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 ass ociated 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 s ector. We observe that R&D spending and patents, both overall and in the en ergy sector, have been highly correlated over the past two decades in the U S. In addition, we observe that the R&D intensity of the US energy sector i s extremely low when compared to other sectors. We argue that the data illu strates the critical role of public policy, as evidenced by the impact of r ecent technology transfer related legislation on the total number and on th e ownership of innovations resulting from federally sponsored R&D. We concl ude that there has been a significant and sustained pattern of under-invest ment in the US energy sector, and that recent declines in energy R&D exacer bate 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 e merging risks such as global warming. (C) 1999 Elsevier Science Ltd. All ri ghts reserved.