By Carrie R. Williams, FAS Intern

There is broad consensus that clean energy investments are critical to the long term stability, security and economic welfare of the United States.  Rep. Paul Tonka (D-NY) recently said, “We cannot cut our way to number one.  If we are to stay competitive as a nation in the long term, we must invest in new technologies, clean energy and job creation.”  But who will make the investment?

Globally, in 2010 governments invested more than $5 billion in renewable energy research and development (R&D).   By comparison, the United States invested $5 billion for all energy R&D during the same period.

In FY2012, the total proposed budget for the U.S. Department of Energy (DOE)—the lead financial supporter of energy R&D in the United States—is  $29.5 billion, with $3.2 billion going to the Office of Energy Efficiency and Renewable Energy (EERE) and $550 million for Advanced Research Projects Agency – Energy (ARPA-E).  This would represent an 11.8% increase over FY2010.  However, the House of Representatives is seeking to terminate ARPA-E and decrease EERE funding by $786.3 million for FY2012—drastically cutting the clean energy R&D budget of the federal government.

Within the DOE, EERE and ARPA-E hold the bulk of the clean energy R&D budget.  The EERE mission focuses on strengthening the United States’ energy security, environmental quality and economic vitality through public-private partnerships.  This office seeks to accomplish this mission by financially supporting organizations that work to enhance energy efficiency and productivity and/or bring clean, reliable and affordable renewable energy technologies into the marketplace.  Modeled on the DARPA funding framework, which has funded basic research to create the computer, among other technologies, ARPA-E funds high-risk, high-reward energy ventures.  Created in the America COMPETES Act, ARPA-E’s mission is to fund innovative energy technology projects with the potential to reduce foreign energy imports, cut energy-related greenhouse gas emissions, and improve efficiency across the sector.  For example, in the first round of proposals ARPA-E funded projects related to axial-flow wind turbines and crystalline silicon wafers.

Additional energy R&D and early commercialization funding is also provided through tax benefits, grants, loans and contracts created by the American Recovery and Reinvestment Act (ARRA) of 2009.  This stimulus bill created $260 billion in energy tax credits for companies and consumers, with the goal of improving the market penetration and share of efficient, clean energy technologies. However, these tax credits either have expired or will expire in 2011.

Along with tax credits, DOE also received $1.4 billion in supplemental loans, grants, and contracts for R&D which is distributed between the Office of Science, fossil energy research and development, general science and research activities and the Innovative Technology Guaranteed Loan Financing programs.

With the ARRA money ending and the DOE clean energy R&D budget likely to shrink, researchers and early commercial investors must look to alternative sources of funding and capital.

What are their options?

Chief amongst the likely energy R&D funders will be: private investors both domestic and foreign, universities, and big corporations.

In 2010, venture investment in clean energy companies rose to $5.1 billion in the United States, 23% of all venture capital investment for the year.  Meanwhile, the United Nations Environment Programme (UNEP) reports that in 2010, renewable energy investment worldwide rose to $211 billion.  While the majority of this funding goes to finance large scale deployoment projects rather than R&D or early commercialization activities, the level of financing indicates there is great interest in renewable and clean energy technologies as good monetary investments.

Large corporations that rely heavily on fossil fuels are beginning to turn to renewable and sustainable energy sources; while not a traditional source of clean energy investment, they are likely to prove to be a valuable source of R&D and commercialization funding.  Google – a company whose data centers uses 0.01% of the world’s total electricity consumption in 2010– is looking to invest $350 million in the renewable energy industry.  According to Google Green, Google has cofounded the Climate Savers Computing as well as joined The Green Grid.  These two groups are dedicated to improving efficiency and sustainability standards for computers and data centers around the world in order to reach a goal of a size zero carbon footprint. Big corporations are looking to reduce their reliance on foreign oil and reduce their impact on the environment; moreover, the cash funding available to many large firms – especially those in the technology sector – provide clean energy R&D entrepreneurs with the support needed to commercialize and develop bigger and better things in the future.

With federal funding likely on the decline, a larger percentage of energy R&D responsibilities may also fall to research universities in the U.S., including internationally recognized public universities such as Colorado State University (CSU), which has programs and researchers looking into alternative fuels, clean engines, solar energy production capabilities, “smart” grid technology, wind engineering, water resources and much more.  However, in the current weak economy, public universities – even those with the best programs and most brilliant researchers – face a high risk of budget cuts that impact hiring and merit scholarships to attract the best talent, as well as investments in laboratory facilities and new research projects.

