Tài liệu Energy Research at DOE WAS IT WORTH IT? Energy Efficiency and Fossil Energy Research 1978 to 2000 docx

Energy Efficiency and Fossil Energy Research 1978 to 2000 Committee on Benefits of DOE R&D on Energy Efficiency and Fossil Energy Board on Energy and Environmental SystemsDivision on Eng

Energy Research at DOE

WAS IT WORTH IT?

Energy Efficiency and Fossil Energy Research

1978 to 2000

Committee on Benefits of DOE R&D on Energy Efficiency and Fossil Energy

Board on Energy and Environmental SystemsDivision on Engineering and Physical Sciences

National Research Council

NATIONAL ACADEMY PRESSWashington, D.C

NOTICE: The project that is the subject of this report was approved by the Governing Board of theNational Research Council, whose members are drawn from the councils of the National Academy

of Sciences, the National Academy of Engineering, and the Institute of Medicine The members ofthe committee responsible for the report were chosen for their special competences and with regardfor appropriate balance

This report and the study on which it is based were supported by Contract No 99PO80016, Task Order DE-AT01-00EE10735.A000, from the U.S Department of Energy Anyopinions, findings, conclusions, or recommendations expressed in this publication are those of theauthor(s) and do not necessarily reflect the view of the agency that provided support for the project

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The National Academy of Engineering was established in 1964, under the charter of the National

Academy of Sciences, as a parallel organization of outstanding engineers It is autonomous in itsadministration and in the selection of its members, sharing with the National Academy of Sciencesthe responsibility for advising the federal government The National Academy of Engineering alsosponsors engineering programs aimed at meeting national needs, encourages education and re-search, and recognizes the superior achievements of engineers Dr Wm A Wulf is president of theNational Academy of Engineering

The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure

the services of eminent members of appropriate professions in the examination of policy matterspertaining to the health of the public The Institute acts under the responsibility given to the NationalAcademy of Sciences by its congressional charter to be an adviser to the federal government and,upon its own initiative, to identify issues of medical care, research, and education Dr Kenneth I.Shine is president of the Institute of Medicine

The National Research Council was organized by the National Academy of Sciences in 1916 to

associate the broad community of science and technology with the Academy’s purposes of ing knowledge and advising the federal government Functioning in accordance with general poli-cies determined by the Academy, the Council has become the principal operating agency of both theNational Academy of Sciences and the National Academy of Engineering in providing services tothe government, the public, and the scientific and engineering communities The Council is admin-istered jointly by both Academies and the Institute of Medicine Dr Bruce M Alberts and Dr Wm

further-A Wulf are chairman and vice chairman, respectively, of the National Research Council

National Academy of Sciences

National Academy of Engineering

Institute of Medicine

National Research Council

ROBERT W FRI, National Museum of Natural History, Chair

WILLIAM AGNEW, NAE,1 General Motors Research Laboratories (retired)

PETER D BLAIR, National Academy of Sciences

RALPH CAVANAGH, Natural Resources Defense Council

UMA CHOWDHRY, NAE, DuPont Engineering Technology

LINDA R COHEN, University of California, Irvine

JAMES CORMAN, Energy Alternative Systems Inc

DANIEL A DREYFUS, National Museum of Natural History (retired)

WILLIAM L FISHER, NAE, University of Texas, Austin

ROBERT HALL, CDG Management, Inc

GEORGE M HIDY, Envair/Aerochem

DAVID C MOWERY, University of California, Berkeley

JAMES DEXTER PEACH, Ellicott City, Maryland

MAXINE L SAVITZ, NAE, Honeywell

JACK S SIEGEL, Energy Resources International, Inc

JAMES L SWEENEY, Stanford University

JOHN J WISE, NAE, Mobil Research and Development Company (retired)

JAMES L WOLF, consultant, Alexandria, Virginia

JAMES WOODS, HP-Woods Research Institute

1 NAE = Member, National Academy of Engineering

Committee Subgroup on Energy Efficiency

MAXINE L SAVITZ, Co-chair

JAMES L WOLF, Co-chair

Committee Subgroup on Fossil Energy

JACK S SIEGEL, Chair

Committee Subgroup on Benefits Framework

JAMES L SWEENEY, Chair

LINDA R COHENDANIEL A DREYFUSROBERT W FRIDAVID C MOWERY

Liaison from the Board on Energy and Environmental Systems

WILLIAM FULKERSON, University of Tennessee,Knoxville

ROGER BEZDEK, consultantANA-MARIA IGNAT, Senior Project Assistant

iv

BOARD ON ENERGY AND ENVIRONMENTAL SYSTEMS

ROBERT L HIRSCH, RAND, Chair

RICHARD E BALZHISER, NAE,1 Electric Power Research Institute (retired)

DAVID BODDE, University of Missouri

PHILIP R CLARK, NAE, GPU Nuclear Corporation (retired)

WILLIAM L FISHER, NAE, University of Texas, Austin

CHRISTOPHER FLAVIN, Worldwatch Institute

HAROLD FORSEN, NAE, National Academy of Engineering, Washington, D.C

WILLIAM FULKERSON, Oak Ridge National Laboratory (retired) and University of Tennessee, KnoxvilleMARTHA A KREBS, California Nanosystems Institute

GERALD L KULCINSKI, NAE, University of Wisconsin, Madison

EDWARD S RUBIN, Carnegie Mellon University

ROBERT W SHAW, JR., Arete Corporation

JACK SIEGEL, Energy Resources International, Inc

ROBERT SOCOLOW, Princeton University

KATHLEEN C TAYLOR, NAE, General Motors Corporation

JACK WHITE, Association of State Energy Research and Technology Transfer Institutions (ASERTTI)JOHN J WISE, NAE, Mobil Research and Development Company (retired), Princeton, New Jersey

Staff

JAMES ZUCCHETTO, Director

RICHARD CAMPBELL, Program Officer

ALAN CRANE, Program Officer

MARTIN OFFUTT, Program Officer

SUSANNA CLARENDON, Financial Associate

PANOLA GOLSON, Senior Project Assistant

ANA-MARIA IGNAT, Senior Project Assistant

SHANNA LIBERMAN, Project Assistant

1 NAE = Member, National Academy of Engineering.

vii

The Committee on Benefits of DOE R&D on Energy

Ef-ficiency and Fossil Energy wishes to acknowledge and thank

the staffs of the Office of Energy Efficiency and Renewable

Energy and the Office of Fossil Energy for their exemplary

cooperation during the course of this project The committee

called on these offices for extensive data, analyses, and

pre-sentations, which added significantly to their already heavy

workload

The committee also wishes to express appreciation to a

number of other individuals and organizations for providing

important background information for its deliberations

Loretta Beaumont of the U.S House Appropriations

Com-mittee briefed us on the congressional origins of this study

Members of the committee visited the General Electric

Com-pany and Babcock & Wilcox, whose cooperation and

open-ness are greatly appreciated Other organizations that briefed

the committee at one or more of its public meetings include

the Ford Motor Company, the Gas Research Institute, Wolk

Integrated Services, the Foster Wheeler Development

Cor-poration, International Fuel Cells, Siemens Westinghouse,

the Air Conditioning and Refrigeration Institute, the U.S

General Accounting Office, Avista Laboratories, the U.S

Environmental Protection Agency, the Peabody Group,

CONSOL Energy Incorporated, and SIMTECHE The

com-mittee is grateful for the facts and insights that these

brief-ings provided

Importantly, the committee recognizes the contribution

of Roger Bezdek, whose analytic support and keen advice

were essential to the completion of its work

Finally, the chair is acutely aware of the extraordinary

efforts of the members of the committee and of the staff of

the Board on Energy and Environmental Systems of the

Na-tional Research Council (NRC) Every member of the

com-mittee contributed to the analysis of the case studies that

form the foundation of this report and to the deliberations on

the report itself The staff, led by Richard Campbell,

man-aged a very complicated and voluminous process in dance with the highest standards of the NRC What the com-mittee was able to accomplish of the ambitious agenda set

accor-by Congress is entirely due to the efforts of these persons.This report has been reviewed by individuals chosen fortheir diverse perspectives and technical expertise, in accor-dance with procedures approved by the National ResearchCouncil Report Review Committee The purpose of this in-dependent review is to provide candid and critical commentsthat will assist the institution in making its published report

as sound as possible and to ensure that the report meets tutional standards for objectivity, evidence, and responsive-ness to the study charge The review comments and draftmanuscript remain confidential to protect the integrity of thedeliberative process We wish to thank the following indi-viduals for their review of this report: Joel Darmstadter, Re-sources for the Future; Clark W Gellings, Electric PowerResearch Institute; Robert L Hirsch, RAND; John Holdren,John F Kennedy School of Government, Harvard Univer-sity; James J Markowsky, American Electric Power ServiceCorporation (retired); John McTague, Ford Motor Company(retired); Glen R Schleede, consultant; Frank J Schuh, Drill-ing Technology, Inc.; and Lawrence Spielvogel, LawrenceSpielvogel, Inc

insti-Although the reviewers listed above have provided manyconstructive comments and suggestions, they were not asked

to endorse the conclusions or recommendations nor did theysee the final draft of the report before its release The review

of this report was overseen by Harold Forsen of the NationalAcademy of Engineering Appointed by the National Re-search Council, he was responsible for making certain that

an independent examination of this report was carried out inaccordance with institutional procedures and that all reviewcomments were carefully considered Responsibility for thefinal content of this report rests entirely with the authoringcommittee and the institution

ix

A Brief History of Federal Energy R&D, 9

Origin and Scope of This Study, 10

Organization of This Report, 12

Conduct of the Study, 18

Assessment of the Methodology, 18

Reference, 19

Introduction, 20

Selection of the Case Studies, 22

Buildings: Lessons Learned from the Case Studies, 27

Industry: Lessons Learned from the Case Studies, 30

Transportation: Lessons Learned from the Case Studies, 32

Findings and Judgments, 36

Recommendations, 41

References, 42

Introduction, 44

Selection of the Case Studies, 44

Lessons Learned from the Case Studies, 47

Findings, 57

Recommendations, 61

References, 61

Benefits of DOE’s RD&D in Fossil Energy and Energy Efficiency, 63

DOE’s Approach to Evaluating Its RD&D Programs, 65

Portfolio Management, 66

Reference, 69

C BIBLIOGRAPHY RELEVANT TO DOE R&D POLICY, CONGRESSIONAL

D MEASURING THE BENEFITS AND COSTS OF THE DEPARTMENT OF

ENERGY’S ENERGY EFFICIENCY AND FOSSIL ENERGY

Free-piston Stirling Engine Heat Pump (Gas-Fired), 106Indoor Air Quality, Infiltration, and Ventilation, 109Low-emission (Low-e) Windows, 114

Lost Foam Technology, 118Advanced Turbine Systems Program, 121Black Liquor Gasification, 127

Industries of the Future Program, 132Oxygen-fueled Glass Furnace, 135Advanced Batteries for Electric Vehicles, 140Catalytic Conversion of Exhaust Emissions, 143Partnership for a New Generation of Vehicles, 145Stirling Automotive Engine Program, 151

PEM Fuel Cell Power Systems for Transportation, 154References, 158

Bibliography, 161

Coal Preparation, 162Direct Coal Liquefaction, 164Fluidized-bed Combustion, 166Gas-to-Liquids Technology, 169Improved Indirect Liquefaction, 172Integrated Gasification Combined Cycle, 174Emission Control Technologies, 177

Mercury and Air Toxics, 180Waste Management/Utilization Technologies, 183Advanced Turbine Systems, 185

Stationary Fuel Cell Program, 187Magnetohydrodynamics, 190Coal-bed Methane, 193Drilling, Completion, and Stimulation Program, 193Downstream Fundamentals Research Program, 198Eastern Gas Shales Program, 200

CONTENTS xi

Enhanced Oil Recovery, 202Field Demonstration Program, 205Oil Shale, 207

Seismic Technology, 208Western Gas Sands Program, 211References, 213

Bibliography, 214

3-3 Categories and Case Studies, 24

3-4 Net Realized Benefits Estimated for Selected Technologies Related to Energy EfficiencyRD&D Case Studies, 29

3-5 Energy Efficiency Technology Case Studies Slotted in the Matrix Cells That AreMost Relevant Today, 38

4-1 Fossil Energy Budgets for the 22 Programs Analyzed by the Committee, 46

4-2 Fossil Energy Programs’ Cost Sharing, 1978 to 2000, 48

4-3 Net Realized Benefits Estimated for Selected Fossil Energy R&D Programs, 56

4-4 Fossil Energy RD&D Benefits, 57

4-5 Realized Benefits from DOE RD&D Programs, 58

4-6 Fossil Energy Technology Case Studies Slotted in the Matrix Cells That Are MostRelevant Today, 60

