POLICY BRIEF
JUNE 2010 | no. 173

Hubs of Transformation:

Leveraging the Great Lakes Research
Complex for Energy Innovation
By James Duderstadt, Mark Muro, and Sarah Rahman

A

merica needs to transform its energy system, and the Great Lakes region (including, Minnesota, Wisconsin, Iowa, Missouri,

Illinois, Indiana, Michigan, Kentucky, West Virginia,
western Pennsylvania and western New York) posReuters / steve Marcus

sesses many of the needed innovation assets. For that
reason, the federal government should leverage this
troubled region’s research and engineering strengths
by launching a region-wide network of collaborative,
high-intensity energy research and innovation centers.
Currently, U.S. energy innovation efforts remain insufficient to ensure
the development and deployment of clean energy technologies and processes. Such deployment is impeded by multiple market problems that lead
private firms to under-invest and to focus on short-term, low-risk research
and product development. Federal energy efforts—let alone state and local
ones—remain too small and too poorly organized to deliver the needed
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breakthroughs. A new approach is essential.

1

Recommendations
The federal government should systematically

region’s ailing economy. Roughly six compelling

accelerate national clean energy innovation by

innovation centers could reasonably be organized

launching a series of “themed” research and com-

in the Great Lakes states with total annual fund-

mercialization centers strategically situated to

ing between $1 billion and $2 billion.

draw on the Midwest’s rich complex of strong public universities, national and corporate research
laboratories, and top-flight science and engineering talent. Organized around existing capacities
in a hub-spoke structure that links fundamental
science with innovation and commercialization,

To achieve this broad goal, the federal government should:
•• Increase energy research funding overall.
•• Adopt more comprehensive approaches to
research and development (R&D) that address

these research centers would engage univer-

and link multiple aspects of a specific problem,

sities, industries and labs to work on specific

such as transportation.

issues that would enable rapid deployment of new
technologies to the marketplace. Along the way,

•• Leverage existing regional research, workforce,

they might well begin to transform a struggling

entrepreneurial and industrial assets.

America needs to transform its energy system in

Energy Sustainability”); the “energy innovation

order to create a more competitive “next econ-

hubs” created by the Department of Energy (DOE);

omy” that is at once export-oriented, lower-carbon

and the agricultural experiment station/coopera-

and innovation-driven. Meanwhile, the Great Lakes

tive extension model of the land-grant universities.

region possesses what may be the nation’s richest complex of innovation strengths—research

In the spirit of the earlier land-grant paradigm,

universities, national and corporate research

this network would involve the region’s research

labs, and top-flight science and engineering tal-

universities and national labs and engage strong

ent. Given those realities, a partnership should be

participation by industry, entrepreneurs and

forged between the nation’s needs and a struggling

investors, as well as by state and local govern-

region’s assets.

ments. In response to local needs and capacities,
each center could have a different theme, though

To that end, we propose that the federal govern-

all would conduct the kinds of focused transla-

ment launch a distributed network of federally

tional research necessary to move fundamental

funded, commercialization-oriented, sustainable

scientific discoveries toward commercialization

energy research and innovation centers, to be

and deployment.

located in the Great Lakes region. These regional

2

centers would combine aspects of the “discovery-

The impact could be transformational. If built out,

innovation institutes” proposed by the National

university-industry-government partnerships would

Academy of Engineering and the Metropolitan

emerge at an unprecedented scale. At a minimum,

Policy Program (as articulated in “Energy Discovery-

populating auto country with an array of break-

Innovation Institutes: A Step toward America’s

through-seeking, high-intensity research centers

JUNE 2010

|

POLICY BRIEF no. 173

Policy Brief no. 173

would stage a useful experiment in linking national

•• Strength and specialization in energy, science

leadership and local capacities to lead the region—

and engineering. In FY 2006, the Department of

and the nation—toward a more prosperous future.

Energy sent 26 percent of its federal R&D obligations to the Great Lakes states and is the second

The Great Lakes Energy System:
Predicaments and Possibilities

largest federal funder of industrial R&D in the

The Great Lakes region lies at the center of the

tion sent 30 percent of its R&D obligations there.

region. Also in 2006, the National Science Founda-

nation’s industrial and energy system trials and
possibilities. No region has suffered more from

•• Existing clean energy research investments and

the struggles of America’s manufacturing sec-

assets. The University of Illinois is a key research

tor and faltering auto and steel industries, as

partner in the BP-funded, $500 million Energy

indicated in a new Metropolitan Policy Program

Biosciences Institute, which aims to prototype

report entitled “The Next Economy: Rebuilding

new plants as alternative fuel sources. Toledo

technological special-

Auto Communities and Older Industrial Metros in

already boasts a growing solar industry cluster;

izations, Midwestern

the Great Lakes Region.”