Private universities such as Massachusetts Institute of Technology (MIT) make significant contributions to the clean energy R&D industry through research and patents as well as financial opportunities.  In 2008, Transformative Integrated Power Structure (TIPS) was developed by electrical engineers at MIT to increase the efficiency of power conversion in semiconductors, which will be cr.  TIPS has been patented and commercialized by a start-up, Arctic Sand after testing proved it reduced power losses by 50-75%.  Arctic Sand was able to capitalize on MIT intuitive research to reach out to the core market of data centers as a way to increase energy efficiency where it is needed the most.

With the United States facing the largest budget deficit it has ever seen, the federal government is committed to cut spending and reduce the deficit over the next 10 years by $1.5 trillion.  The clean energy sector can no longer depend upon federal government funding and must reach out to alternative and even unconventional sources for development support.  Reaching out to domestic and foreign investors, university led R&D and commercialization ventures, and corporate funding all have a role to play.

As Mike Bowlin, chairman and CEO of ARCO said in 1999, “We’ve embarked on the beginning of the last days of the age of oil.  Embrace the future and recognize the growing demand for a wide range of fuels or ignore reality and slowly – but surely – be left behind.”  The United States cannot afford to be left behind when the reality of federal funding slips away.  The country, its clean energy entrepreneurs, and its investors must continue to push forward the state of clean energy technology and market penetration before it’s too late.

Today Yemeni President Ali Abdullah Saleh sits in a hospital in Saudi Arabia, the victim of an assassination
attempt.  Back in Yemen, the opposition is cautiously optimistic about what this means for the future of Yemen.  And as the U.S. State Department and its allies continue to publicly call on Saleh to resign from office and make way for genuine, democratic elections, it is paramount to remember that the removal of Saleh should not be the end game in Yemen.  A successful, stable, secure Yemen needs more than one man’s fall from power.

In the meantime, what are other areas of the U.S. government doing and saying about Yemen?

Just one week ago the U.S. House of Representatives passed the National Defense Authorization Act for Fiscal Year 2012. Included in this act is updated language that affirms and strengthens the Authorization for Use of Military Force (AUMF) with respect to “the ongoing armed conflict with Al Qaeda, the Taliban, and associated forces.”   In justifying the new language, which gives legal grounding to broadened executive actions in the war on terror, House Armed Services Committee Chair, Representative Howard P. “Buck” McKeon (R-CA) explicitly cited Yemen’s terrorist threat and the actions of Al Qaeda in the Arabian Peninsula (AQAP) in Yemen.

The accompanying press release directly states that “the threats posed by al-Qaeda cells in Yemen and Africa underscore the evolving and continuing nature of the terrorist threat to the United States.”  Former U.S. Attorney General Michael Mukasey praises the updated language as adding “order and rationality” to the current ad hoc authorization of military actions and detentions in the war on terror.

Nevertheless, the language does explicitly authorize U.S. military incursions into any country–such as Yemen–perceived to be or contain a security threat to America.

This stance, while bold, does not mark a new era in U.S.-Yemeni relations.  Rather it highlights the narrow lens through which the American government views and interacts with Yemen.  Under the ongoing Yemen strategy, counterterrorism efforts against AQAP take precedence over all other matters.

For the past four months Yemen has been engulfed in anti-government protests that seek to force Saleh to resign from office.  Since January 2011 more than 50 protesters have been killed, hundreds have been wounded, and the economic fragility of this country exposed as oil exports collapse and food and fuel prices soar.

Throughout the protests the U.S. narrative has focused on this crisis as a political matter only, with the primary issues being the implications of Saleh resigning on Yemeni political stability and capacity to combat AQAP.

However, the answer to the question “Is Yemen failing?” does not come down to one man.  As early as the 1960s the U.S. government recognized that the key barriers to development and success in Yemen are the country’s lack of natural resources, shortages of educated and trained manpower, scarcity of water, and divisions in the country’s social structure.  While Yemen has improved in key indicators such as literacy rates and GDP, to date none of these critical development issues have been significantly addressed.

The current conflict  has already exacerbated and will continue to exacerbate these development concerns.

