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Efficiency and Fossil Energy Research 1978 to 2000
Committee on Benefits of DOE R&D on Energy
Efficiency and Fossil Energy, Board on Energy and
Environmental Systems, Division on Engineering and
Physical Sciences, National Research Council
ISBN: 0-309-07448-7, 240 pages, 8 1/2 x 11, (2001)
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Energy Research at DOE: Was It Worth It? Energy Efficiency and Fossil Energy Research 1978 to 2000
http://www.nap.edu/catalog/10165.html
Energy Research at DOE: Was It Worth It? Energy Efficiency and Fossil Energy Research 1978 to 2000
http://www.nap.edu/catalog/10165.html
Washington, DC 20418
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-AM0199PO80016, Task Order DE-AT01-00EE10735.A000, from the U.S. Department of Energy. Any
opinions, findings, conclusions, or recommendations expressed in this publication are those of the
author(s) and do not necessarily reflect the view of the agency that provided support for the project.
International Standard Book Number: 0-309-07448-7
Library of Congress Control Number: 2001093513
Available in limited supply from:
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Energy Research at DOE: Was It Worth It? Energy Efficiency and Fossil Energy Research 1978 to 2000
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Energy Research at DOE: Was It Worth It? Energy Efficiency and Fossil Energy Research 1978 to 2000
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1NAE
Project Staff
RICHARD CAMPBELL, Program Officer and Study
Director
JAMES ZUCCHETTO, Board Director
DAVID FEARY, Senior Program Officer, Board on Earth
Sciences and Resources (BESR)
ROGER BEZDEK, consultant
ANA-MARIA IGNAT, Senior Project Assistant
iv
Energy Research at DOE: Was It Worth It? Energy Efficiency and Fossil Energy Research 1978 to 2000
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1 NAE
Energy Research at DOE: Was It Worth It? Energy Efficiency and Fossil Energy Research 1978 to 2000
http://www.nap.edu/catalog/10165.html
Energy Research at DOE: Was It Worth It? Energy Efficiency and Fossil Energy Research 1978 to 2000
http://www.nap.edu/catalog/10165.html
Acknowledgments
The Committee on Benefits of DOE R&D on Energy Efficiency and Fossil Energy wishes to acknowledge and thank
the staffs of the Office of Energy Efficiency and Renewable
Energy and the Office of Fossil Energy for their exemplary
cooperation during the course of this project. The committee
called on these offices for extensive data, analyses, and presentations, which added significantly to their already heavy
workload.
The committee also wishes to express appreciation to a
number of other individuals and organizations for providing
important background information for its deliberations.
Loretta Beaumont of the U.S. House Appropriations Committee briefed us on the congressional origins of this study.
Members of the committee visited the General Electric Company and Babcock & Wilcox, whose cooperation and openness are greatly appreciated. Other organizations that briefed
the committee at one or more of its public meetings include
the Ford Motor Company, the Gas Research Institute, Wolk
Integrated Services, the Foster Wheeler Development Corporation, International Fuel Cells, Siemens Westinghouse,
the Air Conditioning and Refrigeration Institute, the U.S.
General Accounting Office, Avista Laboratories, the U.S.
Environmental Protection Agency, the Peabody Group,
CONSOL Energy Incorporated, and SIMTECHE. The committee is grateful for the facts and insights that these briefings provided.
Importantly, the committee recognizes the contribution
of Roger Bezdek, whose analytic support and keen advice
were essential to the completion of its work.
Finally, the chair is acutely aware of the extraordinary
efforts of the members of the committee and of the staff of
the Board on Energy and Environmental Systems of the National Research Council (NRC). Every member of the committee contributed to the analysis of the case studies that
form the foundation of this report and to the deliberations on
the report itself. The staff, led by Richard Campbell, man-
aged a very complicated and voluminous process in accordance with the highest standards of the NRC. What the committee was able to accomplish of the ambitious agenda set
by Congress is entirely due to the efforts of these persons.
This report has been reviewed by individuals chosen for
their diverse perspectives and technical expertise, in accordance with procedures approved by the National Research
Council 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: Joel Darmstadter, Resources for the Future; Clark W. Gellings, Electric Power
Research Institute; Robert L. Hirsch, RAND; John Holdren,
John F. Kennedy School of Government, Harvard University; James J. Markowsky, American Electric Power Service
Corporation (retired); John McTague, Ford Motor Company
(retired); Glen R. Schleede, consultant; Frank J. Schuh, Drilling Technology, Inc.; and Lawrence Spielvogel, Lawrence
Spielvogel, Inc.
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 Harold Forsen of the National
Academy of Engineering. Appointed by the National Research Council, he was 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.
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Contents
EXECUTIVE SUMMARY
INTRODUCTION
A Brief History of Federal Energy R&D, 9
Origin and Scope of This Study, 10
Organization of This Report, 12
Reference, 12
13
20
44
62
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CONTENTS
APPENDIXES
A
73
77
79
86
95
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CONTENTS
GLOSSARY
215
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TABLES
ES-1 Energy Efficiency Technology Case Studies Slotted in the Matrix Cells That Are Most
Relevant Today, 4
ES-2 Fossil Energy Technology Case Studies Slotted in the Matrix Cells That Are Most Relevant Today, 5
2-1
The Most Important Fossil Energy and Energy Efficiency Technological Innovations Since
1978, 13
3-1
Summary of the Budget for DOEs Energy Efficiency R&D Programs, FY 1978 to
FY 2000, 21
Expenditures for Energy Efficiency Programs Analyzed by the Committee, 1978 to
2000, 23
Categories and Case Studies, 24
Net Realized Benefits Estimated for Selected Technologies Related to Energy Efficiency
RD&D Case Studies, 29
Energy Efficiency Technology Case Studies Slotted in the Matrix Cells That Are
Most Relevant Today, 38
3-2
3-3
3-4
3-5
4-1
4-2
4-3
4-4
4-5
4-6
E-1
E-2
E-3
E-4
E-5
E-6
E-7
E-8
E-9
E-10
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E-11
E-12
E-13
E-14
E-15
E-16
E-17
E-18
E-19
E-20
E-21
E-22
E-23
E-24
E-25
E-26
E-27
E-28
E-29
E-30
E-31
E-32
E-33
E-34
E-35
E-36
E-37
E-38
F-1
F-2
F-3
F-4
F-5
F-6
F-7
F-8
F-9
F-10
F-11
F-12
F-13
F-14
F-15
F-16
F-17
F-18
F-19
F-20
F-21
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F-22
F-23
F-24
F-25
F-26
F-27
F-28
F-29
F-30
F-31
F-32
F-33
F-34
Total Funding for the Drilling, Completion, and Stimulation Program, FY 1978 to
FY 1999, 195
ADCS Gas Project Organizational Chart, 196
Benefits Matrix for the Drilling, Completion, and Stimulation Program, 198
Summary of Environmental Benefits of Drilling Technology Advances, 199
Funding for the Downstream Fundamentals Program, 199
Benefits Matrix for the Downstream Fundamentals Program, 200
Benefits Matrix for the Eastern Gas Shales Program (EGSP), 202
Benefits Matrix for the Improved Enhanced Oil Recovery Program, 204
Benefits Matrix for the Field Demonstration Program, 206
Funding for the Oil Shale Program, 207
Benefits Matrix for the Oil Shale Program, 209
Benefits Matrix for the Seismic Technology Program, 210
Benefits Matrix for the Western Gas Sands Program (WGSP), 212
FIGURES
ES-1 Matrix for assessing benefits and costs, 3
ES-2 Derivation of columns for the benefits matrix, 3
2-1
2-2
3-1
3-2
3-3
Distribution of DOEs budget by sector for its energy efficiency R&D programs, 22
Consumption of energy in residential and commercial buildings in 1999 by application, 25
Percentage of primary energy used in the manufacturing sector by major
industrial category, 1999, 26
Percentage of fuel consumption for transportation by service, 1999, 26
Electricity consumed by refrigerators, 1947 to 2001, 28
3-4
3-5
4-1
4-2
4-3
4-4
4-5
4-6
4-7
D-1
D-2
E-1
E-2
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Executive Summary
BACKGROUND
From the time of the first Organization of Arab Petroleum Exporting Countries oil embargo nearly 30 years ago,
the United States has looked to new technology for solutions
to its energy problems. Indeed, the first government reports
to recommend an energy research and development (R&D)
agenda appeared within weeks of that 1973 event. In 1975,
President Ford created the Energy Research and Development Administration (ERDA), consolidating under one umbrella existing R&D energy programs from several agencies. In late 1977, ERDA became part of the new Department
of Energy (DOE). And today, energy R&D remains a major
element of DOEs mission.
From 1978 through 1999, the federal government expended $91.5 billion (2000 dollars) on energy R&D, mostly
through DOE programs. This direct federal investment constituted about a third of the nations total energy R&D expenditure, the balance having been spent by the private sector. Of course, government policiesfrom cost sharing to
environmental regulation to tax incentivesinfluenced the
priorities of a significant fraction of the private investment.
On balance, the government has been the largest single
source and stimulus of energy R&D funding for more than
20 years.
In legislation appropriating funds for DOEs fiscal year
(FY) 2000 energy R&D budget, the House Interior Appropriations Subcommittee directed an evaluation of the benefits that have accrued to the nation from the R&D conducted
since 1978 in DOEs energy efficiency and fossil energy programs. In response to the congressional charge, the National
Research Council formed the Committee on Benefits of DOE
R&D on Energy Efficiency and Fossil Energy (the committee).
From its inception, DOEs energy R&D program has been
the subject of many outside evaluations. The present evaluation asks whether the benefits of the program have justified
the considerable expenditure of public funds since DOEs
formation in 1977, and, unlike earlier evaluations, it takes a
comprehensive look at the actual outcomes of DOEs research over two decades.
A Historical Perspective
From 1978, debate about how best to spend the publics
money has surrounded DOEs research program. Perhaps the
most important change in the debate has been the evolving
understanding of the larger goals of energy policy and hence
of R&D objectives. Reducing dependence on energy imports
(especially oil) persisted as a central tenet of energy policy
into the 1980s. During that period, government R&D policy
stressed development of alternative liquid fuels. By the early
1980s, more faith was placed in market forces to resolve
energy supply and demand imbalances and in the development of technologies to enlarge the former and constrain the
latter. In consequence, federal research goals shifted and
began to stress long-term, precompetitive R&D. After 1992,
technology priorities moved in the direction of renewable
energy sources and energy efficiency. And the role of federal funding, having swung between support of expensive
demonstration projects and limited funding of basic research,
settled into a preference for cost sharing in the form of public-private partnerships.
This brief recounting of the shifting forces that shaped
energy R&D over the last 25 years conveys a sense of the
twists and turns of both program goals and management philosophy that DOEs research managers have had to follow
since 1978. Without an appreciation of these shifts, evaluating the successes and failures of DOEs research program
would be a very frustrating and puzzling enterprise.
Energy Efficiency and Fossil Energy Research at DOE
The two program areasenergy efficiency and fossil energythat lie within the scope of this study have expended
about $22.3 billion in federal funds since 1978, or about 26
percent of the total DOE expenditure on energy R&D of
approximately $85 billion (2000 dollars). Their funding histories reflect the changes in goals and philosophies that have
characterized energy research at DOE.
1
Energy Research at DOE: Was It Worth It? Energy Efficiency and Fossil Energy Research 1978 to 2000
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would require adding up the total benefits and costs of research conducted since 1978, determining what proportion
of each is attributable to DOE funding, and calculating the
difference between the DOE contributions and the cost of
achieving them. In practice, methodological challenges
abound. Of these, the most fundamental is how to define and
systematically capture the diverse benefits that result from
publicly funded research within a dynamic environment of
marketplace activity, technological advancement, and societal change. See Chapter 2 and Appendix D for further details on the framework for doing this.
Evaluation Framework
Justification for public sector research rests on the observation that public benefits exist that the private sector cannot
capture. In such cases, the private costs of developing and
marketing a technology may exceed the benefits that the private sector can capture. The committee developed a comprehensive framework based on this general philosophy that
would define the range of benefits and costs, both quantitative and qualitative, that should be considered in evaluating
the programs. Depending on the outcomes of the R&D undertaken, the principal benefit of a program, for example,
may be the knowledge gained and not necessarily realized
economic benefits. The matrix shown in Figure ES-1 and
discussed below provides an accounting framework for the
consistent, comprehensive assessment of the benefits and
costs of the fossil energy and energy efficiency R&D programs. The matrix can be completed for each discrete program, project, or initiative that has a definable technological
objective and outcome. The framework is intended to summarize all net benefits to the United States, to focus attention
on the main types of benefits associated with the DOE mission, and to differentiate benefits based on the degree of certainty that they will one day be realized. It has been designed
to capture two dimensions of publicly funded R&D: (1) DOE
research is expected to produce public benefits that the private economy cannot reap and (2) some benefits may be
realized even when a technology does not enter the marketplace immediately or to a significant degree.
The classes of benefits (corresponding to the rows of the
matrix) are intended to capture types of public benefits appropriate to the objectives of DOE R&D programs. Based
on these stated objectives, the committee adopted the three
generic classes of benefits (and related costs) for the energy
R&D programseconomic, environmental, and security
benefits:
Economic net benefits are based on changes in the total
market value of goods and services that can be produced in
the U.S. economy under normal conditions, where normal
refers to conditions absent energy disruptions or other energy shocks and the changes are made possible by technological advances stemming from R&D.
Energy Research at DOE: Was It Worth It? Energy Efficiency and Fossil Energy Research 1978 to 2000
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EXECUTIVE SUMMARY
Realized Benefits
and Costs
Options Benefits
and Costs
Knowledge Benefits
and Costs
Economic benefits
and costs
Environmental benefits
and costs
Security benefits
and costs
FIGURE ES-1 Matrix for assessing benefits and costs.
Technology
Development Technology
Economic/
Developed
Policy Conditions
favorable for commercialization of the technology. The second column, which includes less certain benefits, is called options benefits and costs. These consist of benefits that might
be derived from technologies that are fully developed but for
which economic and policy conditions are not likely to be,
but might become, favorable for commercialization. All
other benefits, to the extent they exist, are called knowledge benefits and costs. The framework recognizes that the
technologies being evaluated may be in different stages of
the RD&D cycle, and by its nature, it represents a snapshot
in time, with a focus on outcomes of the work performed.
To arrive at entries for the cells of the matrix, a logical
and consistent set of rules for measuring the results of the
individual initiatives is also necessary. These rules define
more exactly the meanings of the rows and columns, and
they provide a calculus for measuring the values to be entered in each of the cells.
Case Studies
To assess the benefits of the energy efficiency and fossil
energy programs within this evaluation framework, the com-
Technology Development
in Progress
Technology
Development Failed
Realized benefits
Knowledge benefits
Knowledge benefits
Options benefits
Knowledge benefits
Knowledge benefits
Knowledge benefits
Knowledge benefits
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TABLE ES-1
tribution in most cases, and doing so remains a methodological challenge for the future. For the purposes of this study, it
simply attempted to specify in its case study analyses the
specific role that DOE playedthe outcome that would not
have happened had DOE not acted. Based on this assessment, the committee used conservative judgment to characterize the DOE contribution for purposes of developing findings and recommendations. No conclusions about the
benefits of unevaluated current energy efficiency or fossil
energy programs can be drawn from this study.
In Tables ES-1 and ES-2, each of the 39 case studies the
committee examined is slotted into the benefits matrix. If a
technology has more than one kind of benefit, the primary
benefit is indicated by boldface type.
Energy Efficiency
Although the issues, problems, and solutions for energy
efficiency may be different for each of the three end-use
sectors (buildings, industry, and transportation), lessons
learned from one sector are often applicable to all the sectors. To study the energy efficiency program comprehensively, the committee selected case studies to illustrate the
main components of the program, important examples of
RD&D activities, and the range of benefits and costs that the
program has yielded (see Selection of the Case Studies in
Chapter 3). The 17 case studies represent $1.6 billion, or
about 20 percent, of the total $7.3 billion energy efficiency
Energy Efficiency Technology Case Studies Slotted in the Matrix Cells That Are Most Relevant Today
Type of Benefit
Realized Benefits
Options Benefits
Knowledge Benefits
Economic benefits
(net life-cycle energy
cost reductions)
Low-e glass
Electronic ballasts
Advanced refrigerators
Advanced turbine systems
Oxygen-fueled glass furnace
Lost foam casting
DOE-2 (applied to design)
Forest products
Forest products
Compact fluorescents
Environmental
benefits
PNGV
DOE-2
Indoor air quality (IAQI&V)
Forest products
Security benefits
PNGV
DOE-2 (peak load analysis)
NOTE: PEM, proton exchange membrane; PNGV, Partnership for a New Generation of Vehicles. The table does not indicate possible future position as a
result of completing R&D. No significance should be attached to the ordering of the entries in the cells. When more than one type of benefit is relevant for a
technology, the primary benefit is shown in bold.
Energy Research at DOE: Was It Worth It? Energy Efficiency and Fossil Energy Research 1978 to 2000
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EXECUTIVE SUMMARY
TABLE ES-2 Fossil Energy Technology Case Studies Slotted in the Matrix Cells That Are Most Relevant Today
Type of Benefit
Realized Benefits
Options Benefits
Knowledge Benefits
Economic benefits
Drilling/completion/stimulation
Atmospheric fluidized-bed combustion
Western gas sands
Eastern gas shales
Improved enhanced oil recovery
Field demonstration programs
Seismic technology
Coal-bed methane
Waste management and utilization
Environmental benefits
Drilling/completion/stimulation
Atmospheric fluidized-bed combustion
Western gas sands
Eastern gas shales
Improved enhanced oil recovery
Field demonstration programs
Seismic technologies
NOx control
Coal-bed methane
Security benefits
Drilling/completion/stimulation
Improved enhanced oil recovery
Field demonstration programs
Seismic technologies
Drilling/completion/stimulation
Fuel cells
NOTE: When more than one type of benefit is relevant for a technology, the primary benefit is shown in boldface type. NOx, oxides of nitrogen; IGCC,
integrated gasification combined cycle.
Fossil Energy
The committee compiled case studies for 22 of the fossil
energy RD&D programs funded between 1978 and 2000.
These case studies account for nearly $11 billion (73 percent) of the $15 billion appropriated to the Office of Fossil
Energy for RD&D during the period.
Energy Research at DOE: Was It Worth It? Energy Efficiency and Fossil Energy Research 1978 to 2000
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EXECUTIVE SUMMARY
Program Evaluation
The committee found that managers of both the energy
efficiency and the fossil energy RD&D programs did not
utilize a consistent methodology or framework for estimating and evaluating the benefits of the numerous projects
within their programs. In addition to a tendency to assign
too much weight to realized economic benefits, especially
avoided costs and unshared costs, the inconsistent approach adopted by DOE policy makers to evaluation of
their programs often was associated with an overstatement
of economic benefits.
The benefits matrix adopted for this study is a robust
framework for evaluating program outcomes. Its application imposes a rigor on the evaluation process that clarifies
the benefits achieved and the relationship among them.
Recommendation. DOE should adopt an analytic framework similar to that used by this committee as a uniform
methodology for assessing the costs and benefits of its
R&D programs. DOE should also use an analytic framework of this sort in reporting to Congress on its programs
and goals under the terms of the Government Performance
and Results Act.
Recommendation. To implement this recommended analytic approach, DOE should consider taking the following
steps:
1. Adopt and improve guidelines for benefits characterization and valuation. Convene a workshop of DOE analysts, decision makers, and committee members to discuss
the problems encountered in the application of the committees guidelines and to consider how to begin the improvement process.
2. Adopt consistent assumptions to be used across programs.
3. Adopt procedures to enhance the transparency of the
process.
4. Provide for external peer review of the application of
the analytic framework to help ensure that it is applied
consistently for all programs.
5. Seek to include the views of all stakeholders in public reviews of its R&D programs.
DOE programs may be effective in very diverse ways,
and better data on the nature of program results will aid
policy makers in assessing the appropriateness of program
structures. It is essential to report specifically the concrete
results achieved by DOEs participation in such programs
relative to the efforts of other investors. Application of this
framework requires data that often are difficult to obtain
within DOE. Public costs may be quite modest compared
with the benefits if they catalyze private investments in innovation.
Recommendation. DOE should consistently record historical budget and cost-sharing data for all RD&D projects. Industry incurs significant costs to commercialize technology
developed in DOE programs, andespecially in the assessment of economic benefitsthese costs should be documented where possible.
Portfolio Management
The committees review of the fossil energy and energy
efficiency programs underscores the significant changes in
energy policy during the nearly three decades of the programs existence. There have been changes in technological
possibilities; expectations about energy supply, prices, and
security; DOE programmatic goals; the national and international political environment; and the feasibility and accomplishments of various technological approaches and R&D
performers. A balanced R&D portfolio is particularly important since individual R&D projects may well fail to
achieve their goals. Rather than viewing the failure of individual R&D projects as symptoms of overall program failure, DOE and congressional policy makers should recognize
that project failures generate considerable knowledge and
that a well-designed R&D program will inevitably include
such failures. An R&D program with no failures in individual research projects is pursuing an overly conservative
portfolio.
Recommendation. DOEs R&D portfolio in energy efficiency and fossil energy should focus first on DOE (national)
public good goals, and it should have (1) a mix of exploratory, applied, development, and demonstration research and
related activities, (2) different time horizons for the deployment of any resulting technologies, (3) an array of different
technologies for any programmatic goals, and (4) a mix of
economic, environmental, and security objectives. In addition, it is important to effectively integrate the results of exploratory research projects with applied RD&D activities
within individual programs.
Recommendation. DOE should develop clear performance
targets and milestones, including the establishment of intermediate performance targets and milestones, at the inception
of demonstration and development programs (in cooperation with industry collaborators, where appropriate) and
employ these targets and milestones as go/no-go criteria
within individual projects and programs.
The committees review of DOE RD&D programs suggests that programs seeking to support the development of
technologies for rapid deployment are more likely to be successful when the technological goals of these programs are
consistent with the economic incentives of users to adopt
such technologies. For the programs in which these goals are
central, the case studies illustrate a number of instances in
Energy Research at DOE: Was It Worth It? Energy Efficiency and Fossil Energy Research 1978 to 2000
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Energy Research at DOE: Was It Worth It? Energy Efficiency and Fossil Energy Research 1978 to 2000
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Introduction
the program has had to adapt to sharp swings in goals, priorities, and management philosophy. A brief review of these
changes is essential to setting the stage for a review of the
program itself.
Perhaps the most important change in the debate has been
the evolving understanding of the larger goals of energy
policy, and hence of R&D objectives. The earliest response
to the first Arab oil embargo was the Nixon administrations
Project Independence, which took as its purpose making the
United States independent of foreign energy sources. Although this goal quickly proved impractical, reducing dependence on energy imports (especially oil) persisted as a
central tenet of energy policy into the 1980s. Well into the
1980s, government R&D policy stressed the development of
alternative liquid fuels. To accelerate this outcome, the government engaged in large and expensive demonstration
projects to stimulate the production of liquid fuels from domestic resources such as oil shale and coal. The sense of
urgency behind this policy of producing homegrown fuels
culminated in the establishment of the Synthetic Fuels Corporation (SFC) in 1980.
In the next year, the incoming Reagan administration radically changed the direction of national energy policy. More
faith was placed in market forces to resolve energy supply
and demand imbalances and in the development of technologies to enlarge the former and constrain the latter. In consequence, federal research goals began to stress long-term,
precompetitive R&D. Large demonstration programs virtually disappeared from the scene, the SFC quickly expired,
and the administration proposed drastic cuts in the federal
energy R&D budget. Although the Congress did not approve
the deepest funding reductions, most of the 1980s became a
time of major retrenchment for DOEs research program.
Throughout this entire period, from the mid-1970s
through the 1980s, the balance of federal funding between
supply and conservation research was a matter of continuing
controversy. The issue had been joined as early as 1975,
when ERDAs first R&D plan was criticized for giving short
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shrift to conservation. The Carter administration made conservation a centerpiece of its energy policy, and much was
made of the market failures that prevented the private sector from adopting cost-effective (and readily available) energy conservation technologies. The Reagan administration
took a different view, and cuts in the conservation budgets
were among the most severe of the cuts that it proposed.
In the late 1980s, the nations understanding of the energy problem and of the goals of energy policy matured. By
1985, the combined effect of more efficient energy use and
important new finds of oil and gas had loosened the hold of
the Organization of Petroleum Exporting Countries (OPEC)
on oil prices and greatly leavened the pessimism of the resource depletion school of energy policy. Concern for energy dependence (measured by the level of oil imports) gave
way to the notion of vulnerability (calculated as the fraction
of oil used in the economy whether imported or not) as the
chief metric of security against possible disruptions in international oil markets. Environmental concerns gained even
greater prominence as a driver of energy policy, particularly
the need to moderate emissions from the nations most
widely used domestic energy resourcecoal. The emergence in the 1990s of global climate change as a serious
environmental issue deepened concerns over the burning of
coal, and indeed of all fossil fuels. Early views of energy
conservation changed to become a strategy of deploying energy efficiency technologies as an economically attractive
solution to energy and environment problems. During this
time, DOE first began to appreciate and address the health
impacts of indoor air quality associated with the inappropriate use of more efficient technology with the potential to
cause adverse health effects when buildings become essentially sealed environments.
Arguably, the late 1980s and early 1990s saw energy
policy and its associated research objectives reach a more
stable level. Even so, adapting to these shifts created another
round of profound change in the direction and management
of DOEs R&D program. Early in the period, the Clean Coal
Technology program invested heavily in technologies for
burning coal in a more environmentally friendly way. After
1992, technology priorities moved in the direction of renewable energy sources and energy efficiency, newly interesting
because of their low or zero net contribution to greenhouse
gas emissions, thus offsetting fossil energy-based emissions
and slowing the buildup of atmospheric greenhouse gases
and resulting climate change. Toward the end of the period,
energy R&D planning began to take a portfolio approach,
recognizing both that energy policy must serve multiple
goals and that research produces failures as well as successes.
And the role of federal funding, having swung between support of expensive demonstration projects and limited funding of basic research, settled into a preference for cost sharing in the form of public-private partnerships.
This brief recounting of the shifting forces that shaped
energy R&D over the last 25 years leaves out many impor-
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11
INTRODUCTION
early 1980s, entailed the push for energy security, development of alternative fuel supplies, and a focus on energy efficiency, with near-term commercial demonstration emphasized. The second phase, from the early 1980s to the
mid-1980s, was characterized by the easing of the energy
crisis as oil prices stabilized, and the CPS R&D programs
shifted their attention to compliance with Clean Air Act
Amendments. Environmental issues have come to dominate
the third and current phase, providing the main impetus for
CPS programs from the mid-1980s to the present.
DOEs oil and gas research, like its CPS research, has
changed substantially since 1978. The history of the oil program can be divided into two periods: from 1978 to 1988
and from 1989 to the present. In the earlier period, the focus
was on long-term, high-risk R&D, mostly for enhanced oil
recovery from existing wells. In more recent years, the program has stressed near- and mid-term results, emphasizing
technological solutions to improving production. At first, the
natural gas program focused on production from unconventional natural gas resources, such as gas shales, tight sands,
and coal-bed methane or gas hydrates. In recent years, the
focus has shifted to the development of tools for finding natural gas, with a downstream program emphasis on gas-to-liquids technology.
In response to the congressional charge, the National Research Council formed the Committee on Benefits of DOE
R&D on Energy Efficiency and Fossil Energy (see Appendix A for committee members biographical information).
The statement of task for this study describes the issues included in the committees review of DOEs fossil energy
and energy efficiency programs:
To devise an approach to conducting the study, the committee carefully reviewed the statement of task and the background that led to its formulation. Three elements of the assignment appeared to be particularly important and were
therefore instrumental in guiding the study design:
In conducting this study, the committee will critically review written reports and hear presentations at its meetings
related to the benefits and costs of federal R&D in the areas
of fossil and energy end-use efficiency technologies, as noted
above. The committee will:
(1) utilize the applicable literature on R&D strategies and
the role of R&D in technological and economic develop-
(2) assess the benefits of R&D (in the areas of fossil energy
and energy efficiency) in light of the framework developed
and available information about these programs. In undertaking this analysis, the committee will review the historical
context over the applicable time period (1978 to the present)
and related policy, legislative, and strategy goals and purposes of the R&D; review studies that have been undertaken
by DOE on the costs and benefits of its R&D efforts; review
studies and/or evaluations by the private sector, consulting
companies, public interest groups, academic researchers, and
others on the costs and benefits of energy technology R&D
investments;
(3) based on its framework, analysis, and observations, suggest strategies to inform future R&D choices.
The committee will use consultants as needed to conduct
analysis based on guidance from the committee. The committee will write a final report that addresses its statement of
work outlined above and documents its conclusions and observations on the benefits and costs of federal energy R&D
in energy efficiency and fossil energy technologies, including a list of significant accomplishments and intellectual
contributions identified.
The study should focus on outcomes. The task statement requires a retrospective examination of improvements
that have already occurred. The committee therefore analyzed actual costs and actual benefits realized to date as its
starting point for evaluating energy research.
Developing a methodology is a central element of the
task. The statement of task not only requires this, but it also
speaks to the need for a methodology that can be applied to
future research proposals. Accordingly, the committee gave
great weight to developing an approach to characterizing outcomes that would be useful to future analysts.
The main purpose of evaluating the benefits and costs
of more than 25 years of energy research is prospective, not
retrospective. In other words, the value of the analysis lies in
the lessons that can be learned from past experience and in
validating the analytic methodology developed by the committee. Because it could not evaluate in detail all of the re-
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benefits and draws some conclusions about the circumstances that seem to be associated with research that produces more (or fewer) benefits than costs. Whether the benefits are sufficient to justify the costs, given the possible
alternative uses of funds, is not within the scope of this study.
Equally important to the study design, however, are several issues that the committee elected not to address. To some
degree, what was not done is the mirror image of the study
priorities noted above. Nevertheless, it is useful for the understanding of the report to make explicit that the committee
did not do the following:
REFERENCE
National Science Foundation (NSF). 2000. Inventory of Historical Tables
by Topic from Research and Development in Industry. Washington,
D.C.: National Science Foundation.
Energy Research at DOE: Was It Worth It? Energy Efficiency and Fossil Energy Research 1978 to 2000
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OVERVIEW
In theory, evaluating the benefits and costs of DOEs research program should be relatively straightforward. It
would require adding up the total benefits and costs of research conducted since 1978, determining what proportion
of each benefit is attributable to DOE funding, and calculating a balance between the DOE contributions and the cost of
achieving them. In practice, of course, methodological challenges abound. Of these, the most fundamental is how to
define and systematically capture the diversity of benefits
that result from publicly funded research within a dynamic
environment of marketplace activity, technological advancement, and societal change. In this chapter, the framework the
committee developed for doing so is discussed, as well as
comments on some of the implications of applying it.
THE SETTING
Basic economic principles suggest that the private sector
undertakes research and commercializes technologies when
private firms can capture economic benefits in excess of the
costs of achieving them. Justification for public sector research rests on the observation that the private sector cannot
capture some of the benefits. Environmental benefits not recognized in market prices provide a familiar example of this
principle, but there are others, including the difficulty of capturing proprietary benefits from basic research.
As background for its study of DOE-sponsored R&D, the
committee decided to examine the role played by industry
and government in developing the technologies that successfully came to market and therefore presumably produced significant private benefits. The committee, with the help of
outside experts, compiled a list of the most important advances in fossil energy and energy efficiency technology
over the past two decades. Based on the experience of the
committee and other experts, judgments were then made
about the significance of both industry and DOE funding
A/M
A/M
A/M
A/M
A/M
D
I
I
I
I
A/M
A/M
A/M
A/M
A/M
D
D
I
A/M
A/M
I
A/M
I
13
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THE FRAMEWORK
Based on this general philosophy, the committee developed a comprehensive framework to define the range of benefits and costs, both quantitative and qualitative, that should
be considered in evaluating the programs. The framework is
intended to summarize all net benefits to the United States,
to focus attention on the major types of benefits associated
with the DOE mission, and to differentiate benefits based on
the degree of certainty that the benefits will one day be realized. It has been designed to capture two dimensions of publicly funded R&D: (1) DOE research is expected to produce
public benefits that the private economy cannot reap and
Realized Benefits
and Costs
Options Benefits
and Costs
Economic benefits
and costs
Environmental benefits
and costs
Security benefits
and costs
FIGURE 2-1 Matrix for assessing benefits and costs.
Knowledge Benefits
and Costs
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Security net benefits are based on changes in the probability or severity of abnormal energy-related events that
would adversely impact the overall economy, public health
and safety, or the environment. Historically, these benefits
arose in terms of national security issues, i.e., they were benefits that assured energy resources required for a military
operation or a war effort. Subsequently, they focused on dependence upon imported oil and the vulnerability to interdiction of supply or cartel pricing as a political weapon. More
recently, the economic disruptions of rapid international
price fluctuations from any cause have been emphasized.
Currently, the economic and health and safety consequences of unreliable energy supply have become a more
general security issue. The reliability of electric power grids
was the initial concern, but natural gas transportation and
storage and petroleum refining and product supply systems
are now receiving attention.
Security net benefits can be seen as special classes of economic net benefits or environmental net benefits. They are
special because they accrue from preventing events that
have a relatively low likelihood or a low frequency of occurrence.
Range of Benefits (Columns of the Matrix)
The columns in the matrix are the first step toward a more
explicit definition of the benefits to be included. They recognize a range of benefits from R&D that are logical measures
of the value of the programs. The categories are realized,
options, and knowledge.
The three columns reflect degrees of uncertainty about
whether the particular benefits have been or will be obtained.
Two fundamental sources of uncertainty are particularly
important: technological uncertainties and uncertainties
about economic and policy conditions.
The technology development programs can be classified
according to whether the technology has been developed, is
still in progress, or has terminated in failure. All else being
equal, a technology still under development is less likely to
result in benefits than a technology that has already been
successfully developed, since technological success is not
assured in the former case. However, even if a technology is
never successfully developed, the knowledge gained in the
program could lead to another beneficial technology.
Similarly, if a technology is fully developed and economic and policy conditions are favorable for its commercialization, there can be reasonable confidence that future
benefits will accrue. However, it may be that economic and
policy conditions are not expected to be favorable but might
become favorable under plausible circumstances. In this
case, the benefits may occur, but their probability is lower.
Finally, while it may be virtually certain that the economic
and policy conditions will never become favorable and that
the technology itself will never be adopted, the knowledge
associated with the technology development may be appli-
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Technology
Development Technology
Economic/
Developed
Policy Conditions
Economic Benefits
The estimate of economic benefits resulting from an R&D
initiative is intended to measure the net economic gain captured by the economy. The impact of a new technology is
measured by comparing it with the next best alternative that
was available when the technology was introduced or that
would have been available absent the DOE efforts. Benefits
are intended to be net of all economic costs of achieving the
benefits, not just the cost to the direct participants in the
R&D initiative. Benefits and costs are to be calculated on the
basis of the life cycle of investments. Dollar amounts are all
expressed in constant 1999 dollars. The committee did not
discount benefits, costs, or governmental expenditures but
added together benefits from different years, adjusted only
for inflation.
Neither macroeconomic stimulation of the national
economy or the creation of jobs is to be considered a benefit
Technology Development
in Progress
Technology
Development Failed
Realized benefits
Knowledge benefits
Knowledge benefits
Options benefits
Knowledge benefits
Knowledge benefits
Knowledge benefits
Knowledge benefits
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of an R&D initiative. In todays national economic circumstances, such impacts are more likely to be transfers rather
than net increases at the national level. In any case, the investment of similar amounts of funds elsewhere in the
economy would also have impacts. To attribute net macroeconomic benefits to a particular R&D initiative, therefore,
would be highly speculative and should not be done.
Unintended improvements in economic activities that are
unrelated to the objectives of the R&D initiative usually
should not be counted as benefits in evaluating the success
of the R&D. Such serendipitous results may offset the costs
to the public of the initiative, but they are a random consequence of investment. Ancillary benefits might have resulted
from investing the funds elsewhere. Judgment must be applied in specific cases to determine if the results are relevant
to the objectives of the initiative.
Environmental Benefits
Environmental benefits result when the introduction of a
new technology RD&D program makes possible an improvement (or reduced degradation) in measures of environmental
quality. Most often, the benefit is a net reduction in toxins or
other harmful emissions compared with the situation that
would have prevailed in the absence of the technology. Such
benefits might be achieved by improving emission controls
or increasing the efficiency of emission-producing processes.
In some cases, an environmental benefit may be a net reduction in the use of environmental resources for the provision
of energy services, including a reduction of adverse impacts
on land use, air and water quality, or aesthetics.
Savings in the costs of achieving a given standard of emission control or a required level of remediation would be considered to be an economic benefit. Environmental benefits
result only if there is a net improvement in environmental
quality from what would have been the case absent the DOE
program.
Security Benefits
The prevention or mitigation of macroeconomic losses
resulting from energy disruptions can be considered as a security benefit. Transient and unpredicted impacts on the national economy of sudden and/or unpredicted service interruptions or price shocks can severely impair productivity at
the national level, leading to real costs that can be estimated.
Reductions in the probability or severity of such events are
appropriate measures of the security benefit of R&D initiatives.
It may be possible to calculate a reasonable realized security benefitfor example, in the case of a technology that
has demonstrably reduced the frequency of electric service
interruptions. More often, however, security benefits based
on changing the probability of international energy disruptions will be difficult to quantify and will instead be described qualitatively.
Options Benefits
Options benefits are credited to those technologies for
which the R&D has been completed and the technological
and economic attributes are reasonably well known. These
technologies can be considered to be on the shelf and available for commercialization if future circumstances warrant.
They may be uneconomic under current pricing conditions
but become viable if the costs of alternatives rise. They may
also become viable if the alternatives are curtailed by increasingly stringent environmental, health, or safety regulations or by unexpected constraints on fuels or other resources. Judgment must be used in specific cases. Not all
unsuccessful R&D initiatives can be viewed as potentially
viable in situations that have credible possibilities of occurring.
Knowledge Benefits
Knowledge benefits are defined as scientific knowledge
and useful technological concepts resulting from the R&D
that have not yet been incorporated into commercialized results of the program but hold promise for future use or are
useful in unintended applications. These are products of the
research that have value over and above the benefits that
have been accounted for in the other two columns of the
matrix. Knowledge benefits may include unanticipated and
not closely related technological spin-offs that are made possible by the research programs. This is probably the broadest
and most heterogeneous category of benefits.
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REFERENCE
Department of Energy (DOE). 2000. Strategic Plan. Strength Through Science: Powering the 21st Century. Washington, D.C.: U.S. Department
of Energy. Available online at <http://www.energy.gov/index/
indexs.html>.
Energy Research at DOE: Was It Worth It? Energy Efficiency and Fossil Energy Research 1978 to 2000
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INTRODUCTION
mental quality, and raise economic productivity in many sectors of the economy. Indeed, research, development, demonstration, and deployment (RDD&D) in energy efficiency
have proved effective ways to simultaneously reduce the use
of electricity, reduce oil imports, meet environmental requirements, and improve economic productivity. Even with
the U.S. economy gradually moving away from energy-intensive industry, as much as two-thirds of the drop in energy
intensity of the economy in the last three decades can be
attributed to improvements in energy efficiency (OTA,
1990).
This chapter evaluates the contribution that DOEs energy efficiency RD&D programs have made to improving
the technologies used in the buildings, industry, and transportation sectors. These energy-efficiency programs, along
with the Federal Energy Management Program (FEMP) and
state and local grant programs (these involve weatherization), are in the current Office of Energy Efficiency and Renewable Energy (EERE) and come under the Interior Appropriations Committee of the U.S. Congress. The renewable
energy part of EERE is funded by the Energy and Water
Appropriations Committee of the Congress. The committee
was charged with addressing only the portion of the EERE
programs that comes under the Interior Appropriations Committee, not FEMP, the state grants, or renewable components.
The authorities and goals of the DOE programs have
changed and evolved over the past 22 years. The RD&D
energy efficiency program was initiated in the early 1970s,
following the first oil embargo (1973), at DOEs predecessor agenciesthe Federal Energy Administration (FEA) and
the Energy Research and Development Administration
(ERDA)in a climate of great urgency and concern over
U.S. energy consumption and dependence on foreign sources
of petroleum. During the 1970s, the programs at FEA,
ERDA, and then DOE were mostly applied product and process research, working with industry to develop more effi-
20
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vided for minimum efficiency standards for selected buildings equipment and appliances. The Energy Policy Act of
1992 (EPAct) (P.L. 102-486) provided additional authority
and guidance for R&D programs on energy efficiency. For
example, it provided a mandate for DOE to work with the
largest users in the industrial sector to develop new energyefficient technology. A review of the national energy plans
of the 1970s and 1980s and the DOE strategic plans of the
1990s indicates that RD&D to improve energy efficiency
was an integral part of energy strategy, although the emphasis and the focus changed as administrations changed.3
Table 3-1 shows DOE energy efficiency R&D budget data
by year for FY 1978 to FY 2000 in constant 1999 dollars by
sector. Figure 3-1 shows the allocation of funds by sector for
FY 1978, FY 2000, and FY 1978 to 2000. As can be seen
from the figure, the transportation sector always received the
largest share of the budget (43 percent in 2000, cumulative
42 percent 1978 to 2000). In the early years (FY 1978) of the
program, buildings received 40 percent of the funds and industry, 18 percent. In FY 2000, there was less of a difference, with buildings receiving 28 percent of the funds and
industry, 29 percent. Over the total period for the programs,
industry and buildings received about 26 and 32 percent of
the funds, respectively. The focus of energy efficiency R&D
shifted during the early 1980s to emphasize basic sciences
and early technology development, resulting in less funding
for technology and product development and (as seen in
Table 3-1) a reduction in R&D dollars for energy-efficiency
programs. In the 1990s, energy-efficiency R&D was broadened to include applied research, development, and demonstrations, which are in general limited to proof of concept.
3DOE, 1979; DOE, 1983; DOE, 1985; DOE, 1990; DOE, 1992; DOE,
1994; DOE, 1997; DOE, 1998; DOE, 2000a.
TABLE 3-1 Summary of the Budget for DOEs Energy Efficiency R&D Programs, FY 1978 to FY 2000 (thousands of
constant 1999 dollars)
Sector
FY 1978
FY 1979
FY 1983 FY 1984
FY 1985 FY 1986
Buildings
129,659
Industry
61,553
Transportation 138,066
Total
329,278
157,644
74,861
190,991
423,496
178,755
105,816
199,172
483,743
59,594
42,251
84,379
186,224
57,809
44,688
86,457
188,954
39,389 40,725
45,811 40,302
73,723 67,230
158,923 152,466
Sector
FY 1991
FY 1995 FY 1996
FY 1997 FY 1998
57,449
70,326
92,766
220,541
53,986
110,938
125,384
290,308
121,468
141,960
216,487
479,915
102,516
118,501
176,824
397,841
120,039
165,859
202,071
487,969
FY 1990
Buildings
43,230
Industry
61,222
Transportation 78,133
Total
182,585
152,024
115,872
174,866
442,762
57,928
123,813
153,388
335,129
74,798
45,269
92,497
212,564
87,631
134,486
192,021
414,138
54,674
29,657
94,670
199,001
91,500
113,027
182,164
386,691
49,932
54,233
78,135
182,300
100,027
138,196
196,108
434,331
139,416
175,200
232,760
547,376
40,725
37,832
67,860
146,417
2,015,127
2,071,673
3,196,152
7,282,952
NOTE: This includes only the R&D budget for energy efficiency. It does not include state and local grants, FEMP policy and management, or renewable
technologies managed by the Assistant Secretary for EERE.
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Buildings
40%
Transportation
42%
Industry
18%
FY 1978
Buildings
28%
Transportation
43%
The amount of basic science performed by the energy efficiency program has been small; thus in FY 2000, Congress
appropriated $10.9 million for basic science research with
potential application in energy-efficient technologies. Thirteen teams led by universities were selected to perform scientific research on energy-efficient power generation for
industrial and buildings systems or transportation. An additional $10.9 million was appropriated in FY 2001 by the
Interior Appropriations Committee to continue this initiative
(DOE, 2001).
