National Academies Press: OpenBook
Suggested Citation:"Front Matter." National Research Council. 2007. Prospective Evaluation of Applied Energy Research and Development at DOE (Phase Two). Washington, DC: The National Academies Press. doi: 10.17226/11806.
×

PROSPECTIVE EVALUATION OF APPLIED ENERGY RESEARCH AND DEVELOPMENT AT DOE (PHASE TWO)

Committee on Prospective Benefits of DOE’s Energy Efficiency and Fossil Energy R&D Programs (Phase Two)

Board on Energy and Environmental Systems

Division on Engineering and Physical Sciences

NATIONAL RESEARCH COUNCIL OF THE NATIONAL ACADEMIES

THE NATIONAL ACADEMIES PRESS

Washington, D.C.
www.nap.edu

Suggested Citation:"Front Matter." National Research Council. 2007. Prospective Evaluation of Applied Energy Research and Development at DOE (Phase Two). Washington, DC: The National Academies Press. doi: 10.17226/11806.
×

THE NATIONAL ACADEMIES PRESS

500 Fifth Street, N.W. Washington, DC 20001

NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance.

This report and the study on which it is based were supported by Contract No. DE-AT01-05EE13073. Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the authors and do not necessarily reflect the views of the organizations or agencies that provided support for the project.

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Suggested Citation:"Front Matter." National Research Council. 2007. Prospective Evaluation of Applied Energy Research and Development at DOE (Phase Two). Washington, DC: The National Academies Press. doi: 10.17226/11806.
×

THE NATIONAL ACADEMIES

Advisers to the Nation on Science, Engineering, and Medicine


The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Ralph J. Cicerone is president of the National Academy of Sciences.


The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. Charles M. Vest is president of the National Academy of Engineering.


The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Harvey V. Fineberg is president of the Institute of Medicine.


The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy’s purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Ralph J. Cicerone and Dr. Charles M. Vest are chair and vice chair, respectively, of the National Research Council.


www.national-academies.org

Suggested Citation:"Front Matter." National Research Council. 2007. Prospective Evaluation of Applied Energy Research and Development at DOE (Phase Two). Washington, DC: The National Academies Press. doi: 10.17226/11806.
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Suggested Citation:"Front Matter." National Research Council. 2007. Prospective Evaluation of Applied Energy Research and Development at DOE (Phase Two). Washington, DC: The National Academies Press. doi: 10.17226/11806.
×

COMMITTEE ON PROSPECTIVE BENEFITS OF DOE’S ENERGY EFFICIENCY AND FOSSIL ENERGY R&D PROGRAMS (PHASE TWO)

MAXINE L. SAVITZ, NAE,1 Chair,

Honeywell, Inc. (retired), Los Angeles, California

LINDA R. COHEN,

University of California, Irvine

JAMES CORMAN,

Energy Alternatives Studies, Inc., Schenectady, New York

PAUL A. DeCOTIS,

New York State Energy Research and Development Authority, Albany

RAMON L. ESPINO,

University of Virginia, Charlottesville

ROBERT W. FRI,

Resources for the Future, Washington, D.C.

W. MICHAEL HANEMANN,

University of California, Berkeley

WESLEY L. HARRIS, NAE,

Massachusetts Institute of Technology, Cambridge

MARTHA A. KREBS,

California Energy Commission, Sacramento

LESTER B. LAVE, IOM,2 

Carnegie Mellon University, Pittsburgh, Pennsylvania

RICHARD G. NEWELL,

Resources for the Future, Washington, D.C.

JACK S. SIEGEL,

Energy Resources International, Inc., Washington, D.C.

JAMES E. SMITH,

Duke University, Durham, North Carolina

TERRY SURLES,

University of Hawaii, Manoa

JAMES L. SWEENEY,

Stanford University, California

MICHAEL TELSON,

University of California, Washington, D.C.

Project Staff

Board on Energy and Environmental Systems (BEES)

MARTIN OFFUTT, Study Director

ALAN CRANE, Senior Program Officer

JAMES J. ZUCCHETTO, Director, BEES

PANOLA GOLSON, Program Associate

DANA CAINES, Financial Associate

JENNIFER BUTLER, Financial Assistant

Transportation Research Board

JILL WILSON, Senior Program Officer

Consultant

KAREN JENNI, Insight Decisions

1

NAE, member, National Academy of Engineering.

2

IOM, member, Institute of Medicine.