E-1 Funding for Advanced Refrigerators-Freezer Compressors, 96

E-2 Benefits Matrix for the Advanced Refrigerator-Freezer Compressors Program, 98E-3 Funding for the Compact Fluorescent Lamps Program, 100

E-4 Benefits Matrix for the Compact Fluorescent Lamps (CFLs) Program, 100

E-5 Benefits Matrix for the DOE-2 Program, 103

E-6 DOE Funding for the Fluorescent Lamp Electronic Ballast Program, 105

E-7 Benefits Matrix for the Fluorescent Lamp Electronic Ballast for Program, 107

E-8 DOE Funding for the Free-Piston Stirling Engine Heat Pump Program, 108

E-9 Benefits Matrix for the Stirling Engine Heat Pump Program, 110

E-10 Benefits Matrix for the Indoor Air Quality Program, 113

E-11 Benefits Matrix for the Low-emission (Low-e) Windows Program, 116

E-12 Funding for the Lost Foam Program, 119

E-13 Benefits Matrix for the Advanced Lost Foam Technologies Program, 120

E-14 Selected Outage Costs, 122

E-15 Funding for the Advanced Turbine Systems Program (Energy Efficiency Component), 124

E-16 Benefits Matrix for the Advanced Turbine Systems Program (Energy Efficiency

Component), 126E-17 Predicted Environmental Emissions from the MTCI/StoneChem Steam Reformer

and from a Tomlinson Recovery Boiler, 128E-18 Funding for the Black Liquor Gasification Program, 129

E-19 Benefits Matrix for the Black Liquor Gasification Program, 131

E-20 Total Funding in IOF/Forest by Program Area, 133

E-21 Changes in IOF Priorities: Share of OIT/Forest Budget by Program Area, 134

E-22 Participation in IOF/Forest Program Then and Now, 135

E-23 Changes in Participation by Share of Budget, 135

E-24 Benefits Matrix for the IOF/Forest Program, 136

E-25 General Funding for the Oxy-fueled Glass Furnace Program, 137

E-26 Funding for the Oxy-fueled Glass Furnace Program by Technology to FY 2000, 138

E-27 Oxy-fuel Penetration and Characteristics by Glass Industry Segment, 138

E-28 Benefits Matrix for the Oxy-Fueled Glass Furnace Program, 139

E-29 DOE Funding for Advanced Battery R&D, 141

E-30 Benefits Matrix for the Advanced Batteries (for Electric Vehicles) Program, 142

E-31 DOE Funding for the Catalytic Conversion Program, 144

E-32 Benefits Matrix for the Catalytic Conversion Program, 145

E-33 Benefits Matrix for the PNGV Program, 148

E-34 MTI Stirling Engine Development Project Budgets, 152

E-35 General Motors STM Stirling Engine Development Project Budgets, 152

E-36 Benefits Matrix for the Stirling Automotive Engine Program, 153

E-37 Funding for Transportation PEM Fuel Cell Power Systems, 154

E-38 Benefits Matrix for the Transportation PEM Fuel Cell Power System Program, 157

F-1 Benefits Matrix for the Coal Preparation Program, 164

F-2 DOE Appropriations and Industry Cost Sharing for Direct Liquefaction, 165

F-3 Benefits Matrix for the Direct Liquefaction Program, 166

F-4 Benefits Matrix for the Fluidized-bed Combustion (FBC) Program, 168

F-5 DOE Investments in the Gas-to-Liquids Program, FY 1978 to FY 2000, 170

F-6 DOE Investments in the Gas-to-Liquids Program, 1999, 170

F-7 Benefits Matrix for the Gas-to-Liquids Program, 171

F-8 Benefits Matrix for the Improved Indirect Liquefaction Program, 173

F-9 Benefits Matrix for the Integrated Gasification Combined-Cycle (IGCC) Program, 176

F-10 Benefits Matrix for the Improvement of the Flue Gas Desulfurization (FGD)

Program, 180F-11 Benefits Matrix for the NOx Control Program, 181

F-12 Benefits Matrix for the Mercury and Air Toxics Program, 182

F-13 Benefits Matrix for the Waste Management/Utilization Technologies Program, 184

F-14 Funding for the Advanced Turbine Systems Program (Fossil Energy Component), 185

F-15 Benefits Matrix for the Advanced Turbine System (ATS) Program (Fossil Energy

Compo-nent), 187F-16 Funding for the DOE Fuel Cell Program, FY 1978 to FY 2000, 188

F-17 Benefits Matrix for the Stationary Fuel Cells Program, 189

F-18 DOE Funding for the Magnetohydrodynamics Program, 191

F-19 Benefits Matrix for the Magnetohydrodynamics (MHD) Program, 192

F-20 Funding for the Coal-bed Methane Program, 193

F-21 Benefits Matrix for the Coal-bed Methane Program, 194

TABLES AND FIGURES xv

F-22 Total Funding for the Drilling, Completion, and Stimulation Program, FY 1978 to

FY 1999, 195F-23 ADCS Gas Project Organizational Chart, 196

F-24 Benefits Matrix for the Drilling, Completion, and Stimulation Program, 198

F-25 Summary of Environmental Benefits of Drilling Technology Advances, 199

F-26 Funding for the Downstream Fundamentals Program, 199

F-27 Benefits Matrix for the Downstream Fundamentals Program, 200

F-28 Benefits Matrix for the Eastern Gas Shales Program (EGSP), 202

F-29 Benefits Matrix for the Improved Enhanced Oil Recovery Program, 204

F-30 Benefits Matrix for the Field Demonstration Program, 206

F-31 Funding for the Oil Shale Program, 207

F-32 Benefits Matrix for the Oil Shale Program, 209

F-33 Benefits Matrix for the Seismic Technology Program, 210

F-34 Benefits Matrix for the Western Gas Sands Program (WGSP), 212

FIGURES

ES-1 Matrix for assessing benefits and costs, 3

ES-2 Derivation of columns for the benefits matrix, 3

2-1 Matrix for assessing benefits and costs, 14

2-2 Derivation of columns for the benefits matrix, 16

3-1 Distribution of DOE’s budget by sector for its energy efficiency R&D programs, 22

3-2 Consumption of energy in residential and commercial buildings in 1999 by application, 25

3-3 Percentage of primary energy used in the manufacturing sector by major

industrial category, 1999, 263-4 Percentage of fuel consumption for transportation by service, 1999, 26

3-5 Electricity consumed by refrigerators, 1947 to 2001, 28

4-1 Funding for DOE’s Office of Fossil Energy, FY 1978 to FY 2000, 45

4-2 Overall budget, FY 1978 to FY 2000 ($10,528 million), 47

4-3 Budget for coal and gas conversion technologies, FY 1978 to FY 2000 ($6149 million), 48

4-4 Adjusted budget for coal and gas conversion technologies, FY 1978 to FY 2000 ($2956

million), 494-5 Budget for DOE’s fossil energy environmental programs, FY 1978 to FY 2000

($410 million), 514-6 Reported budgets for electricity production, FY 1978 to FY 2000 ($2502 million), 52

4-7 Reported budgets for oil and gas production research, FY 1978 to FY 2000 ($1468

million), 54

D-1 Matrix for assessing benefits and costs, 86

D-2 Derivation of columns for the benefits matrix, 87

E-1 Electricity consumed by refrigerators, 1947 to 2001, 97

E-2 Distribution of OAAT PNGV funds by technology, 147

Executive Summary

From the time of the first Organization of Arab

Petro-leum Exporting Countries oil embargo nearly 30 years ago,

the United States has looked to new technology for solutions

to its energy problems Indeed, the first government reports

to recommend an energy research and development (R&D)

agenda appeared within weeks of that 1973 event In 1975,

President Ford created the Energy Research and

Develop-ment Administration (ERDA), consolidating under one

um-brella existing R&D energy programs from several

agen-cies In late 1977, ERDA became part of the new Department

of Energy (DOE) And today, energy R&D remains a major

element of DOE’s mission

From 1978 through 1999, the federal government

ex-pended $91.5 billion (2000 dollars) on energy R&D, mostly

through DOE programs This direct federal investment

con-stituted about a third of the nation’s total energy R&D

ex-penditure, the balance having been spent by the private

sec-tor Of course, government policies—from cost sharing to

environmental regulation to tax incentives—influenced the

priorities of a significant fraction of the private investment

On balance, the government has been the largest single

source and stimulus of energy R&D funding for more than

20 years

In legislation appropriating funds for DOE’s fiscal year

(FY) 2000 energy R&D budget, the House Interior

Appro-priations Subcommittee directed an evaluation of the

ben-efits that have accrued to the nation from the R&D conducted

since 1978 in DOE’s energy efficiency and fossil energy

pro-grams In response to the congressional charge, the National

Research Council formed the Committee on Benefits of DOE

R&D on Energy Efficiency and Fossil Energy (the

commit-tee)

From its inception, DOE’s energy R&D program has been

the subject of many outside evaluations The present

evalua-tion asks whether the benefits of the program have justified

the considerable expenditure of public funds since DOE’s

formation in 1977, and, unlike earlier evaluations, it takes a

comprehensive look at the actual outcomes of DOE’s

re-search over two decades

BACKGROUND

A Historical Perspective

From 1978, debate about how best to spend the public’smoney has surrounded DOE’s research program Perhaps themost important change in the debate has been the evolvingunderstanding of the larger goals of energy policy and hence

of R&D objectives Reducing dependence on energy imports(especially oil) persisted as a central tenet of energy policyinto the 1980s During that period, government R&D policystressed development of alternative liquid fuels By the early1980s, more faith was placed in market forces to resolveenergy supply and demand imbalances and in the develop-ment of technologies to enlarge the former and constrain thelatter In consequence, federal research goals shifted andbegan to stress long-term, precompetitive R&D After 1992,technology priorities moved in the direction of renewableenergy sources and energy efficiency And the role of fed-eral funding, having swung between support of expensivedemonstration projects and limited funding of basic research,settled into a preference for cost sharing in the form of pub-lic-private partnerships

This brief recounting of the shifting forces that shapedenergy R&D over the last 25 years conveys a sense of thetwists and turns of both program goals and management phi-losophy that DOE’s research managers have had to followsince 1978 Without an appreciation of these shifts, evaluat-ing the successes and failures of DOE’s research programwould be a very frustrating and puzzling enterprise

Energy Efficiency and Fossil Energy Research at DOE

The two program areas—energy efficiency and fossil ergy—that lie within the scope of this study have expendedabout $22.3 billion in federal funds since 1978, or about 26percent of the total DOE expenditure on energy R&D ofapproximately $85 billion (2000 dollars) Their funding his-tories reflect the changes in goals and philosophies that havecharacterized energy research at DOE

en-Energy Efficiency Programs

Energy-efficient technologies can reduce the life-cycle

costs of energy-consuming goods and services paid by

con-sumers and industry, reduce pollutant emissions, reduce the

risk of oil supply interruptions, and help to stabilize the

elec-tricity system and make it more reliable DOE’s energy

effi-ciency research, development, and demonstration (RD&D)

programs have helped to improve the energy efficiency of

buildings technology and industrial and transportation

tech-nologies The transportation sector has always received the

largest share of the budget (42 percent in 2000 and,

cumula-tively, 43 percent between 1978 and 2000) In the early years

of the program (for example, in FY 1978), buildings received

40 percent of the funds and industry, 18 percent In FY 2000,

there was less of a difference, with buildings receiving 25

percent of the funds and industry, 32 percent Over the entire

program, industry and buildings each received about 28

per-cent of the funds

Fossil Energy Programs

Research in the Office of Fossil Energy has historically

focused on two programs: the Office of Coal and Power

Sys-tems and the Office of Natural Gas and Petroleum

Technol-ogy Very large budgets from 1978 through 1981 were

pro-vided in response to the energy crises of the 1970s and early

1980s During that period, over 73 percent of the money was

provided for technologies to produce liquid and gas fuel

op-tions from U.S energy resources—coal and oil shale

Over the 1978 to 2000 study period, 58 percent of the

expenditures were for RD&D in coal utilization and

conver-sion Of this, approximately one-half was spent on direct

liquefaction and gasification for building and operating

large, commercial-scale demonstration plants between 1978

and 1981 In 1978, the coal conversion and utilization

por-tion of the budget represented 68 percent of the total fossil

energy expenditures, but since then, as funding for direct

liquefaction and gasification declined, it has represented a

considerably lower percentage In 2000, it represented only

30 percent of the overall fossil energy budget for the

tech-nology programs analyzed

The share of Office of Fossil Energy funds devoted to

environmental characterization and control was 4 percent of

the total over the study period, partly because the

Environ-mental Protection Agency (EPA) maintained a large program

in this area prior to 1985 The share of funds for the

electric-ity production programs averaged 24 percent over the study

period, and the share of funds for the oil and gas programs

averaged 14 percent, one-third of which was for shale oil

R&D in the early period

EVALUATION FRAMEWORK AND CASE STUDIES

In theory, evaluating the benefits and costs of DOE’s

re-search program should be relatively straightforward It

would require adding up the total benefits and costs of search conducted since 1978, determining what proportion

re-of each is attributable to DOE funding, and calculating thedifference between the DOE contributions and the cost ofachieving them In practice, methodological challengesabound Of these, the most fundamental is how to define andsystematically capture the diverse benefits that result frompublicly funded research within a dynamic environment ofmarketplace activity, technological advancement, and soci-etal change See Chapter 2 and Appendix D for further de-tails on the framework for doing this

