NRC Energy Research at DOE - Was It Worth It - Energy Efficiency and Fossil Energy Research 1978 To 2000

Energy Research at DOE: Was It Worth It?
Energy
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)
This free PDF was downloaded from:
http://www.nap.edu/catalog/10165.html
Visit the National Academies Press online, the authoritative source for all books from the
National Academy of Sciences, the National Academy of Engineering, the Institute of
Medicine, and the National Research Council:
Download hundreds of free books in PDF
Read thousands of books online, free
Sign up to be notified when new books are published
Purchase printed books
Purchase PDFs
Explore with our innovative research tools
Thank you for downloading this free PDF. If you have comments, questions or just want
more information about the books published by the National Academies Press, you may
contact our customer service department toll-free at 888-624-8373, visit us online, or
send an email to comments@nap.edu.
This free book plus thousands more books are available at http://www.nap.edu.
Copyright National Academy of Sciences. Permission is granted for this material to be
shared for noncommercial, educational purposes, provided that this notice appears on the
reproduced materials, the Web address of the online, full authoritative version is retained,
and copies are not altered. To disseminate otherwise or to republish requires written
permission from the National Academies Press.
Energy Research at DOE: Was It Worth It? Energy Efficiency and Fossil Energy Research 1978 to 2000
Energy Research at DOE

WAS IT WORTH IT?
Energy 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
NATIONAL ACADEMY PRESS

Washington, D.C.
Copyright National Academy of Sciences. All rights reserved.
NATIONAL ACADEMY PRESS
2101 Constitution Avenue, N.W.
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:
Board on Energy and Environmental Systems
HA-270
202-334-3344
Additional copies are available for sale from:

National Academy Press
Box 285
800-624-6242 or 202-334-3313 (in the
Washington metropolitan area)
http://www.nap.edu
Copyright 2001 by the National Academy of Sciences. All rights reserved.

Printed in the United States of America
National Academy of Sciences

National Academy of Engineering
Institute of Medicine
The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of
science and technology and to their use for the general welfare. Upon the authority of the charter
granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the
federal government on scientific and technical matters. Dr. Bruce M. Alberts is president of the
National Academy of Sciences.
The National Academy of Engineering was established in 1964, under the charter of the National
Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its
administration and in the selection of its members, sharing with the National Academy of Sciences
the responsibility for advising the federal government. The National Academy of Engineering also
sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. Wm. A. Wulf is president of the
National Academy of Engineering.
The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure
the services of eminent members of appropriate professions in the examination of policy matters
pertaining to the health of the public. The Institute acts under the responsibility given to the National
Academy of Sciences by its congressional charter to be an adviser to the federal government and,
upon its own initiative, to identify issues of medical care, research, and education. Dr. Kenneth I.
Shine is president of the Institute of Medicine.
The National Research Council was organized by the National Academy of Sciences in 1916 to
associate the broad community of science and technology with the Academys purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the
National Academy of Sciences and the National Academy of Engineering in providing services to
the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Bruce M. Alberts and Dr. Wm.
A. Wulf are chairman and vice chairman, respectively, of the National Research Council.
COMMITTEE ON BENEFITS OF DOE R&D ON ENERGY EFFICIENCY AND FOSSIL ENERGY

ROBERT W. FRI, National Museum of Natural History, Chair
WILLIAM AGNEW, NAE,1 General Motors Research Laboratories (retired)
PETER D. BLAIR, National Academy of Sciences
RALPH CAVANAGH, Natural Resources Defense Council
UMA CHOWDHRY, NAE, DuPont Engineering Technology
LINDA R. COHEN, University of California, Irvine
JAMES CORMAN, Energy Alternative Systems Inc.
DANIEL A. DREYFUS, National Museum of Natural History (retired)
WILLIAM L. FISHER, NAE, University of Texas, Austin
ROBERT HALL, CDG Management, Inc.
GEORGE M. HIDY, Envair/Aerochem
DAVID C. MOWERY, University of California, Berkeley
JAMES DEXTER PEACH, Ellicott City, Maryland
MAXINE L. SAVITZ, NAE, Honeywell
JACK S. SIEGEL, Energy Resources International, Inc.
JAMES L. SWEENEY, Stanford University
JOHN J. WISE, NAE, Mobil Research and Development Company (retired)
JAMES L. WOLF, consultant, Alexandria, Virginia
JAMES WOODS, HP-Woods Research Institute
Committee Subgroup on Energy Efficiency
Committee Subgroup on Benefits Framework
MAXINE L. SAVITZ, Co-chair

JAMES L. WOLF, Co-chair
WILLIAM AGNEW
PETER D. BLAIR
RALPH CAVANAGH
UMA CHOWDHRY
LINDA R. COHEN
DAVID C. MOWERY
JAMES WOODS
JAMES L. SWEENEY, Chair

LINDA R. COHEN
DANIEL A. DREYFUS
ROBERT W. FRI
DAVID C. MOWERY
Liaison from the Board on Energy and Environmental
Systems
WILLIAM FULKERSON, University of Tennessee,
Knoxville
Committee Subgroup on Fossil Energy

JACK S. SIEGEL, Chair
JAMES CORMAN
WILLIAM L. FISHER
ROBERT HALL
GEORGE M. HIDY
JAMES DEXTER PEACH
JOHN J. WISE
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
= Member, National Academy of Engineering
iv
BOARD ON ENERGY AND ENVIRONMENTAL SYSTEMS

ROBERT L. HIRSCH, RAND, Chair
RICHARD E. BALZHISER, NAE,1 Electric Power Research Institute (retired)
DAVID BODDE, University of Missouri
PHILIP R. CLARK, NAE, GPU Nuclear Corporation (retired)
WILLIAM L. FISHER, NAE, University of Texas, Austin
CHRISTOPHER FLAVIN, Worldwatch Institute
HAROLD FORSEN, NAE, National Academy of Engineering, Washington, D.C.
WILLIAM FULKERSON, Oak Ridge National Laboratory (retired) and University of Tennessee, Knoxville
MARTHA A. KREBS, California Nanosystems Institute
GERALD L. KULCINSKI, NAE, University of Wisconsin, Madison
EDWARD S. RUBIN, Carnegie Mellon University
ROBERT W. SHAW, JR., Arete Corporation
JACK SIEGEL, Energy Resources International, Inc.
ROBERT SOCOLOW, Princeton University
KATHLEEN C. TAYLOR, NAE, General Motors Corporation
JACK WHITE, Association of State Energy Research and Technology Transfer Institutions (ASERTTI)
JOHN J. WISE, NAE, Mobil Research and Development Company (retired), Princeton, New Jersey
Staff
JAMES ZUCCHETTO, Director
RICHARD CAMPBELL, Program Officer
ALAN CRANE, Program Officer
MARTIN OFFUTT, Program Officer
SUSANNA CLARENDON, Financial Associate
PANOLA GOLSON, Senior Project Assistant
ANA-MARIA IGNAT, Senior Project Assistant
SHANNA LIBERMAN, Project Assistant
1 NAE
= Member, National Academy of Engineering.
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.
vii
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
FRAMEWORK FOR THE STUDY

Overview, 13
The Setting, 13
The Framework, 14
Conduct of the Study, 18
Assessment of the Methodology, 18
Reference, 19
13
EVALUATION OF THE ENERGY EFFICIENCY PROGRAMS

Introduction, 20
Selection of the Case Studies, 22
Buildings: Lessons Learned from the Case Studies, 27
Industry: Lessons Learned from the Case Studies, 30
Transportation: Lessons Learned from the Case Studies, 32
Findings and Judgments, 36
Recommendations, 41
References, 42
20
EVALUATION OF THE FOSSIL ENERGY PROGRAMS

Introduction, 44
Selection of the Case Studies, 44
Lessons Learned from the Case Studies, 47
Findings, 57
Recommendations, 61
References, 61
44
OVERALL FINDINGS AND RECOMMENDATIONS

Benefits of DOEs RD&D in Fossil Energy and Energy Efficiency, 63
DOEs Approach to Evaluating Its RD&D Programs, 65
Portfolio Management, 66
Reference, 69
62
ix
CONTENTS
APPENDIXES
A
BIOGRAPHICAL SKETCHES OF COMMITTEE MEMBERS
73
PRESENTATIONS AND COMMITTEE ACTIVITIES
77
BIBLIOGRAPHY RELEVANT TO DOE R&D POLICY, CONGRESSIONAL

MANDATES, R&D RESULTS, AND EVALUATIONS
79
MEASURING THE BENEFITS AND COSTS OF THE DEPARTMENT OF

ENERGYS ENERGY EFFICIENCY AND FOSSIL ENERGY
R&D PROGRAMS
Summary of the General Framework, 86
Discussion of the Rows, 88
Discussion of the Columns, 92
Interpretation and Appropriate Use of the Framework, 93
CASE STUDIES FOR THE ENERGY EFFICIENCY PROGRAM

Advanced Refrigeration, 95
Compact Fluorescent Lamps, 99
DOE-2 Energy Analysis Program, 100
Electronic Ballasts, 104
Free-piston Stirling Engine Heat Pump (Gas-Fired), 106
Indoor Air Quality, Infiltration, and Ventilation, 109
Low-emission (Low-e) Windows, 114
Lost Foam Technology, 118
Advanced Turbine Systems Program, 121
Black Liquor Gasification, 127
Industries of the Future Program, 132
Oxygen-fueled Glass Furnace, 135
Advanced Batteries for Electric Vehicles, 140
Catalytic Conversion of Exhaust Emissions, 143
Partnership for a New Generation of Vehicles, 145
Stirling Automotive Engine Program, 151
PEM Fuel Cell Power Systems for Transportation, 154
References, 158
Bibliography, 161
CASE STUDIES FOR THE FOSSIL ENERGY PROGRAM

Coal Preparation, 162
Direct Coal Liquefaction, 164
Fluidized-bed Combustion, 166
Gas-to-Liquids Technology, 169
Improved Indirect Liquefaction, 172
Integrated Gasification Combined Cycle, 174
Emission Control Technologies, 177
Mercury and Air Toxics, 180
Waste Management/Utilization Technologies, 183
Advanced Turbine Systems, 185
Stationary Fuel Cell Program, 187
Magnetohydrodynamics, 190
Coal-bed Methane, 193
Drilling, Completion, and Stimulation Program, 193
Downstream Fundamentals Research Program, 198
Eastern Gas Shales Program, 200
86
95
162
xi
CONTENTS
Enhanced Oil Recovery, 202

Field Demonstration Program, 205
Oil Shale, 207
Seismic Technology, 208
Western Gas Sands Program, 211
References, 213
Bibliography, 214
G
GLOSSARY
215
ACRONYMS AND ABBREVIATIONS
222
Tables and Figures
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
Fossil Energy Budgets for the 22 Programs Analyzed by the Committee, 46

Fossil Energy Programs Cost Sharing, 1978 to 2000, 48
Net Realized Benefits Estimated for Selected Fossil Energy R&D Programs, 56
Fossil Energy RD&D Benefits, 57
Realized Benefits from DOE RD&D Programs, 58
Fossil Energy Technology Case Studies Slotted in the Matrix Cells That Are Most
Relevant Today, 60
E-1
E-2
E-3
E-4
E-5
E-6
E-7
E-8
E-9
E-10
Funding for Advanced Refrigerators-Freezer Compressors, 96

Benefits Matrix for the Advanced Refrigerator-Freezer Compressors Program, 98
Funding for the Compact Fluorescent Lamps Program, 100
Benefits Matrix for the Compact Fluorescent Lamps (CFLs) Program, 100
Benefits Matrix for the DOE-2 Program, 103
DOE Funding for the Fluorescent Lamp Electronic Ballast Program, 105
Benefits Matrix for the Fluorescent Lamp Electronic Ballast for Program, 107
DOE Funding for the Free-Piston Stirling Engine Heat Pump Program, 108
Benefits Matrix for the Stirling Engine Heat Pump Program, 110
Benefits Matrix for the Indoor Air Quality Program, 113
xiii
xiv
TABLES AND FIGURES
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
Benefits Matrix for the Low-emission (Low-e) Windows Program, 116

Funding for the Lost Foam Program, 119
Benefits Matrix for the Advanced Lost Foam Technologies Program, 120
Selected Outage Costs, 122
Funding for the Advanced Turbine Systems Program (Energy Efficiency Component), 124
Benefits Matrix for the Advanced Turbine Systems Program (Energy Efficiency
Component), 126
Predicted Environmental Emissions from the MTCI/StoneChem Steam Reformer
and from a Tomlinson Recovery Boiler, 128
Funding for the Black Liquor Gasification Program, 129
Benefits Matrix for the Black Liquor Gasification Program, 131
Total Funding in IOF/Forest by Program Area, 133
Changes in IOF Priorities: Share of OIT/Forest Budget by Program Area, 134
Participation in IOF/Forest Program Then and Now, 135
Changes in Participation by Share of Budget, 135
Benefits Matrix for the IOF/Forest Program, 136
General Funding for the Oxy-fueled Glass Furnace Program, 137
Funding for the Oxy-fueled Glass Furnace Program by Technology to FY 2000, 138
Oxy-fuel Penetration and Characteristics by Glass Industry Segment, 138
Benefits Matrix for the Oxy-Fueled Glass Furnace Program, 139
DOE Funding for Advanced Battery R&D, 141
Benefits Matrix for the Advanced Batteries (for Electric Vehicles) Program, 142
DOE Funding for the Catalytic Conversion Program, 144
Benefits Matrix for the Catalytic Conversion Program, 145
Benefits Matrix for the PNGV Program, 148
MTI Stirling Engine Development Project Budgets, 152
General Motors STM Stirling Engine Development Project Budgets, 152
Benefits Matrix for the Stirling Automotive Engine Program, 153
Funding for Transportation PEM Fuel Cell Power Systems, 154
Benefits Matrix for the Transportation PEM Fuel Cell Power System Program, 157
Benefits Matrix for the Coal Preparation Program, 164
DOE Appropriations and Industry Cost Sharing for Direct Liquefaction, 165
Benefits Matrix for the Direct Liquefaction Program, 166
Benefits Matrix for the Fluidized-bed Combustion (FBC) Program, 168
DOE Investments in the Gas-to-Liquids Program, FY 1978 to FY 2000, 170
DOE Investments in the Gas-to-Liquids Program, 1999, 170
Benefits Matrix for the Gas-to-Liquids Program, 171
Benefits Matrix for the Improved Indirect Liquefaction Program, 173
Benefits Matrix for the Integrated Gasification Combined-Cycle (IGCC) Program, 176
Benefits Matrix for the Improvement of the Flue Gas Desulfurization (FGD)
Program, 180
Benefits Matrix for the NOx Control Program, 181
Benefits Matrix for the Mercury and Air Toxics Program, 182
Benefits Matrix for the Waste Management/Utilization Technologies Program, 184
Funding for the Advanced Turbine Systems Program (Fossil Energy Component), 185
Benefits Matrix for the Advanced Turbine System (ATS) Program (Fossil Energy Component), 187
Funding for the DOE Fuel Cell Program, FY 1978 to FY 2000, 188
Benefits Matrix for the Stationary Fuel Cells Program, 189
DOE Funding for the Magnetohydrodynamics Program, 191
Benefits Matrix for the Magnetohydrodynamics (MHD) Program, 192
Funding for the Coal-bed Methane Program, 193
Benefits Matrix for the Coal-bed Methane Program, 194
xv
TABLES AND FIGURES
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
Matrix for assessing benefits and costs, 14

Derivation of columns for the benefits matrix, 16
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
Funding for DOEs Office of Fossil Energy, FY 1978 to FY 2000, 45

Overall budget, FY 1978 to FY 2000 ($10,528 million), 47
Budget for coal and gas conversion technologies, FY 1978 to FY 2000 ($6149 million), 48
Adjusted budget for coal and gas conversion technologies, FY 1978 to FY 2000 ($2956
million), 49
Budget for DOEs fossil energy environmental programs, FY 1978 to FY 2000
($410 million), 51
Reported budgets for electricity production, FY 1978 to FY 2000 ($2502 million), 52
Reported budgets for oil and gas production research, FY 1978 to FY 2000 ($1468
million), 54
D-1
D-2
Matrix for assessing benefits and costs, 86

Derivation of columns for the benefits matrix, 87
E-1
E-2
Electricity consumed by refrigerators, 1947 to 2001, 97

Distribution of OAAT PNGV funds by technology, 147
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 Programs

Energy-efficient technologies can reduce the life-cycle
costs of energy-consuming goods and services paid by consumers and industry, reduce pollutant emissions, reduce the
risk of oil supply interruptions, and help to stabilize the electricity system and make it more reliable. DOEs energy efficiency research, development, and demonstration (RD&D)
programs have helped to improve the energy efficiency of
buildings technology and industrial and transportation technologies. The transportation sector has always received the
largest share of the budget (42 percent in 2000 and, cumulatively, 43 percent between 1978 and 2000). In the early years
of the program (for example, in FY 1978), buildings received
40 percent of the funds and industry, 18 percent. In FY 2000,
there was less of a difference, with buildings receiving 25
percent of the funds and industry, 32 percent. Over the entire
program, industry and buildings each received about 28 percent of the funds.
Fossil Energy Programs

Research in the Office of Fossil Energy has historically
focused on two programs: the Office of Coal and Power Systems and the Office of Natural Gas and Petroleum Technology. Very large budgets from 1978 through 1981 were provided in response to the energy crises of the 1970s and early
1980s. During that 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.
Over the 1978 to 2000 study period, 58 percent of the
expenditures were for RD&D in coal utilization and conversion. Of this, approximately one-half was spent on direct
liquefaction and gasification for building and operating
large, commercial-scale demonstration plants between 1978
and 1981. In 1978, the coal conversion and utilization portion of the budget represented 68 percent of the total fossil
energy expenditures, but since then, as funding for direct
liquefaction and gasification declined, it has represented a
considerably lower percentage. In 2000, it represented only
30 percent of the overall fossil energy budget for the technology programs analyzed.
The share of Office of Fossil Energy funds devoted to
environmental characterization and control was 4 percent of
the total over the study period, partly because the Environmental Protection Agency (EPA) maintained a large program
in this area prior to 1985. The share of funds for the electricity production programs averaged 24 percent over the study
period, and the share of funds for the oil and gas programs
averaged 14 percent, one-third of which was for shale oil
R&D in the early period.
EVALUATION FRAMEWORK AND CASE STUDIES

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 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.
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.
Environmental net benefits are based on changes in the

quality of the environment that have occurred or may occur
as a result of a new technology RD&D program.
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.
The three columns in the matrix are the first step toward a
more explicit definition of the benefits to be included. They
reflect different degrees of uncertainty about whether a given
benefit will be obtained. Two fundamental sources of uncertainty are particularly importanttechnological uncertainties and uncertainties about economic and policy conditions
(Figure ES-2). Rather than attempting to fully characterize
the uncertainty of benefits, the committee used these two
distinctionsthe state of technology development and the
favorability of economic and policy conditionsto define
the columns of the matrix (Figure ES-1). The first column,
realized benefits and costs, is reserved for benefits that are
almost certainthat is, those for which the technology is developed and for which the economic and policy conditions are
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
Will be favorable for

commercialization
Realized benefits
Knowledge benefits
Knowledge benefits
Might become favorable

for commercialization
Options benefits
Knowledge benefits
Knowledge benefits
Knowledge benefits
Knowledge benefits
Will not become favorable Knowledge benefits

FIGURE ES-2 Derivation of columns for the benefits matrix.
mittee prepared a series of case studies on technologies and

programs selected by the committee for examination. It
should be noted that there were large differences in project
scale, size, complexity, and time horizon between the energy
efficiency and fossil energy programs. In particular, the fossil energy program tends to be characterized by relatively
large, long-term projects. As a result, the committee was able
to select a manageable number of case studies22that
covered almost all of the research expenditures in the DOE
fossil energy program since 1978. In contrast, the energy
efficiency program, especially in the buildings and industry
programs, is composed of a large number of relatively small
projects. The committee determined that it was not possible
to analyze enough cases to capture a large fraction of DOEs
research expenditures in these areas. Therefore, the committee selected 17 case studies that, in its expert opinion, were
sufficiently representative to permit the testing of the analytical framework and to draw reliable conclusions about the
success or failure of the overall program. The criteria
for selecting this representative group are explained in
Chapter 3.
Perhaps the most difficult analytic problem is assigning
to DOE a proportion of the overall benefit of an R&D program that properly reflects DOEs contribution to it. In most
of the case studies, DOE, industry, and sometimes other federal and nonfederal governmental research organizations
contributed to the outcome of the research program. The
committee found no reliable way to quantify the DOE con-
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
DOE-2 (applied to standards)

Black liquor gasification
Forest products
Oxy-glass technology (applied to other areas)
Lost foam
Free-piston Stirling heat pump (failure)
Environmental
benefits
Indoor air quality, infiltration,

and ventilation
Electronic ballasts
Low-e glass
Oxy-glass
PNGV
DOE-2
Indoor air quality (IAQI&V)
Forest products
Catalytic converters for diesels

PEM fuel cell for transportation and
distributed generation
Advanced batteries for electric vehicles
Indoor air quality (sick buildings)
Stirling engine for automobiles (failure)
Security benefits
PNGV
DOE-2 (peak load analysis)

PEM fuel cells for transportation and
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.
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
Improved indirect liquefaction

Improved direct liquefaction
Advanced turbine system
Fuel cells
Western gas sands
Eastern gas shales
Shale oil
Flue gas desulfurization
IGCC
Coal preparation
Mercury and air toxics

