Norman R. Augustine, retired chairman and CEO of Lockheed Martin Corporation, recently spoke at MITEI’s annual colloquium about uncertainties in energy planning. Augustine has served as Under Secretary of the Army, on the advisory board of the Department of Energy, and as a founder of the American Energy Innovation Council. Here, Augustine expands on what he means by “certain uncertainties” and how we can invigorate research and development in the energy sector.
Q: You’ve referenced “certain uncertainties” in energy planning. What are the most pressing of these uncertainties?
A: Decision-making in the energy sphere is extraordinarily difficult, given the long-lasting consequences of decisions, their enormous cost implications, their profound impacts on society, and the uncertainty regarding the future in which they will be implemented. Such uncertainties include the extent to which humanity will react to warning signs of environmental change, the speed with which new technologies will be implemented (e.g., all-electric vehicles), public acceptance of certain new technologies (e.g., advanced nuclear), breakthroughs in science (e.g., nuclear fusion), as well as the effects of largely unpredictable events (e.g., Fukishima). In such an environment there is a premium on prototyping new concepts, building flexibility into plans, and rapidly adapting to the unforeseeable when it occurs. One need only look to hydraulic fracking to see the magnitude of the consequences that technological advancements can have and the breadth of their scope—in this case from climate change to the economy and from geopolitics to national security.
Q: What are some of the development challenges that are unique to new energy technologies?
A: Almost every entrepreneur faces the infamous “Valley of Death” when transitioning a new idea or research discovery from the paper or laboratory phase to the status of a proven technology. Entrepreneurs in fields where special entry barriers exist, such as very large capital requirements, face what might be termed a second Valley of Death, wherein the “bench level” verification of technology must be taken yet another step to near full-scale in order to verify economic viability. This latter Valley generally demands more capital and more patience than individual investors, or even groups of private investors, are willing to endure, and even large firms are prone to dismiss such “opportunities” as cases of “you bet your company.” An established role of government is to promote just such pursuits when the results can clearly benefit the public at large but their support cannot be justified by the private sector.
Q: What are some possible paths forward?
A: Potential advanced sources of energy abound today, but for most of them to become practicable important hurdles remain. The latter range from enhancing the energy density and recharging times of batteries to the sustainment of controlled fusion reactors and from providing economically practicable carbon sequestration to establishing a truly modern, secure electric grid. Most of the nation’s infrastructure assets are owned and operated by the private sector; the fundamental source of most new ideas is in the laboratories at the nation’s great research universities; and, with regard to resources, the federal government has an overall annual budget that exceeds the revenues of the nation’s nineteen largest industrial firms combined.
Only by working together—academia, industry and government—can major challenges such as those often encountered in developing new sources of energy be surmounted and their underlying benefits realized by society as a whole. Unfortunately, such a cooperative partnership has all too seldom existed in the United States, but the importance of providing the nation and world with clean, affordable, sustainable, safe energy would seem to demand exactly such a construct.
What I believe is required is the creation of a government owned private sector entity governed and managed entirely by private citizen employees. The organization would be principally but not entirely government funded and would operate under standard commercial laws and regulations regarding hiring, firing, and decision-making. Its most distinctive characteristic would be that it would operate as a business entity independent of government except for its mission statement and its funding, the latter of which would be derived in part from industry matches. It would competitively fund promising new technologies as they encounter the second Valley of Death. Such an entity should not compete with industry, but instead should support the efforts of industry, always acting in the best interests of the public. Most importantly, such an entity should be designed to celebrate success rather than investigate failure, except, of course, in cases of malfeasance.
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