Hydrocarbon development. A net oil and gas exporter, Yemen depends upon oil for more than 70% of its declared GDP.  The country nevertheless possesses only 0.2% of the world’s total oil reserves (2.7 thousand million barrels proven in 2009) as is believed to have already reached peak production.  Attempts to compensate for the expected oil revenue loss through natural gas development, namely a 5-year $4 billion project to build and supply a liquified natural gas (LNG) terminal, have been stifled by political instabilities, tribal tensions, and reluctant foreign investment.

Since the start of the anti-government protests this national income crunch has only gotten worse.  Daily oil exports have been cut by more than 100,000 barrels per day, down by more than one-third from 270,000 barrels, and worker strikes and pipeline cuts have completely halted both production and export for days on end.  Internally, over the last three months the combination of pipeline disruptions and limited domestic refining capacity has fueled severe electricity, gasoline, and heating fuel shortages within Yemen.

Water. By 2050 several main cities, including Sana’a and Taiz, are expected to drain their water aquifers—effectively running out of water.  Current withdraw rates show the aquifers under Sana’a withdrawing at up to 5-6 meters annually (data from the German Technical Office).  In a water sector already characterized by water management struggles, corruption, bloody fights over irrigated land and water access, prolonged absence of central authority will likely reduce the already limited compliance with Yemen’s environmental and water laws.  Even if central fighting were to stop tomorrow, the Ministry of Water and the Environment is in disarray in the wake of Minister Abdulrahman al-Eryani’s resignation on March 22nd and the leveling of the Ministry building (located in the Hasaba district, near the Ministry of the Interior) during the last week ‘s violent conflict between government troops and tribesmen supporting Sadiq Al Ahmar.

Population. With or without Saleh, Yemen must confront one of the highest population growth rates in the world (more than 3%), a poor education system, high unemployment, and one of the world’s most significant gender equality gaps.  In a population of 23 million, over 45% of people lived on less than $2/day in 2010, a level defined by the United Nations Development Programme (UNDP) as being poverty level.  With many livelihoods either directly or indirectly dependent upon hydrocarbon extraction and tourism, this poverty level has without question risen over the past six months.

Food. Once considered the breadbasket of Arabia, Yemen is now a net food importer.  The World Food Programme considers 32% of Yemen’s population to be food insecure and 12%  severely food insecure.  While there is significant evidence that social networks and communities in Yemen ensure that even the poorest families are not calorie deficient, there is significant nutrient deficiency and many families depend upon borrowing in order to meet their basic food needs.

To aid Yemen in addressing their extensive social, economic, and resource challenges the U.S. Department of State (DOS) has requested just over $120 million in aid for FY 2012.  Of this, just 57 percent or $68.6 million will go towards all economy building, education, health, and democracy building activities.  To offer perspective, in FY 2012 DOS alone requests $5.6 billion for global foreign military funding.

As the U.S. government develops its policies toward Yemen it must look beyond a narrow perspective of counterterrorism and seek to address key causes of insecurity—environmental, social, and economic, as well as political and military. Neither authorizing military force against actors in Yemen nor providing security funding is enough.  Addressing root causes of terrorism and instability means sustained and significant engagement over critical issues including education, resource management, governance reforms, and economic and financial restructuring and development.

When the Embassy staff return to Sana’a and engage with the Yemeni government, whatever its form, the US must work with Yemen to:

• rebuild key institutions  and capacity;
• support those existing development and business projects that have been most successful;
• initiate new U.S-Yemeni partnerships that strengthen Yemen’s internal scientific, economic, governance, and business capacity; and
• push the Yemeni government for meaningful governance reforms.

Revolution in Egypt (c) Al Jazeera

• In the wake of revolution the U.S. must immediately engage with Egypt and Tunisia through S&T initiatives.
• The U.S. should: expedite student visas, fund additional scholarships, support dialogues between U.S and regional universities, and recommit existing S&T and education aid packages.
• S&T activities should be a key component of building better, more resilient relationships with MENA countries.

The Middle East and North Africa are currently in a period of intense instability and transition and we do not know what the other side looks like.  Within the last month revolutions in Tunisia and Egypt have ousted Presidents Ben Ali and Hosni Mubarak, respectively, while Yemenis continue to protest against the rule of President Ali Abdullah Salah, who has agreed to step down in the next election.  All three of these leaders are secular strongmen who have ruled their respective countries for at least twenty years and are widely viewed in the region as pro-American.

While vastly different, each of these three countries has the potential to be an important economic, political, and security partner for the United States.  Currently America’s relationship with all three heavily emphasizes military and anti-terrorism cooperation, often at the expense of our economic and political relationship.

