If you want to achieve innovation, you need to invest in research — and have a laser-like focus on productivity.
“Innovation lies at the heart of society. Science and technology research lie at the heart of innovation.”
That’s according to U.S. Department of Energy secretary Steven Chu, who said this morning that innovation has changed the world in “remarkable ways” — but the United States is at risk of watching other nations pass it by if it doesn’t recognize the trajectory and implications of globalization.
“We need innovation in energy,” he said. “Innovation in energy is going to be a second industrial revolution.”
In a 45-minute presentation at the Stevens Institute of Technology, Chu outlined several technological innovations in history that “transformed the world” — and demonstrated that for all of them, productivity through technology was the winning formula.
“In the long run, you’ve got to get better at what you do,” he said. “If you produce the same, it’s no good. Productivity per person has to increase.”
One major innovation: the development of nitrogen-based fertilizer at the close of the 19th century by chemists Carl Bosch and Fritz Haber. The pair would win multiple Nobel Prizes for the discovery — “because it was that important,” Chu said — which allowed humans to drastically increase their agricultural yield by five times or more, staving off starvation in many developing nations.
“The battle to feed all humanity is over,” Chu said quoting author Paul Ehrlich.
A subsequent major development was the development of disease-resistant strains of wheat that could handle artificial fertilizer and produce higher yields. The hungry saw it as life-changing, but others criticized it for ushering in an age of monoculture in which farmers turned their backs on biodiversity in the interest of maximizing food production per acre.
Chu quoted Nobel Laureate Norman Borlaug:
Some of the environmental lobbyists of the Western nations are the salt of the earth, but many of them are elitists. They’ve never experienced the physical sensation of hunger. They do their lobbying from comfortable office suites in Washington or Brussels. If they lived just one month amid the misery of the developing world, as I have for 50 years, they’d be crying out for tractors and fertilizer and irrigation canals and be outraged that fashionable elitists back home were trying to deny them these things.
Still, the critics had a point.
Consider this world population chart throughout history, Chu said:
The big jump occurs between 1800 and 1930 — the Industrial Revolution.
“Are we getting out of control?” Chu asked. At the current rate, it will take just 13 more years to add another billion people.
“The good news is: no,” Chu said. “If you look at the projection of population growth, it begins to slow down. By mid-century we are predicting 9.3 billion. By the end of this century, it’s actually predicted to plateau and then decline.”
The reason: plummeting fertility rates. In one country today, the fertility rate is 1.1. (To keep a population stable, you need a rate of 2.1 to 2.2). There are many reasons for the drop, but there is a strong correlation between fertility rate and the number of women who are educated.
“The poorer you are, the more children you have because in a poor country you don’t expect all your children to survive childhood,” he said.
But there are many more transformative technologies. The invention of modern electronics and the ability to use electronics to amplify signals is one, and it all started with the vacuum tube at Bell Labs, at which Chu spent nine years. The invention of this device, and then the solid-state transistor that replaced it, and then the integrated circuit that replaced that, was a pillar to one of the largest industries on Earth.
“These innovative things really transformed how information travels around the world,” Chu said, adding optical fibers and wireless communication as examples.
The shift from self- and animal-powered transportation to the steam engine was also transformative.
“During the bleakest moments of our country’s history — the Civil War — you would think that the country could not spare all of its resources to something not dedicated to fighting a war,” Chu said. “But it didn’t.”
The Lincoln administration’s funding of a transcontinental railroad — $16,000 in bond subsidies to rail companies for each mile, plus a lock of land every 10 miles — allowed California to be connected to the Eastern Seaboard in just seven years.
“Nowadays it would take seven years [just] to get a permit,” Chu said.
Developments in the rail industry furthered along more in the shipping and aviation industries, which in turn impacted other markets, Chu said.
“Trains and planes and ships revolutionized [the food market],” he said. “It really transformed the way people move and the way we move material.”
Then came the automobile. While taking pains to note that it was Gottlieb Daimler who invented the automobile and internal combustion engine, not Henry Ford, Chu said that it was Ford’s assembly line that took the car to the mass market.
“Productivity per worker went up enormously,” he said.
Chu said he saw similarities to Ford’s assembly line when he visited a SunTech solar plant in China. With four stories of automated production lines and the record for polycrystalline silicon efficiency, the company was executing on the mantra, “Make it better, make it cheaper,” he said.
“They just looked at what the United States’ playbook was over the last half-century and thought, we can do this, too,” he said.
Clean energy technologies can positively impact the environment the same way that automobiles did. Not that cars don’t produce smog, of course — but the major environmental pollution problem at the turn of the century was the millions of pounds of manure in city streets produced by horses used for transport.
At the time, gasoline-powered vehicles provided clean streets, Chu said.
“[Now] we have another environmental problem,” he said of pollution and greenhouse gases from burning fossil fuels. “It may not be quite as visible or an assault on our senses as horse manure,” but it’s just as significant.
The good news: in the last six years, the installation price for utility-scale solar has dropped by 50 percent. Every business model predicts at least another 50 percent drop in this decade, Chu said.
That’s why the Department of Energy asks itself: how can we accelerate the decline to achieve the elusive $1/watt price where clean technologies are price-competitive with fossil fuels?
“We think that even at $1.50 a watt, this will go viral,” he said. “It will go viral all over the world. The question is: do we want to import this stuff, or export it?”
In other words: does America want to merely invent new technologies like Gottlieb Daimler, or manufacture it to great success like Henry Ford, too?
From 1990 to 2008, U.S. employment grew by about 27 million jobs — but virtually all of it was in the “non-tradable” sector, such as government jobs, healthcare, construction and other positions that can’t be shipped overseas.
“The tradable side, where we compete with the rest of the world, did not grow at all,” Chu said.
There’s nothing wrong with more non-tradable jobs, Chu said, and the best ideas are still coming out of research universities, national laboratories and inventors in garages — but America is missing out on a major opportunity to lead the world if it doesn’t fight to popularize clean energy technologies, too.
“Invented in America is not good enough,” he said. “You really don’t want an iPhone box that says ‘Invented in America, made in China.’ You really want a box that says, ‘Invented in America, made in America.’ ”
After inventing aviation, the U.S. was able to recover to lead the aviation industry once again, Chu said. The same ought to happen in energy.
“We can become us again,” he said. “We did in many other sectors. We better become us again in the energy sector.”