Good afternoon.

It is an honor and a pleasure to represent the U.S. Department of Commerce before such a distinguished international gathering of scientists, engineers, businessmen and women, financiers, and policymakers. And it is a privilege to discuss with you the economic and social potential-and challenges-of nanotechnology.

It has only been a few years since the United States launched the National Nanotechnology Initiative-a bold, visionary effort to harness the extraordinary power of matter at the atomic level. So it's truly amazing how far we've come in so short a time-lifting nanotechnology out of the genre of science fiction, into our academic and industrial laboratories, and more recently, into the marketplace. And how governments around the world have launched similar initiatives.

A variety of factors contributed to the launch of the NNI and continue to contribute to its strong bi-partisan-I was pleased to see my friend, Rep. Honda, on this morning's agenda-support today.

First, nanotechnology offers a new scientific and technological frontier that may offer a better understanding of ourselves and our universe .and America has always been on the leading-edge of exploring such new frontiers-in electronics, atomic power, space, pharmaceuticals and vaccines, environmental remediation, and the human genome, to name a few.

Second, nanotechnology holds the promise of enormous economic potential. Nanotechnology has the potential to revolutionize industry, changing the things we make and the way we make them-literally from the bottom up. Entire industries, their processes, and the knowledge and skills of the people who work in them could be changed completely. For that matter, entire industries could disappear as they are supplanted by new nano-enabled industries, much the same as horse-and-buggy makers were replaced by automobile manufacturers.

Not since the Industrial Revolution has a field held such enormous potential to transform the industrial landscape. And for most of our history, America has been at the vanguard of technological innovation and its economic rewards-leading the Industrial Revolution, revolutionizing agriculture, building horseless carriages, inventing and commercializing powered-flight, generating and transmitting electric power, harnessing electricity from the atom, creating global communications networks, rocketing to the moon and back, and unleashing the power of semiconductors to bring about the Information Age. More than ever before, those nations that are among the first to harness the potential of powerful emerging and enabling technologies will be the ones that reap the greatest rewards.

Third, nanotechnology offers unparalleled.in fact, almost unimaginable. potential in bolstering the national security and homeland security to protect our citizens and those of our allies against both conventional threats and those posed by terrorists developing and seeking to wield weapons of mass destruction. Nanotechnology offers tremendous additions to the American arsenal which has served as a bulwark for global freedom, democracy, and liberty throughout the 20th Century-through two World Wars and a Cold War-and now into the 21st Century against new enemies of peace.

But when we launched the NNI, another equally important factor came into play to spur policymakers to make these substantial investments: nanotechnology's potential to achieve the nearly miraculous. .

On a human level, nano's potential rises to near Biblical proportions. It is not inconceivable that these technologies could eventually achieve the truly miraculous: enabling the blind to see, the lame to walk, and the deaf to hear; curing AIDS, cancer, diabetes and other afflictions; ending hunger; and even supplementing the power of our minds, enabling us to think great thoughts, create new knowledge, and gain new insights.

On a societal level, nanotechnology will deliver higher standards of living and allow us to live longer, healthier, more productive lives. Nano also holds extraordinary potential for the global environment through waste-free, energy-efficient production processes that cause no harm to the environment or human health. And nano is already showing great potential for repairing existing environmental damage as well.

Given these profound possibilities, nanotechnology enjoys great enthusiasm and support in Washington. However, we come together today at a time when nano is getting a closer, more critical analysis of its business potential. Several factors are driving this scrutiny:

First, nano's emergence as the "next big thing." Nano is perhaps the ultimate in enabling technologies, since it involves the very building blocks of life and matter. It is hard to imagine a single industry that could not be touched by our ability to understand and harness the potential of materials at the nanoscale. Accordingly, estimates of nano's potential economic impact are substantial. The race to develop and commercialize nano has enormous implications for nations, companies and people. And with such far-reaching implications, the underlying claims cannot escape close attention and scrutiny.