Evaluation Framework

Justification for public sector research rests on the vation that public benefits exist that the private sector cannotcapture In such cases, the private costs of developing andmarketing a technology may exceed the benefits that the pri-vate sector can capture The committee developed a compre-hensive framework based on this general philosophy thatwould define the range of benefits and costs, both quantita-tive and qualitative, that should be considered in evaluatingthe programs Depending on the outcomes of the R&D un-dertaken, the principal benefit of a program, for example,may be the knowledge gained and not necessarily realizedeconomic benefits The matrix shown in Figure ES-1 anddiscussed below provides an accounting framework for theconsistent, comprehensive assessment of the benefits andcosts of the fossil energy and energy efficiency R&D pro-grams The matrix can be completed for each discrete pro-gram, project, or initiative that has a definable technologicalobjective and outcome The framework is intended to sum-marize all net benefits to the United States, to focus attention

obser-on the main types of benefits associated with the DOE sion, and to differentiate benefits based on the degree of cer-tainty that they will one day be realized It has been designed

mis-to capture two dimensions of publicly funded R&D: (1) DOEresearch is expected to produce public benefits that the pri-vate economy cannot reap and (2) some benefits may berealized even when a technology does not enter the market-place immediately or to a significant degree

The classes of benefits (corresponding to the rows of thematrix) are intended to capture types of public benefits ap-propriate to the objectives of DOE R&D programs Based

on these stated objectives, the committee adopted the threegeneric classes of benefits (and related costs) for the energyR&D programs—economic, environmental, and securitybenefits:

• Economic net benefits are based on changes in the total

market value of goods and services that can be produced inthe U.S economy under normal conditions, where “normal”refers to conditions absent energy disruptions or other en-ergy shocks and the changes are made possible by techno-logical advances stemming from R&D

EXECUTIVE SUMMARY 3

• Environmental net benefits are based on changes in the

quality of the environment that have occurred or may occur

as a result of a new technology RD&D program

• Security net benefits are based on changes in the

prob-ability or severity of abnormal energy-related events that

would adversely impact the overall economy, public health

and safety, or the environment

The three columns in the matrix are the first step toward a

more explicit definition of the benefits to be included They

reflect different degrees of uncertainty about whether a given

benefit will be obtained Two fundamental sources of

uncer-tainty are particularly important—technological

uncertain-ties and uncertainuncertain-ties about economic and policy conditions

(Figure ES-2) Rather than attempting to fully characterize

the uncertainty of benefits, the committee used these two

distinctions—the state of technology development and the

favorability of economic and policy conditions—to define

the columns of the matrix (Figure ES-1) The first column,

“realized benefits and costs,” is reserved for benefits that are

almost certain—that is, those for which the technology is

de-veloped and for which the economic and policy conditions are

favorable for commercialization of the technology The ond column, which includes less certain benefits, is called “op-tions benefits and costs.” These consist of benefits that might

sec-be derived from technologies that are fully developed but forwhich economic and policy conditions are not likely to be,but might become, favorable for commercialization Allother benefits, to the extent they exist, are called “knowl-edge benefits and costs.” The framework recognizes that thetechnologies being evaluated may be in different stages ofthe RD&D cycle, and by its nature, it represents a snapshot

in time, with a focus on outcomes of the work performed

To arrive at entries for the cells of the matrix, a logicaland consistent set of rules for measuring the results of theindividual initiatives is also necessary These rules definemore exactly the meanings of the rows and columns, andthey provide a calculus for measuring the values to be en-tered in each of the cells

Case Studies

To assess the benefits of the energy efficiency and fossilenergy programs within this evaluation framework, the com-

FIGURE ES-2 Derivation of columns for the benefits matrix.

Will be favorable for Realized benefits Knowledge benefits Knowledge benefitscommercialization

Might become favorable Options benefits Knowledge benefits Knowledge benefitsfor commercialization

Will not become favorable Knowledge benefits Knowledge benefits Knowledge benefitsfor commercialization

Technology Development Economic/

Policy Conditions

FIGURE ES-1 Matrix for assessing benefits and costs.

Realized Benefits Options Benefits Knowledge Benefits

mittee prepared a series of case studies on technologies and

programs selected by the committee for examination It

should be noted that there were large differences in project

scale, size, complexity, and time horizon between the energy

efficiency and fossil energy programs In particular, the

fos-sil energy program tends to be characterized by relatively

large, long-term projects As a result, the committee was able

to select a manageable number of case studies—22—that

covered almost all of the research expenditures in the DOE

fossil energy program since 1978 In contrast, the energy

efficiency program, especially in the buildings and industry

programs, is composed of a large number of relatively small

projects The committee determined that it was not possible

to analyze enough cases to capture a large fraction of DOE’s

research expenditures in these areas Therefore, the

commit-tee selected 17 case studies that, in its expert opinion, were

sufficiently representative to permit the testing of the

ana-lytical framework and to draw reliable conclusions about the

success or failure of the overall program The criteria

for selecting this representative group are explained in

Chapter 3

Perhaps the most difficult analytic problem is assigning

to DOE a proportion of the overall benefit of an R&D

pro-gram that properly reflects DOE’s contribution to it In most

of the case studies, DOE, industry, and sometimes other

fed-eral and nonfedfed-eral governmental research organizations

contributed to the outcome of the research program The

committee found no reliable way to quantify the DOE

con-tribution in most cases, and doing so remains a cal challenge for the future For the purposes of this study, itsimply attempted to specify in its case study analyses thespecific role that DOE played—the outcome that would nothave happened had DOE not acted Based on this assess-ment, the committee used conservative judgment to charac-terize the DOE contribution for purposes of developing find-ings and recommendations No conclusions about thebenefits of unevaluated current energy efficiency or fossilenergy programs can be drawn from this study

methodologi-In Tables ES-1 and ES-2, each of the 39 case studies thecommittee examined is slotted into the benefits matrix If atechnology has more than one kind of benefit, the primarybenefit is indicated by boldface type

Energy EfficiencyAlthough the issues, problems, and solutions for energyefficiency may be different for each of the three end-usesectors (buildings, industry, and transportation), lessonslearned from one sector are often applicable to all the sec-tors To study the energy efficiency program comprehen-sively, the committee selected case studies to illustrate themain components of the program, important examples ofRD&D activities, and the range of benefits and costs that theprogram has yielded (see Selection of the Case Studies inChapter 3) The 17 case studies represent $1.6 billion, orabout 20 percent, of the total $7.3 billion energy efficiency

TABLE ES-1 Energy Efficiency Technology Case Studies Slotted in the Matrix Cells That Are Most Relevant Today

(net life-cycle energy Electronic ballasts Compact fluorescents Compact fluorescents

DOE-2 (applied to design) Free-piston Stirling heat pump (failure)

Forest products Environmental Indoor air quality, infiltration, PNGV Catalytic converters for diesels

Electronic ballasts Indoor air quality (IAQI&V) distributed generation

Advanced refrigerators Forest products Black liquor gasification

Stirling engine for automobiles (failure)

Security benefits Advanced turbine systems PNGV Advanced batteries for electric vehicles

DOE-2 (peak load analysis) PEM fuel cells for transportation and

distributed generation

NOTE: PEM, proton exchange membrane; PNGV, Partnership for a New Generation of Vehicles The table does not indicate possible future position as a result of completing R&D No significance should be attached to the ordering of the entries in the cells When more than one type of benefit is relevant for a technology, the primary benefit is shown in bold.

EXECUTIVE SUMMARY 5

TABLE ES-2 Fossil Energy Technology Case Studies Slotted in the Matrix Cells That Are Most Relevant Today

Economic benefits Drilling/completion/stimulation Improved indirect liquefaction Improved indirect liquefaction

Atmospheric fluidized-bed combustion Improved direct liquefaction Drilling/completion/stimulation

Western gas sands Drilling/completion/stimulation Improved direct liquefaction

Eastern gas shales Atmospheric fluidized-bed combustion Pressurized fluidized-bed combustion Improved enhanced oil recovery Advanced turbine system Advanced turbine system

Waste management and utilization Improved enhanced oil recovery Western gas sands

Flue gas desulfurization Improved enhanced oil recovery

Coal preparation Seismic technology Mercury and air toxics Flue gas desulfurization

Atmospheric fluidized-bed combustion Drilling/completion/stimulation Drilling/completion/stimulation Western gas sands Pressurized fluidized-bed combustion Fluidized-bed combustion Eastern gas shales Advanced turbine systems Advanced turbine systems Improved enhanced oil recovery Fuel cells Improved enhanced oil recovery Field demonstration programs Eastern gas shales Shale oil

Seismic technologies Field demonstration programs Field demonstration

Coal-bed methane Flue gas desulfurization Flue gas desulfurization

Waste management Mercury and air toxics Security benefits Drilling/completion/stimulation Improved indirect liquefaction Drilling/completion/stimulation

Improved enhanced oil recovery Drilling/completion/stimulation Fuel cells Field demonstration programs Improved direct liquefaction

Seismic technologies Field demonstration programs

Shale oil

NOTE: When more than one type of benefit is relevant for a technology, the primary benefit is shown in boldface type NOx, oxides of nitrogen; IGCC, integrated gasification combined cycle.

R&D expenditures over the 22-year period Included are both

successes and failed or terminated projects As noted above,

the selection process did not involve a statistical sampling of

all the projects; instead, it attempted to choose a

representa-tive sample of energy efficiency projects

Fossil Energy

The committee compiled case studies for 22 of the fossil

energy RD&D programs funded between 1978 and 2000

These case studies account for nearly $11 billion (73

per-cent) of the $15 billion appropriated to the Office of Fossil

Energy for RD&D during the period

CONCLUSIONS AND RECOMMENDATIONS

The committee found that DOE’s RD&D programs infossil energy and energy efficiency have yielded significantbenefits (economic, environmental, and national security-re-lated), important technological options for potential applica-tion in a different (but possible) economic, political, and/orenvironmental setting, and important additions to the stock

of engineering and scientific knowledge in a number offields

The committee also found that DOE has not employed aconsistent methodology for estimating and evaluating thebenefits from its RD&D programs in these (and, presum-

ably, in other) areas Importantly, DOE’s evaluations tend to

focus on economic benefits from the deployment of

tech-nologies, rather than taking into account the broader array of

benefits (realized and otherwise) flowing from these

invest-ments of public funds

Finally, the committee found that how DOE’s research

programs were organized and managed made a real

differ-ence to the benefits that were produced by the research

Benefit-Cost Assessment

The committee found that DOE investments in RD&D

programs in both the fossil energy and energy efficiency

pro-grams during the past 22 years produced economic benefits,

options for the future, and knowledge benefits Although the

committee was not always able to separate the DOE

contri-bution from that of others, the net realized economic

ben-efits in the energy efficiency and fossil energy programs

were judged by the committee to be in excess of the DOE

investment

In the programs reviewed by the committee in the energy

efficiency area, most of the realized economic benefits to

date are attributable to three relatively modest projects in the

building sector carried out in the late 1970s and 1980s and

continuing into the 1990s The committee estimated that the

total net realized economic benefits associated with the

en-ergy efficiency programs that it reviewed were

approxi-mately $30 billion (valued in 1999 dollars), substantially

exceeding the roughly $7 billion (1999 dollars) in total

en-ergy efficiency RD&D investment over the 22-year life of

the programs

The committee estimated that the realized economic

ben-efits associated with the fossil energy programs that it

re-viewed amounted to nearly $11 billion (1999 dollars) over

the same 22-year period, some of which it attributed to costs

avoided by demonstrating that more stringent environmental

regulation is unnecessary for waste management and for

ad-dressing airborne toxic emissions

The realized economic benefits of fossil energy programs

instituted from 1986 to 2000, $7.4 billion, exceeded the

esti-mated $4.5 billion cost of the programs during that period

However, the realized economic benefits associated with the

fossil energy programs from 1978 to 1986, estimated as $3.4

billion in 1999 dollars, were less than the costs of this period’s

fossil energy programs ($6.0 billion in 1999 dollars)