Pressurized fluidized-bed combustion
Fuel cells
Gas to liquids
Magnetohydrodynamics
Western gas sands
Eastern gas shales
Field demonstration
Seismic technology
Coal-bed methane
Downstream fundamentals
IGCC
Coal preparation
Waste management
Western gas sands
Eastern gas shales
Seismic technologies
NOx control
Coal-bed methane

Fuel cells
Eastern gas shales
Shale oil
NOx control
IGCC

Fluidized-bed combustion
Shale oil
Field demonstration
Seismic technology
IGCC
NOx control
Waste management
Security benefits
Seismic technologies

Shale oil
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.
R&D expenditures over the 22-year period. Included are both

successes and failed or terminated projects. As noted above,
the selection process did not involve a statistical sampling of
all the projects; instead, it attempted to choose a representative sample of energy efficiency projects.
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.
CONCLUSIONS AND RECOMMENDATIONS

The committee found that DOEs RD&D programs in
fossil energy and energy efficiency have yielded significant
benefits (economic, environmental, and national security-related), important technological options for potential application in a different (but possible) economic, political, and/or
environmental setting, and important additions to the stock
of engineering and scientific knowledge in a number of
fields.
The committee also found that DOE has not employed a
consistent methodology for estimating and evaluating the
benefits from its RD&D programs in these (and, presum-
ably, in other) areas. Importantly, DOEs evaluations tend to

focus on economic benefits from the deployment of technologies, rather than taking into account the broader array of
benefits (realized and otherwise) flowing from these investments of public funds.
Finally, the committee found that how DOEs research
programs were organized and managed made a real difference to the benefits that were produced by the research.
Benefit-Cost Assessment
The committee found that DOE investments in RD&D
programs in both the fossil energy and energy efficiency programs during the past 22 years produced economic benefits,
options for the future, and knowledge benefits. Although the
committee was not always able to separate the DOE contribution from that of others, the net realized economic benefits in the energy efficiency and fossil energy programs
were judged by the committee to be in excess of the DOE
investment.
In the programs reviewed by the committee in the energy
efficiency area, most of the realized economic benefits to
date are attributable to three relatively modest projects in the
building sector carried out in the late 1970s and 1980s and
continuing into the 1990s. The committee estimated that the
total net realized economic benefits associated with the energy efficiency programs that it reviewed were approximately $30 billion (valued in 1999 dollars), substantially
exceeding the roughly $7 billion (1999 dollars) in total energy efficiency RD&D investment over the 22-year life of
the programs.
The committee estimated that the realized economic benefits associated with the fossil energy programs that it reviewed amounted to nearly $11 billion (1999 dollars) over
the same 22-year period, some of which it attributed to costs
avoided by demonstrating that more stringent environmental
regulation is unnecessary for waste management and for addressing airborne toxic emissions.
The realized economic benefits of fossil energy programs
instituted from 1986 to 2000, $7.4 billion, exceeded the estimated $4.5 billion cost of the programs during that period.
However, the realized economic benefits associated with the
fossil energy programs from 1978 to 1986, estimated as $3.4
billion in 1999 dollars, were less than the costs of this periods
fossil energy programs ($6.0 billion in 1999 dollars).
In addition to realized benefits, a number of technologies
have been developed that provide options for the future if
economic or environmental concerns justify their use. For
example, the advanced turbine system (ATS) and the integrated gasification combined-cycle (IGCC) system are technologically ready options awaiting changes in the energy
marketplace. The energy efficiency programs in RD&D also
produced option benefits, with Partnership for a New Generation of Vehicles (PNGV) and forest products (Industries
of the Future) being important examples.
Substantial reductions in pollution evidently resulted

from technologies developed in these programs. Although it
is difficult to assign a monetary value to environmental benefits, the committee estimates that both RD&D programs
yielded environmental benefits valued conservatively at $60
billion to $90 billion.
National security has been enhanced by a number of the
programs. For example, a number of fossil energy programs
(enhanced oil production and seismic technologies) increased oil production and reserve additions in the United
States and thereby reduced U.S. dependence on imported
oil. Although fuel economy regulation has provided significant national security benefits by reducing the countrys dependence on petroleum in transportation, DOEs research
programs have proven disappointing in this regard. The options benefit of PNGV, although not yet realized, is in the oil
security area.
All the technologies funded by the DOE add to our stock
of knowledge in varying degrees.
In addition to its analysis of the individual classes of benefits embodied in the conceptual framework, the committee
reached the following summary conclusions:
By an order of magnitude, the largest apparent benefits
were realized as (1) avoided energy costs in the buildings
sector in energy efficiency and (2) avoided environmental
costs from the NOx reductions achieved by a single program
in fossil energy. This result is not surprising given the balanced research portfolio, which also includes its share of
failures and modest successes.
These large realized benefits accrued in areas where
public funding would be expected to have considerable leverage. For one thing, the buildings sector is fragmented,
and the prevailing incentive structure is not conducive to
technological innovation. For another, the NOx reduction
achieved in fossil energy is an environmental benefit that
private markets cannot easily capture.
The importance of standards pulling technological innovation in buildings and transportation cannot be exaggerated. Often, DOE energy efficiency research has been used
to provide a proper basis for standards.
Important but smaller realized benefits were achieved
in fossil energys oil and gas program and energy efficiencys industry programs. Here, the committee concluded that DOE participation indeed took advantage of the
private sector activity to realize additional public benefits.
In these cases, however, a clearly defined DOE role is crucial to ensuring that public funding is likely to produce appropriate benefits.
Forced government introduction of new technologies
has not been a successful strategy. Recent programs in both
energy efficiency and fossil energy have recognized the importance of industry collaboration and of responding to
likely economic or policy conditions to create credible benefits.
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
which the adoption of the results of DOE RD&D programs

and the associated realization of economic benefits were
aided by regulatory, tax, or other policies that significantly
improved the attractiveness of these technologies to prospective users.
Conversely, the case studies include a number of instances in which the attainment by DOE RD&D programs of
their technical goals (and the production of option or knowledge benefits) did not produce substantial economic benefits, because incentives for users to adopt these technologies were lacking. Such technologies may provide significant
option and knowledge benefits, and they represent appropriate targets for DOE RD&D programs.
Recommendation. Where its RD&D programs seek to develop technologies for near-term deployment, DOE should
consider combining support for RD&D with the development of appropriate market incentives for the adoption of
these technologies based on an understanding of market conditions and consumer needs.
The committees case studies highlight the importance of
flexibility in the RD&D program structure, especially the
need for periodic reevaluation of program goals against
change in the regulatory or policy environment, the projected
energy prices and availability, and the performance or availability of alternative technologies, among other factors.
Recommendation. DOE should expand its reliance on independent, regular, external reviews of RD&D in energy efficiency and fossil energy program goals and structure, enlisting the participation of technical experts who are not
otherwise involved as contractors or R&D performers in
these programs.
The committee found that cost sharing between DOE and

industrial collaborators frequently improved the performance
of RD&D programs and enhanced the level of economic and
other benefits associated with such programs.
Recommendation. DOE should maintain its current policies encouraging industry cost sharing in RD&D programs.
In general, industrys share of program costs should increase
as a project moves from early-stage or exploratory R&D
through development to demonstration. Policy makers
should ensure that an emphasis on collaboration with industry in the formulation of R&D priorities and R&D performance does not result in an overemphasis on near-term technical objectives within the DOE R&D portfolio or in neglect
of public good objectives.
The committees case studies suggest that an appropriate
role for DOE in RD&D programs varies, depending on
whether a given program is focused on exploratory research,
development, or demonstration, as well as the structure of
the industry (including the amount of industry-funded R&D
or the presence of well-established industrial R&D consortia) within which a given technology will be deployed. The
committee found that DOE RD&D programs in fossil energy and energy efficiency have developed greater 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.
Recommendation. DOE should strive to build flexibility
into the structure of its RD&D programs.
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
The oil embargo by the Organization of Arab Petroleum

Exporting Countries nearly 30 years ago stimulated the
United States to search for new technology 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 budgeted $91.5 billion (2000 dollars) in energy R&D, mostly
through DOE programs (NSF, 2000). This direct federal investment constituted about a third of the nations total expenditure on energy R&D, the balance having been spent by
the private sector. Since government policiesfrom cost
sharing to environmental regulation to tax incentivesinfluenced the priorities of a significant fraction of the private
investment, it can be said that, on balance, the government
has been the largest single source and stimulus of energy
R&D funding for more than 20 years.
From its inception, DOEs energy R&D program has been
the subject of many outside evaluations. This project once
again addresses the question of whether the benefits of the
program justify the considerable expenditure of public funds
since 1978. Unlike the authors of earlier studies, however,
this committee aimed to evaluate comprehensively the actual outcomes of DOEs research over two decades. This
chapter outlines the background of the study and the
committees charge and approach to it.
A BRIEF HISTORY OF FEDERAL ENERGY R&D

From 1978 on, debate about how best to spend the
publics money surrounded DOEs research program. As
differing views gained ascendancy in this ongoing debate,
9
10
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-
tant details, of course. But even the highlights convey a sense

of the twists and turns of both the program goals and the
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.
ORIGIN AND SCOPE OF THIS STUDY

In legislation appropriating funds for DOEs fiscal year
(FY) 2000 energy R&D budget, the U.S. House Appropriations Subcommittee on the Interior directed an evaluation of
the benefits that have accrued to the nation from the research
and development programs that have been conducted since
1978 in DOEs Office of Energy Efficiency and Renewable
Energy and its Office of Fossil Energy. The congressional
charge for this evaluation limits its scope to the energy efficiency and fossil fuel programs because they are the ones
under the jurisdiction of the subcommittee. DOE conducts
other energy research programs, including ones in renewable and nuclear energy.1 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 energy
R&D expenditure of approximately $85 billion (2000 dollars) (NSF, 2000).
There have been large differences in project scale, size,
complexity, and time horizon between the energy efficiency
and the fossil energy programs; these differences make any
direct comparisons of results of the two programs difficult.
Both programs have long histories and have undergone significant changes over the past two decades. The Office of
Energy Efficiency and Renewable Energy came into being
in its current form around 1982, having evolved from the
Office of Conservation and Renewable Energy, the name by
which it was known after DOE was founded by the Carter
administration. The change in name reflected both the
changeover to the Reagan administration and a shift in philosophy as the energy crisis eased. The Office of Energy
Efficiency and Renewable Energy comprises five main program offices, three of which this study focuses on: the Office
of Building Technology, State, and Community Programs
(BTS); the Office of Industrial Technologies (OIT); and the
Office of Transportation Technologies (OTT).
Research in the Office of Fossil Energy has historically
focused on two main programs: the Office of Coal and Power
Systems (CPS) and the Office of Natural Gas and Petroleum
Technology (NGPT). The coal and power systems program
can be viewed as having gone through three phases since
DOE was formed. The first phase, from the late 1970s to the
1The committee is sensitive to the fact that the study covers only part of
the energy research conducted by DOE, but it elected not to extend the
study to include the entire technology portfolio.
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:
ment, develop a comprehensive framework for defining the

range of benefits and costs, from quantitative to nonquantitative, of federal R&D and use this comprehensive framework as a basis for conducting its analysis. In developing
this framework, consideration should be given to direct benefits related to program goals and other indirect benefits (for
example, unexpected products or improvements in scientific
understanding), as well as aspects of valuing these benefits
(for example, optimum risk profiles, options values, timing
of benefits);
The NRC committee appointed to conduct this study will

conduct a retrospective examination of the costs and benefits of federal research and development since 1978 for advanced technologies in the Department of Energys program
areas of fossil energy and energy efficiency. The committee
will develop a comprehensive framework that, at a minimum, reflects the goals and public purposes of federal R&D
(but which may be broader in scope), and using this framework will assess the benefits of federal energy R&D and will
identify improvements that have occurred because of federal
funding in (1) fossil energy technologies with regard to performance aspects such as efficiency of conversion into electricity, lower emissions to the environment and cost reduction; and (2) energy efficiency technologies with regard to
more efficient use of energy, reductions in emissions and
cost impacts in the industrial, transportation, commercial and
residential sectors.
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-
12
search projects in fossil energy and energy efficiency over

this period, the committee selected projects for study and
made decisions on the depth of analysis with these values in
mind. (Subsequent chapters, notably Chapter 3, discuss the
specific judgments that were made in this connection.)
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:
ORGANIZATION OF THIS REPORT
Attempt to evaluate the likelihood of achieving future

results. The committee recognizesand the reader should
understandthat some of the research projects evaluated in
the study are still active and have not yet had time to achieve
the results expected of them. This is not to suggest that such
projects will be unsuccessful, but only that maintaining a
careful distinction between actual and promised outcomes is
essential to rigorous evaluation.
Assess whether federal funds devoted to energy research could have been better spent in other ways. The
analysis presented in this report assesses relative costs and
Central to the conduct of this study is the development of

a comprehensive evaluation framework. Chapter 2 discusses
the framework and the rationale behind its development and
application; a detailed description of the analytic methodology appears in Appendix D. Chapters 3 and 4 then address
the benefits and costs of a representative sample of energy
efficiency and fossil energy programs, respectively. Appendixes E and F contain the case studies developed by the committee for the 39 programs. Chapter 5 provides the committees overall findings and recommendations for strategies
to inform future energy R&D choices.
REFERENCE
National Science Foundation (NSF). 2000. Inventory of Historical Tables
by Topic from Research and Development in Industry. Washington,
D.C.: National Science Foundation.
Framework for the Study
OVERVIEW
and DOEs achievement of each of these technologies (Table

2-1).
The technologies listed in Table 2-1 probably all benefited from what may be called critical facilitating tech-
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.
TABLE 2-1 The Most Important Fossil Energy and

Energy Efficiency Technological Innovations Since 1978
Technology Now in the Marketplace
Fossil energy
Efficient gas turbine in stationary systems
3-D seismic imaging
Deep water drilling and production
Improved oil and gas reservoir
characterization and modeling
Improved oil and gas drilling: horizontal,
deviated, and extended
Diamond drill bits
Coal-bed methane
Flue gas cleanup
Atmospheric fluid-bed combustion
Fracture technology for tight gas
Oil refinery optimization
Longwall coal mining
Coal cleaning
Energy efficiency
More efficient electric motors
Higher mileage automobiles
More efficient electronic ballasts
More efficient household refrigerators
More effective insulation
Synthetic lubricants
More efficient gas furnaces
More energy-efficient windows
More efficient industrial processes
More efficient buildings
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
Level of DOE Influence
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
NOTE: Influence levels: A/M, absent or minimal; I, influential; D, dominant.
13
14
nologies, most of which DOE had some part in developing.

These technologies include the following:
Improved materials and catalysts;

Improved instrumentation, sensors, and controls;
Improved computer hardware;
Improved software;
Improved process and combustion modeling; and
High-bandwidth communications.
The committee did not attempt to evaluate the role of DOE

in these critical facilitating technologies.
This analysis, admittedly subjective, nevertheless suggests that the private sector did in fact develop and deploy
many important technologies without DOE participation. On
the other hand, DOE did make an influential or dominant
contribution in 9 of the 22 technologies reviewed.
The rough conclusion to be drawn from these observations is that the DOE funding of energy R&D is not necessarily associated with the most obviously attractive advances. Rather, as basic economic principles suggest, DOE
research should also, and even mostly, be associated with
public policy objectives.
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
(2) some benefits may be realized even when a technology

does not enter the marketplace immediately or to a significant degree.
The matrix shown in Figure 2-1 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 recognizes that the technologies being evaluated may be in different stages of the RD&D cycle;
as well, by its nature, the framework represents a snapshot in
time, with a focus on outcomes of the work performed.
Class of Benefits (Rows of the Matrix)
The classes of benefits, which correspond to the rows of
the matrix, are intended to capture types of public benefits
appropriate to DOE R&D programs. DOEs current stated
mission spells out these benefits in general terms, as follows
(DOE, 2000): To foster a secure and reliable energy system
that is environmentally and economically sustainable, to be
a responsible steward of the Nations nuclear weapons, to
clean up our own facilities, and to support continued United
States leadership in science and technology.
The Strategic Plan expands on the energy aspect of the
mission as follows: The Department is working to assure
clean, affordable, and dependable supplies of energy for the
Nation, now and in the future. That means increasing the
diversity of energy and fuel choices and sources, bringing
renewable energy sources into the market, strengthening
domestic production of oil and gas, supporting commercial
nuclear energy research, and increasing energy efficiency
(DOE, 2000).
The fossil energy and energy efficiency programs each
have a mission statement, and the individual R&D initiatives or projects may have more explicit and focused objectives. The approach of each program to benefit analysis, as
Options Benefits
and Costs
Economic benefits
and costs
and costs
Security benefits
and costs
FIGURE 2-1 Matrix for assessing benefits and costs.
Knowledge Benefits
and Costs
15
presented to the committee in briefings and background

documents, reflects the general themes of the DOE mission
statement and is encompassed within it.
Based on these stated objectives, the committee adopted
the three generic classes of benefits (and related costs) for
the energy R&D programs: economic, environmental,
and security benefits. The entry in each cell of the matrix
is a measure of the economic, environmental, or security net
benefit further characterized according to the column classification schemes, discussed below. Economic costs, or undesirable consequences, are quantified as negative components of net benefits, and economic benefits, or desirable
consequences, as positive components. Ideally, the entries in
the cells would be quantitative measures of each category of
net benefits; in some cases, however, only qualitative descriptors are possible.
refers to conditions absent energy disruptions or other energy shocks. The benefit must be measured net of all public
and private costs. Economic value is increased either because a new technology reduces the cost of producing a given
output or because it allows additional valuable outputs to be
produced by the economy. Economic benefits are characterized by changes in the valuations based on market prices.
These benefits must be estimated on the basis of comparison
with the next best alternative, not some standard or average
value. The next best alternative is defined as a technology
(or combination of technologies) that is available and commercially proven that would accomplish essentially the same
objective as a technology being evaluated and would be the
technology of choice for a buyer in the market. This avoids
the common problem of comparing a new technology with
technology currently in general use rather than with technology that is already available and that could replace the existing technology. In many instances, there may be no alternative better than the one in general use.
quality of the environment that have occurred, will occur, or
may occur as a result of the technology. A technology could
directly reduce the adverse impact on the environment of
providing a given amount of energy service by, for example,
reducing sulfur dioxide emissions per kilowatt-hour of electric energy generated by a fossil fuel-fired power plant, or by
indirectly enabling the achievement of enhanced environmental standards (by, for example, introducing the choice of
a high-efficiency refrigerator). Environmental net benefits
are typically not directly measurable by market prices but by
some measure of the valuation society is willing to place on
changes in the quality of the environment. They can often be
quantified in terms of reductions in net emissions or other
physical impacts. In some cases, market values can be assigned to the impacts based upon emissions trading or other
indicators.
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-
16
cable in other ways, possiblybut not probablyresulting

in benefits.
Rather than attempting to fully characterize the uncertainty of benefits, the committee has used two distinctions
state of technology development and the favorability of economic and policy conditionsto place a benefit in one of
the three columns. The first column in Figure 2-1, called
realized benefits, is reserved for benefits that are almost
certain: those for which the technology has been developed
and economic and policy conditions favor its commercialization. The second column, which includes less certain benefits, is called options benefits. These are benefits that may
be derived from technologies that are fully developed but for
which economic and policy conditions might but are not
likely to favor commercialization.
All other benefits, to the extent they exist, are called
knowledge benefits. The category is thus a very broad one.
It includes knowledge generated by programs still in
progress, programs terminated as failures, and programs that
were technological successes but will not be adopted because
economic and policy conditions will never be favorable. Figure 2-2 summarizes the committees notions of the range-ofbenefit columns.
Realized net benefits can be characterized as economic,
environmental, or security benefits. They accrue from technologies for which the R&D has been completed and that
have been or are ready to be commercialized on an economic
basis under current economic, regulatory, and tax conditions.
Options net benefits can also be characterized as economic, environmental, or security benefits; they are based
on technologies for which the R&D has been completed and
for which the costs and technical capabilities are reasonably
certain but that have not been commercialized. These technologies are not commercially viable under current economic
conditions, but some plausible future circumstance, such as
changed price structures, limitations on alternative technologies or resources, or evolving health or environmental standards could make them a valuable option.
Technology
Economic/
Developed
Policy Conditions
Knowledge benefitsalso classifiable as economic, environmental, or security comprise useful or potentially

useful scientific knowledge and technology that have resulted from the R&D initiatives and that are not reflected in
the realized or options benefits.
Measures of Value (Entries in the Matrix Cells)
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
provide a calculus for measuring the values to be entered in
each of the cells. A complete discussion of the rules to be
applied in using the matrix was prepared to guide the
committees own efforts and to request information from
DOE. It is presented as Appendix D of this report. Some of
the more important rules are abstracted here to assist the
reader in understanding the results of the evaluation.
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
in Progress
Technology
Development Failed

commercialization
Realized benefits
Knowledge benefits
Knowledge benefits

Options benefits
Knowledge benefits
Knowledge benefits
Knowledge benefits
Knowledge benefits

FIGURE 2-2 Derivation of columns for the benefits matrix.
17
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.
Realized Economic Benefits