Second, the investments being made in nanotechnology R&D have soared. The Federal Government investment in nanotechnology alone increased from $116 million in FY 1997, to $422 million in 2001-the first year of the National Nanotechnology Initiative (NNI) to more than $700 million in FY 2003. And for FY 2004, President Bush has proposed a record $849 million in funding for the NNI. And though we do not have nano-specific R&D data, it seems clear from the advances announced publicly alone that the private sector has dramatically stepped up its investments as well.

And, we are not alone. The global competition is in full swing. The United States probably accounts for only a third of the public investments being made globally-with the EU and Japan leading investments overseas, but joined by a variety of other nations as well, including China, Australia, Israel, Canada, Korea, Taiwan, and Singapore. Today, public investments in nanotechnology are estimated to be approximately $3 billion.

These global investments are being driven by a deep appreciation of the ability of disruptive technologies-borne out throughout history-to rapidly shift the global balance of economic and military power. Some lay claim to the mantle of global nanotech leadership, suggesting "it's their's to lose," seeking perhaps to establish an aura that will attract global companies that seek to conduct R&D and manufacturing operations wherever the leading edge research is being conducted. The reality is that-for now-nanotechnology leadership resides largely with the United States. But our ability to retain leadership in this field resides in sustained national investments and thoughtful, informed public policy.

Third, the bursting of the dot-com bubble-or, as some say, the dot bomb. "Once burned, twice shy," investors have adopted the mantra of The Who song, "We Won't Get Fooled Again." And we in the science, technology and business communities must be equally committed to ensuring that nano doesn't become a four-letter word to investors. We must ensure that nano's potential-and there is enormous potential-does not get overhyped, overpromising economic potential. And we must ensure that we fairly estimate the timeframe in which these technologies will be ripe for commercial use, to ensure that investors may fairly assess their potential return on investment.

Let me develop this point a bit. Maybe some of you are familiar with the cover story in the January edition of the Venture Capital Journal, a mainstay of the venture capital community. The cover showed the picture of a red balloon being pierced by a pin, with the phrase "Nano Nonsense" in the balloon.

The cover and the title provide a harsh view of nanotechnology's promise. The article, however, is more balanced and raises very important issues related to the commercial potential of nanotechnology and the framework used by venture capitalists to assess its potential. Issues such as

• the ability to move the technology from laboratory prototype to commercial scale;
• technical complexity, maturity and risk;
• securing and managing intellectual property rights; an
• valuation of the science and technology portfolio.

The most important issue that the article raises, however, is the question of timeframe-how long will it take to move nano science and technology to the marketplace. Now we all know that time is relative, thanks to Albert Einstein. Though he had something far more complex in mind when he developed his theory of relativity, when asked to explain it, Einstein is reported to have said, "Put your hand on a hot stove for a minute, and it seems like an hour. Sit with a pretty girl for an hour, and it seems like a minute. THAT'S relativity."

Extending the analogy to the nanotechnology arena, venture capitalists have their hand on the stove, while the scientists and engineers are sitting with the pretty girl.

In the article, Stan Williams-a friend and former co-worker of mine, who serves as director of quantum science research at H-P Labs-put this in more concrete terms saying, "Different people think in different time frames: Scientists think in decades, engineers think in years and investors think in quarters."

And this is, of course, reasonable and appropriate. However, when deals are being discussed, it's important for everyone in the room to understand what is meant when one party proposes that the technology will be ripe for commercialization SOON. Winston Churchill once said that the Americans and British were "two peoples separated by a common language." This can be said of technologists and financiers as well. Nanotechnology faces this challenge, as well.

For some, nanotechnology is real. It's here today, already touching our generation. It's finding its way into products and improving them. And they are right.

For others, nanotechnology is closer to science fiction, more likely to be realized by our children or our grandchildren-examples, such as self-replicating nanobots, utility fog, and dust. If it's possible at all, it's not likely to yield near returns of the kind required by the venture capital community. And these people are right, too.

Both are right because nanotechnology is such a broad, profound, enabling technology-in fact at the intersection of many fields of science and technology-that it offers both near term improvements in current products and processes (evolutionary applications), as well as the potential for mind-boggling, economy-disrupting, life-changing advances (revolutionary applications).

