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 (Ebook) Energy Research at DOE: Was it Worth It? Energy
Efficiency and Fossil Energy Research 1978 to 2000 by
Committee on Benefits of DOE R&D on Energy Efficiency and
Fossil Energy, Commission on Engineering and Technical
Systems, National Research Council, CETS ISBN 9780309074483,
9780309502962, 0309074487, 0309502969 Pdf Download

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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 Systems
Division on Engineering and Physical Sciences
National Research Council

NATIONAL ACADEMY PRESS

Washington, D.C.
NATIONAL ACADEMY PRESS 2101 Constitution Avenue, N.W. Washington, DC 20418

NOTICE: The project that is the subject of this report was approved by the Governing Board of the
National 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 of
the committee responsible for the report were chosen for their special competences and with regard
for appropriate balance.

This report and the study on which it is based were supported by Contract No. DE-AM01-
99PO80016, Task Order DE-AT01-00EE10735.A000, from the U.S. Department of Energy. Any
opinions, findings, conclusions, or recommendations expressed in this publication are those of the
author(s) and do not necessarily reflect the view of the agency that provided support for the project.

International Standard Book Number: 0-309-07448-7

Library of Congress Control Number: 2001093513

Available in limited supply from: Additional copies are available for sale from:
Board on Energy and Environmental Systems National Academy Press
National Research Council 2101 Constitution Avenue, N.W.
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202-334-3344 Washington metropolitan area)
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Copyright 2001 by the National Academy of Sciences. All rights reserved.

Printed in the United States of America

National Academy of Sciences
National Academy of Engineering
Institute of Medicine
National Research Council

The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distin-

guished scholars engaged in scientific and engineering research, dedicated to the furtherance of
science and technology and to their use for the general welfare. Upon the authority of the charter
granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the
federal government on scientific and technical matters. Dr. Bruce M. Alberts is president of the
National Academy of Sciences.

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 its
administration and in the selection of its members, sharing with the National Academy of Sciences
the responsibility for advising the federal government. The National Academy of Engineering also
sponsors 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 the
National 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 matters
pertaining to the health of the public. The Institute acts under the responsibility given to the National
Academy 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 further-
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 the
National Academy of Sciences and the National Academy of Engineering in providing services to
the 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.
A. Wulf are chairman and vice chairman, respectively, of the National Research Council.
COMMITTEE ON BENEFITS OF DOE R&D ON ENERGY EFFICIENCY AND FOSSIL ENERGY
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

Committee Subgroup on Energy Efficiency Committee Subgroup on Benefits Framework

MAXINE L. SAVITZ, Co-chair JAMES L. SWEENEY, Chair
JAMES L. WOLF, Co-chair LINDA R. COHEN
WILLIAM AGNEW DANIEL A. DREYFUS
PETER D. BLAIR ROBERT W. FRI
RALPH CAVANAGH DAVID C. MOWERY
UMA CHOWDHRY
LINDA R. COHEN
Liaison from the Board on Energy and Environmental
DAVID C. MOWERY
Systems
JAMES WOODS
WILLIAM FULKERSON, University of Tennessee,
Knoxville
Committee Subgroup on Fossil Energy
JACK S. SIEGEL, Chair
Project Staff
JAMES CORMAN
WILLIAM L. FISHER RICHARD CAMPBELL, Program Officer and Study
ROBERT HALL Director
GEORGE M. HIDY JAMES ZUCCHETTO, Board Director
JAMES DEXTER PEACH DAVID FEARY, Senior Program Officer, Board on Earth
JOHN J. WISE Sciences and Resources (BESR)
ROGER BEZDEK, consultant
ANA-MARIA IGNAT, Senior Project Assistant

1NAE = Member, National Academy of Engineering

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, Knoxville
MARTHA 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.