In addition to realized benefits, a number of technologies

have been developed that provide options for the future if

economic or environmental concerns justify their use For

example, the advanced turbine system (ATS) and the

inte-grated gasification combined-cycle (IGCC) system are

tech-nologically ready options awaiting changes in the energy

marketplace The energy efficiency programs in RD&D also

produced option benefits, with Partnership for a New

Gen-eration of Vehicles (PNGV) and forest products (Industries

of the Future) being important examples

Substantial reductions in pollution evidently resultedfrom technologies developed in these programs Although it

is difficult to assign a monetary value to environmental efits, the committee estimates that both RD&D programsyielded environmental benefits valued conservatively at $60billion to $90 billion

ben-National security has been enhanced by a number of theprograms For example, a number of fossil energy programs(enhanced oil production and seismic technologies) in-creased oil production and reserve additions in the UnitedStates and thereby reduced U.S dependence on importedoil Although fuel economy regulation has provided signifi-cant national security benefits by reducing the country’s de-pendence on petroleum in transportation, DOE’s researchprograms have proven disappointing in this regard The op-tions benefit of PNGV, although not yet realized, is in the oilsecurity area

All the technologies funded by the DOE add to our stock

of knowledge in varying degrees

In addition to its analysis of the individual classes of efits embodied in the conceptual framework, the committeereached the following summary conclusions:

ben-• By an order of magnitude, the largest apparent benefitswere realized as (1) avoided energy costs in the buildingssector in energy efficiency and (2) avoided environmentalcosts from the NOx reductions achieved by a single program

in fossil energy This result is not surprising given the anced research portfolio, which also includes its share offailures and modest successes

bal-• These large realized benefits accrued in areas wherepublic funding would be expected to have considerable le-verage For one thing, the buildings sector is fragmented,and the prevailing incentive structure is not conducive totechnological innovation For another, the NOx reductionachieved in fossil energy is an environmental benefit thatprivate markets cannot easily capture

• The importance of standards pulling technological novation in buildings and transportation cannot be exagger-ated Often, DOE energy efficiency research has been used

in-to provide a proper basis for standards

• Important but smaller realized benefits were achieved

in fossil energy’s oil and gas program and energy ficiency’s industry programs Here, the committee con-cluded that DOE participation indeed took advantage of theprivate sector activity to realize additional public benefits

ef-In these cases, however, a clearly defined DOE role is cial to ensuring that public funding is likely to produce ap-propriate benefits

cru-• Forced government introduction of new technologieshas not been a successful strategy Recent programs in bothenergy efficiency and fossil energy have recognized the im-portance of industry collaboration and of responding tolikely economic or policy conditions to create credible ben-efits

EXECUTIVE SUMMARY 7

Program Evaluation

The committee found that managers of both the energy

efficiency and the fossil energy RD&D programs did not

utilize a consistent methodology or framework for

estimat-ing and evaluatestimat-ing the benefits of the numerous projects

within their programs In addition to a tendency to assign

too much weight to realized economic benefits, especially

avoided costs and unshared costs, the inconsistent

ap-proach adopted by DOE policy makers to evaluation of

their programs often was associated with an overstatement

of economic benefits

The benefits matrix adopted for this study is a robust

framework for evaluating program outcomes Its

applica-tion imposes a rigor on the evaluaapplica-tion process that clarifies

the benefits achieved and the relationship among them

Recommendation DOE should adopt an analytic

frame-work similar to that used by this committee as a uniform

methodology for assessing the costs and benefits of its

R&D programs DOE should also use an analytic

frame-work of this sort in reporting to Congress on its programs

and goals under the terms of the Government Performance

and Results Act

Recommendation To implement this recommended

ana-lytic approach, DOE should consider taking the following

steps:

1 Adopt and improve guidelines for benefits

charac-terization and valuation Convene a workshop of DOE

ana-lysts, decision makers, and committee members to discuss

the problems encountered in the application of the

com-mittee’s guidelines and to consider how to begin the

4 Provide for external peer review of the application of

the analytic framework to help ensure that it is applied

consistently for all programs

5 Seek to include the views of all stakeholders in

pub-lic reviews of its R&D programs

DOE programs may be effective in very diverse ways,

and better data on the nature of program results will aid

policy makers in assessing the appropriateness of program

structures It is essential to report specifically the concrete

results achieved by DOE’s participation in such programs

relative to the efforts of other investors Application of this

framework requires data that often are difficult to obtain

within DOE Public costs may be quite modest compared

with the benefits if they catalyze private investments in

in-novation

Recommendation DOE should consistently record

histori-cal budget and cost-sharing data for all RD&D projects dustry incurs significant costs to commercialize technologydeveloped in DOE programs, and—especially in the assess-ment of economic benefits—these costs should be docu-mented where possible

In-Portfolio Management

The committee’s review of the fossil energy and energyefficiency programs underscores the significant changes inenergy policy during the nearly three decades of the pro-grams’ existence There have been changes in technologicalpossibilities; expectations about energy supply, prices, andsecurity; DOE programmatic goals; the national and interna-tional political environment; and the feasibility and accom-plishments of various technological approaches and R&Dperformers A balanced R&D portfolio is particularly im-portant since individual R&D projects may well fail toachieve their goals Rather than viewing the failure of indi-vidual R&D projects as symptoms of overall program fail-ure, DOE and congressional policy makers should recognizethat project failures generate considerable knowledge andthat a well-designed R&D program will inevitably includesuch failures An R&D program with no failures in indi-vidual research projects is pursuing an overly conservativeportfolio

Recommendation DOE’s R&D portfolio in energy

effi-ciency and fossil energy should focus first on DOE (national)public good goals, and it should have (1) a mix of explor-atory, applied, development, and demonstration research andrelated activities, (2) different time horizons for the deploy-ment of any resulting technologies, (3) an array of differenttechnologies for any programmatic goals, and (4) a mix ofeconomic, environmental, and security objectives In addi-tion, it is important to effectively integrate the results of ex-ploratory research projects with applied RD&D activitieswithin individual programs

Recommendation DOE should develop clear performance

targets and milestones, including the establishment of mediate performance targets and milestones, at the inception

inter-of demonstration and development programs (in tion with industry collaborators, where appropriate) andemploy these targets and milestones as go/no-go criteriawithin individual projects and programs

coopera-The committee’s review of DOE RD&D programs gests that programs seeking to support the development oftechnologies for rapid deployment are more likely to be suc-cessful when the technological goals of these programs areconsistent with the economic incentives of users to adoptsuch technologies For the programs in which these goals arecentral, the case studies illustrate a number of instances in

sug-which the adoption of the results of DOE RD&D programs

and the associated realization of economic benefits were

aided by regulatory, tax, or other policies that significantly

improved the attractiveness of these technologies to

prospec-tive users

Conversely, the case studies include a number of

in-stances in which the attainment by DOE RD&D programs of

their technical goals (and the production of option or

knowl-edge benefits) did not produce substantial economic

ben-efits, because incentives for users to adopt these

technolo-gies were lacking Such technolotechnolo-gies may provide significant

option and knowledge benefits, and they represent

appropri-ate targets for DOE RD&D programs

Recommendation Where its RD&D programs seek to

de-velop technologies for near-term deployment, DOE should

consider combining support for RD&D with the

develop-ment of appropriate market incentives for the adoption of

these technologies based on an understanding of market

con-ditions and consumer needs

The committee’s case studies highlight the importance of

flexibility in the RD&D program structure, especially the

need for periodic reevaluation of program goals against

change in the regulatory or policy environment, the projected

energy prices and availability, and the performance or

avail-ability of alternative technologies, among other factors

Recommendation DOE should expand its reliance on

inde-pendent, regular, external reviews of RD&D in energy

effi-ciency and fossil energy program goals and structure,

enlist-ing the participation of technical experts who are not

otherwise involved as contractors or R&D performers in

Recommendation DOE should maintain its current

poli-cies encouraging industry cost sharing in RD&D programs

In general, industry’s share of program costs should increase

as a project moves from early-stage or exploratory R&Dthrough development to demonstration Policy makersshould ensure that an emphasis on collaboration with indus-try in the formulation of R&D priorities and R&D perfor-mance does not result in an overemphasis on near-term tech-nical objectives within the DOE R&D portfolio or in neglect

of public good objectives

The committee’s case studies suggest that an appropriaterole for DOE in RD&D programs varies, depending onwhether a given program is focused on exploratory research,development, or demonstration, as well as the structure ofthe industry (including the amount of industry-funded R&D

or the presence of well-established industrial R&D tia) within which a given technology will be deployed Thecommittee found that DOE RD&D programs in fossil en-ergy and energy efficiency have developed greater flexibil-ity and sensitivity to the needs of the relevant industrial sec-tors over the past 15 years The committee applauds thistrend and urges that DOE policy makers continue to explorecreative and adaptive solutions to the requirements of col-laborative RD&D in very diverse industrial sectors

consor-Recommendation DOE should strive to build flexibility

into the structure of its RD&D programs

priori-Perhaps the most important change in the debate has beenthe evolving understanding of the larger goals of energypolicy, and hence of R&D objectives The earliest response

to the first Arab oil embargo was the Nixon administration’sProject Independence, which took as its purpose making theUnited States independent of foreign energy sources Al-though this goal quickly proved impractical, reducing de-pendence on energy imports (especially oil) persisted as acentral tenet of energy policy into the 1980s Well into the1980s, government R&D policy stressed the development ofalternative liquid fuels To accelerate this outcome, the gov-ernment engaged in large and expensive demonstrationprojects to stimulate the production of liquid fuels from do-mestic resources such as oil shale and coal The sense ofurgency behind this policy of producing homegrown fuelsculminated in the establishment of the Synthetic Fuels Cor-poration (SFC) in 1980

In the next year, the incoming Reagan administration cally changed the direction of national energy policy Morefaith was placed in market forces to resolve energy supplyand demand imbalances and in the development of technolo-gies to enlarge the former and constrain the latter In conse-quence, federal research goals began to stress long-term,precompetitive R&D Large demonstration programs virtu-ally disappeared from the scene, the SFC quickly expired,and the administration proposed drastic cuts in the federalenergy R&D budget Although the Congress did not approvethe deepest funding reductions, most of the 1980s became atime of major retrenchment for DOE’s research program.Throughout this entire period, from the mid-1970sthrough the 1980s, the balance of federal funding betweensupply and conservation research was a matter of continuingcontroversy The issue had been joined as early as 1975,when ERDA’s first R&D plan was criticized for giving short

radi-The oil embargo by the Organization of Arab Petroleum

Exporting Countries nearly 30 years ago stimulated the

United States to search for new technology solutions to its

energy problems Indeed, the first government reports to

rec-ommend an energy research and development (R&D) agenda

appeared within weeks of that 1973 event In 1975,

Presi-dent Ford created the Energy Research and Development

Administration (ERDA), consolidating under one umbrella

existing R&D energy programs from several agencies In

late 1977, ERDA became part of the new Department of

Energy (DOE) And today, energy R&D remains a major

element of DOE’s mission

From 1978 through 1999, the federal government

bud-geted $91.5 billion (2000 dollars) in energy R&D, mostly

through DOE programs (NSF, 2000) This direct federal

in-vestment constituted about a third of the nation’s total

ex-penditure on energy R&D, the balance having been spent by

the private sector Since government policies—from cost

sharing to environmental regulation to tax

incentives—in-fluenced the priorities of a significant fraction of the private

investment, it can be said that, on balance, the government

has been the largest single source and stimulus of energy

R&D funding for more than 20 years

From its inception, DOE’s energy R&D program has been

the subject of many outside evaluations This project once

again addresses the question of whether the benefits of the

program justify the considerable expenditure of public funds

since 1978 Unlike the authors of earlier studies, however,

this committee aimed to evaluate comprehensively the

ac-tual outcomes of DOE’s research over two decades This

chapter outlines the background of the study and the

committee’s charge and approach to it

A BRIEF HISTORY OF FEDERAL ENERGY R&D

From 1978 on, debate about how best to spend the

public’s money surrounded DOE’s research program As

differing views gained ascendancy in this ongoing debate,

shrift to conservation The Carter administration made

con-servation a centerpiece of its energy policy, and much was

made of the “market failures” that prevented the private

sec-tor from adopting cost-effective (and readily available)

en-ergy conservation technologies The Reagan administration

took a different view, and cuts in the conservation budgets

were among the most severe of the cuts that it proposed

In the late 1980s, the nation’s understanding of the

en-ergy problem and of the goals of enen-ergy policy matured By

1985, the combined effect of more efficient energy use and

important new finds of oil and gas had loosened the hold of

the Organization of Petroleum Exporting Countries (OPEC)

on oil prices and greatly leavened the pessimism of the

re-source depletion school of energy policy Concern for

en-ergy dependence (measured by the level of oil imports) gave

way to the notion of vulnerability (calculated as the fraction

of oil used in the economy whether imported or not) as the

chief metric of security against possible disruptions in

inter-national oil markets Environmental concerns gained even

greater prominence as a driver of energy policy, particularly

the need to moderate emissions from the nation’s most

widely used domestic energy resource—coal The

emer-gence in the 1990s of global climate change as a serious

environmental issue deepened concerns over the burning of

coal, and indeed of all fossil fuels Early views of energy

conservation changed to become a strategy of deploying

en-ergy efficiency technologies as an economically attractive

solution to energy and environment problems During this

time, DOE first began to appreciate and address the health

impacts of indoor air quality associated with the

inappropri-ate use of more efficient technology with the potential to

cause adverse health effects when buildings become

essen-tially sealed environments

Arguably, the late 1980s and early 1990s saw energy

policy and its associated research objectives reach a more

stable level Even so, adapting to these shifts created another

round of profound change in the direction and management

of DOE’s R&D program Early in the period, the Clean Coal

Technology program invested heavily in technologies for

burning coal in a more environmentally friendly way After

1992, technology priorities moved in the direction of

renew-able energy sources and energy efficiency, newly interesting

because of their low or zero net contribution to greenhouse

gas emissions, thus offsetting fossil energy-based emissions

and slowing the buildup of atmospheric greenhouse gases

and resulting climate change Toward the end of the period,

energy R&D planning began to take a portfolio approach,

recognizing both that energy policy must serve multiple

goals and that research produces failures as well as successes

And the role of federal funding, having swung between

sup-port of expensive demonstration projects and limited

fund-ing of basic research, settled into a preference for cost

shar-ing in the form of public-private partnerships

This brief recounting of the shifting forces that shaped

energy R&D over the last 25 years leaves out many

impor-tant details, of course But even the highlights convey a sense

of the twists and turns of both the program goals and themanagement philosophy that DOE’s research managers havehad to follow since 1978 Without an appreciation of theseshifts, evaluating the successes and failures of DOE’s re-search program would be a very frustrating and puzzlingenterprise