Since the start of the energy efficiency RD&D technology programs in the 1970s, industry has been an active participant, performing research and, to a more limited extent,
establishing the research agenda. Since the beginning of the
ERDA programs, industry has usually cost-shared at least 20
percent to allow it to retain patent rights (P.L. 93-438, 1974).
During the past 8 years, in major programs such as the Partnership for a New Generation of Vehicles (PNGV) and Industries of the Future (IOF),4 industry has taken an active
role in establishing the technical goals, in jointly developing
the research agenda, and in consistently cost sharing.
Industry
29%
FY 2000
Buildings
26%
Transportation
42%
Industry
32%
FY 1978 to FY 2000
FIGURE 3-1 Distribution of DOEs budget by sector for its energy efficiency R&D programs (in thousands of dollars). Totals are
$329,278,000 in 1978; $547,376,000 in 2000; and $7,282,952,000
for 1978 to 2000. SOURCE: OEE, 2000.
4The Industries of the Future strategy creates partnership between industry, government, and supporting laboratories and institutions to accelerate
technology research, development, and deployment. Led by the Department of Energys Office of Industrial Technologies (OIT), the Industries of
the Future strategy is being implemented in nine energy- and waste-intensive industries (OIT, 2001).
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DOE Costs
1.6
1.8
23.2
6
30.2
4
34
100.8
3.6
184
53.6
14.9
1.3
257.4
376
19.3
231
210
371c
1207.3
also the responsibilities and goals for each sector have varied, in response to the needs and opportunities offered by the
sector. The buildings sector has been responsible for the development and implementation of standards for buildings,
appliances, and equipment in addition to the RD&D since
the 1970s. It has had responsibility for developing, and in
some cases implementing, financial incentive programs at
different times during the 22-year period. There has been no
apparent conflict between performing the RD&D and implementing technology using various policy tools. In fact, in the
committees opinion, the RD&D has provided a more solid
basis for the policy tools.
As will be seen in the section on transportation, the improvements in automobile efficiency in the 1970s and the
1980s were primarily a result of CAFE standards developed
and implemented by the Department of Transportation
(DOT). Existing commercial technologies or modest advances in them were sufficient to meet the CAFE standards.
To realize significant efficiency improvements, dramatic
advances in technology were required but generally had not
been demanded by the public or pursued by industry in an
era of low gasoline prices. As was seen in 2000, gasoline
prices at the pump can increase dramatically in a short time;
R&D, by contrast, can take many years or decades to result
in safe, economical products. The volatility of the oil market
and the possibility of extended price drops during the period
when the developer is trying to develop and market efficient
vehicles could lead to significant losses. The Environmental
Protection Agency (EPA) has been responsible for automobile information guidelines and testing methods and tailpipe
emissions regulations. Although the Department of Commerce (DOC) has had the lead in PNGV, DOE has had the
lead in funding and coordinating with industry the R&D program for developing a production prototype passenger car
with up to 80 mpg. The DOE also assumed the management
and technical leadership role for the 21st Century Truck Initiative in 2000, which is aimed at aggressive 2010 targets for
improved fuel economy for trucks. For the past 20 years,
there have been no federal regulatory policies or incentives
for energy-efficient industrial programs, although from time
to time there have been voluntary targets.
Capital stock turnover is different for each of the sectors:
14 years for cars and 40 years or more for the buildings sector. Within the buildings sector, appliances and equipment
have lifetimes ranging from 1000 hours (lightbulbs) to 20
years for space conditioning equipment. Consequently, to
realize energy savings in the economy, substantial time may
be required for new energy-efficient technologies to penetrate the market.
In addition to economic benefits, there are also environmental and security benefits that the committee wished to
introduce through the case studies. Energy production and
use has a wide variety of environmental, health, security,
and other impacts whose costs are generally not included in
its price. Economically, however, for markets to allocate re-
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TABLE 3-3
Dimension Illustrated
Benefits matrix
High economic benefit
Project/Program
Target Sector
Electronic ballasts
Lost foam
High environmental benefit Indoor air quality
High security benefit
PNGV, fuel cells
High public benefit
PNGV
Predominantly knowledge
Batteries, catalytic
benefit
conversion
Predominantly options
Forest products
benefit
Different federal roles
Interaction of technology
Residential
and regulation
refrigerators
DOE as catalyst
Low-emissivity
windows, DOE-2
DOE demonstration
Oxy-fuel, advanced
turbine, black liquor
Different program types
Consortium
Forest products,
PNGV
Individual company
Advanced gas
turbine
Other
Program initiated by
Stirling engine, PNGV
Congress/the
administration
Failure
Stirling engine
Buildings
Industry
Buildings
Transportation
Transportation
Transportation
Industry
Buildings
Buildings
Industry
Industry,
transportation
Industry
Transportation
Buildings,
transportation
Buildings
Buildings account for 36 percent of the total U.S. energy
consumption and two-thirds of the electricity used. Residential buildings have used approximately 55 percent of the
building sectors total, and commercial buildings have used
approximately 45 percent annually since 1979 (EIA, 1998).
Figure 3-2 shows the percentage of consumption by function, for residential buildings and for commercial buildings.
Combined heating and cooling consume the most energy in
buildings. In residential buildings, water heating and refrigeration are the next biggest energy consumers, accounting
for 24 percent of the energy consumed. In commercial buildings, lighting consumes 25 percent. Computers consume a
growing share of energy in commercial buildings.
Currently, there are approximately 4.6 million commercial (that is, nonresidential, nonindustrial) buildings and 100
million residential buildings (EIA, 1996) in the United
States. The annual rates of growth and replacement of this
building stock have been approximately 2 percent for residential buildings and 4 percent for commercial buildings
over the last 20 years (EIA, 1997). Thus, approximately 2
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Residential Buildings
Computers
1%
Other
17%
Heating
32%
Television
2%
Clothes/Dishes
Washer and
Dryer
5%
Lighting
6%
Cooking
3%
Cooling
9%
Refrigeration
10%
Water Heating
15%
Commercial Buildings
Heating
17%
Other
27%
Cooling
9%
Water heating
8%
Computers
8%
Refrigeration
4%
Lighting
25%
Cooking
2%
FIGURE 3-2 Consumption of energy in residential and commercial buildings in 1999 by application. In residential applications,
other refers to miscellaneous devices and appliances used in residential applications, from furnace fans to swimming pool heaters;
in commercial applications, it refers to miscellaneous uses such as
service station equipment, automatic teller machines (ATMs), telecommunications, and medical equipment. In both applications,
transmission and distribution losses are included. SOURCE: EIA,
2001.
Industry
The manufacturing sector consumes about 36 percent of
the nations energy and is complex and heterogeneous. Figure 3-3 shows the percentage of primary energy used in the
manufacturing sector by process industry. Since the 1970s,
industry varied its petroleum use between about 7.5 to 10.5
quads (1 quad = 1015 Btu), with consumption increasing
slowly over the past decade to the current 9.5 quads. Natural
gas use varied similarly, from about 6.8 to 10.3 quads, with
consumption increasing over the past decade to the current
10.2 quads (Q) and electricity use increased fairly steadily
from about 6.6 Q in 1970 (including generation losses) to the
current 11.1 Q (EIA, 1999). Industry also became more adept
at fuel switching depending on price and availability. The
increasing importance of computerized control and the in-
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Chemicals
19%
Petroleum
24%
Forest products
11%
Steel
6%
Aluminum
2%
Metal casting
1%
Mining
3%
Agriculture
8%
Other
26%
FIGURE 3-3 Percentage of primary energy used in the manufacturing sector by major industrial category, 1999. SOURCE: D.W. Reicher.
Deputy Assistant Secretary, Energy Efficiency and Renewable Energy Network, Department of Energy, in a briefing to the committee on
June 22, 2000.
Rail
2%
Marine
5%
Pipeline fuel
3%
Air
13%
Transportation
The transportation sector consumes 27 percent of the
nations energy, with 97 percent of the fuel used by this sector being petroleum. Figure 3-4 shows the consumption of
fuel by transportation service. This sector accounts for more
than two-thirds of the nations oil demand and uses more oil
than is produced domestically. The large dependency on oil
to move people and goods makes the sector vulnerable to oil
price changes and supply interruptions. Transportation (automobiles, trucks and buses) is one of the largest sources of
Trucks
20%
Light-duty
vehicles
57%
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Over the past two decades, the automobile industry became global, and mergers created multinational ownership.
In the mid-1970s, CAFE standards were implemented under
the Energy Policy and Conservation Act of 1975 (P.L. 94163), which contributed to the doubling of the fuel economy
for new passenger cars in the next decade. These standards
were met largely by developing and implementing existing
technology. Vehicle weight reduction was one of the major
contributors to meeting the standard. Although continued
development of conventional automotive technologies will
undoubtedly provide additional gains in fuel efficiency, to
make significant advances in the future requires the development of entirely new technologies.
the Department helped accelerate progress on energyefficiency standards at the state level. The DOE-2 program
allowed designers to simulate the interaction of complex
building systems and to project the energy consumption of a
vast range of design alternatives. The development of this
computer program also stimulated the promulgation of performance-based standards that provided designers with
multiple ways to meet particular efficiency targets. The committee concludes that DOE-2 was influential in the development of both Californias Title 24 and the American Society
of Heating, Refrigerating and Air-Conditioning Engineers
(ASHRAE) standards that have guided the development of
building standards throughout the United States (and indeed
the world). Compliance with these standards has resulted in
significant energy, environmental, and security benefits.
That conclusion draws further support from the committees review of DOE research on indoor air quality, infiltration, and ventilation (IAQI&V), initiated more than 20 years
ago to address the concerns about potential linkages between
improved energy efficiency and poorer indoor air quality.
DOE contributed significantly to the development of standards and technologies that have allowed for the integration
of energy-efficiency and public-health objectives, resulting
in net improvements in indoor air quality along with reduced
energy needs for heating and cooling. The committee finds
that the resulting economic benefits are likely to have substantially exceeded DOEs costs for the indoor air quality
program. Important (if indeterminate) environmental and
security benefits also attend DOEs contribution to showing
that energy efficiency, health, safety, and productivity are
not mutually exclusive.
Another case study tracks recent (post-1997) DOE efforts
to induce a paradigm shift in the technology of compact fluorescent bulbs, whose residential-sector penetration remains
hampered by a combination of the ballasts cost and bulk.
DOE and industry partners like General Electric are working
aggressively to achieve cost reductions and miniaturize ballast electronics. The principal benefits currently are in the
area of options and knowledge for future development, with
a very large future opportunity represented by the 20 percent
of lighting energy consumption associated with some 500
million portable lighting fixtures in U.S. residences and hotels.
In addition to the case studies that have had positive returns, a case study was prepared for one representative terminated project: the gas-fired, free-piston Stirling-engine
heat pump ($30.2 million). The program was terminated
twice (1982 and 1992) owing to technical and economic
problems, including materials for the refractive heater head
and the extremely high tolerance needed for successful gas
bearings (see Stirling engine gas-fired heat pump case study
for details).
Another lesson learned from the low-e, DOE-2, and
IAQI&V case studies is that credible cost and benefit analyses are required to demonstrate the effectiveness of DOEs
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that any affordable substitutes would further increase electricity needs. The refrigerator story is one of industry and
government cooperation, based on the integration of federal
and private sector R&D, utility-financed incentives for customers to purchase efficient models, and government efficiency standards at both state and federal levels. While many
institutions were involved, DOE played a critical role, starting with its 1977 launch of a program of appliance product
development. DOEs initial investment of some $775,000
helped demonstrate the feasibility of a full-featured refrigerator using 60 percent less electricity than comparable conventional units and produced new computer tools for analyzing the energy-use implications of refrigerator design
options. DOE R&D funds and partnerships also played a key
role in allowing industry to phase out HCFCs without an
energy penalty (Geller and Thorne, 1999, p. 4). DOE also
funded R&D by a leading compressor manufacturer to improve compressor efficiency, something that was accomplished with only modest increases in compressor cost. These
better compressors were estimated to be responsible for
about half of the refrigerator efficiency improvement during
the 1980s. The net economic benefit of these compressors in
reduced consumer electricity costs is estimated to be about
$7 billion over the period from 1981 to 1990 (see Table 3-4
and the advanced refrigeration case study in Appendix E).
Adj. Volume, ft
2,200
22
2,000
1,800
18
1,600
U.S. Sales
Weighted
Average
U.S. DOE
Standard
1978 CA Standard
14
1,400
Projected
1980 CA Standard
1,200
1,000
1987 CA Standard
1990 NAECA
10
Adj. Volume
(ft3)
800
1993 DOE Standard
600
2001 DOE
400
2
200
0
1947
1953
1959
1965
1977
1971
1983
1989
1995
Year
FIGURE 3-5
Electricity consumed by refrigerators, 1947 to 2001. SOURCE: Goldstein and Geller, 1999.
2001
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TABLE 3-4
Net Realized Benefits Estimated for Selected Technologies Related to Energy Efficiency RD&D Case Studies
Technology
Advanced
refrigerator/freezer
compressors
Electronic ballast for
fluorescent lamps
Low-e glass
Advanced lost foam
casting
Oxygen-fueled glass
furnace
Advanced turbine
systems
Total
Environmental Benefits
(Cumulative Pollution Reduction)
Cost of
DOE and
Private
RD&D
(billion $)a
SO2
(millions
of metric
tonnes)
NOx
(millions
of metric
tonnes)
Carbon
(millions Damage
of metric Reduction
tonnes)
(billion $)e
Oil and
Electricity
LPG (Q)f Reliability
Value
(billion $)g
7i
0.4
0.2
20
1-5
0.04
0.02-0.1
15
0.7
0.4
40
1-10
0.1
0.05-0.3
0.3
0.01
0.2
0.006
20
0.5
0.5
0.02-0.1
0.2
0.1-0.7
0.02
0.05-0.2
0.02
0.05-0.2
Electricity
(Q of
Fuel primary
(Q)b energy)c
~0.002h
>0.006j
2.5
>0.004k
0.008
0.7
0.002
0.06
~0.356
0.09
~0.4
0.5
0.03
Net Cost
Savings
(billion $)d
8l
0.1m
0.3
~0 by 2005n
~30
~3-20
Yes
0.2-1
NOTE: The EE benefits are total (EE plus other sponsors, including industry).
aDOE R&D investment plus all private sector R&D cost share in billions of 1999 dollars.
bCumulative fuel savings in quadrillion Btu (quads, or Q).
cCumulative electricity savings in quadrillion Btu of primary energy.
dCumulative energy cost savings net of R&D costs, extra capital, and labor costs compared to the next-best alternative all in 1999 dollars. The DOE
investment is assumed to have led to the innovation coming on the market 5 years earlier than it otherwise would have.
eAvoided emissions of SO and NO are assumed to be valued in the ranges of $100 to $7,500 and $2,300 to $11,000 per metric tonne, respectively, in
2
x
avoided damages, and avoided carbon emissions are assumed to be worth $6 to $11 per metric tonne. These ranges are for the lower end of damage values
estimated in the literature. The open market value of mitigating a tonne of SO2 is $100-300, and $100 was used to peg the lower end of the range for SO2.
SOURCES: Stirling, 1997; Ottinger et al., 1990; ORNL, 1994; EC, 1996-2001; OTA, 1994; Pearce et al., 1996; Tol, 1999.
fFuel oil saving from saving electricity is equal to the primary energy used to make electricity times 1/30.
gReducing oil use by one barrel is judged to be worth $3 to $20 in reducing the cost of an oil price shock. The value of $3 assumes cartel pricing and oil price
shocks have cost the U.S. economy $25 billion per year. This derives from Paul N. Leiby, Donald W. Jones, T. Randall Curlee, and Russell Lee, Oil Imports:
An Assessment of Benefits and Costs, ORNL-6851, Nov. 1, 1997. That report also examined (Table 5.9) the range of oil import premiums and found them
to be from $0.21 to $9.91/bbl. The value of $20/bbl comes from taking the total cost of cartel pricing and oil price shocks over the past 28 years and dividing
by the total cumulative use of oil by the United States during that time. The cost is estimated to be $3.7 trillion divided by 153 billion barrels, or $22/barrel.
The total cost is from Greene and Tishchishyna, 2000.
hPrivate sector cost share was $0.28 million.
iAs a result of DOE R&D investment with a compressor manufacturer, a series of much more efficient compressors for refrigerator/freezers came on the
market beginning in 1981. These were assumed to have resulted in half the energy savings of the sales weighted average refrigerator/freezers sold between
1981 and 1990 compared to 1979 as a base from which to calculate the savings. The net life-cycle cost savings of units sold through 1990 were reduced by
assuming an improved compressor would have appeared on the market by 1986 without the DOE investment, and that it would have followed the same
penetration path displaced by 5 years. No energy or cost savings beyond the 1990 year were assumed, but the full life-cycle savings over the assumed 20-year
life of the units was counted. Beyond 1990, improvements in efficiency were due to DOE standards and R&D on HCFC substitutes without performance
degradation, and these are estimated to save 2.6 Q of primary energy for electricity generation and $15 billion in net consumer life-cycle savings through 2005.
jPrivate sector cost share unknown.
kPrivate sector cost share unknown.
lThe net energy cost savings was $37 billion (due to use in residential buildings and heating load reductions only). The committee applied the 5-year rule,
and the savings dropped from 6 to 1.2 Q and the energy cost savings dropped to $8 billion. These benefits ignore those deriving from cooling load reductions
and commercial buildings applications.
mEE estimates the benefit from substituting the lost foam casting technology for sand casting at 46 percent in labor productivity and 7 percent reduction in
material cost. These cost savings are much larger than the net energy cost savings, but they are not reflected in the realized economic benefits number.
nFor this case, the net life-cycle energy cost savings over the 10 years of turbine lifetime for turbines estimated to be installed by 2005 pays for the R&D
invested by DOE and private sector partners.
These successes strongly influenced the enactment of increasingly demanding efficiency standards, first in California and ultimately by DOE itself under authority of the National Appliance Energy Conservation Act of 1987. A
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BOX 3-1
Lost Foam Metal Casting:
A Revolutionary Technology
The casting of metals is an energy-intensive process. In 1989,
OIT began research on the technical issues inhibiting the use of the
lost foam process as an alternative to traditional sand casting of
metals. Several specific technologies and process improvements,
such as an air gauging system and a distortion gauge, were developed as part of this research. Energy savings of 25 to 30 percent are
typically achieved by the lost foam process compared to conventional sand casting.
But more important to many in industry who have adopted the
lost foam process are the other benefitsit is a much simpler process, with less machinery, waste, and pollution and greater output.
It even enables parts to be cast that could not be cast using older
techniques. Production cost reductions of 20 to 25 percent are likely
on reasonably simple cored items, and 40 to 45 percent on complex
castings. The lost foam casting method is penetrating the market
now and is projected to account for about 19 percent of the casting
market by 2010.
BOX 3-2
Black Liquor Gasification Demonstration
This initiative was one outcome of the IOF process for the forest
products industry. The technologies are being evaluated as replacements for existing Tomlinson recovery boilers. Black liquor technologies have up to 10 percent higher thermal efficiency, two to
three times more electrical output per ton of biomass and black
liquor input, and the same or lower installation and operating costs.
The timing of the research and these demonstrations is critical because over 80 percent of the 200 Tomlinson boilers currently in use
will require major modifications or replacements before 2020. OIT
is continuing research to resolve technical issues prior to demonstration.
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BOX 3-3
Forest Products IOF
Leveraging Resources
In 1994, OIT signed a compact with the forest products industry.
The industry vision and roadmap documents were created by industry leaders, technical staff, national laboratory personnel, and university researchers. Agenda 2020, developed as part of this IOF process, outlines six areas for precompetitive research. In 2002, 46
projects are scheduled to be funded jointly by DOE ($10.8 million)
and the private sector. The Forest Products IOF leverages many outside organizations, such as the American Forest and Paper Association, the Institute of Paper Science Technology, and the Department
of Agriculture. Benefits to date have included the commercialization
of one technology, the demonstration of some others, collaborative
input into the EPA cluster rules, and continuing cooperation in research to leverage resources.
tries, or low energy prices in the past decadethese industries have not aggressively pursued such research.
OITs roleit stimulates roadmapping and visioning by
bringing representatives of industry together to address
precompetitive issues and technology needsis a critical
one, applauded by industry. The committee believes it should
be continued.
Like OIT, the committee believes it is valuable to have
both the technical experts and operational management
present from the industry when the roadmaps are prepared.
It also finds that OIT has been successfully proactive in
reaching out and broadening participation in the IOF.
At the same time, the committee believes that OIT must
ensure that its own research agenda does not become too
applied and focused on the short term owing to the natural
tendency of industry to focus on applied, shorter-term research. OIT should always carefully weigh and integrate the
public benefits to be achieved, and it should have energy
efficiency as a primary evaluation criteria even as it considers the other benefits, such as improved productivity, that
may result from developing a specific technology. It needs,
as well, to recognize at the inception of a program, during
the road mapping, that its role and funding levels will change
over the technology development path.
BOX 3-4
Oxygen-fueled Glass Furnace Demonstration:
Promoting Technology Adoption
Using a mixture of gases that is 90 to 99 percent oxygen instead
of ordinary air in furnaces reduces energy consumption between 15
and 45 percent, depending on the size of the furnace. Significant
reductions in NOx and particulate emissions are also achieved, as
well as an increase in throughput. Oxygen had been used in very
small furnaces, but OIT took the initiative in 1988 to sponsor research on new means to extract oxygen from air and then funded a
demonstration of an oxygen-fueled midsize glass furnace using this
new technique. The potential reduction in NOx emissions convinced
the end user to participate in the demonstration. The demonstration
achieved about a 25 percent reduction in energy use, an 85 percent
reduction in NOx emissions, and a 25 percent reduction in particulate emissions.
While only very small specialty furnaces and no midsize glass
furnaces were using oxygen at the time of the demonstration in the
early 1990s, by 1995, 11 percent of U.S. commercial-grade furnaces were using oxygen. This increased to 28 percent by 2000.
Both the demonstration and continued DOE outreach to the industry
through the glass IOF have been critical to achieving this sharp
increase in market penetration. Through 2005, the realized economic
benefits from this technology, as reflected in the case study, are
projected to be $300 million (1999 dollars).
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BOX 3-5
Advanced Turbine Systems: Improved
Performance Goals
In 1992, DOE began a program to produce turbines that were 15
percent better then the 1991 baseline, had 10 percent lower NOx
emissions, and had a 10 percent lower cost of electricity than conventional systems meeting the same environmental requirements.
The EERE program concentrated on turbines of less than 15 MW,
and the Office of Fossil Energy covered larger-scale applications.
The federal R&D funding for smaller turbines challenged the industry to work on performance targets that their own development plans
had not originally incorporated. These targets have been significantly exceeded in field testing of the technologies. Working closely
with the affected constituencies, including state agencies, suppliers,
and end users, enabled a dynamic research program that evolved in
light of changing market conditions and other factors but remained
true to the original performance metrics.
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BOX 3-6
Partnership for a New Generation of Vehicles
The Partnership for a New Generation of Vehicles (PNGV) was formed in 1993 with three goals: (1) develop by 2004 production-prototype, midsize
sedans with up to 80 mpg while meeting all regulated emission requirements, (2) improve U.S. competitiveness in manufacturing technology, and (3)
implement as soon as possible improvements in conventional vehicle efficiency and emissions. The participants in the partnership are DOE, the United
States Council for Automotive Research (USCAR) (Ford, GM, and DaimlerChrysler), the national laboratories, automotive suppliers, and universities.
DOE was expected to concentrate on long-range, high-risk, more basic research while industry participants carried out the applied development of
actual products. The DOE to date has spent about $600 million, with a nominal 50 percent in matching funds from industry. There has been large in-house
additional private funding by the car manufacturers.
In 2000, a significant milestone was reached when the three car manufacturers demonstrated concept cars with fuel economies of 70 to 80 mpg and
most of the performance, comfort, and convenience of current vehicles. However, they did not reach the affordability and emissions goals of the program.
A principal feature of these concept cars was a hybrid power train comprising a small diesel engine and an electric propulsion motor working in parallel.
Hybrid diesel or gasoline engine power trains are now ready for production except for problems with cost and, in the case of diesel engines,
emissions. However, the manufacturers are proceeding with plans to market vehicles using hybrid power trains in some market segments (mostly sport
utility vehicles and pickup trucks) in the next 3 or 4 years. These vehicles are not expected to have 80 mpg but rather will have 10 to 40 percent
improvements in fuel economy over comparable conventional vehicles. Their market penetration remains to be seen.
Fuel cell vehicles have been the subject of intense R&D. They would significantly reduce emissions but have serious problems remaining, both
technical and economic. The fuel supply and preparation are also still uncertain, affecting overall efficiency and the required infrastructure.
PNGV has had very few realized benefits of any kind to date. However, it could save a huge amount of petroleum consumption if overall success is
achieved, a significant benefit even if the other goals are only partially attained. The price of these petroleum consumption benefits is liable to be of
negative economic benefit to the nation, since PNGV vehicles will probably cost more than conventional vehicles. From the experience of PNGV, it is clear
that partnerships of DOE with industry can be very beneficial, with joint selection and guidance of a portfolio of projects, including early consideration of
marketing issues and the appropriate termination of projects showing inadequate progress toward goals.
Diesel bottoming cycle (1970s through 1985). The research was discontinued because of the cost and complexity
of the engine and auxiliary systems. In addition, competing
enhancements to conventional diesel engines showed more
promise for increasing power density, efficiency, and durability. The developers did not continue the research after
DOE support was discontinued.
Electric vehicle program (1977 through 1990; $85 million). The research was discontinued because of the shift
toward hybrid electric vehicle development. Electric vehicle
battery research continued with the USABC, but DOE efforts to develop electric vehicle drive trains were halted.
Ford, GM, and the other automotive companies continued
electric vehicle development without further government
funding and eventually offered them for sale in California
and to fleet operators nationwide. Derivatives of some of the
drive train components that were developed in the DOE program are used in those vehicles. General Motors discontinued production of its EV-1 electric vehicle in 2000 due to
poor acceptance by the public (see case study Advanced
Batteries for Electric Vehicles in Appendix E).
At the present time, PNGV is DOEs largest effort in the
transportation sector and is scheduled to continue until 2004.
Hybrid electric power trains with either diesel or gasoline
engines are being actively pursued as the near-term choice
for highly efficient vehicles, and fuel cells (see Box 3-7) are
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BOX 3-7
Proton Exchange Membrane Fuel Cell: Insurance from a High-Risk Technology
It may be that the world must further constrain its emissions of regulated pollutants and of greenhouse gases, like CO2, as well. But how can that be
done while still retaining the personal automobile as a principal form of transportation?
The proton exchange membrane (PEM) fuel cell vehicle, picked by PNGV as the long-term alternative to the internal combustion engine (ICE) hybrid
vehicle for achieving the 3X fuel economy goal, may provide one practical answer. There are other possibilities, of course, such as electric vehicles with
electricity from renewable or nuclear sources and biomass-fueled ICE hybrids. But the fuel cell vehicle is high on the list because of the potential for
ultralow emissions, high efficiency, fuel flexibility, and high performance. Enormous progress has been made as a result of DOE and private investment
since 1990. This investment has stimulated interest, so that now the private sector invests more than DOE.
It is a risky business, however, because of the remaining technical and economic problems, including the especially formidable one of getting the cost
of PEM fuel cells down to a competitive level. But Ford, DaimlerChrysler, and General Motors are spending significant amounts of money in the
expectation that if circumstances demand it, they can do it.
But its not just the fuel cell that must work. A whole new fuel infrastructure is required if the personal vehicle is to be decarbonized. If the energy
efficiency of fuel supply and preparation is low, then the high efficiency of the fuel cell itself will be attenuated, and if the ultimate source of the fuel is a
hydrocarbon, then CO2 from the fuel preparation must be dealt with somehow.
Williams (1998) explains one possible approach. Hydrogen is manufactured centrally from fossil fuels (natural gas and coal) with capture of the
resulting CO2. The CO2 by-product would be sequestered in coal seams, in depleted oil and gas reservoirs, in deep saline aquifers, or perhaps in the deep
ocean. The hydrogen product would be pressurized and piped to filling stations, where fuel cell vehicles are refueled. The vehicle itself emits nothing in
use except water vapor.
These fuel infrastructure changes would be daunting and expensive. Ogden (1999) points out that the transition might be accomplished gradually,
with hydrogen produced first from natural gas at distributed filling stations. Central plants would replace these as the need for sequestration became
compelling. Alternatively, hydrogen might be supplied without carbon emissions from the hydrolysis of water using off-peak nuclear power or renewable
electricity.
The fuel cell vehicle may be considered as technological insurance to reduce the cost of avoiding adverse climate change. In the bargain, cleaner cities
could result. This is the sort of R&D the government should support. The potential public good benefits are worth the high investment risk. The private
sector is unlikely to take this risk alone.
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ogy for midsize sedans will be applicable to sport utility vehicles and light trucks, and the manufacturers are carrying
forward on that. The heavy-duty truck sector is now being
accentuated by DOEs recently established 21st Century
Truck Initiative, and again some of the PNGV technology is
applicable.
While none of these programs has yet made a dent in the
nations energy consumption, none has attained the required
degree of emissions control, and none has reached the
affordability goal, progress has been made, and the committee believes that at least partial success is almost certain.
Lessons Learned
From the case studies in the transportation sector, especially from the PNGV case study, the committee believes
that the following lessons are evident:
The most significant lesson learned from DOEs transportation technology R&D is that DOE can be highly effective in stimulating and aiding R&D in the private sector by
partnering on programs aimed at the public good. An important feature of such partnerships is the teaming of government and industry representatives in the selection and planning of the research projects to be pursued. By this means,
appropriate roles for DOE and industry contributions can be
determined, overall integration of the program is advanced,
and buy-in by all the partners in the final result is more probable.
A second lesson is that good lines of communication
need to be established over the full range of directed exploratory research, development, demonstration, and deployment
to market. Inputs from industry on marketing must be carefully considered in the implementation of any new technology, and they should clearly be included early in any R&D
program, as they were in PNGV. Typically, DOE has not
considered the market or made efforts to assess consumer
needs before embarking on new technology development.
To deal with these issues and to avoid wasted effort and
money, DOE needs inputs from the companies involved in
marketing the technologies. DOEs role here is to consider
inputs from industry about marketing when designing and
directing programs in order to avoid waste and focus on barriers to introduction of the technologies.
Another lesson learned is that care must be taken to
assure that goals and objectives are not set so far out as to be
utterly unattainable. This does not mean that stretch goals
are to be avoided. But it does mean that unrealistic goals
should not be promoted to such an extent that interim or
compromised successes are ignored and the overall program
is incorrectly labeled a failure. PNGV suffers from this
threat. The public and news media are not likely to comprehend strategic research goals. Also, deadlines that are set too
soon as a result of regulations or improper assessment of
difficulties lead to rushed R&D programs too narrowly focused on near-term development.
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8Applying this rule reduced the net realized economic benefits of electronic ballasts from about $32 billion estimated by EE to $15 billion, for
example. For the refrigerator/freezer compressor the benefits decreased
from about $9 billion to $7 billion. For low-e windows the benefits were
decreased from $37 billion to $8 billion 1999 dollars.
commercialization efforts. The committees calculations assumed that the DOE R&D or demonstration accelerated the
introduction of new technology into the market by 5 years.
The 5-year rule is an oversimplification, the committee acknowledges, but it imparts a conservative cast to the estimation exercise. For some technologies, the 5 years may be
much too conservative, and this is indeed reflected in some
of the case studies. For example, the building sector is fragmented and supports only limited R&D activities, so government R&D might speed change by much more than 5
years.
The committee used this methodology because it could
find no consistent and satisfying way of determining what
fraction of each technologys benefits should be ascribed to
the investment in energy efficiency R&D or demonstration
compared to input from various partners or other players that
may have contributed. The committee judged that the contribution of the DOE energy efficiency program was very substantial in all of the technologies listed in Table 3-4 and that
the technology would not have happened easily without DOE
involvement.
Even though the technology case studies in buildings and
industry represent only a small percentage of the total R&D
budgets in these sectors, the committee considers them to be
reasonably representative in the sense that failures as well as
successes, and completed as well as ongoing projects, were
purposely chosen from the energy efficiency portfolio. The
committees case studies covered a larger percentage of the
transportation program budget, since that program is characterized by larger projects. Also, seven case studies were developed for buildings, five for industry, and five for transportation, so each sector was about equally represented.
Given what is in the energy efficiency R&D pipeline, the
committee does not consider the remarkable abundance of
achievements in the buildings sector (Table 3-4) to be a
fluke. Rather, it believes that in any effective portfolio there
are likely to be some big winners. Furthermore, the committee judges that the potential future benefits from other parts
of the energy efficiency portfoliofor example, from PNGV
(including fuel cells), advanced industrial turbine systems,
and the Industries of the Future programscould also be
large, particularly in the areas of environment and security.
This is indicated in Table 3-5, where each of the 17 case
studies the committee examined is slotted into a benefits
matrix. When more than one type of benefit is relevant for a
case study, the primary benefit is shown in boldface type.
The industrial sector technologies listed in Table 3-4 have
also produced significant realized economic benefits, which
are not, however, as individually dramatic as those of the
buildings technologies. These differences in impact probably arise because an innovation in the buildings sector is
often applicable to large numbers of buildings, whereas an
innovation in the industrial sector often applies to only one
small part of the sector. Energy R&D was reported to have
enhanced productivity (e.g., in lost foam casting) as well as
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TABLE 3-5
Energy Efficiency Technology Case Studies Slotted in the Matrix Cells That Are Most Relevant Today
Type of Benefit
Options Benefits
Knowledge Benefits
Economic benefits
(net life-cycle energy
cost reductions)
Low-e glass
Electronic ballasts
Advanced refrigerators
Advanced turbine systems
Oxygen-fueled glass furnace
Lost foam casting
DOE-2 (applied to design)
Forest products
Forest products
Compact fluorescents
Environmental benefits
PNGV
DOE-2
Indoor air quality (IAQI&V)
Forest Products
Security benefits
PNGV
DOE-2 (peak load analysis)
NOTE: PEM, proton exchange membrane; PNGV, Partnership for a New Generation of Vehicles. The table does not indicate possible future position as a
result of completing R&D. No significance should be attached to the ordering of the entries in the cells. When more than one type of benefit is relevant for a
technology, the primary benefit is shown in bold.
energy efficiency. These other benefits are frequently a primary force for a technologys adoption and may be of as
much economic value as the energy savings. The committee
has discussed these qualitatively but did not quantify them
for purposes of inclusion in Table 3-4.
Nevertheless, the energy efficiency program has contributed to a progression of improvements and innovations in
the industrial sector that it estimates has saved 1.6 quads
over the years, with an estimated net cumulative energy cost
savings of $3.2 billion (DOE, 2000b). The cumulative DOE
R&D investment was $2.1 billion. The committee has not
validated these numbers and cannot endorse them per se, but
it has reviewed the report and discussed it with industry representatives and others. Also, for the three industrial technologies listed in Table 3-4, the oxygen-fueled glass furnace, lost foam casting, and advanced industrial turbines,
the estimated net realized economic benefits exceeded the
RD&D investment by DOE and its industrial partners. The
committee believes, therefore, that the benefits from technologies enhanced by the DOE energy efficiency program
are very likely to justify the investment on the basis of energy savings alone, without accounting for any other realized economic benefits.
The transportation technologies examined have not yet
produced large realized economic benefits, but they have
produced important options and knowledge benefits such as
those from the U.S. Advanced Battery Consortium
(USABC). Furthermore, PNGV has made substantial
progress toward difficult goals, and the promise is great. The
same can be said for PEM fuel cells. Some advanced automotive technology, developed in the PNGV program, is
ready or nearly ready for deployment if changing economics
(oil price) or regulations (CAFE) or environment (climate
change) so warrant. It is, in a sense, insurance for the nation.
Other advances might be incorporated under current market
conditions.
Finding 1b. Environmental benefits. Substantial environmental benefits have resulted from the reduction in the U.S.
economys use of energy as a result of energy efficiency
programs.
The six technologies listed in Table 3-4 have resulted in
substantial reduction in emissions of NOx, SO2, and carbon,
with cumulative totals of approximately 1 million tons of
SO2 and NOx and 100 million metric tonnes of carbon. The
committee also tried to estimate a range of monetary values
for these emissions reductions based on the costs of damage
reported in the literature. These costs depend on many variables such as the population density near emission sites and
whether the pollutant is regulated or unregulated. Using a
range of estimates bridging the lower end of market trading
prices for SOx and various damage estimates$100 to $7500
for a tonne of SO2, $2,300 to $11,000 for a tonne of NOx,
and $6 to $11 for a tonne of carbon (see footnote e in Table
3-4 for the sources used)the cumulative value of emission
reduction is $3 billion to $20 billion. This is between 10 and
75 percent of the realized economic benefits. The committee
believes the realized environmental benefits of the technolo-
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data are becoming available that DOE could use for such an
assessment.
Finding 1d. Knowledge benefits. For all of the case studies
the committee found contributions to the nations knowledge bank, some of them substantial. Substantial contributions to the nations bank of knowledge have been made by
such programs as DOE-2; indoor air quality, infiltration, and
ventilation (IAQI&V); the U.S. Advanced Battery Consortium; PEM fuel cells; PNGV; catalytic converters for diesels; and advanced industrial turbines (Table 3-5). A large
number of specific advances are listed in the matrices for
each of the case studies, in Appendix E. These range from
the development of improved materials to better manufacturing technology.
Finding 2. The management and institutional structure of
the energy efficiency R&D programs often played a significant role in their success. There is no single approach that
works for all situations; instead, a rich variety of approaches
is needed, and the appropriate one will depend on market
conditions, industry structure, and a variety of other factors.
Some important features of success are the following:
Regular peer and administrative reviews of large programs can be very productive. An excellent example is the
PNGV program, which involved an annual review by the
National Research Council (NRC, 2000). Frequent, ongoing
communication between program staff and outside panels of
reviewers can make the process more collaborative and less
confrontational.
Consortia can lead to better research agendas (e.g., Industries of the Future and PNGV), better deployment mechanisms (e.g., the lost foam casting technology), and the leveraging of DOE funds (PNGV). On the other hand, they can
also lead to overemphasis on short-term results (e.g.,
USABC). A proper balance between the need to achieve
early results and the need to fulfill important longer-term
objectives must be maintained. Industry partnerships work if
goals, including public good goals, and directions are agreed
upon up, if stretch but not unobtainable goals are set, if
market conditions are continuously considered, if coordination with other agencies is assured, and if peer review is
used. The advanced turbine system is a good example.
Difficult technical objectives may benefit from a portfolio approach involving parallel projects (e.g., the Stirling
engine heat pump and the absorption heat pump). Carefully
planned and well-timed reviews of the parallel paths allow
sensible, goal-oriented selection of the most promising path.
Some important advances in technology have come
from small companies or individual inventors who are unwilling or unable to sell their innovation to large, dominant
players. In fact, dominant players even obstruct innovation
sometimes. In these circumstances DOE has occasionally
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Finding 5. Lessons learned from the energy efficiency programs indicate that differences between the three end-use
sectors are important determinants of strategies that work
for each. For example, standards may be appropriate for
buildings, and consortia may be appropriate for industry.
These activities include standards, demonstrations, regulations, tradable emission permits, tax credits and other incentives, information and even government-led voluntary actions. The R&D program can maximize its effectiveness
when these other policies are considered and utilized as appropriate to promote a technologys development and adoption.
The periodic application of more and more stringent performance standards for refrigerators (and other appliances),
integrated with government R&D for assessing independently the economic life-cycle justification of the prescribed
increase in performance, has been very effective in bringing
to market a continuous stream of ever more energy-efficient
refrigerators. The R&D even proved effective in maintaining high efficiency in refrigerators despite the banning of
CFCs and HCFCs as refrigerants. As happened in this case,
environmental regulations will sometimes work against efficiency improvements. Meeting the PNGV goal of tripling
automobile fuel economy is certainly made more difficult by
the Tier 2 Clean Air Act emission standards. This suggests
that different regulatory agencies need to balance their requirements in a systematic manner to ensure the best overall
good for the nation.
Demonstration is another powerful policy, particularly important for the industrial sector, as exemplified by the oxygenfueled glass furnace and the lost foam casting process.
Finding 4. DOE has often not had sufficient budgetary or
institutional emphasis on what the committee refers to as
directed exploratory R&D (DERD), which is research or-
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RECOMMENDATIONS
This assessment of the costs and benefits of DOEs energy efficiency R&D programs since their inception nearly
two decades ago resulted in many insights into the planning
and design of research, technology development, and demonstration, and into efforts to accelerate deployment of technology in the world marketplace (since U.S. companies are
globally focused for export factors and consideration of
global climate change). Just as important, however, the assessment yielded some general recommendations for estab-
lishing mechanisms for tuning DOEs energy efficiency initiatives to the changing marketplace, for providing a balanced portfolio designed to maximize the likelihood of deploying new energy efficiency technologies under a wide
variety of market conditions, and for focusing the R&D portfolio on technologies where federal support is needed or
warranted and for developing options and increasing knowledge. These general recommendations fall in three groups:
ongoing planning and evaluation, achieving R&D portfolio
balance, and promoting the adoption of technology.
Ongoing Planning and Evaluation
Some system of identifying and measuring the benefits of
R&D is crucial to making decisions about changes in programs. The methodology offered in this assessment, that is,
the benefits matrix construct used throughout the case studies and analysis, while not perfect, goes a long way toward
providing an orderly classification, order-of-magnitude measurement, and evaluation of the benefits of R&D initiatives
in energy efficiency. The committee recommends that this
methodology, or some extension of it, be developed for (1)
ongoing planning and program evaluation purposes, (2) retrospective evaluations, and (3) incorporation into the
departments annual process for compliance with the wellknown Government Performance and Results Act (GPRA).
In the committees judgment, the methodology is most likely
to succeed if it does the following:
Shows consistency across the energy efficiency program and to the maximum extent possible, consistency with
fossil energy and other program offices in DOE and is publicly transparent in all its assumptions.
Incorporates a rigorous system of peer review across
the R&D portfolio. The potential for this feature is illustrated by the role peer review has played in the DOE-sponsored Industries of the Future program and PNGV.
Establishes a firm go/no-go decision date for terminating or continuing a project or a program. The efficiency of
such a feature is illustrated by its use in the PNGV program,
which has allowed successively focusing the programs resources on areas with the most promise of success.
Establishes milestones for all programs and projects
that can be used in conjunction with established goals for
measuring progress and detecting problems. Use of milestones for monitoring progress is a well-known best practice
in managing any R&D portfolio, and the DOE energy efficiency portfolio could benefit from more widespread use in
managing program and project decisions, as shown in the
advanced turbine systems case study.
Establishes measurable evaluation criteria and the procedures necessary to ensure the validity and reliability of the
reported results.
To address funding, the committee judges that process
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identified and central goal in DOEs energy efficiency policies and programs. This assessment revealed many examples
of effective programs and projects with a focus on adoption
by the market, but many of these program efforts appear to
be formulated and executed ad hoc rather than in a coordinated manner across the portfolio. If a policy priority is
established for promoting the adoption of new energy efficiency technologies, the committee recommends that additional and well-coordinated emphasis in this area be effected
across the energy efficiency portfolio.
For example, in energy efficiency for buildings, coordination with regulatory and policy mechanisms has proved
very effective in improving the energy efficiency of commercial buildings and appliances. Similarly, in energy efficiency for industry, sponsorship of key demonstration efforts has been very effective.
Such efforts could yield benefits far greater than the costs
of implementing them. Industry and government consortia
could play a key role, as they did in the PNGV program,
which so far shows great promise. Other interagency government programs, such as that with the Environmental Protection Agency, and government implementation programs,
such as that of the Federal Energy Management Program,
could be developed much further.
REFERENCES
Builderonline.com (Builder). 2000. Top 100 builders. 1999 Gross Revenue
Ranking. Available online at <http://builderonline.com/frmArt/>.
Clinton, J., H. Geller, and E. Hirst. 1986. Review of government and utility
energy conservation programs. Annual Review of Energy and the Environment 11: 95-142.
Davis, S. 2000. Transportation Energy Data Book. Edition 20, Department
of Energy, ORNL-6959. Oak Ridge, Tenn.: Oak Ridge National Laboratory.
Department of Energy (DOE). 1979. National Energy Plan. Washington,
D.C.: DOE.