v
 Acknowledgments

The Committee on Benefits of DOE R&D on Energy Ef- aged a very complicated and voluminous process in accor-
ficiency and Fossil Energy wishes to acknowledge and thank dance with the highest standards of the NRC. What the com-
the staffs of the Office of Energy Efficiency and Renewable mittee was able to accomplish of the ambitious agenda set
Energy and the Office of Fossil Energy for their exemplary by Congress is entirely due to the efforts of these persons.
cooperation during the course of this project. The committee This report has been reviewed by individuals chosen for
called on these offices for extensive data, analyses, and pre- their diverse perspectives and technical expertise, in accor-
sentations, which added significantly to their already heavy dance with procedures approved by the National Research
workload. Council Report Review Committee. The purpose of this in-
The committee also wishes to express appreciation to a dependent review is to provide candid and critical comments
number of other individuals and organizations for providing that will assist the institution in making its published report
important background information for its deliberations. as sound as possible and to ensure that the report meets insti-
Loretta Beaumont of the U.S. House Appropriations Com- tutional standards for objectivity, evidence, and responsive-
mittee briefed us on the congressional origins of this study. ness to the study charge. The review comments and draft
Members of the committee visited the General Electric Com- manuscript remain confidential to protect the integrity of the
pany and Babcock & Wilcox, whose cooperation and open- deliberative process. We wish to thank the following indi-
ness are greatly appreciated. Other organizations that briefed viduals for their review of this report: Joel Darmstadter, Re-
the committee at one or more of its public meetings include sources for the Future; Clark W. Gellings, Electric Power
the Ford Motor Company, the Gas Research Institute, Wolk Research Institute; Robert L. Hirsch, RAND; John Holdren,
Integrated Services, the Foster Wheeler Development Cor- John F. Kennedy School of Government, Harvard Univer-
poration, International Fuel Cells, Siemens Westinghouse, sity; James J. Markowsky, American Electric Power Service
the Air Conditioning and Refrigeration Institute, the U.S. Corporation (retired); John McTague, Ford Motor Company
General Accounting Office, Avista Laboratories, the U.S. (retired); Glen R. Schleede, consultant; Frank J. Schuh, Drill-
Environmental Protection Agency, the Peabody Group, ing Technology, Inc.; and Lawrence Spielvogel, Lawrence
CONSOL Energy Incorporated, and SIMTECHE. The com- Spielvogel, Inc.
mittee is grateful for the facts and insights that these brief- Although the reviewers listed above have provided many
ings provided. constructive comments and suggestions, they were not asked
Importantly, the committee recognizes the contribution to endorse the conclusions or recommendations nor did they
of Roger Bezdek, whose analytic support and keen advice see the final draft of the report before its release. The review
were essential to the completion of its work. of this report was overseen by Harold Forsen of the National
Finally, the chair is acutely aware of the extraordinary Academy of Engineering. Appointed by the National Re-
efforts of the members of the committee and of the staff of search Council, he was responsible for making certain that
the Board on Energy and Environmental Systems of the Na- an independent examination of this report was carried out in
tional Research Council (NRC). Every member of the com- accordance with institutional procedures and that all review
mittee contributed to the analysis of the case studies that comments were carefully considered. Responsibility for the
form the foundation of this report and to the deliberations on final content of this report rests entirely with the authoring
the report itself. The staff, led by Richard Campbell, man- committee and the institution.

vii
 Contents

EXECUTIVE SUMMARY 1

1 INTRODUCTION 9
A Brief History of Federal Energy R&D, 9
Origin and Scope of This Study, 10
Organization of This Report, 12
Reference, 12

2 FRAMEWORK FOR THE STUDY 13

Overview, 13
The Setting, 13
The Framework, 14
Conduct of the Study, 18
Assessment of the Methodology, 18
Reference, 19

3 EVALUATION OF THE ENERGY EFFICIENCY PROGRAMS 20

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

4 EVALUATION OF THE FOSSIL ENERGY PROGRAMS 44

Introduction, 44
Selection of the Case Studies, 44
Lessons Learned from the Case Studies, 47
Findings, 57
Recommendations, 61
References, 61

5 OVERALL FINDINGS AND RECOMMENDATIONS 62

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

ix
x CONTENTS

APPENDIXES

A BIOGRAPHICAL SKETCHES OF COMMITTEE MEMBERS 73

B PRESENTATIONS AND COMMITTEE ACTIVITIES 77

C BIBLIOGRAPHY RELEVANT TO DOE R&D POLICY, CONGRESSIONAL

MANDATES, R&D RESULTS, AND EVALUATIONS 79

D MEASURING THE BENEFITS AND COSTS OF THE DEPARTMENT OF

ENERGY’S ENERGY EFFICIENCY AND FOSSIL ENERGY
R&D PROGRAMS 86
Summary of the General Framework, 86
Discussion of the Rows, 88
Discussion of the Columns, 92
Interpretation and Appropriate Use of the Framework, 93