ORIGIN AND SCOPE OF THIS STUDY

In legislation appropriating funds for DOE’s fiscal year(FY) 2000 energy R&D budget, the U.S House Appropria-tions Subcommittee on the Interior directed an evaluation ofthe benefits that have accrued to the nation from the researchand development programs that have been conducted since

1978 in DOE’s Office of Energy Efficiency and RenewableEnergy and its Office of Fossil Energy The congressionalcharge for this evaluation limits its scope to the energy effi-ciency and fossil fuel programs because they are the onesunder the jurisdiction of the subcommittee DOE conductsother energy research programs, including ones in renew-able and nuclear energy.1 The two program areas—energyefficiency and fossil energy—that lie within the scope of thisstudy have expended about $22.3 billion in federal fundssince 1978, or about 26 percent of the total DOE energyR&D expenditure of approximately $85 billion (2000 dol-lars) (NSF, 2000)

There have been large differences in project scale, size,complexity, and time horizon between the energy efficiencyand the fossil energy programs; these differences make anydirect comparisons of results of the two programs difficult.Both programs have long histories and have undergone sig-nificant changes over the past two decades The Office ofEnergy Efficiency and Renewable Energy came into being

in its current form around 1982, having evolved from theOffice of Conservation and Renewable Energy, the name bywhich it was known after DOE was founded by the Carteradministration The change in name reflected both thechangeover to the Reagan administration and a shift in phi-losophy as the energy crisis eased The Office of EnergyEfficiency and Renewable Energy comprises five main pro-gram offices, three of which this study focuses on: the Office

of Building Technology, State, and Community Programs(BTS); the Office of Industrial Technologies (OIT); and theOffice of Transportation Technologies (OTT)

Research in the Office of Fossil Energy has historicallyfocused on two main programs: the Office of Coal and PowerSystems (CPS) and the Office of Natural Gas and PetroleumTechnology (NGPT) The coal and power systems programcan be viewed as having gone through three phases sinceDOE was formed The first phase, from the late 1970s to the

1 The committee is sensitive to the fact that the study covers only part of the energy research conducted by DOE, but it elected not to extend the study to include the entire technology portfolio.

INTRODUCTION 11

early 1980s, entailed the push for energy security,

develop-ment of alternative fuel supplies, and a focus on energy

effi-ciency, with near-term commercial demonstration

empha-sized The second phase, from the early 1980s to the

mid-1980s, was characterized by the easing of the energy

crisis as oil prices stabilized, and the CPS R&D programs

shifted their attention to compliance with Clean Air Act

Amendments Environmental issues have come to dominate

the third and current phase, providing the main impetus for

CPS programs from the mid-1980s to the present

DOE’s oil and gas research, like its CPS research, has

changed substantially since 1978 The history of the oil

pro-gram can be divided into two periods: from 1978 to 1988

and from 1989 to the present In the earlier period, the focus

was on long-term, high-risk R&D, mostly for enhanced oil

recovery from existing wells In more recent years, the

pro-gram has stressed near- and mid-term results, emphasizing

technological solutions to improving production At first, the

natural gas program focused on production from

unconven-tional natural gas resources, such as gas shales, tight sands,

and coal-bed methane or gas hydrates In recent years, the

focus has shifted to the development of tools for finding

natu-ral gas, with a downstream program emphasis on

gas-to-liq-uids technology

In response to the congressional charge, the National

Re-search Council formed the Committee on Benefits of DOE

R&D on Energy Efficiency and Fossil Energy (see

Appen-dix A for committee members’ biographical information)

The statement of task for this study describes the issues

in-cluded in the committee’s review of DOE’s fossil energy

and energy efficiency programs:

The NRC committee appointed to conduct this study will

conduct a retrospective examination of the costs and

ben-efits of federal research and development since 1978 for

ad-vanced technologies in the Department of Energy’s program

areas of fossil energy and energy efficiency The committee

will develop a comprehensive framework that, at a

mini-mum, reflects the goals and public purposes of federal R&D

(but which may be broader in scope), and using this

frame-work will assess the benefits of federal energy R&D and will

identify improvements that have occurred because of federal

funding in (1) fossil energy technologies with regard to

per-formance aspects such as efficiency of conversion into

elec-tricity, lower emissions to the environment and cost

reduc-tion; and (2) energy efficiency technologies with regard to

more efficient use of energy, reductions in emissions and

cost impacts in the industrial, transportation, commercial and

residential sectors.

In conducting this study, the committee will critically

re-view written reports and hear presentations at its meetings

related to the benefits and costs of federal R&D in the areas

of fossil and energy end-use efficiency technologies, as noted

above The committee will:

(1) utilize the applicable literature on R&D strategies and

the role of R&D in technological and economic

develop-ment, develop a comprehensive framework for defining the range of benefits and costs, from quantitative to nonquanti- tative, of federal R&D and use this comprehensive frame- work as a basis for conducting its analysis In developing this framework, consideration should be given to direct ben- efits related to program goals and other indirect benefits (for example, unexpected products or improvements in scientific understanding), as well as aspects of valuing these benefits (for example, optimum risk profiles, options values, timing

of benefits);

(2) assess the benefits of R&D (in the areas of fossil energy and energy efficiency) in light of the framework developed and available information about these programs In under- taking this analysis, the committee will review the historical context over the applicable time period (1978 to the present) and related policy, legislative, and strategy goals and pur- poses of the R&D; review studies that have been undertaken

by DOE on the costs and benefits of its R&D efforts; review studies and/or evaluations by the private sector, consulting companies, public interest groups, academic researchers, and others on the costs and benefits of energy technology R&D investments;

(3) based on its framework, analysis, and observations, gest strategies to inform future R&D choices.

sug-The committee will use consultants as needed to conduct analysis based on guidance from the committee The com- mittee will write a final report that addresses its statement of work outlined above and documents its conclusions and ob- servations on the benefits and costs of federal energy R&D

in energy efficiency and fossil energy technologies, ing a list of significant accomplishments and intellectual contributions identified.

includ-To devise an approach to conducting the study, the mittee carefully reviewed the statement of task and the back-ground that led to its formulation Three elements of the as-signment appeared to be particularly important and weretherefore instrumental in guiding the study design:

com-• The study should focus on outcomes The task

state-ment requires a retrospective examination of improvestate-mentsthat have already occurred The committee therefore ana-lyzed actual costs and actual benefits realized to date as itsstarting point for evaluating energy research

• Developing a methodology is a central element of the

task The statement of task not only requires this, but it alsospeaks to the need for a methodology that can be applied tofuture research proposals Accordingly, the committee gavegreat weight to developing an approach to characterizing out-comes that would be useful to future analysts

• The main purpose of evaluating the benefits and costs

of more than 25 years of energy research is prospective, notretrospective In other words, the value of the analysis lies inthe lessons that can be learned from past experience and invalidating the analytic methodology developed by the com-mittee Because it could not evaluate in detail all of the re-

search projects in fossil energy and energy efficiency over

this period, the committee selected projects for study and

made decisions on the depth of analysis with these values in

mind (Subsequent chapters, notably Chapter 3, discuss the

specific judgments that were made in this connection.)

Equally important to the study design, however, are

sev-eral issues that the committee elected not to address To some

degree, what was not done is the mirror image of the study

priorities noted above Nevertheless, it is useful for the

un-derstanding of the report to make explicit that the committee

did not do the following:

• Attempt to evaluate the likelihood of achieving future

results The committee recognizes—and the reader should

understand—that some of the research projects evaluated in

the study are still active and have not yet had time to achieve

the results expected of them This is not to suggest that such

projects will be unsuccessful, but only that maintaining a

careful distinction between actual and promised outcomes is

essential to rigorous evaluation

• Assess whether federal funds devoted to energy

re-search could have been better spent in other ways The

analysis presented in this report assesses relative costs and

benefits and draws some conclusions about the stances that seem to be associated with research that pro-duces more (or fewer) benefits than costs Whether the ben-efits are sufficient to justify the costs, given the possiblealternative uses of funds, is not within the scope of this study

circum-ORGANIZATION OF THIS REPORT

Central to the conduct of this study is the development of

a comprehensive evaluation framework Chapter 2 discussesthe framework and the rationale behind its development andapplication; a detailed description of the analytic methodol-ogy appears in Appendix D Chapters 3 and 4 then addressthe benefits and costs of a representative sample of energyefficiency and fossil energy programs, respectively Appen-dixes E and F contain the case studies developed by the com-mittee for the 39 programs Chapter 5 provides the com-mittee’s overall findings and recommendations for strategies

to inform future energy R&D choices

REFERENCE

National Science Foundation (NSF) 2000 Inventory of Historical Tables

by Topic from Research and Development in Industry Washington, D.C.: National Science Foundation.

2

Framework for the Study

and DOE’s achievement of each of these technologies (Table2-1)

The technologies listed in Table 2-1 probably all efited from what may be called “critical facilitating tech-

ben-OVERVIEW

In theory, evaluating the benefits and costs of DOE’s

re-search program should be relatively straightforward It

would require adding up the total benefits and costs of

re-search conducted since 1978, determining what proportion

of each benefit is attributable to DOE funding, and

calculat-ing a balance between the DOE contributions and the cost of

achieving them In practice, of course, methodological

chal-lenges abound Of these, the most fundamental is how to

define and systematically capture the diversity of benefits

that result from publicly funded research within a dynamic

environment of marketplace activity, technological

advance-ment, and societal change In this chapter, the framework the

committee developed for doing so is discussed, as well as

comments on some of the implications of applying it

THE SETTING

Basic economic principles suggest that the private sector

undertakes research and commercializes technologies when

private firms can capture economic benefits in excess of the

costs of achieving them Justification for public sector

re-search rests on the observation that the private sector cannot

capture some of the benefits Environmental benefits not

rec-ognized in market prices provide a familiar example of this

principle, but there are others, including the difficulty of

cap-turing proprietary benefits from basic research

As background for its study of DOE-sponsored R&D, the

committee decided to examine the role played by industry

and government in developing the technologies that

success-fully came to market and therefore presumably produced

sig-nificant private benefits The committee, with the help of

outside experts, compiled a list of the most important

ad-vances in fossil energy and energy efficiency technology

over the past two decades Based on the experience of the

committee and other experts, judgments were then made

about the significance of both industry and DOE funding

TABLE 2-1 The Most Important Fossil Energy andEnergy Efficiency Technological Innovations Since 1978

Technology Now in the Marketplace Level of DOE Influence

Fossil energy

Efficient gas turbine in stationary systems A/M

Deep water drilling and production A/M Improved oil and gas reservoir A/M characterization and modeling

Improved oil and gas drilling: horizontal, A/M deviated, and extended

Atmospheric fluid-bed combustion I Fracture technology for tight gas I Oil refinery optimization A/M

Energy efficiency

More efficient electric motors A/M Higher mileage automobiles A/M More efficient electronic ballasts D More efficient household refrigerators D More effective insulation I

More efficient gas furnaces A/M More energy-efficient windows I More efficient industrial processes A/M More efficient buildings I

NOTE: Influence levels: A/M, absent or minimal; I, influential; D, nant.

domi-nologies,” most of which DOE had some part in developing.

