Cleantech Requires Embracing Change and Building Infrastructure

There are two hugely important components to these decisions: embracing change, and building infrastructure.

Charles Darwin noted that humans are virtually the only species that responds to stress by protectively embracing the old order rather than changing to meet the challenges and opportunities of the new order. Even simple bacteria get this right – diversify and multiply in order to survive in a hostile environment. Without change, you simply get consolidation of power where it already lies. Change creates the opportunity for growth.

Building infrastructure may be even tougher than embracing change because it is hard, slow and expensive. By comparison, building applications on top of existing infrastructure is easy, fast, comparatively cheap, and often hugely profitable. But the Facebooks, Twitters, Zyngas, and Googles of the world would not exist without the much more costly, and less sexy, Internet and networking infrastructure. We seem to have forgotten the boom and busts we had to go through to build the computer hardware, networks, Internet backbone, and wireless infrastructure that support our robust consumer Internet and wireless applications businesses.

Similarly, we tend to ignore that modern cars would not exist without the investment we put into building a federal highway system. Even earlier, we brought the nation together byconnecting the East Coast to the West by rail. In the case of the car, rail, and Internet, the infrastructure that underpins a paradigm shift to a new technology is a necessary first step and often one in which the government plays a critical role. This is more than the government spending a few hundred millions on R&D; it is government spending billions on true infrastructure building. Without these efforts by government, we wouldn’t have the growth engines of today’s U.S. economy.

Making Cleantech “Ship It Then Fix it”

Despite a long U.S. history of investing in infrastructure that helps drive innovation, the current debate in America remains extremely skewed. Some policymakers continue to assert that “solar and wind will never be cheap enough to compete without subsidies,” apparently unaware of themassive declines in the installed price of these technologies over the last several years. They also use this as an excuse to argue that federal energy investments should be spent entirely on early stage research and development for wind, solar, and biofuels, with little or no funding for deployment.

Why?

Because this argument keeps the new technologies “down on the farm” where they are more easily denied. In the technology world, we have a phrase called “ship it then fix it.” This came from the early sales of Apple Computers and it helped accelerate the mass adoption of personal computers by getting units rapidly into the hands of real customers.  That same strategy is being deployed in India to replace diesel generators in India with distributed solar and battery power storage. Each incremental installation not only benefits from technology improvements and cost declines in the solar panels, but also from the learning experience of having deployed systems in the field. This learning would be denied in the U.S. if we stop investing in cleantech infrastructure or are forced to choose between R&D and deployment.

Teetering on the Wrong Side of History

History is not encouraging for the U.S.  In the transition from telecomm to information technology, we were hugely aided by the decision of Judge Harold Green to break up AT&T’s monopoly, which helped transform a big incumbent into a series of innovative competitors; without which we might never have so rapidly transformed the global telecomm and datacomm fields. In the case of cars, trucks and buses versus rail, we have been less fortunate. The powers of incumbency have resulted in a very different and arguably much less efficient result than in Europe, where urban rail, in particular has led to a very different transport landscape.

History is clear that investment in infrastructure provides a platform for innovation. It’s an investment opportunity we’re at ever greater risk of missing. Emerging countries are capitalizing on our failure as they prepare to leapfrog ahead of us in the race to dominate the cleantech sector. Yet, instead of planning how the U.S. can leverage our country’s advantages to retain leadership in cleantech, much of Washington is mired in a debate as to whether the sector is even viable. Instead of rebuilding our aging power generation, distribution and management infrastructures, they are focusing on how deeply they can cut taxes. Unfortunately, as right as investing in infrastructure and cleantech is, it is the hard, slow, and expensive way. We seem to have once again lost our courage. Hoping, however, that we can instead pursue the fast, cheap, and easy will only relegate ourselves to living in the past; a slowly declining, aging and ever less attractive past.

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