E CASE STUDIES FOR THE ENERGY EFFICIENCY PROGRAM 95

Advanced Refrigeration, 95
Compact Fluorescent Lamps, 99
DOE-2 Energy Analysis Program, 100
Electronic Ballasts, 104
Free-piston Stirling Engine Heat Pump (Gas-Fired), 106
Indoor Air Quality, Infiltration, and Ventilation, 109
Low-emission (Low-e) Windows, 114
Lost Foam Technology, 118
Advanced Turbine Systems Program, 121
Black Liquor Gasification, 127
Industries of the Future Program, 132
Oxygen-fueled Glass Furnace, 135
Advanced Batteries for Electric Vehicles, 140
Catalytic Conversion of Exhaust Emissions, 143
Partnership for a New Generation of Vehicles, 145
Stirling Automotive Engine Program, 151
PEM Fuel Cell Power Systems for Transportation, 154
References, 158
Bibliography, 161

F CASE STUDIES FOR THE FOSSIL ENERGY PROGRAM 162

Coal Preparation, 162
Direct Coal Liquefaction, 164
Fluidized-bed Combustion, 166
Gas-to-Liquids Technology, 169
Improved Indirect Liquefaction, 172
Integrated Gasification Combined Cycle, 174
Emission Control Technologies, 177
Mercury and Air Toxics, 180
Waste Management/Utilization Technologies, 183
Advanced Turbine Systems, 185
Stationary Fuel Cell Program, 187
Magnetohydrodynamics, 190
Coal-bed Methane, 193
Drilling, Completion, and Stimulation Program, 193
Downstream Fundamentals Research Program, 198
Eastern Gas Shales Program, 200
CONTENTS xi

Enhanced Oil Recovery, 202

Field Demonstration Program, 205
Oil Shale, 207
Seismic Technology, 208
Western Gas Sands Program, 211
References, 213
Bibliography, 214

G GLOSSARY 215

H ACRONYMS AND ABBREVIATIONS 222

 Tables and Figures

TABLES
ES-1 Energy Efficiency Technology Case Studies Slotted in the Matrix Cells That Are Most
Relevant Today, 4
ES-2 Fossil Energy Technology Case Studies Slotted in the Matrix Cells That Are Most Rel-
evant Today, 5

2-1 The Most Important Fossil Energy and Energy Efficiency Technological Innovations Since
1978, 13

3-1 Summary of the Budget for DOE’s Energy Efficiency R&D Programs, FY 1978 to
FY 2000, 21
3-2 Expenditures for Energy Efficiency Programs Analyzed by the Committee, 1978 to
2000, 23
3-3 Categories and Case Studies, 24
3-4 Net Realized Benefits Estimated for Selected Technologies Related to Energy Efficiency
RD&D Case Studies, 29
3-5 Energy Efficiency Technology Case Studies Slotted in the Matrix Cells That Are
Most 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 Most
Relevant Today, 60

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

E-2 Benefits Matrix for the Advanced Refrigerator-Freezer Compressors Program, 98
E-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

xiii
xiv TABLES AND FIGURES

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), 126
E-17 Predicted Environmental Emissions from the MTCI/StoneChem Steam Reformer
and from a Tomlinson Recovery Boiler, 128
E-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, 180
F-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), 187
F-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, 195
F-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, 26
3-4 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), 49
4-5 Budget for DOE’s fossil energy environmental programs, FY 1978 to FY 2000
($410 million), 51
4-6 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- BACKGROUND