Dow Corning’s Michigan facilities produce leading

industries have the

silicon and silicone-based technology innovations;

Given their existing

The region also lies at ground zero of the nation’s

and the Solar Energy Laboratory at the Univer-

potential to excel

need to “green” U.S. industry to boost national

sity of Wisconsin-Madison, the oldest of its kind

economic competitiveness, tackle climate change

in the world, has significant proficiency in devel-

in the research and

and improve energy security. Heavily invested in

oping practical uses for solar energy. Finally, the

manufacture of

manufacturing metals, chemicals, glass and auto-

region is home to the largest U.S. nuclear utility

mobiles, as well as in petroleum refining, the Great

(Exelon), the nation’s largest concentration of

sophisticated com-

Lakes states account for nearly one-third of all U.S.

nuclear plants and some of the country’s leading

ponents required

industrial carbon emissions.

university programs in nuclear engineering.

for clean energy,
such as those used

And yet, the Great Lakes region possesses signifi-

•• Industry potential relevant to clean energy.

cant assets and capacities that hold promise for

Given their existing technological specializa-

in advanced nuclear

regional renewal as the “next economy” comes

tions, Midwestern industries have the potential

into view. The Midwest’s manufacturing commu-

to excel in the research and manufacture of

technologies, precision

nities retain the strong educational and medical

sophisticated components required for clean

wind turbines and

institutions, advanced manufacturing prowess,

energy, such as those used in advanced nuclear

skills base and other assets essential to helping

technologies, precision wind turbines and com-

complex photovoltaics.

the nation move toward and successfully compete

plex photovoltaics.

in the 21st century’s export-oriented, lower-carbon,
innovation-fueled economy.

•• Breadth in energy innovation endeavors and
resources. In addition to universities and indus-

Most notably, the region has an impressive array of

try, the region’s research laboratories specialize

innovation-related strengths in the one field essen-

in areas of great relevance to our national energy

tial to our nation’s future—energy. These include:

challenges, including the work on energy storage
systems and fuel and engine efficiency taking

•• Recognized leadership in R&D. The Great Lakes

place at Argonne National Laboratory, research

region accounts for 33 percent of all academic

in high-energy physics at the Fermi National

and 30 percent of all industry R&D performed in

Accelerator Laboratory, and the work on bioen-

the United States.

ergy feedstocks, processing technologies and

brookings.edu

3

fuels occurring at the DOE-funded Great Lakes

than those who make investments. As a result,

BioEnergy Research Center (GLBRC).

individual firms tend to under-invest and to focus
on short-term, low-risk research and product devel-

James J. Duderstadt is
president emeritus and
University Professor of
Science and Engineering at
the University of Michigan.
His teaching and research
interests include science,
mathematics and engineering.

•• Regional culture of collaboration. Finally, the

opment. Third, uncertainty and lack of information

universities of the Great Lakes area have a strong

about relevant market and policy conditions and

history of collaboration both among themselves

the potential benefits of new energy technologies

and with industry, given their origins in the fed-

and processes may be further delaying innovation.

eral land-grant compact of market and social

Fourth, the innovation benefits that derive from

engagement. GLBRC—one of the nation’s three

geographically clustering related industries (which

competitively awarded DOE Bioenergy Centers—

for many years worked so well for the auto indus-

epitomizes the region’s ability to align academia,

try) have yet to be fully realized for next-generation

industry and government around a single mis-

energy enterprises. Instead, these innovations often

sion. Another example is the NSF-supported Blue

are isolated in secure laboratories. Finally, state and

Waters Project. This partnership between IBM

local governments—burdened with budgetary pres-

and the universities and research institutions in

sures—are not likely to fill gaps in energy innovation

the Great Lakes Consortium for Petascale Com-

investment any time soon.

putation is building the world’s fastest computer
for scientific work—a critical tool for advancing

As a result, the research intensity—and so the

smart energy grids and transportation systems.

innovation intensity—of the energy sector remains
woefully insufficient, as pointed out in the earlier

Mark Muro, a fellow and
director of policy for the
Metropolitan Policy Program
at Brookings, manages the
program’s public policy analysis
and leads key policy research
projects. His expertise includes
regional economic competitiveness; transportation; urban
planning; and state, regional
and local governance.