As a policymaker, I hope to ensure that venture capitalists don't write off all nanotechnology because some of its potential will be realized by future generations. And to ensure that legislators, policymakers, regulators, judges and other non-technical stakeholders don't seek to preemptively impede the development paths of nanotechnology because they have read (or watched!) Michael Crichton's Prey on the big screen, or because a few outliers seek to fan the flames of public fear.

I believe that the near-term applications are more likely to be evolutionary in nature. That is to say that they are likely to improve the performance of things that are currently in the marketplace.

We are already realizing the commercial application, and economic, societal, and military benefits of nanotechnology in such evolutionary applications. And while these applications are being accomplished at the nanoscale, they do not always have nano-related properties.

Some are relatively high profile

• The most well known commercial application of nanotechnology is probably the use of nanowhiskers by Nano-Tex to produce the stain resistant fabric used in Lee Performance Khakis and other clothing products.
• Also well known is Advanced Powder Technologies' ZinClear, a transparent sunscreen with UV protection superior to zinc oxide.

Others are perhaps not as well known:

• Nanocomposites in the running boards in SUV
• NanoBio, with products like NanoDefend which can be used to de-contaminate clothes and surfaces exposed to biological agents, and NanoGreen, which can be used on skin. We have seen the negative impact of the Norwalk virus on the cruise line industry and of SARS on travel, tourism and industry generally. Products with the ability to defend against biological agents have a strong future in our global village.
• Intel is working at the nanoscale. The company has plans to produce a TeraHertz transistor as early as 2005 based on a recent breakthrough in chip transistor design at the nano level. The TeraHertz chip would have 25 times the number of transistors as the top-of-the-line Pentium 4 and run at 10 times the speed, with no increase in power consumption.

Finally, Inmat's Air D-Fense is a nano-clay composite that can be used as a seal to slow the escape of air. Currently it is being used in Wilson's Double Core tennis balls, giving them twice the life of standard tennis balls. But Inmat believes its material can be used to coat the inside of automotive tires, a billion dollar market. Compared to current tire sealants, Inmat's nano-clay is much thinner and lighter. So in addition to the better sealant properties, it could potentially reduce material costs and reduce tire weight-which in turn would improve fuel economy. An added benefit claimed by Inmat would be easier and more environmentally-friendly recycling of tires.

These are just a few examples of nanotechnology's substantial contribution to evolutionary improvements in existing products. Many others are either in the market or will be making their way there soon. The improvements offered by nanotechnology in these applications don't change the fundamental nature of the product, they just offer substantial improvements. Pants are still pants-but nanowhiskers make them better able to resist stains. Sunscreen prevents burns and exposure to carcinogenic rays, nanoparticles make it more attractive and effective. Car running boards are more durable, but they still serve to offer a step up-nothing more. And disinfectants kill germs and viruses; nano just helps do it better.

This is not to diminish their value. These products offer substantial economic benefits and potential. I only point them out to emphasize why they may be missed or discounted by those that are more familiar with the extraordinary potential of nanotechnology. By comparison, these are not exactly disruptive applications. Still.create a better mousetrap and the world will beat a path to your door.

But now let me turn to the extraordinary revolutionary potential of nanotechnology. These usually are products where properties often change due to nanoscale effects.

Here are some visions of what may be possible through advances in nanotechnology, in combination with advances in biotechnology, information technology and the cognitive sciences

• Nanocomputers smaller than a bacterium
• Medical technologies that provide early detection and characterization of diseases or illnesses and enable targeted delivery of pharmaceuticals, nutraceuticals, gene therapy, and sensors;
• Bioengineered tissues to replace damaged or diseased tissues;
• Data storage devices with memory densities sufficient to store the entire collection of the Library of Congress on a device the size of a sugar cube;
• Wearable digital systems that serve as personal brokers- interacting with our surroundings, anticipating our information needs, seeking it out, and delivering it as needed
• Materials up to 100 times stronger than steel, at a fraction of the weight;
• "Clean" manufacturing processes that truly build from the atom up, reducing or eliminating or re-cycling material waste, energy waste and other of today's by-products; an
• Materials that can transform environmental disaster areas to healthy, habitable areas.

