UPDATE: Alan Boyle has more information.
John McCain wants the government to offer a $300 million prize to whoever can develop an automotive battery that far surpasses existing technology. His goals for the battery include delivering power for 30 percent of the current cost with better size, capacity, cost, and power. Doing so, he says, will help propel plug-in hybrid or fully-electric autos.
For a price of $1 for each man, woman, and child in the U.S., this project could propel us toward an economy in which petroleum-based fuels are a thing of the past. Prize-based competitions such as this (and the X Prize) generally produce gains far outstripping their costs, because a large number of competitors vie for the prizes, but only one wins. And in the case of the Ansari X Prize, the winning team at Scaled Composites spent approximately $30 million on R&D before winning the $10 million prize. And that doesn't include what other teams spent. And that $10 million helped launch the sub-orbital tourism flight industry.
In addition to getting better auto batteries for consumers, the prize money will allow the winning company to make presumably massive amounts of money either selling their new batteries the world over or licensing the technology to other battery companies. Either way, that money will provide industrial growth within the U.S. and create American jobs and American wealth. Jobs will be lost in the oil industry, sure, but the U.S. economy will be better off, and so will the environment.