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Clifton Yin and Matthew Stepp: Strengthening America’s Clean Energy Manufacturing Capability

By Clifton Yin and Matthew Stepp March 28, 2013

Analysts from the Information Technology and Innovation Foundation discuss the Department of Energy's latest clean energy manufacturing initiative.

This week, the Department of Energy launched the Clean Energy Manufacturing Initiative (CEMI), a cross-agency effort to improve the United States’ clean energy manufacturing capability. The Initiative is housed within the Office of Energy Efficiency and Renewable Energy (EERE) and addresses the need for improved manufacturing competitiveness, which is an essential yet often overlooked component of the clean energy innovation lifecycle. In addition, CEMI is just one part of a growing effort by the Obama administration to strengthen the competitiveness of the American manufacturing sector as a whole.

In the 2000s, the United States shed 5.7 million manufacturing jobs, a 33 percent loss rate that is even worse than the 31 percent drop in manufacturing employment during the Great Depression. In addition, the U.S. manufacturing sector has significantly declined in productivity: in 2010, 13 of the 19 national manufacturing sectors—employing more than half the manufacturing workforce—produced a lower inflation-adjusted output in comparison to 2000. The manufacturing decline is especially pronounced in the clean energy sector, with the United States’ global share of solar exports falling from 30 percent in 2000 to 7 percent today.

In addition to significant economic impacts, the United States’ declining industrial production also hampers our innovation ecosystem. Manufacturing is a critical component of the innovation lifecycle that links research, engineering know-how, product design, and product development, as discussed in the ITIF report Why America Needs a National Network for Manufacturing Innovation. In fact, 22 percent of manufacturers in the United States developed product or process innovations over the last three years compared to only 8 percent of non-manufacturers. And manufacturing companies fund and conduct roughly 70 percent of U.S industrial R&D, despite accounting for only 12 percent of the economy.

It is no different in the growing clean energy industry. A robust manufacturing sector is integral to commercializing advanced technologies developed at universities, National Labs, and within industry. It also produces technologies at economies of scale to drive down costs and enhance deployment. And research doesn’t stop in the lab – scientists and engineers work continuously to transition new ideas to a scalable product off manufacturing conveyor belts. For example, figuring out the manufacturing process for semiconductors has proven vital to the development of the semiconductors themselves. The feedbacks between research and manufacturing are thus inescapable and create important links that enhance future technology development.

Yet public investments in clean energy manufacturing have been characterized by boom-and-bust periods of policy support. According to ITIF’s Energy Innovation Tracker, federal investment in clean energy manufacturing dropped from nearly $9 billion to just $700 million between fiscal years 2009 and 2012, a 92 percent decrease. Without consistent support, U.S. investments in clean energy research won’t have a competitive domestic manufacturing base to transition into and emerging technologies are more likely to be produced elsewhere.

CEMI is designed to reverse this troubling trend by providing coordinated support for clean energy manufacturing innovation, technology transfer, and industrial education and training. Among its components, the Initiative will develop enhanced funding programs for public-private partnerships to spur technology commercialization and new technical assistance programs to help firms bring new innovations to market. For example, the Department of Energy will implement an applied research institute focused on clean energy manufacturing through the President’s National Network for Manufacturing Innovation and expand EERE’s Better Plants Challenge, which works with U.S. manufacturers to reduce energy use by 25 percent over 10 years.

An excellent example of the potential of this Initiative is the Carbon Fiber Technology Facility (CFTF), a 42,000 square foot facility at the Oak Ridge National Laboratory, officially commissioned in tandem with the Initiative’s launch. The progression of low-cost carbon fiber is a notable government clean technology innovation success story and the facility should help further that success, serving as a hub for carbon fiber R&D, spurring the scalability of low-cost carbon fiber manufacturing, and assisting in the development of a future carbon fiber workforce. In fact, nearby Roane State Community College won grants totaling more than $4 million from various federal entities in 2011 to support carbon fiber manufacturing-workforce training in conjunction with the facility, including a specialized associate’s degree program. The United States needs many more such facilities if it is to foster breakthrough technologies and win the global clean energy race.

Although the Clean Energy Manufacturing Initiative is still taking shape, it holds great promise. Manufacturing has been an overlooked and underfunded component of the nation’s economic competitiveness strategy for far too long and it’s particularly important for the nascent clean energy economy. The Initiative is a significant first step on the path to a robust U.S. clean energy manufacturing sector and will be a boon to clean energy innovation as a whole.

Clifton Yin is a Policy Analyst and Matthew Stepp is a Senior Policy Analyst with the Information Technology and Innovation Foundation.