In computing realized economic benefits, the net lifecycle effects of a completed technology are considered.
However, the decreases in damages associated with reduced
releases of materials as a result of the new installations may
last for much longer times. Benefits are included for the entire time of this decreased damage.
Realized economic benefits should include the results of
the life-cycle operation of all capital stock utilizing the technology that has been installed through the year 2000 and that
is projected to be installed through 2005 (the 2005 rule). A
new technology may well be adopted for new installations
beyond a 5-year horizon, but for technologies that provide
significant economic benefits that can be captured by private
sector investments, it is reasonable to assume that at some
point a comparable improvement would have been introduced in the absence of the DOE R&D initiative. Adopting a
5-year limit (the 5-year rule) on future installations but allowing the full useful life of the installations to be considered provides a reasonable but conservative estimate of the
contribution of the technology without introducing speculative projections of its longer-range impact. The committees
calculations also assume that the DOE R&D or demonstration program advanced the introduction of new technology
into the market by 5 years.
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.
18
CONDUCT OF THE STUDY

The committee began its work in June 2000. As envisioned by the statement of task, the committee first developed an analytic framework for assessing benefits. The committee reviewed a number of reports (see Appendix C)
prepared by others over the years evaluating DOEs R&D
program. Unlike most of these reports, the charge for this
project focuses attention on assessing the actual outcomes of
DOEs energy R&D programs. The committee therefore
elected to take a case-study, data-intensive approach to this
project, recognizing that time and resource constraints would
prevent it from resolving every analytic issue and closing all
the gaps in data that ideally would be needed to implement
the analytic framework.
Because of these constraints, the committee identified a
representative sample of programs and projects as a basis for
arriving at overall findings and recommendations. As outlined in the discussion of the task statement in Chapter 1,
this selection was designed both to identify lessons learned
from the range of programs conducted by DOE and to evaluate the utility of the analytic framework in a diversity of
circumstances.
The committee then asked the Office of Fossil Energy
and the Office of Energy Efficiency and Renewable Energy
at DOE to provide information required by the framework,
and to do so following the detailed procedures specified in
Appendix D. Both the framework and the procedures are
essential parts of the methodology developed by the committee. Both offices supplied a great deal of statistical and
analytic information in response to the committees request.
Much of the data provided had to be developed specifically
for this study. Because the programs changed over time, the
task of documenting programs as far back as 1978 was at
times extremely challenging.
Each of the 39 case studies was assigned to a committee
member for analysis. With the help of an independent consultant, committee members assessed the DOE submissions
for quality and conformance to the analytic methods prescribed by the committee. Considerable iteration and correction took place in this process to ensure that the committees
procedures were followed. As the study proceeded, the
framework was refined. The cooperation of DOE staff in
this process was exemplary, and it is gratefully acknowledged.
The committee met as a whole and in subgroups to ensure
that the analytic process was being applied consistently
across all of the case studies. In addition, considerable attention was paid to the use of common assumptions, designed
to promote comparability of results across case studies as
well as conservatism in the valuing of benefits. One such
assumption is embodied in the 5-year rule, which assumes
the technology would have entered the market 5 years later
without government involvement. For example, if a technology entered the market with DOE involvement in 1992, the
5-year rule assumes the technology would have gotten to

market in 1997 without a government program. Another assumption is the 2005 rule, by which the committee assessed
benefits for all the technologies evaluated by the committee
as being installed in the market by 2005 and assessed those
benefits over their useful economic life. The year 2005 was
used because the committee was reasonably sure of economic and other conditions up to that time and did not want
to project out further because of uncertainties.
As part of its deliberations, the committee invited members of government, industry, and public interest groups to
comment on the goals, performance, and effectiveness of the
relevant DOE research and development programs over the
period of interest. Appendix B lists the formal comments
received during the course of the project. In analyzing the
case studies, the committee also directly contacted other representatives of industries that participated with DOE in the
case study programs to secure their views on the value of the
research and DOEs role in it.
In these ways, the committee attempted to be conservative in the judgments it drew from the available data. While
much more can and should be done to refine the methodology launched with this study, the committee believes the
methodology has come far enough to allow stating with confidence the findings and recommendations included in this
report.
ASSESSMENT OF THE METHODOLOGY

The committee considers that the analytic methodology
described in this chapter is useful as an internally consistent
and comprehensive framework for the objective comparison
of the benefits and costs of energy R&D programs across
programs and technologies. Its opinion is based on the actual
application of the methodology in the 39 case studies of diverse technologies. In the course of this experience, however, a number of lessons bearing on the methodologys implications and future utility were identified.
To provide perspective on the more detailed analyses that
follow, as well as to suggest directions for improvement,
several of the lessons learned are discussed here:
Specifying categories of benefits by means of systemic
analysis is a useful discipline. In particular, benefit evaluation must take care to give adequate weight to benefits other
than realized economic benefits (the upper left corner cell of
the matrix). Quantifying realized economic benefits is usually easier than quantifying the kinds of benefits that fit in
the eight other cells, and the temptation is great to focus on
these easily quantified benefits. But, as the committee has
noted, environmental and security benefits, while harder to
value in dollar terms, are equally important objectives of
public funding. Similarly, creating options in the face of future oil price changes and acquiring knowledge that can be
19
used by many private sector actors are important public benefits.

Many of the case studies in the committees sample
experienced the changes in policy and other changes that
occurred in DOE R&D programs outlined in Chapter 1. This
fact needs to be taken into account in judging the outcomes
observed when the committee applied the framework. For
example, the programs to develop a technology for making
liquid fuels from coal were not notably successful. However, had oil prices continued to rise, as expected at the time
the program was designed, the outcome might have been
more favorable. In some cases, these effects are so striking
that the committee notes them explicitly. In all cases, the
reader should consider the context of the program before
arriving at a final judgment about its benefits.
More refined analysis of knowledge benefits would improve the methodology. The committees focus on outcomes
results in many benefits falling into the knowledge category.
In some cases, this is because recently begun research
projects have not yet had time to achieve their expected results. In other cases, research that is abandoned before producing a realized or optional technology also produces
mainly knowledge benefits. Distinguishing between these
two kinds of knowledge benefits may provide useful information that the present version of the methodology does not
provide.
The committees use of the 5-year rule should not be be
interpreted to mean that the only effect of federal R&D is to
accelerate the introduction of a technology into the marketplace by 5 years. The committee recognizes that there may
be many effects of federal R&D, including the acceleration
of a technology into the marketplace by more than 5 years,
or other effects such as an increase in the ultimate market
penetration of a technology. The committee used the 5-year
rule because it needed a uniform, conservative standard for
the analysis of these particular case studies.
As noted earlier, quantification of the benefits suffers

from inherently difficult methodological problems. The time
and resource constraints of this study made it difficult even
to apply fully the valuation methods that do exist. Where it
has used quantified benefits to support its findings and recommendations, the committee considers it has been conservative in establishing upper and lower bounds for its benefit
estimates. In general, the committee believes it is more likely
than not that a more thorough analysis would increase the
values of the benefits that the committee has assigned to
DOEs programs.
Perhaps the most difficult analytic problem is assigning to DOE a proportion of the overall benefit of an R&D
program that properly reflects DOEs contribution to it. In
most of the case studies, DOE, industry, andsometimes
other federal and nonfederal governmental research organizations contributed to the outcome of the research program.
In some cases, as in the development of seismic technology,
for example, industry made virtually all of the contribution,
but DOE nevertheless made an important one. The committee has found no reliable way to quantify the DOE contribution in most cases, and doing so remains a methodological
challenge for the future. For the purpose of this study, the
committee has simply attempted to identify in its case study
analyses the specific role that DOE played, by looking at the
outcome that would not have happened had DOE not acted.
The committee considers that it has used conservative
judgment in characterizing the DOE contribution for the
purpose of developing findings and recommendations.
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>.
Evaluation of the Energy Efficiency Programs
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-
Energy efficient technologies can reduce the life-cycle

costs of energy-consuming goods and services paid by consumers and industry, pollutant emissions, and the risk of oil
interruptions. For the purposes of this study, energy efficiency has been defined by the committee as the achievement of at least the same output of goods and services (at the
same or lower cost) while using less energy. It can be in the
form of more efficient products or equipment or processes.
Depending on the process or technology, it is measured in
different ways, but the goal remains the provision of the same
or better level of utility to the consumer while reducing the
amount of energy used. For example, in the automotive industry, vehicles that obtain more miles per gallon (mpg); in
the aluminum industry, production of more pounds of aluminum per British thermal unit (Btu) of energy; in lighting,
more lumens per watt. The pattern of energy use in the U.S.
economy has gradually changed over the last two decades,
from one dominated by an energy-intensive heavy industry
base to one much more dependent on information and services. Nonetheless, the role of energy, and especially electricity, remains vital to the economys functioning. In the
wake of growing information, service, and other light industrial sectors as well as the electrification of some sectors
such as steel, the economy is becoming more electricity-intensive at a faster rate than in the past and often with a higher
premium being placed on the quality and reliability of electricity supply. Because of the importance and scale of energy use in the economyin particular, oil for transportation and electricity for buildings and industry sectorsthe
efficient use of energy has become crucial to virtually all
economic activity and, in the committees view, has contributed substantially to the sustained economic growth in the
U.S. economy over the last decade.
Energy efficiency can enhance the reliability of the electricity supply, facilitate growth while improving environ-
20
21
cient heating, lighting, refrigeration, industrial processes,

and new multifuel propulsion engines or battery-driven automobiles. In the mid-1970s, several R&D laws1 were passed
specifically directed at electric vehicles and multifuel automotive propulsion engines. The oil embargo also led to the
passage of regulatory, information, and financial incentive
laws in that decade, including laws on automotive corporate
average fuel economy (CAFE) standards, appliance labeling, tax credits for energy-efficient retrofit improvements in
residential buildings, low-income weatherization grants, retrofit grants for schools and hospitals, programs for retrofit
activities, and building energy performance standards for
new buildings.2 In 1987, Congress enacted the National Appliance Energy Conservation Act (P.L. 100-12), which pro1For example, the Electric and Hybrid Vehicle Research, Development,
and Demonstration Act of 1976 (P.L. 94-413) required the federal Energy
Research and Development Administration to purchase several thousand
electric or hybrid vehicles from 1978 to 1982, to demonstrate their feasibility.
2The Energy Policy and Conservation Act of 1975 (P.L. 94-163), established a wide range of energy conservation programs, including fueleconomy standards for passenger cars, appliance labeling and standards
programs, and energy conservation programs for federal buildings. The Energy Conservation and Production Act of 1976 (P.L. 94-385) established
energy conservation standards for new buildings; weatherization assistance
for low-income people; and demonstration grants and loan guarantees for
energy conservation measures in existing buildings. The National Energy
Extension Service Act of 1977 authorized states to establish energy conservation extension programs. The National Energy Tax Act of 1978 (P.L. 95618) established tax credits for residential conservation measures and solar
energy applications. The National Energy Conservation Policy Act (P.L.
95-619) created a program of energy conservation grants for schools, hospitals, and local government buildings; required the national mortgage associations to purchase loans for conservation improvements; and authorized
grants and standards for improving the energy efficiency of public housing
(for further discussion, see Clinton et al., 1986).
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 1980 FY 1981 FY 1982
FY 1983 FY 1984
FY 1985 FY 1986
FY 1987 FY 1988 FY 1989
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 1992 FY 1993 FY 1994
FY 1995 FY 1996
FY 1997 FY 1998
FY 1999 FY 2000 FY 1978-2000
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.
22
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.
SELECTION OF THE CASE STUDIES
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.
The energy efficiency (EE) R&D program is aimed at

three sectors: buildings (both residential and commercial),
industry (manufacturing and cross-cutting technologies), and
transportation (primarily automotive and light- and heavyduty trucks). Although the issues, problems, and solutions
for energy efficiency may be different for each of the three
end-use sectors, lessons learned from one sector are often
applicable to all the sectors. In order to provide a comprehensive study of the energy efficiency program, 17 case studies were selected to illustrate the main components of the
program, important examples of RD&D activities, and the
range of benefits and costs that the energy efficiency program has yielded. The case studies cover only about 20 percent of the total EE R&D expenditures (see Table 3-2) over
the 22-year period. As a result of the characteristics of the
building and industry sectors and the type of programs DOE
has sponsored, the case studies for the buildings sector account for about 5 percent of the total building budget and
those for the industry sector, 13 percent of the total industry
budget. The transportation case studies represent 38 percent
of the transportation budget.
The buildings and industry programs tend to have many
smaller projects (in the millions of dollars rather than tens of
millions), so it was not possible to select a few larger projects
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).
23
TABLE 3-2 Expenditures for Energy Efficiency

Programs Analyzed by the Committee, 1978 to 2000
(millions of dollars)
Program
DOE Costs
Buildings (budget 1978 to 2000, $2015 million)

Advanced refrigerator/freezer compressors
Compact fluorescent lamps
DOE-2 program
Electronic ballasts for fluorescent lamps
Free-piston Stirling engine-drive heat pump
Low-emission glass
Indoor air quality
Subtotal
Industry (budget 1978 to 2000, $2072 million)
Advanced lost foam technology
Forest products IOF programa
Subtotal
Transportation (budget 1978 to 2000, $3196 million)
Advanced batteries
Catalytic conversion
Stirling automotive engine
Transportation fuel cell power systems
PNGVb
Subtotal
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
NOTE: Budget estimates are for 1978 to 2000 in millions of constant

1999 dollars.
aExcluding black liquor gasification.
bIncludes the P-4 (programmed powder preform process) for Manufacturing of Automotive Composite Structures program, but excludes the Catalytic Conversion for Cleaner Vehicles program and the Transportation Fuel
Cell Power Systems program.
cExcludes the budgets for the Catalytic Conversion for Cleaner Vehicles
program and the Transportation Fuel Cell Power Systems program.
SOURCE: Office of Energy Efficiency. 2000. Response to questions
from the Committee on Benefits of DOE R&D in Energy Efficiency and
Fossil Energy (February 5).
to cover a larger percentage of the programs. In addition, the

committee members know these programs well and were
able to use that knowledge to select representative examples
of how the program works and to reach overall conclusions.
There were seven case studies selected from the buildings
program, five from the industry program, and five from the
transportation program. In the mid-1990s, the Office of Industrial Technologies (OIT) initiated the IOF program,
which addresses a number of different industries. There are
now larger overall programs because each has several
projects that focus on a particular IOF. PNGV, initiated in
late 1993, is an OIT program for all the automotive-related
technologies and systems and enjoys the active participation
of industry.
Not only do the type of energy efficiency R&D performed
and the actual performers of the RD&D differ by sector, but
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-
24
sources efficiently, these costs (or externalities) must be

included in the price of the particular energy service. A number of efforts, particularly in the electricity sector, have been
launched in recent years to value these costs and use them to
guide investment in and use of energy services; a number of
states (and some countries) now consider environmental externalities in their electric sector planning processes (European Commission, 1996-2001; Hohmeyer, 1988; ORNL,
1994; Ottinger et al., 1990; Stirling, 1997). These externalities generally encourage the use of energy efficiency measures that lower the need for energy supply (and its emissions) and the use of improved energy supply technologies
with resultant lower emissions. The energy efficiency program that most directly addresses oil security is in the transportation sector. Electricity reliability and power quantity
and quality have become more important in the past few
years, as illustrated by the situation in 2000 and 2001 in
California. Reliability and power quality have had an impact
on industry productivity and the costs of doing business.
Rationale for the Case Studies
The case studies were selected to illustrate hypotheses
(see Table 3-3), but they also stimulated additional hypoth-
TABLE 3-3
Categories and Case Studies
Dimension Illustrated
Benefits matrix
High economic benefit
Project/Program
eses, which led to other findings. An individual case study

may be in more than one category. Included are both successes and failed or terminated projects. They did not come
from a statistical sampling of the projects but were, instead,
a representative sample of projects. For both purposes, programs were chosen for treatment as case studies based on
their suitability for illustrating the following (see Table 3-3
and Appendix E):
The benefits matrix. Of particular interest were programs or projects that provide benefits along dimensions
other than just row 1-column 1, the northwest corner of the
matrix (net realized economic benefit), so that the importance of public goods benefits for a public sector program
can be illustrated. The benefits matrix is described in Appendix D.
The federal role in applied research/technology development. This may be of particular relevance in explaining
the relationship, or lack of one, between DOEs financial
participation in a project and the amount of credit it deserves
for the outcome. There is a mix of R&D supporting tools,
demonstrations, and standards, depending on the sector.
Program organization and industry type. In energy efficiency, this covers the major sectoral targets (building,
transportation, industry), as well as programmatic choices
(industry-dominated consortia; multiple individual-company
projects within a larger programmatic framework, with
project choices made by DOE; DOE demonstrations with
industry).
Target Sector
Buildings, Industry, and Transportation Sectors
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
25
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.
million new residential buildings and 200,000 commercial

buildings have been constructed each year.
However, the building construction industry has been
fragmented, as no builder has had more than 5 percent of the
market (Builder, 2000). Moreover, there has been little in-
centive for designing, constructing, or operating buildings to

improve their energy efficiency.
The architects and consulting engineers who design commercial buildings are generally paid as a percentage of the
job cost and have little incentive to take extra time to design
more energy-efficient buildings given the constraints of
minimizing first costs. Moreover, architects and consulting
engineers must comply with a plethora of building codes and
standards on health and safety in addition to energy efficiency. Many buildings are constructed on spec, that is,
based on what the architect/engineer specifies, and first costs
of labor and materials are typically the primary concern of
the builder. Although many energy-efficient materials and
products do not have higher first costs, builders resist implementing them because additional time is needed to train
workers to install them. Also, until the builder gains experience with these energy-efficient materials and products, they
are perceived as risky.
Many residential and commercial buildings are leased.
Commercial tenants have little incentive to invest in improving energy efficiency in places that are perceived to adversely affect occupant performance, as the cost of energy is
only about 1 percent of the cost of salaries, and such capital
improvements would be largely left with the owner when the
tenant leaves. Likewise, owners have little incentive to spend
more on capital improvements for energy efficiency, as the
savings typically accrue to the tenants, who pay the energy
bills. Thus, there are numerous split incentives or even
disincentives for the designers, builders, owners, and tenants.
Within this framework, the energy efficiency program has
sponsored relatively small RD&D projects for discrete technologies that have the potential for significant energy savings in new and existing buildings without compromising
the health or safety of the occupants, such as more efficient
windows for residential and commercial buildings, lighting
for commercial buildings, and refrigerators for residential
buildings.
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-
26
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.
creased sensitivity of many high-technology industries to

power disruption are making new demands on electricity
providers for high quality and reliability. The DOE IOF program focuses on nine process industries (steel, aluminum,
chemical, petroleum-refining, forest products, glass, agriculture, mining, and metal-casting) that consume about 80 percent of industrial energy and about a quarter of all the
nations energy at a cost of about $100 billion in energy per
year. Hundreds of different processes are used to produce
thousands of different products. Even within a process industry, individual firms vary greatly in the output they produce and their methods of production. Except for primary
metals and petroleum refining, energy normally accounts for
less than 5 percent of the cost of manufacturing a product,
with labor and capital accounting for larger shares.
Although environmental drivers are motivating some industries to improve their energy efficiency, unless there are
significant price signals, industry will not generally make
substantial improvements. However, if energy-efficient
manufacturing technologies are available when industry is
making capital investments, they will be incorporated if they
are cost-effective.
local and regional air pollution. Although automobiles have

become twice as fuel efficient as in the 1970s, the increase in
numbers of vehicles and vehicle miles traveled and the increase in the use of less efficient light trucks (e.g., sport utility vehicles and minivans) for personal transport mean that
energy used by the transportation sector has grown rapidly
and the sector has not changed its dependence on oil, which
still remains at 97 percent. However, since the price of fuel,
even with recent gasoline price increases, is a relatively minor part of the cost of driving, there is little incentive for
consumers to demand more efficient vehicles.
In the 1970s, the automobile industry was dominated by
three major U.S. manufacturers, with less than 10 percent of
the market supplied by non-U.S. companies.
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%
FIGURE 3-4 Percentage of fuel consumption for transportation

by service, 1999. SOURCE: EIA, 1999.
27
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.
BUILDINGS: LESSONS LEARNED FROM

THE CASE STUDIES
The committee reviewed seven R&D programs in the
buildings sector and found very positive returns on a relatively modest federal investment for all but one of the
projects reviewed. It is important to emphasize, however,
that these returns are not exclusively a function of the size of
the federal technology investment; they require effective integration of incentives to deploy the new technologies and
energy-efficiency standards that accelerate adoption.
Formidable market barriers, summarized in the preceding
section, tend to block the development and introduction of
energy-efficient technologies in the buildings sector even if
paybacks in the form of reduced energy bills are very rapid.
Over the 20-year horizon of this study, a potent response has
emerged that marries federal R&D-based technology innovation initially with financial incentives for technology adoption (typically funded by utility programs and tax incentives)
and ultimately with amendments to building and equipment
efficiency standards. This progression is illustrated most
fully by the refrigerator, electronic ballast, and low-emission (low-e) window programs. Such efforts require sensitivity to considerations of federalism and effective cooperation with the private sector; for example, building-efficiency
standards and utility regulation have traditionally been dominated by state-level authorities, whereas responsibility for
many equipment-efficiency standards lies at DOE itself under the National Appliance Energy Conservation Act of
1987. The committee concludes that DOE appears to have
made a substantial contribution to significant changes in the
U.S. lighting, glazing, and refrigeration markets, with benefits to consumers and the environment that exceed the entire federal R&D investment in the buildings sector over the
period under review. No precise accounting of DOEs share
of that benefit is possible, but the conclusion is robust across
a wide range of reasonable assumptions.
Two other case studies (DOE-2 and indoor air quality)
illustrate additional, albeit less dramatic positive outcomes
of DOE investment in the buildings sector. Through its development of the DOE-2 computer program starting in 1978,
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
28
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).
energy efficiency RD&D programs. None of the case studies

was accompanied by statistically valid data that could be
used to analyze the benefits to a given level of uncertainty.
The committee recommends that DOE develop standardized
procedures for quantifying the benefits of its RD&D programs within specified levels of uncertainty along the lines
of the benefits framework (see Appendix D).
Case Study Summary: The Refrigerator
One of the largest sources of electricity consumption in
many American households is the refrigerator. Figure 3-5
illustrates one of the last half-centurys more remarkable
technological achievements in the energy efficiency field: a
reduction of more than two-thirds in the average electricity
consumption of refrigerators since 1974, even as average
unit sizes increased, performance improved, and ozone-depleting chlorofluorocarbons and hydrochlorofluorocarbons
(HCFCs) were removed.
At the time the DOE R&D effort began, in the late 1970s,
such an outcome would have seemed highly implausible.
From 1947 to 1974, average consumption per unit had quadrupled, and there was little reason to expect the process to
reverse. The subsequent need to remove chlorofluorocarbons
added to the challenge, since many experts believed initially
Adj. Volume, ft
2,200
22
Average energy use per unit per year(kWh)
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
29
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
Economic Benefits (Cumulative Net Energy

