Energy Secretary Steven Chu on Private Incentives

It's a statistic that the Department of Energy likes to hammer home: Forty percent of energy in America is consumed in homes and buildings, more than what is used by either transportation or industry. That number is the primary reason for the DOE's Solar Decathlon contest, a biannual competition on the National Mall that calls on groups of college students worldwide to meet a simple (or at least simple-sounding) challenge: with two years and $100,000, construct a fully operational house powered by nothing but the sun. There is only one winner each year, judged on more than a dozen criteria, from comfort to market viability, who receives substantial bragging rights. (Story continued below...)

The contest, which began in 2002, is a sign of an important shift. Since the mid-1970s, the task of figuring out how to use energy in the future has fallen to the National Renewable Energy Lab in Colorado and the handful of other DOE labs around the country. But a climate bill up for debate by the Senate would substantially shift incentives, rewarding private-sector thinkers for coming up with new ways not just to create energy, but to maximize its effiency. Energy Secretary Steven Chu thinks that government labs and public universities will always be valuable research centers, but that the ingenuity of innovative thinkers who don't work for the government will shape the future. During a break from touring the new batch of Solar Decathlon homes, Chu sat down with NEWSWEEK's Daniel Stone. Excerpts:

What impresses you most about these students' housing designs? To have students get into the idea of doing something that stretches their ingenuity is ultimately good for everybody. I would hazard to guess that projects like these have more educational value than your standard class.

What does it mean that these enhanced innovative models have begun to come from private people—from students and people outside of government labs?
What it means is that we're going to have another generation of engineers who can actually design things. Housing of the future is going to be very high tech, things that take full advantage of sensors and technology and computers. We've seen it in cars, how computers are constantly tuning up the car, deciding what the engine needs, when you fire the spark plug, or how much fuel you need. But you can really go to town on a house. As we begin to look at what you can actually do both in the home and in the business in terms of managing energy use and efficiency, and even having design tools, you can imagine, within five years or even less, having tools for buildings that have automatic energy analysis embedded in [them] to calculate energy use for you.

The National Renewable Energy Lab does a lot of this work, but now, some of this work is being done by whoever has enough ingenuity or drive to ask new questions. Are there implications of shifting research centers?
Good ideas [on energy efficiency] come from a wide range of sources. We have a National Renewable Energy Lab and we have universities. Today in the universities, it's not unusual to have a curriculum and a set of courses or researchers actively engaging on energy efficiency and researchers actively trying to build the next generation of photovoltaics and sensors. But the fact that other groups, like these students [competing in the Solar Decathlon], get together with good ideas speaks well to the entrepreneurial spirit of the United States. These are the people [who], in several years, I can see starting companies and making renewable energy their business.

As little as 10 years ago, there weren't many public incentives to start those kinds of companies.
That's true, but I think we still need federal funding in universities and national labs. What you're seeing is people beginning to realize that this could be a business. It not only can be a business, it will be the business going into the future. We will need a new industrial revolution. We've already had one. The next one needs to give us that same prosperity, but in a carbon-free way.

In the context of the climate bill the Senate will soon be discussing, what do you see as the top priorities to reach that new breakthrough?
We need a comprehensive energy bill, and that means several things. We want more energy efficiency. And for most Americans, we want to make this as painless as possible. We want to create a structure where there are credible contractors [to help maximize efficiency] who will actually help you save money. The second part is that you want to give incentives so that companies will develop a new generation of wind turbines and photovoltaics. If we're going to continue to use coal, we'll have to find a way to capture that carbon. The third part is very important and is a long-term signal. As we learn more and more about climate change and its catastrophic effects, we'll need to tell the world that there has to be a cap on carbon and it has to ratchet down. It's a long time horizon. So the most important part of a comprehensive energy bill is that long-term signal.

Do you see those signals as the best way to push people toward new projects and energy efficiency research?
I think once you send these long-term signals, there's an incentive for new businesses to make money. That's a powerful incentive. If you know you can not only be gainfully employed, but employed in something you deeply believe in and something which will help save the planet, that's quite an incentive. Oh, and by the way, you can get rich, too.