These technologies include the following:

• Improved materials and catalysts;

• Improved instrumentation, sensors, and controls;

• Improved computer hardware;

• Improved software;

• Improved process and combustion modeling; and

• High-bandwidth communications

The committee did not attempt to evaluate the role of DOE

in these critical facilitating technologies

This analysis, admittedly subjective, nevertheless

sug-gests that the private sector did in fact develop and deploy

many important technologies without DOE participation On

the other hand, DOE did make an influential or dominant

contribution in 9 of the 22 technologies reviewed

The rough conclusion to be drawn from these

observa-tions is that the DOE funding of energy R&D is not

neces-sarily associated with the most obviously attractive

ad-vances Rather, as basic economic principles suggest, DOE

research should also, and even mostly, be associated with

public policy objectives

THE FRAMEWORK

Based on this general philosophy, the committee

devel-oped a comprehensive framework to define the range of

ben-efits and costs, both quantitative and qualitative, that should

be considered in evaluating the programs The framework is

intended to summarize all net benefits to the United States,

to focus attention on the major types of benefits associated

with the DOE mission, and to differentiate benefits based on

the degree of certainty that the benefits will one day be

real-ized It has been designed to capture two dimensions of

pub-licly funded R&D: (1) DOE research is expected to produce

public benefits that the private economy cannot reap and

(2) some benefits may be realized even when a technologydoes not enter the marketplace immediately or to a signifi-cant degree

The matrix shown in Figure 2-1 and discussed below vides an accounting framework for the consistent, compre-hensive assessment of the benefits and costs of the fossilenergy and energy efficiency R&D programs The matrixcan be completed for each discrete program, project, or ini-tiative that has a definable technological objective and out-come The framework recognizes that the technologies be-ing evaluated may be in different stages of the RD&D cycle;

pro-as well, by its nature, the framework represents a snapshot intime, with a focus on outcomes of the work performed

Class of Benefits (Rows of the Matrix)

The classes of benefits, which correspond to the rows ofthe matrix, are intended to capture types of public benefitsappropriate to DOE R&D programs DOE’s current statedmission spells out these benefits in general terms, as follows(DOE, 2000): “To foster a secure and reliable energy systemthat is environmentally and economically sustainable, to be

a responsible steward of the Nation’s nuclear weapons, toclean up our own facilities, and to support continued UnitedStates leadership in science and technology.”

The Strategic Plan expands on the energy aspect of themission as follows: “The Department is working to assureclean, affordable, and dependable supplies of energy for theNation, now and in the future That means increasing thediversity of energy and fuel choices and sources, bringingrenewable energy sources into the market, strengtheningdomestic production of oil and gas, supporting commercialnuclear energy research, and increasing energy efficiency”(DOE, 2000)

The fossil energy and energy efficiency programs eachhave a mission statement, and the individual R&D initia-tives or projects may have more explicit and focused objec-tives The approach of each program to benefit analysis, as

FIGURE 2-1 Matrix for assessing benefits and costs.

Realized Benefits Options Benefits Knowledge Benefits

FRAMEWORK FOR THE STUDY 15

presented to the committee in briefings and background

documents, reflects the general themes of the DOE mission

statement and is encompassed within it

Based on these stated objectives, the committee adopted

the three generic classes of benefits (and related costs) for

the energy R&D programs: “economic,” “environmental,”

and “security” benefits The entry in each cell of the matrix

is a measure of the economic, environmental, or security net

benefit further characterized according to the column

clas-sification schemes, discussed below Economic costs, or

un-desirable consequences, are quantified as negative

compo-nents of net benefits, and economic benefits, or desirable

consequences, as positive components Ideally, the entries in

the cells would be quantitative measures of each category of

net benefits; in some cases, however, only qualitative

de-scriptors are possible

Economic net benefits are based on changes in the total

market value of goods and services that can be produced in

the U.S economy under normal conditions, where “normal”

refers to conditions absent energy disruptions or other

en-ergy shocks The benefit must be measured net of all public

and private costs Economic value is increased either

be-cause a new technology reduces the cost of producing a given

output or because it allows additional valuable outputs to be

produced by the economy Economic benefits are

character-ized by changes in the valuations based on market prices

These benefits must be estimated on the basis of comparison

with the next best alternative, not some standard or average

value The “next best alternative” is defined as a technology

(or combination of technologies) that is available and

com-mercially proven that would accomplish essentially the same

objective as a technology being evaluated and would be the

technology of choice for a buyer in the market This avoids

the common problem of comparing a new technology with

technology currently in general use rather than with

technol-ogy that is already available and that could replace the

exist-ing technology In many instances, there may be no

alterna-tive better than the one in general use

Environmental net benefits are based on changes in the

quality of the environment that have occurred, will occur, or

may occur as a result of the technology A technology could

directly reduce the adverse impact on the environment of

providing a given amount of energy service by, for example,

reducing sulfur dioxide emissions per kilowatt-hour of

elec-tric energy generated by a fossil fuel-fired power plant, or by

indirectly enabling the achievement of enhanced

environ-mental standards (by, for example, introducing the choice of

a high-efficiency refrigerator) Environmental net benefits

are typically not directly measurable by market prices but by

some measure of the valuation society is willing to place on

changes in the quality of the environment They can often be

quantified in terms of reductions in net emissions or other

physical impacts In some cases, market values can be

as-signed to the impacts based upon emissions trading or other

indicators

Security net benefits are based on changes in the ability or severity of abnormal energy-related events thatwould adversely impact the overall economy, public healthand safety, or the environment Historically, these benefitsarose in terms of national security issues, i.e., they were ben-efits that assured energy resources required for a militaryoperation or a war effort Subsequently, they focused on de-pendence upon imported oil and the vulnerability to inter-diction of supply or cartel pricing as a political weapon Morerecently, the economic disruptions of rapid internationalprice fluctuations from any cause have been emphasized.Currently, the economic and health and safety conse-quences of unreliable energy supply have become a moregeneral security issue The reliability of electric power gridswas the initial concern, but natural gas transportation andstorage and petroleum refining and product supply systemsare now receiving attention

prob-Security net benefits can be seen as special classes of nomic net benefits or environmental net benefits They are

eco-“special” because they accrue from preventing events thathave a relatively low likelihood or a low frequency of occur-rence

Range of Benefits (Columns of the Matrix)

The columns in the matrix are the first step toward a moreexplicit definition of the benefits to be included They recog-nize a range of benefits from R&D that are logical measures

of the value of the programs The categories are “realized,”

“options,” and “knowledge.”

The three columns reflect degrees of uncertainty aboutwhether the particular benefits have been or will be obtained.Two fundamental sources of uncertainty are particularlyimportant: technological uncertainties and uncertaintiesabout economic and policy conditions

The technology development programs can be classifiedaccording to whether the technology has been developed, isstill in progress, or has terminated in failure All else beingequal, a technology still under development is less likely toresult in benefits than a technology that has already beensuccessfully developed, since technological success is notassured in the former case However, even if a technology isnever successfully developed, the knowledge gained in theprogram could lead to another beneficial technology.Similarly, if a technology is fully developed and eco-nomic and policy conditions are favorable for its commer-cialization, there can be reasonable confidence that futurebenefits will accrue However, it may be that economic andpolicy conditions are not expected to be favorable but mightbecome favorable under plausible circumstances In thiscase, the benefits may occur, but their probability is lower.Finally, while it may be virtually certain that the economicand policy conditions will never become favorable and thatthe technology itself will never be adopted, the knowledgeassociated with the technology development may be appli-

cable in other ways, possibly—but not probably—resulting

in benefits

Rather than attempting to fully characterize the

uncer-tainty of benefits, the committee has used two distinctions—

state of technology development and the favorability of

eco-nomic and policy conditions—to place a benefit in one of

the three columns The first column in Figure 2-1, called

“realized benefits,” is reserved for benefits that are almost

certain: those for which the technology has been developed

and economic and policy conditions favor its

commercial-ization The second column, which includes less certain

ben-efits, is called “options benefits.” These are benefits that may

be derived from technologies that are fully developed but for

which economic and policy conditions might but are not

likely to favor commercialization

All other benefits, to the extent they exist, are called

“knowledge benefits.” The category is thus a very broad one

It includes knowledge generated by programs still in

progress, programs terminated as failures, and programs that

were technological successes but will not be adopted because

economic and policy conditions will never be favorable

Fig-ure 2-2 summarizes the committee’s notions of the

range-of-benefit columns

Realized net benefits can be characterized as economic,

environmental, or security benefits They accrue from

tech-nologies for which the R&D has been completed and that

have been or are ready to be commercialized on an economic

basis under current economic, regulatory, and tax conditions

Options net benefits can also be characterized as

eco-nomic, environmental, or security benefits; they are based

on technologies for which the R&D has been completed and

for which the costs and technical capabilities are reasonably

certain but that have not been commercialized These

tech-nologies are not commercially viable under current economic

conditions, but some plausible future circumstance, such as

changed price structures, limitations on alternative

technolo-gies or resources, or evolving health or environmental

stan-dards could make them a valuable option

Knowledge benefits—also classifiable as economic, vironmental, or security— comprise useful or potentiallyuseful scientific knowledge and technology that have re-sulted from the R&D initiatives and that are not reflected inthe realized or options benefits

en-Measures of Value (Entries in the Matrix Cells)

To arrive at entries for the cells of the matrix, a logicaland consistent set of rules for measuring the results of theindividual initiatives is also necessary These rules definemore exactly the meanings of the rows and columns andprovide a calculus for measuring the values to be entered ineach of the cells A complete discussion of the rules to beapplied in using the matrix was prepared to guide thecommittee’s own efforts and to request information fromDOE It is presented as Appendix D of this report Some ofthe more important rules are abstracted here to assist thereader in understanding the results of the evaluation

Economic BenefitsThe estimate of economic benefits resulting from an R&Dinitiative is intended to measure the net economic gain cap-tured by the economy The impact of a new technology ismeasured by comparing it with the next best alternative thatwas available when the technology was introduced or thatwould have been available absent the DOE efforts Benefitsare intended to be net of all economic costs of achieving thebenefits, not just the cost to the direct participants in theR&D initiative Benefits and costs are to be calculated on thebasis of the life cycle of investments Dollar amounts are allexpressed in constant 1999 dollars The committee did notdiscount benefits, costs, or governmental expenditures butadded together benefits from different years, adjusted onlyfor inflation

Neither macroeconomic stimulation of the nationaleconomy or the creation of jobs is to be considered a benefit

FIGURE 2-2 Derivation of columns for the benefits matrix.

Will be favorable for Realized benefits Knowledge benefits Knowledge benefitscommercialization

Might become favorable Options benefits Knowledge benefits Knowledge benefitsfor commercialization

Will not become favorable Knowledge benefits Knowledge benefits Knowledge benefitsfor commercialization

Technology Development Economic/

Policy Conditions

FRAMEWORK FOR THE STUDY 17

of an R&D initiative In today’s national economic

circum-stances, such impacts are more likely to be transfers rather

than net increases at the national level In any case, the

in-vestment of similar amounts of funds elsewhere in the

economy would also have impacts To attribute net

macro-economic benefits to a particular R&D initiative, therefore,

would be highly speculative and should not be done

Unintended improvements in economic activities that are

unrelated to the objectives of the R&D initiative usually

should not be counted as benefits in evaluating the success

of the R&D Such serendipitous results may offset the costs

to the public of the initiative, but they are a random

conse-quence of investment Ancillary benefits might have resulted

from investing the funds elsewhere Judgment must be

ap-plied in specific cases to determine if the results are relevant

to the objectives of the initiative

Environmental Benefits

Environmental benefits result when the introduction of a

new technology RD&D program makes possible an

improve-ment (or reduced degradation) in measures of environimprove-mental

quality Most often, the benefit is a net reduction in toxins or

other harmful emissions compared with the situation that

would have prevailed in the absence of the technology Such

benefits might be achieved by improving emission controls

or increasing the efficiency of emission-producing processes

In some cases, an environmental benefit may be a net

reduc-tion in the use of environmental resources for the provision

of energy services, including a reduction of adverse impacts

on land use, air and water quality, or aesthetics

Savings in the costs of achieving a given standard of

emis-sion control or a required level of remediation would be

con-sidered to be an economic benefit Environmental benefits

result only if there is a net improvement in environmental

quality from what would have been the case absent the DOE

program

Security Benefits

The prevention or mitigation of macroeconomic losses

resulting from energy disruptions can be considered as a

se-curity benefit Transient and unpredicted impacts on the

na-tional economy of sudden and/or unpredicted service

inter-ruptions or price shocks can severely impair productivity at

the national level, leading to real costs that can be estimated

Reductions in the probability or severity of such events are

appropriate measures of the security benefit of R&D

initia-tives

It may be possible to calculate a reasonable realized

secu-rity benefit—for example, in the case of a technology that

has demonstrably reduced the frequency of electric service

interruptions More often, however, security benefits based

on changing the probability of international energy

disrup-tions will be difficult to quantify and will instead be

de-scribed qualitatively

Realized Economic Benefits

In computing realized economic benefits, the net cycle effects of a completed technology are considered.However, the decreases in damages associated with reducedreleases of materials as a result of the new installations maylast for much longer times Benefits are included for the en-tire time of this decreased damage

life-Realized economic benefits should include the results ofthe life-cycle operation of all capital stock utilizing the tech-nology that has been installed through the year 2000 and that

is projected to be installed through 2005 (the 2005 rule) Anew technology may well be adopted for new installationsbeyond a 5-year horizon, but for technologies that providesignificant economic benefits that can be captured by privatesector investments, it is reasonable to assume that at somepoint a comparable improvement would have been intro-duced in the absence of the DOE R&D initiative Adopting a5-year limit (the 5-year rule) on future installations but al-lowing the full useful life of the installations to be consid-ered provides a reasonable but conservative estimate of thecontribution of the technology without introducing specula-tive projections of its longer-range impact The committee’scalculations also assume that the DOE R&D or demonstra-tion program advanced the introduction of new technologyinto the market by 5 years