Savings and Consumer Cost Savings)
(Cumulative Pollution Reduction)
Security Benefits (Oil Use or

Outage 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
reinforcing cycle began that continues to this day, under

which targeted federal R&D helps make possible the introduction of increasingly efficient and life-cycle cost-effective
new refrigerator models, which themselves become the ba-
30
sis for tightening the minimum efficiency standards (based

on marketplace demonstrations of the feasibility of meeting
a tighter standard). The refrigerator standards that DOE promulgated in 1990, 1993, and 2001 have been credited with
net life-cycle savings to consumers of about $15 billion, and
cumulative primary energy savings through 2005 will be
about 2.6 quads.5
INDUSTRY: LESSONS LEARNED FROM THE CASE

STUDIES
The committee prepared five case studies from OIT
advanced lost foam technology for metal casting (see Box
3-1), advanced turbine systems, oxygen-fueled gas furnaces
for glass making, black liquor technology (see Box 3-2) for
the forest products industry, and the forest products IOF program (the last-mentioned is clearly not an individual technology but a program). The advanced turbine systems program in the Office of Energy Efficiency is only the portion
of the overall DOE turbine program that was part of OIT
the Office of Fossil Energy has a separate program addressing the larger turbines. Recently, the OIT program was transferred to the Office of Power Technologies within EERE,
but the committee examined it nonetheless as part of its retrospective review of OIT.
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.
5The cumulative energy savings estimate includes the initial impact of

the 2001 refrigerator standards and is taken from McMahon et al., 2000,
Impacts of U.S. Appliance Standards to Date, Lawrence Berkeley National
Laboratory Report number 45825.
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.
The five case studies represent only a very small portion

of the overall OIT expenditures, but the committee believes
that some valuable lessons can be learned from an examination of them. These lessons include the following:
The great value of OIT as a catalyst for convening industry and bringing together other experts and affected constituencies to address common needs,
The advantages of early agreement on goals and metrics
for success to guide the development path of a technology,
The importance of nonenergy benefits to industry as a
driver for the adoption of technology, and
The significance of demonstration as a means of promoting technology adoption in these industries.
The OIT approach to the industrial sector has changed
dramatically over the past two decades. Originally, it focused
on individual technologies (e.g., the lost foam process), but
now it is organized around the energy-intensive industries
(e.g., metal casting). Once a technology-push program, it is
now more a market-pull program.
OIT is now focused on the nations energy-intensive industries in the IOF program (see Box 3-3). This initiative
brings industry together with its suppliers and other interested parties to roadmap the industrys future and envision
the technology paths and research needs to achieve the goals.
OIT examines the portfolio of projects identified by the industry as part of its vision and selects the projects it will
support, forging a partnership with industry in this unique
manner.
As a complement to IOF, OIT also has a cross-cutting
program that focuses on three technology areas: sensors and
controls, materials, and combustion.
Demonstration of a technology is critical for its acceptance by industry. The demonstration should be geared to
the particular problem that industry is concerned with at the
31
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.
time. This is another important reason to have operational

management and not just technical staff involved in agenda
setting and working out strategies for the research program
and technology adoption. The committee believes that DOE
is doing a good job of bringing the right people together to
develop the strategies. DOE recognizes that these strategies
need to examine a variety of factors, not just technical ones.
These factors will range from environmental regulations to
the timing of major capital investments.
While its financial support for a demonstration is important, having OIT involved in the demonstration is also important. Such involvement carries with it the assurance that
the technology is effective and that expertise from sources
other than just the vendor of the technology will be available
to address any unexpected problems. And, from the perspective of the end-user, the driving force for a demonstration
may not be the energy savings potential. The oxy-fuel glass
furnace illustrates the importance of demonstrations in the
OIT program (Box 3-4).
According to OIT, the nine IOF energy-intensive industriesaluminum, agriculture, chemicals, forest products,
glass, metal casting, mining, steel, and petroleumaccount
for about 80 percent of the nations use of energy for manufacturing. They also have many environmental issues they
must address and are generally waste-intensive. Their high
energy use makes them a logical focus for OIT, although
there are some potential contradictions and caveats.
Precisely because these industries are the most energyintensive, they should have the most incentive to conduct
R&D on efficient technologies that would improve their utilization of energy. However, for a variety of reasonsforeign competition, low profit margins in commodity indus-
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).
32
The importance of developing good metrics at the outset

of the development program is illustrated by the advanced
turbine program (Box 3-5). Goals were set to achieve particular public benefits from the technology, and the research
followed from those goals.
The combination of energy savings, productivity improvements, and environmental benefits can make a compelling case for industry to adopt a technology, although the
most important driver can vary from case to case. Often,
energy savings may be much less important than other reasons for industrys interest in the technology. However,
sometimes energy-efficient technologies lead to benefits in
all three areas.
A program investigating the use of oxygen instead of air
in the combustion process began before the glass IOF came
into existence. It has been successfully incorporated into that
program and is now finding application in other industries.
The technology is successfully saving energy and penetrating the market. As noted previously, the committee believes
that once a technology has been commercialized, the OIT
role needs to be examined and perhaps changed.
The committee believes that any changes in the nature or
amount of OIT support due to the movement of a technology
through the development process are best agreed upon at the
beginning. At that time, the participants from industry and
other affected constituencies should concur on OITs role
and indeed their own rolesas the agreed-on performance
metrics are met. Clear metrics for the technology development will also facilitate oversight and management of the
programs. The committee, on the basis of its conversations
with both industry representatives and OIT staff, considers
that OIT is moving in this direction and encourages the
movement.
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.
In conclusion, on the basis of the case studies, interviews

with experts in industry, and a review of the report IMPACTS
Office of Industrial Technologies: Summary of Program
Results, prepared by DOE,6 the committee believes that the
OIT industrial programs are cost-effective and have produced significant energy, environmental, and productivity
benefits for both the industrial sector and the country (DOE,
2000b). The knowledge base, as is made clear by the benefits matrices in the case studies, has also been expanded by
many of these research initiatives. The matrices in the case
studies present the range of benefits the committee found
from the technologies. Since the industrial sector accounts
for approximately 36 percent of the nations energy use, the
impact is large.
Many of the technologies the committee examined are
already producing benefits for industry and the nation; some
are still in the initial stages of research. The importance of
the nonenergy economic benefitssuch as improved productivitythat are achieved by some of these technologies
often far exceeds the energy savings, and they are frequently
the primary reason for the technologies adoption by industry. Many of the technologies are achieving very significant
benefits of all typesenergy savings up to 25 percent are
common; productivity improvements of over 40 percent have
been achievedand they are rapidly penetrating into the industrial sector.
TRANSPORTATION: LESSONS LEARNED

FROM THE CASE STUDIES
Transportation uses about 27 percent of all energy consumed in the United States. Petroleum represents about 38
percent of all energy, and 71 percent of that petroleum is
used for transportation (EIA, 1998). Within the transportation sector, highway transportation accounts for approximately 75 percent of all transport energy use, which makes it
53 percent of all U.S. petroleum demand (EIA, 1998). Highway transportation also accounts for the equivalent of about
10 million barrels of oil per day, compared to our net oil
imports of about 9.9 million barrels per day (EIA, 1998;
Davis, 2000). Disruptions or price hikes in the U.S. petroleum supply could cause massive damage to the U.S.
economy and to national security (Greene and Tishchishyna,
2000). The above numbers make clear the critical importance of highway fuel consumption to the U.S. energy picture and the reason for DOEs considerable R&D activity in
highway transportation. The transportation technologies
budget accounted for about 40 percent of the energy efficiency R&D budget in 2000.
6The committee does not endorse as conclusive each number presented

in the report, because the report was not subject to detailed scrutiny. It finds,
however, that on balance the report was helpful in arriving at the finding
that the program has been cost effective.
33
The greatest changes in highway transportation energy

consumption since 1978 have come about because of the
CAFE regulations set by Congress in 1975, counterbalanced
by the increase in vehicle population and miles traveled.
After 1978, the average number of gallons of fuel consumed
per vehicle (all motor vehicles) decreased by 12 percent
(EIA, 1999), but motor vehicle registrations increased by 35
percent and total vehicle miles traveled increased by 71 percent. As a result, all motor fuel consumption increased by 33
percent (FHA, 1999). According to an EPA report (EPA,
2000), new passenger car fuel economy in 2000 was 28.1
mpg, while light trucks got 20.5 mpg (the 1978 figures were
14 and 12 mpg, respectively) (EIA, 1999). However, as a
result of a surge in sales of light trucks, vans, and sport utility vehicles, the new vehicle fleet fuel economy dropped
from 25.9 mpg in 1987 to 24 mpg in 2000 (EPA, 2000). The
DOE had little to do with these changes. The improvements
in new vehicle mpg were largely the result of industrys
elimination of excess weight in vehicles and improvements
in power train efficiency.
How difficult it is for DOE to make any significant improvement in overall motor vehicle fuel consumption must
be recognized. It takes many years, perhaps 20 to 30, to penetrate the motor vehicle market with any dramatically new
technology. Years are needed to develop the production capability, build the maintenance infrastructure, convince consumers of product reliability and quality, and then to fully
turn over the remaining manufacturing plant and the existing
conventional vehicle stock. Public policies, technology-forcing regulations like CAFE, subsidies, or other incentives can
speed this process somewhat, but these effects are limited
and generally beyond DOEs control.
Another difficulty is that the automobile industry has
spent a century improving and optimizing its products and in
the process has already examined in some depth the alternatives to the internal combustion engine. Moreover, for the
past 25 years the pressure of CAFE has intensified industrys
R&D on fuel economy. These factors limited the potential
for DOE to make significant contributions. DOE chose initially to focus on alternative power plants, Stirling engines,
gas turbines, and battery-powered electric motors. Alternative power plants had been researched for many years by
industry, but they were still being championed by promoters. The hybrid electric power train entered the picture
lateragain, not as a new concept, for it, too, had been
looked at previously. However, the development by 1993 of
systems engineering and power electronics to control the
interactions between two separate power sources for propulsion offered a new opportunity for hybrid electric vehicles to
compete with conventional vehicles. Researchers recognized
the opportunity, and DOE initiated work in this area. The
possibilities of fuel cell power plants for motor vehicles also
emerged rather suddenly, originally from the National Aeronautics and Space Administration (NASA), and DOE and
industry worked together to develop this approach.
Before 1993, much of DOEs passenger car R&D was

conducted under various contracts and cooperative research
and development agreements (CRADAs) with industry partners. DOE also supported several industry partnerships and
consortia, including a hybrid electric vehicle program, the
USABC (United States Advanced Battery Consortium) (see
the case study PEM Fuel Cell Power Systems for Transportation), and the United States Automotive Materials Partnership (USAMP). In September 1993, most of the passenger car R&D then under way was rolled over into the PNGV
(see Box 3-6 and the case study Partnership for a New Generation of Vehicles). Congress did not augment the FY 1994
budget for PNGV, so there was not a large increase in activity or redirection of the work.
In 1996, DOE created the Office of Heavy Vehicle Technologies to specifically address the issues of heavy-duty vehicle energy efficiency, the ability to use alternative fuels,
and reduced emissions. The DOE budget for this program
from 1996 through 2000 was $219 million. Actually, 22 percent of this amount was devoted to small diesel engines for
light-duty trucks and sport utility vehicles. In 1999, the
heavy-truck industrys cost share was 72 percent for the total
program. The program was essentially rolled over into a new
program in 2000, the 21st Century Truck Initiative, which,
much like PNGV, would conduct a program to improve fuel
economy and reduce pollutant emissions, but with participants from the heavy-truck industry. The program includes
diesel hybrid power trains and engines powered by natural
gas.
Between 1978 and 1997, a number of R&D programs
were terminated. Some were terminated in the course of the
down-selection process during PNGV because of the poor
likelihood of their success given the goals and time frame of
PNGV. Although the committee did not prepare case studies
on all of the following programs, committee members knew
them well and were able to summarize them:
Automotive Stirling engine (1978-1987 and 1993-1997;
$231 million). The program was twice terminated for a variety of technical and economic problems: lower than expected
thermal efficiency, high heat rejection requirements, poor
specific power, excessive hydrogen leakage, and high costs
(see Appendix E).
Automotive gas turbine development (1978 through
1997; $300 million). All of the gas turbine work was terminated as part of the downselection of technologies in 1997
under the PNGV. Despite large R&D investments over many
years and several different engine concepts, difficult technical hurdles remained for gas turbines to overcome before
they could be competitive with conventional engines. It was
felt that the diesel engine had a higher probability of meeting
the challenges of efficiency, emissions, reliability, and durability in the time frame of PNGV. Two developers (Allison
Engine Companynow Rolls Royceand Allied Signal
now Honeywell) continued development of the engines and
34
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.
are using them in other applications (as Army tank auxiliary

power units and turbogenerators, respectively).
Structural ceramics for automotive turbines (1978
through 1997; $100 million). This program supported the
automotive gas turbine development efforts and was terminated at the same time. Some of the ceramic materials research was transferred to OIT and continues today. The industry has benefited from the research on designing with
ceramics, processing techniques, and joining technologies.
Ultracapacitor energy storage (1990 through 1997; $7
million). This research was terminated because the cost of
the materials (ruthenium oxide) needed to make high-power
capacitors was not potentially competitive with alternatives
in the high-volume auto market. Also, competing high-power
energy storage technologies based on batteries offered more
promise. The developers continued ultracapacitor development for application in power electronics and stationary energy storage, among other uses.
Flywheel electromechanical energy storage (1993
through 1996; $26 million). Flywheel work was terminated
because of concerns about the safety of the high-speed rotors
and because the stage of flywheel development was incompatible with the PNGV time frame for producing concept
vehicles and prototypes. The flywheel developers have continued to attempt to commercialize them for stationary power
storage such as for uninterruptible power systems and critical computer systems.
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
35
being intensely researched for the longer term. Considerable

progress has been made in both areas, and there are indications that hybrid electric vehicles will be marketed by the
Big Three auto companies by 2004. The fuel cell R&D also
shows considerable promise, although serious problems remain.
Some of the manufacturing and materials R&D from
PNGV has already produced realized benefits. The 21st Century Truck Partnership, just getting under way, is attacking
another important segment of motor fuel consumption and
promises additional gains.
Summary of DOEs Transportation Technology R&D
To date, DOEs transportation technology R&D has had
very little effect on the energy consumption or environmental impact of the U.S. transportation sector. Many programs
prior to 1993 were generally unsuccessful in meeting their
goals, as indicated above. The PNGV program, while so far
falling well short of its principal goal of developing a marketable 80-mpg car, has had some successes in developing
useful manufacturing technologies that are just being intro-
duced in production. Also, there is promise that, as a result

of PNGV, motor vehicles with significantly improved fuel
economy will be introduced into the market in the near future. Whether they will make up a significant fraction of the
U.S. fleet and thus mitigate the relentless increase in transportation fuel consumption remains uncertain.
DOE transportation R&D is split among several offices
and is conducted by a variety of entities. PNGV, the USABC,
and the 21st Century Truck Initiative are major activities, all
directed at similar goals and with overlapping technologies.
They need to be well coordinated and in good communication with each other. It would appear to be up to DOE to
ensure this coordination and communication on preproprietary R&D, because industry participants are usually somewhat reluctant sharers.
The light truck and sport utility vehicle segments of the
transportation system were largely ignored until recently,
when they came to represent about 46 percent of the lightduty market (EPA, 2000). Heavy-duty trucks and buses,
which consume about 25 percent of the motor fuel in the
United States (EIA, 1998), also received inadequate attention until recently. Fortunately, much of the PNGV technol-
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.
36
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.
It is appropriate in a large R&D program directed at a

single goal to structure a portfolio of parallel projects with
varying potentials for success. However, a clear plan should
be in place to terminate (downselect) at the earliest possible
time those projects that do not show progress toward realization, with appropriate consideration of the technical barriers
and potentials and with reasonable flexibility. Roadmaps
with scheduled milestones and go/no-go decision points
should be carefully established and frequently reviewed for
changes.
DOE should identify in each program the most critical
barriers to success and focus its R&D on overcoming them.
Given limited resources, a smaller number of carefully chosen projects will usually be more productive. In general,
long-term, high-risk, directed exploratory research aimed at
these critical areas is more appropriate for DOE than nearterm product development.
Peer review of large R&D programs on a regular basis is
useful for program management, to force researchers from
different organizations to communicate, to avoid technical
narrowness, and to help terminate programs, which is sometimes necessary.
To decide whether a given public good (benefit) is worth
an economic cost to the nation (or the R&D cost to DOE),
some measure of the value of that public good is needed. In
the case of environmental and energy security, the values are
matters of public policy and are ill-defined. DOE may make
inputs to these policy decisions, but in the final analysis it
can only seek the most cost-effective means to achieve those
benefits with the funds available to it, limited only by the
point at which R&D becomes ineffective or wasteful. PNGV
industry representatives at one point stated that they did not
need more funds but rather could use more ideas.
FINDINGS AND JUDGMENTS

The committee agreed on the following set of findings
and judgments about the benefits derived from the energy
efficiency R&D case studies examined by the committee.
These cases were developed from EE7 inputs and with additional inputs from a variety of other sources, including interviews with industry representatives and nongovernmental organizations (NGOs). The cases included by the committee
account for only about 20 percent of the total EE R&D budget expenditures from 1978 to 2000. They constitute about 5
percent of the total buildings sector budget, 13 percent of the
industry sector budget, and 38 percent of the transportation
sector budget.
Finding 1. DOE made significant contributions over the last
22 years to the well-being of the United States through its
energy efficiency programs. These programs led to impor7EE refers to the energy efficiency component of DOEs Office of Energy Efficiency and Renewable Energy.
37
tant realized economic benefits, options for the future, and a

bank of scientific knowledge. The benefits substantially exceeded their costs and led to improvements to the economy,
the environment, and the energy security of the nation, as
indicated below.
Finding 1a. Economic benefits. The realized cumulative
net economic benefit to the nation of a few advanced technologies to which EE was a major contributor in the form of
R&D or demonstration were found by the committee to be in
the range of $30 billion in 1999 dollars (the calculation considers investments made by DOE and other sponsors, including industry). The benefit dwarfs the approximately $7
billion 1999 dollars of investment in energy efficiency R&D
over the history of DOE (22 years).
The results of just 6 of the 17 case studies examined by
the committee showed sufficient savings to justify the entire
government R&D spending in energy efficiency, as shown
in Table 3-4. The numbers in Table 3-4 reflect the committees judgments on the effect of the programs based on
materials submitted by DOE, the application of the committees methodology, and its independent assessment. The
preponderance of the benefit is economic, in the form of
lower-cost energy services to consumers and businesses
that is, life-cycle energy cost reduction (net of increased capital, R&D costs, and other costs that are unique to the technology) and a resulting increase in productivity. The 6 case
studies represent only 6 percent of the R&D cost of the entire program.
Since the 17 case studies reviewed by the committee account for only about 20 percent of the energy efficiency budget, the benefits listed in Table 3-4 must be considered an
underestimate for the entire energy efficiency program. (It
would behoove DOE to extend this analysis to the remainder
of the energy efficiency R&D portfolio and to consider,
where appropriate, ranges of uncertainties.)
The committee must draw attention to two important
points about the realized economic benefits. First, the benefits are only estimated for technology projected to be
adopted by 2005. Recent technology will not have achieved
significant market penetration by then, so the estimate should
not be viewed as reflecting the potential of a technology in
the future.
Second, the committee adopted a 5-year rule to be very
conservative about the effect of DOE R&D.8 This rule assumes that the same technology would in any case enter the
market 5 years later as a result of private sector R&D and
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
38
TABLE 3-5
Energy Efficiency Technology Case Studies Slotted in the Matrix Cells That Are Most Relevant Today
Type of Benefit
Realized Net Benefits
Options Benefits
Knowledge Benefits
Economic benefits
(net life-cycle energy
cost reductions)
Low-e glass
Electronic ballasts
Lost foam casting
DOE-2 (applied to design)
Forest products
Forest products
DOE-2 (applied to standards)

Forest products
Oxy-glass technology applied to other areas
Lost foam
Free-piston Stirling heat pump (failure)
Indoor air quality, infiltration,

and ventilation (IAQI&V)
Electronic ballasts
Low-e glass
PNGV
DOE-2
Indoor air quality (IAQI&V)
Forest Products
Catalytic converters for diesels

PEM fuel cell for transportation and
Indoor air quality (sick buildings)
Stirling engine for automobiles (failure)
Security benefits
PNGV
DOE-2 (peak load analysis)

