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TMCNet:  News and Analysis of the Global Innovation Scene [Research Technology Management]

[March 20, 2013]

News and Analysis of the Global Innovation Scene [Research Technology Management]

(Research Technology Management Via Acquire Media NewsEdge) Obama's Reelection and U.S. Technology Policy With a contentious election in his rearview mirror and just four more years to crafthis legacy, Barack Obama faces a challenging term. The sputtering economy and deadlocked Congress that hamstrung some first-term efforts remain obstacles, with the added threat of a looming fiscal crisis. President Obama's first term was marked by efforts to revitalize America's innovativeness that focused needed attention on innovation and technology policy. Efforts to revitalize the manufacturing and energy sectors laid the groundwork for further transformations in the economy and infrastructure, and Big Data projects initiated an effort to bolster the U.S. infrastructure for handling-and innovating with-big data.


The question is whether this proactive stance can be maintained through what promises to be an eventful and difficult second term. The focus of the president's administration going forward must remain the revitalization of America's innovation capabilities and economic competitiveness. But the philosophies underlying the Obama administration's approach to these issues calls for a wider engagement. Early in his first term, President Obama declared that government needs to lead from the front in order to inspire change in the rest of society. His innovation and technology initiatives have reflected that idea, placing the federal government in the lead on a number of fronts, including the centerpieces of the administration's innovation and technology policy: developing advanced manufacturing capabilities and reconfiguring the energy infrastructure to allow for environmental sustainability and energy security.

Advanced Manufacturing Manufacturing has long been understood as the engine that drives the American economy. A 2011 report compiled by the President's Council of Advisors on Science and Technology (PCAST), Capturing Domestic Competitive Advantage in Advanced Manufacturing , highlighted the degree to which manufacturing drives U.S. innovativeness and productivity. The report estimated that nearly 70 percent of private-sector R&D spending comes from manufacturing, that manufacturers employ around 60 percent of all private-sector R&D workers, and that 60 percent of exports are manufactured goods. Given these numbers, it makes sense that growth in manufacturing would drive increased job creation.

Shortly after the release of the PCAST report, President Obama launched the Advanced Manufacturing Partnership to drive expansion of high-tech manufacturing in the United States. The partnership plan represents a national effort to bring together universities, industries, and the federal government to identify and direct funding toward research that will deliver advanced manufacturing innovations and jobs. Obama also created the Office of Manufacturing Policy to oversee executive policy changes to support the partnership. In January 2012, in the State of the Union address, the president outlined his Blueprint for an America Built to Last, which included several advanced manufacturing initiatives, reemphasizing his intent to move forward on this front. With a hotly contested election underway, though, actual policy changes have been lacking; however, advanced manufacturing topped President Obama's seven-point plan for getting the economy back on track.

The administration plans to continue this effort, although how far it gets depends on how quickly needed policy changes can be enacted. Planned changes for this year include a $2.2 billion investment in advanced manufacturing R&D-a 19 percent increase from last year-as well as the enactment of a 2012 proposal to create a $1 billion National Network for Manufacturing Innovation, centered around 15 manu facturing innovation institutes across the U.S. built on large-scale publicprivate partnerships. The pilot contract for this project will be awarded this summer, funded from $45 million of available resources drawn from the Departments of Defense, Energy, and Commerce, as well as NASA and the National Science Foundation.

Other planned actions include tax alterations to shiftincentives away from those outsourcing jobs and reward companies that create new positions in manufacturing. An expansion and simplification of the R&D tax credit has also been proposed, including making the credit a permanent fixture in the tax code.

Action is also being taken to ensure there are skilled workers available to power the expansion of advanced manufacturing. The Defense Department also began training and certifying military personnel in transferrable manufacturing and engineering capabilities in 2012, in an attempt to help veterans find civilian jobs. Upwards of 126,000 servicemen and women were eligible for retraining and certification at the end of 2012, providing a small boost in available manpower over the next few years as their enlistments expire. Increases in funding for community colleges that offer manufacturing training are also intended to increase the skill level of the workforce.