DOE. 1983. National Energy Plan. Washington, D.C.: DOE.
DOE. 1985. National Energy Plan. Washington, D.C.: DOE.
DOE. 1990. National Energy Strategy. Washington, D.C.: DOE.
DOE. 1992. National Energy Strategy. Washington, D.C.: DOE.
DOE. 1994. Strategic Plan. Washington, D.C.: DOE.
DOE. 1997. Strategic Plan. Washington, D.C.: DOE.
DOE. 1998. Strategic Plan. Washington, D.C.: DOE.
DOE. 2000a. Strategic Plan. Washington, D.C.: DOE.
DOE. 2000b. IMPACTS Office of Industrial Technologies: Summary of
Program Results. Washington, D.C.: DOE.
DOE. 2001. Press Release: Energy Department Provides $10.9 Million for
Energy-Efficient Science Research (January 9). Available online at
<http://www.energy.gov/HQPress/releases01/janpr/pr01006.htm>.
Energy Information Administration (EIA). 1997. Annual Energy Outlook
1997 with Projections to 2015. Washington, D.C.: Government Printing
Office.
EIA. 1996. Annual Energy Outlook 1996 with Projections to 2015. Washington, D.C.: Government Printing Office.
EIA. 1998. Annual Energy Outlook 1999 with Projections to 2020, Appendix A, Reference Case Forecast (December 9). Available online at
<http://www.eia.doe.gov/oiaf/aeo98/aeo98.html>.
EIA. 1999. Annual Energy Review, End Use Consumption. Motor Vehicle
Mileage, Fuel Consumption, and Fuel Rates 1949-1998, pp. 3-19, line
18. Available online at <http:// www.eia.doe.gov/emeu/aer/enduse.
html>.
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Energy Research at DOE: Was It Worth It? Energy Efficiency and Fossil Energy Research 1978 to 2000
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INTRODUCTION
program has concentrated on solving problems related to unconventional gas resources (UGR), such as Eastern gas
shales, Western tight sands, coal-bed methane, and gas hydrates. The focus on UGR continued into 1987, when R&D
began to emphasize a national energy technology program
keyed to the development of new tools and techniques for
finding natural gas. That program was finally put in place
after reorganization and realignment of programs were completed in 1994, when a transition began to a gas supply program focused on tools, techniques, and methods for imaging
and diagnostics; the drilling, completion, and stimulation
(DCS) program, and gas storage.
Research in the Office of Fossil Energy has been historically focused on two programs: the Office of Coal and Power
Systems (CPS) and the Office of Natural Gas and Petroleum
Technology (NGPT).
Early in DOEs coal RD&D program, the focus was on
converting coal to liquid and gaseous products to address the
effects of the energy crises created first by the Arab oil embargo and then by the revolution in Iran. Over time, the focus changed. Developing new means of producing electricity from fossil fuels is currently at the heart of the CPS
program. Coal is the most widely used fuel today for the
generation of electricity. It is responsible for approximately
55 percent of the electric power in the United States. It is
also a resource of which the United States has abundant supplies (estimated to be in excess of 100 years supply at current production rates). Growing demand for electric power,
a lack of growth in nuclear and hydroelectric generation, and
rising natural gas prices all combine to make it a priority for
the United States to retain its existing coal-fired capacity and
to develop new facilities (DOE, 2000a). This comes at a time
of increasingly stringent source emission and environmental
standards, including possible limits on carbon dioxide (CO2)
emissions from power plants, and gives the DOE a core focus for the CPS program in coal gasification, environmental
control technology, and combustion technologies.
The current objectives of the Office of Fossil Energys oil
and gas program include expanding the domestic oil resources available to make low-sulfur gasoline and diesel fuel,
and ensuring long-term domestic gas supply to meet a projected 32 trillion cubic foot (Tcf) need by 2020. The oil and
gas R&D program is geared toward new technologies to keep
existing fields productive and finding new fields with the
least disturbance to the environment (DOE, 2000b).
Since its beginnings under the Interior Department and
the Energy Research and Development Administration
(ERDA) in the mid-1970s, the natural gas R&D upstream
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Gas-to-liquid fuels,
Direct and indirect liquefaction for fuels, and
Coal preparation for cleaner coal production.
Since the fluidized-bed combustion and IGCC technologies are electricity production technologies, they could also
fit in that category. However, the committee decided that
much of the atmospheric fluidized-bed combustion (AFBC)
program was devoted to industrial applications and that
much of the early gasification program was centered on producing gas from coal for fuel supply, as well as industrial
and other applications.
Environmental characterization and control include the
following four technologies:
and
Seismic technology,
Well drilling, completion and stimulation,
Enhanced gas production (from coal-bed methane,
Eastern gas shales, and Western tight gas sands),
Enhanced oil recovery,
Field demonstrations of extraction technologies,
Fuel production from oil shale, and
Downstream technology development.
Figure 4-1 shows the Office of Fossil Energy funding by
year (OFE, 2000). The line represents funds as appropriated
by Congress for the entire fossil energy (FE) program, including programs not evaluated by the committee, such as
program direction, policy and management, plant and capital equipment, and cooperative R&D.
As Figure 4-1 depicts, very large budgets from 1978
through 1981 were provided in response to the energy crises
of the 1970s and early 1980s. During this period, over 73
percent of the money was provided for technologies to produce liquid and gas fuel options from U.S. energy resourcescoal and oil shale. In 1982, with the change of administrations, of energy philosophies, and of policies and as
a result of the beginning of the decline in oil prices, fossil
energy budgets declined very rapidly and have remained
2,000
1,500
FE Enacted Appropriations
1,000
500
FIGURE 4-1 Funding for DOEs Office of Fossil Energy, FY 1978 to FY 2000. SOURCE: OFE, 2000.
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
$0
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FYs
1978-1985
FYs
1986-2000
783.1
3,967.0
91.5
684.5
2,181.5
318.7
1,467.6
6,148.6
410.2
1,183.3
6,025.0
1,318.7
4,503.4
2,502.0
10,528.4
Total
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Electricity
production
24%
Environmental
characterization
and control
4%
Coal conversion
and utilization
58%
FIGURE 4-2 Overall budget, FY 1978 to FY 2000 ($10,528 million). SOURCE: OFE, 2000.
stant 1999 dollars over the study period was about $5 billion,
or 38 percent of overall expenditures. A considerable portion of the industry cost sharing in the coal programs resulted from the clean coal technology demonstration program.
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TABLE 4-2
Fossil Energy Programs Cost Sharing, 1978 to 2000 (millions of 1999 dollars)
Program
DOE Costs
1,467.6
79.3
28.6
48.2
137.4
177.1
259.0
447.6
105.5
184.9
6,148.6
292.1
2302.5
843.0
42.4
320.4
2,348.2
410.2
223.6
42.4
67.2
77.0
2,502.0
314.7
1,167.1
1,020.2
10,571.0
3,616
32
10a
6
35
47
368
3,000b
109
9
4,464
15c
1,200
800d
85
164
2,200
450.1
301
6.2
42.9
100
537
155
292e
90
9,067.1
71
29
26
11
20
21
59
87
51
5
42
5
48
49
50
34
48
52
57
13
39
56
18
33
20
8
46
aCost
sharing was significant, but DOE provided no data. Here it is estimated at about 25 percent.
of this was spend independently by Exxon, Unocal, and Occidental.
cCost sharing was minimal; here it is estimated at about 5 percent.
dCost share estimate of $703 million available only in current dollars; constant (1999) dollar estimate is probably about $800 million.
eAssumes about a 20 percent cost share.
bMost
Coal preparation
5%
Integrated gasification
combined cycle
38%
Direct liquefaction
37%
Indirect
liquefaction
5%
Gas-to-liquids
1%
FIGURE 4-3
Fluidized-bed
combustion
14%
Budget for coal and gas conversion technologies, FY 1978 to FY 2000 ($6149 million). SOURCE: OFE, 2000.
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Coal preparation
10%
Direct liquefaction
9%
Integrated gasification
combined cycle
40%
Fluidized-bed
combustion
29%
Indirect
liquefaction
11%
Gas-to-liquids
1%
FIGURE 4-4 Adjusted budget for coal and gas conversion technologies, FY 1978 to FY 2000 ($2956 million). NOTE: Excludes budgets for
direct liquefaction and IGCC from FY 1978 to FY 1982. SOURCE: OFE, 2000.
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Two very promising technologies, IGCC and indirect liquefaction, provide the opportunity for coal to be used under
more stringent environmental requirements, possibly even
under some carbon-constrained scenarios, if market conditions change (i.e., sustained high oil and natural gas prices).
These technology optionsin the case of IGCC, DOE
played a major developmental role (mainly by cost-sharing
the demonstration of commercial-sized systems under the
CCT demonstration program) and, in the case of indirect
coal liquefaction, a lesser roleoffer large potential economic and environmental benefits. Indirect liquefaction has
the potential to produce gasoline, diesel, methanol, and other
superclean fuels cleanly and therefore also has potential security benefits. Indirect liquefaction will also benefit from
commercial deployment of IGCC, which uses the same gasification and clean-up technology. At present, the United
States faces most of the same pressures on its energy supply
that it did in the 1970s. Yet the nations apparent energy
policy has reacted with short-term responses to (1) accessibility of cheap fuels dictated by the international marketplace and (2) increasingly stringent environmental constraints. The long-term viability of a stable and inexpensive
energy supply based primarily on domestic resources has
been a low priority. If this objective had been accorded the
highest priority, IGCC might well be further along in its applications. IGCC has been successfully demonstrated for
coal-based electricity generation on a commercial scale in
the United States and Europe and is being introduced commercially in refineries to convert low-valued fuels to chemicals and electricity. It offers the advantages of high efficiencies (which will improve as gas turbine technology
improves) and the best potential (among coal-based systems)
for cost-effective control of criteria pollutants, air toxics, and
carbon emissions.
Coal preparation is used extensively today in the United
States and internationally to reduce coal transportation costs
and improve boiler performance. However, the technologies
currently in use were developed without much DOE involvement. DOE has, however, played a significant role in enhancing the technology to remove more of the ash, sulfur
and other impurities in coal and to improve coal recovery,
especially fines, after washing. These technologies are now
options for consideration as users look to optimize the costs
of environmental compliance and energy production. However, based on discussions with potential users of the cleaned
coal, the market prospects for advanced coal preparation
appear to be very limited because more cost-effective options are now available that use high- and medium-sulfur
coals without first cleaning them extensively. Nevertheless,
DOEs coal preparation RD&D has greatly improved our
knowledge of coal chemistry and other factors important in
understanding how to use coal more efficiently and cleanly.
Direct liquefaction is a technological option for producing liquid fuels from coal. It is currently being considered by
China as a viable option to meet growing demand for liquid
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Waste
management/utilization
19%
Flue gas
desulfurization
55%
NOx controls
16%
FIGURE 4-5 Budget for DOEs fossil energy environmental programs, FY 1978 to FY 2000 ($410 million). SOURCE: OFE, 2000.
ventional and advanced coal-based systems, monitoring advanced technologies for wastes, and researching potential
uses for the waste by-products.
Emissions of mercury and other toxic substances in the
atmosphere (air toxics). DOE has played a significant role
in characterizing the air toxics emissions from conventional
and advanced coal-based technologies (and determining their
fate) and in conducting research on technologies that could
remove the toxic elements from the feed coal and flue gas.
Emphasis has recently been placed on the characterization
and control of mercury emissions, currently an air toxic of
primary concern to EPA.
This group of technologies is heavily driven by environmental regulation. Given that energy production and use are
very much principal producers of pollution, the committee
believes that an appropriate role for DOE is to support the
development of technology options and knowledge that allow utilities to select an appropriate system for their sitespecific needs. The RD&D on the technologies in this category has realized economic benefits in the form of costs
avoided by the use of less-expensive technologies than were
available in the past (e.g., NOx reduction) or reduced environmental compliance costs associated with coal-fired power
plant solid waste disposal and air toxics emissions control
requirements.
The last two benefits, estimated by DOE to be worth billions of dollars, were a result of its collecting and analyzing
detailed technical and economic information that enabled
EPA to set less stringent control requirements than it might
have done otherwise. In addition, DOE research on waste
utilization resulted in economic benefits associated with the
substitution of coal combustion wastes for extraction and
processing of mineral resources. In these and in other areas,
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of $3 billion, that derive from enabling EPA to set less stringent control requirements than it might otherwise have set.
In addition, DOEs research on waste utilization resulted in
economic benefits associated with the use of coal combustion wastes and FGD sludge. DOE also provides knowledge
that continues to be shared with EPA to assist in developing
Resource Conservation and Recovery Act (RCRA) regulations governing disposal of coal wastes and that resulted in
avoided costs of unnecessary regulation. The information on
waste utilization options is available to both vendors and
utilities. As a result, the avoided costs from this program are
considered to be substantial.
As it did with the waste management program, DOE has
played a substantial role in characterizing air toxic emissions from conventional and advanced power systems and is
supporting research on control technology for mercury, currently viewed as the most severe air toxic problem facing
coal-fired power plants. DOE, EPA, and EPRI collaborated
on the most extensive study of hazardous air pollution from
domestic utilities, enabling EPA to focus its regulatory efforts on the one believed to be of most concernmercury.
Realized economic benefits cannot be attributed to cost savings associated with focusing EPA on just one pollutant,
mercury, at this time since regulations have not yet been
promulgated. The information on air toxic emissions and
emissions control options will be available to vendors and
utilities to consider if EPA decides to promulgate regulations at some future time. As a result, the options and knowledge benefits from this program are considered to be substantial.
Electricity Production
DOE expended over $2.5 billion on electricity production technologies from 1978 through 2000. As shown in Fig-
Fuel cells
46%
FIGURE 4-6
Reported budgets for electricity production technologies, FY 1978 to FY 2000 ($2502 million). SOURCE: OFE, 2000.
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ure 4-6, MHD power production and fuel cells have dominated the funding in the category. DOE has played a significant role in the development of the technologies. Specifically,
For advanced turbine systems (ATS), DOE has been
instrumental in accelerating the highly cost-shared development of gas turbines that have both high efficiencies and low
NOx emissions.
For stationary source fuel cells, DOE has played the
major role in cost-shared research, development, and demonstration of phosphoric acid, molten carbonate, and solid
oxide systems.
For MHD power generation, DOE provided over
$1 billion for research and pilot-scale tests of the major components of the system.
DOEs programs in electricity production involve concepts that could improve the efficiency and reduce the pollution from producing electricity from fossil fuels and, in recent years, from biomass. The commercial use of
DOE-supported technologies developed for electric power
production will depend upon many market factors, but most
importantly, two: fuel price and capital and operating costs.
In addition, the new technologies must be very reliable, as
conventional technologies have already proven to be, and
must have low environmental and economic risks. As a result, from the time they are conceived, advanced electric
power systems face many barriers to their commercial deployment.
Besides its support of MHD, fuel cells, and ATS, DOE
has supported the development of other technologies (i.e.,
IGCC and FBC) that also have applications to electric power
generation. Realized benefits from RD&D in each of these
areas have been impeded by the market factors noted above.
However, ATS provides options benefits for producing environmentally benign, economically viable, and reliable
power using coal, gas, and biomass.
DOEs involvement in the development of advanced turbines began in 1992. By that time, gas turbines were readily
available and in widespread commercial use. In the committees view, the large increase in the use of gas turbine
combined-cycle systems in the 1990s was not related to
DOEs involvement in the program. However, gas turbine
combined-cycle systems used in the future will probably
employ technology developed under the ATS program, for
which DOE provided $315 million (and industry provided
$155 million).
Gas turbines have increased in acceptability in recent
years for two main reasons: the availability of a relatively
inexpensive, clean fuel (i.e., natural gas) and the improvements that industry has made on the efficiency of gas turbines using aircraft technology spun off Department of Defense (DOD) programs. Gas turbines also have advantages
of lower capital cost, shorter lead times for construction and
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for fuel cells, the DOE stationary fuel cell applications program has seen very little commercial success (other than in
the form of heavily DOE-subsidized sales). The programs
future benefits are uncertain, because the capital cost of the
technology remains high and stationary source phosphoric
acid and molten carbonate fuel cell developers continue to
decline in numbers. There are, however, indications that industry interest in solid oxide fuel cells may be growing.
In the opinion of the committee, this program shows that
it is extremely difficult for DOE to force the development of
new concepts with dollars alone. Technology advancement
requires a partnership with industry, which has the market
vision and resources to commercialize the results of the programs. In the fuel cell area, this has not happened. Rather,
DOE has continued to move to different types of fuel cells
from low temperature to intermediate temperature and, finally, to high temperature. Each of these technologies has
unique advantages, but each is also very different and faces
increasingly difficult technical challenges. This program area
appears to be one in which DOE has not done a good job of
identifying clear goals for program success or of making the
difficult decision to terminate elements of a program if goals
are not met or prove not to be achievable.
MHD is another technology that got its start in a government agency outside of DOE, in this case the DOD. During
the energy crises of the 1970s, the concept was viewed by
some as having potential for efficient use of domestic coal
resources. As a result, DOE allocated a great deal of funding
for the technology to build pilot facilities and begin testing
MHD components for electric power production. As devel-
Drilling, completion,
and stimulation
5%
Western tight gas
sands
13%
Seismic technology
7%
Coal-bed methane
2%
Downstream
technology
3%
Eastern gas shales
9%
Oil shale
31%
Field demonstrations
18%
FIGURE 4-7
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TABLE 4-3
DOEs involvement in the field demonstration program, which tests different oil recovery technologies in the
field, also resulted in significant realized economic benefits.
It is estimated that DOEs involvement will result in
1290 million barrels of incremental oil production and 1740
Bcf of incremental gas production over the period from 1996
to 2005. This resulted in realized economic benefits from
royalties on federal lands and increased state severance taxes
estimated by the committee to be $2.2 billion.
The program also resulted in unquantifiable benefits:
downstream fundamental R&D program, important knowledge benefits in fuels chemistry, process fundamentals, thermodynamics, and other areas that have been important to
commercial chemical and refinery process designs.
The committee viewed the return on the governments
investment in most of these programs to be significant in
both economic and security terms. In addition, these programs and the shale oil RD&D programs resulted in modest
options benefits (although under most currently reasonable
future energy scenarios, it is unlikely that the shale oil option
will be used); all of the programs resulted in knowledge benefits.
Overall, in the opinion of the committee, DOEs program
appears to have met its objectives of expanding the oil and
gas resource base and increasing domestic production of oil
and gas in response to mandates from Congress or the administration. It did this by utilizing DOE expertise and emphasizing high-risk projects. Also, DOE supports smaller
companies and independent oil and gas producers, which
make up a significant portion of the production capacity in
the United States and which have limited resources to undertake R&D programs.
Net Realized Benefits Estimated for Selected Fossil Energy R&D Programs
Technology
R&D Cost
(billion $)a
Economic Benefits:
Net Savings (billion $)
0.11
0.21
0.85
0.19
0.17
0.04
0.53
0.13
1.3
3.53
1
0.6
2.9
0.8
0.6
0.2
1.0
3.0
0.8
10.9
Environmental Benefits:
Cumulative Pollution Damage
Reduction (million tons)
360
1,457
2
26c
28
aDOE
R&D investment plus all private sector R&D cost share in billions of 1999 dollars.
incremental production of oil was achieved but difficult to assess.
cIncludes atmospheric fluidized-bed emissions.
bImproved
1,984
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TABLE 4-4
Type of Benefit
Economic benefits
and costs
Environmental
benefits and costs
Security benefits
and costs
aAll
FINDINGS
Finding 1. As shown in Tables 4-3 and 4-4, the committee
found that the DOEs fossil energy program made a significant contribution over the last 22 years to the well-being of
the United States through the development of fossil energy
programs that led to realized economic benefits, options for
the future, and significant knowledge. It is the committees
judgment that these benefits have substantially exceeded
their cost and led to improvements to the economy, the environment, and the security of the nation.
Finding 1a. Economic benefits. It is estimated that the realized economic benefits attributable to the fossil energy programs approach $11 billion (Table 4-5). The 22 DOE fossil
energy programs analyzed in this study, which represent
about 70 percent of the programs on an expenditure basis,
can be divided into two periods. The first, from 1978 through
1985, is characterized by larger programs mainly designed
to convert coal and shale to fuels in response to the energy
crisis. The second period, from 1986 to 2000, is characterized by smaller programs designed to logically develop en-
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19781985
19862000
19782000
Seismic
Drilling, completion, and stimulation
Enhanced oil recovery and field demonstrations
Western gas sands
Eastern gas shales
Coal-bed methane
Flue gas desulfurization
Environmental characterization
Atmospheric fluidized-bed combustion
Total
0.0
0.1
1.0
0.8
0.6
0.2
0.0
0.0
0.8
3.5
0.6
0.9
1.9
0.0
0.0
0.0
1.0
3.0
0.0
7.4
0.6
1.0
2.9
0.8
0.6
0.2
1.0
3.0
0.8
10.9
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ward. The most capable nongovernmental partners were involved, thereby increasing the chances of an early and successful deployment of the technology.
Finding 2c. Rushing technology to the demonstration stage
was found to be costly and often led to failure. In some early
DOE programs, technologies were rushed to the demonstration stage before they were ready. For example, the early
direct coal liquefaction program was a costly effort that
yielded no direct economic benefits. This was due to premature demonstration resulting from political pressures to reduce U.S. oil imports during the energy crises of the 1970s.
Because national concerns about rapidly increasing energy
prices caused by U.S. dependence on foreign oil were high,
DOE was under excessive pressure to find a quick fix. The
MHD program is an example of DOE initiating pilot-scale
testing of major components knowing that there were serious concerns about the cost and complexity of the technology that should have first been addressed in the laboratory
and in smaller-scale testing. In addition, MHD was one of
the programs that continued to receive funding from Congress for several years after DOE stopped requesting funds.
Finding 2d. Applied R&D programs were found to be more
successful when coupled with a supporting research program
directed at solving issues identified in the applied program.
One example is the advanced turbine systems program,
which utilized a university consortium to focus on technical
issues identified in the program. This approach could be used
as a model.
Finding 2e. DOEs portfolio approach was found to provide
a wider range of technological options. The DOE program
consists of a good balance of near-term, intermediate-term,
and long-term programs designed to provide a wide array of
technological options (Table 4-6). Programs with near-term
applications were primarily in the oil and gas sector. Programs with intermediate-term applications consisted of programs such as the advanced turbine systems and IGCC. Programs with longer-range potential are the coal liquefaction
and environmentally focused programs.
Finding 2f. Good communication with EPA and the private
sector was found to be effective in accelerating the deployment of environmentally clean technologies. A significant
number of DOEs programs have been focused on environmental issues as part of the national strategy. This is an important role for DOE and could be facilitated by more formal
interaction with EPA and the private sector. At present there
is no formal mechanism of communication or interaction
between the parties. Where good communication was promoted, the benefits were large (e.g., in the solid waste management, air toxics control, and NOx control programs).
Finding 2g. The committee found that some DOE programs
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TABLE 4-6
Fossil Energy Technology Case Studies Slotted in the Matrix Cells That Are Most Relevant Today
Type of Benefit
Realized Benefits
Options Benefits
Knowledge Benefits
Economic
benefits
Environmental
benefits
Security
benefits
NOTE: When more than one type of benefit is relevant for a technology, the primary benefit is shown in boldface type.
continued for a long time without any real promise of commercial success. Although all of the fossil energy research
programs that were evaluated had potential for commercial
success initially, some fell short of commercial market needs.
While this is to be expected in all R&D programs, the costs
can be minimized by recognizing market and commercialization constraints and focusing efforts on addressing those
constraints before committing to or continuing large-scale
spending. A current example is the stationary fuel cell program, which has a history of partial technological success
but has failed to achieve expectations in market penetration.
This program should have been reviewed critically to determine whether technical and economic barriers could be over-
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RECOMMENDATIONS
Recommendation. DOE should use a benefits matrix and a
consistent set of assumptions like the ones adopted for this
study to help design, implement, and evaluate DOE programs. The use of such a methodology allows assessing the
relative merits of a combination of economic benefits, options benefits, and knowledge benefits and their impact on
national energy, environmental, and security strategies.
While economic benefits are important, it is also important
to have options for the future and a knowledge bank to draw
upon when needed. Use of this matrix can facilitate a balanced judgment on the value and expected benefits to the
nation of DOE programs. However, in applying this methodology, it is critical to use a consistent set of economic,
environmental, and security parameters. It is also important
to distinguish between the contributions made by DOE and
the contributions made by others.
Recommendation. The committee recommends that DOE
continue to maintain a diverse portfolio of programs and resist the temptation to overemphasize near-term, economically driven programs. A diverse portfolio of projects, some
of which are geared to a short-term time frame and others a
longer-range time frame, should be maintained. Some
projects should have potential for realized economic benefits in the near term, some should create options for the
future if energy prices or the market conditions change. Some
should provide environmental benefits, some should provide
energy security benefits, and some should provide knowl-
REFERENCES
Department of Energy (DOE). 2000a. Description of the Office of Coal and
Power Systems Programs. Available online at <http://www.fe.doe.gov/
programs_coalpwr.html>.
DOE. 2000b. Description of the Natural Gas and Petroleum Technology
Programs. Available online at <http://www.fe.doe.gov/programs_
oilgas.html>.
Office of Fossil Energy (OFE). 2000. OFE response to questions from the
Committee on Benefits of DOE R&D in Energy Efficiency and Fossil
Energy: OFE Budget History. November 27, 2000.
Energy Research at DOE: Was It Worth It? Energy Efficiency and Fossil Energy Research 1978 to 2000
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The benefits (as outlined above) of DOE RD&D programs in fossil energy and energy efficiency;
The assessment of DOEs techniques for evaluating its
RD&D programs in fossil energy and energy efficiency and
recommendations for improving the techniques; and
The assessment of DOEs R&D portfolio in fossil energy and energy efficiency and recommendations for improvements in its structure and management.
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and it is too early to know if they will be a commercial success; many current programs fall into this category.
However, significant knowledge benefits have already
been realized from older programs such as advanced turbine
systems, which contributed to improved methods for fabricating advanced materials and ceramics, enhanced knowledge of design and cooling techniques for turbine components, and improved understanding of the effects of sulfur
on protective coatings within these systems. Fossil energy
programs such as enhanced oil recovery, Western gas sands,
and seismic technology also have yielded significant knowledge benefits in the areas of reservoir characterization, seismic imaging, and algorithm development.
In addition to this analysis of the individual classes of
benefits embodied in the conceptual framework, the committee reached the following summary conclusions:
The largest (by an order of magnitude) apparent benefits were realized as avoided energy costs in the buildings
sector in energy efficiency and environmental cost avoidance from the NOx reductions achieved in fossil energy. This
result is not surprising in a balanced research portfolio, which
will have its share of failures and moderate successes. On
the other hand, it is not possible to predict, a priori, which
projects in the portfolio will hit the jackpot. This skewed
distribution of realized benefits (the NOx benefit is an environmental benefit, not an economic benefit) underscores the
importance of systematically accounting for the less quantifiable benefits by entering them in the benefits matrix.
The large realized benefits accrued in areas where public funding would be expected to have considerable leverage. The buildings sector is fragmented, and the prevailing
incentive structure is not conducive to technological innovation. The NOx reduction achieved in FE is considered to be
an environmental rather than an economic benefit because
private markets cannot easily capture it.
The importance of standards for driving technology innovation in buildings and in transportation cannot be overemphasized. Often DOE energy efficiency research has been
used to provide a proper basis for standards.
Important but smaller realized benefits were achieved
in the Office of Fossil Energys oil and gas program and in
the industry programs of EEREs energy efficiency research.
In these cases, the industries involved did have significant
private incentives to capture the benefits of energy R&D.
Nevertheless, the committee concluded that DOE participation took advantage of the private sector activity to realize
additional public benefits. In these cases, however, clearly
specifying the DOE role is critically important to ensuring
that public funding is likely to produce appropriate benefits.
Forced government introduction of new technologies
not yet economic has not been a successful strategy. Many
of these programs, such as fuels from coal or technologies
that would greatly reduce the use of oil in the transportation
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the problems encountered in the application of the committees guidelines (Appendix D) and to consider how to
begin the improvement process.
2. Adopt consistent assumptions to be used across programs.
3. Adopt procedures to enhance the transparency of the
process, clarifying the choices made in characterizing benefits and the methodology used in valuing them.
4. Provide for external peer review of the application of
the analytic framework to help ensure that it is applied consistently for all programs. This independent peer review team
should include individuals from industry and other sectors
that are not connected to the programs being evaluated.
5. Seek to include the views of all stakeholders in public
reviews of its R&D programs.
Finding 3. One of the most difficult problems in the evaluation of RD&D programs is determining DOEs share of the
benefit of a program in which industry (and even other government agencies) also made significant contributions. It is
essential to spell out specifically the concrete results
achieved by DOEs participation in such programs relative
to the efforts of other investors. The discussion of individual
fossil energy and energy efficiency programs in preceding
chapters shows that DOE programs are effective in very diverse ways, and better data on the nature of program results
will aid policy makers in assessing the appropriateness of
program structures.
Recommendation. Application of the framework requires
data that often are difficult to obtain within DOE. DOE
should work to overcome these problems by (among other
things) consistently recording historical budget and costsharing data for all RD&D projects. Industry incurs significant costs to commercialize technology developed in DOE
programs, andespecially in the assessment of economic
benefitsthese costs should be documented where possible.
Industrys investment in many of the technologies evaluated
is likely very high. However, for this report, cost sharing
was assumed to be industrys share of the costs of RD&D
involving DOE. From the point of view of public benefits,
which entity deserves the credit is much less important than
that public benefits should exceed public investment costs.
Public costs may be quite modest compared to benefits if
they catalyze private investments in innovation.
PORTFOLIO MANAGEMENT
Finding 4. The committees review of the fossil energy and
energy efficiency programs underscores the significant
changes in energy policy during the nearly three decades of
the programs existence. There have been changes in technological possibilities; expectations about energy supply,
prices, and security; DOE programmatic goals; the national
and international political environment; and the feasibility
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and energy efficiency R&D portfolios. Indeed, these programs adversely affected the overall benefit-cost balance for
fossil energy and energy efficiency R&D portfolios. In the
case of the MHD program, for example, Congress continued
to appropriate funds for nearly a dozen years after DOE
stopped asking for them. Nearly 45 percent of the $1.02 billion (1999 dollars) in total DOE expenditures on this program was appropriated by Congress between 1982 and 1993,
despite the fact that DOE requested funds for the program
only once during that time. Since the program yielded no
direct benefits and only limited knowledge benefits, its continuation by congressional action for a lengthy period diverted public funds that might have been better spent on other
programs.
The MHD case is one in which Congress ignored DOE
recommendations that program funding be terminated. But a
more public review and set of expert recommendations for
such termination could have made it more politically costly
or difficult for Congress to continue funding. In hindsight, it
is apparent that the continued investment of public funds in
a program past the point at which it is capable of attaining its
original goals drives up costs, especially when the project is
continued into early-stage or commercial development.
Recommendation. DOE should develop clear performance
targets and milestones, including the establishment of intermediate performance targets and milestones, at the inception
of demonstration and development programs (in cooperation with industry collaborators, where appropriate) and
employ these targets and milestones as go/no-go criteria
within individual projects and programs. These performance
targets and milestones should be incorporated into DOE
funding requests to congressional appropriators. Consideration should be given to the type of research performed when
evaluating these targets, as preset milestones may not be
applicable in programs focused on exploratory research. Key
milestones that can be used in conjunction with established
goals for measuring progress and detecting problems should
be established for all program and project activity.
Use of milestones for monitoring progress is a wellknown best practice in managing any R&D portfolio, and
the DOE energy efficiency portfolio could benefit from more
widespread use in managing program and project decisions.
As noted previously, the evaluation framework recommended by the committee involves the retrospective analysis of program outcomes, and recently initiated programs
may not yet have achieved the ultimate outcomes projected
for them. It is therefore important to develop interim milestones and metrics that enable policy makers and program
managers to assess intermediate progress toward the ultimate project or program objectives and to make any needed
adjustments in program structure or budget in a timely fash-
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lated by a large number of small firms with little or no internal R&D, and in this situation DOE acted in part as a supplier of generic R&D that produced useful tools and concepts for industrywide use. Many of the programs in OIT
also have involved work to demonstrate technological concepts in industries with relatively small privately funded
R&D budgets.
The PNGV program, on the other hand, presents a sharp
contrast. The U.S. automotive industry is much more highly
concentrated and populated by many firms with substantial
internal R&D budgets. In this situation, DOEs role has been
one of working with industry to define an agenda for
precompetitive R&D that contributes to DOE goals as well
as industry needs and that would not raise antitrust issues.
DOE also provided financial support for the more long-term
elements of the agreed-upon R&D agenda. But much of the
R&D performed within the PNGV program is undertaken by
the participating firms, in contrast to the situation in the energy efficiency buildings programs. DOE plays an important
third-party role between the regulator (DOT), EPA, and the
industry, which establishes the credibility of new, expensive
knowledge from non-EPA studies that inform the regulatory
process.
Still another structure for R&D serving the public interest
is DOEs activities in environmental characterization and
control. Here, DOE technology demonstration and characterization have contributed to the development of lower-cost
methods to meet emissions targets, while also providing federal regulatory agencies with technical information to formulate more realistic and cost-effective regulations.
These programs differ greatly in their budgets, in the mix
of public and private funding for the RD&D activities they
perform, in the division of labor between public and private sector actors in the performance of that RD&D, and in
the mix of near- and long-term RD&D activities they support. In addition, the operation of these programs has involved a varied mix of policies supporting the adoption of
new technologies. The more successful DOE programs have
been structured to respond to the unique technological and
economic circumstances of each industrial sector that they
seek to serve, and they have thereby served the public interest more effectively. Part of the challenge surrounding the
program requires that DOE define areas in which its funding
or performance of R&D is likely to prove most effective.
Recommendation. DOE should strive to build flexibility
into the structure of its RD&D programs.
DOE RD&D programs have contributed to technological
progress and knowledge in a variety of ways that are influenced by the structure and characteristics of the relevant industrial sectors. DOE should structure its RD&D programs
to be flexible and regularly evaluate program goals and structure. The committee found that DOE RD&D programs in
fossil energy and energy efficiency have developed greater
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flexibility and sensitivity to the needs of the relevant industrial sectors over the past 15 years. The committee applauds
this trend and urges that DOE policy makers continue to
explore creative and adaptive solutions to the requirements
of collaborative RD&D in very diverse industrial sectors.
REFERENCE
Department of Energy. 1999. Energy Resources R&D Portfolio Analysis.
Volume I: Summary Report. Panel Report to the Research & Development Council. August. Washington, D.C.: U.S. DOE.
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Appendixes
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ments. He is a member of the National Academy of Engineering. His technical expertise spans internal combustion
engines, gas turbines, engine performance, automotive air
pollution, and automotive power plants. He has a Ph.D. in
mechanical engineering from Purdue University.
Ralph Cavanagh codirects the Energy Program of the Natural Resources Defense Council (NRDC), a nonprofit environment-advocacy organization that he joined in 1979. Mr.
Cavanagh was a member of the board of E-Source, a Colorado-based energy services company, from 1992 until 1999.
He has held appointments as a visiting professor at the
Stanford and Boalt Hall (University of California at Berkeley) law schools and as a lecturer on law at the Harvard Law
School. Before arriving at NRDC, Mr. Cavanagh was employed by the Department of Justice as an attorney advisor.
He is a past member of the Energy Engineering Board of the
Peter D. Blair is executive director of the Division on Engineering and Physical Sciences of the National Research
Council (NRC). Prior to joining the NRC, he was executive
director of Sigma Xi, the Scientific Research Society. He
has held a number of positions related to energy technology,
energy policy, and energy economics. At the congressional
Office of Technology Assessment (OTA), he was assistant
director and director of the Division of Industry, Commerce
and International Security. Formerly, he was program manager of energy and materials. In those positions, he was responsible for OTAs research on energy and materials, transportation, infrastructure, international security and space,
industry, and commerce. Dr. Blair was a cofounder and principal of Technecon Consulting Group, Inc., specializing in
investment decisions related to, and management of, independent power projects, as well as contract research in the
area of energy and environmental systems. His primary areas of interest are energy management, systems engineering,
and energy policy analysis. He has a Ph.D. in energy management and policy from the University of Pennsylvania.
73
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APPENDIX A
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APPENDIX A
Geologists, and a member of the National Academy of Engineering. He has served on numerous federal government
committees and councils and NRC committees. He has expertise in energy policy, oil and gas resources and recovery,
fossil fuel exploitation and technology, geology, and mineral resource policy. He has a Ph.D. in geology from the
University of Kansas.
Robert Hall is currently president, CDG Management, Inc.
He held a number of positions at Amoco Corporation including general manager, Alternative Fuels Development; manager, Management Systems and Planning; manager, IS Strategic Planning; director, Amoco Oil R&D Department; and
supervisor, Amoco Chemical Process Design and Economics. He has extensive experience in planning and management of technology innovation in the areas of petroleum refining, petrochemicals, alternative fuels, process design, and
process economics. He served on the NRC Committee on
Production Technologies for Liquid Transportation Fuels,
the NRC Committee on Strategic Assessment of the Department of Energys Coal Program, and the NRC Committee
on Review of the Research Strategy for Biomass-Derived
Transportation Fuels, and was past chairman of the International Council on Alternate Fuels. He has a B.S. in chemical
engineering from the University of Illinois, UrbanaChampaign.
George M. Hidy is a consultant in energy and environmental engineering. He formerly was Alabama Industries Professor of Environmental Engineering at the University of
Alabama, where he was also a professor of environmental
health science in the School of Public Health. From 1987 to
1994, he was technical vice president of the Electric Power
Research Institute, where he managed the Environmental
Division and was a member of the Management Council.
From 1984 to 1987, he was president of the Desert Research
Institute of the University of Nevada. He has held a variety
of other scientific positions in universities and industry and
has made significant contributions to research on the environmental impacts of energy use, including atmospheric diffusion and mass transfer, aerosol dynamics, and chemistry.
He is the author of many articles and books on these and
related topics. Dr. Hidy received a B.S. in chemistry and
chemical engineering from Columbia University, an M.S.E.
in chemical engineering from Princeton University, and a
D.Eng. in chemical engineering from Johns Hopkins University.
Maxine L. Savitz is general manager, Technology/Partnerships, Honeywell. She has held a number of positions in the
federal and private sectors managing large R&D programs.
Some of her positions included chief, Buildings Conservation Policy Research, Federal Energy Administration; professional manager, Research Applied to National Needs,
National Science Foundation; division director, Buildings
and Industrial Conservation, Energy Research and Development Administration; deputy assistant secretary for Conservation, Department of Energy; president, Lighting Research
Institute; and general manager, Ceramic Components,
AlliedSignal, Inc. She has extensive technical experience in
materials, fuel cells, batteries and other storage devices, energy efficiency, and R&D management. She is a member of
the National Academy of Engineering and has been, or is
serving as, a member of numerous public- and private-sector
boards and has served on many energy-related and other
NRC committees. She has a Ph.D. in organic chemistry from
the Massachusetts Institute of Technology.
David C. Mowery is Milton W. Terrill Professor of Business at the Walter A. Haas School of Business, University of
California, Berkeley. His research on the economics of technological innovation and the effects of public policies on
innovation helped the committee respond to the statement of
task. Dr. Mowery has served on a number of National Research Council committees and boards, has testified before
Jack S. Siegel is a principal with the consulting firm of Energy Resources International, Inc., and president of its Technology and Markets Group. While at the Department of Energy (DOE), he held various positions of leadership,
including deputy assistant secretary for Coal Technology and
acting assistant secretary for Fossil Energy. Before that, he
was at the Environmental Protection Agency and led efforts
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PNGV: An Overview
Bob Culver, Ford Motor Company
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APPENDIX B
Energy Research at DOE: Was It Worth It? Energy Efficiency and Fossil Energy Research 1978 to 2000
http://www.nap.edu/catalog/10165.html
Brown, M.A., T.R. Curlee, and S.R. Elliott. 1995. Evaluating Technologies Innovation Programs: The Use of
Comparison Groups to Identify Impacts. Research
Policy 24(5): 669-684.
Chemical Sciences Roundtable, National Research Council.
2000. Research Teams and Partnerships: Trends in the
Chemical Sciences. Report of a Workshop. Washington, D.C.: National Academy Press.
Clinton, J., H. Geller, and E. Hirst. 1986. Review of Government and Utility Energy Conservation Programs.
Annual Review of Energy and the Environment 11: 95142.
Cohen, L., and R. Noll. 1991. The Technology Pork Barrel.
Washington, D.C.: The Brookings Institution.
Committee on Science and Technology, U.S. House of Representatives. 1986. Science Policy Study Background
Report No. 1: A History of Science Policy in the
United States, 1940-1985. Report prepared for the
Task Force on Science Policy by Jeffrey K. Stine. 99th
Congress, 2d sess. Serial R (September). Washington,
D.C.: U.S. Congress.
Committee on Science and Technology, U.S. House of Representatives. 1986. Science Policy Study Background
Report No. 2Part A: Bibliography of Studies and
Reports on Science Policy and Related Topics, 19451985. Report prepared for the Task Force on Science
Policy. 99th Cong., 2d sess. (December). Washington,
D.C.: U.S. Congress.
Committee on Science, Engineering, and Public Policy.
1992. The Government Role in Civilian Technology:
Building a New Alliance. Washington, D.C.: National
Academy Press.
Committee on Science, Engineering, and Public Policy.
1999. Evaluating Federal Research Programs: Research and the Government Performance and Results
Act. Washington, D.C.: National Academy Press.
Congressional Budget Office (CBO). 1998. Climate Change
and the Federal Budget: Chapter 1Climate Change:
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APPENDIX C
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APPENDIX C
OTA. 1993. Energy Efficiency: Challenges and Opportunities for Electric Utilities. OTA E-561 [OTA 9323],
September. Washington, D.C.: OTA.
OTA. 1993. Industrial Energy Efficiency. OTA-E-560 [OTA
9330], August. Washington, D.C.: OTA.
Perry, Harry, and Hans Landsberg. 1981. Factors in the
Development of a Major U.S. Synthetic Fuels Industry. Annual Review of Energy and the Environment 6:
233-266.
P.L. 96-480. 1980. Stevenson-Wydler Technology Innovation Act.
P.L. 96-517. 1980. Bayh-Dole University and Small Business Patent Act.
P.L. 97-219. 1982. Small Business Innovation Development
Act.
P.L. 99-502. 1986. Federal Technology Transfer Act.
P.L. 100-418. 1988. Omnibus Trade and Competitiveness
Act.
P.L. 101-189. 1989. National Competitiveness Technology
Transfer Act.
P.L. 102-486. 1992. Energy Policy Act.
Presidents Committee of Advisors on Science and Technology (PCAST). 1997. Federal Energy Research and Development for the Challenges of the Twenty-First Century, Report of the Energy Research and Development
Panel, the Presidents Committee of Advisors on Science and Technology (PCAST), November 5.
PCAST, Panel on International Cooperation in Energy Research, Development, Demonstration, and Deployment. 1999. Powerful Partnerships: The Federal Role
in International Cooperation on Energy Innovation.
Washington, D.C.: Executive Office of the President.
Pye, Miriam, and Steven Nadel. 1997. Energy Technology
Innovation at the State Level: Review of State Energy
RD&D Programs. Available online at <http://aceee.
org/pubs/e973.htm>.
Resource Data International (RDI). 1995. Energy Choices in
a Competitive Era: The Role of Renewable and Traditional Energy Resources in Americas Electric Generation Mix. Boulder, Colo.: RDI.
RDI. 1998. Renewable Resources Under the Bright Light of
Peer Review: Energy Choices, Practical Realities: Renewable Energy and Utility Restructuring. Prepared
for the Center for Energy and Economic Development,
April. Boulder, Colo.: RDI.
Schipper, L., R. Howarth, and H. Geller. 1990. United States
Energy Use from 1973 to 1987: The Impacts of Improved Efficiency (summary), in the 1990 Annual Review of Energy. Available online at <http://aceee.org/
pubs/e901.htm>.
Schurr, S., J. Darmstadter, W. Ramsay, H. Perry, and M.
Russell. 1979. Energy in Americas Future: The
Choices Before Us. Baltimore: Johns Hopkins Press.
