Clean-energy efforts a high-stakes bet for U.S.

WASHINGTON — WASHINGTON -President Barack Obama's plans to lead America from recession rest in part on a task bigger than a moon shot and the Manhattan Project, as complicated as any feat of economic engineering in the nation's history.

His goal, which past presidents have spent more than $100 billion chasing with limited success, is to replace imported oil and other fossil fuels with a so-called "clean energy economy" powered by the wind, the sun and bio-fuels.


The stakes are high. If Obama succeeds, he could spark a domestic jobs boom and lead an international fight against climate change. If he fails, he could cripple existing industries and squeeze cash-strapped Americans with higher energy prices.

"We essentially need a second Industrial Revolution that can generate lots of energy cleanly, cheaply, sustainably," Energy Secretary Steven Chu, a Nobel Prize-winning physicist, said in an interview. "We have a lot of necessity," he added, and the administration and the Energy Department "have to start inventing right, left and center."


Success hinges on whether Obama can nurture alternative energy sources to the point where they cost no more than fossil fuels - a feat that most experts say will require heavy doses of brainpower, cash and market manipulation.

It also requires clearing most of the same hurdles that frustrated Obama's predecessors, including: technology bottlenecks, a shortage of capital to finance innovation and above all, crippling economic factors that have repeatedly trumped good intentions.

To help renewable energy compete on price, Chu and other officials say, the administration wants to revamp energy research and spend more on it, starting with billions of dollars in the pending economic stimulus bill; to create demand for clean energy by forcing utilities to draw from renewable sources such as wind turbines and solar panels; to string thousands of miles of transmission lines to bring wind and solar power to consumers; and to levy a de facto tax on fossil fuels through a nationwide cap on greenhouse gas emissions.

"I'm not going to call it a once-in-a-generation challenge," said Deborah Wince-Smith, president of the Council on Competitiveness, a collaboration of business, labor and academics. "It's even more rare than that."

By the end of this year, the Energy Department's spending on 35 years of clean energy research will exceed the total inflation-adjusted cost of the Apollo program, which sent Americans to the moon, and the Manhattan Project, which developed the nuclear bomb.

That research, economists say, has made wind, solar and other alternative sources of energy cheaper. But fossil fuels remain cheaper yet.

Renewable sources comprise about the same sliver of America's energy portfolio as they did three decades ago, while the nation's reliance on imported oil has doubled.

Experts say more money would help. The federal government spends about the same amount on energy research today, adjusted for inflation, as it did in 1968. The private sector spends more than $1 trillion a year on clean energy research but has only begun to outpace government spending in the past year, University of California-Berkeley economist Daniel Kammen found in a new study.


"Energy is the biggest chunk of our national expenditures," Kammen said in an interview, "and we just neglect it."

Investment ran high in the oil-shocked 1970s then slumped in the '80s and '90s. It was rising again in recent years, until the financial crisis froze lending.

Chu said this week that he will recruit "the smartest people" to the Energy Department and charge them with bringing clean-energy technology to market. But to drive down prices, he said, the government must help those sources "scale up" to a size that lets them compete with Big Oil and other fossil fuel providers.

Price Fishback, an economic historian at the University of Arizona, said that when it comes to bringing technologies to market, "Governments haven't typically done a very good job of picking winners."

But clean-energy researchers say government has long helped fossil fuels, offering tax breaks and subsidizing transmissions systems, such as railroads that carry coal to power plants. Stephen Long, a leading bio-fuels researcher at the University of Illinois, said without those subsidies, many bio-fuels could easily compete with coal as an affordable energy source.