I am fascinated by Steven Chu, Barack Obama's Secretary of Energy. I first heard him speak in St. Peter, MN at the Nobel conference in 2007, and thought, "Wow, imagine if he were in power."

Business Week's current issue has this nice coverage of Steven Chu here and here. Time will tell, but it seems this guy is perfect for this moment in history. Admittedly, the job of Energy Secretary has much to do with weapons and waste, and little to do with energy policy, so he will have to work across departments for clean energy and efficiency industries to accelerate at the pace they need to. Will he be a good inside player? Will he stand up to Larry Summers or Jim Jones? Will he and Carol Browner and John Holdren get on the same page immediately, doubling their clout?

But as for science, technology, and innovation, give this guy whatever budget he wants and let him innovate. Breakthrough clean technology is not a pipedream if we put the full power of the human mind to the problem. Innovation will occur most rapidly when the market demands it. The market will demand rapid innovation within a policy context of the right incentives, strong efficiency and renewable standards, and a shift of tax policy to reward the right stuff (eg., getting rid of oil  depletion allowance for oil drilling, and making the renewable energy production tax credit for wind power both long-term and refundable).

More than anything, for Chu's cleantech innovations to quickly find their way to market requires an ever-increasing carbon price signal that comes from a tight cap on carbon emissions that declines over time, consistent with what science requires. A tight cap is one that auctions the permits, and does not allow screwy offset loopholes or corporate giveaways of free permits. The cap itself can be a stimulus to the economy by recycling all the revenue back to consumers.