Tuesday, June 24, 2008<

The $300M Car Battery

I agree with David Axelrod that McCain's idea for a $300M prize to the developer of a superior car battery is not completely dumb. It's good to see Republicans thinking creatively about energy policy.

That being said, it's still dumb.

Of all the things McCain could have chosen to reward, it was strange to single out a car battery. Prizes make sense when a promising technology might slip through the cracks because there are no parties doing research on it. But in this case, clearly the auto makers have been working and will continue to work on improving hybrid technology. So, are we really going to give $300M to GM if they come up with a better battery?

More generally, prizes make sense when research on a technology can't get funding because the ultimate reward to successful development of the technology is uncertain. For example, better ways to capture and/or neutralize carbon would be a huge benefit to the world, but not easy to monetize. A prize for carbon sequestration would guarantee a reward for that technology. But with car batteries, there is no doubt that there would be a huge upside because every car purchaser wants better gas mileage. The problem in developing a better car battery is not lack of reward.

If McCain was serious about trying to develop better battery technology, it would make more sense to take that $300M and invest it in R&D in related technologies that are not easily commercialized but which are important building blocks for further research. This is where government can really make a difference with some well targeted funding (as it has done with NIH and all the prescription drugs that were built on the back of basic government research).

Of course, actually spending $300M on R&D now is different than proposing a $300M prize (since that money will probably not be spent for years if ever). That's why I still file this proposal in the cheap political gimmick file (no political risk, questionable benefit to society).

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