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Tassey, G. 1996. Rates of Return from Investments in Technology Infrastructure. Department of Commerce, National Institute of Standards and Technology, Technology Administration, 96-3 Planning Report, June.
Taylor, J. 1993. Energy Conservation and Efficiency: The
Case Against Coercion. Policy Analysis No. 189.
Washington, D.C.: Cato Institute.
Taylor, J. 1999. Energy Efficiency: No Silver Bullet for Global Warming. Policy Analysis No. 356. Washington,
D.C.: Cato Institute.
VanDoren, P. 1999. The Costs of Reducing Carbon Emissions: An Examination of Administration Forecasts.
Briefing paper 44. Washington, D.C.: Cato Institute.
Yeager, K. 1980. Coal Clean-up Technology. Annual Review of Energy and the Environment 5:357-387.
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It is necessary to have a consistent, comprehensive framework with which to assess retrospectively the past, current,
and future benefits, costs, and results of the DOE fossil energy and energy efficiency R&D programs. The framework
should allow all of the net benefits to the United States to be
summarized, it should focus attention on the major types of
benefits associated with the DOE mission, and it should differentiate benefits based on the degree of certainty that they
will one day be realized. To accomplish this, the committee
developed the matrix given in Figure D-1, and for each
project or program for which it chose to prepare a case study
(see Appendixes E and F), it attempted to fill in the nine
cells.
Each cell is an economic net benefit, an environmental
net benefit, or a security net benefit, and each cell is also
either a realized net benefit, an options net benefit, or a
knowledge benefit. Undesirable consequences would be
quantified as negative components of net benefits, desirable
consequences as positive components. Ideally, quantitative
measures for each category of net benefits would be desirable, but in many cases only qualitative measures will be
Realized Benefits
and Costs
Options Benefits
and Costs
Economic benefits
and costs
Environmental benefits
and costs
Security benefits
and costs
FIGURE D-1 Matrix for assessing benefits and costs.
86
Knowledge Benefits
and Costs
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APPENDIX D
Technology
Development Technology
Economic/
Developed
Policy Conditions
Technology Development
in Progress
Technology
Development Failed
Realized benefits
Knowledge benefits
Knowledge benefits
Options benefits
Knowledge benefits
Knowledge benefits
Knowledge benefits
Knowledge benefits
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APPENDIX D
Knowledge Benefits
Knowledge benefits are economic, environmental, or security net benefits that flow from technology for which R&D
has not been completed or that will not be commercialized.
The benefits stem from possibilities for future uses of the
knowledge. Figure D-2 shows the mapping from the status
of technology development and from economic and policy
conditions to the columns in Figure D-1.
refers to conditions absent energy disruptions or other energy shocks. The total market value can be increased as a
result of technologies because a technology may cut the cost
of producing a given output or it may allow additional valuable outputs to be produced by the economy. Economic benefits are characterized by changes in the valuations based on
market prices, relative to the next-best feasible alternative.
These could either be changes in asset values (e.g., owing to
increases in the amount of petroleum that could be economically recovered) or changes in life-cycle costs (e.g., owing to
reductions in energy used for home lighting) reflecting market penetrations expected for the technologies.
The benefit must be estimated net of costs in all cases:
Implementing technologies has costs, and the measure of
benefits must be net of these costs. Further, this estimation
must be computed on the basis of comparison with the nextbest alternative, not some standard or average value. For
example, the benefit of a new coal power technology must
be estimated on the basis of a comparison with a state-ofthe-art coal plant or a natural gas combined-cycle plant, not
on the basis of a comparison with an average existing coal
plant.
Thus, the economic benefits must be truly net, and all
economic benefits and costs must be explicitly accounted
for. This requires consideration of all impacts, desirable and
undesirable.
The net benefits are estimated using life-cycle costs or
benefits, including the life-cycle costs or benefits over the
entire future life of all installations. Typically, it may be easiest to estimate net benefits on a per-installation basis and
multiply by the estimated number of new installations or to
add up over these installations if they are of substantially
different scales. In the discussion that follows it is assumed
that such a procedure is used.
The benefits include the following:
Past and current benefits that are already in place
the benefits resulting from all capital stock installed through
2000. For the committees analysis, the estimates of this additional capital stock are obtained, when possible, from independent Energy Information Administration (EIA) forecasts, not from unsupported DOE program estimates or DOE
contractor data. Although sources other than EIA could be
used, it is important that a consistent set of reasonable, unbiased estimates is used, such as those developed through EIA.
Future/forecast benefitsbenefits resulting from capital stock expected to be put in place from 2001 through 2005.
The committee used the year 2005 cutoff as a rough rule of
thumb consistent with its belief that, absent DOE involvement, some private sector entity would have developed the
economically attractive new technologies that were, in fact,
aided by DOE research efforts. To that end, the committee
also adopted a conservative 5-year rule presuming that the
DOE R&D or demonstration program accelerated the introduction of the technology to the market. Thus, the commit-
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APPENDIX D
1This research was conducted between May 2000 and December 2000,
and for most of this period the Annual Energy Outlook (AEO) 2000 was the
latest forecast base case available. This was therefore the base case scenario
used.
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APPENDIX D
tion have been included in the costs in the data set used for
the calculations. In that case, the two transfer payments
royalties and severance taxesmust be added back into the
benefits to compensate for their initial inclusion as costs.
Environmental Benefits and Costs
mental regulations and policy, enhance environmental management, and facilitate the development of more efficient
and cost-effective environmental regulations. These types of
benefits from fossil energy R&D are classified as environmental benefits, whereas any cost savings attributable to
them are classified as economic benefits.
Possible Impacts on Biodiversity. Increased biodiversity
is counted as an environmental benefit, and decreased
biodiversity is counted as an environmental cost. The value
of these benefits and costs is difficult to measure.
Replacing Toxic or Other Environmentally Damaging
Materials with More Benign Materials. The net benefit of
substituting more benign materials for toxic or other environmentally damaging materials is the difference between
the environmental damage attributable to the more environmentally degrading materials and the damage to the environment attributable to the more benign materials.
Changes in Indoor Environmental Quality. Benefits
should be based on the value placed on changes in human
health and confort, and the perceived health benefits must be
made explicit. This is especially relevant, since some energy
efficiency improvements, by limiting indoor air flow and
circulation, can decrease indoor air quality.
Impact on Environmental Emissions That May Impact
Operating Costs. Reduction of certain types of environmental emissions may cause an increase in other types of environmental emissions as well as an increase in operating costs.
For example, reducing SOx and NOx emissions may increase
carbon and mercury emissions and decrease plant operating
efficiency.
These costs, to be correct, should be separated, although
their causative linkage needs to be made clear. The increases
in emissions of other environmentally damaging materials
must be taken into account in estimating the overall net environmental benefits achieved. Increases in operating costs
also must be taken into account. However, because these
changes directly impact the goods and services that can be
produced in the economy, these must appear as an economic
cost.
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APPENDIX D
Security Benefits
Security benefits are based on changes in the probability
or severity of events that would adversely impact the overall
economy or the environment. They can be considered as
impacts under extraordinary conditions. Typically, they
would be transient events, but they might also be lowprobability, nontransient events. They can be disaggregated
into short-run and long-run benefits.
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APPENDIX D
Knowledge Benefits
Knowledge benefits are defined as scientific knowledge
arising from a technology for which R&D has not been completed but that holds promise for future application, perhaps
in completely unforeseen ways. These benefits are qualitative descriptions of advances in knowledge based on research
over and above the research that developed specific technologies. The advances could lead to other technologies, but
at this time those technologies have not been developed.
Knowledge benefits include unanticipated and not-closelyrelated technological spin-offs that are made possible by research programs. For example, the Office of Fossil Energys
coal R&D programs have had many significant technological spin-offs. These spin-offs represent knowledge benefits.
The category knowledge benefits probably has by far
the greatest diversity of economic, environmental, and security benefits and is, accordingly, probably the hardest to
evaluate with any confidence. For some classes of knowledge benefits, it will be impossible to quantify in any manner that would allow an objective overall assessment of importance. For example, improvements in our knowledge of
basic physical processes would fall into this category. However, other knowledge benefits do allow some quantification. This is particularly true for some well-defined technology development programs currently under way. The
Partnership for a New Generation of Vehicles may fall into
this category.
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PNGV,
Stirling automotive engine, and
Transportation fuel cell power systems.
The case studies are presented here in the order they are
listed above.
ADVANCED REFRIGERATION
Program Description and History
Refrigeration accounts for about $14 billion of the U.S.
residential electricity bill and also has significant commercial sector applications (OEE, 2000a). In 1977, DOE initiated an appliance product development program that included emphasis on refrigerator-freezers and supermarket
refrigeration systems. Manufacturer involvement was substantial from the outset. DOE targeted both improved components, starting with the electricity-intensive refrigerator
compressor, and computer tools for analyzing refrigerator
design options. Early successes included a compressor system that achieved 44 percent efficiency improvement over
the technology commonly used in refrigerators of the late
1970s.
When the Montreal Protocol forced manufacturers of refrigeration equipment to replace chlorofluorocarbons
(CFCs), DOE responded with cooperative R&D agreements
that helped the private sector investigate and test alternative
refrigerants, new insulation materials, and new appliance
designs. These partnerships helped industry phase out CFCs
while continuing to improve the energy efficiency of refrigeration.2
From the programs and technologies in the industry sector, the committee selected the following:
2DOEs role in easing the industrys transition from CFCs was confirmed
by Mark Menzer, Air Conditioning and Refrigeration Institute, in a presentation to the committee on October 31, 2000. Also see Geller and Thorne
(1999).
95
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APPENDIX E
Fiscal Year
(thousands of
current year dollars)
(thousands of
1999 dollars)
1978
1979
1980
1981
Total
112
264
226
225
827
243
529
414
377
1563
ity of a full-featured refrigerator using 60 percent less electricity than comparable conventional units and produced new
computer tools for analyzing the energy-use implications of
refrigerator design options. DOE R&D funds and partnerships also played a key role in allowing industry to phase
out CFCs without an energy penalty (Geller and Thorne,
1999).
These successes strongly influenced the enactment of increasingly demanding efficiency standards, first in California and ultimately by DOE itself, under authority of the National Appliance Energy Conservation Act of 1987. A
reinforcing cycle began that continues to this day, under
which targeted federal R&D helps make possible the introduction of increasingly efficient new refrigerator models,
which themselves become the basis for tightening the minimum efficiency standards (based on their demonstration that
meeting a tighter standard is technologically feasible).
Benefits and Costs
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APPENDIX E
3
Adj. Volume, ft
2,200
22
2,000
1,800
18
1,600
U.S. Sales
Weighted
Average
U.S. DOE
Standard
1978 CA Standard
14
1,400
Projected
1980 CA Standard
1,200
1,000
1987 CA Standard
1990 NAECA
10
Adj. Volume
(ft3)
800
1993 DOE Standard
600
2001 DOE
400
2
200
0
1947
1953
1959
1965
1977
1971
1983
1989
1995
2001
Year
FIGURE E-1 Electricity consumed by refrigerators, 1947 to 2001. SOURCE: Goldstein and Geller, 1998.
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APPENDIX E
pal cause of this continued improvement is the DOE standards. DOE R&D contributed to the setting of these standards. Improvements are also the result of finding ways to
substitute non-ozone-depleting refrigerants for HCFCs without degrading energy performance. This was helped by
DOE-supported R&D. The energy savings from these further improvements through 2005 are estimated to be 2.6 Q of
primary energy. The corresponding net cost savings to consumers is estimated to be $15 billion (McMahon et al., 2000).
Lessons Learned
Table E-2 summarizes the benefits and costs of the program. This case study underscores the value to society of
integrating RD&D and minimum efficiency standards as an
instrument for accelerating technological innovation.
A key factor in the development of more demanding efficiency standards is simply the availability of more efficient
models in the market (Goldstein, 2000). As a result, sim-
TABLE E-2 Benefits Matrix for the Advanced Refrigerator-Freezer Compressors Programa
Realized Benefits/Costs
Options Benefits/Costs
Knowledge Benefits/Costs
Economic
benefits/costs
Environmental
benefits/costs
Security
benefits/costs
aUnless
otherwise noted, all dollar estimates are given in constant 1999 dollars through 2000.
bFrom 1977 through 1982, DOE conducted a program on appliance product development with substantial manufacturer involvement, expending about $4.9
million (current dollars) for R&D. The largest product development efforts were focused on heat pump water heaters, refrigerator-freezer compressors,
refrigerator-freezers, and supermarket refrigeration systems. Of the total budget, $1.6 million (1999 dollars) was spent on refrigerator-freezer compressors.
cAs a result of DOE R&D investment with a compressor manufacturer, a series of much more efficient compressors for refrigerator/freezers came on the
market beginning in 1981. These compressors were assumed to have resulted in half the energy savings of the sales-weighted average refrigerator/freezers sold
between 1981 and 1990 compared to 1979 as a base from which to calculate the savings. The net life-cycle cost savings of units sold through 1990 were
reduced by assuming an improved compressor would have appeared on the market by 1986 without the DOE investment and that it would have followed the
same penetration path displaced by 5 years. No energy or cost savings beyond 1990 were assumed, but the full life-cycle savings over the assumed 20-year life
of the units was counted. Beyond 1990, improvements in efficiency were due to DOE standards and R&D on hydrochlorofluorocarbons substitutes without
performance degradation, and these are estimated to have saved 2.6 quads of primary energy for electricity generation and $15 billion in net consumer lifecycle savings through 2005.
dDOE selected a suite of 13 modifications and incorporated them into a laboratory prototype unit. These involved two approaches to improving efficiency:
(1) improving the efficiency of the motor through improved materials and better design and (2) improving the refrigerant flow path to reduce pressure losses
through improved valve and port designs. A 44 percent improvement in efficiency was achieved over the compressor technology commonly used in refrigerators in the late 1970s.
eIn the late 1980s, DOE began to develop efficiency standards in response to industry requests for national standards to obviate a multitude of emerging state
standards. The prospect of national standards would have spurred industry to begin work on improved compressors by the late 1980s. Therefore, without the
DOE R&D program, market penetration of advanced compressors likely would not have begun until the early 1990s, about 10 years later than actually
occurred.
fThe project developed a computer program for analyzing refrigerator design options. The program was further developed by Arthur D. Little after the
project and was later used for a variety of purposes: to develop the technical basis for the DOE national minimum efficiency standards, to design advanced
products for manufacturers, to evaluate refrigerant design options for EPA refrigerant rulemakings, and to help design efficient refrigerators for developing
countries.
gFor example, the refrigerator-freezer development focused on systems optimization of the entire refrigerator-freezer, including the refrigeration circuit,
case design, insulation, and controls.
hThe technology and knowledge base developed in the refrigerator compressor R&D effort was applied by industry to improving compressors for room air
conditioners, and experience in improving refrigerator compressors enabled appliance manufacturers to increase the average efficiency of room air conditioner
compressors by more than 25 percent through the 1980s.
iEE estimates avoided emissions of 41.6 million metric tons of carbon, 0.36 million tons of nitrogen oxide, 0.63 million tons of sulfur dioxide, 0.01 million
tons of particulate matter (PM 10), 0.04 million tons of carbon monoxide, and 0.01 million tons of volatile organic compounds.
jImproved refrigerators reduce household electricity demand and, since the heat from refrigerators adds to the house cooling load, they also reduce cooling
energy demands and thus peak demand.
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APPENDIX E
the ballast in place. However, separable products are generally more bulky than unitized products since they require the
additional connection apparatus between the bulb and the
ballast. These were the principal issues challenging the DOEsponsored joint program with industry to develop CFLs, initiated in 1997.
A key industry partner was General Electric (GE), which
in the course of the first project of the new program, projected that reducing the cost of a CFL from $15 to $9 would
increase sales by more than 250 percent. This first project,
which concluded in 1999, identified evolutionary approaches
to reducing cost by about 30 percent, concluding that more
aggressive technical approaches to achieve greater cost reductions would probably result in less-than-adequate product performance (energy efficiency, size, and electronic interference). The second project, which started in 1999, is
ongoing. It is exploring the possibility of miniaturizing the
ballast electronics to such an extent that it can be built into
the lighting fixture itself, with attendant reductions in lamp
cost and size.
Another DOE effort has been to stimulate manufacturers
to develop more compact, lower-cost CFLs by extending existing lamp technology. In this effort, DOE is fostering private sector R&D by guaranteeing a minimum level of CFL
purchases, primarily from the public sector for schools, public housing, etc.
Portable lamp fixtures in the United States account for 20
percent of the energy consumed in lighting. There are 400
million to 500 million portable lighting fixtures in U.S. residences and another 30 million or so in U.S. hotels.
Funding and Participation
In FY 1999, Congress provided funds specifically for the
competitive procurement of new R&D projects with industry, including a project for developing the CFL and a substantial increase in funding over the previous several fiscal
years for lighting research. This was prompted in part by
increased support from industry for collaborative work with
the DOE, particularly in lighting. Table E-3 shows the funding history of the integrated ballast-fixture CFL project.
Results
The generic product (a lampholder) envisioned in the
DOE CFL integrated ballast-fixture project being carried out
jointly with GE is not part of the current GE product line.
Indeed, since GE does not have a major product line in electronic ballasts and does not have an established market position to support, this project was not ranked very high in GEs
internal prioritization process for allocating internal R&D
funding.
As a result, it is clear that without DOE funding, the
project would probably not have been initiated.
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APPENDIX E
DOE Cost
Contractor Cost
Total
1999
2000 to 2001
Total
1172
579
1751
293
462
755
1466
1040
2506
Lessons Learned
Building on the recent history of successful DOE/industry collaboration in lighting R&D, the CFL program has
adopted many of the features of previous efforts, in, for example, the electronic ballasts program. In particular, the role
of industry in helping shape the direction of the program has
helped ensure continued interest on the part of industry.
TABLE E-4 Benefits Matrix for the Compact Fluorescent Lamps (CFLs) Programa
Realized Benefits/Costs
Options Benefits/Costs
Knowledge Benefits/Costs
Economic
benefits/costs
Environmental
benefits/costs
Security
benefits/costs
aUnless
otherwise noted, all dollar estimates are given in constant 1999 dollars through 2000.
savings of 15.4 billion kWh/yr would result in $5.3 billion of net dollar savings (energy cost savings less incremental first cost). Assumptions
include lamp data: (1) average wattage of incandescent lamp = 75 W, average wattage of CFL = 18 W, (2) first cost differential for fixture with integrated CFL
ballast and lamp = $12, and (3) average lifetime of ballast/lamp = 24,000/8,000 hours; Market data: residential energy market penetration = 50 percent, hotel
occupancy = 81 percent, hotel market penetration = 80 percent. The benefits are calculated using 1999 energy costs and no discounting, and EE assumes that
the DOE project accelerates the market by 7 years. EE calculates the area between the curves of two market penetration scenarios, one with and one without
the DOE project. The market penetration curves (rate and maximum penetration) for the two scenarios are identical, but displaced by 7 years. The total longrun benefits (in energy savings) do not depend on the rate of penetration.
cThe goal is to miniaturize the ballast to such an extent that it can be built into the fixture, with attendant benefits in lower lamp cost and smaller lamp size.
dA focus of DOE efforts has been to stimulate manufacturers to develop more compact, lower cost CFLs by extending existing lamp technology. In this case,
DOE is fostering private sector R&D by guaranteeing a minimum level of purchases, primarily from the public sector (schools, public housing, etc.).
eIncandescent lamps are a very inefficient way to generate light; only 3 to 5 percent of the electric energy they consume is converted into light. Fluorescent
lamps, on the other hand, are four to five times more efficient than incandescent lamps.
fAvoided emissions total: carbon, 3 million tons/yr; SO , 0.05 million tons/yr; and NO , 0.03 million tons/yr.
x
x
gAs concerns grow about the adequacy of electricity generating capacity to meet future electricity demand, R&D focusing on the sources of electricity
demand has received additional attention.
bEnergy
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3William Coad, McClure Engineering Associates and ASHRAE, personal communication, January 2001; Richard Pearson, Pearson Consulting
Engineers, personal communication, January 2001; Lawrence Spielvogel,
Lawrence G. Spielvogel Inc., personal communication, January 2001.
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Options Benefits/Costs
Knowledge Benefits/Costs
Economic
benefits/costs
Energy Plusc
Home Energy Saver (Web version) and
RESFEN-3
Ability to model complex building
interactions, material properties, and
performance of energy-using equipment
Environmental
benefits/costs
Security
benefits/costs
aUnless
otherwise noted, all dollar estimates are given in constant 1999 dollars through 2000.
of constant 1999 dollar total. A complete time series budget is not available.
cDOE-2 combined with BLAST plus enhancements.
dEstimate of constant 1999 dollar total. A complete time series budget is not available.
eEE estimated that approximately $90 billion cumulative net energy bill savings will result from the use of DOE-2 through 2005. To estimate these savings,
EE (1) assumed 25 percent penetration of new buildings design, (2) assumed that 1999 survey respondents represent only 20 percent of actual square footage
designed using DOE-2, (3) used sq. ft. energy savings of 25.5 percent and average energy use of new buildings of 225,000 Btu/ft2 (this is originating source
data, not end-use energy consumption), (4) used EIA and F.W. Dodge data to estimate new and existing building floor space, (5) assumed that buildings
savings would continue for 25 years, and (6) assumed that DOE-2 results in twice the savings as the next-best alternative. Thus, the benefit estimate appears
to be extremely high for a computer program that acts primarily as a facilitator. While it is clear that software programs and information technology can play
an important role in building design, it is very difficult to precisely estimate how much energy can be saved by DOE-2 or any other analytical tool. At best,
DOE-2 allows predictions of how much energy might be saved over a period if certain building components are assembled in specified sets and only under
certain specific assumptions, as no actual data on energy savings are available. Nevertheless, DOE-2 did demonstrate that software tools can facilitate energy
efficiency improvements, and it helped redefine the mode of thinking in the energy efficiency industry. The benefits are thus probably substantial and greatly
exceed the R&D costs.
fThese can be adjusted to reflect increases in energy prices, changes in building product prices, labor costs, etc.
gProvides the opportunity to change building designs in light of changes in the relative cost of electricity and natural gas.
hEE estimated avoided emissions of 225 million tons of carbon, 1.8 million tons of nitrogen oxides, and 2.8 million tons of sulfur dioxide, as well as
additional avoided emissions of suspended particulates. However, these benefit estimates are subject to the same reservations discussed in footnote e.
iAbility to assist other countries in improving building practices and reducing global environmental impacts.
jEE claimed that, in the short run, peak-load electricity consumption was reduced, often more than average consumption, and the probability of outages was
also reduced. However, these benefit estimates are subject to the same reservations discussed in footnote e. Moreover, the propensity for DOE-2 modeling to
overestimate energy savings may have resulted in a sense of false security.
kFor example, partial thermal storage.
bEstimate
other decision makers to evaluate the performance of complex systems by simulation. The technological improvement
of a component or subsystem may offer the potential for
energy savings and improved environments. However, how
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if the interactions of the candidate components are not accurately simulated. A corollary to this lesson is that care is
needed to avoid double- or triple-counting the potential for
energy savings of the components identified within a system
in addition to the energy savings likely to be realized by the
composite use of all of the components as a whole system.
A second lesson to be learned from this case study is that
simulation models (i.e., software tools or instruments, such
as DOE-2) are critically important enablers of decisions to
improve energy economics, environmental quality, and security. However, as good as the tool or instrument may be, if
the user misapplies it (e.g., provides incorrect assumptions
or input data), incredible results can occur. It is therefore
imperative that predicted results from whole-system simulations be carefully calibrated using data from actual systems,
and that those who are responsible for the consequences of
these simulations understand the limitations of the predicted
results.
A third, and maybe the most important, lesson to be
learned from this case study is that enabling tools such as
DOE-2 do not themselves save energy. Rather, they provide
methods by which energy-saving alternatives can be evaluated. Thus, the benefit/cost justification for support of these
programs should not be based on how much energy can be
saved through their use. In fact, if that is the measure of
success of the program, the effectiveness of the simulation
models could be biased. Because DOE-2 has been used to
estimate the energy savings of various technologies in the
EE program, another method for measuring their benefits
and costs should be identified.
ELECTRONIC BALLASTS
Program Description and History
Fluorescent lights, the dominant lighting type in commercial buildings, require ballasts, which help start the flow of
current through the lamp and then control it. The ballast provides the high voltage needed to start the lamps and subsequently limits the current to a safe value for operation of the
lamp. Traditionally, magnetic ballasts, constructed from passive components such as inductors, transformers, and capacitors, have been used to operate fluorescent lamps at the same
frequency as the power line. They are inexpensive and longlasting devices that have been used for as long as fluorescent
lighting has been used.
Operating fluorescent lights at higher frequencies has
long been recognized as a way of increasing their energy
efficiency. When DOE began its program on lighting research and development in 1977, it was, in part, attempting
to exploit this potential. Electronic ballasts are designed to
operate fluorescent lamps at frequencies a thousand times
higher than the power line frequency used in traditional magnetic ballasts; such operation can increase the efficiency of
converting electric energy into light by 10 percent. By using
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Current $
1999 $
1977
1978
1979
1980
1981
1982
1983
Total
345
560
727
457
389
411
274
3163
802
1215
1457
833
652
649
400
6009
SOURCE: Office of Energy Efficiency. 2000f. Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency
and Fossil Energy: Electronic Ballast for Fluorescent Lamps Program. December 12.
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TABLE E-7 Benefits Matrix for the Fluorescent Lamp Electronic Ballast Programa
Realized Benefits/Costs
Options Benefits/Costs
Knowledge Benefits/Costs
Economic
benefits/costs
Environmental
benefits/costs
Security
benefits/costs
aUnless
otherwise noted, all dollar estimates are given in constant 1999 dollars through 2000.
data are not available. However, EE notes that The successful deployment of the technology in the marketplace required substantial outlays
by ballast manufacturers.
cEE estimates that reduced net energy bills from sales of electronic ballasts through 2005 will result in savings of $21.9 billion, $13 billion of which is due
to a 5-year acceleration of market adoption. This assumes that 20 W is saved by replacing a magnetic ballast with an electronic ballast that has an annual 3200
hr of ballast operation in a lifetime of 45,000 hr.
dEE estimates that the ballast efficiency standard adopted on September 19, 2000, will save approximately 2 quads of energy by 2030, resulting in savings
to U.S. industry with a net present value of about $2 billion. However, since the ballasts are required by DOE minimum energy efficiency standards, all of the
benefits cannot be attributed to R&D.
eEspecially when used with design software, these save energy by increasing opportunities for day lighting and task-specific lighting, and they also could
increase occupant satisfaction with the indoor environment.
fAssuming a 5-year acceleration of market penetration and the 1999 marginal fuel mix for electricity, EE estimates that the ballasts have avoided 44.7
million tons of carbon, 410,000 tons of NOx, and 720,000 tons of SO2.
gBased on the efficiency standard, EE estimates that for 2005 to 2030, the ballasts will avoid 15 million tons of carbon and reduce NO emissions by 50,000
x
tons.
hDuring periods of peak demand (around 4:00 p.m.), electronic ballasts reduce energy demand directly and also indirectly, by reducing cooling loads which
are highest on peak.
bCost-sharing
Why Stirling?
Internally, several factors supported the choice of the freepiston Stirling engine as a leading candidate technology to
achieve a gas heat pump:
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cogeneration, and remote power were best suited to the characteristics of Stirling engines.
A government role seemed appropriate, given the high
level of technical challenge and the relative immaturity of
the technology.
There was substantial commitment from a variety of
partners in the DOE development projects: private industry,
GRI, gas utilities, and NASA. There also were a number of
independent efforts under way on Stirling engine technology (e.g., DOE-OTT, Army) that validated the general view
that the technology was generally attractive.
The free-piston type of Stirling engine appeared to have
the greatest potential for achieving low cost required in the
residential and small commercial marketplace, DOEs primary focus.
The Stirling engine is theoretically capable of achieving
the maximum efficiency limit for Carnot-cycle heat engines.
In this sense, the Stirling engine is fundamentally superior to
most other heat engines, such as the internal-combustion
engine or the gas turbine. But as a practical matter, the
Stirling engine, like all other heat engines, falls far short of
its maximum theoretical potential.
Stirling engine hardware designs are of two types: the
kinematic type and the free-piston type. In rough analogy,
the kinematic type is similar to a conventional automotive
engine in which the internal power-producing components
(pistons) are mechanically linked together and coupled to
the power-absorbing device (e.g., a generator or automotive
drive systems). In the free-piston type, as its name implies,
the power-producing components operate in unconstrained,
oscillatory harmonic motion. The power-absorbing device is
not coupled mechanically to the power-producing components but is driven through some type of hermetic coupling
(e.g., magnetic).
There are inherent advantages and disadvantages associated with both kinematic and free-piston Stirling engines.
The putative advantages of the free-piston type include the
following:
Nominal $
Deflation Factor
Total 1999 $
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
Total
800
1100
2488
2509
845
109
814
534
1073
1221
1169
1432
1434
1404
1200
1100
0
0
17,332
0.430
0.461
0.499
0.549
0.596
0.633
0.658
0.683
0.704
0.720
0.742
0.767
0.796
0.827
0.857
0.878
0.899
0.918
1860
2386
4986
4570
1418
172
1237
782
1524
1696
1575
1867
1802
1698
1400
1253
0
0
30,226
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cepts, one of which was eventually tested by an HVAC (heating, ventilation, and air-conditioning) manufacturer.
This concept met the thermal performance goals of the
project, demonstrating that such systems could attain the projected efficiency levels and save significant energy. However, the final conclusion by all parties was that (1) the freepiston Stirling engine was less attractive than other
technologies in the near- and midterm and (2) the long-term
prospects for free-piston Stirling engines were somewhat
attractive, but major development investments would be required to reach cost goals.
This conclusion allowed both government and private research managers to redirect scarce research funds to more
attractive technologies. Among the technical and cost problems were materials for the refractive heater head and the
extremely high tolerances needed for successful gas bearings.
At the end of the program, a prospectus was prepared to
solicit interest from venture capitalists. No interest was
shown. It is notable that work on free-piston Stirling applications for electric power production and combined heat and
power applications continues, with some DOE support.7,8
Also, the knowledge gained about magnetic coupling across
hermetic seals is currently being applied to an artificial heart
pump by Foster Miller. Foster Miller bought part of MTI,
the free-piston Stirling heat pump contractor. In addition,
Sunpower proposed a duplex system where a free-piston
engine drives a free-piston heat pump.
Some variations on these themes are still being pursued
by Sunpower. There is still interest in the Stirling-enginedriven, Rankine-cycle heat pump. Stirling-driven generators
and compressors have a variety of niche applications. Combined heat and power (CHP) for residential applications of
Stirling-engine-driven generators will probably be commercialized in Europe.
There is no doubt that the DOE and GRI investments in
Stirling-driven heat pumps advanced the technology. It is
much further along today then when the program was terminated in 1993. The project did not merit commercialization.
Benefits and Costs
The realized benefits to the consuming public were zero,
and the deflated cumulative costs were $30 million spent by
the government and another $14 million spent by the industrial partners. Thus, the total realized economic benefit of
the R&D was zero, with only costs of $44 million resulting
7This combined heat and power (CHP) unit for the home is to be powered by a gas-fired piston Stirling engine supplied by Stirling Technology
Company of the United States (OECD/IEA, 2000).
8Free-piston Stirling engine application to a direct solar thermal electric
generator was developed at Sandia National Laboratory. This application
has the Stirling engine at the focal point of a parabolic reflector. The system
has been completely automated to start and stop automatically. It will be
tested at a remote Native American site.
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TABLE E-9 Benefits Matrix for the Stirling Engine Heat Pump Programa
Realized Benefits/Costs
Options Benefits/Costs
Knowledge Benefits/Costs
Economic
benefits/costs
Environmental
benefits/costs
None
Minimali
Some applications of FPS engine
technologyj
Security
benefits/costs
None
Minimal
Minimal
aUnless
otherwise noted, all dollar estimates are given in constant 1999 dollars through 2000.
is the total of industry cost-sharing contributions for 1984 to 1992, the only years for which the data are available. Thus, the total industry cost share
for the total program is probably higher.
cNatural gas heat pumps can save 40 percent of the energy used by todays best gas and oil heating systems and can reduce summer electric peak loads by
providing an alternative energy source for air conditioning. However, other gas heat pump approaches investigated in the DOE program have better potential.
dStirling-driven generators and compressors have a variety of niche applications, and CHP for residential applications of Stirling-engine-driven generators
will probably be commercialized in Europe.
eNatural gas heat pumps can save 40 percent of the energy used by todays best gas and oil heating systems and can reduce summer electric peak loads by
providing an alternative energy source for air conditioning.
fThere is no doubt that the DOE and GRI investments in Stirling-driven heat pumps advanced the technology, and it is much farther along today than when
the program was terminated in 1993.
gThis concept met the thermal performance goals of the project, demonstrating that such systems could attain the projected efficiency levels and save
significant energy.
hFor example, the knowledge gained during the program about magnetic coupling across hermetic seals is currently being applied to an artificial heart pump
by Foster Miller.
iGas heat pumps can reduce energy and electricity use during peak summer cooling periods and have the potential for reducing heat island effects and
nonattainment incidents.
jBasic FPS engine technology could facilitate the development of solar thermal power generation systems and remote power systems using agricultural
waste fuels in developing countries.
bThis
9IAQ
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ASHRAE Standard 136-1993, Method of Determining Air Change Rates in Detached Dwellings.
ASHRAE Standard 119-1988 (reaffirmed as 1191993), Air Leakage Performance for Detached Single-Family Residential Buildings.
ASHRAE Standard 129-1997, Measuring Air Change
Effectiveness.
ASHRAE Standard 62-1999, Ventilation for Acceptable Indoor Air Quality.
ASHRAE Standard 62.2P (in progress), Ventilation
and Acceptable Indoor Air Quality in Low-Rise Residential
Buildings.
Although the development of new technologies was not
the primary focus of the IAQI&V Program,11 EE claims that
the program was influential in improving four IAQI&V-related technologies from 1985 to 1999:
1. A device that is capable of pressurizing or depressurizing a building to identify and locate the source of air leaks
(a blower door) was introduced into the United States by a
Swedish researcher. EE reported that the device was improved through the IAQI&V program and mathematical
models were derived for interpreting the results (Sherman,
1995a).
2. Together with DOEs Office of Science, research determined that the dominant source of indoor radon was the
pressure-driven entry of soil gas rather than the constituents
of building material. DOE claims that these results led to the
development of effective and energy-efficient mitigation
methods (Fisk et al., 1995).
3. DOE research on radon transmission in buildings led
to a parallel study on moisture migration and transmission in
buildings. Moisture in building materials has been historically associated with mold impaction and a reduction of thermal resistance of the materials. As reported by EE, this research assisted in the development of mathematical models
that were incorporated into the computer program MOIST,
developed by the National Institute of Standards and Technology (NIST) for estimating moisture transmission through
building envelopes (Burch and Chi, 1997).
4. DOE research has demonstrated the importance of
measuring building ventilation and concentrations of indoor
air pollutants. As reported by EE, this research helped stimulate the development and refinement of a broad range of instruments and sensors used for building control systems (e.g.,
low-cost carbon dioxide sensors and pressure-sensitive sensors) and for diagnostic purposes (e.g., instruments to measure pollutants in investigations of IAQ problems) (Seppanen
11EE reported that the primary research focus of the IAQI&V Program
has been the development of knowledge and the application of this knowledge to other R&D areas, such as methods of incorporating energy-efficient
technologies into building systems without compromising the health of occupants.
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14The
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TABLE E-10 Benefits Matrix for the Indoor Air Quality Programa
Realized Benefits/Costs
Options Benefits/Costs
Knowledge Benefits/Costs
Economic
benefits/costs
Environmental
benefits/costs
Security
benefits/costs
Minimal
aUnless
otherwise noted, all dollar estimates are given in constant 1999 dollars through 2000.
large fraction of spending by others on IAQ research is by the NIH, with considerable emphasis on asthma, allergies, and pesticide exposures and very
little emphasis on building science. The second-largest spending is by the EPA, with a greater focus on education programs than on research. Some of the
objectives of the IAQI&V program have also been supported at the national laboratories with funding from other public and private sector sources (e.g., utility
companies, corporations, states, and local communities), but the amount of this funding was not reported to the committee. The IAQ research at LBNL after
1994 was aggregated with other activities into a larger program area, Design Tools and Strategies, and is no longer featured as a distinct budget line item.
DOE did not provide an estimate to the committee of private sector investment in IAQI&V and energy efficiency research during the period 1978 to 1999, but
it contends that, owing to the relatively low financial returns from conducting ventilation and other IAQ research, the private sector has invested little in this
area.
cDOE research, through development of a series of mathematical models for interpreting the data derived from the use of the blower door, enhanced the
blower door testing industry. The blower door has been extensively used to field-verify air leakage reductions from weatherization techniques and to improve
the effectiveness and cost-effectiveness of weatherization strategies.
dASHRAE Standard 119-1988 sets maximum leakage levels based on energy considerations, and it may result in substantial energy cost savings.
eDOE research determined that the dominant source of indoor radon was pressure-driven entry of soil gas, laying the foundation for effective energy
efficient mitigation methods. Without DOEs research, it is possible that the previous misperception would have persisted for several years, possibly with
higher rates of exposure and higher energy usage.
fConsistent with sufficient ventilation rates for human health and performance.
gIf ASHRAE 119 is adopted, the energy use associated with ventilation in homes could be reduced substantially.
hThese savings can be estimated based on the electricity savings and the GPRA NO and SO coefficients.
x
2
bA
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glazing but prevented transmission of much of the ultraviolet and infrared radiation (i.e., heat), thus reducing solar heat
gain into the room during summer and reducing heat loss
from the room in the winter.
While industry was developing the spectrally selective
coatings, DOE supported simulation efforts (i.e., WINDOW
4.1) (Arasteh et al., 1994) and field tests at LBNLs field test
facility to demonstrate that the cooling load reductions were
measurable and real. During the 1990s, DOE also supported
rating and labeling efforts so that the performance of spectrally selective glazings could be accurately conveyed to
consumers and design professionals. As part of these efforts,
LBNL was instrumental in developing a solar heat gain coefficient (SHGC) parameter for windows and other fenestration products (ASHRAE, 1997a), and for supporting the development of SHGC ratings and labeling through the
National Fenestration Rating Council. In 1997, DOE expanded its promotion of spectrally selective glazings by
funding the Efficient Windows Collaborative; promoting
these glazings in the Sunbelt is one priority of the collaborative (Geller and Thorne, 1999).
Funding and Participation
According to information provided to the committee by
EE, DOE invested about $2 million in the development of
low-e windows between the years 1976 and 1983. Unfortunately, annual funding of low-e research is not available in
the references available (OEE, 2000h). The committee has
therefore estimated that $2 million in expenditures between
1976 and 1983 translates into about $4 million in constant
1999 dollars. Because LBNL continued to be involved in the
research in the 1980s and 1990s, and in the promotion of the
low-e technology, this estimate is likely to be low. EE provided no information on industry cost share.
Results
A range of spectrally selective glazings is now commercially available for residential and nonresidential buildings
(e.g., schools, offices, and hospitals), and methods for calculating heat losses and heat gains for these glazings are readily
available (ASHRAE, 1997a). References cited by EE (DRC,
1996 and DRC, 1998) estimate that low-e penetration of the
residential market was 31 percent in 1991 and 33 to 35 percent from 1995 to 1997. The result was that commercial
products began to appear in the market in 1983 and by the
year 2000 had captured 40 percent of the residential window
market (Ducker, 2000) and perhaps 15 percent of the commercial building market (Geller and McGaraghan, 1998). No
comparable studies were provided for low-e penetration in
the nonresidential market.
Standardized methods for rating low-e glazing and window assemblies with low-e glass are now available in the
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TABLE E-11 Benefits Matrix for the Low-emission (Low-e) Windows Programa
Realized Benefits/Costs
Options Benefits/Costs
Knowledge Benefits/Costs
Economic
benefits/costs
Environmental
benefits/costs
Security
benefits/costs
aUnless
otherwise noted, all dollar estimates are given in constant 1999 dollars through 2000.
bThe EE submission states: DOE invested about $2 million in the development of low-e windows between the years 1976 and 1983. Unfortunately, annual
funding of low-E research is not available in the references available. The committee thus estimated that $2 million in expenditures between 1976 and 1983
translates into about $4 million in constant 1999 dollars. However, because of the continued research involvement of LBNL in the 1980s and 1990s and DOEs
involvement in the promotion of this technology, this estimate is likely to be low. EE provided no information on industry cost share.
cEE estimates that, of a total of $35.5 billion in life-cycle cost savings, $23.5 billion reflects a 5-year acceleration of market introduction and a doubling of
market penetration. EEs estimates are based on an assumed constant 35 percent (35.2 kBtu/ft2 per year) reduction in conduction heat loss through the coated
glazing compared to a pre-1987 untreated double-glazed residential window (with no differences in heat losses in the framing or infiltration), in heatingdominated climates, for all years from 1983 to 2005. This basic assumption was apparently based on one referenced study in 1987 and does not consider the
development of next-best technologies since that time. Moreover, this assumption does not consider potential energy savings from reduced cooling loads in
residential nor any potential energy savings from reduced heating losses or cooling loads in nonresidential buildings. Finally, this assumption does not consider
the added flexibility that the availability of low-e glazing provides to building designers. For example, the availability of low-e glazing allows the percent of
glazed area to be increased without incurring additional heat losses or cooling loads. Thus, the availability of low-e glazing does not assure that energy savings,
and corresponding net life-cycle cost savings, will be realized if other functional requirements such as view, comfort, or occupant performance dominate
design requirements.
dEE estimates that full adoption of LEWs in all new residential and commercial construction by 2010 could save $2.5 billion annually in heating and cooling
costs. Payback is 4 to 10 years in retrofit applications and shorter in new construction.
eEE estimates these benefits as avoided life-cycle emissions of 68 million tons of carbon, 540,000 tons of NO , and 770,000 tons of SO .
x
2
fEE estimates that full adoption of LEWs in all new residential construction by 2010 could save 0.45 Q annually and significantly reduce environmental
impacts.
gThis assumes that spectrally selective glazing is used to reduce summer peak demand. EE also contends that low-e will reduce indoor stress on human
health but does not quantify these benefits.
hEE estimates cumulative life-cycle savings of 0.41 Q of fuel and LPG for heating and a total of 0.65 Q of fuel and liquified petroleum gas saved.
iEE contends that this will also reduce the regional strain on infrastructure for natural gas, heating oil, and electricity delivery; also, Because winter supply
infrastructure for oil, natural gas, and electricity can be further constrained by adverse weather impacts (e.g., ice storms, frozen ports), the ability to reduce peak
demand is especially important to avoid disruption during these periods (OEE, 2000h).
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18The committee assumed that the penetration fraction of low-e glass for
each year was just shifted by 5 years. Perhaps more realistic would have
been to assume that the sale of the same number of square feet of low-e
glass was displaced by 5 years rather than the penetration fraction. This
assumption would yield a net life-cycle cumulative energy savings substantially higher than for the penetration fraction method and a correspondingly
higher estimate of primary energy saving.
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The DOE both sponsored research and encouraged industry to work collaboratively to address the technical challenges that were preventing the lost foam process from being
widely adopted. Without DOE as a catalyst and as a funder,
the lost foam technology would have languished. Industry
experts said that DOE was absolutely critical in getting the
research conducted and assembling the consortium to address the multiple challenges. They also gave DOE very high
marks for the manner in which the consortium was run.
Federal funding was matched 1:1 on a cost-share basis by
the metal casting industry. Much of the research was performed at university research centers.
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Production efficiency,
Recycling,
Pollution prevention,
Application development,
Process control, and
New technology development.
tern cavity. These were overcome through both process improvements and new technologies.
Some specific technology and processes/improvements
developed as a result of this research to date include the following:
A single-stage air gauging system was developed, followed by a 30-channel commercial air gauge for rapid determination of pattern dimensions.
Instruments and transducers were developed for measuring vibrational frequencies and amplitudes on compactor
tables, on flasks, and in sand. Sand vibrational amplitude
and direction are important in achieving efficient compaction.
A distortion gauge was developed to determine when
and under what conditions pattern distortion occurs during
compaction.
