Research in Energy Efficiency Provides Dividends

Three programs to promote energy efficiency in the United States have cost the government $11 billion, but have produced economic returns of $30 billion.

WASHINGTON, DC, US, 2001-07-27 [] Three programs to promote energy efficiency in the United States have cost the government $11 billion, but have produced economic returns of $30 billion. The National Research Council reviewed 17 energy efficiency programs and 22 in fossil fuel technologies, dating back to 1978. It estimated the programs received an investment of $13 billion from the U.S. Department of Energy, and yielded economic returns of $40 billion. Three programs to improve the efficiency of compressors for refrigerators, of electronic ballasts in fluorescent lights, and of low-emissivity window glass received most of the funding but also yielded three-quarters of total benefit. The most significant advances were made in standards and regulations to ensure that the higher efficiencies of those technologies would be adopted across the country to compound their impact. “Government funding can stimulate R&D benefits in areas where there is little incentive to improve existing technologies,” explains Robert Fri of the National Museum of Natural History in Washington and chair of the ‘Committee on Benefits of DOE R&D in Energy Efficiency and Fossil Energy.’ “We discovered that a few key programs have delivered benefits many times over the total amount invested,” he adds.”Some technologies are poised to have a significant impact once the economic climate is right, while other R&D efforts have added to our stock of engineering and science knowledge in several fields.” The study emphasized that federal research by DOE has produced large public benefits that cannot be reduced to dollar terms. Large environmental gains were identified in fossil fuels, notably with atmospheric fluidized bed combustion and nitrogen oxides control to reduce emissions, which decreased atmospheric emissions by 26 megatonnes of NOx and 2 megatonnes of SO2. The environmental savings are worth $60 billion in avoided damage and mitigation costs. Another three programs (Partnership for a New Generation of Vehicles, integrated gasification combined cycle and advanced turbine systems) have created important options that could produce large benefits if economic or policy incentives support their commercialization, notes the report. A DOE program to promote fuel cells was considered a failure because the government attempted to introduce new technology without the incentives necessary for adoption in the private sector and has not identified clear technological goals, has funded a variety of disparate programs, and has not partnered with industry to help make products marketable. Another failure was the former magnetohydrodynamic technology to generate electricity from domestic coal, which was funded long after the technology was found to be too costly and complex for widespread use. The U.S. Congress asked the National Academy of Sciences to identify general improvements attributed to federal funding, including efficient generation of electricity, lower environmental emissions and reduced energy costs. The comprehensive framework will allow DOE to evaluate the success of its programs for public benefits, both quantitative and qualitative such as economic benefits measured in dollars and energy saved; environmental gains measured in tons of pollutants reduced; and national security benefits measured in amount of fuel and energy saved. “Even research that did not result in immediately useful technologies may reap benefits to the public,” the committee explains. “Economic conditions could change, paving the way for a new, more affordable technology, or knowledge gained from failed attempts may prove useful for developing future technologies.” The 400 page report recommends steps to improve the management and evaluation of DOE’s research program, and says future programs should include objectives that support economic, environmental and national security goals. Clear performance targets and milestones should be defined at start to help DOE determine whether to proceed with a program or to abandon it before too much money has been spent. The committee found that standards, regulations and market incentives can be useful for helping programs achieve success by increasing the likelihood that a technology will be adopted. The National Research Council is the principal operating agency of the National Academy of Sciences and the National Academy of Engineering. It is a private, nonprofit institution that provides science and technology advice under a congressional charter. Ralph Cavanagh of the Natural Resources Defense Council is a member of the committee that wrote the report. The recent budget of President George Bush proposed to cut research for renewable energy by 26 percent and by 17 percent for fossil fuels, so money could be diverted to clean coal research. The Senate Appropriations Committee has restored much of the money. “The Energy Efficiency and Fossil Energy research budgets reviewed returned more than three dollars in economic benefits for every dollar invested to date, a return of investment that any business would envy,” says DOE Secretary Spencer Abraham. “The NAS review found that there’s every indication that the investment ratio will continue to grow well into the future as promising systems currently under development … are deployed by industry.” The review “generally reaffirms our efforts in these research-intensive programs,” he adds. “While our energy research success in the economic arena is impressive, our impact on the environment has been even greater.” “Overall, the NAS findings support our energy research efforts and provide clear indications that increasing efficiency, as well as increasing domestic energy supplies are supported by science and are cost-effective,” he concludes. “The findings also reaffirm the importance of a diversified energy research and development portfolio.”