Affordability has quickly overtaken climate change as the primary focus of energy policy. One reason may be that the climate policies adopted over the past decade are finally starting to bind, imposing added costs at a time of rising electricity demand and, in some parts of the country, higher power bills.
The problem is that the debate over affordability has become highly politicized, with each side eager to assign blame. A prime example is the discourse around low-emissions energy technologies such as renewable generation and electric vehicles. Republicans often talk as if these technologies are nothing more than expensive ideological projects. Democrats often talk as if cleaner energy comes with few tradeoffs or costs. Neither side is being entirely candid.
In reality, low-emissions technologies may offer real advantages, but they also have limits. Renewables have very low marginal costs, but they are intermittent and require additional grid resources to manage that intermittency. EVs have improved dramatically, but high upfront costs and charging remain real concerns for many consumers. Over time, these technologies may succeed on their merits. But policymakers should let markets lead and be honest about both the benefits and the drawbacks.
That is one reason federal support for early-stage energy innovation may be an effective policy tool. Well-targeted subsidies for energy innovation, especially for low-emissions technologies, could help put downward pressure on both energy costs and emissions. Given those potential benefits, it is worth assessing how effective government R&D spending actually is.
My new paper examines the effects of government innovation policy by looking at the relationship between public spending and innovation across OECD countries over the past couple of decades. It finds that public investment in clean-energy R&D is associated with greater innovation in clean-energy technologies, as measured by patent applications.
This does not mean every dollar of federal support is well spent, or that every favored technology will prove commercially viable. The effectiveness of energy innovation policy depends in part on keeping it narrowly focused and insulated from politics. Still, the evidence suggests that public support for R&D can help generate new ideas and improvements in technologies that could eventually contribute to lower costs, lower emissions, or both.
The paper does not find a similarly clear relationship between clean-energy R&D and emissions outcomes. But that is not especially surprising. Emissions are much harder to link directly to research investment than innovation is, and any effects may take years to materialize.
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The key takeaway is straightforward: public support for clean energy innovation appears to be effective at inducing more innovation. To the extent those innovations help make our broader energy systems cheaper, cleaner, or more reliable, they could provide benefits for both affordability and emissions. That is a more constructive path than treating all clean technologies as either economic threats or costless solutions.