In short, the Great Lakes states and metropolitan

Metropolitan Policy Program paper on discovery-

areas—economically troubled and carbon-reliant

innovation institutes. Currently, the sector devotes

as they are—have capabilities that could contribute

no more than 0.3 percent of its revenues to R&D.

to their own transformation and that of the nation,

Such a figure lags far behind the 2.0 percent of

if the right policies and investments were in place.

sales committed to federal and large industrial R&D
found in the health care sector, the 2.4 percent in

Remaking America’s Energy System
within a Federal Policy Framework

agriculture, and the 10 percent in the information
technology and pharmaceutical industries.

America as a whole, meanwhile, needs to overcome
the massive sustainability and security challenges

As to the national government’s efforts to respond to

that plague the nation’s energy production and

the nation’s energy research shortfalls, these remain

delivery system. Transformational innovation and

equally inadequate. Three major problems loom:

commercialization will be required to address
these challenges and accelerate the process of

The scale of federal energy research funding is

reducing the economy’s carbon intensity.

insufficient. To begin with, the current federal
appropriation of around $3 billion a year for non-

Sarah Rahman is a policy
analyst in the Metropolitan
Policy Program at Brookings,
where she performs policy
outreach, reviews best practices
of federal, state, and local
program implementation,
and conducts timely policy
research.

4

Despite the urgency of these challenges, however,

defense energy-related R&D is simply too small.

a welter of market problems currently impedes

Such a figure remains well below the $8 billion

decarbonization and limits innovation. First, energy

(in real 2008 dollars) recorded in 1980, and rep-

prices have generally remained too low to provide

resents less than a quarter of the 1980 level when

incentives for companies to commit to clean and

measured as a share of GDP. If the federal govern-

efficient energy technologies and processes over

ment were to fund next-generation energy at the

the long haul. Second, many of the benefits of long-

pace it supports advances in health care, national

range innovative activity accrue to parties other

defense, or space exploration, the level of invest-

JUNE 2010

|

POLICY BRIEF no. 173

Policy Brief no. 173

ment would be in the neighborhood of $20 billion

or nuclear), rather than on fully integrated end-

to $30 billion a year.

use approaches needed to realize affordable,
reliable, sustainable energy. Siloed approaches

Nor do the nation’s recent efforts to catalyze

simply do not work well when it comes to tackling

energy innovation appear sufficient. To be sure,

the complexity of the nation’s real-world energy

the American Recovery and Reinvestment Act

challenges. A perfect example of a complicated

(ARRA) provided nearly $13 billion for DOE invest-

energy problem requiring an integrated end-use

ments in advanced technology research and

approach is transportation. Moving the nation’s

innovation. To date, Great Lakes states are slated

transportation industry toward a clean energy

to receive some 42 percent of all ARRA awards

infrastructure will require a multi-pronged, full-

from the fossil energy R&D program and 39 per-

systems approach. It will depend not only upon

cent from the Office of Science (a basic research

R&D in such technologies as alternative propul-

agency widely regarded as critical for the nation’s

sion (biofuels, hydrogen, electrification) and

yet to effectively

energy future). However, ARRA was a one-time

vehicle design (power trains, robust materials,

connect researchers

injection of monies that cannot sustain adequate

advanced computer controls) but also on far

federal energy R&D.

broader technology development, including that

at different organiza-

... federal policy has

related to primary energy sources, electricity

tions, break down

Relatedly, the Great Lakes region has done well in

generation and transmission, and energy-efficient

tapping two other relatively recent DOE programs:

applications that ultimately will determine the

stovepipes between

the Advanced Research Projects Agency–Energy

economic viability of this important industry.

