‘I Have No Patience for Bureaucracy’: an Exit Interview With DOE’s Vanessa Chan

Vanessa Chan didn’t think she had the right temperament to work in government. After a 13-year stint as a partner at McKinsey, six years as a partner at the angel investment firm Robin Hood Ventures, and four years at the University of Pennsylvania, most recently as professor of practice in innovation and entrepreneurship, Chan considered herself to be an impatient, get-it-done type — anathema to the traditionally slow, procedurally complex work of governing.

But the Energy Act of 2020 had just formalized a new role within the Department of Energy ideally suited to her skills: Chief Commercialization Officer, which would also serve as the director of the Office of Technology Transitions. Who would fill these dual roles was to be the decision of then-incoming Secretary of Energy Jennifer Granholm, who found a kindred spirit in Chan. Under her leadership, Chan told me, “I found someone who’s less patient than me.”

In her four years at the DOE, the OTT’s annual budget — which she referred to as “literally a rounding error to most people” — grew from $12.6 million to $56.6 million. She leveraged it to its fullest extent, establishing a precedent for the potential of this small but mighty office. Chan spearheaded the “Pathways to Commercial Liftoff” reports that provide investors with a path to market for the most important decarbonization technologies, and announced over $41 million in funding for 50 clean energy projects across all of the nations 17 national labs through the Technology Commercialization Fund.

She also changed the way the DOE, national labs, venture capitalists, and startups alike talk about getting ready for primetime with the Adoption Readiness Level framework, which put a much-needed focus on factors such as economic viability, regulatory hurdles, and supply chain constraints in the same way that the established Technology Readiness Levels, pioneered by NASA, focus on the question of whether a technology actually works.

Now Chan is back at the University of Pennsylvania in a new, extremely apt role: the Inaugural Vice-Dean of Innovation and Entrepreneurship. She’s weaving lessons learned from her time in the public and private sectors into academia, where her goal is to help incorporate real-world skills into the education of engineers and PhD scholars to prime them for maximum impact upon graduation.

“It’s such a disservice if you invent something and it never sees the light of day,” she told me. “So we need to make sure that isn’t happening and we increase our odds of things making it to the market.”

Over two separate interviews, one before President Trump’s inauguration and one after, I asked Chan how her work with the DOE has helped climate technologies move from the lab to the market, the challenges that remain, and what to keep an eye on in the new administration. Our conversation has been edited for length and clarity.

How did you get recruited for this job? Was government work even on your radar before?

No, this was never on my vision board. But the way in which this came about was in 2016, there was a workshop that was being led by DOE on a potential new foundation that was going to be focused on commercialization. And one of my former clients told the person running the workshop, if you’re talking about technology commercialization, you have to talk to Vanessa Chan. And when I was there, I just yapped off about all the issues that I see with commercialization and what the federal government should be doing about it. And I didn’t think anything of it.

And then fast forward to 2020, I get this cryptic email saying, “Hey, the Biden-Harris administration is interested in you.” I spent all the time during the interview [with the Biden-Harris team] going, “Here’s my thing about commercialization, but I don’t think you guys want me, because I’m someone who works really fast. I have no patience for bureaucracy. I like to disrupt. I don’t like the status quo.” And they’re like, that’s exactly what we want.

How did the DOE, and the OTT in particular, really undergo a shift in the Biden administration?

Historically, DOE has been very focused on research and development. And then when the [Bipartisan Infrastructure Law] and [Inflation Reduction Act] got passed, now there was half-a-trillion dollars going towards demonstration and deployment, and it became a lot more fun being the chief commercialization officer.

The mantra that we’ve had is that the clean energy transition — and quite frankly, commercialization — has to be private sector-led but government-enabled. Because in the end, it’s the private sector that’s actually commercializing. It’s not the government. DOD can buy stuff to bring things to market, but DOE, we’re an enabler. And unless the private sector has sustainable, viable economic models, nothing will ever be commercialized.

How does your work intersect with other DOE agencies that are focused on commercialization, like the Office of Clean Energy Demonstrations and the Loan Programs Office?

I worked very closely with all of them. In particular, one of the things that was really important to do was to get us on the same page of what it actually means to deploy technologies. So I quarterbacked an effort called the Pathways to Commercial Liftoff, which OCED, LPO, and any program office that was touching research, development, demonstration, and deployment was a part of.

If we use hydrogen hubs as an example, OCED was given $8 billion towards hydrogen. When we did the hydrogen liftoff report, what we found was a few things. One is that electrolyzer costs are super high, and so we have to be able to drive those downward to make the unit economics work. We have an issue where there is no midstream infrastructure. We also had a chicken-and-the egg, which is pretty classic: No one wants to buy hydrogen until the supply chain is stood up, [but] the supply chain doesn’t want to stand up until they know they actually have offtake agreements.