In mid-2012, Dorothy Coleman, VP of the National Association of Manufacturers, criticized the Obama plan as not considering the interconnectedness of the economy. She worries that credits given to manufacturing are likely to come at the expense of other areas of business, ultimately cancelling out the economic benefits of the effort. She also noted that manufacturing accounts for one-third of the nation's energy consumption, meaning an increase in manufacturing activity will result in an increase in energy costs for everyone. Such criticism has merit, but President Obama's blueprint does call for changes in the nation's energy infrastructure and increases to renewable energy R&D, which may address such concerns.

Energy Infrastructure and R&D Energy is a complex, difficult issue, particularly now, as the world struggles to deal with the realities of global warming and geopolitical forces again bringing into question the security of the nation's energy supply. New sources of petroleum-based energy are emerging, but environmental realities will require a global shiftto other energy sources. If the country is to maintain its status as a leader in innovation, the United States must be in the forefront of that shift.

The Obama administration has recognized that reality and is working on several fronts to ensure America's leadership in the next energy economy, laying the groundwork for a transformation of the country's energy infrastructure. For starters, his administration has more than tripled public investment in clean energy R&D between 2010 and 2012, pushing research dollars into smart-grid technologies, electric and hybrid vehicles, and new renewable energy facilities and fuels. The administration also leveraged its bailout of the auto industry to push through additional efficiency standards that will force American auto manufacturers to develop the nextgeneration automobile. In a related attempt to get old, fuel-guzzling cars offthe road, the "Cash for Clunkers" program allowed many consumers to trade in older, less fuel-efficient vehicles, contributing to an average increase in fuel efficiency of 9.2 miles per gallon, with a national net savings of around 33 million gallons of oil.

The administration's efforts to reduce America's dependency on foreign sources of energy and ensure a cleaner, more sustainable future have encountered some challenges. Smart-grid technologies have raised concerns about privacy associated with meters that collect detailed information about consumption patterns. And the controversial bankruptcy of solar panel producer Solyndra, which received a sizable investment from Recovery Act funds, has put a damper on plans to provide direct investment to seed technology development in renewable energies.

The challenges associated with transforming America's energy infrastructure are not so unlike the challenges industries face when deciding whether or not to pursue potentially disruptive technologies. The risks are significant, but the ROI could be tremendous, if it is done right.

Moving Forward President Obama has made a series of promises and programs that suggest a president bent on transforming the nation's innovation landscape. Ultimately, that will require an increase in real support-that is, funding-for R&D. The president has promised to double the budgets of the National Science Foundation, the Department of Energy's Office of Science, and the National Institutes of Standards and Technology's national labs during his second term. Given ongoing negotiations around spending cuts and the debt ceiling, though, prospects for such a move seem shaky. However, the administration's 2013 budget proposal does include a 5 percent increase in non-defense R&D spending over the 2012 budget and a 19 percent increase in advanced manufacturing R&D funding.

The political climate may shiftin favor of President Obama's renewed mandate at the start of 2013, but concerns over the national debt, tax code, healthcare reforms soon going into effect, and general tension between the two houses of Congress, and between Congress and the White House, make it likely that the momentum generated by the election will not last long enough for many of his promises to come to fruition. In advanced manufacturing and infrastructure investment, financial concerns and negotiations over spending cuts are likely to gouge efforts at increasing such investments-despite the president's promises-and the drawdown in Afghanistan will no doubt pull funding away from defense R&D spending over time. Other expectations are for a decrease in public funding for oil, gas, and coal R&D, as well as tightened regulations and fewer tax credits for those industries as Obama's agenda to shiftAmerica to a clean energy infrastructure goes into effect. So what we might expect overall is not so much the fulfillment of the many promises Obama has made but a gradual shifting away from traditional avenues of energy and infrastructure R&D spending, as the nation shifts its focus to environmental sustainability and a new model for the American manufacturing sector.

