sion of the study. It satisfies the subcommittee’s request, transmitted to the NRC on July 21, 2004, to “provide an overview of the study committee’s methodological approach; how that approach differs from the retrospective study delineated in the Academies’ report …; and what is expected to be contained in the committee’s final report.”

This letter report begins with a summary of the context of the prospective benefits study. It then discusses the main characteristics of the prospective methodology. The final report is discussed in the section “Contents of the Phase 1 Final Report,” below.


Recognizing the importance of technological innovation, the Department of Energy, the Office of Management and Budget (OMB), and Congressional appropriations committees have given increasing attention to understanding the effectiveness of federal funding of applied energy R&D. The conference report of the Consolidated Appropriations Act4 for fiscal year (FY) 2000 requested that the NRC assess the benefits and costs of DOE’s R&D programs in fossil energy and energy efficiency5—a task agreed upon by the House and Senate subcommittees with jurisdiction over the funding of these programs.

Completed in 2001, the retrospective study conducted by the NRC reported that, in the aggregate, the benefits of federal energy R&D exceeded the costs, but it observed that the DOE portfolio included both striking successes and expensive failures. As important, the NRC study noted that the methodologies by which DOE had calculated the benefits of its programs varied considerably, thus making comparisons of program benefits difficult. The committee that carried out the retrospective study, the Committee on Benefits of DOE R&D on Energy Efficiency and Fossil Energy, developed and applied its own uniform methodology for assessing the benefits of energy R&D programs. This methodology was, however, limited to a retrospective analysis of the results of completed R&D programs.6

The Congress continued to express its interest in R&D benefits assessment by providing funds for the National Research Council to build on the retrospective methodology in order to develop a methodology for assessing prospective benefits.7 Funds were made available for this purpose in both FY 2003 and FY 2004. In response, the NRC began a project in two overlapping phases for the development of a prospective benefits methodology. The current study, which is the first of these phases, began in December 2003 and is expected to be completed in early 2005. The second phase will begin in early 2005. It is expected that the Congress will fund subsequent phases. The statement of task assigned to the committee for Phase 1 is as follows:

Adapt the results of the previous committee with an aim to develop a methodology and matrix for evaluating prospective benefits of DOE’s energy efficiency and fossil energy programs. In addition, the committee will apply its newly developed methodology to evaluate energy efficiency and fossil energy programs.

Two considerations are particularly important in the formulation of this task. One is that the committee is to build on the work of the retrospective study and, by extension, on the work of DOE and OMB that has taken place since the retrospective study was completed. OMB has made considerable progress in creating tools for assessing the value of future energy R&D investments and has promulgated specific investment guidelines for applied R&D as well as for more basic research programs.8 OMB also began the evolutionary development of the Program Assessment and Rating Tool (PART), which ranks programs on the basis of both their likely benefits and the quality of program design and management.9 One of the first applications of PART was to the applied energy R&D programs. OMB now makes public its summary assessments of major DOE programs.10

DOE has also made important strides in developing tools for assessing the likely benefits of its R&D programs. While the final report of this committee will comment in more detail on DOE’s work, it is important to note here that elements of the Department—and particularly the fossil energy and energy efficiency programs—have worked together toward common methodologies and approaches. The scale of DOE’s effort has been impressive, involving substantial staff com-


or recommendations, nor did they see the final draft of the report before its release. The review of this report was overseen by John Ahearne, NAE, Sigma Xi, and Larry Papay, NAE, Science Applications International Corporation (retired). Appointed by the NRC, they were responsible for making sure that an independent examination of this report was carried out in accordance with institutional procedures and that all review comments were carefully considered. Responsibility for the final content of this report rests entirely with the authoring committee and the institution.


House Report 106-479. November 18, 1999. Washington D.C.: U.S. Government Printing Office, p. 493.


The fossil energy R&D programs are administered by the Office of Fossil Energy and the energy efficiency programs by the Office of Energy Efficiency and Renewable Energy.


National Research Council. 2001. Energy Research at DOE: Was It Worth It? Washington D.C.: National Academy Press.


Specifically, the Congress provided funds for “a continuing annual review by the [National] Academy [of Sciences] of programs, using the Academy’s matrix, to measure the relative benefits expected to be achieved and to inform decision making on what programs should be continued, expanded, scaled-back, or eliminated.” (House Report 107-564. July 11, 2002. Washington D.C.: U.S. Government Printing Office, p. 125.)


John H. Marburger and Mitchell E. Daniels, Jr. “Memorandum for the Heads of Executive Departments and Agencies: FY2005 Interagency Research and Development Priorities.” Washington D.C.: Executive Office of the President, June 5, 2003.


Office of Management and Budget. President’s Management Agenda, Fiscal Year 2002. Washington, D.C.: U.S. Government Printing Office, 2001.


Office of Management and Budget. Budget of the United States Government, Fiscal Year 2004, Performance and Management Assessments. Washington, D.C.: U.S. Government Printing Office, 2003.

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