Rep. Alexandria Ocasio-Cortez’s proposal for a Green New Deal is a major step forward in the fight for a green economic transition and progressive social reform. While many of the plan’s goals involve investments in infrastructure and already-existing green technologies, the Green New Deal also calls for “public investments in the research and development of new clean and renewable energy technologies and industries.” As other observers have pointed out, the Green New Deal’s R&D strategy will be crucial to bringing down the cost of low-carbon energy.
In a paper released today by the People’s Policy Project, we outline a new public R&D strategy that can help achieve a more sustainable environment and a more equitable economy. We argue that existing federal innovation programs should be sharply expanded and reoriented toward producing the technology needed for a carbon-negative economy. Additionally, we suggest changes to the present system that would boost public ownership and control over the economic gains these innovation programs generate.
Since World War II, the federal government’s R&D programs have been critical to many of the economy’s most transformative technologies. The internet is one obvious example: though later advances came from the private sector, the origins of the web lie in the Department of Defense’s ARPANET project in the late 1960s. Same for the iPhone: nearly all of its components can be traced back to technology programs funded by the US government. Today, the federal government promotes innovation through an array of programs, including government-run laboratories, technology development agencies, state-led industry consortia, and public venture capital funds.
But the existing system suffers from a number of glaring flaws. R&D is overwhelmingly geared toward military purposes, and the direct gains from innovation tend to concentrate in particular geographic areas, many of which are already thriving. To make matters worse, the current system shortchanges the public sector, channeling government investments into private, profit-seeking hands without direct public reimbursement. In short, the system socializes risk while privatizing gains.
A more socially just innovation policy was once a major goal of American progressives. During and immediately after World War II, pro–New Deal lawmakers proposed expanding the government’s R&D operations to serve broad social goals and regional development. Crucially, they also wanted the government to retain its ownership stakes over the results of these programs. This progressive vision eventually lost out to pro-business alternatives and has never been fully revived.
The Green New Deal represents a promising opportunity to return to a progressive vision for industrial policy. Toward this end, we propose four core reforms:
- Radically scale up ARPA-E, the government’s primary program for developing early stage green technologies and launch a major carbon capture project within that program focused exclusively on carbon-negative technologies.
- Create a national network of Green New Deal Institutes. These can serve as industry and university consortia that, in partnership with the government, coordinate research efforts with particular sustainable technology goals.
- Shift the federal government’s venture capital activities toward green technology startups. The government should increase public ownership and control over these firms by placing conditions on federal financial assistance and by taking equity stakes in companies, thereby gaining leverage in corporate governance.
- Create a Green Innovation Fund for investments in green technology, financed in part by revenue from public ownership stakes in intellectual property generated by the technology programs listed above; interest from loans made to green technology firms; and returns from the government’s ownership shares in those firms.
Recent discussions about economic planning have triggered a reassessment of its viability in various forms. This is long overdue. Innovation policy, including the federal government’s public R&D strategy, too often flies under the radar. Innovation in the US is already planned — it just isn’t planned for a green and equitable future.
To meet the threat of climate change, that has to change. We can ensure that a fair share of the gains generated by government investment are returned to the public rather than hoarded in tax havens. And we can take steps to bring the public innovation system under real democratic control — while simultaneously creating socially necessary technology and advancing a progressive vision for the economy.
The federal government has a history of catalyzing remarkable technological advances through publicly funded R&D. The Green New Deal is a chance for a repeat performance. And this time, the planet is on the line.