MIT Institute Professor and former CIA Director John Deutch yesterday warned that the US needs to revamp its “innovation system” if we want to make timely progress on global warming and energy security. The former Deputy Secretary of Defense and Undersecretary of Energy offered his views on the challenges to remaking our energy system in a plenary talk at the Optics and Photonics for Advanced Energy Technology meeting at MIT.

Deutch’s main point is that the researchers and entrepreneurs who are rushing to tackle the energy problem are following the traditional model of technology innovation: identify a problem, come up with an idea to solve it, engineer the solution for specific applications, and bring the solution to market.

This linear, technology-push approach is running up against the hard economic and regulatory realities of the energy market as currently embodied by Congress and exemplified by the Waxman-Markey Bill.

Innovation needs to be more of a team sport, Deutch said. You have to start the science, engineering and business aspects at the same time. “So this traditional distinction we have… between discovery and application is blurred because discovery here depends upon the character of the application,” he said.

On top of the systemic challenges, the Waxman-Markey Bill poses a particular challenge for energy innovation, Deutch said. On one hand you have Renewable Portfolio Standards (RPS) that dictate specific amounts of wind, solar and other renewable energy sources. And on the other you have cap-and-trade, which attempts to place a price on carbon emissions.

The two methods clash, Deutch said. “You have an inconsistent set of measures that are supposed to guide our energy future. The problem is RPS hides the cost of the generation technologies that are going to replace CO₂, and the CO₂ cap-and-trade system recognizes the costs,” he said. “It makes an uneconomic basis for technology choices.”

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