Suggested Citation:"Front Matter." National Research Council. 2007. Prospective Evaluation of Applied Energy Research and Development at DOE (Phase Two). Washington, DC: The National Academies Press. doi: 10.17226/11806.
×

BOARD ON ENERGY AND ENVIRONMENTAL SYSTEMS

DOUGLAS M. CHAPIN, NAE,1 Chair,

MPR Associates, Alexandria, Virginia

ROBERT W. FRI, Vice Chair,

Resources for the Future, Washington, D.C.

RAKESH AGRAWAL, NAE,

Purdue University, West Lafayette, Indiana

ALLEN J. BARD, NAS,2 

University of Texas, Austin

MARILYN BROWN,

Georgia Institute of Technology, Atlanta

PHILIP R. CLARK, NAE, GPU

Nuclear Corporation (retired), Boonton, New Jersey

MICHAEL CORRADINI, NAE,

University of Wisconsin, Madison

E. LINN DRAPER, JR., NAE,

American Electric Power, Inc., Austin, Texas

CHARLES GOODMAN,

Southern Company, Birmingham, Alabama

DAVID G. HAWKINS,

Natural Resources Defense Council, Washington, D.C.

DAVID K. OWENS,

Edison Electric Institute, Washington, D.C.

WILLIAM F. POWERS, NAE,

Ford Motor Company (retired), Ann Arbor, Michigan

TONY PROPHET,

Hewlett-Packard Company, Cupertino, California

MICHAEL P. RAMAGE, NAE,

ExxonMobil Research and Engineering Company (retired), Moorestown, New Jersey

MAXINE L. SAVITZ, NAE,

Honeywell, Inc. (retired), Los Angeles, California

PHILIP R. SHARP,

Resources for the Future, Washington, D.C.

SCOTT W. TINKER,

University of Texas, Austin

Staff

JAMES J. ZUCCHETTO, Director

DUNCAN BROWN, Senior Program Officer (part time)

ALAN CRANE, Senior Program Officer

MARTIN OFFUTT, Senior Program Officer

DANA CAINES, Financial Associate

PANOLA GOLSON, Program Associate

JENNIFER BUTLER, Financial Assistant

1

NAE, member, National Academy of Engineering.

2

NAS, member, National Academy of Sciences.

Suggested Citation:"Front Matter." National Research Council. 2007. Prospective Evaluation of Applied Energy Research and Development at DOE (Phase Two). Washington, DC: The National Academies Press. doi: 10.17226/11806.
×

Acknowledgments

The Committee on Prospective Benefits of DOE’s Energy Efficiency and Fossil Energy R&D Programs (Phase Two) wishes to acknowledge and thank the many individuals who contributed time and effort to this National Research Council (NRC) study. The presentations at committee meetings and ongoing dialogue with interested participants from within the administration and outside experts provided valuable information and insight. In particular, the Department of Energy’s Office of Energy Efficiency and Renewable Energy, the Office of Fossil Energy, and the Office of the Undersecretary for Energy and Environment supplied extensive data and analysis for the study. Their valuable information on and insight into advanced technologies and development initiatives assisted the committee in formulating the recommendations included in this report. Ongoing dialogue with the Office of Management and Budget, the Office of Science and Technology Policy, and congressional staff provided valuable guidance for the selection of case studies and presentation of results.

The chair particularly wants to acknowledge the participation of the expert panels, who performed the analysis with professionalism and insight in a timely and informative way. The Phase Two panels exhibited the same high quality as those of Phase One.

All of the committee members served as chairs or members of the expert panels and as members of the methodology and process subcommittees, displaying both expertise and leadership. The chair would like to thank William Fisher, University of Texas, Austin, who, although not a member of the full committee, chaired the panel for the Natural Gas Exploration and Production Program.

In particular, the chair is very grateful for the work and support of the staff of the NRC. The staff included Martin Offutt, James Zucchetto, Alan Crane, and Jill Wilson. Martin Offutt did an excellent job in assembling six expert panels in a relatively short period of time, staffing the work of three of them, and helping to drive the production of this report. This study differs from many other NRC projects and has placed additional demands on the expertise of the staff. Panola Golson did an excellent job of supporting the six panels and the committee throughout. Karen Jenni, the consultant, assisted the panels in understanding the methodology and developing the decision trees in a manner consistent across all of the panels.