Greg Holden, Contributor Arlington, Virginia holden@iriweb.org Outlook Cloudy for Germany's Solar R&D Germany has been the world leader in solar energy since the early 2000s, but the sun is shining less brightly on the country's photovoltaic research these days. A deep crisis in the German solar industry is threatening its innovation leadership. Researchers are now scrambling for funding as local manufacturers cut back production or close their doors altogether. Solar energy technology, once synonymous with "made in Germany," could become yet another example of Europe's largest economy taking a pioneering lead in research only to be eclipsed by others, like China, that have cashed in on the innovation.

At its peak, Germany accounted for nearly 70 percent of the world market for solar panels and the equipment required to make them. In just over a decade beginning in the early 2000s, the country created thousands of production jobs and hundreds more in R&D and, through an incentive program, encouraged scores of businesses and households to mount solar panels on their rooftops. So much so, in fact, that in 2012, Germany achieved a world record generation rate of 2.2 gigawatts of electricity per hour, equal to 20 nuclear power stations at full capacity.

Today, the country has as much installed solar power generation capacity as the rest of the world combined, generating nearly 6 percent of its annual electricity needs from the sun alone. Renewable energy sources, such as solar and wind, play a huge role in Germany's plans to cut greenhouse gas emissions by 40 percent from 1990 levels by 2020. And these sources are expected to fill a big gap in Germany's energy mix, created by the government's decision after Japan's 2011 Fukushima nuclear disaster to shut down eight nuclear plants immediately and phase out the remaining nine by 2022.

The German photovoltaic boom was fueled by legislation that included attractive subsidies for solar electricity over a 20-year period. The subsidies, known as feed-in-tariffs, guarantee an elevated price for energy generated from solar that is fed back into the grid. Initially, the state-mandated fees added several euro cents per kilowatt/hour on top of traditional electricity prices, but the rate has gradually declined with the growth of solar power and technology advances. The policy created huge demand not only for solar energy but also for research to increase panel efficiency and reduce overall power generation costs.

Nearly 60 different research organizations in Germany entered the frenzy, each determined to explore new opportunities in solar power. The Fraunhofer Institute for Solar Energy Systems (ISE) in Freiburg is one of them and has racked up some world efficiency records along the way. But to stay at the top, the institute must continue researching, not only to further increase the efficiency of cells but also to reduce material costs in production.

That's proving to be a challenge, for lack not of expertise but of funding, especially from the private sector. The dizzying drops in solar equipment prices over the past two years, down more than 50 percent due largely to low-cost Chinese imports, have leftdeep scars on the German sector. More than a dozen German solar companies have gone out of business over the past 12 months, many of them in the country's "Solar Valley" cluster in Bitterfeld-Wolfen, and those still operating are struggling. Their ability to invest in R&D has, in many cases, all but disappeared.

"From the start, we've collaborated closely with two groups of companies: those that make photovoltaic systems and those that produce the materials and equipment to make those systems," says Ralf Preu, director of photovoltaic production and quality control at ISE. "That collaboration worked nicely until the prices collapsed." For years, industry picked up between 40 and 45 percent of ISE's solar research costs, with the rest coming from public funding, according to Preu. "But our overall industrial funding has been quite substantially reduced as a result of the downturn," he says. "It's now between 20 and 25 percent." In recent months, industrial customers have been pulling the plug on projects on a weekly basis, admits colleague Harry Wirth, who heads a unit that tests finished photovoltaic modules on the Fraunhofer research campus. Wirth's team examines the protective layers of solar cells that must remain sealed for 30 years, withstanding heat, cold, moisture, and dust. For more than a decade, he received one contract after another to develop and test modules to sustain these dangers, but the flood of contracts, he says, has slowed to a trickle.

What now Preu believes that after Germany's explosive growth in solar energy, a key focus will be to keep local companies competitive through further innovation. "There is no funding demand for new equipment but there is demand to upgrade existing technology to even greater efficiency," he says.