PEM fuel cells for transportation and
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-
39
gies listed in Table 3-4 are at least 10 percent of the realized

economic benefits. In addition, other environmental benefits
are realized from the R&D associated with technologies in
the case studies, including substitutes for hydrochlorofluorocarbons (HCFCs) in refrigerators (and other heating,
ventilation, and air conditioning equipment) that do not degrade performance and improvements in indoor air quality
resulting from the application of technologies and methodologies developed partially from DOE R&D. However, data
were not available to enable the committee to quantify these
environmental benefits.
PNGVs work promises to improve the environment by
significantly reducing emissions. While not an option now,
in the much longer term the PEM fuel cell, which uses hydrogen, may provide an even cleaner option for transportation.
Finding 1c. Energy security benefits. Energy security has
benefited from a number of the energy efficiency programs
that have contributed to reducing energy demand.
The committee considered two types of energy security
threats. One is the oil price shock that occurs when the
worlds oil supply is curtailed for one reason or another. This
risk can be reduced by a multipronged approach that includes
reducing the quantity of oil used by increasing end use efficiency, developing and deploying technologies that use alternative fuels, diversifying the U.S. oil supply around the
globe, and maintaining the Strategic Oil Reserve. Small reductions in oil use are estimated in Table 3-4 from the savings in electricity (about 1/30 of primary energy used in the
United States to generate electricity is oil) and in home fuel
oil use, due to the more efficient building technologies listed.
Cumulatively, this amounts to almost half a quad over the
years. The committee assigned a range of monetary values
to this savings of $3 to $20 per barrel: $0.2 billion to $1
billion in 1999 dollars (see footnote g in Table 3-4).
The most significant oil savings benefits from the energy
efficiency program are embodied in the prospects for PNGV.
If the partnership reaches its goals, those savings could be
very large indeed. Although the 21st Century Truck Initiative was not evaluated explicitly by the committee, it may
hold the same sort of promise.
The second type of energy security threat considered is to
the energy system infrastructurenamely, to the reliability
of the natural gas and electricity systems. The committee
notes that the electricity savings listed in Table 3-4 is a cumulative 4 Q of primary energy, but the committee could
make no judgment about the security value of such reductions. Work on technologies such as advanced industrial turbines may make distributed generation and combined heat
and power more attractive, and deployment of such systems
should improve electric system reliability. The committee
did not determine a way to quantify this benefit. However,
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
40
succeeded by partnering with the innovator and working with

it until the value of the innovation is realized. Low-e glass is
an example.
DOE has often acted as a catalyst to encourage the development of better technologies. A prominent example is
the Industries of the Future program, where representative
groups for each energy-intensive industry were brought together or asked to establish a common vision of the future
and develop roadmaps to identify serious energy and environment problems for mobilization of common resources.
The committee found that the DOE energy efficiency
program did not analyze its successes or its failures with
adequate diligence to provide timely feedback to the R&D
management process. At times, it overvalued its successes
(see, for example, the case study on DOE-2 in Appendix E),
it did not always use a consistent and disciplined methodology for estimating R&D benefits and costs, and it did not
always terminate unproductive R&D in a timely fashion
(e.g., the Stirling heat pump and the Stirling automotive engine).
ganized around specific identified technical problems that

are barriers to progress in a particular area.
Finding 3. DOEs ability to integrate R&D with other policy

and market-conditioning activities is often an effective
means and sometimes a necessary condition for substantial
market penetration.
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-
The required research may be fundamental in nature. For

most of the energy efficiency programs, DERD is organized
as a part of each major program. In the Advanced Batteries
for Electric Vehicles case study, DERD competed (sometimes unsuccessfully) for support against shorter-term priorities even though the technical difficulties suggested
greater emphasis on DERD was needed.
PNGV does support DERD, but the work is sometimes
poorly integrated into the mainstream of the program because communications are inadequate. The Advanced Turbine Systems Program is an example where DERD was adequately planned and integrated.
DERD could also be accomplished by working closer
with DOEs Office of Basic Energy Sciences and integrating
and linking the projects funded under the FY 2000 congressional Energy-Efficient Science initiative.
Finding 5a. Buildings. The buildings industry has been and

is still fragmented and possesses little capacity for R&D.
ASHRAE, the Advanced Refrigeration Institute (ARI), the
Electric Power Research Institute (EPRI), the Gas Technology Institute (GTI, formerly GRI), the National Institute of
Standards and Technology, and manufacturers of materials
and equipment, including appliances, sponsor precompetitive R&D. Other organizations associated with building
contractors, owners and facility managers tend not to sponsor energy efficiency RD&D. For this sector, standards development integrated with R&D has been shown to encourage innovation that favors energy efficiency in equipment
and for whole buildings. To a limited extent, there is some
R&D being undertaken by foreign countries and foreign
companies.
R&D in support of standards has been very effective. One
example is standards for appliances (e.g., refrigerators). Another is for building systems, where DOE-2 results were used
to support building standards. But there is still a need for
innovation in building components (e.g., low-e glass) that
may not fit easily into standards setting. DOEs encouragement of R&D on individual targets of opportunity outside
the setting of standards is still important. Furthermore, as
community, infrastructure, productivity, and energy security
become more and more important, the focus on energy efficiency blurs. EE must integrate its approach on energy with
the other main drivers of the sector.
41
Finding 5b. Industry. U.S. industry is highly diversified

and generally very competitive. Getting companies to work
together on problems of energy, environment, and security
is difficult and sometimes illegal. The Industries of the Future Program is a good strategy for achieving an industrywide focus on the right problems by mutual agreement. Industries of the Future targets each major energy-using
industrial group, builds a consortium in partnership with
DOE, and develops a strategic plan for joint R&D focused
on mutual goals concerned with the public good.
The importance of this strategy is illustrated by the Forest
Products IOF Program and Black Liquor Gasification case
studies. It is doubtful that effective demonstration of the gasification combined cycle for black liquor can be worthwhile
unless the forest products consortium works with DOE.
Crosscutting areas of innovation deserve continuing attention outside the Industries of the Future arena. And as
noted above in the section on the building sector, the industrial program must continue to integrate its focus on energy
with the other main drivers in the industrial sector, such as
productivity or the environment.
Finding 5c. Transportation. The transportation vehicle industry consists of a few major manufacturers with a myriad
of suppliers. The industry has a large R&D capability and
capacity. For this sector, PNGV, which is a consortium of
the manufacturers, USCAR, and government agencies, has
proved effective in mobilizing joint R&D efforts on more
efficient automobiles. This model is now being copied for
the 21st Century Truck Initiative. In a way, PNGV and IOF
are variations on a theme. The U.S. Advanced Battery Consortium is a fourth such example. Government/industry R&D
partnerships can be an alternative to standards and regulations, or they can lead to the setting of better standards and
regulations. If oil use is to be reduced, more efficient vehicles with very low emissions must be invented, manufactured, and marketed. Partnerships seem to be a good way to
mobilize the R&D community, but the market will probably
require conditioning with standards or some other policy instrument before efficient vehicles are widely adopted. In this
sense, transportation and buildings have something important in common.
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
42
and methodology should be part of DOEs ongoing and new

programs, and adequate funding should be provided for data
and analysis. This ongoing planning and evaluation analysis
cannot substitute for the portfolio analysis and roadmapping
exercises9 instituted over the past 2 years at DOE, but it provides an important supplement to that analysis.
Achieving R&D Portfolio Balance
In reviewing the array of benefits matrices constructed
for this assessment, the committee observed that a sense of
urgency about deployment and perhaps the availability of
near-term, high-payoff opportunities over the past decade
have caused directed exploratory research in energy efficiency to be underemphasized. The committee recommends
that this kind of research receive more emphasis as the energy efficiency R&D portfolio is shaped in future years. Indeed, balance across all regions of the benefits matrix
should be a high-priority goal, with elements of the program
designed to respond to and yield benefits under a wide variety of future market conditions. Concepts and technologies
with longer time horizons, for example, might have enormous payoffs under various possible future economic and
environmental scenarios, and efforts to develop such concepts and technologies deserve a more prominent place in
the DOE portfolio. To achieve balance in the portfolio, a
broad range of considerations should be addressed, including the following:
Coordination of technology development with policy
mechanisms, such as codes and standards, in scenarios of
deployment (as in the very successful refrigerator program,
which advances with a careful balance between efficiency
standards and technology development);
The role of industry and government (at all levels) consortia in technology development (as, for example, in the
case of PNGV);
The impact of economic globalization on energy and
technology markets (as, for example, when such globalization affects the location and relative market strength of highefficiency lighting technology suppliers around the world);
Provision of enabling tools to help facilitate market
penetration of new energy efficiency technologies (as, for
example, in the case of the development of the DOE-2 family of computer design and analysis tools); and
Integration of energy efficiency technology development with other driving forces such as health, safety, and
productivity (as, for example, in the cases of IAQI&V,
PNGV, and IOF).
Promoting the Adoption of Technology
Market adoption of technology should be an explicitly
9DOE,
1999a; DOE, 1999b; DOE, 1999c; DOE, 2000c.
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. 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>.
43

EIA. 2001. Annual Energy Outlook 2001 with Projections to 2020. DOE/
EIA-0383. Washington, D.C.: EIA.
Environmental Protection Agency (EPA). 2000. Light Duty Automotive
Technology and Fuel Economy Trends 1975 Through 2000, EPA420R-00-008 (December). Available online at <http://www.epa.gov/0taq/
fetrends.htm>.
European Commission (EC). 1996-2001. ExternE: Externalities of Energy.
Available online at <http://externe.jrc.es/>.
Federal Highway Administration (FHA). 1999. Vehicle Registrations, Fuel
Consumption, and Vehicle Miles of Travel as Indices. Available online
at <http://search.bts.gov/ntl/query.html?qt=Vehicle+Registrations&
search.x=11&search.y=3>.
Geller, G., and J. Thorne. 1999. U.S. Department of Energys Office of
Building Technologies: Successful Initiatives of the 1990s (January).
Washington, D.C.: American Council for an Energy-Efficient Economy.
Goldstein, D.B., and H.S. Geller. 1999. Equipment efficiency standards:
Mitigating global climate change at a profit. Physics & Society 28(2).
Presented at the Conference of the American Physical Society, FPSAPS Awards Session, Columbus, Ohio, April 14, 1998.
Greene, D.L., and N.I. Tishchishyna. 2000. Costs of Oil Dependence: A
2000 Update, ORNL/TM-2000/152 (May). Oak Ridge, Tenn.: Oak
Ridge National Laboratory.
Hohmeyer, Olav. 1988. Social Costs of Energy Consumption. Berlin:
Springer-Verlag.
McMahon, J.E., P. Chan, and S. Chaitkin. 2000. Impacts of U.S. appliance
standards to date. International Conference on Energy Efficiency in
Household Appliances and Lighting, Naples, Italy, September 27-29.
Naples, Italy: AIEE (Italian Association of Energy Economists).
National Research Council (NRC). 2000. Review of the Research Program
of the Partnership for a New Generation of Vehicles (Sixth Report).
Washington, D.C.: National Academy Press.
Oak Ridge National Laboratory (ORNL). 1994. Estimating Fuel Cycle Externalities. Resources for the Future.
Office of Energy Efficiency (OEE). 2000. Response to questions from the
Committee on Benefits of DOE R&D in Energy Efficiency and Fossil
Energy (February 5).
Office of Industrial Technologies (OIT). 2001. Description of the Industries

of the Future strategy of the DOEs Office of Industrial Technologies.
Available online at <http://www.oit.doe.gov/industries.shtml>.
Office of Technology Assessment (OTA). 1990. Energy Use in the U.S.
Economy, OTA-BP-E-57, NTIS order #PB90-254145 (June).
OTA. 1994. Studies of the Environmental Costs of Electricity. Washington,
D.C.: U.S. Government Printing Office.
Ogden, J.M. 1999. Prospects for building a hydrogen energy infrastructure.
Annual Review of Energy and the Environment 24: 227-279.
Ottinger, R., D.R. Wooley, N.A. Robinson, D.R. Hodas, and S.E. Barb.
1990. Environmental Costs of Electricity. New York: Oceana Publications, Inc.
Pearce, D.W., et al. 1996. The social costs of climate change: Greenhouse
damage and the benefits of control. In Climate Change 1995: Economic
and Social Dimensions of Climate Change. James P. Bruce, Hoesung
Lee, and Erik F. Haites, eds. New York: Cambridge University Press.
Public Law (P.L.) 93-438. The Energy Reorganization Act. 1974.
P.L. 94-163. The Energy Policy and Conservation Act. 1975.
P.L. 94-385. The Energy Conservation and Production Act. 1976.
P.L. 94-413. The Electric and Hybrid Vehicle Research, Development, and
Demonstration Act. 1976.
P.L. 95-39. The National Energy Extension Service Act. 1977.
P.L. 95-618. The National Energy Tax Act. 1978.
P.L. 95-619. The National Energy Conservation Policy Act. 1978.
P.L. 100-12. The National Appliance Energy Conservation Act.
P.L. 102-486. 1992. The Energy Policy Act of 1992.
Stirling, Andrew. 1997. Limits to the value of external costs. Energy Policy
25(5): 517-540.
Tol, Richard S.J. 1999. The marginal costs of greenhouse emissions. Energy Journal 20 (1): 61-81.
Williams, R.H. 1998. Fuel decarbonization for fuel cell applications and
sequestration of the separated CO2. In Eco-Restructuring: Implications
for Sustainable Development. W. Ayres, ed. Tokyo: United Nations
University Press.
Evaluation of the Fossil Energy Programs
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
SELECTION OF THE CASE STUDIES

Case studies were completed by the committee for 22 of
the Office of Fossil Energys RD&D programs funded between 1978 and 2000. These case studies comprise nearly
$11 billion (73 percent) of the $15 billion appropriated to the
office for RD&D during this period. Most of the remainder
of the appropriated funds was for overhead (e.g., program
direction), laboratory equipment, and facility maintenance.
The case studies used as the basis for evaluating the benefits
of the program over this time period are provided as Appendix F.
To facilitate the analysis, the fossil energy program was
divided into four categories: (1) coal and gas conversion and
utilization, (2) environmental characterization and control,
(3) electricity production, and (4) oil and gas production.
These are logical groupings of the technologies included in
the fossil energy research portfolio over roughly two decades. Coal and gas conversion and utilization includes the
following six technologies:
Atmospheric and pressurized fluidized-bed combustion
for electricity production,
Integrated gasification combined cycle (IGCC) for fuel
and electricity production,
44
45
Gas-to-liquid fuels,
Direct and indirect liquefaction for fuels, and
Coal preparation for cleaner coal production.
Finally, oil and gas production and upgrading includes

the following nine technologies:
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
Flue gas desulfurization,

NOx emissions controls,
Coal combustion waste management and utilization,
Emissions of mercury and other air toxics.
Electricity production includes the following three technologies:

Advanced turbines,
Fuel cells, and
Magnetohydrodynamic electricity production.
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
Millions of 1999 dollars
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
46
fairly constant since, even though major investments were

made in clean coal technology (CCT) demonstrations in the
early 1990s.
Table 4-1 shows the funding for each of the four categories of fossil energy programs broken into two distinctly different RD&D time periods, FYs 1978 to 1985 and FYs 1986
to 2000. In the late 1970s and early 1980s, federal funding
was concentrated on RD&D related to developing alternatives for petroleum and natural gas. Some of these alternatives evolved into large-scale commercial demonstrations
supported by the now-defunct Synthetic Fuels Corporation,
but there was also significant funding for magnetohydrodynamic (MHD) electricity generation, industrial fluidized-bed
combustion, shale oil, and fuel cells. During the 8-year period, 57 percent of the total funding went to the 22 fossil
energy programs analyzed by the committee. Over the next
15 years, only 43 percent of the total funding went to the
same programs.
As shown in Figure 4-2, over the 1978 to 2000 study period, 58 percent of the expenditures were for RD&D in coal
utilization and conversion. Of this, approximately one-half
was spent on building and operating large commercial-sized
demonstration plants for direct liquefaction and gasification
in the 1978 to 1981 time period. In 1978, the coal conversion
and utilization portion of the budget represented 68 percent
of the total fossil energy expenditures. However, since then,
as funding for direct liquefaction and gasification (which
underwent a fundamental refocusing from producing pipeline-quality gas and gas for the industrial sector to integrated
gasification gas turbine combined-cycle) declined, this category represented a considerably lower percentage. In 2000,
it represented only 30 percent of the overall fossil energy
budget for the technology programs analyzed.
The share of DOE fossil energy funds devoted to environmental characterization and control was 4 percent of the
total over the study period, partly because the Environmental Protection Agency (EPA) maintained a large program in
this area prior to 1985. During the FY 1978 to FY 2000
study period, the share of funding in this program area var-
TABLE 4-1 Fossil Energy Budgets for the 22 Programs

Analyzed by the Committee (millions of constant 1999
dollars)
Reported Fossil Energy Budget
Oil and gas production
Coal conversion and utilization
Environmental characterization
and control
Electricity production
Total
SOURCE: OFE, 2000.
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
ied considerably, from 0 percent to 13 percent. The principal

factors that influenced annual funding were (1) SO2 and NOx
control technology demonstrations conducted under the CCT
demonstration program in the early 1990s and (2) mercury
characterization and control initiatives in the 1990s.
The share of funds for the electricity production programs
averaged 24 percent over the study period. Although funding for this program area remained fairly constant from 1982
through 2000, its importance (and priorities within the program) changed dramatically.
Magnetohydrodynamic power generation was the recipient of the majority of funds in this category until 1982 and a
significant recipient until the program was terminated in
1994. The fuel cell program, on the other hand, was consistently funded at between $40 million and $50 million per
year for most of the study period. The advanced turbine technology program, which began receiving DOE funds in 1992,
has been a major recipient of funds since then, averaging
$35 million per year. As a result, the electricity production
programs now comprise 45 percent of the overall funding
provided by the Office of Fossil Energy for the programs
analyzed by the committee.
The share of funds devoted to the oil and gas programs
over the study period was 14 percent, of which one-third was
shale oil R&D early on. However, the percentage of the fossil energy R&D budget allocated to these programs rose
steadily, from 12 percent in 1978 to 22 percent in 2000. The
increase in the programs share of funds is due more to declining budgets in other parts of the program than to increases
in the oil and gas budgets.
Cost Sharing in the Fossil Energy Program
Since the beginning of the fossil energy RD&D program
at DOE, cost sharing was used to (1) leverage federal funds,
(2) obtain commitment from industry for RD&D projects,
and (3) involve industry in the transfer of technologies to the
commercial marketplace. Generally speaking, and with the
exception of the large commercial demonstration projects,
in the early days of DOE, industrial cost sharing was not
deemed critical to program success. In many instances when
cost sharing was required, it was loosely defined, allowing
industry to use a variety of financial techniques to meet the
cost-sharing goals. One common technique was in-kind contributions (e.g., including the value of equipment, buildings,
land, and other capital resources originally used for purposes
other than RD&D with DOE). Using these techniques, industry was in some cases able to meet the cost-share requirement with no direct expenditure. This resulted in some organizations receiving DOE contracts without being committed
to commercializing the technology if successful. Even in the
early commercial demonstration projects, cost sharing was
often designed so that the initial project costs would be borne
by the government (for feasibility studies, design studies,
and even initial capital outlays), with industrys share pro-
47
Electricity
production
24%
Environmental
characterization
and control
4%
Oil and gas

production and
upgrading
14%
Coal conversion
and utilization
58%
FIGURE 4-2 Overall budget, FY 1978 to FY 2000 ($10,528 million). SOURCE: OFE, 2000.
vided only if the industrial participants wanted to go forward

with the commercial phases of the projects. The commercial
decision was not made until after the government had spent
considerable funds up-front to reduce the technical risks.
As the fossil energy RD&D program matured, its costsharing philosophy, along with the evaluation of the costshare percent, has changed. Now, true cost sharing is required throughout all stages of technology development.
Typically, cost-sharing requirements are less (on the order
of 20 percent) for research projects and feasibility studies
that are far from producing a commercial product. In the
product development and commercial demonstration phases
of a project, the industry percentage could be 50 percent or
more. In addition, current-year cost sharing is required
throughout each stage of project. This more recent approach,
which requires true sharing of cost by industry during the
technology development phase, encourages an earlier assessment of commercialization risks by industry and should increase the probability that the results of the DOE RD&D
programs are commercialized.
The point of industry cost sharing is not just to reduce
government expenditures but rather to ensure that the industrial partner has the resources and commercial commitment
needed to bring a new technology to the marketplace once
the technologys viability has been shown. This reduces the
number of projects that are conducted just to gain access to
the research funds with no real commitment to the concept
being funded.
As shown in Table 4-2, cost sharing for the fossil energy
programs throughout the study period is estimated to have
been approximately $9 billion, or 46 percent of overall funds
spent. This includes $3 billion in cost sharing for oil shale
demonstrations and $1 billion for direct liquefaction demonstrations in the late 1970s and early 1980s. Excluding the
cost sharing from these programs, total cost sharing in con-
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.
LESSONS LEARNED FROM THE CASE STUDIES