In fact the U.S. government is the leading military supplier for all three countries, with military assistance counting for over 70% of their total country aid package.  Egypt alone received over USD 1.5 billion in military and economic aid in 2010, second only to Israel in the Middle East and North Africa (MENA) region, while Tunisia received USD 20 million and Yemen received USD 160 million.  Of this almost USD 1.7 billion in aid, less than 800 million went to all non-security aid programs, which include economic development, civil society and governance building, and education.

To provide perspective on the size of U.S. military support, the President’s FY 2012 requested budget for the entire Office of International Science and Engineering (OISE) at the National Science Foundation requests just over USD 58 million, up over 21% from FY 2010.  Under this budget funding for OISE, which serves as the interagency focal point for all international science and engineering activities, equals just over 22% of the military aid for Egypt alone in FY2010.   And given the current Congress, even this relatively small budget is likely to face stiff opposition.  But should the United States be focusing so intently on military and security aid to the MENA region or could other forms of aid and engagement play an equally important role?

Despite decades of high military funding for Egypt and other MENA countries, Egypt and Tunisia’s revolutions reveal that the countries are neither stable nor economically and politically successful.  A different approach to U.S. economic assistance and engagement is needed.  The U.S. S&T sector will play a critical role in this new approach because of the sector’s ability to develop new economic opportunities, the popularity of U.S. science, and the focus on positive engagement.

Over the past two years the U.S. government has begun a new initiative in the region that aims to further and deepen science and technology (S&T) ties between America and the Muslim world.  Popularly termed the “Cairo Initiative,” through the Mulsim-Majority Countries Initiative the government has appointed three science envoys, scaled up existing S&T projects, increased dialogue on S&T and education, and developed (on paper) five centers of excellence, though none have received appropriations and remain unrealized.

In the face of the recent political upheaval and revolution, S&T partnership, assistance, and support play an even more critical role, both because of the disruptions to S&T that have occurred and because of the unique opportunities provided by these circumstances.

The S&T challenges created or exacerbated by political upheaval and revolution can broadly be grouped into: education, economic, foreign relations, and damages to or destruction of resources and physical infrastructure.

In each category some challenges and opportunities will be immediate, while others will be long term and may not be most effectively addressed until a new government and power structure is in place.

In the immediate future the greatest needs and challenges for the S&T communities will be:  the disruption of academic institutions, the temporary halting or holdup of student visas, international aid holds, and lost economic opportunities.  The U.S. government and S&T community can play a critical role in responding to and overcoming these challenges.

Immediately, embassies in each country should work to get their visa processing—especially of student visas—back up to speed.  The U.S. embassies should expedite the processing of visas for all students who have a place at a U.S. academic institution.  Simultaneously, academic institutions in the U.S. should work with students to make up any time they have missed as a result of their visa holdup and inability to leave the country.  For the upcoming Fall 2011 semester, the U.S. should look for opportunities to increase study opportunities and scholarships in the U.S. for students from Egypt, Tunisia, and other countries where academic institutions may not be on stable footing.

In many Middle Eastern countries, top university positions are politically appointed.  Where the revolution or political transition has created voids in S&T leadership and where there are opportunities to restructure how leadership positions are decided, U.S. universities can immediately begin dialogues with partner institutions in the Middle East on how to restructure leadership based on criteria such as merit and fit with institutional needs.  The government can support U.S. universities in these efforts by creating a pool of funding for delegations of university administrators and leaders to visit and engage with existing partner institutions in Egypt, Tunisia, and other countries undergoing similar upheaval.

A third critical role the U.S. government can play in the immediate future will be the recommitment of all promised S&T aid and funding, especially for funding that benefits S&T stakeholders at many levels.

In Egypt, for example, USAID has promised USD 50 million for S&T higher education in Egypt, to be channeled to the Ministry of Higher Education.  Over the past few months, USAID has worked with Ministry officials, scientists, and other stakeholders to develop a model to leverage this funding to engage and benefit stakeholders and provide economic opportunities for the S&T community.  Efforts such as these must not be lost.  Rather, the U.S. government must recommit to this and similar assistance packages, get staff back on the ground to determine how the funding model has changed, and actively engage with S&T stakeholders to provide aid that is appropriate, need driven, and stakeholder supported.

At this critical juncture in the Middle East, the U.S. must seize our opportunities to engage with, to support, and to build our positive relationship with the S&T community.