nized within the framework matrix must consider R&D work in progress as well as R&D programs that are largely or entirely complete in order to avoid inadvertently biasing the results against the former classes of programs.

Second, and closely related, placing the benefits or costs of a DOE R&D program in a particular row or column of the matrix does not constitute a judgment on the value of the program. It is not desirable to have the benefits of DOE’s R&D programs concentrated disproportionately in any rows or columns. For example, while realized benefits are of obvious importance, options values are also important. In fact, a strong argument can be made that a major goal of the DOE R&D programs should be to provide options benefits for the nation relating to technology availability, potential fuel diversity, and future energy choices.

Similarly (but row-wise), while economic benefits are important, environmental and security benefits are too. Indeed, for federal government programs, a strong case can be made for emphasizing them:

  • Environmental benefits, while often difficult to estimate precisely and quantitatively, have become increasingly significant in recent decades and are not generally accounted for in private market transactions.

  • National security benefits are also significant and are not accounted for in the private market.

Both types of benefit represent externalities and public goods that are often not accounted for in the private market and may require government intervention in the market. In general, therefore, it is probably not advisable to have the benefits and/or costs of the DOE’s energy efficiency and fossil energy R&D programs concentrated in any particular cell or cells of the matrix. An appropriate evaluation of the programs must take into account the entire benefits/costs framework.

Finally, it must be recognized that the decision to place a cost or benefit of an R&D program in a particular cell of the matrix can be somewhat subjective and can change depending on circumstances. For example, the reliability of our nation’s energy infrastructure—especially of the electricity grid and the natural gas transmission system—has become of increasing concern in recent years and has recently been given higher priority at DOE. However, energy reliability has aspects that apply to most cells in the matrix: The reliability of the energy infrastructure has obvious security implications, but, especially in the new high-tech information and manufacturing economy, even very short interruptions in energy supplies can have enormous economic costs.

Another example of the potential fluidity of the matrix criteria relates to R&D programs designed to address greenhouse gas emissions. At present, the costs and benefits of these programs should be placed in the environmental row of the matrix. However, if stringent international controls are instituted and greenhouse gas emissions are taxed and priced, then the costs and benefits of the R&D programs addressing greenhouse gases would shift from the environmental benefits and costs row to the economic benefits and costs row. Of course, in this case, the benefits themselves would not have changed only their position within the matrix. This shows, once again, the importance of looking at the entire matrix framework when evaluating energy R&D programs.



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