This audience knows these are no longer the pie-in-the-sky fantasies of some wild-eyed science fiction writer. And maybe once they were. But, in fact, there are scientists and engineers here in this room and elsewhere in the United States and around the world working to make each of these visions a reality. And some may be closer to realization than you might imagine.

For example, just this week, research conducted by Lehigh University- supported by the National Science Foundation and the Environmental Protection Agency-was published showing that nanoscale iron is remarkably effective at cleaning up contaminated soil and groundwater. Field tests showed that nanoscale iron reduced toxic chemicals in soil by as much as 96 percent. In addition, the cost of producing nanoscale iron has fallen a full order of magnitude in the past eight years. Given the trillion dollar problem posed by more than 1,000 still untreated Superfund sites, 150,000 underground storage tank releases, and the huge number of landfills, abandoned mines, and industrial sites-this work represents an extraordinary technological advance with staggering economic and environmental benefits.

Consider IT. Drawing from the industry I am most familiar with, here are some examples of the revolutionary work taking place in information technology:

• Last October, IBM researchers announced their success in building and operating the world's smallest working computer circuits using an innovative new approach in which individual molecules cascade across an atomic surface like toppling dominoes.
• Also last Fall, IBM announced that its Millipede project had successfully produced an experimental prototype of a new storage medium with 20 times the density of current hard drives. The chip has more than 1,000 heated spikes that makes and reads 10-nanometer indentations in polymer film, storing and retrieving digital information. And remarkably, IBM says that the chips will be inexpensive to manufacture because they can be made with existing manufacturing methods.
• H-P has continued its leading-edge research in building molecular grids, using a chemical process to make grids of nanowires a few atoms thick, how to place molecules at the intersections of the wires, and how to manipulate the molecules to function like a microprocessor. And these circuits are not only rewritable, but their memory is non-volatile and HP researchers say the process for manufacturing these circuits is "fairly simple."

But as extraordinary as these advances may seem, this is not the limit to what may be possible at the intersection of nanotechnology and other emerging technologies. As I mentioned earlier, some of the possibilities border on the truly miraculous:

• Enabling the blind to see better, the lame to walk better, and the deaf to hear better
• Curing and preventing AIDS, cancer, diabetes and other afflictions
• Ending hunger
• Clean, renewable energy
• Supplementing the power of our minds, enabling us to think great thoughts, create new knowledge and gain new insights.

So when I hear talk from some quarters around the world that suggest a slow down-or even an absolute moratorium-on nanoscale research, I believe the only ethical response is: NO WAY. The economic, societal, and human potential offered by nanotechnology-especially in its convergence with biotechnology, information technology and the cognitive sciences-is too great, too profound, to delay or prevent.

This in no way should suggest that we should not concern ourselves with societal and ethical issues associated with nanotechnology research, development and commercialization. Quite the contrary. The NNI has, since its inception, included a focus on these issues in tandem with our R&D agenda. And, in fact, the United States has led the world in examining and addressing these issues. We began examining these issues sooner and have made more investments than any other nation.

Our efforts go back more than a decade. The National Science Foundation has supported research on the health effects of nano-size particles since 1991 as part of its Nanoparticle Synthesis and Processing program.

This year the National Science Foundation alone will spend more than $25 million on societal, ethical and educational issues related to nanotechnology, and an additional $33 million on environmental and health implications. Just last week, the National Science Foundation announced $3.4 million in grants to U.S. universities to address these subjects.

And each of the NSF-funded Nanoscale Science and Engineering Centers must apply a portion of its budget to addressing societal, ethical and educational issues.

The White House National Science and Technology Council's interagency subcommittee on Nanoscale Science, Engineering and Technology (NSET) is also taking on the challenge, convening representatives from government, industry and academia to proactively address these issues.

• In November, the interagency subcommittee will host a workshop on Nanotechnology and the Environment: Applications and Implications;
• And in December, NSET will host a three-day workshop on the Societal Implications of Nanoscience and Nanotechnology, which I am honored to open with Sen. John Warner.

