Evidence of under-investment in energy R&D in the United States and the impact of Federal policy

Investments in energy technology research and development (R&D), and in associated human and institutional capacity, are fundamental to our ability to respond to changing economic and environmental needs. This paper uses data on R&D investments and patent records to examine the relationship between expenditures on R&D and innovation, with a particular focus on the energy sector. We observe that R&D spending and patents, both overall and in the energy sector, have been highly correlated over the past two decades in the US. In addition, we observe that the R&D intensity of the US energy sector is extremely low when compared to other sectors. We argue that the data illustrates the critical role of public policy, as evidenced by the impact of recent technology transfer related legislation on the total number and on the ownership of innovations resulting from federally sponsored R&D. We conclude that there has been a significant and sustained pattern of under-investment in the US energy sector, and that recent declines in energy R&D exacerbate this situation. Innovation for the US energy infrastructure is also a significant driver of the international energy economy. Thus, the spillover from US under-investment detracts from the global capacity to respond to emerging risks such as global warming. (C) 1999 Elsevier Science Ltd. All rights reserved.