Can Obama Give U.S. Clean Energy Manufacturing a Fighting Chance?

On March 26th, Assistant Secretary of Energy, Dr. David Danielson, announced the launch of a new Clean Energy Manufacturing Initiative (CEMI). The twin aim of the initiative is to increase U.S. competitiveness in the production of clean energy and in manufacturing, by increasing energy productivity.

The Obama Administration has called for $1 billion in total one-time funding to award competitive grants to create a National Network for Manufacturing Innovation (NNMI). Up to 15 institutes will be tasked with creating regional networks that bridge academia, suppliers, and related industries around focused specialties in clean tech energy.

This is part of President Obama's plan to revitalize American manufacturing, as he presented in his 2012 State of the Union address, where he called for $1 billion in funding for regional manufacturing innovation hubs. At the State of the Union, the President said that his blueprint for the American economy “begins with American manufacturing," which the Obama Administration sees as critical for jobs, economic recovery, and national security.

The CEMI Institutes would provide several key services to accelerate the commercialization of cost-competitive U.S.-based manufacturing of clean energy technologies--such as wind, solar, geothermal, and biofuels. The Institutes would educate manufacturers on energy productivity to improve their efficiency, provide competitive analysis, and prioritize opportunities that would strengthen U.S. competitiveness in clean energy manufacturing.

In the past seven years, global investment in the clean energy sector grew almost five-fold to $260 billion worldwide in 2012; and is expected to continue to grow in coming decades. Even with matched private funding--which would bring the total coffers to around $2 billion--it is still a drop in the bucket. But the initiative seeks to create synergies that provide value greater than their initial monetary grant.

The Institutes would also launch public-private partnerships between industry, academia, government, the supply chain, and related industries. The example given of this is D.C.-based organization, the U.S. Council on Competitiveness, which is"partnering with the Energy Department to convene a series of dialogues among government, small business, industry, research institutions and labor leaders to help develop and recommend strategies for growing the U.S. clean energy manufacturing sector."

Compared with a year ago, manufacturing profits are down $147.3 billion, according to government-provided data. Can this collection of manufacturing innovation centers focused on clean energy revive a flagging sector, upon which so much of the American economy has historically been built?

There are a few sobering statistics that federal advocates of NNMI put forward about manufacturing. While the U.S. has lost 687,000 high-technology manufacturing jobs since 2000, manufacturing is a central engine of innovation in the United States. Furthermore, while contributing only 12 percent of GDP, manufacturing performs 70 percent of domestic industry R&D, employing 60 percent of the industry's scientists and engineers.

The alphabet soup of federal agencies that support the NNMI point out that Germany, Korea, and Japan each have more intensive R&D investment in their manufacturing sectors than the United States, and each has a positive trade balance.  A 2012 report from the National Science and Technology Council indicates that other countries are already ahead of the U.S. in taking action to support the interdependent relationship between manufacturing, innovation, and economic growth.

Our nation faces a stark choice: the energy technologies of the future can be developed and manufactured in America for export around the world, or we can cede global leadership and import these technologies from other nations," Assistant Secretary Danielson said. "As part of President Obama’s plan to revitalize American manufacturing, the Clean Energy Manufacturing Initiative will seize this opportunity to ensure U.S. leadership in the clean energy sector and advance the global competitiveness of American manufacturers.

The Advanced Manufacturing National Program Office (AMNPO), a collaboration among several federal agencies, conducted what they call a "crowdsourcing" effort to gather information and feedback on how the NNMI might be designed. In January, AMNPO issued a report, entitled National Network for Manufacturing Innovation: A Preliminary Design, to the White House National Science and Technology Council outlining a summary of their ideas, after combing through input from more than 900 organizations and individuals. In it, AMNPO models estimate that federal funding will taper off as the capital-intensive Institutes mature and can absorb overhead. Non-federal funding is also expected to come into the Institutes via in-kind awards, member fees, user fees, and other sources.

[Image credit: Mark Bridge]