Lastly, the chair would like to thank Robert Fri, who stepped in over the last few months to assist the chair in getting the report completed.

This report has been reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise, in accordance with procedures approved by the NRC’s Report Review Committee. The purpose of this independent review is to provide candid and critical comments that will assist the institution in making its published report as sound as possible and to ensure that the report meets institutional standards for objectivity, evidence, and responsiveness to the study charge. The review comments and draft manuscript remain confidential to protect the integrity of the deliberative process. We wish to thank the following individuals for their review of this report:


William Agnew, NAE, General Motors (retired),

David Archer, NAE, Westinghouse (retired),

William Banholzer, NAE, Dow Chemical,

Joseph Cordes, George Washington University,

Roland Horne, NAE, Stanford University,

Trevor Jones, NAE, Biomec, Inc.,

James J. Markowsky, NAE, American Electric Power (retired),

Dexter Peach, General Accounting Office (retired),

Tim Pinkston, Southern Company Generation,

Edward Rubin, Carnegie Mellon University,

Rosalie Ruegg, Independent Consultant,

Page viii Cite
Suggested Citation:"Front Matter." National Research Council. 2007. Prospective Evaluation of Applied Energy Research and Development at DOE (Phase Two). Washington, DC: The National Academies Press. doi: 10.17226/11806.
×

Robert Shaw, Arete Corporation,

Jack Wise, NAE, Mobil Research and Development Corporation (retired),

Jim Wolf, Independent Consultant, and

Frankie Wood-Black, Philips Petroleum Company.


Although the reviewers listed above have provided many constructive comments and suggestions, they were not asked to endorse the conclusions 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 Lawrence Papay, NAE, Science Applications International Corporation (retired). Appointed by the National Research Council, they were responsible for making certain 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.

Suggested Citation:"Front Matter." National Research Council. 2007. Prospective Evaluation of Applied Energy Research and Development at DOE (Phase Two). Washington, DC: The National Academies Press. doi: 10.17226/11806.
×

Contents

 

 

SUMMARY

 

1

1

 

INTRODUCTION

 

8

   

 Background,

 

8

   

 Applied Energy Research and Development at DOE,

 

9

   

 Evaluating the Federal Investment in Energy Research and Development,

 

10

   

 The Current Study,

 

13

2

 

RESULTS OF APPLYING THE METHODOLOGY

 

14

   

 Case Study Selection and Execution,

 

14

   

 Statement of Task,

 

14

   

 Advice to Users,

 

15

   

 Results of Case Studies,

 

16

3

 

METHODOLOGY FOR PROSPECTIVE EVALUATION OF DEPARTMENT OF ENERGY PROGRAMS

 

40

   

 Valuation of Environmental and Security Benefits,

 

40

   

 Methodological Considerations in Measuring Benefits,

 

47

4

 

EXPERT PANEL PROCESS

 

52

   

 Introduction,

 

52

   

 Expert Panel Composition,

 

52

   

 Role of the Panel Chair, the Consultant(s), and the Oversight Committee,

 

53

   

 Panel Activities and Process,

 

54

   

 Interactions with DOE and Information Request,

 

56

   

 Duration and Frequency of the Expert Panel Reviews,

 

57

   

 Assessment of Activities by Non-DOE Entities,

 

57

   

 General Issues,

 

57

   

 Quality Assurance,

 

58

   

 Full-Scale Implementation of the Methodology,

 

58

5

 

CONCLUSIONS AND RECOMMENDATIONS

 

60

   

 Introduction,

 

60

   

 Priorities Identified for Phase Three of This Project,

 

60

   

 The Process for Obtaining Results,

 

61

   

 Using the Results,

 

62

   

 Estimating National Security and Environmental Benefits,

 

62

   

 Continuity: Institutionalizing the Evaluation Process,

 

63

Suggested Citation:"Front Matter." National Research Council. 2007. Prospective Evaluation of Applied Energy Research and Development at DOE (Phase Two). Washington, DC: The National Academies Press. doi: 10.17226/11806.
×

Tables and Figures

TABLES

S-1

 

Benefits of Three EERE R&D Programs,

 

6

S-2

 

Benefits of Three FE R&D Programs,

 

7

1-1

 

Summary of Congressional Appropriations Oversight of EERE Programs,

 

10

1-2

 

Stated Goals of GPRA and PART,

 

11

3-1

 

Estimates of the Social Damage Costs of Air Emissions,

 