A fill gauge was developed that can be put in a pattern
cavity to determine the conditions that cause sand to flow
and fill.
Two types of compaction gauge were developed to
measure sand density in cavities during pattern compaction.
A procedure was developed to measure the liquid absorption characteristics of liquid pattern pyrolysis into castings.
Research to advance lost foam technology continues in
the IOF program. To date, the lost foam program has concentrated on the iron and aluminum industries. Another important focus now is to move the lost foam process into steel
castings. This requires a better understanding of the role of
coatings and the ability of a vacuum to reduce carbon-related defects. The process also needs a better understanding
and methodology to eliminate casting quality problems related to porosity, folds, polystyrene bead formulations, coating, and quality control. An accurate, quick, user-friendly
process simulation modeling capability will reduce lead time
and quality problems encountered in the start-up of the lost
foam process.
The transfer of a technology from one IOF industry to
another is valuable. The technology is cross-cutting and relates to modeling, sensors, and control technology. The energy and productivity improvements this technology produces will encourage many other applications in industries
such as motors and tools and automotive. Care must be exercised to ensure that internal budget battles about which IOF
industry within DOE is funding the next round of solicitations do not hamper DOEs ability to do valuable cross-cutting work.
1989 1990 1991 1992 1993 1995 1997 1999 2000 2001
277
366
311
302
304
507
228
611
325
340
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nology has dramatic energy, productivity, and environmental benefits. It also is enabling the production of parts that
cannot be produced using the traditional casting methods.
These benefits account for its rapid expansion in the marketplace (Birkel and Hunter, 1998). See Table E-13 for a presentation of the benefits.
Industry experts consulted estimated an average of 25 to
30 percent energy savings relative to traditional casting
methods, although there is no such thing as a typical applica-
tion. They also emphasized the other benefits of the technology: a simpler process with less machinery, less waste and
pollution, and increased output.
Estimates of these other benefits are a 46 percent improvement in labor productivity and the use of about 7 percent by weight fewer materials in lost foam casting compared with green-sand or resin-bonded-sand molding.
Production cost reductions of 20 to 25 percent are possible
TABLE E-13 Benefits Matrix for the Advanced Lost Foam Technologies Programa
Realized Benefits/Costs
Options Benefits/Costs
Knowledge Benefits/Costs
Economic
benefitsb/costs
Environmental
benefits/costs
Security
benefits/costs
Minimal
aUnless
otherwise noted, all dollar estimates are given in constant 1999 dollars through 2000.
next-best alternative to lost foam casting is assumed to be sand casting, and all benefits calculations were made relative to conventional sand casting
technology, which has been the dominant technology used by industry.
cEE estimates energy cost savings will be $24.5 million per year in 2010.
dEE projects that energy cost savings will total $12.8 million annually by 2005. All avoided energy consumption, energy cost savings, and environmental
benefits were estimated using the DOE/OIT Impact Projections Model, Advanced Lost Foam Casting. Environmental benefits were based on emission
reductions resulting from energy savings, and emission rates, emission savings, and electricity generation capacity type are based on the DOE/OIT Impact
Projections Model. EE assumed that the total annual energy consumption of iron, steel, and aluminum sand castings (adjusted for scrap and yield) is 24 trillion
Btu, that the lost foam process would save 27 percent of the energy requirements, and that under lost foam, energy consumption would be 17 trillion Btu. It was
assumed that the ultimate accessible market is 70 percent, and that the likely market share is 40 percent over a 30-year time frame. The estimated likely market
share is 11 percent by 2005 and 19 percent by 2010. The energy forecasts used by the Impact Projections Model are based on EIA data and forecasts, and the
fuel type is electricity.
eExamples of some of the barriers to lost foam are a lack of control over pattern dimensions, pattern distortion, lack of control in achieving appropriate
vibration amplitude and direction of sand, and a lack of understanding of the conditions surrounding sand flow and fill in the pattern cavity. These were
overcome through both process improvements and new technologies.
fIn addition to improving productivity, this improves the competitiveness of metal casting vis--vis other forming techniques by increasing the range of parts
that can be formed using metal casting.
gEE estimates that materials requirements are reduced by 7 percent and that productivity is increased by 46 percent.
hThis is one of the more labor- and energy-intensive stages in casting.
iCurrent research concentrates on understanding and methodology to eliminate casting quality issues related to porosity, folds, polystyrene bead formulations, coating, and quality control.
jEE estimates that energy savings will total 3.23 trillion Btu (0.315 billion kWh) in 2005 and 5.13 trillion Btu (0.615 billion kWh) in 2010, and that carbon
dioxide emission reductions will total 0.063 millions tons of coal equivalent (MMTCE) in 2005 and 0.12 MMTCE in 2010. Emissions of carbon, SO2, NOx,
volatile organic compounds (VOCs), and other pollutants are also reduced.
kReduces solid waste (foundry sand) by 700,000 tons per year.
lEE estimates that electricity requirements will be reduced by 0.0692 billion kWh in 2005, thus reducing consumption of coal, natural gas, and oil.
bThe
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Source
Cellular communications
Telephone ticket sales
Airline reservations
Credit card operations
Brokerage operations
41,000
72,000
90,000
2,580,000
6,480,000
Teleconnect Magazine
Contingency Planning Research1996
Contingency Planning Research1996
Contingency Planning Operations1996
Contingency Planning Operations1996
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APPENDIX E
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TABLE E-15 Funding for the Advanced Turbine Systems Program (Energy Efficiency Component)
Fiscal Year
Federal Funding
(millions of constant 1999 $)
1992
1993
1994
1995
1996
1997
1998
1999
2000
Total
2.2
3.0
7.3
18.50
21.60
24.65
34.65
50.10
18.30
180.30
2.5
3.30
7.90
19.70
22.58
25.31
35.16
50.10
18.15
184.70
0.60
0.80
2.00
13.70
15.58
23.78
33.03
47.07
35.24
171.80
R&D Stage
Early phases of applied research
Applied research
SOURCE: OEE. 2000j. Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency and Fossil Energy: Advanced
Turbine Systems Program. December 12.
Direct Results
Solar Turbines initiated six field demonstrations of the
Mercury 50 in 2000. These demonstrations are expected to
show the long-term durability of the product (24,000 hours
approximately 3 years of continuous operation). Full-scale
commercialization of the Mercury 50 is scheduled to begin
in 2003, with approximately 25 units being installed in the
United States in the first year and approximately 50 units per
year by 2005. Final commercialization plans depend on the
final results of the field tests currently under way.
Howmet and PCC are currently utilizing the melt desulfurization technology in their processing lines. They had
produced more than 155,000 lb of this material as of September 2000, which is being used for both land-based and
aircraft castings. Advanced thermal barrier coatings are currently under long-term testing, and final commercialization
of these coatings will depend on the results of these field
tests.
This DOE program has contributed to the development of
technical capabilities and expertise in several areas. It has
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APPENDIX E
tial users of these systems, equipment suppliers, project developers, and federal and state regulators and energy and
environmental policy officialsfor example, officials from
the EPA and the Treasury Department, state environmental
siting and permitting officials, and state public utility regulators.
coming even more competitive as a result of utility restructuring initiatives in the United States and around the world,
DOEs participation has helped U.S. gas turbine manufacturers to position themselves and their products for success
in the battle to produce efficient, clean, and cost-effective
power generation systems.
Products produced by the EERE portion of the ATS program have already contributed to the development and deployment of distributed energy systems and will continue to
do so. Distributed energy systems are becoming an increasingly valuable energy solution in restructured markets, where
customers need power quality and reliability beyond what
the utility grid was designed to provide.
EEREs portion of the ATS program was at the forefront
of activities aimed at eliminating the barriers to deployment
of distributed energy systems. ATS program participants
were actively involved in numerous conferences, workshops,
and seminars convened to discuss the regulatory and institutional barriers to such deployment. At those forums, the
manufacturers, universities, national laboratories, and state
agencies were able to share lessons learned about the use of
turbine power systems in distributed energy applications,
including the successes and failures in overcoming the regulatory and institutional barriers. The barriers include grid interconnection difficulties; environmental siting and permitting issues; and poor awareness and understanding of the
energy, economic, and environmental benefits of advanced
industrial turbines and other distributed energy systems.
As a result of these outreach activities, several key industrial participants in the ATS program had the opportunity to
learn about and participate in the formation of organizations
such as the California Alliance for Distributed Energy Resources (CADER), one of the power industrys most influential organizations devoted to distributed energy systems,
and the Distributed Power Coalition of America (DPCA), a
trade group dedicated to improving education and awareness
of distributed energy technologies and their potential benefits to our nation.
EERE and FE established a cooperative program to facilitate the management of the ATS program, and joint annual meetings have been held. As part of the ATS programs
effort in distributed energy resources, a joint working group
was established in EERE and EPA. This working group,
along with several industry participants, trade associations,
and nongovernmental organizations, conceived and launched
the Combined Heat and Power (CHP) Challenge Program,
which subsequently led to the joint DOE-EPA Energy Star
Award program for CHP systems.
In short, the nationwide effort by state policy makers,
equipment manufacturers, and others to address the regulatory and institutional barriers to the development and deployment of distributed energy systems has been aided
greatly by the ATS program. This effort has been made more
effective by the lessons learned in the ATS program.
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TABLE E-16 Benefits Matrix for the Advanced Turbine Systems Program (Energy Efficiency Component)a
Realized Benefits/Costs
Options Benefits/Costs
Knowledge Benefits/Costs
Economic
benefitsb/costs
Environmental
benefits/costs
Security
benefits/costs
Minimal
aUnless
otherwise noted, all dollar estimates are given in constant 1999 dollars.
bThe next-best alternative EE uses for comparison is the existing Centaur 50S Gen Set at ISO conditions, using natural gas. The Centaur 50S has an ISO heat
rate of 11,628 Btu/kWeh (29.35 percent efficiency). For emissions savings, the Centaur 50S baseline is 25 ppmv NOx at 15 percent O2, or 18 tons/year.
cEE estimates that $390 million in energy savings will accrue between 2000 and 2005 resulting from Mercury 50 and ceramic liners. EE estimates another
$9.6 billion in energy savings from 2006 to 2010. However, it should be noted that EE is claiming credit for all of the economic benefits resulting from this
program, even though nearly half of the total funding for development of advanced turbine technologies was provided by private industry. EEs justification
for this is that If DOE did not provide half of the funding, then there would have been no funding, and, consequently, no program. Thus, it is fair for DOE to
take credit for all economic benefits. Based on its analysis, the committee believes DOE had a substantial role in developing more efficient gas turbines for
industrial applications.
dHowever, the next-best alternatives that need to be considered here include the various uninterruptible power supply options, such as batteries and
supraconducting magnetic energy storage.
eExamples of products that may benefit from the ATS program include industrial furnaces, boilers, and combustors, and other applications may include
cooling flows, blades, fuel injector tips, nozzles, shrouds, and combustor liners. In addition, the advanced design turbine components, systems, and subsystems
can be used in the design of equipment such as compressors.
fThis represents EEs estimate of the cumulative NO reductions between 2000 and 2005 resulting from Mercury 50 and ceramic liners. In addition, because
x
of the higher efficiency and lower fuel use of the Mercury 50 and the ceramic liners, the emission of other pollutants, including CO2, will be reduced as well.
Where the Mercury 50 or the ceramic liners replace coal or diesel units, the emissions reductions will be even greater. However, only NOx emissions were
considered in this analysis, since the ATS program plan stated that the focus would be on one emissions reduction metric, namely NOx. In addition, EE
estimates another 211,000 tons of cumulative NOx reductions, from 2006 to 2010.
gIn addition to reduced emissions from greater efficiency and lower fuel consumption, thermal barrier coatings also lower CO and unburned hydrocarbon
emissions.
hThere is expected to be little impact on oil imports, because oil is a small part of the nations power mix and the analysis uses natural gas-fired units as the
baseline.
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APPENDIX E
designing and building actual equipment with a parallel supporting technology and with well-defined measurable performance goals and intermediate milestones led to this success. The program has also shown that collaborative
programs between EE and FE are possible.
Lessons Learned
The committee considers the ATS program to be a good
example of a successful industry-government RD&D partnership. Some lessons learned include the following:
The importance of focusing federal RD&D resources
on a program that emphasizes designing and building actual
equipment, and the value of enlisting teams made up of representatives from industry, universities, and the national
laboratories to collaborate in this, as well as the importance
of a parallel supporting technology program devoted to material development and processing, test procedures, modeling, etc. The partnership with FE allowed for greater leveraging of funds in the crosscutting areas of materials,
combustion, and university research.
The need for continual assessment of changing market
conditions and requirements and flexibility in adjusting technical directions and priorities.
The need to develop a commercialization plan and commitment from the industrial participants at the earliest possible stages of the program to ensure that technical performance, cost sharing, siting, permitting, and high-volume
manufacturing are well understood and accepted. It would
be valuable for DOE to continuously review this commercialization plan to ensure that it can be adjusted as market
forces change.
The need to coordinate with other federal and state
agencies that could share in the costs and benefits of the
program and to communicate findings with them.
The need to understand fully the cost targets and their
trade-off implications for the design of advanced technologies.
The need to clearly define the performance goals and
quantify them to the maximum possible extent, establishing
a schedule for contract milestones that is consistent with the
achievement of the goals.
The need to take business ownership decisions into account and understand the possible implications for the industrial participants.21
The need to encourage coordination among the various
agencies of the federal government to ensure that all are well
informed and able to take advantage of potential synergies.
Because of the decision not to proceed with the 701 design, the RD&D contract with Rolls-Royce did not succeed
in developing a commercial advanced turbine system. The
decision not to proceed was a result of several factors. One
was the change in management. The initial RD&D contract
was with Allison Engine Co. When Allison was purchased
by Rolls-Royce, management infused new corporate strategies for integrating the turbine product lines of the two companies. In fact, Rolls-Royce has had several changes in management since its purchase of Allison, with the net result
being greater emphasis on refinements to existing product
lines at the expense of progress on the 701 advanced turbine
design.
The 701 design has the potential to be a technical success
if further field testing of prototypes takes place. The expected
efficiency of the 701 design far exceeds the ATS target; however, the projected cost of electricity from the 701 engine
also exceeds the ATS target. Unfortunately, the projected
costs of RD&D to produce a more economical 701 design
exceeded the funding available in the ATS budget. This resulted in DOEs decision in FY 1999 to focus the RollsRoyce activity on identifying viable commercial products
from the 701 development effort and getting those technologies to the market as soon as possible rather than on working
toward the costly field testing of a design that might not ever
achieve the ATS programs cost goals. In any case, the 800hour field test identified unexpected recession of the ceramic
nozzles and led to a more aggressive environmental coatings
program.
New programs for developing the next generation of
microturbines and reciprocating engines for distributed energy generation are using the same successful approaches as
the ATS program. For example, like the ATS program, the
Advanced Microturbine Systems program began with a technical workshop in which industry practitioners evaluated the
energy, economic, and environmental performance of existing microturbine systems in order to gain agreement on the
performance improvements needed in public benefits areas
such as energy efficiency and environmental emissions.
These became the performance targets that were used in
the competitive RD&D solicitation that was issued and in
the evaluation of proposals. There is also a parallel materials, control, and sensor modeling program in support of the
actual designing and building. A similar process is being
followed for the Advanced Reciprocating Engine Systems
program, which was started in FY 2000.
21During
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Steam Reformer
Recovery Boiler
TRSa (ppmv)
NOx (ppmv)
CO (ppmv)
HCl (ppmv)
Particulates (g/ft3)
VOCs (ppmv)
1
25
25
Not detected
0.01
5
1-2
150
250
5
0.02
80
aTRS,
mills used Tomlinson boilers to recover the inorganic chemicals and burn the organic material. The recovered chemicals
are recycled in the mill and are critical to the economic production of pulp and paper. Tomlinson boilers also produce
steam, which is either used directly in the industrial process
or run through a steam turbine to produce electricity. Paper
and pulp mills are among the most energy-intensive industries in the United States, but over half of this energy, about
1.6 quads, is generated internally from biomass-derived fuels, mainly the spent black liquor.
Replacing Tomlinson boilers with gasification units is a
primary objective of the IOF-Black Liquor Gasification program, part of the Forest Products IOF. Black liquor gasification technology has very significant environmental and energy efficiency benefits. A kraft mill (the dominant type of
mill in the United States) gasifier is projected to have 10
percent higher thermal efficiency and 5 percent better chemical reduction efficiency than a current Tomlinson boiler. Predicted environmental emissions from the Manufacturing and
Technology Conversion International, Inc. (MTCI)
StoneChem steam reformer (the technology chosen for the
first DOE Black Liquor Gasification demonstration) and
from a Tomlinson recovery boiler are summarized in Table
E-17.22
The key energy benefit of black liquor gasification would
arise from the production of electricity. When used with a
combined-cycle generator, black liquor gasification combined cycle (BLGCC) is expected to produce twice as much
electricity as the current arrangement, cause the industry to
become a net producer of electricity, and generate up to 1.2
quads of electricity per year. Assuming that fossil fuels are
22By another estimate, the Big Island Demonstration is projected to reduce volatile organic compounds (VOCs) from 1646 with the current smelters at the mill to 7.5 tons per year and from 7592 to 11.7 tons per year
(Martin, 2000).
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TABLE E-18 Funding for the Black Liquor Gasification Program (constant 1999 dollars)
Year
Project Name
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
OIT Funding
(thousands of $)
40
563
1,093
1,677a
2,817a
2,398a
2,405a
1,070
797
462
0
0
0
92
203
230
250
0
0
109
393
23
137
78
507
108
821
92
300
455
372
0
61
62
0
50
0
0
0
396
189
149
233
0
41
120
13,616
178
300
13,500
TBDb
43
167
TBDb
aHigh
funding levels in these years are due to design and testing at a New Bern, North Carolina, mill of a 50-tpd pilot unit.
= to be determined.
SOURCE: Office of Energy Efficiency. 2000k. OEE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency and
Fossil Energy: Black Liquor Gasification Program for the Forest Products Industry.
bTBD
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not conduct the kraft black liquor tests or other DOE-mandated demonstration activities.25
Agenda 2020 (AFPA, 1994) contemplates demonstrating
two other technologies as well: pressurized kraft black liquor gasification and low inlet velocity gasification of biomass such as bark and wood residuals (PIMAs North American Papermaker, 1999a). An atmospheric draft black liquor
gasification process, called Chemrec, was commercialized
by Kvaerner Pulp & Paper Co. and has been available for
incremental capacity but not as replacement for a Tomlinson
boiler. The process is in use in Scandinavia, and Weyerhaeuser installed a unit at its New Bern facility in 1997.
However, the process is not suitable for BLGCC at atmospheric pressure, and pressurization, as well as other scaleup features, is not a simple extension. Kvaerner sold its
Chemrec R&D project in 1999 due to losses in its paper and
pulp business, and the technology is now being developed
by Nykomb Synergetics (PIMAs North American Papermaker, 1999b). In July 1999, DOE awarded $1.75 million to
Champion International to plan a demonstration project of
pressurized kraft black liquor gasification.26 If this project is
successful, it would have wide applicability in the U.S. paper and pulp industry. In particular, the lions share of energy efficiency and electricity generation estimates claimed
to potentially accrue to the technology are associated with
commercializing this option. Weyerhaeuser is considering
hosting a demonstration of the third technology at its New
Bern mill. This technology is for biomass gasification (not
black liquor), and it builds on experience at small projects in
Europe and South America.
Funding and Participation
The funding and participation for projects in the Black
Liquor Gasification area are detailed in Table E-18. The estimated DOE R&D funding is $14,880 million (1999 dollars) and the industry cost share is $2196 million (1999 dollars). This encompasses the period from 1987 to 2001.
Costs and Benefits
DOE anticipates that these demonstrations could lead to
replacing the Tomlinson boilers in a 10- to 20-year time
frame. This is probably optimistic. The StoneChem process
may be available for commercialization soon (and used, particularly if the EPA follows through with both the MACT-II
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APPENDIX E
regulations and Project XL), but few plants can take advantage of it, and it does not yield the large benefits associated
with electricity generation from a BLGCC. A large pressurized version of the Chemrec process is farther in the future
probably at least a dozen yearsand uncertainty goes with
the substantial technological development that remains to be
done prior to commercializing the gas cycle piece of the technology. Industry observers are not sanguine about the economic benefits of the technology, at least in the near future.
TABLE E-19 Benefits Matrix for the Black Liquor Gasification Programa
Realized Benefits/Costs
Options Benefits/Costs
Knowledge Benefits/Costs
Economic
benefits/costs
Environmental
benefits/costs
None
Security
benefits/costs
None
Minimal
aUnless
otherwise noted, all dollar estimates are given in constant 1999 dollars through 2000.
liquor gasification technology has not yet been proven to be commercially successful on a full scale. Two smaller units have been operating at mills
in Sweden as incremental capacity additions since the early 1990s; however, the technology has not been demonstrated as a replacement to the Tomlinson
boiler.
cThere is a large potential for increased use of biomass- and waste-derived fuels such as wood and agricultural residues, chemical manufacturing byproducts, and food processing waste that could be utilized through successful development of commercial-scale gasification technologies. Pulp and papermaking is a very steam- and electricity-intensive process and requires close to 1.3 quad of fossil-derived fuel annually, making it the fourth-largest consumer of
fossil energy in the U.S. manufacturing sector.
dEE estimates that commercialization of this technology could generate between 454 trillion and 1200 trillion more Btu of electricity per year than would
be produced with Tomlinson recovery boilers. This assumes a total market size of 220 units, a unit size of 1327-1500 tons of kraft pulp/day, an annual market
growth rate of 2 percent, market share of 55 percent, and market introduction in 2008.
eThe advantages include up to 10 percent higher thermal efficiency, much higher power output, two to three times the kWh/ton depending on the system
configuration, lower NOx, SOx, VOC, and CO2 emissions, elimination of the danger of smelt-water explosions, up to 5 percent increase in chemical reduction
efficiency, more compact size, and lower-capital-cost construction.
fEE contends that the MTCI/StoneChem steam reforming technology would not currently be ready for demonstration without the DOE program.
gBiomass and black liquor are important sources of energy for the forest products industry, and increasing the efficiency and utilization rates of these fuels
can have a major impact on U.S. fossil fuel consumption and CO2 emissions. Assuming that the electricity generated replaces fossil-fuel-fired power generation, this corresponds to a reduction in CO2 emissions of between 12 and 31 million tons of carbon equivalent/year.
bBlack
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Results
Industry has invested substantially in black liquor gasification, and several technologies are commercially available
in the United States and Europe. The driver for adopting
gasification technology in the United States has been EPAs
Cluster Regulations. DOEs role, however, is critical to accelerating the development of BLGCC. Commercialization
of BLGCC is inhibited in two ways. First, the (projected)
economics of the technology involves scaling the gasification units to replace the current technology rather than using
it in an incremental fashion. The risks associated with relying entirely on the new technology are considerable. DOEs
contribution here is in sharing the financial risk and, indirectly, through the influence of the IOF-Forest program on
the EPA Cluster Regulations (see the IOF case study).
Second, technological hurdles need to be addressed in the
combined-cycle part of the program. Moving from the existing black liquor gasification units to systems suitable for use
with combined cycle requires bench-scale research as well
as demonstration. Here, current economic drivers are inadequate: the price of electricity (at least in Scandinavia, the
leader to date in kraft black liquor gasification technology)
is not high enough to justify a large effort. The IOF-Forest
program supports precompetitive and generic research on
combined-cycle problems, drawing from the earlier pilot
plants and activities in other DOE (both EE and FE) programs.
The institutional framework of the IOF-Forest program
may be DOEs most important contribution to this RD&D
program. Over the past decade, the mill equipment industry
underwent numerous reorganizations, reflected in the multiplicity of names associated with each black liquor technology (Air Products-Kvaerner-Nykomb; ThermoChem-MTCIStoneChem), while the mill industry itself has been involved
in consolidations and acquisitions, generally to the detriment
of their R&D activities. The IOF-Forest program, alternatively, has been stable, with logical investments in benchscale R&D and pilot plants and further generic projects responding to the pilot plant experiences. This sustained
investment depends on the organizational structure developed in the IOF program.
As with other OIT programs, the black liquor gasification
demonstration program also illustrates the interaction between government technology programs and government
regulatory programs. The opportunity for flexibility in meet-
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Coordinated by the American Forest and Paper Association (AFPA), the industry formulated an overall technology
development strategy and implementation plan (AFPA,
1999), and signed a compact with DOE in 1994. Agenda
2020 identified six focus areas for DOE-supported research:
sustainable forestry, environmental performance, energy performance, capital effectiveness, recycling, and sensors and
control.
Projects in the first solicitation were funded in FY 1996.
By FY 2001, the program had supported 130 projects at an
annual cost to DOE of approximately $10 million per year
and to the private sector of about $5 million (see Table
E-20).28 Forty-six R&D projects are funded in FY 2001.
These projects range from science to precompetitive technology development. Over 80 percent of the projects have
involved one or more universities. Approximately 40 percent have a federal lab partner, 65 percent list an industry
supplier as a partner, and 60 percent list a manufacturer as a
partner (see Table E-20).29
As of December 2000, DOE had identified only one new
commercial product from the program and a handful of others in demonstration. However, the program draws widespread support from the industry and from industry observers for its structure and potential in an industry that has
traditionally performed very little research.
28The IOF Web page lists 82 active and 48 completed projects. The information provided by EE to the committee identifies 46 as currently receiving federal support and lists 126 projects in total, of which 18 received
no support in FY 1996 to FY 2000. The difference in totals between the
sources appears to be due to minor differences in project identification and
the inclusion of some new projects on the Web page.
29Based on the ongoing projects listed at the IOF/Forest Web site.
The program is responsible for the formation of important new institutional arrangements in the industry, including a working group of AFPA-member chief technology officers, who provide input on long-term goals and research
priorities to IOF; task forces that plan and manage each of
the five identified programmatic areas; an association of
universities that work on the IOF projects (the Pulp and Paper Education Research Alliance, or PPERA); an innovative
outreach program cosponsored by the Institute of Paper Science and Technology and OIT; and the partnerships that conduct R&D under the program, which include universities,
federal laboratories, suppliers, and manufacturers.30
In addition to the specific knowledge benefits discussed
below, the program, through these groups, has yielded benefits important to the industry, although difficult to quantify.31 Among the significant accomplishments cited by industry was the input provided by these groups and the IOF
research program to EPA in its formulation of the 1997 Cluster Regulations. The industry also credits the program with
focusing university training, as well as research, on forestry
product technological problems and expanding the base of
scientists working in the area.
30The Institute of Paper Science and Technology-OIT Business Development Executive program sponsors a group of retired industry executives
to advise mills on emerging technologies and best practices (AFPA, 1999).
31EE anticipates completing a study in summer 2001 that characterizes
benefits that are currently speculative. For example, the mills are believed
to have adopted better process technologies as a result of the collaborations
and discussions. Given the low R&D nature of the industry, it is plausible
that significant productivity improvements could ensue from the IOF structure even in the absence of specific new technologies.
TABLE E-20 Total Funding in IOF/Forest by Program Area (constant 1999 dollars)
Program Area
Fiscal
Year
Source of
Funding
Capital
Effectiveness
Energy
Performance
Environmental
Performance
Recycling
Sensors and
Control
Sustainable
Forestry
Total
1996
OIT
Industry
OIT
Industry
OIT
Industry
OIT
Industry
OIT
Industry
OIT
OIT
Industry
278,581
154,568
457,593
158,564
186,848
134,955
752,899
337,023
877,464
377,563
960,000
2,553,385
1,162,674
2,852,887
1,093,248
1,160,680
367,026
1,714,008
1,561,767
1,948,647
985,036
1,326,056
796,465
1,350,000
9,002,279
4,803,541
3,146,350
1,256,851
4,630,175
1,368,685
3,471,158
1,527,931
2,120,855
703,420
2,168,769
1,099,562
2,320,000
15,537,307
5,956,449
456,797
306,976
237,399
230,719
594,179
461,968
367,258
155,167
1,032,229
574,963
1,050,000
2,687,863
1,729,792
3,598,554
1,419,804
2,118,520
731,757
2,334,573
550,656
3,379,396
1,324,296
3,782,627
1,264,702
3,850,000
15,213,671
5,291,216
1,017,319
864,300
1,908,182
937,144
2,564,301
1,208,338
1,865,119
999,861
1,242,838
746,552
1,270,000
8,597,759
4,756,195
11,350,488
5,095,748
10,512,549
3,793,894
10,865,067
5,445,616
10,434,174
4,504,803
10,429,984
4,859,807
10,800,000
53,592,262
23,699,868
1997
1998
1999
2000
2001
1996-2000
SOURCE: Office of Energy Efficiency. 2000l. OEE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency and
Fossil Energy: Forest Products Industries of the Future (IOF) program. December 12.
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APPENDIX E
The program has yet to demonstrate that its structure facilitates technology transfer. The forest products industry, in
common with other OIT target industries, such as buildings,
presents barriers to technology transfer owing to the modest
industry research establishment and the narrow profit margins. Recognizing the problem for very large capital investments, IOF/Forest has started a large demonstration program
for black liquor gasification (see the Black Liquor Gasification case study). The industry anticipates suppliers commercializing technology, but the adequacy of suppliers activities remains a key concern. Compared with suppliers to the
buildings industry, the forest products supplier industry lacks
a competitive research-intensive base. Furthermore, the lead
partner in nearly all projects is a university or national lab,
and these entities typically retain intellectual property rights
in the IOF projects. A current working group at AFPA is
considering how better to integrate the suppliers and the university technology licensing offices.
declined, reflecting the conclusion of the Cluster Regulations negotiations. The increased emphasis on capital effectiveness is associated with the Black Liquor Gasification
demonstration.
During the first 4 years of the program, partnerships became more inclusive. As Tables E-22 and E-23 show, most
projects now have a university partner and virtually all have
either a university or national laboratory member. The inclusion of suppliers and manufacturers as partners32 is nearly
twice as common for current projects as for completed ones,
although as Table E-20 shows, these entities have partnered
in most of the larger projects since 1996. Currently, either a
supplier or manufacturer participates in projects that receive
over 80 percent of the IOF/Forest budget. In theory, this
structure should keep research focused on activities relevant
to industry problems and should facilitate technology transfer.
32All projects have AFPA members as advisors. Tables E-22 and E-23
include a manufacturer as partner if it is listed on the IOF/Forest Web site in
that capacity.
TABLE E-21 Changes in IOF Priorities: Share of OIT/Forest Budget by Program Area (percent)
Program Area
Fiscal
Year
Capital
Effectiveness
Energy
Performance
Environmental
Performance
Recycling
Sensors
and Control
Sustainable
Forestry
Total
1996
1997
1998
1999
2000
2001
2.45
4.35
1.72
7.22
8.41
8.89
25.13
11.04
15.78
18.68
12.71
12.50
27.72
44.04
31.95
20.33
20.79
21.48
4.02
2.26
5.47
3.52
9.90
9.72
31.70
20.15
21.49
32.39
36.27
35.65
8.96
18.15
23.60
17.88
11.92
11.76
100.00
100.00
100.00
100.00
100.00
100.00
SOURCE: Office of Energy Efficiency. 2000l. OEE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency and
Fossil Energy: Forest Products Industries of the Future (IOF) program. December 12.
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APPENDIX E
Completed Projects
Ongoing Projects
University
Federal laboratory
University or laboratory
Supplier
Manufacturer
Supplier or manufacturer
60.87
30.43
78.26
36.96
32.61
54.35
82.50
41.25
95.00
63.75
58.75
80.00
1996
1997
1998
1999
2000
University
Federal laboratory
University or laboratory
Supplier
Manufacturer
Supplier or manufacturer
58.80
48.71
77.82
54.39
32.67
66.39
70.92
53.90
88.48
38.07
38.09
53.08
75.99
56.80
94.12
54.01
51.58
71.77
76.41
58.57
98.74
68.04
47.81
78.39
79.10
49.29
98.15
66.50
54.46
82.39
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APPENDIX E
Options Benefitsb/Costs
Knowledge Benefits/Costs
Economic
benefits/costs
Environmental
benefits/costs
Security
benefits/costs
Minimal
Minimal
Minimal
aUnless
otherwise noted, all dollar estimates are given in constant 1999 dollars through 2000.
bThe EE assumptions for the benefits estimation include the following. Biomass and black liquor gasification demonstration initiative: Market introduction
is in 2008, with 31 units installed by 2015. Combined-cycle configuration for maximum electric power production increases power output from a 1500-tpd
kraft mill from 70 MW (using conventional technology) to 300 MW. Market size is estimated at 220 existing recovery boilers, and over 80 percent of these will
require major retrofit or replacement prior to 2020.
cExcluding $16.2 million in R&D for black liquor gasification. This program is analyzed as a separate case study and matrix.
dThese advantages include higher thermal efficiency, higher electrical power generation, improved product quality, improved process uniformity and
productivity, reduced electricity costs, and reduced chemical costs.
eAs of 1997, the XTREME Cleaner was operating in three wastepaper recycling mills, and the reported savings from reduced energy and raw material costs
were $3500-$11,000 per day per mill.
fEE estimates that the biomass and black liquor demonstration will result in cumulative benefits (2008-2015) of 2.3 1015 Btu and $11.2 billion in energy
cost savings.
gEE estimates that use of the XTREME Cleaner resulted in savings of 0.04 trillion Btu in 1997.
hEE estimates that use of the XTREME Cleaner in 1997 resulted in emissions reductions of 29 tons of SO , 11 tons of NO , 2667 tons of CO , and 8 tons
x
x
2
of particulates.
nia. The reduction in NOx was one of the main drivers for
Gallo to try the technology as part of the cofunded demonstration.
The VPSA system is only one of several point-of-use oxygen-generating systems now available, but it continues to be
the most energy efficient and cost effective when compared
with similar vacuum swing adsorption or pressure swing
adsorption systemsthough the specific capital and operating costs of competing technologies are unique to each installation.
Research is still being conducted by DOE in cooperation
with the industry as part of the glass industries IOF program
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APPENDIX E
Current Dollars
Fiscal
Year
OIT
Funding
Industry
Cost Share
OIT
Funding
Industry
Cost Share
1988
1989
Total
1127
207
1334
445
82
527
869
166
1035
343
66
409
ing for the oxy-fuel firing program. The primary funding for
the demonstrations was for a cost-shared agreement with
Praxair, which provided all of the industry cost sharing.
Praxair is still the leader in VPSA technology, with competition from other major oxygen suppliers such as Air Products, BOC Gases, and American Air Liquide.
No DOE funds were provided for the 1990 to 1995 time
frame. Carryover funds were used. Projects in the 1990s continued to explore techniques to improve oxy-fuel firing for
other aspects of glassmaking (Table E-26). It is notable that
DOE in many cases provided more than 50 percent of the
research funding even though this technology was considered commercial at that time for some portions of the
glassmaking industry.
Not all of the funding shown in Table E-25 is directly
attributable to oxy-fuel for the glassmaking considered as
part of this case study, but it is interesting to see how DOE
itself lists its ongoing research agenda. Projects are not easily categorized and are often put in categories for a variety of
purposes.
In addition, OIT has recently funded research on oxy-fuel
burners for use in the steel industry under the OIT Steel Industries of the Future program. The technical challenges in
steel are different from those in glass, but the expertise acquired in the glass program will be very valuable. This extension of a successful project to another IOF industry is
commendable.
Results
Generally, smaller air-gas furnaces have been less efficient, and the conversion to oxy-fuel has resulted in a reduction of up to 45 percent in energy consumption for glass
manufacturers. Energy savings in larger furnaces are generally about 15 percent, based on measurements at individual
facilities. However, the energy required to produce the oxygen utilized in the furnace does offset some of the energy
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APPENDIX E
TABLE E-26 Funding for the Oxy-fueled Glass Furnace Program by Technology to FY 2000 (thousands of dollars)
Constant 1999 Dollars
Current Dollars
Fiscal
Year
OIT
Funding
Industry
Cost Share
OIT
Funding
Industry
Cost Share
1996
1997
1998
1999
2000
239
221
305
250
250
79
62
61
356
581
229
215
301
250
250
76
60
60
356
581
1998
1999
2000
264
325
325
101
120
155
260
325
325
100
120
155
1997
1998
1999
2000
480
325
200
200
252
146
114
182
468
320
200
200
245
144
114
182
Technology
SOURCE: Office of Energy Efficiency. 2000m. OEE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency and
Fossil Energy: Oxygen-Fueled Glass Furnace Program. December 12.
Industry Segment
Number of
Oxy-Fuel
Furnaces
Total
Number of
Furnaces
Oxy-Fuel
(%)
Container
Pressed and blown
Textile fiber
Wool fiber
Flat
Lighting
TV glass
Total
24
27
31
12
2
8
9
114
126
79
68
43
40
21
12
406
19
34
46
28
5
38
75
28
Typical
Furnace
Size (TPD)
250
75
75-100
100-150
500+
75-150
100-300
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APPENDIX E
TABLE E-28 Benefits Matrix for the Oxy-fueled Glass Furnace Programa
Realized Benefits/Costs
Options Benefits/Costs
Knowledge Benefits/Costs
Economic
benefits/ costs
Environmental
benefits/costs
Security
benefits/costs
Minimal
aUnless
Minimal
otherwise noted, all dollar estimates are given in constant 1999 dollars through 2000.
estimated budget for the program was approximately $200,000 for the years prior to 1988, $1.3 million for 1988 and 1989, and approximately
$450,000 for 1998 to 2000.
cThe industry cost share for 1988 and 1989 was 28 percent and totaled $527,000; the industry cost share for the other years is indeterminate.
dIncludes all units put in place by 2005 and assumes an 8-year lifetime for each unit. The 1997 level of penetration of the technology was increased by
2 percent annually. Average energy savings vary from up to 45 percent on a small furnace to 15 percent on large furnaces.
eCosts for the oxygen production systems vary greatly depending on system features and capacity. VPSA system costs range from $200,000 to $600,000,
with an additional $200,000 in installation costs.
fEE estimates that glass furnace production rates can improve by up to 25 percent in comparison to conventional furnaces, although 10-15 percent improvements are more common. For example, by retrofitting oxy-fuel firing technology for a wine manufacturers bottle production facility, OIT and its industrial
partners achieved energy savings of 25 percent while reducing NOx emissions by over 80 percent and particulate emissions by about 25 percent.
gAs a result, all costs of production are reduced while the product quality is improved.
hSystems can be installed at a capital cost of $50 to $100 per annual ton of oxygen capacity, with a payback of 2 to 4 years.
iOxygen could be used in sulfur recovery in the petroleum refinery industry, and other environmental applications include wastewater treatment and
hazardous waste incineration. The paper and pulp and the health care industries may benefit from these technologies, and industries that depend on various
partial oxidation processes during production may also benefit from the ongoing development of oxygen production technologies initiated by the oxy-fuelfired furnace.
jThese include (1) a better understanding of the heat flux fundamentals and the characterization and modeling of the process, (2) reductions in the costs of
producing oxygen, (3) sensing and control instrumentation to better monitor and optimize the melting process, (4) refractories that are exposed to the oxy-fuel
combustion environment, and (5) burners used in oxy-fuel furnaces.
kEE estimates 3.3 million tons of CO , 3970 tons of NO , and 84 tons of particulates.
2
X
lNO emissions are reduced by up to 90 percent, CO by up to 96 percent, and particulates by up to 30 percent.
x
mThe process does not require regenerators to achieve the high temperatures required for glass production, it eliminates the burden on landfills for disposal
of regenerator refractories when furnaces are rebuilt every 5 to 10 years, and it increases the use of recycled glass.
nEE estimates about 57 trillion Btu, primarily natural gas.
bThe
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APPENDIX E
fuel began before the IOF program under the Office of Industrial Technologies auspices, and research had been sponsored and a successful demonstration completed before that
initiative was begun. Ongoing research is still being conducted under the IOF glass program, as well as in the IOF
steel program. Incorporating appropriate existing research
initiatives into the IOF program appears to have progressed
well. The transfer of a technology from one IOF industry to
another is commendable. The convening and road mapping
that the IOF industries are doing is very valuable.
DOE, however, needs to assess whether the technology,
since it is in commercial use, is now perceived by the marketplace to be much less risky than at its inception. If so,
even if research challenges remain, the federal role should
perhaps change.
The federal role may be still very appropriate and important, but perhaps the cost share provided by industry needs to
be increased as the technology moves along the development curve. DOE has been providing over 50 percent for
much of this research, although new projects require a 50
percent cost share by industry.
A formal process for DOE involvement and funding
should be part of the visioning and road mapping, with expectations about DOE and industry involvement agreed upon
and made clear from the beginning. DOE should have a role
through much of the road mapping and visioning for individual technologies as well as for the industry, but the nature
or amount of federal support for research on a technology
should be expected to change at a predetermined point.
For basic research or directed exploratory research, the
industry cost share should be very low or even zero. As the
technology moves to applied research, the industry cost share
should increase. As the technology achieves commercialization and refinements or enhancements are the main research
focus, DOE participation needs to be carefully examined and
industrys cost share made more significant. This is particularly true when the DOE funding is being provided to only
one firm as opposed to an industry consortium. There are
clearly many factors that must be weighed, such as the nature of the industry, nature of the research, state of the technology, or type of benefits expected, in determining the DOE
role and the amount of funding that is appropriate. These
considerations should all be agreed upon early in the
roadmap process.
century. The nemesis for the electric car has always been the
battery, its energy storage and power capacity, its life cycle,
its weight, and its cost. Lead acid batteries (used for starting,
lighting, and accessories in cars today) were the battery of
choice for electric cars through most of this history, but it
was always known that something better was needed to make
the electric car more widely acceptable.
The DOE has conducted R&D in advanced batteries over
much of its history. In the 1980s the modest funding was
usually earmarked for specific technology programs. In the
fall of 1990, California adopted the zero emissions requirement for vehicles marketed in that state by 1998 (later
amended to 2003). This prompted the formation in 1991 of a
joint government-industry program, the United States Advanced Battery Consortium (USABC) to develop advanced
high-energy batteries for electric cars. This program resulted
in an increased federal contribution and a 50 percent cost
share from industry, which significantly increased the overall R&D funding available.
In 1993 the USABC became associated with Partnership
for a New Generation of Vehicles (PNGV), and as a result of
discussions held by PNGV participants in 1994, a second
program was added in high-power batteries, required in hybrid propulsion vehicles. This program was complementary
to the existing high-energy battery program and eventually
addressed similar technologies but with different parameters.
Since no new resources were made available for PNGV, the
advanced battery funding was split between the two efforts.
The present discussion focuses only on the high-energy battery program for all-electric cars and not on the high-power
batteries for hybrid vehicles, although there is considerable
crossover of research results.
Each program from the time before USABC had an opportunity to propose its development activities to the
USABC. Existing programs in advanced lead acid batteries
and zinc-bromine batteries could not meet the USABC performance criteria. Nickel-iron systems were not sealed, and
air battery systems were too inefficient from an energy cycle
viewpoint. These programs were all terminated.
USABC decided in 1991 that R&D efforts for advanced
electric vehicle batteries would be split into two efforts. Midterm technology was sought that would be responsive to the
proposed California requirements for electric vehicles in
1998, even though it was recognized that such vehicles
would not be competitive with conventional gasoline-powered vehicles in a normal market. Long-term efforts would
focus on lithium-based technologies, which involved much
higher technical risk. The goal of the long-term program was
to produce advanced batteries that would allow for fully
competitive electric vehicles.
USABC continued research on sodium-sulfur and
lithium-iron disulfide batteries in USABCs phase I (1991 to
1996) program. Toward the end of phase I, comparative
evaluations of all batteries were conducted. USABC invested
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APPENDIX E
about $60 million (50 percent from DOE) in these technologies that were not carried forward into the phase II program.
The nickel-metal hydride (NiMH) battery was selected as
the midterm candidate for USABCs phase II (1996 to 2000).
One lithium polymer technology was also carried forward to
phase II, and a smaller program was started in lithium ion
batteries. During phase II, USABC invested about $16 million (about $7 million from DOE) in a lithium ion technology program that did not result in a successful product.
