1) For years, private sector energy and environmental research and development (R&D) has been stagnant. This could be normal, but it indicates that the government-driven view of innovation is at odds with the realities of private-sector responses.
2) Tax policy matters for energy and environmental innovation. For example, the private sector responded to the 2017 Tax Cuts and Jobs Act (more commonly known as the tax reform) in a big way, with an increase of $3.3 billion of investment in the energy and environmental space.
3) There is not enough data to determine how big of an impact specific pieces of the tax reform had on private-sector innovation. However, the fact that there was a notable response to the tax reform means that policymakers should be cautious when considering paying for energy or environmental priorities with corporate rate increases or other taxes on capital investment as those changes may be counter-productive to overall energy and environmental investment and innovation.