Industrial subsidies are as American as apple pie.

Energy Secretary Steven Chu, fresh from the budget standoff in Washington, D.C., outlined how the U.S. government historically has used its heft to jumpstart new industries by sponsoring research or assuming underlying infrastructure costs in a talk at the Berkeley-Stanford Cleantech Conference in San Francisco. Now, that same heft should be flexed to help the U.S. build a greentech industry -- before it's too late.

"What made America great was the interplay between the government and the policies it set and businesses." he said. "Every country in the world has read our playbook. State-sponsored research is the road to prosperity. It is good to remind people what happened."

Some examples:

--In the midst of the Civil War, Abraham Lincoln established the National Academy of Sciences. He also signed a bill to that gave land, access rights and cash to private companies to build a transcontinental railroad.

--Bike mechanics Wilbur and Orville Wright might have invented the airplane, but Europe quickly took over the nascent aeronautics industry. To remedy the situation, Congress created the National Advisory Committee on Aeronautics to help. Then in 1925, it passed the Kelly Airmail Act, which allowed private airlines to carry mail for the post office.

"It allowed aircraft manufacturers to get into the business" at a time when passenger traffic was almost nonexistent.

--Radar. It was invented by the U.S. and Brits during the war and the basic science went on to give birth to nuclear magnetic resonance, the transistor, radio astronomy and lasers, among other wonders. The transistor and semiconductor industries largely relied on military spending in the first years. Just good old fashioned free market economics, or a government agency trying to help a business? No matter what your views on that question, it remains that without federal buying, the transistor market wouldn't have taken off like it did.

"For the first 10 or 15 years, the military was the impetus for the industry," Chu said.

--Argonne National Labs has invented a lithium manganese battery for cars that provides 50 to 100 percent better cathode density and increases safety. LG Chem has licensed the technology and has incorporated the technology into batteries for the Chevy Volt. General Motors has taken out its own license and will compete against LG, he said. Again, public science was released for private industry. (Editor's note: I first interviewed Chu back in 2004 when he took over Lawrence Berkeley Lab. Soon after, many startups began to find it much easier to license technology from the lab. Chu's stance on commercialization is backed by action.)

--At Oak Ridge National Labs, researchers have found by putting an airfoil on the undercarriage of 18-wheelers can increase diesel mileage by 3 percent to 4 percent. Aerodynamics, capacitors, regenerative braking and other technologies -- which will make it from the lab to the private sector -- can potentially increase big-rig mileage by 7 percent to 12 percent.

In clean energy, we have the opportunity to do the same. Solar power now costs around $3.80 a watt, a figure that includessolarmodules, electronics, installation and other costs. By 2020 or earlier, the DOE, along with private industry hopes to bring that down to $1 through the SunShot program. At $1 a watt, solar power will cost 6 to 7 cents per kilowatt sans subsidies, making it comparable to conventional energy.

Existing technologies will already allow the industry to cut 50 percent of the cost of solar, bringing it down to $1.50. "But can we get to 75 percent?" he asked.

Car batteries, meanwhile, will drop from $800 to $1,000 a kilowatt hour to $400 a kilowatt hour or even $300 by 2015. $500 a kilowatt hour is a given.

Chu, though, however, warned that other nations are ramping up quickly in their scientific achievements -- and in finding ways to commercialize them. China, of course, is the most remarkable exmple. Ten years ago, China was known as a cheap manufacturing center for high tech companies. Now it is a leader in many fields. (Areva North America CEO Jacques Besnainou yesterday echoed similar sentiments: the private sector would never have built the highway system or the Golden Gate Bridge.)

China has the world's fastest supercomputer, the fastest high speed trains and is leading the world in building nuclear plants. One of its more remarkable achievements has been modernizing the grid. The country has developed a 1 million AC volt transmission line that loses only 8 percent of its power on a 1,200 mile journey from the power plant in western China to the cities in the east.

An equivalent U.S. line, with only 760 kilovolts, would lose 80 percent of its power.

Meanwhile, Congressional representative Paul Ryan has put forth a budget proposal that would cut federal energy R&D funding by 85 percent.

Yumin Liu, president of China's GCL Solar, added more facts behind these figures. He said his company closed 2010 with a solar wafer capacity of 3.5 gigawatts. By the end of 2011, the number will balloon to 5.5 gigawatts and hit 6.5 gigawatts by the middle of 2012. Polysilicon production will rise from 31,000 tons to 65,000 tons in the same period.

Remember those stats from last year touting how the U.S. was a net exporter of solar because of its polysilicon production? Better get out the eraser.

Ira Ehrenpreis, meanwhile, noted how one of his companies stared out as a U.S.-focused venture. The headquarters is in Georgia and the first pilot was in Kentucky. Now, the entire focus is on Inner Mongolia.

"100 percent of the capacity will be there," he said. Ira didn't say the name, but the company is CoalTek, which has a technology to squeeze water out of coal for a cleaner burn.

Other panelists, such as Andrew Chung from Lightspeed Ventures and Suntech's Polly Shaw, also urged students to study Chinese along with engineering. Zach Gentry from Adura Technologies added that green companies must improve sales and marketing, too.


(Photo from Nicole Davis at Talking Tourism under a Creative Commons license.)