What we did with OCED was, we took $7 billion to invest in seven hydrogen hubs across the nation, and then we reserved $1 billion to create an offtake demand mechanism. And that’s the first time ever that the federal government has actually focused on a demand activation program.

Have these liftoff reports been well received on both sides of the aisle? Do you think they’ll continue to be referenced in the new administration?

We were very, very, very fact-driven. There’s no policy by design, because in the end it’s all about, what does it take for a technology to make sense, for it to be in the market? So it’s not Republican or Democratic, it’s just — what does the private sector have to do? I’m really hoping they’re not seen as partisan and really more a synthesis of what’s required for the private sector to actually scale technology.

What are some additional successes from your time at the DOE?

An example program is MAKE IT, which is Manufacturing of Advanced Key Energy Infrastructure Technologies, which was a program that we created with OCED in order to figure out ways in which we could try to help bolster manufacturing across the nation. We also have this program called EPIC, the Energy Program for Innovation Clusters, and we have funded over 80 incubators and accelerators across the nation, which are supporting startups.

We’ve created a voucher program for startups and smaller organizations — sometimes there’s very tactical things that they need help on, and they need a small dollar amount, like a couple-hundred-thousand-dollars to tackle that. We’re like, Oh, you need to do techno-economic analysis? We’re going to pair you with this organization here that can do it, and you don’t have to negotiate anything with them. We’re just going to send them the money, you’re given a voucher, and you just call them.

When I talk with venture capitalists, something that often comes up is the difficulty of getting startups through the so-called Valley of Death, the funding gap between a company’s initial rounds and its commercial scale-up. How do you think about the public sector’s role in helping companies through this stage?

First of all, this private sector-led, government-enabled idea around commercialization is really important. And the work we’ve done with Liftoff and how we’ve gotten money out the door has really worked, because for every dollar going out the door from DOE, we’ve seen $6 matching from the private sector. That in itself is showing that there’s a way for the public sector to nudge the private sector to act.

What I’ll tell you, though, is that I think there needs to be a wholesale reframe around how the private sector thinks about investments and the returns that they want on them. Right now, we are in the Squid Games, where everyone is first in line to be sixth or seventh, no one is first in line to be first, second, or third, because they know the person who is first, second, or third is going to lose money. So what we need to do is figure out, how do we have the ecosystem crowdsource the first 10 of a kind, so that we get to the tipping point where the unit economics are working? How do we get the private sector to promise to buy technologies when they’re not quite there? How do we in the public sector help on the back end?

What are other primary barriers to commercialization that you see?

Another big barrier is that the time clock for moving up the learning curve and moving down the cost curve is quite long in some of these hard-tech technologies. And so the challenge is, how do we convince CEOs to make investments in something which is not going to benefit them, but benefit a CEO two or three down the line? Humans just don’t work that way, right? They’re all about earnings per share and quarterly earning reports and so forth.

Now the challenge is, if we don’t do it, then countries like China are going to do it. This is what happened in solar: We invented the technology, but China was willing to take a loss in order to get up the learning curve and drive down the cost curve, and we need to figure out how to do the same.

Have you been in touch with anyone from the Trump administration? Do you know who your successor will be?

No idea. My team didn’t even know who I was until day one. But what I’ll tell you is that OTT has really strong bipartisan support because we’re commercializing technologies, which is creating jobs, and I think everyone understands the importance of this. Also for the [Foundation for Energy Security and Innovation] I was very deliberate with the other ex officio board members to make sure we had a bipartisan board. We have 13 board members that we appointed here at DOE, and I have representation from every single administration since George H.W. Bush, including two Trump appointees.

I really do hope that whoever sits in my seat will reach out, and I left a letter offering that, too. Hopefully they do give me a call because I really want to wish them every success in the work that they’re doing.

What’s it like to be back at the University of Pennsylvania, watching this new administration from a civilian perspective?

This was the best job ever, so I’m just sad in general to not be at the Department of Energy because I really enjoyed the work that we were doing there. A lot of the money from the BIL and IRA were used to catalyze many, many red states. I am hopeful that people in power recognize this and are going to do right by those counties. Because I think, in the end, what we’re trying to do is really help with American jobs and competitiveness.

Any thoughts on the executive order that’s frozen disbursement of funds from BIL and IRA?

I don’t know, because I always think it’s not right to be on the outside in, trying to figure out what different executive orders are trying to say or not say. We all have to wait to see how these get executed upon.

What do you think people should be keeping an eye on to gauge the impacts that these sweeping executive orders are having?

In my mind it’s really, is the private sector spooked? Are they going to continue to invest the money that’s needed for these manufacturing plants to continue and so forth? Because in the end, it’s the private sector that actually is driving American competitiveness — the federal government is a catalyst. And so I think what I’d be looking to is the private sector. Are they stopping the momentum that we helped to kickstart?