National Research Council Survey
on U.S. Energy Efficiency Programs

A National Research Council (NRC) report issued July 17 finds that U.S. government research programs on energy efficiency and fossil fuel technologies have resulted in significant economic, environmental and national security benefits.

The NRC study group reviewed 17 research and development (R&D) programs in energy efficiency, and 22 programs in fossil energy. All were funded by the U.S. Department of Energy (DOE), some dating as far back as 1978. The programs cost the government $13,000 million, and yielded economic benefits of $40,000 million, according to a press release from the National Academies of Sciences (NAS), the parent organization of the NRC.

"Government funding can stimulate R&D benefits in areas where there is little incentive to improve existing technologies," said Robert Fri, director of the National Museum of Natural History in Washington and chair of the committee that wrote the report. "We discovered that a few key programs have delivered benefits many times over the total amount invested."

Three energy-efficiency programs produced nearly three-quarters of the economic benefit calculated in the study. These programs brought advances in compressors for refrigerators and freezers, energy-efficient fluorescent-lighting components called electronic ballasts, and low-emission, or heat-resistant, window glass. "Standards and regulations incorporating efficiencies attainable by these new technologies ensured that the technologies would be adopted nationwide, thus dramatically compounding their impact," says the report.

Other DOE programs produced technological advances in the use of fossil fuels, which in turn led to lower levels of emissions into the atmosphere. The NAS press release says these programs decreased nitrogen oxides in the atmosphere by more than 26 million tons and sulfur dioxides by 2 million tons.

DOE's record does include some failures, however. The NRC report finds that R&D programs that did not meet expectations were unsuccessful generally because they lacked incentives for adoption in the private sector, or built inadequate partnership with industry to achieve marketability for the research discoveries.

In response to the NAS report, Energy Secretary Spencer Abraham said, "Overall, the NAS findings support our energy research efforts and provide clear indications that increasing efficiency, as well as increasing domestic energy supplies -- two goals of the President's National Energy Plan -- are supported by science and are cost-effective. The findings also reaffirm the importance of a diversified energy research and development portfolio."

The full text of Secretary Abraham's statement is available at http://www.energy.gov/HQPress/releases01/julpr/pr01116.htm

The NRC is a private, non-profit institution providing scientific and technological advice under a congressional charter.

The full text of the NRC report is available at http://www.nap.edu/books/0309074487/html

Following is the NAS press release on the NRC report.

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NATIONAL ACADEMIES NEWS

National Research Council

July 17, 2001

Energy Efficiency and Fossil Energy Technologies

Prove Wise Investment for Department of Energy

WASHINGTON -- In a comprehensive review of federal R&D efforts to advance energy-efficient and fossil-fuel technologies, a committee of the National Academies' National Research Council found these programs have yielded significant economic, environmental, and national security benefits.

Looking back as far as 1978, the report examines 17 R&D programs in energy efficiency and 22 programs in fossil energy funded by the U.S. Department of Energy (DOE). These programs yielded economic returns of an estimated $40 billion from an investment of $13 billion.

Three energy-efficiency programs, costing approximately $11 million, produced nearly three-quarters of this benefit. Most significant were advances made in compressors for refrigerators and freezers, energy-efficient fluorescent-lighting components called electronic ballasts, and low-emission, or heat-resistant, window glass. Standards and regulations incorporating efficiencies attainable by these new technologies ensured that the technologies would be adopted nationwide, thus dramatically compounding their impact.

"Government funding can stimulate R&D benefits in areas where there is little incentive to improve existing technologies," said Robert Fri, director, National Museum of Natural History, Washington, D.C., and chair of the committee who wrote the report. "We discovered that a few key programs have delivered benefits many times over the total amount invested. Also, some technologies are poised to have a significant impact once the economic climate is right, while other R&D efforts have added to our stock of engineering and science knowledge in several fields."

The committee's study emphasized that DOE research has produced large public benefits that cannot easily be reduced to dollar terms. Large environmental gains were identified chiefly in the fossil energy arena, where two technologies -- atmospheric fluidized bed combustion, a cleaner, more thorough method for burning coal, and nitrogen oxides control to reduce emissions -- decreased nitrogen oxides in the atmosphere by more than 26 million tons and sulfur dioxide by 2 million tons. The resulting environmental savings translated to more than $60 billion in damage and mitigation costs that were avoided. In addition, three programs -- the Partnership for a New Generation of Vehicles, integrated gasification combined cycle, and advanced turbine systems -- have created important options that could produce large benefits if economic or policy incentives support their commercialization.

Among program areas that have not lived up to expectations are ones in which DOE attempted to introduce new technology that lacked the incentives necessary for adoption in the private sector. These include fuel cells for home and industry uses and the now defunct magnetohydrodynamic electricity production technology. For certain fuel-cell technologies, DOE has not identified clear technological goals, has funded a variety of disparate programs, and has not partnered with industry to help make products marketable. Magnetohydrodynamic electricity production, a technology that was identified as a potentially efficient method for generating electricity from domestic coal, continued to be funded long after the technology was found to be too costly and complex for widespread use.

The report was requested by Congress to identify general improvements that can be attributed to federal funding in these areas, including more efficient generation of electricity, lower environmental emissions, and reduced energy cost. The committee developed a comprehensive framework by which the DOE could evaluate the success of its programs.

Using this framework, the committee evaluated each program for its possible public benefits, both quantitative and qualitative. These included economic benefits, measured in dollars and energy saved; environmental gains, measured in tons of pollutants reduced; and national security benefits, measured in amount of fuel and energy saved.

Even research that did not result in immediately useful technologies may reap benefits to the public, the committee said. For example, economic conditions could change, paving the way for a new, more affordable technology, or knowledge gained from failed attempts may prove useful for developing future technologies.

The committee also recommended steps to improve the management and evaluation of DOE's research program. Future DOE programs should include objectives that support economic, environmental, and national security goals. Also, clear performance targets and milestones should be defined at a program's start to help DOE determine whether to proceed with a program or to abandon it before too much money has been spent.

The committee found that market incentives, such as new standards and regulations, can sometimes be useful for helping programs achieve success by increasing the likelihood that a technology will be adopted. Finally, DOE should continue cost-sharing efforts with industry, so that the most promising programs -- with the greatest potential for success in the marketplace -- are funded.

The National Research Council is the principal operating agency of the National Academy of Sciences and the National Academy of Engineering. It is a private, nonprofit institution that provides science and technology advice under a congressional charter.

NATIONAL RESEARCH COUNCIL Division on Engineering and Physical Sciences Board on Energy and Environmental Systems

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

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