It is sometimes suggested that the U.S. should undertake a no-holds-barred crash program for developing alternative energy technologies, similar in scope to the Manhattan Project for the atomic bomb or the Apollo Project for moon travel.

While I agree that far more R&D on alternative energy technologies would be a good thing, and that the government has a valid role in stimulating efforts in that aim, I’m pretty sure that a project like Manhattan/Apollo for alternative energy simply wouldn’t work.

This is because there are two major differences between solving our energy challenges and either building an atomic bomb or landing a man on the moon.

First, it would be difficult to set a meaningful final goal for an alternative energy program. How exactly would success be defined? In Apollo, the goal was to send a man to the moon and bring him (male chauvinists!) back by 1970. For Manhattan, it was to build a deliverable atomic bomb as quickly as possible, before Hitler did. These were unambiguously clear and motivating goals. For energy, well, what? Should the goal be to completely eliminate the use of oil? To completely eliminate the use of all fossil fuels? Neither seems even remotely plausible in any time horizon of less than three decades – an impossibly long time to maintain focus. Should the goal be to create a solar cell that costs $0.25/watt? A fuel cell that costs $25/kw? Picking any particular technology to focus on, or any economic/performance threshold to achieve, will invariably be arbitrary and of dubious inspirational value.

Second, it’s hard to see how a major alternative energy effort led by the government wouldn’t lead to nationalization of all subsequent energy industrial activity – a potentially miserable outcome. The previous analogues are instructive: in both atomic weapons and space travel, stemming from their respective mega-projects, the government is the only buyer of the resulting product. There are essentially no markets, and hence no pricing mechanism to allocate economic resources. Entrepreneurial activity is limited to vendors in the supply chain – most of whom are members of the vaunted military/industrial complex. You think you hate ExxonMobil and Halliburton and your local regulated monopoly utility today? You think they lobby too much now? You think they’re too powerful? You think too much corruption derives from them? Imagine a world after an alternative energy program that has been driven by the government, where these companies and their peers negotiate contracts through bidding programs with government agencies for sole-source public supply of energy. As important as it is to dramatically advance alternative energy, I don’t want to see the $900 toilet seat coming to the energy sector.

So, I would submit that we need to think of more creative ways for the government to spur on the massive increase in alternative energy R&D that we badly need. Perhaps it’s well-funded grant programs competitively selected by unbiased expert panels associated with clearly-defined technical/economic challenges. Perhaps it’s tax deductions equal to qualified energy R&D expenditures.

Or, perhaps it’s just an appropriately high carbon tax, to drive fossil fuel prices faced by customers to levels sufficiently high to motivate more energy R&D. I bet we’d be amazed at what $10 gas and 50 cent/kwh electricity would bring out of the woodwork.
Nah, that’s too logical. It’s far more dramatic for politicians and pundits to grab the spotlight and ask for a Manhattan/Apollo program for alternative energy, which has no chance of coming to fruition or succeeding.