As for collaborating with companies that operate outside of Germany and Europe, Preu sees limited opportunities. Public funds from the German state put certain restrictions on such collaboration; taxpayers' money should create jobs and value in Germany. And there is the question of mutual benefit. "We have worked with U.S. companies and with some Japanese companies where we've had good 'give and get' relations," he says. "But we have no real interest to get into a direct technology transfer with China. This wouldn't be a sustainable strategy for us." Over the past several years, China has busily assembled the world's largest and most efficient solar manufacturing facilities, thanks not only to huge government support but also to German machinery and facility builders. Its industrial output is three to four times that of German-based manufacturers. And it could grow even further; in March 2011, the Chinese government declared solar energy a key market in its five-year plan. Such a capability gives Chinese companies competitive advantages that can be further cemented with targeted industrial policies in the research sector.

In many ways, the Chinese photovoltaic manufacturing situation and ensuing price war is analogous to shakeouts seen in other sectors, such as LCD panel manufacturing. High demand in that sector led to huge leaps in innovation. But the cutthroat economics of competition and brutal economies of scale ultimately drove many manufacturers to sell their factories or liquidate their businesses.

Germany's attractive feed-in tariffs may have inadvertently propped up those companies that were initially focused on selling less-efficient panels. But recent moves to reduce these payments could now be an incentive for researchers to create, manufacturers to build, and consumers to buy higher efficiency panels. Solar energy could still be a win-win proposition for these groups in Germany- and for the global environment.

John Blau , Contributing Editor Düsseldorf, Germany john@johnblau.com The Blossoming of Open Access The publishing industry is evolving rapidly, and scientific publishing is not immune. Like book publishers, traditional publishers of scientific research are struggling to get on top of a wave of cultural change driven by technological developments. The information revolution sparked by the Internet has spread to scientific publishing, with many arguing that scientific research should not be locked away in costly journals but should be freely accessible to everyone. The concept has particular resonance in the case of research funded by governments. In the United States, open-access advocates assert that papers based on such research should be made freely available to those who pay the bills- American taxpayers.

Opponents of open access argue that journals and other publishers represent important gatekeepers. Peer review processes ensure that published research is relevant, accurately reported, and of high technical quality. Those processes cost money and, by undermining the subscription model, open access threatens the revenues that have traditionally funded scientific publications.

The argument may appear to affect academic institutions more than industry, but the issue is one that industrial R&D executives shouldn't avoid. "Research industry managers need to be aware of it," says Michael Carroll, Director of the Program on Information Justice and Intellectual Property at American University's Washington College of Law and a strong supporter of open access. "The whole goal is to improve the technical quality for research." That technical quality frequently results from collaborative research projects between academia and industry funded by government. While contracts for those projects typically protect companies' intellectual property, publications that result from them fall under the open-access requirement. On the other hand, not all open-access journals are equal. Perhaps as many as one in five do not require peer review of the articles they publish- a fact that casts doubt on their scientific credibility.

Rapid Growth Open-access journals represent a growing segment of scientific publications. In 2011, the latest year for which figures are available, the number of articles published in open-access journals exceeded 300,000, three times the 2005 figure. Government agencies have played a strong role in the movement. Since 2007, papers reporting on work funded by the National Institutes of Health have been available gratis through the National Library of Medicine. And the Office of Science and Technology Policy, headed by presidential science adviser John Holdren, has called on researchrelated government agencies to develop their own public access policies.

The movement is not restricted to the United States. The British government, following the recommendations of a working group headed by Dame Janet Finch that released its report in 2012, has committed to making all publications from government-funded research freely available from April of this year.

