of the projects centered on basic and conceptual work that would contribute to demonstration programs in later stages, although funds were expended on several prototype and full-scale demonstration experiments.37 Formed in response to the 1970s energy crisis, the SFC was intended to support projects that industry was unable to support because of technical, environmental, or financial uncertainties.38 Federal loans, loan guarantees, price guarantees, and other financial incentives totaling $20 billion were authorized to spur industry action.39 Although SFC was designed to continue operating until at least 1992, the collapse in energy prices, environmental concerns, lack of support from the Reagan administration, and administrative problems ended the synthetic fuels program in 1986.

The failure of the federal government’s effort to create a synthetic fuels industry yields valuable lessons about the role of government in technology innovation. The synthetic fuels program was established without sufficient flexibility to meet changes in market conditions, such as the price of fuel. Public unwillingness to endure the environmental costs of some of the large-scale projects was an added complication. An emphasis on production targets reduced research and program flexibility.40 Rapid turnover among SFC’s high level officials slowed administrative actions. The synthetic fuels program did demonstrate, however, that large-scale synthetic energy projects could be built and operated within specified technical parameters.

Energy programs of that time were hindered by excessive political interference. Political influence on funding allocation decisions, selection of R&D projects, or the direction and conduct of scientific research is counterproductive and damaging to the success of federal technology efforts. Fuel-cell projects under the SFC, for example, were allotted to each of the 50 states, regardless of economic viability. Implementation of energy performance standards for buildings was held back by complex regulations.41 The clean coal technology project was hampered by congressional involvement in technical design and operational management. Although programs such as the tertiary oil recovery initiative and the R&D program in photovoltaic cells attained some success, these technologies were not widely adopted. In the case of photovoltaic energy, the government programs of the 1970s concentrated on research, as opposed to advanced development, in an immature technology.42

Assessing Federal Support

Changes in the international and domestic economic and technological environments have made the federal role in technology more important today than in past decades. As we have shown, the government can invest productively in civilian technology beyond basic scientific research. Factors that contributed to successful intervention in the past provide general



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