stration. This program approach in partnership with industry has been critical to the commercialization of fossil energy technology. It is, as well, critical to independent petroleum producers and coal producers, which often do not have the sophistication and resources by themselves to carry research from the concept stage through the high-risk commercial demonstration stage.

Recommendation. DOE should use a benefits matrix and a consistent set of assumptions like the ones adopted for this study to help design, implement, and evaluate DOE programs. The use of such a methodology allows assessing the relative merits of a combination of economic benefits, options benefits, and knowledge benefits and their impact on national energy, environmental, and security strategies. While economic benefits are important, it is also important to have options for the future and a knowledge bank to draw upon when needed. Use of this matrix can facilitate a balanced judgment on the value and expected benefits to the nation of DOE programs. However, in applying this methodology, it is critical to use a consistent set of economic, environmental, and security parameters. It is also important to distinguish between the contributions made by DOE and the contributions made by others.

Recommendation. The committee recommends that DOE continue to maintain a diverse portfolio of programs and resist the temptation to overemphasize near-term, economically driven programs. A diverse portfolio of projects, some of which are geared to a short-term time frame and others a longer-range time frame, should be maintained. Some projects should have potential for realized economic benefits in the near term, some should create options for the future if energy prices or the market conditions change. Some should provide environmental benefits, some should provide energy security benefits, and some should provide knowledge to build on for the future. In general, a well-balanced portfolio puts the nation in a better position to face its future.

Recommendation. DOE should implement an independent critical program review. Many of the planning and management techniques discussed in the committee’s findings—such as sliding-scale cost sharing, partnerships with industry, managing a balanced portfolio—have been successfully implemented by DOE. The committee believes that implementing a periodic, independent, and critical review of the programs, particularly when considering expenditures for the scale-up of technology, would be beneficial. Examples of programs that would have benefited from periodic critical reviews include the magnetohydrodynamics program, the pressurized fluid-bed combustion program, and the fuel cell program. An extremely critical part of the management of any R&D portfolio is a proper review and go/no-go decision-making process. This has to be introduced at the various stages of a program to assure that the concept still has a realistic chance of meeting the original program goals and that the goals still match a changing market and environmental situation. It is important to do this before entering into full-scale demonstrations. The peer review process is critical. If properly implemented, it can form a sound basis deciding whether a program should be continued or terminated. DOE needs to develop a consistent mechanism for this review process.

Department of Energy (DOE). 2000a. Description of the Office of Coal and Power Systems Programs. Available online at <http://www.fe.doe.gov/programs_coalpwr.html>.

DOE. 2000b. Description of the Natural Gas and Petroleum Technology Programs. Available online at <http://www.fe.doe.gov/programs_oilgas.html>.

Office of Fossil Energy (OFE). 2000. OFE response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency and Fossil Energy: OFE Budget History. November 27, 2000.