technology inducement prizes replicate the incentive structure offered by the patent system, and thereby encourage would-be innovators to devote their efforts to developing technological breakthroughs. If ARPA-E wants to maximize its effectiveness, and maximize the return on taxpayers’ investments in technological innovation, it should make greater use of prizes than traditional research grants.

ARPA-E Director Arun Majumdar has asked two important questions about how the country could more effectively create breakthrough clean energy technologies: What are the most pressing “white spaces” you see for developing domestic energy technologies and industries, and how do government and private industry complement each other’s efforts in bridging the gap between the discovery of a breakthrough technology and its mainstream adoption?

My answer is to both questions is this: ARPA-E must pursue a sophisticated and systematic coordination between its research efforts and the state policy makers and funders who create markets for clean energy adoption.

Let me explain. If one looks at the upcoming ARPA-E summit, scheduled for later this month, the gap is clear. This excellent event will have leading federal officials, academics, consultants, private technology proponents, venture investors, corporations, utilities and a few state utility commissioners and even former President Clinton. See: http://www.energyinnovationsummit.com/program/full.html.

But it’s the people not there that create a serious “white space” that needs to be filled. The folks who need to be there are the many state leaders who have made, and will make, the policies that bring about the adoption of the breakthrough technologies that ARPA-e now supports. These are the state players who have worked assiduously over the last decade to create the clean energy markets that are now flourishing across the United States.

At the upcoming meeting in late February, there are no state clean energy fund managers — the public investors in over twenty states who have placed billions of dollars of state public funding in clean energy technologies.

There are no state policy makers who manage the state renewable portfolio programs, now in 29 states plus D.C. and Puerto Rico, and who have created the national market for wind and solar across the United States in the last decade.

There are no state legislators who have created innovative and far reaching clean energy legislation over the last decade, who have led the way on new financing schemes, utility mandates and a host of related policy mechanisms.

There are no development finance agencies, the hundreds of public authorities who have financed this country’s infrastructure –from roads to bridges to highways – and who are now demanding to put their capital to work on clean energy.

This is only to illustrate a simple and basic point – if the federal government’s research investment is to pay off, it must be coordinated with the state policy makers and funders who make the markets for clean energy technology deployment. If the federal government is not seriously engaged with those state players, it is missing one of the biggest opportunities to create real markets for those federal investments. Those state leaders have done much to create the policy environment for technology deployment; they could do even more to encourage technology innovation if they had the right federal partners like ARPA-E.

Collaborative overtures from the states have been made to ARPA-e in the past to make this partnership happen. It is not too late to start now.

This is especially important in this time of declining federal support for clean energy, and the fascinating wave of bipartisan support for clean energy in the states.

ARPA-E would do well to create a real working relationship with these many state champions if these federal investments are to make it from the lab to the market.

Government can play important roles in advancing the creation of knowledge. In fact, investing in basic research is a considerably underdeveloped area in this regard. Applied research is also appropriate if it is on generic technologies or where clear criteria are met for spending on specific technologies. However, that should not spill over into areas where the technology is close to commercialization and the private sector has the incentives to bring it to market.

What might be called technological home runs are appropriate for government R&D because the private sector is unlikely to invest in things such as space based solar power or fusion technologies. Where government gets into areas that are the domain of the private sector, unintended consequences, such a moral hazard do more damage than good.

It is, as Advanced Research Projects Agency-Energy (ARPA-E) Director Arun Majumdar notes, important to “invest in game-changing ideas that will build the technological infrastructure for a new energy economy.” Yet, a sticking point arises in the in defining what constitutes “game changing ideas?” If they are the technological home runs that makes sense but is that where ARPA-E is investing? If not, it may be substituting taxpayer dollars for private capital. If private markets are not forthcoming with capital, that failure should be a large red flag and warning to the government.

The history of government energy research and development (R&D) is rich in lessons that government officials rarely seem to learn. ARPA-E represents an attempt to take a model for technology development that has been a great success for the Department of Defense and apply it to energy. It, like past industrial policy attempts, is failing and will fail. DOE’s R&D program needs a radical overhaul, and ARPA-E should be relegated to the history of well meaning but flawed ideas.

According to the project’s website<http://www.darpa.mil/our_work/>, DARPA’s mission involves applying:

multi-disciplinary approaches to both advance knowledge through basic research and create innovative technologies that address current practical problems through applied research .... As the DOD’s primary innovation engine, DARPA undertakes projects that are finite in duration but create lasting revolutionary change.

DARPA has been successful because it has a known customer—DOD—that has a clear set of needs. The same is not true with ARPA-E. DOE bureaucrats who run its R&D program have no special knowledge of the commercial processes and internal feedback mechanisms needed to take a concept to commercial viability and profitability. And no one should be surprised by that reality.

The skills, temperament, and response to incentives that make for success in government service are not the same as those that produce innovation and successful products in the private sector. But the biggest difference is knowledge of the customer, customer needs, and market driven feedback.

If the advocates and funders of ARPA-E had done their homework, they would have concluded that what looks promising in theory will fail in practice. It is hard to believe that they were ignorant of this history, which is unambiguous—unambiguously negative. The cynicism produced by a rich history of failed energy R&D attempts over the past 40 years being ignored leads to a conclusion that the DARPA model for advanced energy R&D is just another Trojan Horse to hide political cronyism and budget games.

Three years ago, former Obama National Economic Committee chairman Larry Summers was brutally frank in making the point that the “government is a crappy venture capitalist.” While he was specifically referring to loan guarantees to organizations like Solyndra, his message had a broader application.

Last week, Stanford Professor and former chair of the Council of Economic Advisors wrote<http://online.wsj.com/article/SB10001424052970204883304577221630318169656.html> in The Wall Street Journal about Washington’s knack for picking losers. He made the following points:

Mr. Obama is spending immense sums for subsidies to particular industries and technologies, almost $40 billion for clean-energy programs alone (some, appropriately, for pre-competitive generic technology.) Yet a large number of prominent venture-capital funds are devoted to alternative-energy providers. They should be competing with each other and with the technologies they seek to replace—not for government handouts.

The argument is often advanced that government support is needed to nurture infant technologies and get through the “Valley of Death” where risk and uncertainty dries up the availability of capital. Both rationales leave much to be desired. The private sector has a long record of bringing new technologies to market and is routinely faced with its own internal “Valley of Death.” Somehow, they know how to manage risk and how use champions, sponsors, and gatekeepers to advance technologies that meet consumer needs. When they fail, as they often do, they deal with their boards and shareholders, not Congressional Committees who seek to punish any failure.