Innovating the next Energy revolution

A practical application of Innovation prizes

In a recent post, I claimed that Innovation prizes are an underutilized means for accelerating technological innovation in a cost-effective manner.

Advantages of Innovation Prizes

To recap a bit, Innovation prizes have many advantages:

1. The single biggest advantage is that, if the proposed solution does not meet the criteria, innovation prizes cost the taxpayers almost no money.

2. Leverage the efforts of a constellation of individuals, start-ups, and established companies.

3. Focus on outputs (i.e. results), rather than inputs (i.e. how those results are achieved). All of the other strategies for promoting innovation focus on inputs.

4. Encourage experts in completely different domains to get involved. While experts in a certain domain often have a knowledge advantage, that advantage is often undone by a group-think mentality.

5. Encourage outsiders and iconoclasts to get involved. While scorned by experts, these people often offer simple solutions that are missed by experts who are so immersed in their field that they get tunnel vision.

6. Encourage individuals with contrarian ideas within established institutions to quit, form their own institutions, and test their ideas in the field.

7. Do not require the government to find new institutions and ramp up the hiring of experts.

8. Have zero costs in the short run, so it is possible for the government to create a large number of prizes very quickly.

For all of the reasons above, I believe that innovation prizes should become the default method through which the government and other institutions promote technological innovation.

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Most of the following is an excerpt from my second book Promoting Progress: A Radical New Agenda to Create Abundance for All. You can order my e-books at a discounted price at my website, or you can purchase full-price ebooks, paperback, or hardcovers on Amazon.

Other books in my “From Poverty to Progress” book series:

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An Energy Prize

To give one example of where an innovation prize could have a transformative effect on society, let’s look at energy.

With the possible exception of food production, energy is the type of technology that has the largest impact on human societies. Since modern agriculture has largely solved the food problem that has dominated most of human history, innovating a new energy technology seems very likely to be the most transformative technological breakthrough for the immediate future.

A new energy source that is cheaper and denser than fossil fuels, that is widely available across the nation and the globe, and also has little or no radiation, pollution, or carbon emissions would be one of the greatest technological breakthroughs of the 21^st Century. A new abundant, secure, carbon-free energy source that is significantly cheaper than fossil fuels would fundamentally change the world for the better.

Greens and Ecomodernists who think that we can do this with solar, wind, electric vehicles, and batteries are either deliberately destructive or very naive. The technologies are nowhere near enough to accomplish their celebrated goal of global NetZero by 2050. Worse, the results of trying to do so will lead to:

• only a tiny effect on future global temperatures (i.e. far less than one degree)

• tens of trillions of wasted dollars (spending is now over $1 trillion per year and growing)

• economic stagnation

• downward mobility for the poor and working class in wealthy nations and developing nations being trapped in poverty forever.

Fortunately, there is a viable energy alternative. We should build an energy system that is based on a blend of natural gas, nuclear, and hydroelectric power. The exact blend will be determined by geography and local cost structure. In the United States, this is clearly natural gas, particularly shale gas.

In the long run, however, we need a transformative energy source that has all the benefits of fossil fuels and few of the drawbacks. If such a new energy technology existed, wealthy nations would receive a far better energy system than the one that currently exists. Both fossil fuels and renewable energy sources would become obsolete, once such a system could be widely rolled out.

Wealthy nations would no longer have to spend trillions to import fossil fuels. Carbon emissions and pollution would drop like a rock. It is difficult for me to conceive of innovation as profound as this for the next century.

A far superior source of energy would lower the cost of living and greatly boost economic growth, while having a positive impact on the natural environment. The new energy source would also create a new high-value-added industry to create jobs and exports.

If this energy source were far better than coal China, India, Indonesia, and the rest of Asia would immediately stop building fossil fuel-burning power plants and purchase this new technology. In the long run, they would likely decommission all or most of their existing coal-burning power plants.

Poorer developing nations in Africa and Latin America could also build an energy infrastructure far more easily than with current technology. In the same way that mobile devices enabled these countries to avoid the enormous cost of building a landline infrastructure, the equivalent might happen in the energy sector.

Such an innovation would also be devastating to the authoritarian regimes of Iran, Saudi Arabia, Russia, and other oil- and gas-exporting nations. Without huge export earnings from fossil fuels, those nations will be forced to reform their economic and political structures. More importantly, their regional influence would be seriously curtailed.

For this reason, I believe that the government should offer a $100 billion prize to the first individual or group who can design it and produce a working prototype. This may seem like a huge amount of money (and it is), but the amount is trivial in comparison to the trillions of dollars and Euros spent thus far on fossil fuels and Green energy systems.

More to the point, the benefits of such an energy technology to society would be hundreds of times greater. $100 billion, while a huge incentive, would be a bargain price for such a technology.

To win a prize, the individual or group must do all the following:

1. Must have design specs and a working prototype that is fully testable.

2. Must offer a total cost of operation per unit of energy that is significantly lower than coal, natural gas, or petroleum. This total cost should include the cost of construction, fuel, operations, maintenance, and decommissioning.

3. Must output its energy in the form of electricity or be easily capable of being transformed into electricity, so it can be easily integrated into an electrical grid.

4. Must output energy as either a steady 24/7 stream for months at a time, or be capable of being fully modulated (i.e. the energy output can be cranked up or down) with little effort.