The discontinued technologies either had major technical
problems or represented such high financial risks that the
developers elected not to continue the private funding. The
high-temperature sodium sulfur and lithium iron disulfide
batteries were discontinued because they could not meet certain technical goals. Stiff potential competition from Japanese developers and the need for considerable capital investment also discouraged some firms from continuing work on
lithium advanced batteries, especially in light of continued
technical problems.
Funding and Participation
Participants in USABC were USCAR (Ford, General Motors, and DaimlerChrysler) along with the Electric Power
Research Institute (EPRI) and an assortment of battery developers, national laboratories, and universities.
During phase I (1991 to 1996), USABC expended about
$190 million of total federal and private funds. In 1996,
PNGV put in place a phase II agreement for continuing development of advanced batteries. The value of this phase II
agreement was $106 million for 1996 to 2000. Almost all of
the phase II resources are now expended. In 1999, a phase III
agreement was put in place for $62 million for 2000 to 2003.
Table E-29 shows DOE funding for advanced battery
R&D for FY 1978 through FY 2001. Directed exploratory
research was also supported at a level of about $3 million per
year through this time period. Directed exploratory research
is focused on developing new electrode and electrolyte materials for advanced batteries. This program also works on
advanced diagnostics and modeling techniques for understanding battery operation. This work is conducted at DOEs
national laboratories and at supporting universities.
The cost share for USABC was 50 percent in phase I; 55
percent in phase II; and 65 percent in phase III.
The original partnership agreement and subsequent contracts also included provisions for battery manufacturers to
repay USCAR and DOE for some or all of their financial
contributions to the consortium when the batteries developed
by USABC are commercialized.
For reference, the funding for high-power energy storage
for hybrid vehicles under PNGV continued in 1996 and 1997
at about $15 million per year, with federal resources equally
split between cost-shared industrial development and the
Advanced Technology Development program in the national
laboratories. This is double the effort for electric vehicle
batteries.
Fiscal
Year
DOE Development
Programs, Supporting
Work, and
Benchmarking
Directed
Exploratory
Research
Programs
DOE Portion
of USABC
Cooperative
R&D (Phase)
1978a
1979a
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
12.4
11.2
13.7
11.8
8.7
8.6
6.6
2.9
3.0
4.1
6.7
8.3
8.8
5.1
0.6
2.8b
0.3
0.2
0.4
0.0
0.5
0.8
1.0
1.0
0.9
1.7
6.1
6.6
9.7
6.9
6.6
6.6
5.4
4.4
4.0
3.6
4.0
5.7
3.0
4.4
3.6
2.2
2.0
2.4
3.3
2.9
3.7
2.7
7.9 (I)
24.1 (I)
24.7 (I)
29.6 (I)
23.8 (I)
15.8 (II)
13.3 (II)
12.1 (II)
3.7 (II)
3.0 (III)
4.0 (III)
aData for FY 1978 and FY 1979 are estimated from combined program
elements in program budget.
bIncluded work on an air battery system that was not part of USABC.
SOURCE: Office of Energy Efficiency. 2000. OEE Letter response to
questions from the Committee on Benefits of DOE R&D in Energy Efficiency and Fossil Energy: Advanced Batteries for Electric Vehicles Program. December 4.
Results
At the outset, USABC and DOE established battery performance and cost targets for both midterm and long-term
development (NiMH and lithium-based batteries, respectively). These targets have not been fully attained, but considerable progress toward them has been made.
NiMH batteries are now being used in commercially produced electric vehicles, although only in very small niche
markets. Currently, electric vehicles are being manufactured
by the USCAR partners as well as Honda and Toyota. Using
the NiMH battery, General Motors introduced the EV-1 and
the S-10 Chevrolet electric pickup, and DaimlerChrysler has
developed the EPIC interurban commuter vehicle. However,
General Motors recently stopped production of its EV-1 passenger car owing to poor customer acceptance.
Although the USABC R&D has made considerable
progress, the batteries remain the limiting factor in the widespread application of electric cars. They remain too costly,
and too heavy, and their cycle life is too short. The result is
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that the vehicles travel range before recharging and the time
to battery replacement are too short, and their cost is too
high for general public acceptance. Battery recycling is also
still of concern because of the toxic materials that might be
released.
It is expected that the transition from the use of NiMH
batteries to lithium-based batteries for electric vehicles may
occur in the near future. Lithium ion and lithium polymer
batteries are being demonstrated in electric vehicles by one
Japanese manufacturer (Nissan). This will likely result in
more economically competitive electric vehicles with longer
ranges and smaller cost differentials. If that occurs, the overall goals of the program will largely have been met. Market
forces will determine the competitiveness of electric vehicles
with other advanced vehicles developed to meet the requirements of the California zero emissions program and the parallel programs in the northeastern states.
Outside the automotive field, advanced NiMH, lithium
ion, and lithium polymer batteries are the mainstays of the
consumer electronics industry. They are widely used in cellular telephones, laptop personal computers or digital assistants, and video camera-recorders. Lithium polymer batteries are emerging now as the preferred technology for these
electronics because of their performance levels. In these applications, the annual value of the products is several billion
dollars. Advanced NiMH, lithium ion, and lithium polymer
batteries are also being developed and tested in a variety of
electric and telecommunications utility applications. In electric utility systems, they would play a key role in storing
electric energy to allow for load management and improved
power quality or to serve as backup power sources. In telecommunications applications, they would serve as a backup
power source for equipment, especially in remote locations
with harsh environments. Some of these parallel efforts are
sponsored by DOEs Office of Power Technologies and by
EPRI. Workshops on advanced battery technology are sponsored jointly with DOEs Office of Science and organizations in the Department of Defense.
TABLE E-30 Benefits Matrix for the Advanced Batteries (for Electric Vehicles) Programa
Realized Benefits/Costs
Options Benefits/Costs
Knowledge Benefits/Costs
Economic
benefits/costs
Environmental
benefits/costs
Security
benefits/costs
aUnless
otherwise noted, all dollar estimates are given in constant 1999 dollars through 2000.
on the basis of the private industry cost shares for the different phases of USABC: phase I, 1991 to 1995, $111 million; phase II, 1996 to 1999,
$55 million; phase III, 2000+, $3 million.
bEstimated
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R&D projects on catalytic control of emissions from leanburn engines were initiated in 1994. (It should be noted that
typical gasoline light-duty vehicles today use stoichiometric
combustion engines with highly developed catalytic converters that are not the focus of the current research.) At that
point in time, the focus was on emission control from sparkignited, direct-injection (SIDI) engines. Lean-burn engines
such as the SIDI and CIDI engines cannot use the highly
effective catalysts developed for typical gasoline engines to
control NOx. Since 1997, the focus of R&D on catalytic
emission control has been CIDI engines, though work still
continues on emission control for SIDI engines, which can
use most of the technology developed for CIDI applications.
Funding and Participation
Auto manufacturers, diesel engine manufacturers, the
Manufacturers of Emission Controls Association, and other
suppliers contributed matching amounts through several cooperative research and development agreements (CRADAs)
with DOE. All the funds shown in Table E-31 were for the
joint technology development efforts only; additional, unknown amounts are being expended by industry to develop
CIDI catalytic exhaust emission control devices. The DOE
work on catalytic control of emissions from CIDI engines
receives direction as part of a yearly peer review process of
the PNGV program.
Results
The emissions goals for CIDI exhaust emission control
devices have yet to be achieved, and no commercial products have resulted from this work. However, progress to-
DOE
Industry
1994
1995
1996
1997
1998
1999
2000
Total
487
435
1,208
2,168
2,368
4,190
8,469
19,325
487
435
1,208
2,168
2,368
4,190
5,288
16,144
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Options Benefits/Costs
Knowledge Benefits/Costs
Economic
benefits/costs
Environmental
benefits/costs
None yet
None yet
Security
benefits/costs
None yet
None yet
aUnless
otherwise noted, all dollar estimates are given in constant 1999 dollars through 2000.
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50.0
45.0
40.0
35.0
30.0
Fuel Cells
Combustion and Aftertreatment
25.0
Fuels
Propulsion Materials
20.0
Lightweight Materials
15.0
10.0
5.0
0.0
1995
1996
1997
1998
1999
2000
Fiscal Year
FIGURE E-2 Distribution of OAAT PNGV funds by technology. SOURCE: NRC. 2000. Standing Committee on the Review of the Research Program of the Partnership for a New Generation of Vehicles. Sixth Report. Washington, D.C.: National Academy Press; Partnership
for a New Generation of Vehicle (PNGV). 1999. Answers from the PNGV to questions from the Standing Committee to Review the
Partnership for a New Generation of Vehicles. December 17.
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Options Benefits/Costs
Knowledge Benefits/Costs
Environmental
benefits/costs
Security
benefits/costs
Same as environmental
Improved fuel economy reduces demand for
imported oil.
Same as environmental
Improved fuel economy reduces demand
for imported oil.
Same as environmental
Improved fuel economy reduces demand
for imported oil.
Knowledge applicable to military use.
Economic
benefits/costs
aUnless
bSee
otherwise noted, all dollar estimates are given in constant 1999 dollars through 2000.
separate case study for this technology.
nologies in manufacturing, energy conservation, and emission reduction as soon as possible, and there have been a
number of realized successes in these areas, e.g., in the manufacturing and use of lightweight materials (aluminum, magnesium, and composites), welding, metal forming, hole drilling, and leak testing. These technologies are all critical in
reducing the weight (improving fuel economy) and cost of
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keting of some sport utility vehicles (SUVs) and pickup vehicles with these power trains in the next several years. Specific details are proprietary, but General Motors indicated
that its ParadiGM hybrid system would be available worldwide, across a variety of market segments, from compacts to
SUVs, starting in 2004. DaimlerChrysler said a $3000 subsidy or tax rebate would be required for its Dodge Durango
hybrid, but it apparently is ready to go ahead with or without
that marketing aid. Ford plans hybrid Escape and Explorer
vehicles in 2003. These vehicles will not have fuel economies of 80 mpg, but they may be 10 percent to 40 percent
better than comparable current vehicles and, as sales increase, will have a substantial impact on fuel consumption in
some high-volume market segments. It should be recognized
that a 20 percent improvement in mpg for a sport utility vehicle might save 124 gallons per year, while it would take a
41 percent improvement in mpg to get the same gallon savings with a midsize passenger car. In the opinion of the committee, a possible eventual outcome of PNGV could be a
fleet of light-duty vehicles with a cost premium of several
thousand dollars and a 40- to 50-mpg fleet average fuel
economy (i.e., double todays value).
In addition, there has been a great deal of knowledge developed about other technologies that may be useful in the
future, some more useful than others. Among the more useful knowledge is that concerning diesel engine fuel and emissions (which is helping heavy-duty engines for trucks), fuel
cell technology, aerodynamic drag, lightweight interiors, efficient air conditioners, vehicle system modeling, engine
combustion, and power electronics.
The fuel cell has captured a great deal of attention lately
because it promises great benefits in emission reduction, and
surprising progress has been made in developing the technology. The fuel cell itself is highly efficient, but the fuel
supply and preparation may not be. In addition there are severe technical problems remaining before it can be commercialized in significant volumes, notably the cost and a fuel
infrastructure. The promise remains, and R&D, both in DOE
and the private sector, is extensive.
Some of the less useful knowledge has been in automotive Stirling engines, automotive gas turbines, and flywheel,
ultracapacitor, and hydraulic energy storage. These projects
might be considered failures of the PNGV program, and it
might be questioned whether their potential was sufficient to
have warranted starting them in the first place or whether
they should have been terminated sooner. However, the program was established with a portfolio of projects covering
many possible solutions to the problem, each enthusiastically put forward by promoters. A planned downselection,
scheduled for 1998 to terminate those projects that had
proved to be less likely to succeed in the time frame of the
program, was carried out. Some of the research results from
these terminated projects have migrated to nonautomotive
applications and may prove useful there.
It also seems possible that PNGV spurred international
Economic
The economic benefits realized to date have mostly been
with respect to goals 1 and 2 of PNGV, that is, in the areas of
manufacturing and materials, where technologies can be directly applied to conventional vehicles. The dollar value of
these benefits is hard to determine, but would not seem to be
large in the overall picture. Many other manufacturing and
materials technologies have been developed and are ready
for application as soon as manufacturers can make changes
to their systems. Knowledge gained in PNGV about certain
other processes and procedures should help reduce engineering costs as they are put into use.
In general, many of the option and knowledge economic
benefits of PNGV could be negative when and if they are
eventually commercialized, since most of the technologies
under development are now more expensive than the corresponding conventional technologies they will replace, and
the consumers savings in fuel consumption may not cover
the initial cost premium over the life of the vehicle. This
should not be surprising, since the principal purpose of
PNGV, goal 3, is to reduce petroleum consumption and reduce CO2 in the atmosphere, while meeting very strict hydrocarbon, NOx, and particulate emissions requirements. It
should not necessarily be expected that these important gains
can be obtained with no cost to the nation. Every technology
in PNGV, if successful, will impact these goals.
The cost premium of PNGV vehicles over conventional
vehicles will probably be reduced and may be eliminated in
the future, but there is no assurance of that now, since
planned PNGV power trains generally represent more content than the power trains they replace, and the new content
is usually more expensive. Also, the conventional technology against which PNGV is compared also becomes less
expensive and more efficient with time.
The DOE has published several detailed analyses (OTT,
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2000b; DOE, 2000c) estimating the future energy, environmental, and economic benefits of EERE programs. These
analyses project the market penetration of PNGV technologies in passenger cars and light- and heavy-duty trucks out
to the year 2020 with the resulting benefits and costs. A variety of analytical models were used for the projections. With
many of the technologies still undergoing intensive R&D
and suffering from major problems (especially cost), and
with very little knowledge of customer acceptance and other
market trends, the committee feels these analyses are too
uncertain to form the basis for the current study.
However, if all PNGV goals are met (at 80 mpg) or even
a portion of them (at, say, 40 to 50 mpg), and if the entire
highway vehicle fleet were instantaneously converted to
PNGV technology, there would be a very large impact on
petroleum consumption in the nation and probably the world.
To gain an impression of the magnitude of this potential benefit and the possible costs to the nation, the following back
of the envelope example is offered.
Doubling light-duty vehicle fuel economy from 25 mpg
to 50 mpg and assuming the vehicles travel 12,000 miles per
year, the gasoline saved per vehicle would be 240 gallons
per year. For a 220-million-vehicle fleet (DOT, 2000b), that
would amount to 52.8 billion gallons per year, or almost 40
percent of our nations yearly crude oil imports (EIA,
1999b). There would be a correspondingly large reduction in
CO2 emissions to the atmosphere.
Assuming gasoline costs $1.08 per gallon ($1.50 retail
minus taxes of 42 per gallon (Cook, 2000) the savings to
the nation discounted at 3 percent over the 14-year life of the
vehicles would amount to $644 billion. Discounted at 8 percent, this would be $469 billion. These figures need to be
compared to the initial cost of the PNGV vehicles, which
DaimlerChrysler has estimated at a $3000 premium (cost,
not price) over conventional vehicles. The total cost for 220
million vehicles would be $660 billion, and the net benefit
for the nation would be a negative $16 billion, or $191 billion depending on the discount rate. This negative benefit
would be repeated each 14 years as the fleet is replaced.
Even though the direct economic cost could be high, the
economic value of the environmental and security benefits
could be great. The preceding calculations do not include the
possible economic costs of climate change, which are presently unmeasurable, or the economic costs of oil supply disruptions (Greene and Tishchishyna, 2000), which could far
outweigh any negative economic benefits from applying the
new technologies.
If the economic benefit to the nation is negative, it might
be asked what the deal looks like to the individual car buyer.
If the customer pays $3000 extra for a PNGV vehicle and
doubles the fuel economy to 50 mpg, and drives 168,000
miles in 14 years with gasoline at $1.50 per gallon (including taxes), he or she will have saved $5040. Discounted at 3
percent, this would have a present value of $4068. Dis-
Environmental
Introduction to the market of PNGV vehicles operating
on hydrocarbon fuels would not reduce hydrocarbon, NOx,
and particulate emissions below the already promulgated tier
2 standard, but this very stringent level, much lower than
today, would be met as a constraint. On the other hand, CO2
emissions to the atmosphere would be reduced in direct proportion to the reduction in carbon fuel consumption. Although CO2 is currently unregulated, it is a known greenhouse gas and a potential threat for climate change. Fuel cell
vehicles, if employed, would probably have emissions well
below the tier 2 level, but the emissions from fuel preparation are still uncertain, since the supply system has not yet
been chosen.
Security
The security benefits of PNGV technologies are primarily related to the reduction in need for imported petroleum.
As pointed out above in the back of the envelope example,
imported petroleum could be reduced by almost half even if
the fuel economy of the highway fleet were only doubled.
This benefit centers on economic security from price and
supply volatility and disruptions (either domestic or foreign)
in the near term and national defense in the longer term.
Also, some of the PNGV technologies are applicable to military use, where logistics support and agility could be improved.
Whether the security and climate benefits, potentially
very large, would be worth a possible direct economic penalty is a societal issue that the committee cannot decide. It
may only be said that the people are already paying about
$2100 extra (in 1999 dollars) for fuel economy and emission
control and $1700 for safety equipment in their vehicles (Department of Labor, 2000), so with proper recognition of the
environmental and security risks to the nation, they may accept similar costs for additional fuel economy.
Benefits and Costs
The benefit/cost ratio for the nation should be based on
the above described net benefits and the total cost of the
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DOE (estimated)
Cost Share
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
Total
18.00
22.77
20.90
20.88
22.96
18.84
22.65
24.99
25.74
16.68
214.41
0
0
0
0
0
0
0
0
0
0
0
SOURCE: Office of Energy Efficiency. 2000r. OEE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency
and Fossil Energy: Stirling Automotive Engine Case Study (failure) Program. November 29.
DOE Funding
General Motors
Cost Share
1993
1994
1995
1996
1997
Total
0.28
2.75
3.74
5.25
4.85
16.88
0.28
2.75
3.74
5.25
4.85
16.88
SOURCE: OEE. 2000r. OEE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency and Fossil Energy:
Stirling Automotive Engine Case Study (failure) Program. November 29.
33All
budget data came from DOE in response to the committees requests for information (OEE, 2000r).
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TABLE E-36 Benefits Matrix for the Stirling Automotive Engine Programa
Realized Benefits/Costs
Options Benefits/Costs
Knowledge Benefits/Costs
Economic
benefits/costs
Minimalc
Minimald
Environmental
benefits/costs
None
Minimale
Stirling Thermal Motors (STM) is
currently attempting to commercialize
various applications of the DOE
technologyf (unlikely to happen)
Security
benefits/costs
None
None
None
aUnless
otherwise noted, all dollar estimates are given in constant 1999 dollars through 2000.
represents General Motors cost share for the period 1993-1997.
cDOE contends that, as a result of utility deregulation, the market for small (30- to 100-kW) generators is expected to increase to several hundred million
dollars annually by 2005 and that STM could compete for a share of that market if it is successful in commercializing the Stirling generator. However, the
committee is skeptical of the Stirling generator meeting the efficiency and emission levels of equipment currently on the market by 2005.
dIf the knowledge derived from this program ever results in a commercial automotive Stirling engine, the economic benefits would probably be negative,
and any resulting benefits should be classified as environmental.
eEE notes that STM is working with a commercial partner to commercialize Stirling generators for distributed power systems. However, the potential
success of this venture is uncertain.
fAlong with the technical and economic shortcomings of the automotive Stirling engine, the automobile industry has so much plant and equipment devoted
to the manufacture, service, and sale of gasoline and diesel engines that incremental improvements in competing technologies do not justify the enormous cost
and logistical difficulties of introducing an entirely new engine type, such as the Stirling engine. Potential gains under programs such as PNGV could be large
and would be implemented in the appropriate circumstances.
gHowever, the MTI Stirling engine was eventually abandoned by NASA as well.
bThis
Lessons Learned
The committee finds it should have been clear to DOE
from the beginning that the Stirling program was a high-risk
backup technology that had only a small chance of commercialization but that had considerable benefits if its problems
could be solved. The engine had a history of unsuccessful
efforts to commercialize that went all the way back to its
invention in 1816.
With this understanding, there should have been several
critical go/no-go points where cancellation could occur,
based on technical progress. As an assist to the contractor,
the contract should have had a comprehensive cancellation
clause that would have allowed at least 6 months for ongoing research to be completed and documented. This was not
done, and competition for budget by proponents of the
Stirling engine led to continuation of the program over many
years, even though there was minimal progress against several serious technical barriers. If the R&D had focused on
progress on critical barriers, including hydrogen containment
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1978-1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
Total (rounded)
Funding
(millions of current $)
0
3.1
5.8
7.5
10
17.5
20.7
21.5
21.1
23.5
33.7
37
41.5
243
Funding
(millions of 1999 $)
0
3.84
6.9
8.62
11.3
19.2
22.1
22.6
21.5
24.0
33.7
37a
41.5a
252
aNo
deflation applied.
SOURCE: OEE. 2000s. OEE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency and Fossil Energy:
Transportation Fuel Cell Power Systems Program. December 12.
place during the energy crisis of the 1970s because it was too
costly.
DOE initiated work on PEM fuel cells in 1990, and this
rekindled interest. The budget history is shown in Table
E-37. The growth in budget from 1990, when it was approximately $3 million, to FY 2001, when it is $41.5 million, is
due to five factors:
EPAct explicitly authorized DOE fuel cell R&D.
The early and continued success and rapid development
of PEM technology demonstrated consistent progress in becoming commercially viable (early work was conducted
largely at Los Alamos National Laboratory and funded at a
very low level by the Electric Vehicle Battery Exploratory
Technology Program.
PEM technology was included in the PNGV program
in 1993 (a decision made jointly by the government and
USCAR representatives) and subsequently selected (by joint
industry-government recommendation and approved by the
PNGV Operating Steering Group) in 1997 as one of two
candidate technologies capable of achieving 80 mpg in a
PNGV-class vehicle (this decision was influenced by the
third PNGV NRC peer review and commended in the fourth
review) (NRC, 1998; NRC, 1999).
Early success led to growing industry interest and
heightened legislative visibility.
There was increased need for domestic manufacturers
to compete with foreign auto manufacturers.
Approximately one-third of the work effort takes place at
national laboratories (no cost share). The remaining two-
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(POX) research effort at Little funded by DOE where previously there had been no work. This work was successful and
grew (almost exclusively funded by DOE) until Little spun
off a separate company, Epyx, to continue work in the area.
DOE continued to fund Epyx and urged it to form a partnership that involved a fuel cell stack technology company,
which it did in 2000, when NUVERA, a joint venture between Amerada Hess, Little, and DeNora Fuel Cells, was
formed. It should be noted, however, that foreign companies
were excluded by DOE rules from competing for DOE contracts even though such companies represented the state of
the art at the time.
There would probably be no U.S. automotive programs
in PEM. For eample, early work with General Motors established that companys PEM fuel cell program (approximately
$28 million in DOE funding). A large General Motors program continues today without DOE funding (see General
Motors statement above regarding the importance of the
DOE work in fuel cells). The DOE effort established PEM
as an early PNGV technology, helping to promote automotive industry interest. If it had not been part of PNGV at the
inception of the program (including PEM as part of PNGV
was a joint industry-government decision), PEM technology
would probably never have been included in PNGV due to
the aggressive timetable of the program.
Overall, DOE estimates, if PEM were not part of PNGV,
the current performance of the technology would be set back
approximately 10 years, significantly delaying the introduction of the technology into early market areas such as portable and stationary power and subsequently delaying the
emergence in the automotive application. The DOE impact
has been significant because it concentrated on high-risk
barriers that are often not addressed by industry.
For example, 8 years ago, the concept of reforming gasoline onboard the vehicle was not thought possible. It was
extremely unlikely that industry would have devoted the required resources to solve this technical challenge. Because
of DOE success in this area, multiple industry programs now
exist to refine, package, and lower the cost of gasoline reforming systems (General Motors, International Fuel Cells,
DaimlerChrysler, etc.).
It should be noted, however, that the development of PEM
for vehicles is an international endeavor. For example, the
involvement of Ballard, a leader in the field, came through
funding from Canadian governments (central and provincial). Xcellsis, the firm created by the partnership between
Ballard and DaimlerCrysler and later with Ford, depends on
a European subsidiary for advanced onboard reformers.
In discussing the DOE technical contributions with people
from the fuel cell companies, it is clear that the work on
platinum catalyst loading, air bleed to control carbon monoxide (CO) catalyst poisoning, and onboard gasoline reforming by partial oxidation are all significant. These gave momentum to the private sector developments. Now that the
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TABLE E-38 Benefits Matrix for the Transportation PEM Fuel Cell Power System Programa
Realized Benefits/Costs
Knowledge Benefits/Costs
Economic
benefits/costs
Likely minimal,
depending on
circumstancesc
Substantialsee below
Environmental
benefits/costs
Security
benefits/costs
Benefits are potentially large since fuel cells can use a variety
of fuels (including hydrogen from natural gas and coal
reformation and electrolysis) as substitutes for oil
derivatives. Transportation accounts for 67% of oil
consumption, and PEM fuel cells can substantially increase
the energy efficiency of a vehicle using alternative fuelsg
Potential option for distributed generation and creation of
electricity on the demand side of congested T&D linesh
aUnless
otherwise noted, all dollar estimates are given in constant 1999 dollars through 2000.
on the basis of information provided by EE indicating the portion of the work effort conducted at the national laboratories (about one-third) for
which there is no cost sharing and the average cost share of the remaining two-thirds of the R&D effort, where the average cost share by industry is about 28
percent.
cNone of the fuel cell technologies will have significant economic benefits to the consumer until the cost of a fuel cell vehicle can be brought down to the
level where the life-cycle cost (including fueling costs) is less than that of advanced ICE vehicles. The benefits will be almost exclusively in the environmental
and security areas. Under some circumstances, i.e., the regulation of greenhouse gases, the advantages of the fuel cell may cause it to be the least expensive way
of dealing with the constraints imposed. The CEF study indicates that it is unlikely fuel cell vehicles can achieve the necessary low costs before 2020 without
very significant success in RD&D. The MIT 2020 study indicates the possibility of such success is within the range of uncertainty estimates, however. Under
those circumstances, the fuel cell vehicle and the stationary source fuel cell may have economic benefits.
dThese contributions include reductions in cell stack costs, size reductions, harsh environmental operability, research on partial oxidation, advanced
membranes, bipolar plate technology, and electrode catalyst development. Early work on minimizing Pt catalyst loading, control of CO poisons, and gasoline
partial oxidation reforming is due to or benefited greatly from the DOE program. It is fair to say that the DOE program has catalyzed the interest of many firms.
eEE estimated that fuel cell hybrid vehicles running on gasoline with on-board conversion to hydrogen could achieve up to 80 mpg; hydrogen fuel cell
vehicles running on stored hydrogen could achieve the equivalent of 110 mpg.
fThese would use natural gas reforming to supply hydrogen. The systems are very clean, with little or no NO or SO and with less CO emissions, because
x
2
2
of higher efficiency on a total fuel cycle basis. Stationary systems may reach the market before vehicles.
gThe CEF study does not indicate much penetration of fuel cell vehicles by 2020 unless R&D is very successful at bringing down costs and other policies
are invoked to stimulate the learning curve progress and buy-down costs. Without such policies, a realistic estimate of new car fuel cell sales in 2020 is
probably only about 200,000. Finally, although the potential benefits of fuel cells are large and the promise is fairly good, the R&D is not complete, and large
barriers remain. There may well be prototypes in a few years and field demonstrations, and buses may be even sold (at a financial loss) to clean city
environments, but passenger car fuel cells cannot currently be classified as an option according to the definition used in this study. It is impossible to predict
20 years in advance what the market for these vehicles will look like. However, oil market volatility, environmental pressures, policy changes, and other factors
will all strongly influence the evolution of vehicle markets. What is clear, however, is that these technologies have the potential to significantly reduce oil
consumption.
hHigher-temperature membranes, currently the object of intense investigation, may also enable PEM fuel cell systems to provide combined heat and power
for some applications.
bEstimated
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COAL PREPARATION
Program Description and History
Enhancement of coal quality by different forms of pretreatment such as washing or flotation to remove sulfur and
other minerals has important implications for improving the
heat value of the fuel, as well as for its combustion emissions. Coal washing and beneficiation have been used commercially for some years at mines and power plants where
coal quality has been of concern. A continuing interest in
coal preparation has been the search for deep cleaning to
maximize removal of impurities and to maximize the recovery of purified coal from the solvent wash with high coal
throughput. The latter is of particular concern in recovering
the fine pulverized coal fraction. Since the conventional
methods of coal cleaning are low in cost and well established in the industry, the interest in advanced coal preparation has declined in recent years.
The oil and gas production category comprises the following technologies:
Since 1978, DOE has invested nearly $300 million in advanced technologies for coal preparation. Most of the fund-
162
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APPENDIX F
ing was committed prior to 1991; funding since that time has
declined to about $5 million annually (OFE, 2001a). DOEs
program in coal preparation devoted a major effort to the
deep-cleaning process through the early 1980s, but the focus
on postcombustion technologies for pollution control and the
shifts in the coal market toward low-cost modest-quality fuel
supplies shifted DOEs emphasis in the late 1980s to recovery efficiency objectives. DOEs program has contributed to
the development of advanced cleaning processes for demineralization, including flotation, recovery of the fine
particle fraction of pulverized coal, coal dewatering, and coal
processing system simulation. At one point, interest developed in the cleaned, ultrafine fraction of pulverized coal that,
if suspended in air or other fluids, could be used directly
for instance, for injection into turbines. This application has
not been pursued, because natural gas (or coal gas) is now
the preferred fuel.
DOEs current program has declined to a relatively low
priority maintenance level, with interest and support from
the coal industry in continuing studies of cleaning and material-handling technologies as a means of training and educating qualified technical people to support the industry.
Results
DOEs program has contributed substantially since the
1970s to improving knowledge about advanced preparative
treatment of coal. The accompanying process development
is estimated to add substantially, however, to the cost of untreated coal.
The work also resulted in the commercialization of an
advanced (Microcel1) flotation column and the precommercial testing of an air-sparged hydrocyclone for flotation separation. A continuous separation technology involving a
packed separation column system has also been tested.
To improve the separation and capture of pulverized coal
fines, the Granuflow process has been developed and licensed for commercialization. More exotic methods for
beneficiation have reached development and testing, including the tribo-electric separation process, which was tested at
(formerly) New England Electrics Salem Harbor and
Brayton Point plants, and micronized-magnetite cyclone
cleaning for fine pulverized coal. In the current market, however, large-volume sales are directed toward low-cost coals;
the added costs of cleaning are not justified. The existing
technology for coal cleaning is sufficient to supply require-
1Microcel is a novel froth flotation column cell for cleaning finely ground
coal. The Microcel process uses microbubbles in a water-filled flotation
column to separate mineral impurities from coal. It is particularly effective
in cleaning very fine coal particles, typically smaller than grains of sand,
that are often discarded in coal waste ponds. The University Coal Research
Grant to Virginia Polytechnic Institute licensed it to Mineral Technologies
International, Inc. There are 70 to 80 units installed worldwide.
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APPENDIX F
Options Benefits/Costs
Knowledge Benefits/Costs
Economic
benefits/costs
None
Environmental
benefits/costs
None
Security
benefits/costs
None
None
None
aUnless
otherwise noted, all dollar estimates are given in constant 1999 dollars through 2000.
provided no information on industry costs or cost share; however, private industry interest in this technology was minimal.
cSince coal cleaning and beneficiation add to the cost of pulverized coal supplies, there is no current economic benefit to the application of the technologies.
FE provided no discussion or estimates of economic benefits.
dIf conventional coal use is reduced owing to real or perceived environmental, health, or other concerns, then demand for the traditional coal products would
also be expected to decrease; at the same time, the demand for deeply cleaned coal with very low ash, sulfur, and trace element content using advanced
technologies developed via coal preparation R&D might increase.
bFE
Lessons Learned
This program is another good example of a technology
option that has lost its motivation because of shifting environmental requirements and fuel preferences guided by
changing energy policy. The program has a history of 22
years or more in DOE with productivity in technology development. At the beginning it was aimed at environmental
protection by improving the quality of coal and the precombustion removal of undesirable constituents of coal for sequestration as solid waste. This approach was one favored
option for retaining Eastern coals as a fuel option in the early
stages of pollution control. However, there has been little or
no motivation to wash low-sulfur Western coals. Air quality
requirements and the switching of electricity generation to
low-sulfur, low-cost coals and natural gas made this approach obsolete by the late 1980s.
Given the changes occurring in the electricity generation
industry with the advent of natural-gas-fired gas turbine designs and IGCC applications for future coal options, combined with deregulation of the electricity industry, FE has
moved this program to a low priority. At the same time, there
remains industry support to press on with some basic R&D
effort in this area so as to continue developing a reservoir of
knowledge about coal beneficiation. The lack of commercial
interest in technologies in the coal sector indicates that the
market for the foreseeable future will not be amenable to
adding costs to coal supplies. While the spin-offs from separation technologies have found commercial application in
the other industries, they do not warrant according this area
a high priority.
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APPENDIX F
eral liquefaction concept was first commercialized using inefficient, very high-pressure reactors in Germany and England to provide liquid fuels during World War II. After the
OPEC embargo in 1973 and 1974, a variety of process concepts were examined on a small scale, and three so-called
second-generation processes were demonstrated on a large
scale: SRC-II (solvent-refined coal) in Tacoma, Washington; EDS (Exxon donor solvent) in Baytown, Texas; and HCoal (single-reactor hydrogenation) in Catlettsburg, Kentucky. The DOE provided 65 percent of the funding for these
demonstrations, which were technically successful but not
commercialized because the oil price increases projected
during the 1970s did not materialize.
The DOE led and funded 83 percent of the more fundamental process improvement R&D program that followed
the large-scale demonstrations. The Advanced Coal Liquefaction R&D facility in Wilsonville, Alabama, became the
focus of U.S. coal liquefaction process R&D until the mid1990s, when it was shut down, leaving the Hydrocarbon
Research, Inc. (later, Hydrocarbon Technologies, Inc.) (HRI/
HTI) multistage coal liquefaction unit the only operating facility in the United States.
Funding and Participation
As shown in Table F-2, from 1978 to 1999, the DOE budgeted $2.3 billion (constant 1999 dollars) for direct liquefaction of coal. Industry cost sharing over this period was $1.15
billion. From 1978 through 1982, the DOE budgeted slightly
over $2 billion for direct liquefaction technology demonstrations, and industry participation in the demonstration programs was over $1 billion. The industry participants consisted of the major oil companies (Exxon, Mobil, Chevron,
Amoco, Conoco, Gulf, and others) and the electric power
industry (notably EPRI and Southern Co.) There was no cost
sharing from the U.S. coal industry. The DOE budget
dropped sharply in 1983 after the demonstration projects
ended and continued to decline gradually over the next 5
years; then it increased modestly for 4 years, at which point
it began a steady decline lasting 8 years until the program
was terminated after 1999. During the process-improvement
period, the DOE budgeted nearly $270 million, with cost
Demonstration projects
Process-improvement R&D
Total
Years
DOE
Industry
1978 to 1982
1983 to 1999
1978 to 1999
2035
267
2302
1096
54.8
1150.8
SOURCE: Office of Fossil Energy. 2001b. OFE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency
and Fossil Energy: Direct Coal Liquefaction. January 8.
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Options Benefits/Costs
Knowledge Benefits/Costs
Economic
benefits/costs
Environmental
benefits/costs
None
None
None
Security
benefits/costs
None
aUnless
otherwise noted, all dollar estimates are given in constant 1999 dollars through 2000.
bThere was no investment in the technology by the coal industry, but there were substantial investments by the petroleum industry and by the electric power
Lessons Learned
In retrospect, technology development in direct coal liquefaction and other synthetic fuels programs during the
1970s and early 1980s was not handled well by the government or industry. Technologies were targeted for major demonstration expenditures before they were well understood.
The impact of high petroleum prices on worldwide exploration efforts and the positive impact of new technology on
finding and producing crude oil were not fully accounted
for.
Another reason for the premature demonstration programs was the lack of a suitable ongoing long-term R&D
program when the energy crisis began. It is expensive and
ineffective to start and stop large, complicated R&D programs, especially in a rush created by crisis. A related lesson
learned from the program that followed the demonstrations
is that steady application of R&D over an extended period
can significantly reduce costs, improve process operability,
and improve product quality.
FLUIDIZED-BED COMBUSTION
Program Description and History
The fluidized-bed combustion (FBC) program consists of
two related but different technologies: (1) atmospheric bub-
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role in using low-cost and waste fuels for smaller-scale operations if the technology can economically meet environmental requirements.
PFBC technology is still in the early demonstration stage.
Three 80-MW demonstrations have been conducted in the
United States and Europe to demonstrate the technical viability of the first generation systems. Scale-up to 157 MWe
in the United States and 350 MWe in Japan are under way.
Although there were some technical successes in the first
demonstration plants, the first-generation systems suffer
from high costs that will inhibit widespread utilization of the
technology. In addition, first-generation systems do not offer efficiency and/or economic advantages over conventional
technology and are larger emitters of air pollutants than the
IGCC and gas turbine combined-cycle technologies.
Second-generation systems are in their infancy. Although
demonstration of a system is part of the CCT demonstration
program, the committee is of the opinion that serious concerns exist over the ability of the turbines to withstand alkali
vapors from the PFBC and to meet stringent future environmental requirements without costly add-on control systems.
Both concerns may hamper commercial applications of the
technology. Both concerns were confirmed by interviews
with private sector PFBC experts (M. Marrocco, Renewable
Energy and Advanced Power Systems, American Electric
Power, personal communication, February 2001; D.
Wietzke, Babcock & Wilcox, personal communication, November 9, 2000).
DOEs involvement in developing both AFBC and PFBC
technologies was critical to their technological development.
TABLE F-4 Benefits Matrix for the Fluidized-bed Combustion (FBC) Programa
Realized Benefitsb/Costs
Options Benefits/Costs
Knowledge Benefits/Costs
Economic
benefits/costs
Environmental
benefits/costs
Security
benefits/costs
None
None
None
aUnless
otherwise noted, all dollar estimates are given in constant 1999 dollars through 2000.
based on a comparison of FBC with a market-based PC steam generator.
cTotal benefits are estimated at $1.5 billion, one-half of which are allocated to DOE, since it played a significant role in FBC development.
dThese represent one-half of the total NO reduction.
x
bBenefits
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APPENDIX F
GAS-TO-LIQUIDS TECHNOLOGY
Program Description and History
The Gas-to-Liquids Technology program is part of the
Natural Gas Processing and Utilization program, which has
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APPENDIX F
the goal to support the development of advanced gas upgrading and conversion processes to bring low-grade gas up to
pipeline standards and to convert stranded gas in the United
States to more readily transportable high-value liquid fuels
and feedstocks. Commercial technologies to convert gas to
liquids are well known (NRC, 1990). The major processes
are Fischer-Tropsch, methanol, and methanol to gasoline.
The gas-to-liquids portion of this program has the primary
objective of lowering the cost of the existing Fischer-Tropsch
process for converting natural gas to liquid hydrocarbons.
During the mid-1980s, emphasis was on basic research
on gas conversion to fuels and chemicals. In the early 1990s,
the program focused more on process development to make
chemicals and fuels by partial oxidation, oxidative coupling,
and pyrolysis. Currently, the program focuses on novel technologies to generate synthesis gas and improved gas conversion to fuels with emphasis on monetizing stranded natural
gas in Alaska and deep offshore.
DOE Investment
0.8
0.5
0.6
1.9
SOURCE: Office of Fossil Energy. 2000b. OFE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency
and Fossil Energy: Gas-to-Liquids Technology, December 4.
Fischer-Tropsch Synthesis
Funding and Participation
Table F-5 shows investments in the Gas-to-Liquids Technology program over the last 22 years (constant 1999 dollars). The program has been well supported by industry,
which averaged about 50 percent cost sharing. Over the
years, industry contributed 20 percent for basic research, a
minimum of 50 percent for pilot and demonstration projects,
and about 65 percent for some large-scale projects. Table
F-6 focuses on the current Gas-to-Liquids Technology program technology mix.
Results
DOE Investment
25
4
3
33
1
3
79
SOURCE: Office of Fossil Energy. 2000b. OFE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency
and Fossil Energy: Gas-to-Liquids Technology, December 4.
Oxyhydrochlorination
Research work was directed to a novel process for converting natural gas to liquid fuels and chemicals, in which
methane is chlorinated in the presence of oxygen and hydrogen chloride. Research work was terminated due to unfavorable economics.
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Options Benefitsb/Costs
Knowledge Benefits/Costs
Economic
benefits/costs
None
Environmental
benefits/costs
None
None
None
Security
benefits/costs
None
None
Noneg
aUnless
otherwise noted, all dollar estimates are given in constant 1999 dollars through 2000.
claims substantial options benefits for gas to liquids, especially after 2005, including $24 billion in energy savings, increased domestic production of
liquid transportation fuels, avoidance of the need to build an LNG pipeline from Alaska, and the possibility of CO2 sequestration. However, industry experts
believe that the assumption that any significant quantity of natural gas in the United States could ever be valued (relative to oil) low enough to justify
conversion to liquid fuels by conventional gas-to-liquids technologies is questionable. Also, the recent increase in gas prices has even made the gas in the
Alaska North Slope sufficiently valuable that the oil industry is now considering moving it via a new pipeline into the lower 48 states. Thus, the options benefits
for gas to liquids are negligible.
cThe program has been well supported by industry. It has averaged about 50 percent cost sharing with industry, reflecting 20 percent for basic research, a
minimum of 50 percent for pilot and demonstration projects, and about 65 percent for some large-scale projects.
dFor example, ceramic membrane technology is being developed to separate oxygen from air to reduce the cost of synthesis gas manufacture.
eResearch was conducted on a novel process for converting natural gas to liquid fuels and chemicals, in which methane is chlorinated in the presence of
oxygen and hydrogen chloride. However, the research was terminated due to unfavorable economics.
fSystem studies have been conducted to evaluate how gas-to-liquids technologies compare with other options.
gResearch on improving conventional gas-to-liquids technologies may improve our ability to convert truly stranded natural gas in other parts of the world to
liquid fuel. While this may not reduce U.S. dependence on imports, it could diversify the supply base. An earlier example of this was work supported by the
DOE predecessors to convert natural gas to methanol to gasoline using novel zeolite catalysts for the methanol to gasoline conversion. While this technology
was never commercialized in the United States because of the high cost of natural gas, it was commercialized in New Zealand and for many years supplied onethird of the New Zealand gasoline supply. It reduced the demand for crude oil in the world market, albeit in a small way, thereby increasing supply and reducing
price. A Fischer-Tropsch plant is currently operating in Malaysia on natural gas.
bFE
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APPENDIX F
nations store of knowledge and may eventually lead to domestic economic benefits.
Also, research on improving conventional gas-to-liquids
technologies may improve our ability to convert truly
stranded natural gas in other parts of the world to liquid fuel.
While this may not reduce our dependence on imports, it
could diversify our supply base. An earlier example of this
was work supported by DOE predecessors to convert natural
gas to methanol to gasoline using novel zeolite catalysts for
the methanol-to-gasoline (MTG) conversion. While this
technology was never commercialized in the United States
because of the high cost of natural gas, it was commercialized in New Zealand and for many years supplied one-third
of New Zealands gasoline. This reduced the demand for
crude oil in the world market, albeit in a small way, increasing supply and reducing price. A Fischer-Tropsch plant is
currently operating in Malaysia on natural gas.
Lessons Learned
The DOE programs are focused in part on high-risk and
exploratory research, which is appropriate considering that a
major breakthrough is needed to justify the conversion of
gas to liquids in the United States. On the other hand, programs focused on marginal improvements in existing technologies are unlikely to get enough of a cost reduction to
make them domestically viable.
DOE needs to critically assess the economic assumptions
underlying the program. One is the above-mentioned availability of stranded low-cost gas in the United States. The
other is inherent in the Ultra Clean Transportation Fuels program, which assumes that Fischer-Tropsch synthesis would
be a more economic route to clean fuel than hydrogenation
of conventional diesel fuel. Currently, neither of these assumptions seems warranted.
Fischer-Tropsch Hydrocarbons
Novel Catalysts. Considerable effort was put into the development of iron-based catalysts to improve the conversion
of coal-derived synthesis gas, which typically has a low
H:CO ratio. Iron-based systems are able to perform the water gas shift reaction so that the required stoichiometric ratio
of H and CO can be achieved without external shift. Also,
iron-based catalyst systems are less expensive than the cobalt-based systems otherwise used and produce valuable olefins as a by-product.
