TABLE S-2 Benefits of Three FE R&D Programs


Program Completion Costs

(Assuming Level Funding)

Economic Benefits

(Cumulative Net Savings)a

Environmental Benefits

(Cumulative Reduction in Emissions)

Security Benefits

(Cumulative Reduction in Consumption or Importation of Natural Gas)b

Natural Gas Exploration and Productionc

$140 M through 2015

Ref: $220 M

High O&G: $590 M

CC: $300 M

Not quantifiedd

Ref: 1.2 Tcf

High O&G: 0.6 Tcf

CC: 1.2 Tcf

Integrated Gasification Combined Cycle Technology

$750 M through 2020

Ref: $6.4 B to $7.8 B

High O&G: $7 B to $47 B

Ref: −90 to 30 MMTCE

High O&G: 34 to 36 MMTCE

Ref: up to 4.5 Tcf natural gas

High O&G: up to 3.6 Tcf natural gas

Carbon Sequestration

$875 M through 2020

CC: $3.5 B

Other:e $3.9 B

CC and other:e Net environmental benefits are likely zero.f

CC and other:e Net security benefits are likely zero.g

NOTES: High O&G, High Oil and Gas Prices scenario; Ref, Reference Case from Energy Information Administration’s Annual Energy Outlook 2005 (EIA, 2005b); Other, fourth scenario added by panel; CC, Carbon Constrained scenario, which assumes a $100 tax per ton of carbon emissions; MMTCE, million metric tons carbon equivalent; Tcf, trillion cubic feet; quad, quadrillion British thermal units; MT, metric tons; M, million; B, billion.

aFor the Natural Gas Exploration and Production program, benefits are cumulative through 2025. For IGCC and Carbon Sequestration, benefits accrue over the 20-year book life of new plants built through 2025. Economic benefits have been discounted at 3 percent annually.

bFor the natural gas technology program, security benefits are expressed as offsets of imported natural gas. For the IGCC program, benefits are reduced U.S. consumption.

cIncludes the exploration and production activities only.

dModest environmental benefits could result from a reduction in disturbed area and, if fuel switching from coal occurs, from lower carbon emissions.

eThe “other” scenario devised for the carbon sequestration program assumes a $300 tax per ton of carbon emissions.

fOther technologies that could be deployed in a CC regime would reduce emissions by the same amount as those of the DOE program, albeit at higher cost.

gThe least-cost alternatives to the technology under development in the DOE program would be a combination of nuclear generation and renewable electricity that also would reduce natural gas consumption. The costs of other technologies that would reduce carbon emissions were taken from DOE forecasts.

would be most sensitive to changes in budget levels. In the Phase One study, for example, the lighting program proved to be highly budget-dependent. When such sensitivities exist, the decision tree can be re-estimated for a different budget level, using the committee’s methodology. The marginal benefit associated with the change in budget level is the difference between the net benefits of the two calculations.

The methodology estimates benefits for each of three scenarios that describe future states of the world, but it does not attempt to combine the three sets of benefits into a single set. As a result, the decision maker must weigh the alternative scenarios in arriving at judgments about the benefits of the overall research portfolio. Presumably, the portfolio would contain a balance of projects that would produce acceptable results across the range of scenarios outcome.

The methodology estimates public benefits in three areas—economic, environmental, and energy security. While these three types of benefits reflect DOE’s strategic goals (DOE, 2005a), the committee recognizes that other kinds of benefits may be important in evaluating some projects. For example, markets demand that automobile manufacturers produce cars that not only meet the fuel economy objective that is important to DOE but also satisfy several other needs as well. An example of another need might be employment.

Recommendation 11: If benefits in areas other than economic, environmental, or energy security are found to occur, they should be noted in the text accompanying the results matrix. However, the matrix should stay focused on the three main types of benefits to facilitate comparisons across programs.

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