Options BenefitsOptions benefits are credited to those technologies forwhich the R&D has been completed and the technologicaland economic attributes are reasonably well known Thesetechnologies can be considered to be “on the shelf” and avail-able for commercialization if future circumstances warrant.They may be uneconomic under current pricing conditionsbut become viable if the costs of alternatives rise They mayalso become viable if the alternatives are curtailed by in-creasingly stringent environmental, health, or safety regula-tions or by unexpected constraints on fuels or other re-sources Judgment must be used in specific cases Not allunsuccessful R&D initiatives can be viewed as potentiallyviable in situations that have credible possibilities of occur-ring

Knowledge BenefitsKnowledge benefits are defined as scientific knowledgeand useful technological concepts resulting from the R&Dthat have not yet been incorporated into commercialized re-sults of the program but hold promise for future use or areuseful in unintended applications These are products of theresearch that have value over and above the benefits thathave been accounted for in the other two columns of thematrix Knowledge benefits may include unanticipated andnot closely related technological spin-offs that are made pos-sible by the research programs This is probably the broadestand most heterogeneous category of benefits

CONDUCT OF THE STUDY

The committee began its work in June 2000 As

envi-sioned by the statement of task, the committee first

devel-oped an analytic framework for assessing benefits The

com-mittee reviewed a number of reports (see Appendix C)

prepared by others over the years evaluating DOE’s R&D

program Unlike most of these reports, the charge for this

project focuses attention on assessing the actual outcomes of

DOE’s energy R&D programs The committee therefore

elected to take a case-study, data-intensive approach to this

project, recognizing that time and resource constraints would

prevent it from resolving every analytic issue and closing all

the gaps in data that ideally would be needed to implement

the analytic framework

Because of these constraints, the committee identified a

representative sample of programs and projects as a basis for

arriving at overall findings and recommendations As

out-lined in the discussion of the task statement in Chapter 1,

this selection was designed both to identify lessons learned

from the range of programs conducted by DOE and to

evalu-ate the utility of the analytic framework in a diversity of

circumstances

The committee then asked the Office of Fossil Energy

and the Office of Energy Efficiency and Renewable Energy

at DOE to provide information required by the framework,

and to do so following the detailed procedures specified in

Appendix D Both the framework and the procedures are

essential parts of the methodology developed by the

com-mittee Both offices supplied a great deal of statistical and

analytic information in response to the committee’s request

Much of the data provided had to be developed specifically

for this study Because the programs changed over time, the

task of documenting programs as far back as 1978 was at

times extremely challenging

Each of the 39 case studies was assigned to a committee

member for analysis With the help of an independent

con-sultant, committee members assessed the DOE submissions

for quality and conformance to the analytic methods

pre-scribed by the committee Considerable iteration and

correc-tion took place in this process to ensure that the committee’s

procedures were followed As the study proceeded, the

framework was refined The cooperation of DOE staff in

this process was exemplary, and it is gratefully

acknowl-edged

The committee met as a whole and in subgroups to ensure

that the analytic process was being applied consistently

across all of the case studies In addition, considerable

atten-tion was paid to the use of common assumpatten-tions, designed

to promote comparability of results across case studies as

well as conservatism in the valuing of benefits One such

assumption is embodied in the 5-year rule, which assumes

the technology would have entered the market 5 years later

without government involvement For example, if a

technol-ogy entered the market with DOE involvement in 1992, the

5-year rule assumes the technology would have gotten tomarket in 1997 without a government program Another as-sumption is the 2005 rule, by which the committee assessedbenefits for all the technologies evaluated by the committee

as being installed in the market by 2005 and assessed thosebenefits over their useful economic life The year 2005 wasused because the committee was reasonably sure of eco-nomic and other conditions up to that time and did not want

to project out further because of uncertainties

As part of its deliberations, the committee invited bers of government, industry, and public interest groups tocomment on the goals, performance, and effectiveness of therelevant DOE research and development programs over theperiod of interest Appendix B lists the formal commentsreceived during the course of the project In analyzing thecase studies, the committee also directly contacted other rep-resentatives of industries that participated with DOE in thecase study programs to secure their views on the value of theresearch and DOE’s role in it

mem-In these ways, the committee attempted to be tive in the judgments it drew from the available data Whilemuch more can and should be done to refine the methodol-ogy launched with this study, the committee believes themethodology has come far enough to allow stating with con-fidence the findings and recommendations included in thisreport

conserva-ASSESSMENT OF THE METHODOLOGY

The committee considers that the analytic methodologydescribed in this chapter is useful as an internally consistentand comprehensive framework for the objective comparison

of the benefits and costs of energy R&D programs acrossprograms and technologies Its opinion is based on the actualapplication of the methodology in the 39 case studies of di-verse technologies In the course of this experience, how-ever, a number of lessons bearing on the methodology’s im-plications and future utility were identified

To provide perspective on the more detailed analyses thatfollow, as well as to suggest directions for improvement,several of the lessons learned are discussed here:

• Specifying categories of benefits by means of systemicanalysis is a useful discipline In particular, benefit evalua-tion must take care to give adequate weight to benefits otherthan realized economic benefits (the upper left corner cell ofthe matrix) Quantifying realized economic benefits is usu-ally easier than quantifying the kinds of benefits that fit inthe eight other cells, and the temptation is great to focus onthese easily quantified benefits But, as the committee hasnoted, environmental and security benefits, while harder tovalue in dollar terms, are equally important objectives ofpublic funding Similarly, creating options in the face of fu-ture oil price changes and acquiring knowledge that can be

FRAMEWORK FOR THE STUDY 19

used by many private sector actors are important public

ben-efits

• Many of the case studies in the committee’s sample

experienced the changes in policy and other changes that

occurred in DOE R&D programs outlined in Chapter 1 This

fact needs to be taken into account in judging the outcomes

observed when the committee applied the framework For

example, the programs to develop a technology for making

liquid fuels from coal were not notably successful

How-ever, had oil prices continued to rise, as expected at the time

the program was designed, the outcome might have been

more favorable In some cases, these effects are so striking

that the committee notes them explicitly In all cases, the

reader should consider the context of the program before

arriving at a final judgment about its benefits

• More refined analysis of knowledge benefits would

im-prove the methodology The committee’s focus on outcomes

results in many benefits falling into the knowledge category

In some cases, this is because recently begun research

projects have not yet had time to achieve their expected

re-sults In other cases, research that is abandoned before

pro-ducing a realized or optional technology also produces

mainly knowledge benefits Distinguishing between these

two kinds of knowledge benefits may provide useful

infor-mation that the present version of the methodology does not

provide

• The committee’s use of the 5-year rule should not be be

interpreted to mean that the only effect of federal R&D is to

accelerate the introduction of a technology into the

market-place by 5 years The committee recognizes that there may

be many effects of federal R&D, including the acceleration

of a technology into the marketplace by more than 5 years,

or other effects such as an increase in the ultimate market

penetration of a technology The committee used the 5-year

rule because it needed a uniform, conservative standard for

the analysis of these particular case studies

• As noted earlier, quantification of the benefits suffersfrom inherently difficult methodological problems The timeand resource constraints of this study made it difficult even

to apply fully the valuation methods that do exist Where ithas used quantified benefits to support its findings and rec-ommendations, the committee considers it has been conser-vative in establishing upper and lower bounds for its benefitestimates In general, the committee believes it is more likelythan not that a more thorough analysis would increase thevalues of the benefits that the committee has assigned toDOE’s programs

• Perhaps the most difficult analytic problem is ing to DOE a proportion of the overall benefit of an R&Dprogram that properly reflects DOE’s contribution to it Inmost of the case studies, DOE, industry, and—sometimes—other federal and nonfederal governmental research organi-zations contributed to the outcome of the research program

assign-In some cases, as in the development of seismic technology,for example, industry made virtually all of the contribution,but DOE nevertheless made an important one The commit-tee has found no reliable way to quantify the DOE contribu-tion in most cases, and doing so remains a methodologicalchallenge for the future For the purpose of this study, thecommittee has simply attempted to identify in its case studyanalyses the specific role that DOE played, by looking at theoutcome that would not have happened had DOE not acted

The committee considers that it has used conservativejudgment in characterizing the DOE contribution for thepurpose of developing findings and recommendations

Evaluation of the Energy Efficiency Programs

mental quality, and raise economic productivity in many tors of the economy Indeed, research, development, demon-stration, and deployment (RDD&D) in energy efficiencyhave proved effective ways to simultaneously reduce the use

sec-of electricity, reduce oil imports, meet environmental quirements, and improve economic productivity Even withthe U.S economy gradually moving away from energy-in-tensive industry, as much as two-thirds of the drop in energyintensity of the economy in the last three decades can beattributed to improvements in energy efficiency (OTA,1990)

re-This chapter evaluates the contribution that DOE’s ergy efficiency RD&D programs have made to improvingthe technologies used in the buildings, industry, and trans-portation sectors These energy-efficiency programs, alongwith the Federal Energy Management Program (FEMP) andstate and local grant programs (these involve weatheriza-tion), are in the current Office of Energy Efficiency and Re-newable Energy (EERE) and come under the Interior Ap-propriations Committee of the U.S Congress The renewableenergy part of EERE is funded by the Energy and WaterAppropriations Committee of the Congress The committeewas charged with addressing only the portion of the EEREprograms that comes under the Interior Appropriations Com-mittee, not FEMP, the state grants, or renewable compo-nents

en-The authorities and goals of the DOE programs havechanged and evolved over the past 22 years The RD&Denergy efficiency program was initiated in the early 1970s,following the first oil embargo (1973), at DOE’s predeces-sor agencies—the Federal Energy Administration (FEA) andthe Energy Research and Development Administration(ERDA)—in a climate of great urgency and concern overU.S energy consumption and dependence on foreign sources

of petroleum During the 1970s, the programs at FEA,ERDA, and then DOE were mostly applied product and pro-cess research, working with industry to develop more effi-

INTRODUCTION

Energy efficient technologies can reduce the life-cycle

costs of energy-consuming goods and services paid by

con-sumers and industry, pollutant emissions, and the risk of oil

interruptions For the purposes of this study, energy

effi-ciency has been defined by the committee as the

achieve-ment of at least the same output of goods and services (at the

same or lower cost) while using less energy It can be in the

form of more efficient products or equipment or processes

Depending on the process or technology, it is measured in

different ways, but the goal remains the provision of the same

or better level of utility to the consumer while reducing the

amount of energy used For example, in the automotive

in-dustry, vehicles that obtain more miles per gallon (mpg); in

the aluminum industry, production of more pounds of

alumi-num per British thermal unit (Btu) of energy; in lighting,

more lumens per watt The pattern of energy use in the U.S

economy has gradually changed over the last two decades,

from one dominated by an energy-intensive heavy industry

base to one much more dependent on information and

ser-vices Nonetheless, the role of energy, and especially

elec-tricity, remains vital to the economy’s functioning In the

wake of growing information, service, and other light

indus-trial sectors as well as the electrification of some sectors

such as steel, the economy is becoming more

electricity-in-tensive at a faster rate than in the past and often with a higher

premium being placed on the quality and reliability of

elec-tricity supply Because of the importance and scale of

en-ergy use in the economy—in particular, oil for

transporta-tion and electricity for buildings and industry sectors—the

efficient use of energy has become crucial to virtually all

economic activity and, in the committee’s view, has

contrib-uted substantially to the sustained economic growth in the

U.S economy over the last decade

Energy efficiency can enhance the reliability of the

elec-tricity supply, facilitate growth while improving

environ-EVALUATION OF THE ENERGY EFFICIENCY PROGRAMS 21

cient heating, lighting, refrigeration, industrial processes,

and new multifuel propulsion engines or battery-driven

au-tomobiles In the mid-1970s, several R&D laws1 were passed

specifically directed at electric vehicles and multifuel

auto-motive propulsion engines The oil embargo also led to the

passage of regulatory, information, and financial incentive

laws in that decade, including laws on automotive corporate

average fuel economy (CAFE) standards, appliance

label-ing, tax credits for energy-efficient retrofit improvements in

residential buildings, low-income weatherization grants,

ret-rofit grants for schools and hospitals, programs for retret-rofit

activities, and building energy performance standards for

new buildings.2 In 1987, Congress enacted the National

Ap-pliance Energy Conservation Act (P.L 100-12), which

pro-vided for minimum efficiency standards for selected ings equipment and appliances The Energy Policy Act of

build-1992 (EPAct) (P.L 102-486) provided additional authorityand guidance for R&D programs on energy efficiency Forexample, it provided a mandate for DOE to work with thelargest users in the industrial sector to develop new energy-efficient technology A review of the national energy plans

of the 1970s and 1980s and the DOE strategic plans of the1990s indicates that RD&D to improve energy efficiencywas an integral part of energy strategy, although the empha-sis and the focus changed as administrations changed.3