43

3-2

 

Estimates of Pollution Abatement Costs,

 

43

H-1

 

Baseline and 2010 Goals for Total IGCC System as Given in DOE’s Advanced IGCC Research,

 

112

H-2

 

Evolutionary Improvements Due to DOE Advanced IGCC Research,

 

113

H-3

 

Evolutionary Improvements Due to DOE Advanced Gasification Research,

 

113

H-4

 

Revolutionary or Long-Term Improvements Due to DOE Advanced Gasification Research,

 

113

H-5

 

Costs for 500-MW Power Plants Using a Range of Technologies Without Carbon Capture and Storage,

 

118

H-6

 

Annual Additions of IGCC Capacity Used to Calculate Program Benefits,

 

131

I-1

 

Top-Level Carbon Sequestration Roadmap,

 

134

J-1

 

DOE’s Performance Targets for Expanding Domestic ERR by 50 Tcf Through 2015,

 

153

J-2

 

Panel Assessments of Technical and Market Risks for Each Subprogram,

 

156

L-1

 

Panel Estimates of Fuel Economy Improvements Relative to Conventional Vehicles,

 

197

L-2

 

Panel Estimates of Fuel Economy Improvement for Vehicles with Specified Technical Improvements,

 

197

Suggested Citation:"Front Matter." National Research Council. 2007. Prospective Evaluation of Applied Energy Research and Development at DOE (Phase Two). Washington, DC: The National Academies Press. doi: 10.17226/11806.
×

FIGURES

S-1

 

Results matrix,

 

3

2-1

 

Findings for DOE’s gasification technologies R&D,

 

17

2-2

 

Findings for DOE’s carbon sequestration program,

 

20

2-3

 

Findings for DOE’s natural gas exploration and production program,

 

23

2-4

 

Findings for DOE’s distributed energy resources program,

 

29

2-5

 

Findings for DOE’s light-duty vehicle hybrid technology R&D,

 

32

2-6

 

Findings for DOE’s chemical industrial technologies program,

 

37

F-1

 

Results matrix for evaluating benefits and costs prospectively,

 

96

F-2

 

Decision tree,

 

99

F-3

 

Example of decision tree applied to advanced lighting program,

 

100

F-4

 

Template for presenting panel results,

 

104-105

G-1

 

Three-page program assessment summary (PAS) form, to be completed by DOE,

 

108-110

H-1

 

Decision tree representing the panel’s assessment of the likely technical outcomes of IGCC R&D,

 

120

H-2

 

Estimated COE for IGCC under different technical success assumptions for the AEO Reference Case global scenario,

 

121

H-3

 

Cumulative amount of IGCC built under three different technical success assumptions and two different global scenarios,

 

122

H-4

 

Cumulative distribution on the net present value of IGCC research under the AEO Reference Case scenario, assuming IGCC replaces PC,

 

124

H-5

 

Results matrix of the Panel on DOE’s Integrated Gasification Combined Cycle Technology R&D Program,

 

126

I-1

 

Funding requirements for DOE’s carbon sequestration program,

 

135

I-2

 

Decision tree used by carbon sequestration panel,

 

139

I-3

 

Summary of probability assessment results,

 

140

I-4

 

Panel assessment of sequestration risks,

 

141

I-5

 

Effect of carbon tax and incremental cost of CCS on COE for IGCC,

 

143

I-6

 

Comparison of COE with competing technologies,

 

145

I-7

 

Impact of DOE program funding on cumulative builds of IGCC with CCS, through 2025,

 

146

I-8

 

Cumulative distribution on the NPV of the economic benefits of carbon sequestration research, with and without the DOE program,

 

147

I-9

 

Results matrix of the Panel on DOE’s Carbon Sequestration Program,

 

148

J-1

 

Decision tree for the existing fields subprogram,

 

155

J-2

 

Decision tree for the drilling, completion, and stimulation subprogram,

 

158

J-3

 

Decision tree for the advanced diagnostics and imaging subprogram,

 

159

J-4

 

Decision tree for the Deep Trek subprogram,

 

161

J-5

 

Estimated increase in domestic natural gas attributed to the program by year,

 

163

J-6

 

Results matrix of the Panel on DOE’s Natural Gas Exploration and Production Program,

 

164

J-7

 

Demand curve and two supply curves for natural gas,

 

169

J-8

 

Change in total surplus from the change in the supply curve,

 