leum Exporting Countries oil embargo nearly 30 years ago,
the United States has looked to new technology for solutions A Historical Perspective
to its energy problems. Indeed, the first government reports
From 1978, debate about how best to spend the public’s
to recommend an energy research and development (R&D)
money has surrounded DOE’s research program. Perhaps the
agenda appeared within weeks of that 1973 event. In 1975,
most important change in the debate has been the evolving
President Ford created the Energy Research and Develop-
understanding of the larger goals of energy policy and hence
ment Administration (ERDA), consolidating under one um-
of R&D objectives. Reducing dependence on energy imports
brella existing R&D energy programs from several agen-
(especially oil) persisted as a central tenet of energy policy
cies. In late 1977, ERDA became part of the new Department
into the 1980s. During that period, government R&D policy
of Energy (DOE). And today, energy R&D remains a major
stressed development of alternative liquid fuels. By the early
element of DOE’s mission.
1980s, more faith was placed in market forces to resolve
From 1978 through 1999, the federal government ex-
energy supply and demand imbalances and in the develop-
pended $91.5 billion (2000 dollars) on energy R&D, mostly
ment of technologies to enlarge the former and constrain the
through DOE programs. This direct federal investment con-
latter. In consequence, federal research goals shifted and
stituted about a third of the nation’s total energy R&D ex-
began to stress long-term, precompetitive R&D. After 1992,
penditure, the balance having been spent by the private sec-
technology priorities moved in the direction of renewable
tor. Of course, government policies—from cost sharing to
energy sources and energy efficiency. And the role of fed-
environmental regulation to tax incentives—influenced the
eral funding, having swung between support of expensive
priorities of a significant fraction of the private investment.
demonstration projects and limited funding of basic research,
On balance, the government has been the largest single
settled into a preference for cost sharing in the form of pub-
source and stimulus of energy R&D funding for more than
lic-private partnerships.
20 years.
This brief recounting of the shifting forces that shaped
In legislation appropriating funds for DOE’s fiscal year
energy R&D over the last 25 years conveys a sense of the
(FY) 2000 energy R&D budget, the House Interior Appro-
twists and turns of both program goals and management phi-
priations Subcommittee directed an evaluation of the ben-
losophy that DOE’s research managers have had to follow
efits that have accrued to the nation from the R&D conducted
since 1978. Without an appreciation of these shifts, evaluat-
since 1978 in DOE’s energy efficiency and fossil energy pro-
ing the successes and failures of DOE’s research program
grams. In response to the congressional charge, the National
would be a very frustrating and puzzling enterprise.
Research Council formed the Committee on Benefits of DOE
R&D on Energy Efficiency and Fossil Energy (the commit-
Energy Efficiency and Fossil Energy Research at DOE
tee).
From its inception, DOE’s energy R&D program has been The two program areas—energy efficiency and fossil en-
the subject of many outside evaluations. The present evalua- ergy—that lie within the scope of this study have expended
tion asks whether the benefits of the program have justified about $22.3 billion in federal funds since 1978, or about 26
the considerable expenditure of public funds since DOE’s percent of the total DOE expenditure on energy R&D of
formation in 1977, and, unlike earlier evaluations, it takes a approximately $85 billion (2000 dollars). Their funding his-
comprehensive look at the actual outcomes of DOE’s re- tories reflect the changes in goals and philosophies that have
search over two decades. characterized energy research at DOE.

1
2 ENERGY RESEARCH AT DOE: WAS IT WORTH IT?

Energy Efficiency Programs would require adding up the total benefits and costs of re-
search conducted since 1978, determining what proportion
Energy-efficient technologies can reduce the life-cycle
of each is attributable to DOE funding, and calculating the
costs of energy-consuming goods and services paid by con-
difference between the DOE contributions and the cost of
sumers and industry, reduce pollutant emissions, reduce the
achieving them. In practice, methodological challenges
risk of oil supply interruptions, and help to stabilize the elec-
abound. Of these, the most fundamental is how to define and
tricity system and make it more reliable. DOE’s energy effi-
systematically capture the diverse benefits that result from
ciency research, development, and demonstration (RD&D)
publicly funded research within a dynamic environment of
programs have helped to improve the energy efficiency of
marketplace activity, technological advancement, and soci-
buildings technology and industrial and transportation tech-
etal change. See Chapter 2 and Appendix D for further de-
nologies. The transportation sector has always received the
tails on the framework for doing this.
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 Evaluation Framework
40 percent of the funds and industry, 18 percent. In FY 2000,
Justification for public sector research rests on the obser-
there was less of a difference, with buildings receiving 25
vation that public benefits exist that the private sector cannot
percent of the funds and industry, 32 percent. Over the entire
capture. In such cases, the private costs of developing and
program, industry and buildings each received about 28 per-
marketing a technology may exceed the benefits that the pri-
cent of the funds.
vate sector can capture. The committee developed a compre-
hensive framework based on this general philosophy that
Fossil Energy Programs
would define the range of benefits and costs, both quantita-
Research in the Office of Fossil Energy has historically tive and qualitative, that should be considered in evaluating
focused on two programs: the Office of Coal and Power Sys- the programs. Depending on the outcomes of the R&D un-
tems and the Office of Natural Gas and Petroleum Technol- dertaken, the principal benefit of a program, for example,
ogy. Very large budgets from 1978 through 1981 were pro- may be the knowledge gained and not necessarily realized
vided in response to the energy crises of the 1970s and early economic benefits. The matrix shown in Figure ES-1 and
1980s. During that period, over 73 percent of the money was discussed below provides an accounting framework for the
provided for technologies to produce liquid and gas fuel op- consistent, comprehensive assessment of the benefits and
tions from U.S. energy resources—coal and oil shale. costs of the fossil energy and energy efficiency R&D pro-
Over the 1978 to 2000 study period, 58 percent of the grams. The matrix can be completed for each discrete pro-
expenditures were for RD&D in coal utilization and conver- gram, project, or initiative that has a definable technological
sion. Of this, approximately one-half was spent on direct objective and outcome. The framework is intended to sum-
liquefaction and gasification for building and operating marize all net benefits to the United States, to focus attention
large, commercial-scale demonstration plants between 1978 on the main types of benefits associated with the DOE mis-
and 1981. In 1978, the coal conversion and utilization por- sion, and to differentiate benefits based on the degree of cer-
tion of the budget represented 68 percent of the total fossil tainty that they will one day be realized. It has been designed
energy expenditures, but since then, as funding for direct to capture two dimensions of publicly funded R&D: (1) DOE
liquefaction and gasification declined, it has represented a research is expected to produce public benefits that the pri-
considerably lower percentage. In 2000, it represented only vate economy cannot reap and (2) some benefits may be
30 percent of the overall fossil energy budget for the tech- realized even when a technology does not enter the market-
nology programs analyzed. place immediately or to a significant degree.
The share of Office of Fossil Energy funds devoted to The classes of benefits (corresponding to the rows of the
environmental characterization and control was 4 percent of matrix) are intended to capture types of public benefits ap-
the total over the study period, partly because the Environ- propriate to the objectives of DOE R&D programs. Based
mental Protection Agency (EPA) maintained a large program on these stated objectives, the committee adopted the three
in this area prior to 1985. The share of funds for the electric- generic classes of benefits (and related costs) for the energy
ity production programs averaged 24 percent over the study R&D programs—economic, environmental, and security
period, and the share of funds for the oil and gas programs benefits:
averaged 14 percent, one-third of which was for shale oil
R&D in the early period. • 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”
EVALUATION FRAMEWORK AND CASE STUDIES
refers to conditions absent energy disruptions or other en-
In theory, evaluating the benefits and costs of DOE’s re- ergy shocks and the changes are made possible by techno-
search program should be relatively straightforward. It logical advances stemming from R&D.
EXECUTIVE SUMMARY 3

