A Central Bank for Energy Innovation
Category: Skills for Innovation.
Energy is a big industry, and innovation has always been its lifeblood. But meeting the world’s soaring energy demands in the 21st century will require game-shifting innovation that can be implemented quickly and on a huge scale.
Not only the brightest brains and generous funding will be needed, but a commitment to shared goals. How can this shared commitment be achieved?
A Central Bank for Energy Innovation would bring together the vision and expertise of the best talents in industry, government and academia to implement innovative solutions in energy. This would be a permanent institution, not a cocktail party. It would be underpinned by hard cash, put to work to deliver tangible results. The board would reflect the funding provided by stakeholders, but with a one-third stake held by developing countries to ensure the interests of poorer nations are served.
Why is such a central bank needed?
Currently, the two main sources of funding for energy R&D are companies and governments. These two worlds rarely meet.
Governments typically allocate funding for research based on long-term energy policy priorities such as climate and energy security. The blue-sky thinking of the chosen academics and research institutes often never gets implemented. Meanwhile, energy companies typically entrust research to internal R&D groups tasked with finding ways to boost productivity and profitability. Such research tends to be incremental, with a high probability of being implemented, and with shorter and more clearly defined payback periods.
A Central Bank has three main functions: to control inflation, to monitor the economy, and to act as a lender of last resort.
On this analogy, the Central Bank for Innovation would have innovative ideas as its currency. Of course, this is an easy enough coinage to mint. To control the risk of hyperinflation from impractical ideas and redundant theory, the board would be entrusted to keep a tight rein on monetary policy. The bank would monitor research in energy, identify gaps and – given that speculative funding is currently anathema to banks – provide funds to high potential innovations in the energy sector.
The bank would have a small team of permanent administrative staff acting independently of the government and corporate stakeholders, reporting to a board of directors who would be rotated every three years to ensure that the innovation did not dry up and that innovative research led to results that could be implemented practically within defined timeframes.
The board would commission the individuals and institutions who would deliver the research, but only within the period of their three-year tenure. This would avoid any gravy trains where, rather like a consultant recommending that more consulting dollars need to be thrown at a problem, a research effort requires ever-increasing resources to deliver results.
Visionary thinking and practical engineering / economic skills will be needed. The Central Bank for Energy Innovation would be a vehicle to break down barriers between research communities, harnessing the brightest talents in academia and industry to work with commitment to shared goals.