Coal and Gas Conversion and Utilization
Figure 4-3 shows the share of the total funding of each of
the technology programs in the coal and gas conversion and
utilization category from 1978 to 2000. During this period,
DOE expended $6.1 billion on this group of technologies.
Seventy-five percent of the total budget in this area was provided for the direct liquefaction and IGCC programs (37
percent and 38 percent, respectively). One-half of the funds
for this category of technologies was for direct liquefaction
and IGCC during the period FY 1978 to FY 1981. The majority of funds in this period were for commercial-scale demonstrations driven by concerns about an energy crisis. For
this reason, the committee opinion is that a more revealing
analysis of costs and benefits is derived from excluding the
early portions of those two programs (Figure 4-4).
In the opinion of the committee, DOE has played a significant role in the development of most of the technologies
in this category. Specifically, the role of DOE in developing
the technologies can be characterized as follows:
Atmospheric fluidized-bed combustion (AFBC). DOE
played a major role (i.e., a role critical to the success of the
program) in the development and demonstration of industrial-scale systems using low-valued, low-cost fuels (culm,
petroleum coke, and medical wastes, among others) and a
significant role (i.e., an important role but not critical to the
48
TABLE 4-2
Fossil Energy Programs Cost Sharing, 1978 to 2000 (millions of 1999 dollars)
Program
DOE Costs
Private Industry Costs
Private Industry Cost Share (%)
Oil and gas production and upgrading

Drilling, completion, and stimulation
Coal-bed methane
Downstream technology
Eastern gas shales
Enhanced oil recovery
Field demonstrations
Oil shale
Seismic technology
Western tight gas sands
Coal conversion and utilization
Coal preparation
Direct liquefaction
Gas-to-liquids
Indirect liquefaction
Integrated gas combined cycle
Environmental characterization and control
Mercury and other air toxics
NOx controls
Electricity production
Advanced turbines
Fuel cells
Total
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.
49
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.
success of the program) in demonstrating systems for utility

applications (it provided 20 percent of the cost).
Pressurized fluidized-bed combustion (PFBC). DOE
played a major role in improving the efficiency and environmental performance of the technology and in large-scale
demonstrations (it provided 45 percent of cost of the demonstrations).
Integrated gasification combined cycle (IGCC). DOE
played a major role in large-scale demonstrations integrating the components into a total system for optimal electricity
production and environmental performance (it provided approximately 50 percent of the cost of the CCT demonstrations).
Gas-to-liquids. DOE played a contributory role (i.e., it
was one of many contributors of resources and ideas) in laboratory and pilot research on novel methods for producing
synthesis gas from natural gas and converting natural gas to
liquids that improved the technologies developed by industry and kept them current.
Direct liquefaction. DOE played a major role in funding basic, pilot-, and bench-scale research and development
that improved the technologies developed by industry until
the program was terminated in 2000.
Indirect liquefaction. DOE had a significant role in basic, pilot-, and bench-scale research and development that
improved the technologies developed by industry and kept
DOE current.
Coal preparation. DOE had a significant role in improving the removal efficiencies of ash, sulfur, and other
impurities through fine grinding of coal and advanced separation techniques.
With the exceptions of AFBC and first-generation coal

preparation (which DOE had little role in developing), this
category consists of technologies that have not been extensively used on a commercial basis and therefore have not
resulted in significant realized economic benefits. However,
the committee believes these technologies offer important
options and knowledge benefits. This is especially true in
developing countries that are dependent on coal to meet their
energy needs.
These benefits are not likely to be realized in the United
States in the near term, because the expected increases in the
prices of oil and gas are not great enough to make these coal
technologies economic (although at the current gas price of
about $5 per million Btu, considerable interest is being
shown in new coal plants by utilities in the United States).
DOEs significant involvement in the development and
demonstration of AFBC is credited with $750 million in realized economic benefits from fuel cost savings associated
with several commercial AFBC plants using a low-grade
fuel, anthracite culm. Similarly, DOE is credited with
900,000 tons of NOx reductions over a 30-year life cycle for
AFBC plants that were constructed because of their inherently low NOx emissions compared with the NOx control
requirements that existed at the time. Also, the committee
credits DOE with realized environmental benefits associated
with reducing mounds of anthracite culm in Pennsylvania.
Future benefits from the technology are expected to be limited to situations where low-cost, low-value fuels (e.g., petroleum coke and wastes) are available and compliance with
future environmental requirements can be achieved cost-effectively. The largest potential for the technology may be in
foreign markets.
50
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
fuels in that country. However, the commercial viability of

the technology is very dependent on the price of oil. High oil
prices (in excess of $45/bbl and possibly significantly higher)
will be required over the long term before the option is considered. In addition, concerns about its environmental performance (that have largely been addressed through advances of the technology) may impede its commercial
potential.
Pressurized fluidized-bed combustion (PFBC) has provided significant knowledge benefits in solids handling and
feeding under pressure, hot gas cleanup in difficult environments, and other areas that may have applications elsewhere.
However, advanced PFBC technology, which is still undergoing development and demonstration, has serious economic
and technical issues (especially that of protecting gas turbines against alkali vapors from the high-temperature combustor) and limited potential for meeting possibly very stringent future environmental requirements. In addition, it will
have to compete with IGCC and gas turbine combined-cycle
technologies, which have much greater potential for highefficiency operation, low emissions, and progressive cost reductions. As a result, the realized benefits from PFBC technology are expected to be minimal. However, the technology
could be an option for niche applications.
Environmental Characterization and Control
Figure 4-5 shows the share of the total funding of each of
the technology programs in the environmental characterization and control category from FY 1978 to FY 2000. During
this period, DOE expended $410 million on this group of
technologies. Seventy percent of the DOE funding came after 1989, especially to support demonstration projects under
the CCT program. Fifty-five percent of the funding in this
category was for flue gas desulfurization RD&D. DOE has
played a significant role in the development of many of the
advanced technologies in this category. Specifically, the
committee believes that the role of DOE in developing the
technologies can be characterized as follows:
Flue gas desulfurization (FGD). DOE has played a significant role in the development and, more importantly, the
demonstration of second-generation systems that offer improved process technology, removal efficiency improvements, and the ability to control emissions from a wider variety of boilers using a wider variety of coals than
conventional systems.
Nitrogen oxides (NOx) control systems. DOE has played
a significant role in the development and, more importantly,
the demonstration of second-generation systems that offer
reliable process technology, removal efficiency improvements, and the ability to control a wider range of large utility
boilers.
Waste management and utilization. DOE has played a
significant role in characterizing the solid wastes from con-
51
Waste
management/utilization
19%
Flue gas
desulfurization
55%
NOx controls
16%
Mercury and other

air toxics
10%
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,
the RD&D conducted by DOE has resulted in technological

options and knowledge that are being used by EPA and others to set environmental requirements and by utilities to assess their compliance options.
DOEs significant involvement in second-generation NOx
control technologies primarily stems from the role it played
in the cost sharing of demonstrations (DOEs share was 56
percent) of a variety of systems at full commercial scale in
its clean coal technology demonstration program. This has
given NOx equipment suppliers the opportunity to accelerate
their commercial offering and sale of the technologies.
Low NOx burners have been installed on approximately
200,000 MW of coal capacity. The large majority of these
modifications are based on technologies that DOE had relatively little involvement in. However, advanced postcombustion NOx controls, in which DOE played a substantial
role in demonstrating, have been installed on about 5000
MW of capacity, with another 40,000 MW on order. DOE
support contributed significantly to the recent technology
development that has realized a 40 to 60 percent reduction in
NOx emissions from existing NOx control technology installed on 175,000 MW of coal-fired plant capacity and a 90
percent reduction in up to 100,000 MW of new selective
catalytic reduction (SCR) units that are expected to be installed by 2005.
Joint DOE-industry development of advanced NOx control technology under the DOE RD&D program also affords
power plant owners the opportunity to more cost-effectively
control NOx emissions beyond existing environmental requirements. This could have at least two very important benefits. The first is that it would create low-cost emissions credits that could be traded with companies whose NO x
compliance costs are higher. The second is associated with
the economic benefits to the nation that can be realized by
52
lessening environmental stress or damage avoidance through

overcompliance, especially in regions that are not attaining
ambient air quality standards. For example, for the purposes
of this study, the committee attributed a value of $2300 per
metric tonne to the avoided damages associated with NOx
emissions.
As with NOx controls, DOEs most important role in FGD
has been cost sharing ($117 million, or approximately 50
percent of DOEs expenditure) the demonstration of a suite
of advanced, reduced-cost, reliable, improved-efficiency
systems for a wide range of U.S. coal and boiler applications. Since no new coal-fired boilers have been built for
several years and the first-phase acid rain control provisions
of the 1990 Clean Air Act Amendments (CAAA) have been
met mainly by fuel switching and emissions trading, few
advanced FGD systems have been installed. Therefore, realized economic benefits from the FGD program, estimated to
be $1 billion, are limited to lower-cost compliance associated with (1) the application of advanced process technology
to existing units and (2) the addition of several secondgeneration units to existing plants to meet the Phase 2 Acid
Rain (Clean Air Act Title IV) SO2 reductions that are expected to be installed by utilities in the next 5 years. However, in large part, the benefits of FGD systems developed
with DOE funds will occur in the future as new coal plants
are built and existing plants will have to meet more stringent
SO2 control requirements.
DOE, in partnership with the Electric Power Research
Institute (EPRI), EPA, utilities, and others, has collected significant and valuable information characterizing solid wastes
from conventional and advanced coal-based power systems.
In addition, it has assessed waste disposal options and conducted research and demonstration on alternative waste utilization options. This research has resulted in realized economic benefits, estimated by the committee to be on the order
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-

13%
41%
Fuel cells
46%
FIGURE 4-6
Reported budgets for electricity production technologies, FY 1978 to FY 2000 ($2502 million). SOURCE: OFE, 2000.
53
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
startup, better environmental compliance, and the ability to

come on line quickly for service as peaking plants. DOE
programs focused on the development of next-generation
technology for gas turbines. This next-generation technology may no longer use DOD-developed technology because
of the need to increase efficiency and at the same time meet
tight NOx control standards. The committee believes that the
DOE ATS program is an excellent example of a DOE/industry collaboration that (1) focuses on stretch (but achievable)
goals that could have a significant impact on future energy
use and environmental compatibility, (2) works with other
government agencies and academia and the national laboratories to design and implement the program, (3) integrates
basic research into the program very effectively, and (4) provides a framework in which innovative ATS concepts can
move from research to component test and finally demonstration with a continual increase in the nongovernment costsharing requirements. DOE structured this program to take
the concepts through to a commercial-scale demonstration,
an extremely critical element in a program of this type.
No realized benefits have resulted from the ATS program
to date, and no significant benefits will be realized until after
2005. Even so, this has been a very successful and valuable
program. It is expected that as new gas turbine combinedcycle plants are built in the future under tightening NOx requirements, ATS machines will probably be widely used. As
they are deployed, significant economic and environmental
benefits will result in comparison with current natural-gasfired gas turbine combined-cycle systems. In addition, the
ATS technologies will improve the performance (efficiency
and air pollution emissions) of other electric power systems
that use gas turbine technology (i.e., integrated gasification
combined cycle). Because of their high efficiency, ATS will
conserve natural gas and increase the competitiveness of coal
and biomass gasification systems by reducing their fuel requirements. The higher efficiency of ATS will reduce CO2
emissions for the same amount of fuel burned. Finally, the
ATS program has increased the knowledge base in a number
of areas including NOx combustor designs, understanding of
pollution formation, and high-temperature materials. DOEs
role in forcing technological improvements through the costsharing mechanism was critical in advancing the technologies more quickly than they would otherwise have developed.
DOE has expended $1.167 billion since 1978 on RD&D
on fuel cells for stationary power applications (phosphoric
acid, solid oxide, and molten oxide). When coupled with
other systems (like combined-cycle turbines), fuel cells have
the potential to produce very efficient and extremely clean
power that could allow using a variety of fuels in a variety of
applications. The development of fuel cells for stationary
applications has, in large part, resulted from DOEs persistence ever since it was established in funding fuel cell research. Although NASA successfully developed the technology for space power and DOE provided significant funds
54
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-
opment continued, it became obvious that the technology

would be too costly and too complex for a changing electric
power industry that would need to provide cost sharing. After many years of congressional appropriations (that were
not requested by DOE), funding was terminated in 1993 after DOE had expended over $1 billion on the technology.
The technology has not realized any economic or options
benefits. However, some knowledge benefits arose in the
course of developing MHD technology, including the following:
A database for technologies that require the injection
of solids into pressurized chambers;
Contributions to the development of a combustor for
subsequent clean coal technology projects;
A database for the design of pressurized, high-temperature gas heaters; and
A material database for boiler tube fabrication in a corrosive environment.
Although the early promise of increased energy efficiency
in the use of coal may have been laudable, this is a prime
example of a program where the result of RD&D clearly
indicated the technology approach was impractical. The program should have been a candidate for termination long before funding actually stopped (and the DOE did try to end
the program, but Congress kept appropriating funds). It is
also an example of a program that attracted less than 10 percent cost sharing, an indicator of lack of commercial interest
in developing the technology.
Drilling, completion,
and stimulation
5%
Western tight gas
sands
13%
Seismic technology
7%
Coal-bed methane
2%
Downstream
technology
3%
Eastern gas shales
9%
Enhanced oil recovery

12%
Oil shale
31%
18%
FIGURE 4-7
Reported budgets for oil and gas production research, FY 1978 to FY 2000 ($1468 million). SOURCE: OFE, 2000.
55
Oil and Gas Production and Upgrading

As shown in Figure 4-7, DOE expended nearly $1.5 billion on oil and gas production research from 1978 through
2000. Approximately one-third of the funding was to demonstrate shale oil technology at a commercial scale. Significant funds were also used between 1978 and 1984 on other
oil and gas demonstrations. The FY 2000 budget for oil and
gas production research was $46.1 million dollars, or approximately 12 percent of the total fossil energy budget. The
magnitude of the FY 2000 budget is on the order of what a
typical integrated oil company might spend on research in
this area.
DOE has played an important role in a variety of oil and
gas RD&D areas. Specifically, its role can be divided into
five program areas as follows:
Seismic. DOE expertise and computer facilities at the
national laboratories played a contributory role in improving
seismic technology. For example, DOE was active in the
development of cross-borehole seismic technology to enable
better reservoir characterization.
Drilling, completion, and stimulation. DOE played a
significant role in developments related to drilling, completion, and stimulation. For example, the development of polycrystalline diamond compact drill bits, mud pulse telemetry,
and underbalanced drilling were all technologies supported
in part by DOE.
Enhanced gas production. DOE played a significant
role in supporting the development of technology to produce
gas from coal beds, technology for fracturing Western tight
gas sands, and technology for the development of Eastern
gas shales.
Enhanced oil recovery (EOR) research and field tests.
DOE played a contributory role in developing technology
for enhanced oil recovery and testing it in the field. For example, tests of chemical flooding, carbon dioxide flooding,
and thermal/heavy oil recovery were funded as joint industry projects.
Retorting Western shale. DOE played a modest role in
the funding of large-scale retorting demonstration programs
and a significant role in the mathematical modeling and testing of oil shale retorting technology.
Downstream fundamentals. DOE played a very significant role in developing thermodynamic databases needed for
the design and operation of petroleum and petrochemical
plants.
DOEs role in oil and gas production has been primarily
in the upstream (exploration and producing) side of the oil
business. This seems appropriate since the major focus of
DOE has been to increase oil and gas production and to expand the resource base in keeping with national energy strategies to improve domestic production. Although the oil and
gas industries are large and financially well endowed, the
committee found that niche government roles in oil and gas

RD&D are appropriate. For example, DOE should continue
to do the following:
Respond to mandatesfor example, mandates to increase research programs that would produce more gas and
oil in the United States led to the projects (and tax incentives) to increase coal-bed methane production, projects to
fracture Western tight gas shales, projects to produce gas
from Eastern gas shales, and shale oil research.
Fund high-risk projects that individual oil companies
cannot justifyfor example, many projects in the drilling,
completion, and stimulation (DCS) areas are very risky and
difficult for any one company to keep proprietary, since they
are often implemented by service companies.
Utilize existing expertise at DOE and national laboratoriesfor example, seismic technology programs utilized
national laboratory expertise and computer facilities and the
downstream fundamentals program utilized the thermodynamic characterization expertise of the National Institute for
Petroleum and Energy Research (NIPER), the national laboratory in Bartlesville, Oklahoma.
Support smaller companies and independent producersfor example, many of the projects in the DCS program
support small- and medium-size service companies, which
have limited R&D budgets. Also, projects to fracture Western tight gas shales supported independent producers in the
West, which are usually too small to be able to support their
own R&D programs.
Economic and security benefits have been realized from
several of the oil and gas RD&D programs. The committee
assessed DOEs contribution to these realized benefits as follows:
That portion of the seismic technology program related
to DOEs investment is estimated by the committee to have
resulted in incremental oil production of 360 million barrels,
113 million barrels of natural gas liquids, 780 billion cubic
feet (Bcf) of natural gas, and realized economic benefits of
$600 million.
The drilling, completion, and stimulation program resulted in realized economic benefits estimated by the committee to have been approximately $1 billion. In addition,
the committee concluded that the program created knowledge benefits that had significant impacts on drilling systems (e.g., the polycrystalline diamond compact drilling bit),
coring techniques, measurement techniques, and other technologies that are used commercially to reduce exploration,
drilling, and completion costs.
That portion of the coal-bed methane program related
to DOEs investment is estimated by the committee to be
$200 million. This represents one-third of the realized economic benefits estimated by DOE. The committee was of
56
the opinion that DOEs investment in developing enabling

technologies to produce coal-bed methane was important.
However, equally important were the funding from the Gas
Research Institute and Section 29 tax credits.
The Eastern gas shales program resulted in significant
incremental shale gas production from the Appalachian Basin and incremental gas production in the Michigan and Fort
Worth basins. Although the program also benefited substantially from R&D funding from the Gas Research Institute
and tax credits (Natural Gas Policy Act, Section 29), DOEs
contribution is estimated by the committee to have led to 90
Bcf of additional gas production in 2000 and 1740 Bcf of
cumulative additional gas production from 1978 to 2005.
This resulted in realized economic benefits from royalties on
federal lands, increased state severance taxes, and lower gas
prices, which are estimated by the committee to be $600
million.
The Western gas sands program (also supported by the
Gas Research Institute and given incentives from the Section 29 tax credit) is credited with a significant increase in
gas production in the Rocky Mountain gas basins. The committee estimates the economic value of these realized benefits to be in excess of $800 million in increased net revenues and cost savings to gas producers in the Rockies,
increased royalties on federal lands, and increased state severance taxes resulting from the RD&D program.
The EOR program successfully demonstrated thermal,
gas, chemical, and microbial techniques and developed
screening models and databases that stimulated production
of 167 million barrels of oil equivalent and provided $625
million in cost savings to oil producers and nearly $90 million in incremental federal and state revenues.
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 $)
Drilling, completion and stimulation

Seismic
EOR and field demos
Western gas sands
Eastern gas shales
Coal-bed methane
Atmospheric fluid bed
Total
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)
Security Benefits: Increased

Incremental Oil Production
(million bbl)
b
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
57
TABLE 4-4
Fossil Energy RD&D Benefits
Type of Benefit
Realized Benefits and Costs
Options Benefits and Costs
Knowledge Benefits and Costs
Economic benefits
and costs
DOE RD&D costs: $10,916 milliona

Benefits: $10.8 billion
$1 billion from lower-cost FGD
$3 billion from avoided waste disposal
costs
$750 million from lower culm
combustion costs
$6.1 billion from increased/accelerated
oil and gas production
Incremental oil production increase
of 1.9 billion barrelsb
Incremental gas production of 4.3
Tcfb
Increased federal royalties and state
severance taxesb
Lower oil and gas prices
Wide range of coal, oil, gas, and shale oil

technologies available as market
conditions change.
Future avoided costs from air toxics
information and control technologies.
Substantially improved understanding of

science of fossil energy production and
consumption. Substantial tools/
techniques/information on wide variety
of issues associated with production
and use of fossil fuels.
Environmental
benefits and costs
26+ million tonnes NOx removed beyond

control requirements (NOx + AFBC
RD&D)cDamage reduction estimated
to be $60 billiond
2 million tonnes SO2 removed beyond
control requirements (FGD RD&D)c
Damage reduction estimated to be
$200 millionc
Fewer oil/gas wells and dry holes; smaller
footprints
Wide range of technologies available to

meet current and future environmental
requirements.
Increased utilization of coal wastes.
Substantially improved science base on

formation and control of pollution from
fossil fuel facilities. Better data upon
which to base environmental
requirements.
Security benefits
and costs
Increased oil reservese
Availability of oil and technologies to

increase reserves (drilling/completion
and field demos).
Availability of technologies to utilize coal
and shale reserves to produce liquid
fuels (indirect and direct coal
liquefaction; shale oil) and to expand
utilization of coal (IGCC).
Substantially improved science base to

understand geologic formations and oil
and gas recovery techniques.
aAll
figures in 1999 dollars.

in $6.1 billion benefit from increased/accelerated oil and gas production.
cThe committee supports DOEs Office of Fossil Energy estimate of cumulative emissions reductions relative to current New Source Performance Standards (NSPS) plant emissions, as described in case studies in Appendix F.
dAvoided emissions of SO and NO are assumed to be valued using the lower of the avoided damage estimates of $100 to $7,500 and $2,300 to $11,000
2
x
per metric tonne, respectively. The open market value of mitigating a tonne of SO2 is from $100 to $300, so $100 was used to peg the lower end of the range
for SO2. These environmental benefits are total: fossil energy plus others, including EPA and industry.
eIncreased oil reserves result from the following RD&D programs: (1) seismic technology, (2) drilling, completion, and stimulation, and (3) enhanced oil
recovery. In addition, several other fossil RD&D programs added gas reserves and allow coal to be used for power generation as an alternative to oil.
bIncluded
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-
58
TABLE 4-5 Realized Benefits from DOE RD&D

