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Earlier this week, California GOP Rep. Dan Lungren introduced a bill that would offer a $1 billion prize to the first automaker than can put 60,000 cars achieving 100 mpg on the road. Only requirement – the cars have to run on gasoline.
The bill is intended as an alternative to further government investment in electric and hybrid cars. And once you get past the irony that the party that excoriates “picking winners and losers” wants to predetermine what kind of fuel we’ll all be using in the future, it’s hard to argue with an effort to develop more efficient gasoline cars. After all, even by the rosiest of projections, the majority of cars on the road 20 years from now will still run on gas.
So can government bounties for innovation work? It’s happened before.
In its story about the bill, The Hill parallels Lungren’s bill to an 18th century effort by Great Britain to develop a method for finding longitude at sea. The Longitude Prize, described in great detail in the book Longitude by Dava Sobel and William J.H. Andrewes, does actually provide an instructional tale about government investment in emerging technologies, but it may not be one that Lungren wants to tell.
In the early 1700s, seafarers could easily determine their distance from the equator by charting the movements of the stars, but finding your east-west location was still largely a matter of guesswork. And guessing wrong could be fatal. So the British government passed the Longitude Act in 1714, which offered a prize of £20,000 for a method of accurately determining longitude within a half a degree.
Conventional wisdom at the time supported what was known as the “lunar distance method,” which involved calculating one’s location based on observed location of the moon and stars in the sky. The method that actually won – keeping time with a clock capable of withstanding the rigors of a sea voyage – was considered wildly impractical, if not impossible.
While the lunar method was favored by government astronomers, clockmaker John Harrison believed firmly in the potential of seaboard clocks, and developed a series of timepieces – each more advanced than its predecessor – durable and accurate enough to do the job. In 1773, after more than 60 years of dealing with a process bogged down by politics, he finally claimed his prize.
So the private sector triumphs over government inefficiency, right? Well, not quite.
Harrison’s prototypes took years – even decades – to build, and were only made possible by large infusions of cash from the government (Harrison would receive occasional stipends of £500 from the Longitude Board, equivalent to roughly $88,000 today). Trans-oceanic voyages were primarily a military venture at the time, meaning the actual deployment and testing of the devices was funded by the government as well.
And as imperfect as the lunar method was, it was far less expensive, so it took nearly a century for sea clocks to become cost-effective enough that they were widely used. But by the mid-1800s, watches and clocks of similar design were produced by a number of companies, and were considered indispensable.
Harrison, incidentally, never received the full amount for the prize. What he was actually awarded in the end, according to the authors, was £8,750, which was nearly the balance of the £20,000 minus the subsidies the government had already provided for development of the clocks.
By Sobel’s and Andrewes’ account, Harrison had a single-minded devotion to solving the longitude problem. But it’s difficult to imagine how he might have completed his prototypes without financial support.
In the end, rather than a free-market-solves-all free-for-all, the actual workings of the Longitude Prize had a bit more in common with today’s Defense Advanced Research Projects Agency, where public money has been deployed to take on dozens of vexing scientific and technological challenges, producing solutions that in turn help fuel the private sector.
What’s absent from Lungren’s plan is any sense of whether his proposed prize is incentive enough for automakers to take such an aggressive step toward more efficient cars. If history is any guide, such prizes can be powerful motivators, but may not necessarily be smart policy.