In addition, Federal nanotechnologies leaders are using opportunities like today's conference, to expand awareness of the need to tackle these issues and to encourage your participation in this vital dialogue. Mike Roco, who chairs the NSET, has delivered more than 20 presentations this year alone addressing societal and ethical implications. And it has been a central theme of nearly every speech I have given on the subject.

We must undertake such efforts now, both because it is the right thing to do. and the necessary thing to do. .

First, let me explain why it is the right thing to do. . Nanotechnology is powerful, and I have given examples of the good it may bring. But such power used inappropriately, irresponsibly or with evil intent can bring about horrendous consequences. In the hands of terrorists, such technology could be used to injure or kill millions. Our memories are still fresh with the pain and devastation that can be wrought by terrorists using just commonplace technology, with reminders from around the world coming all too frequently.

These technologies also could be used to pierce our privacy-monitoring our communications, movements and associations.

Some downsides may be intertwined with the positives that nano offers. Nanotechnology in combination with biotechnology may enable us to enhance our human capabilities by customizing our DNA or incorporating appliances that provide us with superior intelligence, strength, speed, or endurance. But this could create a new societal dividing line of nano have and have-nots. Imagine the advantage to those with nano enhanced mental and physical prowess. And talk about "peer pressure"-conform or fall behind. Clearly these are issues we must grapple with.

Now let me explain why it is the necessary thing to do. Throughout history, promising technological advances have run into strong social resistance. From the advances of the Industrial Revolution, to alternating current, aircraft and automobiles-there have been those who have found such technological achievements to be threatening to their livelihood or their perspectives. And nano may be the ultimate disruptive technology. Disruptive on a scale larger, I submit, than mass production and digital technology.and that's saying something.

Societal resistance can create substantial barriers to technology adoption and diffusion. It can deter or delay the entry of new technology, its economic and social benefits, and its return on investment. In recent years we have seen such concerns play out with respect to nuclear power, genetically modified organisms (GMOs), and other fields. We cannot allow irrational fears to prevent the adoption of technology-enabled products that-like today's GMOs-offer the potential to feed the hungry and alleviate human suffering.

Understanding and addressing, where possible, such concerns may speed technology adoption, broaden the economic and societal benefits, and accelerate and increase return on investment.

Under the leadership of Secretary Don Evans, the Commerce Department has adopted the theme "American Jobs, American Values." While exploring and dealing with societal and ethical issues concurrently with our development and commercialization of nanotechnology, we can and must achieve both: creating American jobs, while honoring and upholding American values!

These are not issues that we can afford to wait to deal with. Our public policy apparatus does not react quickly to change. It is not designed to move quickly. So to engage effectively in the political arena, you must think and act far ahead. And this is an arena that is designed to be responsive to the general public-a general public highly susceptible to the virus of fear. After months on the NY Times Bestseller List, Michael Crichton's nanotechnology nightmare techno-thriller, Prey, will likely be showing soon at a theater near you. This will make reasoned discussion on nanotechnology more difficult, despite the fact that Michael Crichton expresses confidence that we will effectively handle future challenges posed by self-replicating nanobots.

Scientists and engineers on the front lines of research, development and commercialization-along with business leaders and public officials-must play a central role in addressing the societal and ethical issues. But we need a holistic approach that also embraces ethicists, philosophers, theologians, historians, consumer advocates, and others in a public dialogue. We must work closely with educators and the media to ensure all Americans have the knowledge they need-accurate, complete and balanced-to make reasoned judgments on these issues. And this dialogue must extend across the Atlantic and across the Pacific to ensure that nanotechnology advances quickly and responsibly. Technology knows no borders.

The good news is that throughout history, we have successfully managed the downsides of technology-often through great effort-while enjoying the extraordinary benefits it yields. Nanotechnology should be no exception.

In closing, I want to offer my congratulations on your successes to-date, to encourage your continued efforts in advancing nanoscale science and technology, and to urge you to engage in the societal, ethical and political discussions that will shape the future of nanotechnology.

Thank you.