Programs (billions of dollars)
Program
19781985
19862000
19782000
Seismic
Enhanced oil recovery and field demonstrations
Western gas sands
Eastern gas shales
Coal-bed methane
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
ergy technology over a long period of time, to increase oil

and gas production and resources, to improve electricity generation efficiency, and to reduce the environmental impact
of the use of fossil fuels. The second period is also characterized by more industry input and cost sharing. Of the nearly
$11 billion in realized economic benefits, about $7.4 billion
is attributed to the programs carried out between 1986 and
2000 with program expenditures of $4.5 billion. This results
in a benefit to cost ratio of 1.6. The 1978 through 1985 programs are credited with benefits of about $3.4 billion against
program expenditures of $6.0 billion, equivalent to a benefit-cost ratio of 0.57. The post-1985 programs were more
cost-effective, reflecting a relaxation of the crisis atmosphere
and more effective program management by DOE.
Slightly over $6 billion of the realized economic benefits
were from the oil and gas programs, which developed information and technologies that were rapidly commercialized.
The waste management program may be credited with $3
billion, because it developed information that resulted in the
promulgation of less-stringent regulations. The flue gas desulfurization and fluidized-bed combustion programs provided benefits of almost $2 billion as a result of lower compliance costs and lower electricity costs, respectively.
As important, if not more so, considering the public benefits nature of federal RD&D, DOEs Office of Fossil Energy has invested in technologies that are technologically
ready for the market but have not yet been deployed commercially. These technologies (e.g., advanced turbine systems (ATS) and integrated coal gasification combined-cycle
systems [IGCC]) have the potential to realize significant economic benefits in the future, when the energy marketplace is
expected to change. ATS technology, funded jointly by DOE
and industry, will be used in commercial plants as new gas
turbine combined-cycle power plants are ordered. Using current capital cost estimates of between $1200 and $2000/kW,
IGCC is expected to be deployed if natural gas prices remain

above $4 or $6 per million Btu, and coal-based power plants
are once again considered to be economically and environmentally viable by the public and by power generators.
This retrospective valuation did not review some elements
of the current fossil energy RD&D program that are directed
at the development of technologies for the more distant future. For example, the coal programs work on carbon sequestration and the Vision 21 program were not assessed,
because the benefits, if any, are expected to accrue beyond
the time frame of the committees evaluation. No conclusions about the benefits of the unevaluated current fossil
energy programs can be drawn from this study.
Finding 1b. Environmental benefits. Realized environmental benefits of a cumulative 25 million tons of NOx and 2
million tons of SO2 with environmental stress or damage
avoidance value estimates of $60 billion and $200 million,
respectively (see Table 4-4), can be attributed to the fossil
energy programs and others. These emission reductions derive from the atmospheric fluidized-bed combustion program, the flue gas desulfurization program, and the NOx reduction program. The emissions reductions are in excess of
those required by regulation (in the case of NOx control technology, the reduction is relative to current New Source Performance Standards (NSPS) plant emissions). However, in
large part, technologies that were developed by DOE in the
fossil energy programs do not provide, nor were they expected to provide, environmental benefits beyond what regulations require. Rather, they provide lower-cost options to
meet the regulatory requirements and provide a technical
database on which to base the consideration of more stringent environmental regulations. In this regard, the committee agrees that the technologies developed with DOE funds
in the flue gas desulfurization and NOx control areas are
likely to be used extensively in the future in both new and
currently operating coal-fired power plants as the lowestcost options to meet emissions requirements.
Finding 1c. National security benefits. National security has
been enhanced by a number of the programs. Several of the
technologies that resulted in realized economic benefits (e.g.,
enhanced oil production; field demonstrations; seismic; and
drilling, completion, and stimulation) have resulted in security benefits by increasing oil production and oil reserves.
Several other technologies that could provide security benefits are available to be deployed if oil prices rise substantially (e.g., indirect liquefaction, direct liquefaction, and
shale oil). Furthermore, the ability to use the nations large
coal reserves in an efficient, environmentally sound manner
has been improved substantially by several programs in this
category. The demonstration of IGCC as an efficient, environmentally benign means of utilizing coal makes the technology available for economic electricity production if natural gas prices were to remain above approximately $5 per
59
million Btu. No attempt was made to quantify the benefit of

these options for the future.
Finding 1d. Knowledge benefits. Every one of the technologies reviewed in this study that were funded by DOEs fossil
energy program has had some potentially important knowledge benefits. In some cases, the knowledge benefits have
the potential to give rise to significant economic, environmental, or security benefits as the technologies are developed and deployed. In other cases, the knowledge gained
adds to the science and technology base that informs ongoing and future programs. Because this is a retrospective
study, current programs would fall into this category. No
attempt was made to quantify the social or economic benefit
of the knowledge base.
Finding 2. Planning and management techniques were found
to be critical to the success of the DOE fossil energy R&D
program.
Finding 2a. Partnerships with industry were critical. Partnerships ensured better technology choices and earlier implementation of results. Private sector input to the goals and
objectives of the program, coupled with the choice of an
appropriate private sector partner, can lead to successful programs. For example, in the advanced turbine systems program, DOE was able to obtain from industry critical input
into program goals that allowed it to assess whether vendors
would buy into them if successful. DOE was also successful
in assessing that the large contractors would have the resources and manufacturing infrastructure to commercialize
the results of the R&D. However, the private sector participates in some programs primarily because of the significant
DOE funding, but their ability to take products to the marketplace is often limited. This results in R&D programs that
last for years but have little realized or practical output and
that run the risk of being superseded by evolving energy
strategies and policies.
Finding 2b. Cost sharing by industry has been found to be
critical to program success. While cost sharing does not guarantee success, it is a strong indicator of it. In the demonstrations conducted during the energy crises of the 1970s and
1980s, government funding was used and there was minimal
cost sharing on the part of industry (or cost sharing was offered only in later stages of projects) in the hope of accelerating deployment of advanced technologies. The failure rate
of these programs was high. The sliding-scale approach to
cost sharing, in which the industrial participants share more
costs as the project matures from the exploratory research
stage to the commercial demonstration stage, was found to
be a successful approach and has been used successfully in
many recent programs. For example, it was successfully applied in the advanced turbine systems program, where it
helped to ensure that the best concepts were brought for-
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
60
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

Western gas sands
Eastern gas shales
Seismic technology
Coal-bed methane

Fuel cells
Western gas sands
Eastern gas shales
Shale oil
IGCC
Coal preparation

Fuel cells
Gas-to-liquids
Western gas sands
Eastern gas shales
Field demonstration
Seismic technology
Coal-bed methane
Downstream fundamentals
IGCC
Coal preparation
Waste management
Environmental
benefits

Western gas sands
Eastern gas shales
Seismic technology
NOx control
Coal-bed methane

Fuel cells
Eastern gas shales
Shale oil
NOx control
IGCC

Shale oil
Field demonstration
Seismic technology
IGCC
NOx control
Waste management
Security
benefits

Seismic technology

Shale oil

Fuel cells
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-
come and if potential market applications (considering the

technology that will compete against fuel cells in these applications) warrant continued high levels of funding. Likewise, the PFBC program should have been reviewed during
the early 1990s in light of rapidly changing environmental
requirements, severe technical hurdles, and competition with
IGCC and gas turbine combined-cycle technologies. A realistic peer review might have been useful in making these
assessments.
Finding 2h. DOE was found to be successful in establishing
programs to identify concepts and take them through all
stages of research, development, and commercial demon-
61
stration. This program approach in partnership with industry

has been critical to the commercialization of fossil energy
technology. It is, as well, critical to independent petroleum
producers and coal producers, which often do not have the
sophistication and resources by themselves to carry research
from the concept stage through the high-risk commercial
demonstration stage.
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-
edge to build on for the future. In general, a well-balanced

portfolio puts the nation in a better position to face its future.
Recommendation. DOE should implement an independent
critical program review. Many of the planning and management techniques discussed in the committees findings
such as sliding-scale cost sharing, partnerships with industry, managing a balanced portfoliohave been successfully
implemented by DOE. The committee believes that implementing a periodic, independent, and critical review of the
programs, particularly when considering expenditures for the
scale-up of technology, would be beneficial. Examples of
programs that would have benefited from periodic critical
reviews include the magnetohydrodynamics program, the
pressurized fluid-bed combustion program, and the fuel cell
program. An extremely critical part of the management of
any R&D portfolio is a proper review and go/no-go decision-making process. This has to be introduced at the various stages of a program to assure that the concept still has a
realistic chance of meeting the original program goals and
that the goals still match a changing market and environmental situation. It is important to do this before entering
into full-scale demonstrations. The peer review process is
critical. If properly implemented, it can form a sound basis
deciding whether a program should be continued or terminated. DOE needs to develop a consistent mechanism for
this review process.
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.
Overall Findings and Recommendations
The committee does not recommend an appropriate level of

spending by DOE on fossil energy and energy efficiency
RD&D programs, nor does it attempt to compare in a more
detailed way the returns from the investments of public funds
in these two programs. The diverse array of programs and the
wide range of sectors served makes any such comparison very
difficult, and the complex nature of the benefits flowing from
these RD&D programs makes it even more difficult.
As noted elsewhere in this report, it is impossible to assign a dollar figure to all of these benefits, nor are there
feasible or defensible metrics for valuing the full array of
outputs of these programs. Ultimately, the determination of
appropriate levels of spending on RD&D in these two programs requires setting priorities in response to a long-range
national energy policy, combined with the exercise of political and economic insights, scientific and technological judgments, and expert advice from external and (as nearly as
possible) objective evaluations. The committees suggested
framework for evaluating the programs can inform the application of these judgments. But in public RD&D programs,
no less than in those of industry, the allocation of RD&D
funds among diverse programs requires the application of
priorities based on stated policy, as well as the exercise of
judgment, rather than the mechanical application of costbenefit or other financial techniques.
The committees findings and recommendations come in
three areas:
The committee found that DOEs RD&D programs in

fossil energy and energy efficiency have yielded significant
economic, environmental, and national security benefits; important technological options for potential application in a
different (but possible) economic, political, and/or environmental setting; and important additions to the stock of engineering and scientific knowledge in a number of fields. It
lauds the DOEs recent efforts to focus on outcomes of its
R&D activities, particularly through its R&D portfolio
analysis (DOE, 1999), and believes that the benefits matrix
will serve to usefully refine these ongoing activities.
However, the committee also found that DOE has not employed a consistent methodology for estimating and evaluating the benefits of its RD&D programs in these (and, presumably, other) areas. The evaluation frameworks employed
by DOE policy makers vary considerably among programs
and often rely on inconsistent or unrealistic economic assumptions. Importantly, evaluations tend to focus on the economic benefits from the deployment of technologies, at the
expense of the broader array of benefits (realized and otherwise) flowing from these investments of public funds.
Finally, the committee found that the benefits flowing
from DOEs RD&D programs were influenced by the structure and management of the programs. The committee believes that the structure of many of DOEs RD&D programs
in both fossil energy and energy efficiency is now much more
conducive to program success, to industry cost sharing
throughout all stages of the programs (i.e., inception to market readiness), and to systematic development of technologies from conceptualization, bench- and pilot-scale testing,
through demonstration and, in some cases, introduction into
the commercial market than it was when the programs were
launched, in the heat of the energy crises of the 1970s. Not
surprisingly, however, the committee believes that further
improvements in program management and structure are
possible within current and likely future budgets.
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.
62
63
BENEFITS OF DOES RD&D IN FOSSIL ENERGY AND

ENERGY EFFICIENCY
Finding 1. DOE investments in RD&D programs in both the
fossil energy and energy efficiency programs during the past
22 years have contributed to the well-being of U.S. citizens
by producing economic benefits, options for the future, and
knowledge benefits. It is the committees judgment that the
benefits of these programs substantially exceed the programs costs and contribute to improvements in the
economy, the environment, and national security, as described below.
The energy efficiency programs evaluated by the committee accounted for roughly 20 percent of the expenditures
on all energy efficiency programs in the past 22 years. The
committee believes that the programs it reviewed constitute
a representative sample of all energy efficiency programs
and that the conclusions from this analysis are applicable
throughout the energy efficiency portfolio.
The committees evaluation of fossil energy programs examined programs accounting for more than 70 percent of
fossil energy expenditures during this 22-year period. There
is a marked difference in the character of the fossil energy
programs launched from 1978 to 1985 and that of the programs launched from 1986 to 2000. The fossil energy programs of the 1978 to 1986 period, which was dominated by
an atmosphere of crisis following the 1973 oil embargo,
emphasized a high-risk strategy for circumventing commercial-scale demonstrations by going directly from bench-scale
to large-scale demonstrations to make synthetic fuels from
coal and shale oil and to produce oil using enhanced oil recovery techniques. In the second period, however, the fossil
energy R&D program was systematic and involved a more
diverse portfolio and greater emphasis on increasing the efficiency of electric power generation using natural gas, on
reducing the environmental impact when burning coal, and
on advanced oil and gas exploration and production.
The committee found that a relatively small number of
programs in energy efficiency and fossil energy accounted
for the majority of the economic and environmental benefits.
This characteristic of RD&D programs, in which a few
home runs are responsible for the majority of returns on
investments, is shared by industrial R&D programs and underscores the importance of maintaining a diversified portfolio of investments. The areas in which these benefits were
greatest relative to program expenditures include residential
and commercial construction, an industry that historically
was not particularly innovative, and technologies to reduce
environmentally harmful pollution. These are precisely the
areas in which one would anticipate that public R&D programs are most likely to prove most effective (see below for
additional discussion). By contrast, DOE efforts to push the
technology to commercial application in large, accelerated
RD&D programs such as coal liquefaction have been ex-
tremely risky and prone to cost overruns and generally have

yielded relatively small realized economic, environmental,
or security benefits relative to their high costs. Again, however, this tendency is not unique to DOE RD&D programs
but has been demonstrated in numerous other federal and
civilian technology RD&D programs.
Finding 1a. Economic benefits. Although the committee was
not always able to separate the DOE contribution from that
of others, the net realized economic benefits in the energy
efficiency and fossil energy programs were judged by the
committee to be in excess of the DOE investment.
In the energy efficiency programs reviewed by the committee, most of the realized economic benefits to date are
attributable to three relatively modest projects in the building sector carried on the late 1970s and 1980s and continuing into the 1990s. The committee estimated that the total
realized economic benefits associated with the energy efficiency programs that it reviewed were in the $30 billion
range (valued in 1999 dollars), substantially exceeding the
roughly $7 billion (1999 dollars) investment for energy efficiency RD&D over the 22-year life of the programs.
The committee estimated that the realized economic benefits associated with the fossil energy programs that it reviewed amounted to nearly $11 billion (1999 dollars) over
the same 22-year period, some of which is attributed to costs
avoided by demonstrating that more stringent environmental
regulation is unnecessary for waste management and by addressing airborne toxic emissions. As was noted earlier, the
estimated economic benefits of programs instituted during
the 1986 to 2000 period, $7.4 billion, exceeded the estimated
$4.5 billion cost of that periods fossil energy programs. The
realized economic benefits associated with fossil energy programs from 1978 to 1986, $3.4 billion in 1999 dollars, were,
however, less than the costs of the periods fossil energy
programs, $6.0 billion in 1999 dollars.
In addition to realized benefits, a number of technologies
were developed that provide options for the future if economic or environmental concerns justify their use. For example, the Office of Fossil Energys advanced turbine systems (ATS) and integrated coal gasification combined-cycle
(IGCC) systems are technologically ready options awaiting
changes in the energy marketplace. The energy efficiency
RD&D also produced option benefits, with the Partnership
for a New Generation of Vehicles (PNGV) and the forest
products Industries of the Future program being important
examples. The committee made no attempt to evaluate very
recent technologies resulting from current R&D programs
that extend beyond the period covered by our assessment.
For example, carbon sequestration, Vision 21, and the 21st
Century Truck Initiative were not assessed, because any benefits that accrue are expected to occur outside the time frame
for the committees evaluation. This retrospective nature of
the evaluation means that no conclusions about the eco-
64
nomic, option, or knowledge benefits of the current energy

efficiency or fossil energy program portfolios can be drawn
from this study.
Finding 1b. Environmental benefits. Substantial reductions
in pollution evidently resulted from the technologies developed in these programs. Although it is difficult to assign a
monetary value to environmental benefits, the committee
estimates that the fossil energy and energy efficiency RD&D
programs yielded environmental benefits valued at anywhere
from $64 billion to $90 billion.
For example, in the energy efficiency program, dramatic
improvements in refrigerator efficiency reduced the demand
for electricity and the pollution resulting from its generation.
In the fossil energy program, the atmospheric fluidized-bed
combustion program, the flue gas desulfurization program,
and the NOx reduction program provided significant environmental benefits, assuming their current deployment and
using existing regulation as a baseline. The committees attempt to assign a monetary figure to these environmental
benefits may well understate them, since it did not try to
quantify the environmental value of reduced waste, habitat
preservation, and smaller footprints for advanced drilling and
other new technologies.
Finding 1c. National security benefits. National security has
been enhanced by a number of the programs. A number of
fossil energy programs (enhanced oil recovery and seismic
technology) increased oil production and reserves in the
United States and thereby reduced U.S. dependence on imported oil.
Several other technologies (one is indirect liquefaction)
could produce security benefits if deployed in an environment of significantly higher oil prices. Energy efficiency
programs also have provided national security benefits by
decreasing oil use somewhat (although notsignificantly
in the transportation sector) and, to a lesser degree, by improving the reliability of the electric and natural gas infrastructure. Although automotive fuel economy regulations
have provided significant national security benefits by reducing dependence on petroleum in transportation, DOEs
research programs have proven disappointing in this regard.
But this will change because of PNGV, which has made significant progress toward its goals, including an 80-mpg fullsize automobile. This is a very significant energy security
option benefit. The committee assigned dollar values to the
oil reduction achieved by the energy efficiency efforts, but
not to the electricity reduction.
Finding 1d. Knowledge benefits. All the technologies funded
by the DOE add to our stock of knowledge in varying degrees. Some of these technologies are still in the R&D stage
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
65
sector, originated in the 1970s and 1980s and were designed

to produce large energy security benefits. Recent programs
in both energy efficiency and fossil energy have recognized
the importance of industry collaboration and of responding
to likely economic or policy conditions to create credible
benefits.
DOES APPROACH TO EVALUATING ITS RD&D

