. "3 Evaluation of the Energy Efficiency Programs." Energy Research at DOE: Was It Worth It? Energy Efficiency and Fossil Energy Research 1978 to 2000. Washington, DC: The National Academies Press, 2001.
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Energy Research at DOE was it Worth it?: Energy Efficiency and Fossil Energy Research 1978 to 2000
tant realized economic benefits, options for the future, and a bank of scientific knowledge. The benefits substantially exceeded their costs and led to improvements to the economy, the environment, and the energy security of the nation, as indicated below.
Finding 1a. Economic benefits. The realized cumulative net economic benefit to the nation of a few advanced technologies to which EE was a major contributor in the form of R&D or demonstration were found by the committee to be in the range of $30 billion in 1999 dollars (the calculation considers investments made by DOE and other sponsors, including industry). The benefit dwarfs the approximately $7 billion 1999 dollars of investment in energy efficiency R&D over the history of DOE (22 years).
The results of just 6 of the 17 case studies examined by the committee showed sufficient savings to justify the entire government R&D spending in energy efficiency, as shown in Table 3–4. The numbers in Table 3–4 reflect the committee’s judgments on the effect of the programs based on materials submitted by DOE, the application of the committee’s methodology, and its independent assessment. The preponderance of the benefit is economic, in the form of lower-cost energy services to consumers and businesses—that is, life-cycle energy cost reduction (net of increased capital, R&D costs, and other costs that are unique to the technology) and a resulting increase in productivity. The 6 case studies represent only 6 percent of the R&D cost of the entire program.
Since the 17 case studies reviewed by the committee account for only about 20 percent of the energy efficiency budget, the benefits listed in Table 3–4 must be considered an underestimate for the entire energy efficiency program. (It would behoove DOE to extend this analysis to the remainder of the energy efficiency R&D portfolio and to consider, where appropriate, ranges of uncertainties.)
The committee must draw attention to two important points about the realized economic benefits. First, the benefits are only estimated for technology projected to be adopted by 2005. Recent technology will not have achieved significant market penetration by then, so the estimate should not be viewed as reflecting the potential of a technology in the future.
Second, the committee adopted a 5-year rule to be very conservative about the effect of DOE R&D.8 This rule assumes that the same technology would in any case enter the market 5 years later as a result of private sector R&D and commercialization efforts. The committee’s calculations assumed that the DOE R&D or demonstration accelerated the introduction of new technology into the market by 5 years. The 5-year rule is an oversimplification, the committee acknowledges, but it imparts a conservative cast to the estimation exercise. For some technologies, the 5 years may be much too conservative, and this is indeed reflected in some of the case studies. For example, the building sector is fragmented and supports only limited R&D activities, so government R&D might speed change by much more than 5 years.
The committee used this methodology because it could find no consistent and satisfying way of determining what fraction of each technology’s benefits should be ascribed to the investment in energy efficiency R&D or demonstration compared to input from various partners or other players that may have contributed. The committee judged that the contribution of the DOE energy efficiency program was very substantial in all of the technologies listed in Table 3–4 and that the technology would not have happened easily without DOE involvement.
Even though the technology case studies in buildings and industry represent only a small percentage of the total R&D budgets in these sectors, the committee considers them to be reasonably representative in the sense that failures as well as successes, and completed as well as ongoing projects, were purposely chosen from the energy efficiency portfolio. The committee’s case studies covered a larger percentage of the transportation program budget, since that program is characterized by larger projects. Also, seven case studies were developed for buildings, five for industry, and five for transportation, so each sector was about equally represented.
Given what is in the energy efficiency R&D pipeline, the committee does not consider the remarkable abundance of achievements in the buildings sector (Table 3–4) to be a fluke. Rather, it believes that in any effective portfolio there are likely to be some big winners. Furthermore, the committee judges that the potential future benefits from other parts of the energy efficiency portfolio—for example, from PNGV (including fuel cells), advanced industrial turbine systems, and the Industries of the Future programs—could also be large, particularly in the areas of environment and security. This is indicated in Table 3–5, where each of the 17 case studies the committee examined is slotted into a benefits matrix. When more than one type of benefit is relevant for a case study, the primary benefit is shown in boldface type.
The industrial sector technologies listed in Table 3–4 have also produced significant realized economic benefits, which are not, however, as individually dramatic as those of the buildings technologies. These differences in impact probably arise because an innovation in the buildings sector is often applicable to large numbers of buildings, whereas an innovation in the industrial sector often applies to only one small part of the sector. Energy R&D was reported to have enhanced productivity (e.g., in lost foam casting) as well as
Applying this rule reduced the net realized economic benefits of electronic ballasts from about $32 billion estimated by EE to $15 billion, for example. For the refrigerator/freezer compressor the benefits decreased from about $9 billion to $7 billion. For low-e windows the benefits were decreased from $37 billion to $8 billion 1999 dollars.