Pressure for wider use of open access is also increasing. The open-access journal PLoS (for Public Library of Science) has attracted growing numbers of submissions. And in June 2012, a petition filed under an initiative of the Obama Administration's Office of Public Engagement that called for "free, timely access over the Internet to journal articles arising from taxpayer-funded research" gained the 25,000 signatures necessary to require a response from the Administration. The Administration is now considering its response. Overall, says Heather Joseph, executive director of the Scholarly Publishing and Academic Resources Coalition and an organizer of the petition, "We have seen an uptick in interest at a speed we never anticipated." That uptick applies to traditional publishers, as well. "Open access isn't viewed as an outlier," says H. Frederick Dylla, executive director and CEO of the American Institute of Physics (AIP), an organization of scientific societies. "Almost every major publisher has open access journals." Changing the Business Model The growth in open access is driving a move away from the traditional business model of scientific journals. Since the 1960s, scientific societies and commercial publishers have relied mainly on subscriptions paid by college libraries, academic departments, industry, and some individuals to cover the costs of peer review and other editing and distributions processes. "You can't give it away; it all costs money," Dylla says. "In very many instances the subscription model works well because it divides payments over a very large readership base." Traditional journal publishers have responded to the open-access movement in creative ways. One tactic- page charges paid by a paper's authors-harks back to the days before subscription journals became common. "Almost every major publisher has open access journals with all papers paid by authors, or hybrid open access, in which authors can choose to pay up front," Dylla explains. "The author payment segment is the fastest growing in the market," Carroll adds. "The desire to get published quickly is coming to the fore." As Dylla sees it, that change of approach involves some irony. "If the publishing world were to change from predominantly subscription access to predominantly author paid, who will be paying the majority of the fees " he asks. "The researchers, primarily at research universities, would find that the cost of publishing goes up rapidly. And the bill would disappear from small universities and businesses because they wouldn't have to buy journal subscriptions. In some sense in this pure open access world, industry gets a free ride. Is that fair " Dylla focuses on other alternatives. "My default access mechanism apart from open access is either a subscription model with an embargo, chosen by the publisher, for when non-subscribers can see papers or an article rental model with a very modest rental charge," he says. "About 100 publishers now use a rental scheme; it's a nice solution to the political problem of public access." Joseph takes a skeptical view of article rentals. "This is an expected and natural response by businesses, but it isn't open access," she says. "We encourage people to remain aware of the benefits of true open access." Another approach stems from Britain's Finch commission. The idea: When a local university has access to publications, small companies in the neighborhood could make arrangements for licensed access. Dylla recalls that the Thomas Jefferson National Accelerator Laboratory in Newport News, Virginia, used the approach when he worked there.

Predatory Publishers The growth of the open access movement has brought to light a dark side: the rapid increase in the numbers of what Jeffrey Beall, scholarly initiatives librarian at the University of Colorado, Denver, calls "predatory publishers who exploit the model." The growth of publications that ignore peer review, functioning as, in effect, open-access vanity journals, represents a down side of open access. Estimates suggest that dubious publications represent up to 20 percent of open access journals. "They try to look like genuine publishers," says Beall, "but they operate as vanity presses. They basically accept any article and make a profit from authors. Many people in industry have been fooled by them." Beall has first-hand experience of the problem; as the author of a blog that identifies dubious open-access publishers, he has "started receiving spam e-mails inviting me to contribute to journals," he says.

Joseph concedes the difficulty. "Open access is a rapidly growing market that is relatively young," she says. "This is one of the things that does happen." Nevertheless, she takes a positive view of the overall approach and industry's growing acceptance of it. "We are starting to see realization really take hold," she says. "It's started among smaller companies that don't have their own library budgets. But large companies like Google, Microsoft, and Wikipedia have become more aware of the issue-that freeing up information is really good for business." Peter Gwynne, Contributing editor Boston, Massachusetts pgwynne767@aol.com DOI: 10.5437/08956308X5602001 On January 25, 2012, President Barack Obama shares his plans for creating jobs by revitalizing the U.S. manufacturing sector, and especially high-tech manufacturing, at the site of a new Intel Fab 42 fabrication plant in Chandler, Arizona. The plant will manufacture the most advanced computer chips in the world using a leading-edge process.

MaryAnne M. Gobble , Editor (c) 2013 Industrial Research Institute, Inc

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