The DOD and Energy Innovation:Can the Military Lead the Way to Smarter Energy?

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About Today’s Panel

Matthew Stepp is a Senior Analyst with the Information Technology and Innovation Foundation (ITIF) specializing in climate change and clean energy policy. His research interests include clean energy technology development, climate science policy development, transportation policy, and the role innovation has in economic growth.

Judy Marks serves as President and CEO of Siemens Government Technologies, Inc., a U.S. organization that integrates Siemens’ products, technologies and services for programs within the federal government. Marks came to Siemens from Lockheed Martin, where she most recently served as VP of Strategy and Business Development for Electronic Systems.

Sam Thernstrom is the Clean Air Task Force's's senior climate policy advisor, working on clean energy innovation, next-generation nuclear power, and carbon capture and sequestration. He has served as communications director for the White House Council on Environmental Quality, and a resident fellow at the American Enterprise Institute for Public Policy Research.

Tom Hicks is Deputy Assistant Secretary of the Navy for Energy, serving as the Secretariat for all matters pertaining to the Navy’s energy conservation, energy efficiency, energy sources, and green initiatives. Mr. Hicks joined the Department of the Navy from the U.S. Green Building Council, where he was most recently VP for the LEED green building rating system.

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DOD Energy Innovation:Promising

• We look to DOD for energy innovation for 3 good reasons:

1.DOD uses energy like no one else—biggest single energy consumer.

2.DOD innovates like no one else—most technologically sophisticated fighting force in history, standing on the shoulders of the world’s most effective innovation system.

This track record of innovation success is not limited to weapons systems—the two most important energy innovations of the 2nd half of the 20th C. came from DOD—nuclear reactors and combined cycle gas turbine. Many non-E innovations as well: computers, IT, advanced materials, radar, jet aviation, avionics, GPS, mobile IT, etc.

3.DOD has unique motivations to invest in energy innovation

• Being “green” is not a military mission—but green technologies can help the military do its job more effectively, efficiently, affordably. • DOD’s energy requirements are growing, making it important to develop technologies and practices that allow the military to minimize its

use of energy, maximize its ability to generate and store energy on base and in the field, and enhances its ability to acquire fuel and energy and deliver them wherever they are needed.

• DOD has set itself ambitious energy goals; meeting them with existing technologies will be difficult. Innovations are necessary to ensure DOD’s ability to meet its goals in a timely and cost-effective manner.

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Key Drivers of DOD Innovation:

• Huge R&D capacity ($80B in 2010)

• Diversity of roles and approaches (including inter-service competition)

• Unique role as test bed for its technologies.

• Commitment to highly pinpointed performance improvement

• High price point for mission-critical technology

• Strong, enduring and complex ties to private sector and academia (i.e. the “military-industrial complex”

• Role as rich customer and discerning user:

• 2010 Billions• RDT&E $80• Procurement $104 • Operations & Maintenance $184

• National security mission with broad public support

The Dream: DOD as the Nation’s Engine of Energy Innovation

“When Jeffrey Marqusee looks at the US Department of Defense (DOD), what he sees is not history’s most fearsome war machine, but a gigantic test-bed for advanced environmental technologies. Marqusee runs the Pentagon’s environmental technology programs, and he likes to tell anyone who will listen that the DOD’s infrastructure includes 500 fixed installations (some the size and complexity of small cities), 546,000 buildings and other structures and 160,000 non-tactical vehicles.

“Combine these numbers with the fact that no institution on Earth has anything close to the DOD’s buying power and technical capabilities, and it’s hard not to conclude, as Marqusee does, that the Pentagon has the capacity to become the world’s most important weapon in the fight to reduce greenhouse-gas emissions.”

—Daniel Sarewitz, Nature, April 2010

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Great Idea—But is it True?• DOD is investing in energy innovation—but will face increasing scrutiny.

• Strong consensus among scholars and members of the military: DOD will not make a sustained, significant long-term commitment to any energy innovation efforts that do not enhance its ability to fulfill its core national security mission.