(ARPA-E) and Energy Frontier Research Centers

research and industry,
bridge the commer-

(EFRCs). Currently, Great Lakes states account

Federal programming fails to fully realize

for 44 and 50 percent of ARPA-E and EFRC fund-

regional potential. Related to the structural prob-

cialization “valley of

ing. Yet, with ARPA-E focused solely on individual

lems of U.S. energy innovation efforts, finally, is

death,” or establish

signature projects and EFRC on basic research,

a failure to fully tap or leverage critical preexist-

neither initiative has the scope to fully engage all

ing assets within regions that could accelerate

mechanisms to bring

of the region’s innovation assets.

technology development and deployment. In the

federally-sponsored

Great Lakes, for example, current federal policy

R&D to the market-

The character and format of federal energy

does little to tie together the billions of dollars

R&D remain inadequate. Notwithstanding the

in science and engineering R&D conducted or

place quickly and

question of scale, the character of U.S. energy

available annually. This wealth is produced by the

innovation also remains inadequate. In this respect,

region’s academic institutions, all of the available

smoothly.

the DOE national laboratories—which anchor the

private- and public-sector clean energy activities

nation’s present energy research efforts—are

and financing, abundant natural resources in wind

poorly utilized resources. Many of these laborato-

and biomass, and robust, pre-existing industrial

ries’ activities are fragmented and isolated from

platforms for research, next-generation manufac-

the private sector and its market, legal and social

turing, and technology adoption and deployment.

realities. This prevents them from successfully

In this region and elsewhere, federal policy has

developing and deploying cost-competitive, multi-

yet to effectively connect researchers at different

disciplinary new energy technologies that can be

organizations, break down stovepipes between

easily adopted on a large scale.

research and industry, bridge the commercialization “valley of death,” or establish mechanisms to

For example, DOE activities continue to focus

bring federally-sponsored R&D to the marketplace

on discrete fuel sources (such as coal, oil, gas

quickly and smoothly.

brookings.edu

5

Learn More
“The Next Economy:
Rebuilding Auto Communities
and Older Industrial Metros
in the Great Lakes Region”
Jennifer Vey and John Austin
(2010)
“Budget 2011: Industry
Clusters as a Paradigm
for Job Growth”
Mark Muro and Sarah Rahman
(February 2010)
“Energy Discovery-Innovation
Institutes: A Step toward
America’s Energy Sustainability”
James Duderstadt, Mark Muro
and others
(February 2009)
“Clusters and Competitiveness:
A New Federal Role for
Stimulating Regional Economies”
Karen G. Mills, Elisabeth B.
Reynolds and Andrew Reamer
(April 2008)

A New Approach to Regional,
Federally Supported Energy Research
and Innovation

and investors, as well as government agencies

And so the federal government should system-

laboration involving the University of Michigan,

atically accelerate clean energy innovation by

Michigan State University, the University of

launching a series of regionally based Great

Wisconsin and Ford, General Motors, and Dow

Lakes research centers. Originally introduced in

Chemical could address the development of

the Metropolitan Policy Program policy proposal

sustainable transportation technologies. A Chi-

for energy discovery-innovation institutes (or

cago partnership involving Northwestern and

e-DIIs), a nationwide network of regional centers

Purdue Universities, the University of Chicago,

would link universities, research laboratories
and industry to conduct translational R&D that
at once addresses national energy sustainability
priorities, while stimulating regional economies.
In the Great Lakes, specifically, a federal effort
to “flood the zone” with a series of roughly six
of these high-powered, market-focused energy
centers would create a critical mass of innovation
through their number, size, variety, linkages and
orientation to pre-existing research institutions
and industry clusters.
As envisioned here, the Great Lakes network of
energy research centers would organize individual
centers around themes largely determined by the
private market. Based on local industry research
priorities, university capabilities and the market
and commercialization dynamics of various tech-

(federal, state and local) and research universities. For example, a southeastern Michigan col-

the University of Illinois, Argonne National
Lab, Exelon and Boeing could focus on sustainable electricity generation and distribution. A
Columbus group including Ohio State University
and Battelle Memorial Institute could address
technologies for energy efficiency. Regional
industry representatives would be involved
from the earliest stages to define needed
research, so that technology advances are
relevant and any ensuing commercialization
process is as successful as possible.
•• Serve as a distributed “hub-spoke” network
linking together campus-based, industry-based
and federal laboratory-based scientists and
engineers. The central “hubs” would interact
with other R&D programs, centers and facilities
(the “spokes”) through exchanges of participants, meetings and workshops, and advanced
information and communications technology.

nologies, each Great Lakes research and innova-

The goals would be to limit unnecessary dupli-

tion center would focus on a different problem,

cation of effort and cumbersome management

such as renewable energy technologies, biofuels,

bureaucracy and to enhance the coordinated

transportation energy, carbon-free electrical

pursuit of larger national goals.