Reactor Development. Hydrodynamic studies were run to
understand the complex interactions of the three-phase
slurry-bed reactor system. The studies included diagnostic
analysis of hot and cold slurry streams and modeling of the
hydrodynamics. Large-scale testing of both Fischer-Tropsch
catalysts and slurry-bed reactor system components was undertaken at DOEs Alternative Fuels Development Unit in
LaPorte, Texas.
Oxygenates/Chemicals
Methanol. A major success of the indirect coal liquefaction program was the development of the liquid-phase
methanol process. The principal feature of this new technology is the use of a slurry-phase reactor in which synthesis
gas is converted to methanol over catalyst particles suspended in an inert liquid medium. The use of the slurryphase reactor offers substantially improved heat management and operational versatility over the conventional gas
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TABLE F-8 Benefits Matrix for the Improved Indirect Liquefaction Programa
Realized Benefits/Costs
Options Benefits/Costs
Knowledge Benefits/Costs
Economic
benefits/costs
Environmental
benefits/costs
No benefits
Security
benefits/costs
No benefits
aUnless
None
otherwise noted, all dollar estimates are given in constant 1999 dollars.
includes $224 million in R&D funds and $96 million for the Liquid-Phase Methanol Clean Coal Demonstration Project.
cTotal includes $38 million in R&D funds (17 percent cost share) and $126 million for the Liquid-Phase Methanol Clean Coal Demonstration Project (57
percent cost share).
dFE estimates that, assuming successful integration of all process components at the commercial scale, coproduction plants producing electric power and
ultraclean fuels may be competitive at a world oil price of about $33/bbl, and that, with appropriate technical advances, coproduction with CO2 sequestration
may be competitive at a world oil price of about $25/bbl. However, knowledgeable experts question whether the technology would be competitive with oil at
that price.
eA demonstration project has been successfully operating at the Eastman Chemical manufacturing complex in Kingsport, Tennessee, since 1997 and is
scheduled to be completed in 2003.
fFE gives these numbers but provides no documentation or sources for them.
bTotal
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Lessons Learned
The lesson learned in this program is that continued investment in technology development on research, development, pilot-plant, and demonstration-plant scales are needed
to improve this technology. It will then be a better option if
and when the time comes that the United States needs to rely
on coal as a source of liquid fuels. The R&D program appears to be a good mixture of shorter- and longer-range programs. Because of the long lead time and high risk required
to develop coal-based technology and because of the uncertain economics due to the relatively low price of petroleum,
this appears to be an appropriate expenditure of government
funds.
fossil fuel technology today. The IGCC processes also produce a relatively large amount of CO2, with the potential for
efficient removal and sequestration of CO2 to meet greenhouse gas emission needs foreseen in the early 21st century.
These factors, combined with the recent near- or full commercial demonstration of IGCC, make IGCC a highly viable
option for continued use of coal in the United States as a
primary fuel for electricity generation.
The key to the success of the IGCC technology is the
integration of components into an operating system. It is difficult to trace the influence of DOEs basic and applied research programs on IGCC development, in comparison with
the efforts of manufacturing industry, which were built on a
long history of petroleum technology and chemical processing matched with gas turbine technology. The electricity supply industrys interest in IGCC was also stimulated mainly
by the private sector and its concern over the viability of coal
as a fuel. However, both government and the private sector
realized in the mid-1980s that coal continued to be the preferred fuel for electricity production but had to be used in the
face of very stringent environmental constraints. This realization led to considerable industrial investment in a variety
of coal-based power generation technologies.
As a result of a number of post-World War II material and
chemical process component developments, gasifier and advanced gas turbine technology progressed to a point where
their integration to produce electricity could be demonstrated. The first IGCC demonstration with commercial potential took place during the 1980s without direct DOE sponsorship. The plant involved was the Cool Water facility in
California, a joint effort of Texaco-Southern California
Edison (Edison International)-General Electric-Central Research Institute of Electric Power Industry (Japan)-EPRI.
This 100-MW plant was operated for several years and laid
the groundwork, with the advent of new gas turbines, for
scale-up demonstrations at 200- to 250-MW capacity in the
1990s.
The Cool Water experience, combining the Texaco gasification island with advanced gas turbine technology and
conventional steam turbines, demonstrated that IGCC could
offer efficient coal utilization with minimal environmental
impact. With the emergence of new gas turbine technology
at the same time (see FEs Advanced Turbine Systems program), the stage was set for DOE to play a critical role in
commercial-scale IGCC development through sponsorship
of the scale-up demonstration of three IGCC technologies
under the CCT program in the 1990s.
Funding and Participation
Since 1978, DOE has invested more than $2.3 billion
(1999 constant dollars) on gasification, mainly using coal as
a fuel. Of this, about 50 percent was committed to demonstration and commercialization of technology; $600 million
was committed in the 1990s to the demonstration of three
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APPENDIX F
near-commercial IGCC technologies within the CCT partnerships. Except for an early $13 million investment supporting the commercial-scale Great Plains gasification facility in North Dakota, the remainder is accounted for by basic
component research or by bench-scale or pilot-plant testing
of process components. The DOE investment in demonstrations and commercialization has amounted to about half of
the cumulative IGCC budget since 1978 (OFE, 2000d).
Industrys parallel investment in the development of
IGCC technology, including the investigation of gasifier
options, over approximately the same period is estimated to
have been about $2.2 billion (Spencer, 1995). For the recent
CCT demonstrations, DOEs funding amounted to about 50
percent of the capital installation costs, but it is unclear how
much DOE contributed to the incremental operating costs at
the CCT sites during the time the plants operated. The investment in Cool Water did not include any by DOE; the
capital costs for this demonstration were approximately $260
million, or $2600 per kilowatt. With the CCT demonstrations, this cost is projected to be reduced to $1500 per kilowatt or less.
Results
A summary matrix of benefits associated with the introduction of IGCC systems is given in Table F-9.
Even though projections call for the implementation of
several IGCC systems worldwide, their cost of electric power
production in the United States remains higher than that of
conventional natural-gas-fired turbine generators at current
natural gas prices. For widespread coal-based power generation, DOE has estimated that electricity produced in IGCC
plants will remain more costly in the United States than that
produced in conventional plants. However, according to
DOE projections, the economies may begin to favor IGCC
in the next 5 years as a result of added costs for emission
controls on conventional pulverized coal-fired plants, rising
natural gas costs, and assumed improvements in IGCC performance.
While the present-day economic benefits of IGCC systems are not compelling in themselves as a rationale for DOE
investment, the environmental and security benefits need to
be considered as well. IGCC system development has served
the nation well in providing an almost economically viable,
environmentally benign technology option for continued use
of coal as a primary means of electricity production through
the 21st century. The current level of IGCC development
opens the door for major improvements in the thermal efficiency of coal-fired power generation and represents an important option for the reduction of greenhouse gas emissions
2Average price to electric utilities for the year 2000. See Energy Information Administration Web site: <http://www.eia.gov/oil_gas/natural_gas/
info_glance/sector.html.>.
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APPENDIX F
TABLE F-9 Benefits Matrix for the Integrated Gasification Combined-Cycle (IGCC) Programa
Realized Benefitsb/Costs
Options Benefits/Costs
Knowledge Benefits/Costs
Economic
benefits/costs
Environmental
benefits/costs
Security
benefits/costs
None
None
None
aUnless
otherwise noted, all dollar estimates are given in constant 1999 dollars through 2000.
of FEs benefit estimates are based on a comparison of an IGCC plant with a state-of-the-art 1990s pulverized coal plant.
cAccording to the committee, private industry has contributed about as much as DOE to the demonstration program (Spencer, D. 1995. A Screening Study
to Assess the Benefits/Cost of the U.S. DOE Clean Coal R/D/D Program. SIMTECHE, informal report for the Office of Fossil Energy. Washington, D.C.:
Department of Energy.).
dSOURCE: Spencer, 1995.
eFEs estimate is based on the 30-year life cycle of the 1700 MW of IGCC capacity assumed to be in place by 2005. FE estimates that the life-cycle value
of excess SO2 and NOx allowances totals $152 million (based on NOx allowance values from Cantor Fitzgerald (OFE, 2000e) and SO2 allowance values from
EPA). FE also estimates that the health-based benefits of the SO2 reductions total $3.1 billion (based on an EPA estimate of a health value of $7255/ton of SO2
reduced).
fFE estimates that for IGCC installations through 2020, the life-cycle value of excess SO and NO allowances totals $490 million (based on NO allowance
2
x
x
values from Cantor Fitzgerald and SO2 allowance values from EPA). FE estimates that the health-based benefits of the SO2 reductions total $8.1 billion (based
on an EPA estimate of a health value of $7255/ton of SO2 reduced). FE also estimates the cumulative emission reduction benefits from the IGCC capacity in
place by 2020 as 1.1 million tons of SO2, 1 million tons of NOx, and 227 million tons of CO2.
bAll
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APPENDIX F
(based on mass loading) and reliability for some time. However, the early technologies available for flue gas desulfurization (FGD) and NOx reduction could not be applied to all
plant configurations and fuels and were low in collection
efficiency and unreliable for plant operations. To support
the timely achievement of air quality goals, DOE initiated in
1979 a major effort directed toward improvement of FGD
and NOx reduction technologies, in cooperation with the
electric utility industry and equipment vendors. The DOE
activity complemented a parallel effort at EPA.
The perceived goals of the DOE program included the
following: (1) accelerate R&D to improve power-plant-related emission control technology options for SO2 and NOx
such that the emission goals of the CAA would be met with
high collection efficiency, reduced costs, increased reliability, and reduced space requirements for all plant designs and
fuel alternatives; (2) demonstrate the commercial viability
of advanced emission control technologies for SO2 and NOx
for retrofit and new conventional plant applications; and
(3) stimulate interest in U.S. emission control technologies
for application abroad.
After more than 30 years of experience from RD&D activity and full-scale operations, advanced emission control
technologies for PM, SO2, and NOx are now available for
essentially all commercially operating, large-power-plant
boiler configurations. The technology is available for the
range of existing plants in the United States with different
boiler and flue gas conditioning designs and site space limitations and using different fuel supplies, especially coals.
PM emission control devices using electrostatic precipitators and/or baghouse fabric filters are well established and
have been adopted for virtually all U.S. large power plants.
Flue gas desulfurization methods include (1) a variety of wet
scrubbing configurations using lime or limestone alkali reagent and (2) dry scrubbing, including direct sorbent injection into postcombustion regions of the boiler. NOx emission
control has evolved through control of the fuel combustion
process, with the addition of reburn/overfire capability above
the primary boiler combustion zone. NOx technology also
exists for postcombustion treatment of the flue gas using
selective catalytic reduction or selective noncatalytic reduction. These technologies react reduced nitrogen compounds
such as ammonia or urea with NOx at a high temperature for
NOx removal.
Funding and Participation
Since 1979, DOEs investment in FGD technologies, including basic and applied research and the demonstrations
of the Clean Coal Technology (CCT) program has been $179
million,3 which complemented EPAs investment of ap-
3The $179 million figure is in current dollars while the $224 million
estimate in Table F-10 is in constant 1999 dollars.
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APPENDIX F
DOEs Role
DOEs role in emission control technologies came relatively late in the development of much of the commercial
hardware available in the 1980s; it appears to have been
motivated strongly by concerns about acid rain mitigation
and the need to develop best available control technology
(BACT) and address the new source performance standards
called for by the CAA. DOEs early role was a supporting
one, providing basic and applied research activities to resolve technical issues raised in the first generation of hardware. EPA and the private sector, through vendors and EPRI,
played a strong leadership role in RD&D for PM, SO2, and
NOx reductions through 1980. Other than its support for basic and applied research, including support for extensive developmental effort at EPRIs high-sulfur test facility (HSTF),
perhaps DOEs most prominent role was the demonstration
of a number of SO2 and NOx removal technologies as a major component of the CCT program from the late 1980s
through the mid-1990s. The CCT program is significant in
that it supplied resources for partnerships to demonstrate
commercial technologies that add choices for conventional
plant modifications using different U.S. coals and boiler configurations.
DOE assisted in funding three advanced, high-efficiency
FGD wet scrubber technology demonstrations and five sorbent injection technologies for SO2 removal. Under the CCT,
DOE also cosponsored seven NOx combustion or reburn
technology demonstrations and eight postcombustion technologies, including hybrid schemes to simultaneously reduce
NOx and SO2. With the exception of the last category, all of
the CCT demonstrations have yielded commercially viable
technologies, many of which have been sold or are planned
for sale to the domestic and international markets.
Mainly through the CCT demonstrations it cosponsored
with industry, DOE has established a commercializable portfolio of emission control technologies for reducing SO2 and
NOx from conventional coal-fired power plants that will
achieve the desired air pollution reduction requirements of
the CAA. The emission control options add significant capital costs but relatively minor operating expenses for retrofitting existing plants and for designing and constructing new
plants, including AFBC and PFBC systems. However, the
investment provides a second generation of control technologies whose deployment can ensure that U.S. pulverized coal
power plants comply with air quality objectives through at
least 2010 if no additional emission limits are implemented.
In addition to demonstration of several different advanced
technologies for SO2 and NOx emission control, DOE has
taken at least partial credit for key technological developments associated with flue gas treatment that meet the program objectives, including the following:
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APPENDIX F
TABLE F-10 Benefits Matrix for the Improvement of the Flue Gas Desulfurization (FGD) Programa
Realized Benefits/Costs
Options Benefits/Costs
Knowledge Benefits/Costs
Economic
benefits/costs
Environmental
benefits/costs
Security
benefits/costs
None
None
None
aUnless
otherwise noted, all dollar estimates are given in constant 1999 dollars through 2000.
addition, EPA sponsored approximately $100 million in FGD RD&D from the 1970s through the mid-1980s.
cIncluding the EPRI high-sulfur test center.
dThis is the current dollar total, exclusive of site-sharing expenses.
eFE contends that the cumulative life-cycle economic benefits resulting from reduced FGD capital and operating costs for coal-fired plants that currently use
FGD total $4.8 billion.
fFE contends that the cumulative life-cycle value of excess SO removal is $841 million (based on the Cantor Fitzgerald SO allowance value of $128/ton),
2
2
that the cumulative emission benefits for the life cycle of FDG installations is 7.1 million tons of SO2, and that the health-based life cycle SO2 benefits (based
on a health value of $7255/ton of SO2 removed) total $47.6 billion.
gIn addition, some of the advanced technologies yield valuable by-products that do not have to be landfilled. Both elemental sulfur and sulfuric acid byproducts can be produced, and optimized integration into the power plant cycle may reduce ancillary power requirements and further reduce production of
pollutants, as well as CO2.
bIn
port for these developments. DOE appears to have had relatively little intellectual leadership of the technology development. However, its financial push was important in bridging the economic barrier between the bench- and pilot-scale
levels of development and the scale-up to commercial operations. What appears to have been critical is the cost
sharing with industry of demonstrations through the CCT
program; this cost sharing led to realizing the commercial
potential of technologies that have little economic value to
the private sector as profitmaking ventures.
Since the completion of the CCT program, FE has continued to fund advanced concepts for emission control technologies applicable to the current fleet of conventional power
plants. Ongoing RD&D includes work on the superclean
plant concept incorporating very-high-efficiency emission
controls and on ways to reduce mercury emissions. This
raises a question about the logic of continuing to pursue solutions for coal utilization, since a high-quality, environmentally benign solution (IGCC) has already reached the stage
of commercialization.
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APPENDIX F
took into account the impact of current emission control technologies. These measurement programs greatly improved the
basis for estimating HAPs and mercury emissions factors for
various designs of large utility boilers employing coal, oil,
and gas as fuels.
By the mid-1990s, the HAPs emission studies evolved
into a substantial DOE investment in the exploration of emission control technologies that would reduce these emissions.
The 1990s emissions testing program indicated that key
HAPs were substantially reduced by existing particle control technologies and by the addition of acid scrubbers to
plants. The main exception to this result was mercury. Since
the mid-1990s DOE has concentrated its air toxics program
on mercury emission reduction technologies.
Funding and Participation
DOE R&D costs have been $42.4 million (1999 dollars)
for the program. Industry has put up another $6 million. Early
DOE participation in the HAPs emissions characterization
was significant, with sampling and measurement development and field study of eight plants, complementing EPRIs
sampling program of 35 plants. Later, in the mid-1990s,
Options Benefits/Costs
Knowledge Benefits/Costs
Economic
benefits/costs
Environmental
benefits/costs
CAAA-drivenestimated additional
cumulative reduction of 25 million tons
of NOx over new source performance
standards baseline plantf
Security
benefits/costs
None
None
aUnless
None
otherwise noted, all dollar estimates are given in constant 1999 dollars through 2000.
to 1987, EPA conducted NOx control R&D.
cFE estimates that the average private industry cost share for research was 20 percent.
dFE estimates that the average private industry cost share for demonstrations was 44 percent.
eHowever, FE estimates that the realized economic benefits through 2005 total $17.1 billion. It assumed that the next-best alternative was the SCR
technology available prior to the federal development program. Capital costs for the new SCR technology were estimated to be 52 percent less than for the
baseline SCR technology. The cost-effectiveness of the baseline technology was estimated to be $3000/ton NOx removed, compared with $1600/ton NOx
removed for the new SCR technology. This represents a $1400/ton NOx removed cost savings over the baseline technologyan effective net cost savings of
47 percent.
fFE estimates that total additional NO reductions, compared with baseline emissions, amount to 25 million tons for hardware installed through 2005, and
x
that the value of this NOx reduction, based on market trading of NOx, totals $8.6 billion. FE did not quantify the public health benefits of the excess NOx
reduction but contends that they are likely to be much greater than the allowance-based values.
bPrior
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APPENDIX F
TABLE F-12 Benefits Matrix for the Mercury and Air Toxics Programa
Realized Benefits/Costs
Options Benefits/Costs
Knowledge Benefits/Costs
Economic
benefits/costs
Environmental
benefits/costs
None
Security
benefits/costs
None
None
None
aUnless
otherwise noted, all dollar estimates are given in constant 1999 dollars through 2000.
also contributed substantial R&D funding, which is not included here.
cThese data were used in EPA (1998) and in a risk assessment of the significance of exposures to HAPs from power plant emissions. The results of the
analysis indicated that the risk of adverse health effects from utility HAPs emissions was generally insignificant and required no regulatory action.
bEPA
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tant is the fact that this DOE program has contributed significantly to environmental acceptability of coal as a fuel.
While it is too early to determine if the current program will
lead to a practical means of reducing mercury emissions from
coal combustion, the effort is still worthwhile because it is
the principal cooperative U.S. activity dealing with this
emerging issue.
Lessons Learned
As with the case of the DOE Mercury and Air Toxics
program, this program exemplifies the importance of DOE/
industry cooperative programs to inform the regulatory process. The jointly sponsored investigations characterizing the
chemical nature and soil mobility of high-volume solid
wastes from coal combustion were crucial to EPAs determination that the material is nonhazardous. The consequent
avoidance of substantial costs in sequestering CCBs has a
significant impact on the cost of electricity from existing
plants. While programs of this kind in DOE are not necessarily technology-intensive, they are justified by showing a high
benefit-to-cost ratio.
DOE plays an important third-party role between the
regulator, EPA, and industry by establishing the credibility
of new, expensive knowledge from non-EPA studies that
inform the regulatory process. The component of DOEs
R&D portfolio that addresses issues of environmental protection is well justified, in terms of both avoided costs of
overconservative regulation and added options for addressing environmental concerns.
TABLE F-13 Benefits Matrix for the Waste Management/Utilization Technologies Programa
Realized Benefits/Costs
Options Benefits/Costs
Knowledge Benefits/Costs
Economic
benefits/costs
Environmental
benefits/costs
None
Security
benefits/costs
None
None
None
aUnless
otherwise noted, all dollar estimates are given in constant 1999 dollars.
FE provides no comprehensive estimate of industry expenditures, industry (including EPRI) has expended at least $5 million a year over the life of
the program.
cAvoided costs of (1) sequestration and storage of high-volume coal combustion wastes as hazardous material assuming cumulative wastes from 1988 to
2005 at an incremental cost of $100/ton and DOE RD&D contribution of 40 percent, and (2) continued utilization of clean coal by-products as cement or
mineral substitutes. Assumes that DOE work saved 3 years of hazardous waste disposal.
bWhile
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APPENDIX F
TABLE F-14 Funding for the Advanced Turbine Systems Program (Fossil Energy Component) (millions of 1999 dollars)
Fiscal Year
Major Subprogram
6.5
13.1
2.1
33.2
2.2
1.1
1.1
10.9
4.4
1.1
0.3
2.6
1.1
22.6
DOE
1999 2000 Total
5.0
1.6
0.5
2.8
2.1
47.3
22.0
41.8
5.2
2.1
0.5
3.1
2.1
54.9
41.1
5.1
2.1
0.5
3.1
2.1
53.9
16.3
30.4
5.1
2.0
0.5
3.0
2.0
59.4
22.4
5.3
2.0
0.5
3.0
2.0
35.2
17.1
5.0
2.0
0.5
3.1
2.0
29.7
Industry
Industry
Cost
Total Cost
Share
Cost Share (%)
7.3
132.4 71.3
69.9 69.9
37.8
1.0
12.9
0.0
4.5
0.5
21.9
0.0
13.4
4.4
314.8 154.6
29.3 25.0
203.7
139.9
38.8
12.9
5.0
21.9
17.8
469.3
35.0
50.0
2.7
0.0
10.4
0.0
24.9
32.9
SOURCE: Office of Fossil Energy. 2000. OFE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency and Fossil
Energy: Turbine Systems Technology Area, November 22.
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APPENDIX F
Results
The ATS program has been funded since FY 1992. By
mid-year 2000, the gas turbines specifically designed as
part of the program were ready for commercial orders.
These include the General Electric model 7H and 9H machines. These full-scale machines have been evaluated on
test stands, and the plans are in place to install both the 50Hz (9H) and 60-Hz (7H) systems at utility sites. The Siemens-Westinghouse ATS machine is nearing the point
when commercial orders will be taken. Although the
power generation concepts developed under the ATS program will provide a basis for systems for the 21st century,
it is unlikely that the ATS systems will enter commercial
service in a significant way until after 2005.
Siemens-Westinghouse is using its model 501G gas turbine as a testbed for the ATS design. Several of the technical results of the ATS R&D have already been incorporated into the commercial offering of the 501G turbine
(this is a term systemthat is, it does not meet the total
ATS goals but has been developed by the industrial partner).
Parallel technology programs have been conducted at
universities and/or government laboratories. These programs are focused on development of critical technologies
that will support the development of gas turbine power
generation systems. Key areas of research currently include the control of combustion instabilities, testing of
novel low-NOx combustor designs, investigation of the
chemical kinetics of pollutant formation, and development
of advanced diagnostics for measuring heat transfer rates,
flow velocities, and pollutant concentrations during turbine
component testing.
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APPENDIX F
TABLE F-15 Benefits Matrix for the Advanced Turbine System (ATS) Program (Fossil Energy Component)a
Realized Benefitsb/ Costs
Options Benefits/Costs
Knowledge Benefits/Costs
Economic
benefits/costs
Environmental
benefits/costs
No realized benefits
None
Security
benefits/costs
No realized benefits
None
None
aUnless
otherwise noted, all dollar estimates are given in constant 1999 dollars through 2000.
estimates of realized economic and environmental benefits are based on a comparison of the market-based H gas turbine combined cycle (GTCC) with
the market-based 7FA GTCC. However, there is a serious difference of opinion as to the significance of DOEs role in the technology development and hence
its role in any realized or potential options benefits generated. According to FE, its contribution to the advancement of ATS technology has been pivotal.
However, the committee believes the fundamental technologies of the currently commercial machines were established before initiation of the ATS program
and that DOE had no impact on the development of these current machines and systems.
cFE contends that the economic benefits of lower power costs from ATS installations put in place by 2005 will amount to $5.7 billion over a 30-year life
cycle. Although the power generation concepts developed under the ATS program will provide a basis for the systems for the 21st century, it is unlikely that
the ATS systems will enter commercial service in a significant way until approximately 2005. If this is the case, it is not clear how FE expects ATS systems
installed by 2005 to generate $5.7 billion in economic benefits. There could be spin-off concepts, which would be beneficial for the current class of gas turbine
combined cycles; however, this is not the goal of the ATS program, and it is extremely difficult to give economic credit to DOE rather than industry for these
spin-off benefits.
dFE estimates that the potential economic benefits of reduced power costs from ATS installations through 2020 total $28 billion.
eFE contends that ATS could save 1 quad annually by 2020, compared with todays best gas turbine technology and assuming that ATS will achieve 50
percent market penetration.
bFE
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APPENDIX F
lower efficiency. High-temperature fuel cells have the potential for higher efficiency but have operational characteristics that would probably limit them to larger-scale applications and will require integration with other power generation
systems, e.g., gas and/or steam turbines, in order to achieve
competitive efficiencies.
At the beginning of the 1990s, FE, for purposes of commercial demonstration and development, supported two
PAFC developers, three MCFC developers, and one SOFC
developer. As the decade ended, only three of these developers remained (one PAFC, one MCFC, and one SOFC). However, it now appears that interest in the SOFC technology is
increasing, and more industrial organizations are focused on
developing support subsystems for this fuel cell concept.
Funding and Participation
Total funding for the Fuel Cell program from FY 1978
through FY 2000 was $1167 million. Table F-16 shows budget line item program elements.
FE required cost sharing from the participants in the Fuel
Cell program. The guideline for this program was for a developer to contribute a minimum of 20 percent of the total
activity cost for a technology development activity and a
minimum of 50 percent for a system field test demonstration
activity. Cost sharing for start-up development activities and
advanced research efforts was not required.
Results
In spite of NASAs success in the development of alkaline fuel cells for space power applications in the late 1960s,
this fuel cell concept could not be applied for stationary
power. The technology for stationary applications would
Appropriation
Stage
410.8
406.9
Applied R&D
Applied R&D
198.0
Applied R&D
114.2
3.7
33.7
Applied R&D
Applied R&D
Basic and applied
research
SOURCE: Office of Fossil Energy. 2000j. OFE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency
and Fossil Energy: Stationary Fuel Cells Program, December 6.
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APPENDIX F
Lessons Learned
Fuel cells, as a technology to generate power directly from
fuel with no moving parts, have an appeal, and for some
TABLE F-17 Benefits Matrix for the Stationary Fuel Cells Programa
Realized Benefits/Costs
Options Benefits/Costs
Knowledge Benefits/Costs
Economic
benefits/costs
Environmental
benefits/costs
None
None
None
None
Security
benefits/costs
aUnless
otherwise noted, all dollar estimates are given in constant 1999 dollars.
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APPENDIX F
applications, for example, power in space missions, the technology is an ideal match. However, when the technology
was tried for stationary applications, the inability of the fuel
cells to accept fuels and oxidants that were not ultraclean
necessitated fuel/oxidant treatment subsystems, which increased the complexity and cost of these fuel cells. In the 30
years of DOE support for fuel cells, there has been little or
no commercial application that resulted in substantial public
benefit and no commercial product without DOE subsidies.
This leads one to question the ability of subsidies to drive a
new product to market if that product does not have significant stand-alone commercial benefits.
The promised efficiency of fuel cells is a moving target.
Gas turbine combined cycles have become the accepted
power generation technology for the utility industry, and
their efficiencies are projected under the DOE ATS program
to reach 60 percent. Thus, there is no doubt that opportunities exist to increase the efficiency of conventional systems,
so fuel cells will need to meet higher efficiency and lower
capital cost targets in order to be considered. As fuel cell
systems become more complex in order to compete, it will
be more difficult to achieve market acceptance. Systems that
have to rely on many elements working together in order to
produce a desired result are normally viewed by the utility
industry as having reliability issues. This was one of the
major concerns that limited the use of gas turbine combinedcycle technology in its early stages of development. Overcoming the reliability issue will require many years of successful operation at the full-scale demonstration scale.
In the 30 years of the program, major companies have
terminated their internal programs and have exited DOEsponsored programs. The only thing that has kept this program going is an extremely strong advocacy group and the
significant DOE program funding.
In many ways, the fuel cell program shares characteristics with the MHD program. It is difficult if not impossible
for DOE to drive a program to the point of commercial reality with its funding alone unless there is a real effort by industry, with the manufacturing infrastructure and financial
support, to commercialize the technology. DOE has not been
very successful here in determining if an industrial partner is
seriously undertaking the R&D or just in the program to receive DOE funding support. Although industrial support for
fuel cell program has increased in recent years, it has yet to
be shown that the program will result in benefits that are in
line with the more than $1 billion that has been invested in
this technology area.
MAGNETOHYDRODYNAMICS
Program Description and History
Driven in large measure by the desire to find ways to use
abundant domestic coal resources, DOEs Office of Fossil
Energy (FE) conducted R&D on magnetohydrodynamics
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APPENDIX F
Current Dollars
1999 Dollars
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
70
76
72
70
29
29
30
30
27
26
35
37
40
40
39
30
145.1
145.5
125.2
112.2
43.8
42.1
42.0
40.7
35.9
33.5
43.6
44.4
46.2
44.6
42.5
31.9
SOURCE: Office of Fossil Energy. 2000l. OFE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency
and Fossil Energy: Magnetohydrodynamics Program, November 27.
in the following section, the MHD R&D program did contribute valuable information to some spin-off technologies
that are either are being applied or may find application.
Benefits and Costs
The benefits and costs of DOEs MHD R&D program are
summarized in the matrix shown in Table F-19. The program had no realized economic, environmental, or security
benefits. While the MHD concept was proved, the decision
to terminate before proof of concept could be established at
close to a commercial scale means MHD has little if any
options value. The R&D did, however, result in some knowledge benefits, among them the following:
Provided a database for technologies that require the
injection of solids into pressurized chambers,
Contributed to combustor development for subsequent
clean coal technology projects,
Contributed insights on collecting current from multiple power sources that may be applicable to fuel cells,
Provided a database for pressurized high-temperature
gas heaters,
Provided MHD generator information that may find applicability in defense programs (missile defense) and NASA
programs (wind tunnels, assisted launch vehicles), and
Provided a material database for boiler tube fabrication
in a corrosive environment.
Although these claims for spin-off applications are made
by DOE, no direct commercial benefit can be attributed to
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APPENDIX F
Options Benefits/Costs
Knowledge Benefits/Costs
Economic
benefits/costs
None
Environmental
benefits/costs
None
None
None
Security
benefits/costs
None
None
None
aUnless
otherwise noted, all dollar estimates are given in constant 1999 dollars through 2000.
bThe program was funded between 1978 and 1993. Of the $1.02 billion expended on the program over this period, DOE requested only $590 million for the
years 1978 to 1981 and 1985. The remainder of the funding, $430 million (42 percent of the total), was added to the DOE budget by direct congressional line
items additions.
cBeginning in 1986, the private sector was mandated to cost share at a 10 percent level, which steadily increased to 35 percent at the end of the proof-ofconcept program in 1993.
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APPENDIX F
as early as possible and available funds redirected to the areas of greatest potential.
COAL-BED METHANE
Program Description and History
During the natural gas shortages of the 1970s, there was a
widespread notion that the resource base of natural gas in the
United States was substantially depleted. A variety of
nonconventional sources, including coal-bed methane, were
considered as possible sources of commercial gas. With a
combination of basic and applied research, field demonstrations, and tax credit incentives, many of these nonconventional sources of natural gas now compete with conventional sources and contribute significantly to the nations gas
supply. Coal-bed methane (CBM) currently supplies 1.3 Tcf
annually, or 7 percent of total domestic production of natural
gas.
Early work on CBM was carried out by the U.S. Bureau
of Mines and focused on predraining and capturing methane
from the active, gassy mines of the Appalachia and Warrior
basins. The Bureau of Mines program was assumed by DOE
in 1978 and funded for 5 years. Subsequent R&D was conducted chiefly by the Gas Research Institute (GRI) and industry. The DOE effort was aimed mostly at defining the
size and recoverability of the resource base as well as the use
of natural gas associated with active coal mine operations.
Several pilot field projects were conducted, including testing the use of vertical wells in deep, unminable coalbeds;
testing the use of vertical wells in multiple coalbeds; and
combining in-mine, multiple horizontal boreholes and CBMfueled gas turbines for on-site power generation. Experiments in hydraulic fracture stimulation, conducted by the
Bureau of Mines and later by DOE, demonstrated the utility
of this technology in CBM recovery. In addition to the FE
program, the DOE Small Business Innovative Research program funded several projects involving strategies for wellsite selection, drilling practices, and well-completion techniques for coal-bed methane production.
Funding and Participation
The DOE coal-bed methane program was funded for 5
years, from 1978 to 1982, as shown in Table F-20. DOE
reports that significant cost sharing was obtained from industry for the vertical well pilot project and the hydraulic
fracture mine-back efforts on the Warrior Basin, but that no
specific information on the associated expenditures is available.
Funding
1978
1979
1980
1981
1982
Total
1.5
8.0
9.2
8.4
3.0
30.1
SOURCE: Office of Fossil Energy. 2001c. OFE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency
and Fossil Energy: Coal-bed Methane Program, January 10.
Results
DOEs CBM program was relatively short-lived and modestly funded, with much of the fuller development of this
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APPENDIX F
Options Benefits/Costs
Knowledge Benefits/Costs
Economic
benefits/costs
Environmental
benefits/costs
Security
benefits/costs
None
Minimal
aUnless
otherwise noted, all dollar estimates are given in constant 1999 dollars through 2000.
addition to the FE program, the DOE Small Business Innovative Research program funded several projects involving well-site selection strategies,
drilling practices, and well completion techniques for coal-bed methane production.
cDOE reports that significant cost sharing was obtained from industry for the vertical well pilot project and hydraulic fracture mine-back efforts on the
Warrior Basin, but that no specific information on the expenditures is available.
dFE estimates that the benefits total $499 million in lower producer costs and $91 million from incremental royalties and taxes. FE assumed that (1) basic
science is credited with 20 percent of the production impact, and applied science and field demonstrations are credited with the remaining 80 percent; (2) the
DOE CBM program is allocated one-third of the basic science production impact, based on providing one-third of the basic R&D expenditures; industry and
GRI are allocated the remaining two-thirds; (3) the DOE CBM program is allocated 20 percent of the CBM production impact in the Warrior Basin; and
(4) industry and GRI are allocated 80 percent of the CBM production impact from the Warrior Basin and 100 percent of the CBM production impact from all
other basins. However, it must be recognized that, through 1992, coal-bed methane benefited from the existence of Section 29 tax incentives for the production
of unconventional gas. These incentives were substantial and worked in conjunction with the DOE R&D program to increase the production of coal-bed
methane. DOE is credited based on the above with a $200 million benefit.
eThe DOE effort was aimed mostly at defining the size and recoverability of the resource base as well as the use of natural gas associated with active
coalmine operations. The DOE CBM resource assessments established that a large, 400-Tcf natural gas resource was contained in coal seams.
fDOEs initial coal-bed methane R&D program provided a significant portion of the basic R&D that formed the scientific knowledge base for this gas
resource, and established the essential coal-bed methane storage and flow mechanisms, including adsorption, desorption, diffusion, and fracture-dominated
flow.
gThese included the test of use of vertical wells in deep, unminable coals, testing the use of vertical wells in multiple coalbeds, and combining in-mine,
multiple horizontal boreholes and CBM-fueled gas turbines for on-site power generation. A major breakthrough occurred when DOE demonstrated that CBM
could be efficiently produced using vertical wells, as opposed to only using in-mine horizontal boreholes. The program also supported field tests that
demonstrated the mechanisms of methane storage and flow in a near-commercial setting (a closely spaced well pattern) and supported field tests of the
performance and effectiveness of using hydraulic fracturing to stimulate gas flow from coal seams in a series of test wells followed by mine-back experiments.
hConducted by the Bureau of Mines and later by DOE, these demonstrated the utility of this technology in coal-bed methane recovery and that coal seams
could be efficiently and safely hydraulically fractured, thus accelerating the rates of gas flow in these low-permeability formations.
iFE estimates reductions of at least 1000 Bcf.
jOwing to current concerns over greenhouse gases, there is renewed federal government interest in coal-bed methane: DOEs Carbon Sequestration R&D
program is sponsoring a major enhanced coalbed methane recovery project, and EPA is supporting R&D on mine-related coal-bed methane emissions capture
and use in both U.S. and overseas coalmines.
bIn
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APPENDIX F
Oil programs
Gas programs
Total
DOE
Total
48
31
79
24 (33%)
8 (21%)
32 (29%)
72
39
111
Results
The early drilling program, prior to 1983, focused on the
need to gain more efficiency from the limited number of
drilling rigs available at that time. While the early program
focused heavily on drilling technology, the post-1983 programs cover a broader range of completion and stimulation
technologies.
Oil Programs
The oil programs can be categorized into five elements:
(1) drill system development, (2) drill fluids and underbalance drilling, (3) surface operations, (4) completion, and
(5) stimulation. To indicate the scope and depth of the program, some of the projects in each of these five areas are
summarized below.
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APPENDIX F
Gas liquids cylindrical cyclone. DOE has been involved in the development of new cylindrical cyclones for
gas liquids that are more compact and more efficient than
conventional separators.
Fiber-optic sensors for downhole production monitoring. DOE is funding the development of a new, improved
fiber-optic sensor technology for precise monitoring of temperature and pressure at reservoir producing intervals. It has
the advantage of being small, self-calibrating, and able to
withstand high temperatures and pressures.
Completion Projects
Ceramic borehole sealants. Chemically bonded phosphate ceramic sealants, technology created for the stabilization of radioactive waste, show promise as borehole sealants
in place of conventional cement.
Stimulation Projects
Tiltmeter technology. Improved range, cost, size, and
efficiency of tiltmeter technology are used to determine the
orientation of underground fractures.
Gas Programs
High-power slimhole drilling system. DOE is developing a high-power slimhole drilling system that increases the
rate of penetration, which is one of the major limitations on
the use of slimhole drilling.
High-temperature measurement while drilling/logging
while drilling. DOE is supporting the development of hightemperature measurement-while-drilling and high-temperature logging-while-drilling technologies, improving the ability to use smart technology when drilling for deep gas.
Composite drill pipe. DOE is supporting the development of drill pipe made from lightweight composites, which
are about half the weight of steel pipe, thereby improving the
ability to drill horizontal boreholes and to drill in deep water.
High-pressure coil tubing drilling system. DOE is developing a high-pressure drilling system where high-pressure fluid is transmitted to a high-pressure motor at the hole
bottom through concentric coil tubing. This system is ex-
Underbalanced
Drilling Systems
New Concept
Drilling Systems
Integrated directional
drilling system and
slimhole EMMWD
Underbalanced drilling
products
Lightweight solid additives
Foam 1 (foam drilling
model)
Underbalanced drilling
simulator
Supporting Research
Horizontal well technology
(DEA-44)
Coiled-tubing and slimhole
technology (DEA-67)
Underbalanced drilling
technology (DEA-101)
Deep water riser wear study
(DEA-137)
aADCS, advanced drilling, completion, and stimulation; CT, coil tubing; EMMWD, electromagnetic measurement while drilling; LWD, logging while
drilling; MWD, measurement while drilling; and TSP, thermally stable polycrystalline.
SOURCE: Office of Fossil Energy. 2000m. OFE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency and Fossil
Energy: Drilling, Completion, and Stimulation Program, December 4.
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APPENDIX F
Supporting Research
DOE supports industry projects in such areas as horizontal drilling, coil tubing and slimhole drilling, and underbalanced drilling.
DOE did not assess the total value of the gas program, but
it assessed the benefits of just two projects, namely,
underbalanced drilling technologies and high-temperature
measurement while drilling/logging while drilling. It estimated a benefit of $252 million from the two programs.
DOE supported the development of important and highrisk projects that might not otherwise have been done by
industry, with a significant benefit to the country. While difficult to quantify, it is clear that DOE created benefits that
substantially exceeded their outlay. DOE claimed very large
benefits for the program; however, DOE did not calculate
the cost-benefit ratio by the recommended methodology.
Clearly, there were significant benefits from the program.
However, because of the large number of small projects that
make up the program, it was not practical with the time available for the committee to do an assessment using the recommended methodology. Therefore, based on its own experience with similar programs and the obvious success of a
number of these programs, the committee made the judgment that a cost/benefit ratio of about 12 was appropriate
and assigned a benefit of $1 billion.
Environmental Benefits
The advanced drilling and completion technology provides significant environmental benefits such as smaller footprints, reduced noise, lower toxicity of discharges, reduced
fuel use, and better protection of sensitive environments
(Table F-24).
Economic Benefits
The cumulative cost to DOE of the oil program from 1978
to 1999 was $48 million and the cumulative cost of the gas
program was $31 million, for a total of $79 million, all in
1999 dollars (see Table F-24).
Many of the projects were quite successful and are producing significant economic benefits. Nevertheless, it is difficult to assess the total benefit, in part because both programs consist of a myriad of small projects. Also, it is
difficult to separate the contributions made by DOE and contributions made by industry and others.
DOE assessed the benefits from the oil programs from
1978 to 2005 at $2.2 billion. While it has not been possible
to verify the bases for all these assessments, it is certainly
obvious that DOE has made a contribution well in excess of
its outlay. For example, DOE made important contributions
to projects such as the development of polycrystalline diamond compact drill bits, horizontal drilling, slimhole and
coil tubing drilling, synthetic drilling fluids, cutting injection, wireless telemetry for production monitoring, and gas
liquids cylindrical cyclones.
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APPENDIX F
TABLE F-24 Benefits Matrix for the Drilling, Completion, and Stimulation Programa
Realized Benefits/Costs
Options Benefits/Costs
Knowledge Benefits/Costs
Economic
benefits/costs
Environmental
benefits/costs
Security
benefits/costs
aUnless
otherwise noted, all dollar estimates are given in constant 1999 dollars through 2000.
of $48 million for the oil programs and $31 million for the natural gas programs.
cIndustry cost share for the oil programs was 33 percent and for the natural gas programs was 21 percent.
dFE estimates that the economic benefits from programs initiated through 2005 total a projected $2221 million for the oil programs and $252 million for the
gas programs. It is difficult to assess the total benefits because both programs consist of a myriad of small projects. Also, it is difficult to separate the
contributions made by DOE and contributions made by industry and others. However, while it is likely that both of these figures overestimate the benefits
attributable to only the FE R&D programs, it is nevertheless likely that the realized economic benefits are substantial and greatly exceed the total of the DOE
and private industry R&D costs. Assuming a benefit to cost ratio of 12:1 based on industry expert opinion for this class of R&D, a benefit of $1 billion is
assigned.
eThe drilling program prior to 1983 focused on the need to gain more efficiency from the limited number of drilling rigs available at that time. While the
early program focused heavily on drilling technology, the post-1983 programs cover a broader range of completion and stimulation technologies.
fR&D in the oil programs area includes Drill System Development projects, such as the polycrystalline diamond compact drilling bit, pressure coring system
mud pulse telemetry, electrodril, and microdrilling; Drill Fluids and Underbalance Drilling projects, such as air-, mist-, and foam-aerated drilling; Surface
Operations projects, such as gas liquids cylindrical cyclone and fiber-optic sensors for downhole production monitoring; Completion projects, such as ceramic
borehole sealants; and Stimulation projects, such as tiltmeter technology. R&D in the gas programs area includes Drilling System Efficiency, such as highpower slimhole drilling systems, high-temperature measurement while drilling/logging, and composite drill pipe; Underbalanced Drilling Systems, such as
integrated directional drilling systems; New Concept Drilling systems, such as high-pressure coil tubing drilling systems and advanced mud-hammer drilling
systems; Supporting Research in areas such as horizontal drilling, coil tubing, slimhole drilling, and underbalanced drilling; and Advanced Completion and
Stimulation Systems, such as real-time downhole simulation monitoring and control systems and ultradeepwater completion systems.
gFE lists the environmental benefits of advanced drilling and completion technology as including smaller footprints; reduced noise and visual impacts; lessfrequent well maintenance and workovers with less associated waste; reduced fuel use and associated emissions; enhanced well control for greater worker
safety and protection of groundwater; less time on site, with fewer associated environmental impacts; lower toxicity of discharges; and better protection of
sensitive environments.
hSlimhole technologies can significantly reduce the area and duration of land disturbance, and underbalanced drilling can reduce the volume of drilling
fluids that require disposal, especially offshore.
bConsists
cility to measure the thermodynamic properties of petroleum in 1943 at the Bureau of Mines laboratory in Bartlesville, Oklahoma. In the early years this laboratory pioneered the development of new analytical techniques to
separate hydrocarbons and to accurately measure their
thermodynamic properties. Most of the research in downstream fundamentals for the period from 1978 to 1997 was
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APPENDIX F
X
X
X
Smaller
Footprint
Habitat
Protection
X
X
X
X
X
X
X
Better
Wellbore
Control
Reduced
Waste
Volumes
X
X
X
X
X
X
X
X
X
X
Water
Resources
Protection
Reduced
Fuel
Consumption
Reduced
Air
Emissions
Enhanced
Worker
Safety
X
X
X
X
X
X
aMWD,
Results
Program
DOE Expenditures
Total
1978 to 1999
2000
Total
46
2.6
48.6
5 (10%)
1 (28%)
6 (11%)
51
3.6
54.6
Fuels Chemistry
The primary accomplishments in fuels chemistry is the
development of unique analytical methods and separation
SOURCE: Office of Fossil Energy. 2000n. OFE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency
and Fossil Energy: Downstream Fundamentals Area Research, December
6.