Realized Benefits Options Benefits Knowledge Benefits

and Costs and Costs and Costs

Economic benefits
and costs

Environmental benefits
and costs

Security benefits
and costs

FIGURE ES-1 Matrix for assessing benefits and costs.

• Environmental net benefits are based on changes in the favorable for commercialization of the technology. The sec-
quality of the environment that have occurred or may occur ond column, which includes less certain benefits, is called “op-
as a result of a new technology RD&D program. tions benefits and costs.” These consist of benefits that might
• Security net benefits are based on changes in the prob- be derived from technologies that are fully developed but for
ability or severity of abnormal energy-related events that which economic and policy conditions are not likely to be,
would adversely impact the overall economy, public health but might become, favorable for commercialization. All
and safety, or the environment. other benefits, to the extent they exist, are called “knowl-
edge benefits and costs.” The framework recognizes that the
The three columns in the matrix are the first step toward a technologies being evaluated may be in different stages of
more explicit definition of the benefits to be included. They the RD&D cycle, and by its nature, it represents a snapshot
reflect different degrees of uncertainty about whether a given in time, with a focus on outcomes of the work performed.
benefit will be obtained. Two fundamental sources of uncer- To arrive at entries for the cells of the matrix, a logical
tainty are particularly important—technological uncertain- and consistent set of rules for measuring the results of the
ties and uncertainties about economic and policy conditions individual initiatives is also necessary. These rules define
(Figure ES-2). Rather than attempting to fully characterize more exactly the meanings of the rows and columns, and
the uncertainty of benefits, the committee used these two they provide a calculus for measuring the values to be en-
distinctions—the state of technology development and the tered in each of the cells.
favorability of economic and policy conditions—to define
the columns of the matrix (Figure ES-1). The first column,
Case Studies
“realized benefits and costs,” is reserved for benefits that are
almost certain—that is, those for which the technology is de- To assess the benefits of the energy efficiency and fossil
veloped and for which the economic and policy conditions are energy programs within this evaluation framework, the com-

Technology
Economic/ Development Technology Technology Development Technology
Policy Conditions Developed in Progress Development Failed

Will be favorable for Realized benefits Knowledge benefits Knowledge benefits

commercialization

Might become favorable Options benefits Knowledge benefits Knowledge benefits

for commercialization

Will not become favorable Knowledge benefits Knowledge benefits Knowledge benefits
for commercialization

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

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