power generation, and distribution and energy
efficiency. This network would accomplish several
goals at once:

•• Develop and rapidly deploy highly innovative
technologies to the market. Rather than aim
for revenue maximization through technology

6

•• Foster multidisciplinary and collaborative

transfer, the regional energy centers would be

research partnerships. The regional centers

structured to maximize the volume, speed and

or institutes would align the nonlinear flow

positive societal impact of commercialization. As

of knowledge and activity across science and

much as possible, the centers would work out in

non-science disciplines and among companies,

advance patenting and licensing rights and other

entrepreneurs, commercialization specialists

intellectual property issues.

JUNE 2010

|

POLICY BRIEF no. 173

Policy Brief no. 173

•• Stimulate regional economic development.
Like academic medical centers and agricultural
experiment stations—both of which combine
research, education and professional practice—these energy centers could facilitate
cross-sector knowledge spillovers and innovation exchange and propel technology transfer
to support clusters of start-up firms, private
research organizations, suppliers, and other
complementary groups and businesses—the
true regional seedbeds of greater economic
productivity, competitiveness and job creation.
Reuters / stefano Paltera

•• Build the knowledge base necessary to address
the nation’s energy challenges. The regional
centers would collaborate with K-12 schools,
community colleges, regional universities, and
workplace training initiatives to educate future
scientists, engineers, innovators, and entrepreneurs and to motivate the region’s graduating

A solar-powered demonstration house during the
U.S. Department of Energy’s Solar Decathlon

students to contribute to the region’s emerging
green economy.
strong external advisory board representing the

Like academic medical

•• Complement efforts at universities and across

participating partners. In some cases, partners

the DOE innovation infrastructure, but be orga-

might play direct management roles with execu-

centers and agricul-

nizationally and managerially separate from

tive authority.

tural experiment

either group. The regional energy centers would

stations … these energy

focus rather heavily on commercialization and

•• Adopt a competitive award process with spe-

deployment, adopting a collaborative transla-

cific selection criteria. Centers would receive

centers could facilitate

tional research paradigm. Within DOE, the cen-

support through a competitive award process,

ters would occupy a special niche for bottom-up

with proposals evaluated by an interagency

cross-sector knowledge

translational research in a suite of new, largely

panel of peer reviewers.

top-down innovation-oriented programs that
aim to advance fundamental science (EFRCs),

•• Receive as much federal funding as major DOE

bring energy R&D to scale (Energy Innovation

labs outside the Great Lakes region. Given the

Hubs) and find ways to break the cost barriers

massive responsibilities of the proposed Great

of new technology (ARPA-E).

Lakes energy research centers, total federal

spillovers and innovation exchange … 

funding for the whole network should be comTo establish and build out the institute network

parable to that of comprehensive DOE labs, such

across the Great Lakes region, the new regional

as Los Alamos, Oak Ridge and others, which

energy initiative would:

have FY2010 budgets between $1 and $2 billion.
Based on existing industry-university concentra-

•• Utilize a tiered organization and management

tions, one can envision as many as six compel-

structure. Each regional center would have a

ling research centers in the Great Lakes region.

brookings.edu

7

Policy Brief no. 173

Related Policy Briefs

Conclusion

an aggressive initiative to build a network of
regional energy research and innovation centers.

“Economic Growth and
Institutional Innovation:
Outlines of a Reform Agenda”
William A. Galston
No. 172 (June 2010)

In sum, America’s national energy infrastruc-

Through this intervention, the federal government

ture—based primarily upon fossil fuels—must be

could catalyze a dynamic new partnership of Mid-

updated and replaced with new technologies. At

western businesses, research universities, federal

the same time, no region in the nation is better

laboratories, entrepreneurs and state and local

“Spurring Innovation Through
Education: Four Ideas”
Grover J. Whitehurst
No. 174 (June 2010)

equipped to deliver the necessary innovations than

governments to transform the nation’s carbon-

is the Great Lakes area. And so this strong need

dependent economy, while renewing a flagging

and this existing capacity should be joined through

regional economy.

■

“The Future of Small Business
Entrepreneurship: Jobs
Generator for the U.S. Economy”
Martin Neil Baily, Karen
Dynan, and Douglas J. Elliott
No. 175 (June 2010)

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