170

Page xiii Cite
Suggested Citation:"Front Matter." National Research Council. 2007. Prospective Evaluation of Applied Energy Research and Development at DOE (Phase Two). Washington, DC: The National Academies Press. doi: 10.17226/11806.
×

K-1

 

Decision tree for combined heat and power program,

 

175

K-2

 

Assessment of technical success with DOE funding and high electricity prices,

 

176

K-3

 

Assessment of technical success for the AEO Reference Case scenario,

 

176

K-4

 

Assessment of technical success for the High Oil and Gas Prices scenario,

 

177

K-5

 

Assessment of technical success for the Carbon Constrained scenario,

 

177

K-6

 

Assessment of technical success for the Electricity Constrained scenario,

 

178

K-7

 

Assessment of market success,

 

179

K-8

 

Panel’s estimate of the amount of CHP added with and without the DOE program for each scenario,

 

180

K-9

 

Uncertainty around estimated CHP additions for the Electricity Constrained scenario,

 

181

K-10

 

Results matrix of the Panel on DOE’s Distributed Energy Resources Program,

 

182

L-1

 

Decision tree representing the panel’s evaluation of the batteries program,

 

194

L-2

 

Decision tree representing the panel’s evaluation of the lightweighting research program,

 

195

L-3

 

Decision tree representing the panel’s evaluation of the advanced combustion engines program,

 

196

L-4

 

Fraction of new vehicles purchased that are conventional and hybrid electric, for two HEV market scenarios,

 

199

L-5

 

Fraction of total vehicle miles driven by year by vehicle type, for two HEV market scenarios,

 

200

L-6

 

Range and likelihood of discounted total consumer expenditures for vehicles and gas between 2006 and 2050, assuming the Low HEV market scenario and Reference Case prices,

 

201

L-7

 

Results matrix of the Panel on DOE’s Light-Duty Vehicle Hybrid Technology R&D Program,

 

202

M-1

 

Probability of technical success, probability of market success, and value of benefits if the project is successful,

 

210

M-2

 

Uncertainty surrounding estimates of program benefits,

 

213

M-3

 

Implied decision tree representing the panel’s evaluation of the ITP– Chemicals portfolio,

 

214

M-4

 

Results matrix of the Panel on DOE’s Industrial Technologies Program–Chemicals,

 

215

M-5

 

Sample project information sheet,

 

217

Suggested Citation:"Front Matter." National Research Council. 2007. Prospective Evaluation of Applied Energy Research and Development at DOE (Phase Two). Washington, DC: The National Academies Press. doi: 10.17226/11806.
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Since its inception in 1977 from an amalgam of federal authorities, the U.S. Department of Energy (DOE) has administered numerous programs aimed at developing applied energy technologies. In recent years, federal oversight of public expenditures has emphasized the integration of performance and budgeting. Notably, the Government Performance and Results Act (GPRA) was passed in 1993 in response to questions about the value and effectiveness of federal programs. GPRA and other mandates have led agencies to develop indicators of program performance and program outcomes. The development of indicators has been watched with keen interest by Congress, which has requested of the National Research Council (NRC) a series of reports using quantitative indicators to evaluate the effectiveness of applied energy research and development (R&D).

The first such report took a retrospective view of the first 3 years of DOE R&D programs on fossil energy and energy efficiency. The report found that DOE-sponsored research had netted large commercial successes, such as advanced refrigerator compressors, electronic lighting ballasts, and emission control technology for flue gas desulfurization. However, some programs were judged to be costly failures in which large R&D expenditures did not result in a commercial energy technology. A follow-up NRC committee was assigned the task of adapting the methodology to the assessment of the future payoff of continuing programs.

Evaluating the outcome of R&D expenditures requires an analysis of program costs and benefits. Doing so is not a trivial matter. First, the analysis of costs and benefits must reflect the full range of public benefits that are envisioned, accounting for environmental and energy security impacts as well as economic effects. Second, the analysis must consider how likely the research is to succeed and how valuable the research will be if successful. Finally, the analysis must consider what might happen if the government did not support the project: Would some non-DOE entity undertake it or an equivalent activity that would produce some or all of the benefits of government involvement?

This second report continues to investigate the development and use of R&D outcome indicators and applies the benefits evaluation methodology to six DOE R&D activities. It provides further definition for the development of indicators for environmental and security benefits and refines the evaluation process based on its experience with the six DOE R&D case studies.

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