Energy-efficient technologies can reduce the life-cycle costs of energy-consuming goods and services paid by consumers and industry, reduce pollutant emissions, reduce the risk of oil supply interruptions, and help to stabilize the electricity system and make it more reliable. DOE’s energy efficiency research, development, and demonstration (RD&D) programs have helped to improve the energy efficiency of buildings technology and industrial and transportation technologies. The transportation sector has always received the largest share of the budget (42 percent in 2000 and, cumulatively, 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 percent of the funds.
Research in the Office of Fossil Energy has historically focused on two programs: the Office of Coal and Power Systems and the Office of Natural Gas and Petroleum Technology. Very large budgets from 1978 through 1981 were provided 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 options 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 conversion. 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 portion 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 technology 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 Environmental Protection Agency (EPA) maintained a large program in this area prior to 1985. The share of funds for the electricity 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.
In theory, evaluating the benefits and costs of DOE’s research program should be relatively straightforward. It would require adding up the total benefits and costs of research conducted since 1978, determining what proportion of each is attributable to DOE funding, and calculating the difference between the DOE contributions and the cost of achieving them. In practice, methodological challenges abound. Of these, the most fundamental is how to define and systematically capture the diverse benefits that result from publicly funded research within a dynamic environment of marketplace activity, technological advancement, and societal change. See Chapter 2 and Appendix D for further details on the framework for doing this.
Justification for public sector research rests on the observation that public benefits exist that the private sector cannot capture. In such cases, the private costs of developing and marketing a technology may exceed the benefits that the private sector can capture. The committee developed a comprehensive framework based on this general philosophy that would define the range of benefits and costs, both quantitative and qualitative, that should be considered in evaluating the programs. Depending on the outcomes of the R&D undertaken, the principal benefit of a program, for example, may be the knowledge gained and not necessarily realized economic benefits. The matrix shown in Figure ES-1 and discussed below provides an accounting framework for the consistent, comprehensive assessment of the benefits and costs of the fossil energy and energy efficiency R&D programs. The matrix can be completed for each discrete program, project, or initiative that has a definable technological objective and outcome. The framework is intended to summarize all net benefits to the United States, to focus attention on the main types of benefits associated with the DOE mission, and to differentiate benefits based on the degree of certainty that they will one day be realized. It has been designed to capture two dimensions of publicly 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 technology does not enter the market-place immediately or to a significant degree.
The classes of benefits (corresponding to the rows of the matrix) are intended to capture types of public benefits appropriate to the objectives of DOE R&D programs. 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:
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 energy shocks and the changes are made possible by technological advances stemming from R&D.