Table 3-1 shows DOE energy efficiency R&D budget data

by year for FY 1978 to FY 2000 in constant 1999 dollars bysector Figure 3-1 shows the allocation of funds by sector for

FY 1978, FY 2000, and FY 1978 to 2000 As can be seenfrom the figure, the transportation sector always received thelargest share of the budget (43 percent in 2000, cumulative

42 percent 1978 to 2000) In the early years (FY 1978) of theprogram, buildings received 40 percent of the funds and in-dustry, 18 percent In FY 2000, there was less of a differ-ence, with buildings receiving 28 percent of the funds andindustry, 29 percent Over the total period for the programs,industry and buildings received about 26 and 32 percent ofthe funds, respectively The focus of energy efficiency R&Dshifted during the early 1980s to emphasize basic sciencesand early technology development, resulting in less fundingfor technology and product development and (as seen inTable 3-1) a reduction in R&D dollars for energy-efficiencyprograms In the 1990s, energy-efficiency R&D was broad-ened to include applied research, development, and demon-strations, which are in general limited to proof of concept

TABLE 3-1 Summary of the Budget for DOE’s Energy Efficiency R&D Programs, FY 1978 to FY 2000 (thousands ofconstant 1999 dollars)

Sector FY 1978 FY 1979 FY 1980 FY 1981 FY 1982 FY 1983 FY 1984 FY 1985 FY 1986 FY 1987 FY 1988 FY 1989

Buildings 129,659 157,644 178,755 152,024 74,798 59,594 54,674 57,809 49,932 39,389 40,725 40,725 Industry 61,553 74,861 105,816 115,872 45,269 42,251 29,657 44,688 54,233 45,811 40,302 37,832 Transportation 138,066 190,991 199,172 174,866 92,497 84,379 94,670 86,457 78,135 73,723 67,230 67,860 Total 329,278 423,496 483,743 442,762 212,564 186,224 199,001 188,954 182,300 158,923 152,466 146,417

Sector FY 1990 FY 1991 FY 1992 FY 1993 FY 1994 FY 1995 FY 1996 FY 1997 FY 1998 FY 1999 FY 2000 FY 1978-2000

Buildings 43,230 57,449 53,986 57,928 87,631 121,468 91,500 102,516 100,027 120,039 139,416 2,015,127 Industry 61,222 70,326 110,938 123,813 134,486 141,960 113,027 118,501 138,196 165,859 175,200 2,071,673 Transportation 78,133 92,766 125,384 153,388 192,021 216,487 182,164 176,824 196,108 202,071 232,760 3,196,152 Total 182,585 220,541 290,308 335,129 414,138 479,915 386,691 397,841 434,331 487,969 547,376 7,282,952

NOTE: This includes only the R&D budget for energy efficiency It does not include state and local grants, FEMP policy and management, or renewable technologies managed by the Assistant Secretary for EERE.

1 For example, the Electric and Hybrid Vehicle Research, Development,

and Demonstration Act of 1976 (P.L 94-413) required the federal Energy

Research and Development Administration to purchase several thousand

electric or hybrid vehicles from 1978 to 1982, to demonstrate their

feasibil-ity.

2 The Energy Policy and Conservation Act of 1975 (P.L 94-163),

estab-lished a wide range of energy conservation programs, including

fuel-economy standards for passenger cars, appliance labeling and standards

programs, and energy conservation programs for federal buildings The

En-ergy Conservation and Production Act of 1976 (P.L 94-385) established

energy conservation standards for new buildings; weatherization assistance

for low-income people; and demonstration grants and loan guarantees for

energy conservation measures in existing buildings The National Energy

Extension Service Act of 1977 authorized states to establish energy

conser-vation extension programs The National Energy Tax Act of 1978 (P.L

95-618) established tax credits for residential conservation measures and solar

energy applications The National Energy Conservation Policy Act (P.L.

95-619) created a program of energy conservation grants for schools,

hospi-tals, and local government buildings; required the national mortgage

asso-ciations to purchase loans for conservation improvements; and authorized

grants and standards for improving the energy efficiency of public housing

(for further discussion, see Clinton et al., 1986).

3 DOE, 1979; DOE, 1983; DOE, 1985; DOE, 1990; DOE, 1992; DOE, 1994; DOE, 1997; DOE, 1998; DOE, 2000a.

The amount of basic science performed by the energy ciency program has been small; thus in FY 2000, Congressappropriated $10.9 million for basic science research withpotential application in energy-efficient technologies Thir-teen teams led by universities were selected to perform sci-entific research on energy-efficient power generation forindustrial and buildings systems or transportation An addi-tional $10.9 million was appropriated in FY 2001 by theInterior Appropriations Committee to continue this initiative(DOE, 2001).

effi-Since the start of the energy efficiency RD&D ogy programs in the 1970s, industry has been an active par-ticipant, performing research and, to a more limited extent,establishing the research agenda Since the beginning of theERDA programs, industry has usually cost-shared at least 20percent to allow it to retain patent rights (P.L 93-438, 1974).During the past 8 years, in major programs such as the Part-nership for a New Generation of Vehicles (PNGV) and In-dustries of the Future (IOF),4 industry has taken an activerole in establishing the technical goals, in jointly developingthe research agenda, and in consistently cost sharing

technol-SELECTION OF THE CASE STUDIES

The energy efficiency (EE) R&D program is aimed atthree sectors: buildings (both residential and commercial),industry (manufacturing and cross-cutting technologies), andtransportation (primarily automotive and light- and heavy-duty trucks) Although the issues, problems, and solutionsfor energy efficiency may be different for each of the threeend-use sectors, lessons learned from one sector are oftenapplicable to all the sectors In order to provide a compre-hensive study of the energy efficiency program, 17 case stud-ies were selected to illustrate the main components of theprogram, important examples of RD&D activities, and therange of benefits and costs that the energy efficiency pro-gram has yielded The case studies cover only about 20 per-cent of the total EE R&D expenditures (see Table 3-2) overthe 22-year period As a result of the characteristics of thebuilding and industry sectors and the type of programs DOEhas sponsored, the case studies for the buildings sector ac-count for about 5 percent of the total building budget andthose for the industry sector, 13 percent of the total industrybudget The transportation case studies represent 38 percent

of the transportation budget

The buildings and industry programs tend to have manysmaller projects (in the millions of dollars rather than tens ofmillions), so it was not possible to select a few larger projects

FIGURE 3-1 Distribution of DOE’s budget by sector for its

en-ergy efficiency R&D programs (in thousands of dollars) Totals are

$329,278,000 in 1978; $547,376,000 in 2000; and $7,282,952,000

for 1978 to 2000 SOURCE: OEE, 2000.

4 The Industries of the Future strategy creates partnership between try, government, and supporting laboratories and institutions to accelerate technology research, development, and deployment Led by the Depart- ment of Energy’s Office of Industrial Technologies (OIT), the Industries of the Future strategy is being implemented in nine energy- and waste-inten- sive industries (OIT, 2001).

indus-Transportation

42%

Industry 18%

Buildings 40%

FY 1978

Transportation

43%

Buildings 28%

Industry 29%

FY 2000

Transportation

42%

Buildings 26%

Industry 32%

FY 1978 to FY 2000

EVALUATION OF THE ENERGY EFFICIENCY PROGRAMS 23

to cover a larger percentage of the programs In addition, the

committee members know these programs well and were

able to use that knowledge to select representative examples

of how the program works and to reach overall conclusions

There were seven case studies selected from the buildings

program, five from the industry program, and five from the

transportation program In the mid-1990s, the Office of

In-dustrial Technologies (OIT) initiated the IOF program,

which addresses a number of different industries There are

now larger overall programs because each has several

projects that focus on a particular IOF PNGV, initiated in

late 1993, is an OIT program for all the automotive-related

technologies and systems and enjoys the active participation

of industry

Not only do the type of energy efficiency R&D performed

and the actual performers of the RD&D differ by sector, but

also the responsibilities and goals for each sector have ied, in response to the needs and opportunities offered by thesector The buildings sector has been responsible for the de-velopment and implementation of standards for buildings,appliances, and equipment in addition to the RD&D sincethe 1970s It has had responsibility for developing, and insome cases implementing, financial incentive programs atdifferent times during the 22-year period There has been noapparent conflict between performing the RD&D and imple-menting technology using various policy tools In fact, in thecommittee’s opinion, the RD&D has provided a more solidbasis for the policy tools

var-As will be seen in the section on transportation, the provements in automobile efficiency in the 1970s and the1980s were primarily a result of CAFE standards developedand implemented by the Department of Transportation(DOT) Existing commercial technologies or modest ad-vances in them were sufficient to meet the CAFE standards

im-To realize significant efficiency improvements, dramaticadvances in technology were required but generally had notbeen demanded by the public or pursued by industry in anera of low gasoline prices As was seen in 2000, gasolineprices at the pump can increase dramatically in a short time;R&D, by contrast, can take many years or decades to result

in safe, economical products The volatility of the oil marketand the possibility of extended price drops during the periodwhen the developer is trying to develop and market efficientvehicles could lead to significant losses The EnvironmentalProtection Agency (EPA) has been responsible for automo-bile information guidelines and testing methods and tailpipeemissions regulations Although the Department of Com-merce (DOC) has had the lead in PNGV, DOE has had thelead in funding and coordinating with industry the R&D pro-gram for developing a production prototype passenger carwith up to 80 mpg The DOE also assumed the managementand technical leadership role for the 21st Century Truck Ini-tiative in 2000, which is aimed at aggressive 2010 targets forimproved fuel economy for trucks For the past 20 years,there have been no federal regulatory policies or incentivesfor energy-efficient industrial programs, although from time

to time there have been voluntary targets

Capital stock turnover is different for each of the sectors:

14 years for cars and 40 years or more for the buildings tor Within the buildings sector, appliances and equipmenthave lifetimes ranging from 1000 hours (lightbulbs) to 20years for space conditioning equipment Consequently, torealize energy savings in the economy, substantial time may

sec-be required for new energy-efficient technologies to etrate the market

pen-In addition to economic benefits, there are also mental and security benefits that the committee wished tointroduce through the case studies Energy production anduse has a wide variety of environmental, health, security,and other impacts whose costs are generally not included inits price Economically, however, for markets to allocate re-

environ-TABLE 3-2 Expenditures for Energy Efficiency

Programs Analyzed by the Committee, 1978 to 2000

(millions of dollars)

Buildings (budget 1978 to 2000, $2015 million)

Advanced refrigerator/freezer compressors 1.6

Electronic ballasts for fluorescent lamps 6

Free-piston Stirling engine-drive heat pump 30.2

Industry (budget 1978 to 2000, $2072 million)

Transportation (budget 1978 to 2000, $3196 million)

Transportation fuel cell power systems 210

NOTE: Budget estimates are for 1978 to 2000 in millions of constant

1999 dollars.

aExcluding black liquor gasification.

bIncludes the P-4 (programmed powder preform process) for

Manufac-turing of Automotive Composite Structures program, but excludes the

Cata-lytic Conversion for Cleaner Vehicles program and the Transportation Fuel

Cell Power Systems program.

cExcludes the budgets for the Catalytic Conversion for Cleaner Vehicles

program and the Transportation Fuel Cell Power Systems program.

SOURCE: Office of Energy Efficiency 2000 Response to questions

from the Committee on Benefits of DOE R&D in Energy Efficiency and

Fossil Energy (February 5).