Prospective Evaluation of Applied Energy Research and Development at DOE (Phase Two) (2007) / Chapter Skim
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3 Methodology for Prospective Evaluation of Deparment of Energy Programs
3 Methodology for Prospective Evaluation of Deparment of Energy Programs
Pages 40-51
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From page 40... ...
This section reviews current practice in evaluating envi ronmental and security benefits and considers ways in which ValuaTioN oF eNViroNmeNTal aNd securiTY it can be adapted to assessing DOE benefits. BeNeFiTs Assessing the prospective benefits of DOE's R&D pro Valuing air and Water Pollution emissions grams involves challenges common to many public programs but not usually present in private business assessments.
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From page 41... ...
Most of "adders" designed to keep score of the environmental costs associated of the existing damage functions for water pollution apply with different methods of electricity generation under the specific conditions to specific sites; there is only a limited ability to produce applicable to that state. These adders were not actually used in setting prices reliable generic damage functions for waterborne pollutants.
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From page 42... ...
For example, a statistical While uncertainties surround both the damage functions life could be the one more random traffic death in addition to the 42,000 killed on the highways each year. and the economic valuations used to monetize the conse 7The EPA's Retrospective Analysis of the Clean Air Act used 26 indiquences of energy technologies, the general experience has vidual willingness-to-pay studies as the basis of its distribution on health been that the uncertainties associated with the damage func- effects from premature mortality (EPA, 1997b)
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From page 43... ...
To test this ideal against the real world, TaTABLE 3-1 Estimates of the Social Damage Costs of Air ble 3-2 compares data on damage costs and abatement costs. Emissions It includes the median damage costs from Table 3-1 and an additional damage cost estimate from a study of European Cost of Environmental Externality markets (Banzhaf et al., 2002)
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From page 44... ...
Distributed generators can Finding: Although there are a host of land, water, and be internal combustion engines (diesel- or natural-gas-fuperhaps public health impacts to consider, the benefits, in eled) , microturbines run on natural gas, or renewable energy monetary units, of reducing criteria air pollutants is both systems using biomass, wind, or solar energy.
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From page 45... ...
The total annual cost to the studies focused on the first two cost components listed above. United States would increase by $118 per additional barrel And, they were completed when there was significantly more of oil imported during the year, an amount far higher than the excess capacity and lower prices in the oil markets than is the market price of $70.
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From page 46... ...
ing the benefits of marginal changes in oil consumption and These estimates can be expected to be considerably higher imports have not included these costs in their estimates, when there is very little unused capacity in world oil markets. either because they believe that the military expenditures When there is a large amount of unused capacity, disruptions would not change significantly with changes in oil imports in oil supply from one part of the world can be met be com- or because they have no method of rationally quantifying pensating increases in supply from other regions -- that is, the externality.
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From page 47... ...
. This The Phase One prospective benefits study discussed and model is important for providing baseline energy prices and demonstrated principles for calculating the economic benefits demands, but using it to estimate the prices of and demands of DOE programs and proposed a decision tree methodology of all different program outcomes is unlikely to yield refinefor benefits estimation based on these principles.
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From page 48... ...
The High Oil and Gas a very small probability -- say .1 or .05 -- overestimate the Prices scenario assumes that oil prices will remain very high still lower probability an expert believes in but finds difficult throughout the period and that constraints on natural gas to justify or defend. These issues also point to the need for supply lead to higher natural gas prices and higher electrica skilled facilitator who can help panelists appreciate the ity prices.
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From page 49... ...
The committee's recommended Industrial Technologies Program involved niche markets, so methodology proposes to use NEMS to develop prices and that market prices for energy inputs and overall demand for quantities for the global scenarios, but also suggested that in other goods are unlikely to be significantly affected by the most cases a simpler spreadsheet analysis would be sufficient outcome of the program. to account for the changes in outcomes caused by introduc- Although the spreadsheet approach to calculating bening a new technology in a given scenario.
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From page 50... ...
For cal competency of the panel members led them to focus example, the main components of the DOE R&D electricity more on technical risks than market risks. The committee programs in fossil energy and energy efficiency are comple- recommends that the next assessment engage an additional mentary, most obviously, coal gasification and sequestration.
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From page 51... ...
For example, setting a Gas Exploration and Production Program and the Chemical cost target of $28/kW for a battery by the year 2010 does not Industrial Technologies Program are in this category, and it describe the objective adequately for assessment purposes. is these panels that had difficulty assessing the benefits of Does the cost target mean a customer could actually buy a the two DOE programs.
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