• The range of technologies that are both mission-critical and climate & energy-critical is relatively narrow. Let’s be clear about what matters—while being humble in our application of that concept—our crystal ball is imperfect.

• Some key technologies that DOD is focused on (biofuels, distributed PV, mobile batteries) may or may not be relevant to terawatt-scale climate solutions.

• There may be some specific energy technologies where DOD can make vital, even unique contributions to the innovation and commercialization process. Small modular reactors (SMRs) and other advanced nuclear reactor designs appear the most promising specific technology area to me, but there may be others.

• Beyond narrow technology areas, look to DOD for systemic lessons: Culture of innovation at DOD, and the strengths of (and lessons learned from) DOD’s innovation systems, are key assets that may be applicable in other federal agencies.

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3 Key Principles of Federal Innovation Policy

1. Foster competition & cooperation within government in both technologies and institutional settings.

2. Incremental innovation: Given the unpredictability of breakthroughs, focus first on incremental innovation, rapid diffusion, and continuous learning.

3. Innovation is not just Research—Testing, Demonstration, and Procurement are Essential:

• The federal government must learn to manage these aspects of publicly-supported R&D more effectively.

Why Makes DOD’s Innovation System So Effective? How can we use those strengths to advance energy innovation?

1. Competition (and cooperation) within and among agencies

Competition• The military services both cooperate and compete. Innovation has been a

byproduct of service branch rivalries and the competition for roles and missions, and for budget authority.

Cooperation on Technical Systems and Systemic Innovation• When service branches have common technical interests, as in the case of gas

turbines and jet engines, they often work together effectively. • DOD and its contractors have a lot of experience in bringing together multiple

innovations, major and minor, leading to system-level performance advances. • Defense agencies particularly understand that technical advances in

combination, rather than isolated breakthroughs, often lead to substantial gains in actual performance.

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Demonstration is a Key Element of Innovation

DOD funds development of systems through the full spectrum of technical activities, from conceptual design to production, and does so as an integral part of an essential national mission.

• Demonstration, testing, and feedback from the field are intrinsic parts of the R&D spectrum, linking design and development with customers and final users, and also linking private firms with the public sector.

• DOD devotes a substantial share of its R&D spending to testing and demonstration. Other agencies often find it difficult to move beyond science and research to the practical realization of new technologies.

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Procurement: DOD Knows BestDOD purchases technical systems in quantity, on an unprecedented scale, and insists they perform reliably in a wide range of circumstances. As a result, DOD knows more than any other federal agency about how to solicit and purchase technology that works.

The services and their contractors are therefore highly motivated to• manage innovation with practical ends in view, • demonstrate new technologies and test them extensively before placing

them in the hands of military personnel, • extract “lessons learned” from operating experience, and feed those

lessons back into the ongoing process of innovation.

DOD has more sources of feedback into the process of innovation than other agencies typically have, and greater motivation to excel.

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Finding the Sweet SpotThe intersection of DOD’s technology expertise with mission-critical and climate-

critical technologies

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• Small Modular Reactors (SMRs) (and other baseload energy options such as grid-scale energy storage technologies)

• DOD-DOE cooperation• Sustain a key industrial base

(Navy)

• Zero- or low-carbon, high-energy density liquid fuels—major challenge, many questions about sustainability and scalability of biofuels

Policy conclusions for civilians1. It’s all about the innovation ecosystem

– DARPA model: “leap-ahead” breakthroughs– SERDP/ESTPC model: test beds to demonstrate cost-effective technologies;

foster innovation and commercialization– Procurement: key to innovation and commercialization; DOD innovation works

in part because DOD is a great customer.

2. Innovation is incremental systems engineering coupled with effective commercialization, not (usually) black box-breakthroughs. Sustained efforts at maximizing performance.

3. Multi-decade persistence is necessary for success.

4. Institutional competition and diversity is good; innovation culture; ability to serve as a “rich and discerning customer” that can span the gaps with development and early commercial demonstration.

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It adds up to a complex innovation ecosystem

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