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APPENDIX F
Process Fundamentals
Fundamental data related to processes for refining and
petrochemical manufacture were developed. Projects included such processes as HF alkylation, catalytic cracking,
coking, and desulfurization.
Benefits and Costs
The economic benefits of the work carried out under the
Downstream Fundamentals program, which is a very fundamental in nature, are virtually impossible to estimate with
any degree of confidence because the research is so far back
in the chain from science to application (see Table F-27).
Undoubtedly, over the years the results of this work have
made a significant contribution to the well-being of the industry and the nation as a whole. That industry is funding a
significant portion (39 percent) of the current program is an
indication of the value that this program currently engenders.
Lessons Learned
All programs, even those as highly regarded as the early
thermodynamic programs, must evolve over time to fit the
changing needs of society and the changing modalities of
interaction with industry. The Fundamentals program has
changed: first, it was focused on light crude oil, then on synthetic fuels and now, on heavy crude oil. At the same time
the nature of the program has evolved: From being essentially an academic program, it has become a program highly
leveraged in partnership with industry.
Options Benefits/Costs
Knowledge Benefits/Costs
Economic
benefits/costs
None
Environmental
benefits/costs
None
None
None
Security
benefits/costs
None
None
None
aUnless
otherwise noted, all dollar estimates are given in constant 1999 dollars through 2000.
most of the period 1978-2000, industrys cost share was zero or very small; however, since 1995 it has been about 50 percent.
cThe primary accomplishment in fuels chemistry is the development of unique analytical methods and separation techniques and their application to provide
fundamental data on the changing slate of liquid fuel feedstocksfor example, characterization of light cycle oil, a refinery by-product blended into diesel fuel,
to determine which compounds were causing fuel instability.
dThe program has been focused on coal liquids, shale oil, oil from tar sands and, most recently, heavy crude oil. The thermodynamic data developed under
this program are needed to design processes to convert these materials into useful products, calculate yields, and develop process simulations. It is this data set
that underlies the design and operation of petroleum refineries and petrochemical plants.
eProjects included such processes as HF alkylation, catalytic cracking, coking, and desulfurization.
bFor
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APPENDIX F
Results
The DOE program was responsible for bringing together
and integrating a significant amount of scattered data on the
Eastern gas shales critical to a solid assessment of the resource base. Such an assessment was, as is always the case,
necessary for the optimum deployment of technology. DOE
sponsored work in core and fractigraphic analysis, as well as
electrical downhole well logging, all aimed at understanding
the density and distribution of natural fracture networks.
Results of these studies aided in the development and deployment of foam fracture technology and, especially, the
optimum deployment of massive hydraulic fracturing. Directional wells had been drilled in the shale reservoirs prior
to the Eastern Gas Shales program, but the better understanding of the distribution of natural and induced fractures provided by the program permitted maximum intersection of
horizontal and directional wells with fracture zones, increasing yield per well drilled.
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APPENDIX F
TABLE F-28 Benefits Matrix for the Eastern Gas Shales Program (EGSP)a
Realized Benefits/Costs
Options Benefits/Costs
Knowledge Benefits/Costs
Economic
benefits/costs
Environmental
benefits/costs
None
Security
benefits/costs
None
None
None
aUnless
otherwise noted, all dollar estimates are given in constant 1999 dollars through 2000.
bIn addition to the FE R&D expenditures, EGSP benefited from substantial federal tax incentives under the Section 29 program and other legislation, which
involved substantial revenue losses to the federal government. In addition, substantial EGSP R&D was conducted by the Department of the Interior, ERDA,
and NASA, and these expenditures are not included here.
cPrimarily the GRI EGSP R&D program. Estimates of R&D by individual private companies are not available.
dThe direct benefits come from the increased production from the shale formations and were derived from the estimated volumes of incremental shale gas
production DOE credits to the program. Consideration must be given to production that would have occurred in the absence of the program, production induced
by the existence of Section 29 tax credits under the Natural Gas Policy Act, and production resulting from the R&D activities of GRI. The DOE program is
credited with 50 percent of the incremental shale gas production from the Appalachian Basin (over industrys baseline) and 10 percent of the incremental gas
production in the Michigan and Fort Worth basins. This amounts to 92 Bcf of additional gas production in 2000 and l743 Bcf cumulative additional gas
production from 1978 to 2005. The benefits analysis set net revenues at 17.5 percent of sales revenues, giving an increased net revenue to industry of $705
million. In addition, DOE calculates $33 million from royalties on federal lands and from increased state severance taxes. Thus, $600 million is a relatively
realistic estimate that takes into account the influence of the Section 29 tax credits and private industry R&D.
eFE estimates this at natural gas prices exceeding $4.00 per Mcf.
fDOE sponsored work in core and fractigraphic analysis, as well as electrical downhole well logging, aimed at understanding the density and distribution of
natural fracture networks. Results of these studies aided in the development and deployment of foam fracture technology and especially the optimum deployment of massive hydraulic fracturing. Directional wells had been drilled in the shale reservoirs prior to EGSP, but the better understanding of the distribution
of natural and induced fractures provided by the program permitted maximum intersection of horizontal and directional wells with fracture zones, increasing
yield per well drilled.
gThis is important in many hydrocarbon reservoirs other than shales.
hThe DOE program was responsible for collecting and integrating a significant amount of scattered data on the Eastern gas shales critical to a solid
assessment of the resource base. Such assessment is, as always, necessary for the optimum deployment of technology.
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APPENDIX F
$200 million. These are carried by DOE under its field demonstration program.
Under the multitiered pricing of oil in the late 1970s and
early 1980s, oil recovered with EOR techniques qualified
for an incentive price. This proved difficult to administer
and led to significant legal disputes between industry and
government. It is judged not to have been a major factor in
calculations of DOE costs and benefits.
From 1978 through 2000, DOE funded approximately
230 projects (exclusive of the early EOR field demonstrations) in thermal, gas, chemical, and microbial EOR and
sponsored the development of reservoir simulators, screening models, and databases. A total of $177.2 million (1999
dollars) has been expended, with an additional $47 million
in cost sharing, for a DOE share of 79 percent (see Table F29). Approximately equal amounts, about 25 percent each,
were expended in support of programs in thermal, gas, and
chemical methods; about 10 percent of the total was expended each for microbial methods and simulation work;
and about 4 percent supported so-called novel methods
(downhole electric heating, microwave heating, seismic
wave stimulation, and wettability reversal) (OFE, 2000p).
Results
A principal accomplishment of the program in the early
stages was the recognition of the critical importance of reservoir characterization in the deployment of EOR strategies.
Notable R&D accomplishments include advancements in the
understanding and control of CO2-based EOR, especially
development of chemicals and foams for mobility control;
fundamental research on the miscibility of multicomponent
systems; new technologies for thermal-based EOR; and introduction of microbial EOR.
Benefits and Costs
DOE estimates its EOR program and technologies have
stimulated production of some 167 million barrels of oil
equivalent more than would have been produced with industry acting alone. It credits its program with 2.8 percent of
annual domestic EOR production. A net revenue value of
17.5 percent of sales revenues, equal to $3.50/bbl when domestic price is $20/bbl, was used to convert incremental production to benefits.
From 1978 through 2000, the DOE EOR program spent
$177 million (1999 dollars) and attracted $47 million of cost
share. In return for this investment, the program has provided $625 million (1999 dollars) in cost savings to oil producers, with a benefit/cost ratio of 3.5 to 1 (or 2.8 to 1, including the cost-shared portion of the expenditure).
Including incremental federal estate revenues gives a total of
about $700 million (Table F-29). Benefits will likely accrue
in future years from the application of DOE-sponsored EOR
research. Environmental benefits may accrue from the adap-
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APPENDIX F
TABLE F-29 Benefits Matrix for the Improved Enhanced Oil Recovery Programa
Realized Benefits/Costs
Options Benefits/Costs
Knowledge Benefits/Costs
Economic
benefits/costs
Environmental
benefits/costs
None
Security
benefits/costs
None
None
aUnless
otherwise noted, all dollar estimates are given in constant 1999 dollars through 2000.
contends that its program is responsible for maintaining a critical mass of technology innovation in EOR and transferring this technology, particularly
to independents. A net revenue value of 17.5 percent of sales revenues, equal to $3.50/bbl when the domestic price is $20/bbl, was used to convert incremental
production to benefits. Net revenues were set at 17.5 percent of sales revenues and were linked to changes in domestic crude oil prices. FE R&D was allocated
2.8 percent of annual EOR production, which equals about 20,000 BPD of additional oil production in 2000 and 167 million barrels of cumulative additional
oil production from 1978 to 2005. According to FE, this resulted in $625 million in industry savings and $87 million in incremental federal and state revenues,
for a total of about $700 million. The estimates were developed using the Total Oil Recovery Information System (TORIS) and the Gas Supply Analysis Model
(GSAM).
cEspecially development of chemicals and foams for mobility control.
dThe most significant information resulting from these early experiments with EOR was the knowledge that the geological and engineering parameters of
individual fields were insufficiently known.
eThe virtual failure of the early EOR field demonstrations in terms of direct benefits was extremely important to a changed view of reservoirs and fluid
behavior. In addition, this early experience allowed redirection of the EOR program from field demonstrations to a more research-focused effort so that as
complex reservoirs are understood well enough for effective deployment of EOR methods, better techniques will be at hand.
bFE
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APPENDIX F
in the case of oil. The virtual failure of the early EOR field
demonstrations in terms of direct benefits was critical to a
changed view of reservoirs and fluid behavior. In addition,
this early experience allowed redirection of the EOR program from field demonstrations to a more research-focused
effort so that as complex reservoirs are understood well
enough for effective deployment of EOR methods, better
techniques will be at hand.
was directly related to complexity or heterogeneity of reservoirs (Galloway et al., 1983). That complexity was shown to
be primarily related to the architecture of the reservoir, which
in turn resulted from its depositional origin. Improved understanding of the geological and engineering parameters of
reservoirs could lead to increased recovery of mobile oil by
advanced secondary recovery techniques, but without adequate understanding of the heterogeneity of a reservoir,
deployment of advanced recovery technologies was likely to
be ineffective. The Texas study also showed that a large universe of reservoirs could be grouped into plays based on
common depositional origin and common fluid behavior.
Thus, the knowledge of a fully characterized reservoir could
be directly extrapolated to other reservoirs in the play.
DOE adopted the play concept, applied it nationwide, and
instituted in the mid-1980s the Reservoir Life Extension
Field Demonstration program, which would be called the
Reservoir Class Program in the early 1990s. This was also a
time of low to very low oil prices, when a large number of
reservoirs were in danger of premature abandonment. In the
1990s it was also clear that the domestic oil industry was
being operated by a larger percentage of independent producers than now.
Funding and Participation
The cost of the Field Demonstration program from 1978
to 1999 was $259 million (1999 dollars) plus the industry
cost share of $368 million (see Table F-30). Approximately
one-half of the budget was spent on the initial 23 EOR field
demonstrations and the other half on some 39 projects of the
Reservoir Class Program (OFE, 2000q).
Results
Using its TORIS (Total Oil Recovery Information System), DOE calculates that the Field Demonstration program
will result in 1291 million barrels of incremental oil production and 1736 Bcf of incremental gas production from 1996
to 2005. It also assumes that net revenues will amount to
17.5 percent of sales revenue, that 4 to 6 percent of production will come from federal lands; and that state severance
taxes will average 4.55 percent. These conditions applied to
the calculated volume of increased incremental production
give net revenues to industry of $4462 million (1999 dollars). The DOE expenditure for the program from 1978 to
2000 amounts to $259 million (1999 dollars) with an industry cost share of $368 million (1999 dollars). This yields a
benefit to cost ratio of 17.2 to l, or 7.1 to l if the industry cost
share is included. DOE calculates $758 million (1999 dollars) from federal royalties and additional state severance
taxes due to displacement of imports. In addition, improved
screening models and a number of software programs have
been developed and are now being used by industry and researchers.
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APPENDIX F
Options Benefits/Costs
Knowledge Benefits/Costs
Economic
benefits/costs
None
Environmental
benefits/costs
Security
benefits/costs
None
aUnless
otherwise noted, all dollar estimates are given in constant 1999 dollars through 2000.
one-half of the budget was spent on the initial 23 EOR field demonstrations and the other half on 39 projects of the Reservoir Class
bApproximately
program.
cFE estimates using TORIS (Total Oil Recovery Information System) that the Field Demonstration program will result in 1291 million barrels of incremental oil production and 1736 Bcf of incremental gas production from 1996 to 2005. It assumes that net revenues amount to 17.5 percent of sales revenue, that
4 to 6 percent of production comes from federal lands, and that state severance taxes average 4.55 percent. These conditions applied to the estimated volume
of increased incremental production yield estimated net revenues to industry of $4462 million. FE also estimates that the program will generate $758 million
from federal royalties and additional state severance taxes due to displacement of imports. Based on the above, the committee assigned a benefit to DOE of $2.2
billion.
dIn terms of direct economic benefits, the Reservoir Class program predicated on reservoir characterization and play or class definition was dramatically
more successful than the original field demonstration, where the tested reservoirs were not well characterized, and it is generally regarded in industry and the
research community as one of DOEs most successful programs.
eThe program demonstrated that about half of the oil remaining in existing reservoirs classified as unrecoverable was, in fact, mobile oil and that the volume
of remaining unrecovered mobile oil was directly related to the complexity or heterogeneity of reservoirs. It showed that oil and gas reservoirs, with very few
exceptions, were much more complicated than previously believed. It also proved that most reservoirs, especially those containing large volumes of unrecovered oil, were much more complex geologically than expected, and that effective deployment of any reservoir technology depends on thorough geologic
characterization of the reservoir.
fData for evaluation of the industry capabilities are collected throughout the life of the projects, and these data can be used to predict domestic industry
productivity and potential.
gThis results from better reservoir management and better well placement attributable to improved technology.
the important lesson that effective deployment of any reservoir technology depends on thorough geologic characterization of the reservoir. The best recovery technology deployed
into a poorly understood reservoir is ineffective, or if by
chance it is effective, the operator will not know why and
will not be able to repeat the success. In terms of direct economic benefits, the Reservoir Class program predicated on
reservoir characterization and play or class definition was
very much more successful than the original field demonstration, where the tested reservoirs were not well character-
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APPENDIX F
OIL SHALE
Program Description and History
Long before DOEs creation in 1977, the tremendous potential of the Rocky Mountain oil shale deposits led to industry and government interest in researching their possible use.
Every time a crude oil shortage threatened in the 20th century, interest in oil shale would be renewed, only to ebb as
the threat diminished. The energy crises of the 1970s were
the most recent instance of looking to oil shale to expand our
energy supply base.
The strong industry interest over the years is evidenced
by private sector expenditure of over $3 billion on oil shale
R&D. In contrast, total federal spending is estimated at about
$400 million. Since its creation in 1977, DOE has spent about
$273 million ($447 million in constant 1999 dollars) on oil
shale R&D. Only minor amounts have been spent since 1993,
when it became clear that crude oil shale production was not
close to being economic.
Several technologies are involved in using oil shale, including mining and comminution, direct use for power generation, retorting for the recovery of oil or gas from shale,
the upgrading/refining of recovered oil, and processing for
specialty by-products. Environmental R&D has been another
significant component, because recovering shale oil would
create many environmental challenges. DOE has supported
efforts in each of these areas, with some being emphasized
more than others.
Mining and comminution. Issues here related to how to
mine and crush the mined shale. DOE has supported waterjet-assisted mining projects, blasting patterns for mining, and
ways to control crushing of shale.
Power generation. Other countries, such as Estonia and
Israel, have used or tried to use shale oil to generate power.
From 1978 to 1982, DOE had a memorandum of understanding with Israel to develop technologies for the utilization of
Israeli shale oil.
Retorting. Shale oil can be retorted on the surface or in
situ. Surface retorting requires mining the shale and bringing it to a retort facility on the surface. In situ retorting involves various approaches to creating a retort situation within
the site or below surface. DOE supported both types of retort
efforts. Efforts supported included the Paraho project, which
tested, with some DOD funding, the suitability of using shale
oil for military fuels, and the Occidental oil shale vertical
modified, in situ process. DOE also supported testing of true
in situ technology, where no mining preparation was done,
Actual $
Constant 1999 $
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
28.9
45.2
28.2
33.0
19.1
12.2
16.2
14.8
12.6
11.0
9.6
10.5
9.1
9.2
5.9
5.4
62.8
90.7
51.8
55.5
30.2
18.6
23.7
21.0
17.6
14.8
12.4
13.2
11.1
10.8
6.8
6.0
NOTE: In 1997 about $500,000 and in 2000 less than $100,000 in oil
shale funds were provided for a contractor to do work on extracting nitrogen from Green River oil shale.
SOURCE: Office of Fossil Energy. 2000r. OFE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency
and Fossil Energy: Oil Shale Technology, December 12.
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APPENDIX F
the late 1970s and early 1980s, close on the heels of the
energy crises. When the crises abated, funding was reduced
until it was essentially terminated after 1993, when Congress passed a bill amendment eliminating support for oil
shale R&D. This amendment passed after decisions by
Exxon, Unocal, and Occidental to cancel their oil shale
projects. As discussed in the program history section above,
industry has long been interested in oil shale potential and
over the long term has spent over an estimated $3 billion.
A significant amount of DOE funds supported various
retorting projects and environmental studies. Other much
smaller amounts supported mining and comminution and
specialty by-products R&D. Industry cost-shared on some
of the projects at the 50 percent level (New Paraho SOMAT
technology, Occidental VMIS technology, super-heated
steam in situ, and Sohio refinery modification). The Department of Defense provided a $15 million cost share for a
project testing shale oil as a military fuel.
Viewed from another perspective, DOE estimates that the
funding breakdown was about 16 percent basic research, 56
percent applied research, and 28 percent technology demonstration. About 40 percent of total funding flowed through
the national laboratories and universities.
Lessons Learned
DOE is not alone in supporting R&D to find ways to economically use the nations vast oil shale resources. Over the
years, private industry has spent much more than DOE and
the federal government in total. When (if ever) oil prices and
our energy situation create the need to once again turn to oil
shale, the R&D gives us considerable knowledge about what
technologies might or might not work.
Oil shale R&D also demonstrates the sometimes surprising ways in which spin-offs of the research occur. The potential for using shale oil to create longer-life asphalt pavement was discovered when researchers noted that the road to
a retort facility was remarkably free of potholes and began to
do laboratory tests to determine why. The road was built
with asphalt from shale oil because of its ready availability,
and the tests confirmed that the nitrogen compounds in the
shale oil served to chemically link and strengthen the asphalt. DOE believes that any use of shale oil for refinery
feedstock is not likely to occur until after 2030. It also believes there is a strong possibility that shale oil will be used
in asphalt paving before 2010.
SEISMIC TECHNOLOGY
Results
Although oil shale R&D was essentially terminated after
1993, the DOE program and industry efforts provided much
information should the nations energy situation and the economics of shale recovery refocus attention on its potential as
a domestic energy source. DOE involvement shortened the
time for some of the retort technology demonstrations. Without DOE involvement, the water-jet-assisted miner would
not have been tested. Work on Eastern shale provides an
initial base of understanding of the issues related to its potential development and use. Work on true in situ technology is an example of a negative result, having demonstrated
that the approach will not work. In the specialty by-product
area, DOE uncovered the potential for paving with asphalt
derived in part from shale oil. DOE continues to believe oil
from shale has great potential for future use.
Benefits and Costs
As shown in Table F-32, all of the benefits of oil shale
R&D are in the options and knowledge columns. The ultimate use of knowledge gained or options identified will depend on international events and domestic energy and economic developments and on our ability to find ways to deal
with the environmental problems associated with oil shale
development. While most of the program attention has been
on using shale oil as a refinery feedstock to alleviate U.S.
reliance on foreign oil, its potential use in asphalt for highway paving, should it prove economic, could lead to substantial realized benefits.
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APPENDIX F
Options Benefits/Costs
Knowledge Benefits/Costs
Economic
benefits/costs
Environmental
benefits/costs
None
Security
benefits/costs
None
aUnless
otherwise noted, all dollar estimates are given in constant 1999 dollars through 2000.
funding breakdown was 16 percent basic research, 56 percent applied research, and 28 percent technology demonstration, and 40 percent of the funds
flowed through universities and the DOE labs.
cMost of this was spent independently by Exxon, Unocal, and Occidental.
dU.S. oil shale resources are larger than Middle East oil resources, and shale oil can be converted to substitute for imported crude oil. While FE anticipates
that use of oil shale for refinery feedstock is not likely prior to 2030, the program established the potential of shale oil to replace crude oil.
eIssues here relate to how to mine and crush the mined shale, and FE has supported water-jet-assisted mining projects, blasting patterns for mining, and ways
to control crushing of shale.
fShale oil can be retorted on the surface or in situ, and FE has supported both types of retort efforts.
gFE conducted R&D on adding high-nitrogen-content Green River shale oil to paving asphalt binder to achieve a longer-life asphalt pavement, examined
ways to extract high-value nitrogen compounds from Green River shale, and tested the use of spent shale as a support layer for asphalt pavement.
hThe blasting models developed by Sandia National Laboratory are widely used in blasting operations and facilitate the size and placement of explosives and
the sequencing of their detonation to achieve desired blasting results with controlled effects and minimum explosive cost.
iFE support accelerated development of the water-jet-assisted miner.
jThe program provided substantial information on the technology and economics of shale oil recovery, and DOE involvement accelerated the retort
technology demonstrations. Work on Eastern shale assessed its potential, while work on in situ technology demonstrated that it will not work.
kApproximately one-third of all R&D costs were for environmental studies covering air quality, water quality, soil revegetation, and other potential
environmental problems.
bThe
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APPENDIX F
Options Benefits/Costs
Knowledge Benefits/Costs
Economic
benefits/costs
None
Environmental
benefits/costs
None
Security
benefits/costs
None
None
aUnless
otherwise noted, all dollar estimates are given in constant 1999 dollars through 2000.
funds were distributed to industry ($4.9 million), universities and colleges ($5.6 million), the national laboratories ($32.6 million), and the Class
Reservoir program ($62.5 million).
cThe cost shares were industry, $850,000; universities and colleges, $2.2 million; the DOE laboratories, $29.1 million; and the Class Reservoir program,
$76.8 million.
dFE estimated that the cumulative program benefits through 2005 total $27.3 billion, with a public sector return of $8.3 billion. FE utilized a four-step
process to estimate these benefits. First, actual project results were used to determine the benefit of new technologies. Second, the portions of the benefits
attributable to DOE R&D and to industry R&D were estimated, and three estimates were modeled: no new technology, industry technology only, and DOE and
industry technology from R&D. The incremental benefits of the DOE programs were estimated by subtracting the industry-only benefits from the DOE +
industry benefits. Third, estimated benefits due to DOE R&D were estimated for oil production, natural gas production, and dollars saved owing to increased
efficiency. Finally, the total program benefits and public sector return were estimated. Total program benefits were based on oil and gas production times oil
and gas price tracks, and include cost savings from improved efficiencies for exploration, production, and refining operations. Public sector benefits were
estimated using average effective federal, state, and production and severance tax rates. However, FEs benefits estimates are probably much too high,
especially since private industry discounts the importance of the FE seismic R&D program. Nevertheless, the benefits of this program were large and greatly
exceeded the R&D costs. A net benefit of $600 million is assigned to DOE based on a benefit to cost ratio of 2.4 to 4.9.
eFE estimates incremental production of 360 million bbl of crude oil, 113 million bbl of natural gas liquids, and 780 Bcf of natural gas.
fDerived from seismic to target exploration and field development potential.
gThe program provided a strong national knowledge base, aggregated the technical expertise of domestic industry to improve efficiency, and made it
available to all of industry.
hThe research related 3D/3C and 4D seismic more directly to reservoir rock and fluids distributions through attribute analysis in order to more accurately
image the reservoir and high-potential regions.
iThe 3-Component (3C) Vibratory Borehole Source technology is a powerful, nondestructive, fieldable vibratory seismic source used as a high-force, widebandwidth, three-axis seismic source. Resolution of the tool is about 10 times greater than conventional technology. The technology is currently commercial
and is used for cross-well, reverse vertical seismic profiles, and single-well seismic surveys. This technology may capture a large share of the potential U.S.
borehole seismic technology market, which is estimated to be $1.45 billion.
bThe
An advanced three-component, multistation borehole seismic receiver was introduced in 1992 and is available through
OYO-Geospace or as a service through Bolt Technology.
New seismic processing algorithms have been written to help
resolve some of the problems inherent in 3D subsalt imaging. In addition, 4D seismic technology developed through
Lamont Doherty Earth Observatory is now marketed by
Baker Hughes. In addition, DOE support of seismic technology in various field projects has led to better reservoir characterization and improved oil production.
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TABLE F-34 Benefits Matrix for the Western Gas Sands Program (WGSP)a
Realized Benefits/Costs
Options Benefits/Costs
Knowledge Benefits/Costs
Economic
benefits/costs
Environmental
benefits/costs
None
None
Security
benefits/costs
None
None
None
aUnless
otherwise noted, all dollar estimates are given in constant 1999 dollars through 2000.
bPrior to 1992, the program was funded entirely by DOE, but as it became more product-oriented, a larger percentage of funding came from industry. By the
late 1980s, most of the research money was being spent on field demonstration projects. In the basic and applied stages of the program, DOE expenditures led
industry by 2 to l; in the demonstration stage, industry led DOE by nearly 3 to l. In addition, FE acknowledges analogous R&D efforts by GRI and private
industry over the time period in question but provides no information on these efforts.
cProvided the foundation for the emerging natural fracture detection and prediction methodology.
dFE estimates $1626 million in increased net revenues and cost savings to gas producers in the Rockies; inclusion of the industry cost share in the program
would reduce the benefits credited to DOE. FE further estimates $591 million from royalties on federal lands and from increased state severance taxes due to
displacement of imports, and it credits 70 percent of the increased gas production in the Rocky Mountain gas basins since l987 to WGSP. The basis for
estimating the realized economic benefits for the WGSP is the enabling of production of natural gas at prices that would not have been possible without the
program. Overall, WGSP is credited with developing technology and stimulating 35 percent of the tight gas produced from the Rockies from 1978 to 2005.
With a 35 percent DOE share, a net benefit of about $800 million is assigned to DOE. The remaining 65 percent is assigned to industry, GRI, and Section 29
tax credits.
eFuture application of WGS technology in emerging plays and basins will substantially enlarge this part of the resource base. By 2005, production should
approach 800 Bcf. In addition to increased production, the program has significantly advanced understanding of complex lenticular reservoirs and how
fracturing is deployed in them, and a much larger part of the vast in-place resource in the basin-centered gas formations of the Rocky Mountain basins is
economically accessible.
fWGSP has contributed increased gas supplies at lower cost. Tight gas production from the Rocky Mountain gas basins was only 162 Bcf in 1978, at the start
of the program; 10 years later it stood at 224 Bcf, and in 2000 exceeded 700 Bcf.
gWGSP demonstrated the importance of tailoring development of well spacing to the specific geometries of reservoir heterogeneity related to natural
fracturing in tight gas sands.
hThe application of resource assessments, natural fracture detection and prediction technology, and advanced drilling and stimulation will enable less than
half as many wells to be drilled in the future to yield the same volume of reserves.
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tight gas produced from the Rockies from 1978 to 2005. The
remaining 65 percent is assigned to industrys activity, GRIs
R&D program, and Section 29 tax credits.
In return for a DOE R&D investment of a little over $180
million (1999 dollars) to date and $200 million through 2005,
DOE calculates $1626 million (also in 1999 dollars) in increased net revenues and cost savings to gas producers in the
Rockies, with a benefit to cost ratio of 8.9; inclusion of the
industry cost share in the program would reduce that ratio
somewhat. DOE further calculates $591 million (1999 dollars) from royalties on federal lands and from increased state
severance taxes due to displacement of imports. With a 35
percent DOE share, a net benefit of about $800 million is
assigned to DOE (see Table F-34).
Future application of tight gas sand technology in emerging plays and basins will substantially enlarge this part of the
resource base. Tight gas production in the Rockies should
reach 950 Bcf in 2010, providing an environmentally clean
fuel and greater domestic supply. The application of resource
assessments, natural fracture detection and prediction technology, and advanced drilling and stimulation, means that
less than half as many wells will need to be drilled to yield
the same volume of reserves.
Lessons Learned
A significant part of the success of the Western Gas Sands
program was its successful transition from a basic research
program supported entirely by government to an applied research and demonstration program in which industry took
over increasing support of the program. Coupled with governmental tax credit incentives under Section 29 of the Natural Gas Policy Act, this targeted research program brought
an important source of natural gas into the national supply
stream earlier and cheaper than it would otherwise have been
brought in.
REFERENCES
Bloomberg Press Release. 2000. ExxonMobil, BP and Phillips Plan Alaska
Gas Pipeline.
Environmental Protection Agency (EPA), Office of Air Quality Planning
and Standards. 1998. Study of Hazardous Air Pollutant Emissions from
Electric Steam Generating Units: Final Report to Congress. EPA-453/
R-98-004a. Washington, D.C.: EPA.
Galloway, W.E., et al. 1983. Atlas of Texas Major Oil Reservoirs: Bureau
of Economic Geology. University of Texas at Austin Special Publication. Austin, Tex.: University of Texas.
National Energy Technology Laboratory. 1999. Vision 21 Program Plan:
Clean Energy Plants for the 21st Century. Morgantown, W.Va.: National Energy Technology Laboratory.
National Research Council (NRC). 1990. Fuels to Drive Our Future. Washington, D.C.: National Academy Press.
Office of Fossil Energy (OFE), Department of Energy. 2000a. OFE Letter
response to questions from the Committee on Benefits of DOE R&D in
Energy Efficiency and Fossil Energy: Fluidized Bed Combustion (FBC)
Technology Area, December 11.
OFE. 2000b. OFE Letter response to questions from the Committee on Ben-
efits of DOE R&D in Energy Efficiency and Fossil Energy: Gas-toLiquids Technology, December 4.
OFE. 2000c. OFE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency and Fossil Energy: Indirect
Coal Liquefaction Program, December 4.
OFE. 2000d. OFE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency and Fossil Energy: IGCC Technology Area, December 20.
OFE. 2000e. OFE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency and Fossil Energy: Flue Gas
Desulfurization Program, December 4.
OFE. 2000f. OFE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency and Fossil Energy: NOx Control Program, December 4.
OFE. 2000g. OFE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency and Fossil Energy: Mercury
and Other Air Toxics Program, December 6.
OFE. 2000h. OFE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency and Fossil Energy: Waste Management/Utilization (Coal Combustion Byproducts) Program, December 6.
OFE. 2000i. OFE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency and Fossil Energy: Turbine
Systems Technology Area, November 22.
OFE. 2000j. OFE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency and Fossil Energy: Stationary
Fuel Cells Program, December 6.
OFE. 2000k. OFE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency and Fossil Energy: Enacted
Appropriations for the Stationary Fuel Cells Program, November 11.
OFE. 2000l. OFE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency and Fossil Energy: Magnetohydrodynamics Program, November 27.
OFE. 2000m. OFE Letter response to questions from the Committee on
Benefits of DOE R&D in Energy Efficiency and Fossil Energy: Drilling, Completion, and Stimulation Program, December 4.
OFE. 2000n. OFE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency and Fossil Energy: Downstream Fundamentals Area Research, December 6.
OFE. 2000o. OFE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency and Fossil Energy: Summary
of Benefits and Costs of DOE/NETLs Eastern Gas Shales Program,
December 4.
OFE. 2000p. OFE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency and Fossil Energy: Enhanced
Oil Recovery Program, December 18.
OFE. 2000q. OFE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency and Fossil Energy: Field Demonstrations of Technology and Processes, December 6.
OFE. 2000r. OFE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency and Fossil Energy: Oil Shale
Technology, December 12.
OFE. 2000s. OFE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency and Fossil Energy: Seismic
Technologies, December 4.
OFE. 2000t. OFE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency and Fossil Energy: NETL Gas
Supply Projects Division, Western Gas Sands Technology Area, December 6.
OFE. 2001a. OFE Letter Response to questions from the Committee on
Benefits of DOE R&D in Energy Efficiency and Fossil Energy: Coal
Preparation Program. January 25.
OFE. 2001b. OFE Letter Response to questions from the Committee on
Benefits of DOE R&D in Energy Efficiency and Fossil Energy: Direct
Coal Liquefaction. January 8.
OFE. 2001c. OFE Letter response to questions from the Committee on Ben-
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APPENDIX F
BIBLIOGRAPHY
Department of Energy (DOE), National Energy Technology Laboratory.
2000. Response to the National Research Council Questionnaire Fluidized-Bed Combustion (FBC) Technology Area, November 22.
Office of Fossil Energy (OFE). 2000. OFE Letter response to questions
from the Committee on Benefits of DOE R&D in Energy Efficiency and
Fossil Energy: Reservoir Efficiency Processes, Enhanced Oil Recovery, Production Research, December 4.
OFE. 2000. OFE Letter response to questions from the Committee on Ben-
efits of DOE R&D in Energy Efficiency and Fossil Energy: Fossil Energy Congressional Budget Request and Enacted Appropriations, November 27.
OFE. 2000. OFE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency and Fossil Energy: Oil and
Natural Gas Environmental Technology Area, December 4.
OFE. 2000. OFE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency and Fossil Energy: Overview
of Accomplishments and Benefits of DOE R&D Programs in Oil and
Natural Gas, December 5.
OFE. 2000. OFE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency and Fossil Energy: Attachment
1: Individual Program Summaries, December 18.
OFE. 2001. OFE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency and Fossil Energy: Coal Preparation Program (update), Successful Results of the DOE Coal Preparation/Solid Fuels and Feedstocks R&D Program. February 9.
Energy Research at DOE: Was It Worth It? Energy Efficiency and Fossil Energy Research 1978 to 2000
http://www.nap.edu/catalog/10165.html
Glossary
AFBC: Atmospheric fluidized-bed combustion greatly reduces sulfur dioxide (SO2) and nitrogen oxides (NOx)
emissions from coal-burning power plants while increasing combustion efficiency. The result is that power plant
engineers can obtain more power from a given amount of
coal. A key feature of Illinois coal is its high energy content. Unfortunately, it has a high sulfur content as well.
Fluidized-bed combustion neutralizes the process by
which sulfur is converted to SO2 then emitted into the
atmosphere.
alternative fuels: A popular term for nonconventional transportation fuels derived from natural gas (propane, compressed natural gas, methanol, etc.) or biomass materials
(ethanol, methanol).
baseload: Baseload is the minimum amount of power required during a specified period at a steady state.
anthracite: Highest rank of economically usable coal, almost pure carbon, with a heating value of 15,000 Btu/lb, a
carbon content of 86 to 97 percent, and a moisture content
of less than 15 percent. It is a hard, jet black substance
with a high luster. It is primarily mined in northeastern
Pennsylvania.
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APPENDIX G
and wastewater discharges, the potential for self-generation of power, and the potential for improved pulping operations.
bottoming cycle: A means to increase the thermal efficiency
of a steam electric generating system by converting some
waste heat from the condenser into electricity. The heat
engine in a bottoming cycle would be a condensing turbine similar in principle to a steam turbine but operating
with a different working fluid at a much lower temperature and pressure.
Btu: A British thermal unit is a standard unit for measuring
the quantity of heat required to raise the temperature of 1
lb of water by 1F.
CAFE requirements: Corporate average fuel economy is a
sales-weighted average fuel mileage calculation, in terms
of miles per gallon, based on city and highway fuel
economy measurements performed as part of federal emissions test procedures. CAFE requirements were instituted
by the Energy Policy and Conservation Act of 1975 and
modified by the Automobile Fuel Efficiency Act of 1980.
For major manufacturers, CAFE levels in 1996 were 27.5
miles per gallon for light-duty automobiles. CAFE standards also apply to some light trucks. The Alternative
Motor Fuels Act of 1988 allowed for an adjusted calculation of the fuel economy of vehicles that can use alternative fuels, including fuel-flexible and dual-fuel vehicles.
catalytic converter: An air pollution control device that removes organic contaminants by oxidizing them into carbon dioxide and water through a chemical reaction using a
catalyst, which is a substance that increases (or decreases)
the rate of a chemical reaction without being changed itself; required in all automobiles sold in the United States
and used in some types of heating appliances.
CCT: Clean coal technology is a new way to burn or use
coal that significantly reduces the release of pollutants and
offers greater environmental protection and, often, better
economic performance than older coal technologies.
CFL: Compact fluorescent lamps are four to five times more
efficient than incandescent lamps. CFLs are now widely
used in commercial buildings in many applications that
traditionally used incandescent lamps, for example, in recessed downlights. The primary barrier to widespread penetration of the CFL in the residential sector is the cost and
bulk of the ballast. Unitized lamp-ballast products minimize bulk but tend to be expensive because both the lamp
and the ballast are replaced when the product wears out.
CH4: Methane is a colorless, odorless gas that is the most
simple of the hydrocarbons formed naturally from the decay of organic matter. Each methane molecule contains a
carbon atom surrounded by four hydrogen atoms. It is the
principal component of natural gas.
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fuel cell: A fuel cell is an electrochemical device that produces electric power from a fuel. It has some components
and characteristics similar to those of a battery. But, unlike a battery, it continually produces power as long as a
fuel and an oxidant are supplied to its electrodes. It does
not need to be recharged. Fuel (usually a hydrogen-rich
gas) is continuously supplied to the anode (negative electrode), and the oxidant (oxygen from air) is continuously
supplied to the cathode (positive electrode). The electrodes are separated by an electrolyte that conducts ions.
The fuel is converted directly to electrons without any intervening steps of combustion, rotary motion, or reciprocating action.
FGD: Flue gas desulfurization reduces the SO2 output concentration to acceptable levels. FGD technology can be
used with many kinds of coal.
gasification: A group of processes that turn coal into a combustible gas by breaking apart the coal using heat and pressure and, in many cases, hot steam.
Fischer-Tropsch process: The catalytic conversion of synthesis gas into a range of hydrocarbons.
flue gas: Gas that is left over after fuel is burned and which
is disposed of through a pipe or stack to the atmosphere.
greenhouse gases: Gases such as water vapor, carbon monoxide, tropospheric ozone, nitrous oxide, and methane,
which are transparent to solar radiation but opaque to longwavelength radiation; their action is similar to that of glass
in a greenhouse.
heat pump: An air-conditioning unit that is capable of heating by refrigeration, transferring heat from one (often
cooler) medium to another (often warmer) medium, and
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APPENDIX G
psi (psig): Pounds per square inch (psig indicates gauge pressure, that is, pressure above atmospheric pressure).
Stirling engine: An external combustion engine that converts heat into usable mechanical energy (shaftwork) by
the heating (expanding) and cooling (contracting) of a
captive gas such as helium or hydrogen.
rank: Variety of coal; the higher the rank of coal, the greater
its carbon content and heating value.
R&D: Research is the discovery of fundamental new knowledge. Development is the application of new knowledge
to develop a potential new service or product.
RD&D: Research, development, and demonstration.
repowering: Repowering is achieved by investments made
in a plant to substantially increase its generating capability, to change generating fuels, or to install a more efficient generating technology at the plant site.
SCR: Selective catalytic reduction; postcombustion NOx
control with the use of catalysts.
seismic technology: Seismic technologies are geophysical
techniques used to image oil reservoirs, the associated
rock and fluids from the earths surface and/or from
nearby boreholes. The application of seismic technology
in oil exploration and development has increased ultimate
recovery and reduced risk and costs by identifying barriers and pathways of fluids movement through the reservoir, thus allowing for more effective targeting of well
placement and management of enhanced oil recovery
projects.
SFC: Synthetic Fuels Corporation.
shale oil: A type of rock containing organic matter that produces large amounts of oil when heated to high temperatures.
SOx: Oxides of sulfur.
SO2: Sulfur dioxide.
Steel IOF: The Industries of the Future partnership between
DOE and the U.S. steel industry is oriented toward improving the productivity, energy efficiency, and environmental performance of the steel industry by aligning the
R&D resources of industry and government.
Stirling automotive engines: Engines with very high efficiency, operating on nearly any type of fuel, requiring little
maintenance, smooth, and quiet. This engine is well suited
to automobiles, but the auto industry has so much plant
and equipment devoted to the manufacture, service, and
sale of gasoline and diesel engines that incremental improvements in competing technologies do not justify the
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AC
AFBC
AGA
APSE
ARI
ASHRAE
ATS
BACT
bbl
Bcf
BLAST
BPD
BTS
Btu
alternating current
atmospheric fluidized-bed combustion
American Gas Association
advanced production Stirling engine
Advanced Refrigeration Institute
American Society of Heating, Refrigerating and
Air-conditioning Engineers
advanced turbine systems
best available control technology
barrel
billion cubic feet
buildings loads analysis and systems
thermodynamics
barrels per day
Office of Building Technology, State and
Community Programs
British thermal unit
CAA
CAAA
CAFE
CCB
CCT
CDIF
CFCs
CFFF
CFL
CHP
CIDI
CO
CO2
CPS
CRADA
DC
DCS
direct current
drilling, completion, and stimulation
DERD
DOC
DOD
DOE
DOT
DPCA
EDS
EE
EERE
EV
FBC
FCE
FCV
FE
FEA
FEMP
FGD
FPSE
fluidized-bed combustion
Fuel Cell Energy
fuel cell vehicle
fossil energy
Federal Energy Administration
Federal Energy Management Program
flue gas desulfurization
free-piston Stirling engine
GAO
GDP
GM
GNP
GOM
GPRA
GTCC
EGSP
EIA
EOR
EPA
EPAct
EPRI
ERDA
222
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APPENDIX H
GTI
GTL
HAP
HCFCs
HSTF
HTI
HVAC
Hz
IAQ
IAQI&V
ICE
IEA
IFC
IGCC
IGT
IOF
IPST
kW
kWh
kilowatt
kilowatt hour
LBNL
LDV
LEW
LNG
MCFC
MHD
MMBtu
MMTCE
MOU
mpg
MRI
MTG
MW
MWX
NAECA
NASA
NBSLD
NEDO
NES
NGCC
NGPT
NIH
NiMH
NIPER
NIST
NMHCs
NMOGs
NOx
NRC
NSF
nonmethane hydrocarbons
nonmethane organic gases
oxide of nitrogen
National Research Council
National Science Foundation
OAAT
OIT
OPEC
OPT
ORNL
OTT
PAFC
PDC
PEM
PFBC
PM
PNGV
P4
ppm
quad
RCRA
R&D
RD&D
RDD&D
ROI
SCR
SFC
SHGC
SIDI
SMES
SNCR
SO2
SOFC
SRC-II
STM
SUV
SWPC
TBC
Tcf
T&D
TORIS
tpd
UGR
ULEV
UPS
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USABC
USAMP
USCAR
APPENDIX H
VOCs
VPSA
WGSP