5. Must have a capacity factor of at least 80% (i.e. it can produce at least 80% of its theoretical output over the year).

6. Must rely on materials that are widely available in North America and preferably the rest of the world.

7. Must not be more land intensive (the total area of the plant) than a standard fossil fuel power plant.

8. Must produce little or no radiation, carbon emissions, pollutants, or other known threats to human health and safety.

9. Must be capable of being manufactured or constructed at scale. Ideally, this would consist of a mass production plan.

10. Must be capable of being safely manufactured, transported, and constructed near major metropolitan areas.

This energy prize should not choose technologies, but I want to single out one with particular promise to illustrate the possibilities.

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Nuclear Fusion

Nuclear fusion has the potential to revolutionize our future. It creates energy by fusing simple atoms together to create more complex atoms. The reaction creates very little radiation, no carbon dioxide, and no pollution. Most importantly, the net energy created far exceeds any current energy source, including fossil fuels and nuclear fission (the type of nuclear energy currently being produced).

One specific type of nuclear fusion is particularly promising: hydrogen-boron fusion. It creates energy by fusing hydrogen and boron (two very common elements) into lithium, and it creates electricity directly without the need for steam turbines. The lithium could then be used as a raw material for the construction of batteries.

Nuclear fusion is not in any way theoretical, as it relies on proven physical reactions. Nuclear fusion is the process that makes the sun work. There is no reason why it cannot be made to work on Planet Earth.

For decades, nuclear fusion seemed more like science fiction than science fact. However, in December 2022, scientists at Lawrence Livermore lab finally achieved net energy. They created an extremely short fusion reaction in a lab that generated about 50% more energy than was input into the system.

This is a major milestone in nuclear fusion research. It not only proves that we can create energy with nuclear fusion, but now we can constantly run experiments to make the reactions last longer and generate more net energy. The only problem is that we do not know if the technology can cost-effectively produce energy.

We have already seen that the wealthy nations have gone through two Energy Transitions and are currently in the middle of a third. Nuclear fusion might well be the Fourth Energy Transition that would be at least as important as the first three.

Current energy companies have no incentive to create such a transition. The research costs are too high and the pay-offs seem too remote, as they are possibly decades in the future. Meanwhile, governments are largely ignoring the possibilities because of their fixation on solar and wind.

The dominant government research program in the field, ITER Tokamak, has placed all its bets on a different type of fusion energy that is probably far more expensive. So far, the project has consumed over $14 billion of government funding, and the likelihood that it will produce energy that is cheaper than fossil fuels is very low. At the same time, governments around the world have funded trillions of dollars in renewable energy.

Meanwhile, a gaggle of small companies are building prototypes for other, more promising types of fusion technologies with little or no government funding. Many of them claim that they can produce energy far more cheaply than fossil fuels. That remains to be seen, but not following up on this possibility seems foolhardy.

A large prize would enable energy scientists to go in completely new directions that are currently impossible due to the centralized “put all your eggs in one basket” approach that is typical of government projects.

With the enactment of a $100 billion research prize, venture capitalists would come out of the woodwork to fund those companies and create new ones. If that is not enough money to provide strong incentives, we can increase the amount. The wonderful thing about prizes is that, if they do not produce results, it does not cost the taxpayers any money.

So what exactly is the downside?

To be clear, I do not predict a nuclear fusion breakthrough within the next 10 years or even 100 years. Many companies do, and I am optimistic that one will achieve a breakthrough, but it remains to be seen.

I do however predict that, with the right incentive structure, we can at least find out if nuclear fusion or some other energy technology is a potential replacement for fossil fuels within 20-30 years. With the proper funding, we can probably create a working prototype within a decade.

Other possible energy sources

And nuclear fusion may not be the energy source that triggers the Fourth Energy Transition. Perhaps it is a fundamental breakthrough in solar, wind, geothermal, or other renewable resource. Perhaps it is small modular nuclear fission reactors. Or perhaps it is an energy source that only a few supposed crackpots are currently dreaming about.

Geothermal energy, in particular, is a renewable energy source that has not been fully explored. For some reason, Greens are far less enthusiastic about geothermal energy than solar, wind, and biomass.

Geothermal energy exploits intense underground heat caused by radioactive decay in the Earth’s mantle. Current geothermal energy only exploits the very few geographical areas where heat plumes penetrate upward through the crust, so it is near the surface. Drilling deep into the mantle, however, may unlock massive amounts of renewable, high-capacity energy. A $100-billion innovation prize may create the economic incentive to fully exploit this vast energy resource.

Other Innovation Prizes

Once one starts thinking about scaling up innovation prizes, the true possibilities emerge. What about better insulation for walls, doors, and windows, electric airplanes, or solar-powered cars?

Nor is there a reason not to expand the idea to solving difficult social problems. What about cures for mental illness or substance abuse, the best means to teach reading to children, low-cost housing for the homeless, and using digital technologies to isolate non-violent criminals and parolees in their own homes rather than in prisons? These are just a few ideas that I came up with off the top of my head. There are thousands more problems that can potentially be solved by innovation prizes.

We have become so used to the idea that the government needs to solve a problem directly that we ignore the possibilities of other sectors. The private sector is extremely good at solving problems, far better than the government in most cases. Unfortunately, there are many domains where there is no profit incentive. Rather than give up on the private sector and assume that the government can solve the problem itself, we should reformulate the problem. Innovation prizes would enable us to do that.