nomic, option, or knowledge benefits of the current energy efficiency or fossil energy program portfolios can be drawn from this study.

Finding 1b. Environmental benefits. Substantial reductions in pollution evidently resulted from the technologies developed in these programs. Although it is difficult to assign a monetary value to environmental benefits, the committee estimates that the fossil energy and energy efficiency RD&D programs yielded environmental benefits valued at anywhere from $64 billion to $90 billion.

For example, in the energy efficiency program, dramatic improvements in refrigerator efficiency reduced the demand for electricity and the pollution resulting from its generation. In the fossil energy program, the atmospheric fluidized-bed combustion program, the flue gas desulfurization program, and the NOx reduction program provided significant environmental benefits, assuming their current deployment and using existing regulation as a baseline. The committee’s attempt to assign a monetary figure to these environmental benefits may well understate them, since it did not try to quantify the environmental value of reduced waste, habitat preservation, and smaller footprints for advanced drilling and other new technologies.

Finding 1c. National security benefits. National security has been enhanced by a number of the programs. A number of fossil energy programs (enhanced oil recovery and seismic technology) increased oil production and reserves in the United States and thereby reduced U.S. dependence on imported oil.

Several other technologies (one is indirect liquefaction) could produce security benefits if deployed in an environment of significantly higher oil prices. Energy efficiency programs also have provided national security benefits by decreasing oil use somewhat (although not—significantly—in the transportation sector) and, to a lesser degree, by improving the reliability of the electric and natural gas infrastructure. Although automotive fuel economy regulations have provided significant national security benefits by reducing dependence on petroleum in transportation, DOE’s research programs have proven disappointing in this regard. But this will change because of PNGV, which has made significant progress toward its goals, including an 80-mpg full-size automobile. This is a very significant energy security option benefit. The committee assigned dollar values to the oil reduction achieved by the energy efficiency efforts, but not to the electricity reduction.

Finding 1d. Knowledge benefits. All the technologies funded by the DOE add to our stock of knowledge in varying degrees. Some of these technologies are still in the R&D stage and it is too early to know if they will be a commercial success; many current programs fall into this category.

However, significant knowledge benefits have already been realized from older programs such as advanced turbine systems, which contributed to improved methods for fabricating advanced materials and ceramics, enhanced knowledge of design and cooling techniques for turbine components, and improved understanding of the effects of sulfur on protective coatings within these systems. Fossil energy programs such as enhanced oil recovery, Western gas sands, and seismic technology also have yielded significant knowledge benefits in the areas of reservoir characterization, seismic imaging, and algorithm development.

In addition to this analysis of the individual classes of benefits embodied in the conceptual framework, the committee reached the following summary conclusions:

  • The largest (by an order of magnitude) apparent benefits were realized as avoided energy costs in the buildings sector in energy efficiency and environmental cost avoidance from the NOx reductions achieved in fossil energy. This result is not surprising in a balanced research portfolio, which will have its share of failures and moderate successes. On the other hand, it is not possible to predict, a priori, which projects in the portfolio will hit the jackpot. This skewed distribution of realized benefits (the NOx benefit is an environmental benefit, not an economic benefit) underscores the importance of systematically accounting for the less quantifiable benefits by entering them in the benefits matrix.

  • The large realized benefits accrued in areas where public funding would be expected to have considerable leverage. The buildings sector is fragmented, and the prevailing incentive structure is not conducive to technological innovation. The NOx reduction achieved in FE is considered to be an environmental rather than an economic benefit because private markets cannot easily capture it.

  • The importance of standards for driving technology innovation in buildings and in transportation cannot be overemphasized. Often DOE energy efficiency research has been used to provide a proper basis for standards.

  • Important but smaller realized benefits were achieved in the Office of Fossil Energy’s oil and gas program and in the industry programs of EERE’s energy efficiency research. In these cases, the industries involved did have significant private incentives to capture the benefits of energy R&D. Nevertheless, the committee concluded that DOE participation took advantage of the private sector activity to realize additional public benefits. In these cases, however, clearly specifying the DOE role is critically important to ensuring that public funding is likely to produce appropriate benefits.

  • Forced government introduction of new technologies not yet economic has not been a successful strategy. Many of these programs, such as fuels from coal or technologies that would greatly reduce the use of oil in the transportation



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