PROGRAMS
Finding 2. 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.
Evaluations of individual projects or programs within energy efficiency or fossil energy often relied on unrealistic
economic frameworks and assumptions or on frameworks
and assumptions that were inconsistent across programs or
across successive evaluations of any single program or
project. These internal evaluations also assigned considerable weight to realized economic benefits to the near-exclusion of other types of benefits. In the judgment of this committee, this narrow focus on realized economic benefits is an
inappropriate basis for the evaluation of public RD&D programs in the energy field.
Neither DOE nor the outside agencies that evaluated its
R&D programs developed a consistent framework for assessing the benefits and costs of these programs, some of
which must be appropriately apportioned to the private sector. As a result, decision makers do not have good information on which to base decisions about the effectiveness of
R&D expenditures. In the committees view, this situation
leads to an overemphasis on evaluations of realized benefits,
especially economic ones. Although important, these benefits are not the only ones that DOE programs aim to produce. One reason to focus on realized economic benefits is
that these should be proportional to environmental and security benefits. In the energy efficiency case studies, there were
no environmental or security benefits unless the technology
had strongly penetrated the market.
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 evaluate their programs often was associated with an overstatement of economic benefits. In some
cases, such as in low-e windows, DOE failed to consider the
costs and benefits of the next best technology, thereby attributing too large a benefit to the technology to which it had
contributed. In other cases, as in fossil energys ATS program, DOE made unjustified economic claims for the impact that these programs have had on the commercial products now in the marketplace. In all of the examples cited
here, the result of DOEs unrealistic assumptions was a significant overstatement of the benefits of its RD&D programs.
The committee believes that a consistent, well-articulated

set of assumptions and categories for evaluating costs and
benefits would encourage the use of clearer, more realistic
assumptions, in many cases reducing a tendency to overstate
the benefits attributable to DOE RD&D programs.
The piecemeal and inconsistent evaluation methodologies
currently employed by DOE also make more difficult the
development of a portfolio approach for assessing the overall structure, budget allocations, and appropriateness of program objectives for both fossil energy and energy efficiency.
The committee believes that the adoption of the comprehensive, consistent methodology employed in this report would
aid policy makers in evaluating their R&D portfolios.
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. The utility of this framework as an evaluation tool depends fundamentally on the application of specific guidelines for characterizing the benefits produced by program outcomes (e.g.,
realized vs. option vs. knowledge) and for assigning a value
to them. The guidelines developed for this project proved to
be a reasonable starting point, but the committees experience showed that many issues of characterization and valuation remain to be resolved. The framework is valuable for
another reason as well. The rows represent the social objectives of DOE: a reduction in the cost of energy services
(economic benefits), environmental benefits, and security
benefits. Thus the magnitude of these benefits is a measure
of how well DOE is doing in meeting its social good objectives. This is the sort of information needed to evaluate the
DOE portfolio.
Although the analytic framework needs many improvements, the committees application of it and of related guidelines helped identify a number of cases in which benefits
were overestimated in the data submitted to it by DOE. In
other cases, the committee was able to rationalize DOE
claims of very large benefits that might on the surface appear somewhat implausible.
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
66
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
and performance of various technological approaches. But

this combination of change and uncertainty means that diversification across technological approaches, R&D performers, and likely future states of the world is essential
within DOEs R&D portfolio.
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. 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 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 labeled a failure.
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. The committee recommends
regular, external review of the DOE energy R&D portfolio,
dropping projects that do not have a likelihood of successfully meeting goals set for the program.
Finding 5. A significant number of DOEs programs have
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 for communication or interaction between the parties.
Recommendation. DOE should work to establish improved
communication with EPA and the private sector, with the
goal of accelerating deployment of environmentally clean
technologies.
Finding 6. The case studies illustrate a number of instances
in which spending on programs continued past a point justified by program performance as evidenced by the programs
inability to meet technological milestones. This failure to
apply rigorous scrutiny to technological progress affected
the overall evaluation of benefits across both fossil energy
67
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-
ion. The knowledge gained during the research may justify

reconsideration of these targets.
Finding 7. 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. Not all DOE RD&D programs
have sought such near-term technology deployment, nor
does the committee believe that all DOE programs should
pursue such near-term goals. Nonetheless, for the programs
in which these goals are central, the case studies illustrate a
number of instances in which the adoption of the results of
DOE RD&D programs, and the associated realization of economic benefits, was aided by regulatory, tax, or other policies that significantly improved the attractiveness of these
technologies to prospective users.
Conversely, the case studies include a number of instances in which the attainment by DOE RD&D programs of
their technical goals (and the production of option or knowledge benefits) did not produce substantial economic benefits
because incentives for users to adopt these technologies were
lacking. In addition to calling attention to the importance of
consistency between the goals of DOE RD&D programs and
various public policies and coordination in the development
of such goals and associated policies, this point underscores
the importance of close collaboration between DOE and industrial users of such technologies in establishing program
goals and technological performance targets.
Recommendation. Where its RD&D programs seek to develop technologies for near-term deployment, DOE should
consider combining support for RD&D with the development of appropriate market incentives for the adoption of
these technologies based on an understanding of market conditions and consumer needs. These incentives span the gamut
from product standards to tax incentives. Conversely, it is
unrealistic to expect immediate deployment of technologies
developed with public funds that are suited to a very different environment of energy-related costs and prices. But such
technologies may provide significant option and knowledge
benefits, and they represent appropriate targets for DOE
RD&D programs.
Finding 8. The committees case studies highlight the importance of flexibility in the RD&D program structure, especially the need for continual reevaluation of program goals
against change in the regulatory or policy environment, in
projected energy prices and availability, and in the performance or availability of alternative technologies, among
other factors. One approach to such ongoing evaluation relies on regular peer review by panels of technical experts
selected from nonparticipating firms, academia, and other
68
sources of expertise. The work of review panels appears to

have benefited the PNGV program, among others. Such panels also may serve as useful mechanisms to assess program
performance against targets and milestones and may reduce
the likelihood of programs continuing beyond the point
where their benefit-cost ratios decline sharply.
Recommendation. DOE should expand its reliance on independent, regular, external reviews of RD&D in energy efficiency and fossil energy program goals and structure, enlisting the participation of technical experts who are not
otherwise involved as contractors or R&D performers in
these programs.
Finding 9. The committee found that cost sharing between
DOE and industrial collaborators frequently improved the
performance of RD&D programs and enhanced the level of
economic and other benefits associated with such programs.
The appropriate level of cost sharing depends on the specific
circumstances of individual programs, including the characteristics of the technology and structure of the industry where
the technology may be deployed.
Recommendation. DOE should maintain its current policies encouraging industry cost sharing in RD&D programs.
In general, industrys share of program costs should increase
as a project moves from early-stage or exploratory R&D
through development to demonstration. Policy makers
should ensure that an emphasis on collaboration with industry in the formulation of R&D priorities and R&D performance does not result in an overemphasis on near-term technical objectives within the DOE R&D portfolio or in the
neglect of public good objectives.
Finding 10. The committees case studies suggest that the
appropriate role for DOE in RD&D programs varies, depending on whether a given program is focused on exploratory research, development, or demonstration, as well as
the structure of the industry (including the amount of industry-funded R&D or the presence of well-established industrial R&D consortia) within which a given technology will
be deployed.
Some industries with which DOE has worked in technology development, such as home building, are populated by
numerous small firms that perform little or no internal R&D.
In this situation, the DOE role in RD&D extended from technology development through demonstration of the feasibility and cost-effectiveness of new technologies. Deployment
of the technology was accelerated by the development of
energy-efficiency standards that were widely adopted by local building-code authorities. A somewhat similar situation
prevailed in the DOE drilling and enhanced oil recovery programs. The U.S. domestic oil-exploration industry is popu-
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
69
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.
Appendixes
Biographical Sketches of Committee Members
Robert W. Fri, Chair, is director of the National Museum

of Natural History at the Smithsonian Institution, and is senior fellow emeritus at Resources for the Future, where he
served as president from 1986 to 1995. Before joining the
Smithsonian, Mr. Fri served in both the public and private
sectors, specializing in energy and environmental issues. In
1971 he became the first deputy administrator of the Environmental Protection Agency. In 1975, President Ford appointed him as the deputy administrator of the Energy Research and Development Administration. He served as acting
administrator of both agencies for extended periods. From
1978 to 1986, Mr. Fri headed his own company, Energy
Transition Corporation. He began his career with McKinsey
& Company, where he was elected a principal. Mr. Fri is a
senior advisor to private, public, and nonprofit organizations.
He serves as a director of American Electric Power Company. He is currently a member of the National Petroleum
Council, the U.S. Committee for the International Institute
of Applied Systems Analysis, and the advisory board of the
Center for the Integrated Study of the Human Dimensions of
Global Change at Carnegie Mellon University. Mr. Fri is
also a member of the University of Chicago Board of Governors for the Argonne National Laboratory. He received his
B.A. in physics from Rice University and his M.B.A. (with
distinction) from Harvard University and is a member of Phi
Beta Kappa and Sigma Xi.
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.
William Agnew retired as director, Programs and Plans,

General Motors Research Laboratories in 1989. He served in
the Manhattan District from 1944 to 1946 and attended
Purdue University from 1946 to 1952. From 1952 to 1989,
he held a number of positions at GM Research Laboratories
including department head, Fuels and Lubricants; head,
Emissions Research Department; technical director, Engine
Research, Engineering Mechanics, Mechanical Research,
Fluid Dynamics, and Fuels and Lubricants departments;
technical director, Biomedical Science, Environmental Science, Societal Analysis, and Transportation Research depart-
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
74
APPENDIX A
National Academy of Sciences and the Advisory Council of

the Electric Power Research Institute. Mr. Cavanagh is vice
chair of the Center for Energy Efficiency and Renewable
Energy Technologies, which unites representatives of the
environmental, energy efficiency, and renewable energy
communities, and vice chair of the Bonneville Environmental Foundation. He is also a founding board member of the
Northwest Energy Coalition. His awards include the Heinz
Award for Public Policy in 1996 and the Bonneville Power
Administrations Award for Exceptional Public Service. He
also serves on the Secretary of Energys Advisory Board. He
received his undergraduate and law degrees from Yale University.
Uma Chowdhry is the director of the DuPont Engineering
Technology Company, where she has responsibility for business planning and operations in a leveraged service business. Dr. Chowdhry has held a variety of management positions within the DuPont portfolio of businesses, ranging from
managing businesses in Electronics and Specialty Chemicals to directing research and development in the companys
specialty chemicals and electronics businesses as well as in
its central R&D function. She is chair of the Peer Committee
on Materials, which selects members for the National Academy of Engineering, and is a fellow of the American Ceramic Society. Dr. Chowdhry is a member of the advisory
boards of such institutions as Princeton University, the University of Pennsylvania, and the University of Delaware. She
recently served on an NRC committee for benchmarking
materials science and engineering in the United States, and
also serves on the Committee for Women in Science and
Engineering appointed by the White House. Ms. Chowdhry
has a masters degree in engineering science from the California Institute of Technology and received her Ph.D. in
materials science from the Massachusetts Institute of Technology.
Linda R. Cohen is chair of the Economics Department at
the University of California at Irvine, where she has taught
in various capacities with increasing responsibility since
1987. Previously, Dr. Cohen was an associate economist at
the Rand Corporation, a research associate for economics
with the Brookings Institution, a senior economist with the
California Institute of Technologys Environmental Quality
Laboratory, and an assistant professor of public policy at
Harvard Universitys Kennedy School of Government. She
was the Olin Visiting Professor in Law and Economics at the
University of Southern California Law Center in 1993 and
1998, a fellow of the California Council for Science and
Technology in 1998, and a research fellow at the Brookings
Institution in 1977. Dr. Cohen has written many articles and
coauthored a book on federal research and technology policy.
She is currently a member of the editorial board of Public
Choice and a member of the California Energy Commissions Advisory Panel for the Public Interest Energy Re-
search Program. She has a B.A. degree in mathematics from

the University of California at Berkeley and received her
Ph.D. in social sciences from the California Institute of Technology.
James Corman is the principal in an engineering consulting
company, Energy Alternative Systems, which he founded in
1996. He retired from General Electric as general manager
of the Energy System Department in GEs Power Systems.
In that position, he was responsible for the development and
commercialization of the next generation of power generation systems and for the technical interactions with the various GE businesses and with international business associates. Dr. Corman was previously manager of GE Corporate
Research and Developments Advanced Projects Laboratory.
While there, he led a diverse R&D program with a focus on
energy systems and activities that ranged from basic technology to pilot-plant demonstration. He is a member of the
advisory board for the Pennsylvania State University School
of Engineering and is active in the American Society of
Mechanical Engineers (ASME), where he is a fellow. He has
a Ph.D. in mechanical engineering from Carnegie Mellon
University.
Daniel A. Dreyfus is an independent consultant engaged in
research and topical writing. He was formerly the associate
director for operations at the National Museum of Natural
History, reporting to the museums director in his roles as
chief operating officer and chief financial officer. Before
that, he served as special assistant to the Secretary of Energy
and was director of the Office of Civilian Radioactive Waste
Management at the Department of Energy. Dr. Dreyfus
served as a vice president for strategic analysis and forecasting for the Gas Research Institute and was also the first president and CEO of its affiliated Gas Technology Information,
Inc. Previously, he was a professional staff member and then
staff director of the Senate Committee on Energy and Natural Resources, which has jurisdiction over the Department of
Energy and the Department of the Interior. He has a Ph.D.
from American University, is a fellow of the American Society of Civil Engineers, and held several civil engineering
positions prior to his Senate service.
William L. Fisher holds the Leonidas Barrow Chair in Mineral Resources, Department of Geological Sciences, University of Texas at Austin. His previous positions at the University of Texas at Austin included director and state geologist
of Texas, Bureau of Economic Geology; director, Geology
Foundation; chairman, Department of Geological Sciences;
and Morgan J. Davis Centennial Professor of Petroleum
Geology. He has been assistant secretary, Energy and Minerals, Department of the Interior, and deputy assistant secretary, Energy, Department of the Interior. He is a fellow of
the Geological Society of America, a fellow of the Texas
Academy of Science, a fellow of the Society of Economic
75
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.
congressional committees, and has served as an advisor to

various federal agencies and industrial firms. He also serves
as deputy director of the Consortium on Competitiveness
and Cooperation, a multiuniversity research alliance dedicated to research on technology and management and U.S.
competitiveness. His academic awards include the Raymond
Vernon Prize from the Association for Public Policy Analysis and Management, the Economic History Associations
Fritz Redlich Prize, the Business History Reviews
Newcomen Prize, and the Cheit Outstanding Teaching
Award. He received his undergraduate and Ph.D. degrees in
economics from Stanford University.
James Dexter Peach is an independent consultant. He retired as assistant comptroller general of the General Accounting Office (GAO), where he managed the division responsible for the GAOs work on energy, environment, natural
resources, transportation, housing, and agricultural issues
and served as GAOs principal advisor to the Congress on
energy and environmental issues. Mr. Peach also managed
GAOs strategic planning and quality control systems and
helped design evaluation strategies for government programs
under the Government Performance and Results Act. He received a B.S. in business administration from the University
of South Carolina, an M.S. in public administration from
George Washington University, and attended executive
training at Harvard Business School and Dartmouth College.
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
76
APPENDIX A
to regulate and enforce the Clean Air Act of 1970. He has

broad and extensive experience on energy and environmental issues and has recently been involved in studies on markets and barriers to clean coal technologies, conventional
and advanced turbines, renewable energy systems, distributed power systems, impact of electric power restructuring
on fuel and technology choices in the energy sector, options
for reductions of greenhouse gases, and energy and environmental analysis in support of a number of foreign countries,
the World Bank, and the Global Environment Facility. He is
currently a member of the National Academy of Sciences
Committee on Challenges, Opportunities, and Possibilities
for Cooperation in the Energy Futures of China and the
United States. He has received the Presidential Award for
Superior Achievement (1992) and the Secretary of Energys
Gold Medal for Outstanding Performance (1994). He has a
B.S. in chemical engineering from Worcester Polytechnic
Institute.
James L. Sweeney is professor of Management Science and
Engineering, Stanford University, and senior fellow,
Stanford Institute for Economic Policy Research. He has
been director of the Office of Energy Systems, director of
the Office of Quantitative Methods, and director of the Office of Energy Systems Modeling and Forecasting, all at the
Federal Energy Administration. At Stanford University, he
was chairman, Institute of Energy Studies; director, Center
for Economic Policy Research; director, Energy Modeling
Forum; chairman, Department of Engineering-Economic
Systems; and chairman, Department of Engineering-Economic Systems and Operations Research. He has served on
several NRC committees, including the Committee on the
National Energy Modeling System and the Committee on
the Human Dimensions of Global Change, and has been a
member of the Board on Energy and Environmental Systems. His research and writings address economic and policy
issues important for natural resource production and use;
energy markets, including oil, natural gas and electricity;
environmental protection; and the use of mathematical models to analyze energy markets. He has a B.S. from the Massachusetts Institute of Technology and a Ph.D. in engineering-economic systems from Stanford University.
John J. Wise is retired vice president for Research, Mobil
Research and Development Company. He has also been vice
president for R&E Planning, manager of Exploration and
Production R&D, manager of Process and Products R&D,
director of the Mobil Solar Energy Corporation, and director
of the Mobil Foundation. He has been active in the Industrial
Research Institute and is currently on the board of editors of
its journal Research and Technology Management. He was
awarded the Industrial Research Institutes Gold Medal for
Research Management. He was co-chair of the Auto/Oil Air

Quality Improvement Research Program. He has served on
the NRC Board on Chemical Sciences and Technology and
its Board on Energy and Environmental Systems. He has
served on a number of NRC committees, such as the Committee on Transportation and a Sustainable Environment, the
Committee on Developing the Federal Materials Facility
Strategy, the Committee on Reviewing DOEs Office of
Heavy Vehicle Technologies, and the Committee on Aviation Fuels with Improved Fire Safety. He has expertise in
R&D management, process engineering, catalysis, synthetic
and alternative fuels, lubricants, and the effects of fuels and
engines on emissions. He is a member of the National Academy of Engineering. He received a B.S. in chemical engineering from Tufts University and a Ph.D. in chemistry from
MIT.
James L. Wolf is an independent consultant working with
companies to design new products and services for deregulating electric utility markets. He was formerly vice president of energy and environmental markets for Honeywell,
Inc., where he focused on business opportunities to develop
new products and services and market existing services to
energy and environmental concerns. Previously, he was executive director at the Alliance To Save Energy, a nonprofit
coalition whose board of directors is composed of U.S. Senators, chief executive officers of major corporations, and
environmental leaders. He also served as acting deputy assistant administrator for policy and planning with the Department of Commerces National Oceanic and Atmospheric
Administration, where he helped design and supervise policies and programs addressing marine pollution, global climate change, alternative energy resources, and international
scientific research protocols. Mr. Wolf was a member of the
Advisory Panel on Research and Development for the Department of Energy. He has a J.D. degree from Harvard Law
School.
James Woods is the founding director of the HP-Woods
Research Institute and is retired professor of Building Construction at the Virginia Polytechnic Institute and State University. He has been responsible for more than 20 research
projects investigating environmental conditions for office
buildings, schools, residences, hospitals, passenger cabins in
commercial aircraft, and laboratory animal facilities. Dr.
Woods has also served as a consultant or advisor to several
private and public agencies including the Department of
Energy, the National Institute of Standards and Technology,
and the Environmental Protection Agency. He has a Ph.D. in
mechanical engineering from Kansas State University and is
a registered professional mechanical engineer.
Presentations and Committee Activities
1. COMMITTEE MEETING, JUNE 21-23, 2000,

WASHINGTON, D.C.
Oil and Gas Technology Programs: Historical Perspective

Guido Dehoratiis Jr., Oil and Gas Programs, Office of
Fossil Energy, Department of Energy
Energy Efficiency and Renewable Energy Briefing

Dan W. Reicher, Office of Energy Efficiency and
Renewable Energy, Department of Energy
2. COMMITTEE MEETING, AUGUST 14-16, 2000,

WASHINGTON, D.C.
Building Technology, State and Community Programs

Barbara Sisson, Office of Energy Efficiency and
Renewable Energy, Department of Energy
PNGV: An Overview
Bob Culver, Ford Motor Company
Benefits of DOE R&D on Energy Efficiency and Fossil

Energy, Overview Presentation on Fossil Energy
Programs
Robert S. Kripowicz, Office of Fossil Energy,
Department of Energy
GTI R&D and GTI-DOE Interactions

Kent Perry, Gas Research Institute
The DOE R&D Investment in Coal Gasification
Ron Wolk, Wolk Integrated Services
Discussion of the Background for the Study

Loretta Beaumont, House Appropriations Committee,
U.S. Congress
DOE R&D (Office of Industrial Technologies)

R. Ray Beebe, Homestake Mining Company (retired)
Oil and Gas Technology Programs: Benefits

Methodologies
Nancy Johnson, Oil and Gas Programs, Office of Fossil
Energy, Department of Energy
R&D Programs with DOE, Industry Experiences and

Valuations and Options for the Future
Peter A. Carroll, Solar Technologies (retired)
Energy Efficiency and Renewable Energy Briefings
Abe Haspell, Deputy Assistant Secretary, Department of
Energy
DOE Office of Fossil Energy: Benefits Methodologies

Doug Carter, Coal Power Systems, Office of Fossil
Energy, Department of Energy
Energy Resources R&D Portofolio Management

William Fulkerson, Energy and Environmental
Technologies, Oak Ridge National Laboratory (retired)
DOE FEs Approach to Identifying and Measuring Costs

and Benefits of R&D
Rita A. Bajura, National Energy Technology
Laboratory, Department of Energy
Hybrid Gasification and Combustion Technologies

Gopal D. Gupta, Vice President, Foster Wheeler
Development Corporation
R&D ImpactsAn Historical Perspective

Henry Kenchington, Office of Industrial Technologies,
DOE Fuel Cell Programs and IFC

J.M. King, International Fuel Cells
Coal and Power Systems: Late 70s to Now

George Rudins, Coal and Power Systems, Office of
Fossil Energy, Department of Energy
Solid Oxide Fuel Cell (SOFC)

Allan Cassanova, Siemens Westinghouse
77
78
APPENDIX B
3. GENERAL ELECTRIC RESEARCH AND

DEVELOPMENT CENTER SITE VISIT, OCTOBER 20,
2000, SCHENECTADY, NEW YORK
DOE R&D ProgramsStudy Team Visit
Ronald Hodge, General Electric Center for Research
and Development
LightingDOE Involvement Summary
Raymond Fillion, General Electric Center for Research
and Development
GE Corporate Research and Development
Lonnie Edelheit, General Electric Center for Research
and Development
4. COMMITTEE MEETING, OCTOBER 30NOVEMBER 1, 2000, WASHINGTON, D.C.

Air Conditioning and Refrigeration Institute Working with
DOE
Mark Menzer, Air Conditioning and Refrigeration
Institute
Lessons Learned from GAOs Evaluations of Government
R&D
Dan Haas, Robin Nazarro, Natural Resources and
Environment, General Accounting Office
5. BABCOCK & WILCOX SITE VISIT, NOVEMBER 9,

2000, ALLIANCE, OHIO
Babcock & Wilcox, a McDermott Company
Byers Rogan, Babcock & Wilcox
Contract Research at McDermott International
Ray Posey, Babcock & Wilcox, Contract Research
Division
Fluidized Bed Combustion
Don Wietzke, Babcock & Wilcox
Environmental Issues
Paul Nolan, Babcock & Wilcox
Clean Energy for the World: Fuel Cells and Hydrogen
Systems
Bill Schweizer, Babcock & Wilcox
6. COMMITTEE MEETING, DECEMBER 13-15, 2000,

WASHINGTON, D.C.
U.S. Environmental Protection Agency R&D Programs
Kathleen Hogan and Blair Martin, Environmental
Protection Agency
7. CLOSED COMMITTEE MEETING, FEBRUARY 1416, 2001, IRVINE, CALIFORNIA
Improving the R&D Process to Deployment

Michael Davis, Avista Labs
Bibliography Relevant to DOE R&D Policy, Congressional

Mandates, R&D Results, and Evaluations
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:
Pursuant to the task statement, the committee reviewed

the literature on the history of DOE, including its legislative
history; on evaluations of the Department and its R&D programs conducted over its 22-year history; and on policy studies conducted by people inside and outside the government.
In addition, committee members talked to a wide array of
people across DOE and in the industry and academic communities who are knowledgeable about DOEs energy efficiency (EE) and fossil energy (FE) R&D programs.
One conclusion from the literature and discussions with
experts was that no appropriate and comprehensive framework for evaluating benefits of the EE and FE R&D programs was discovered. As a consequence, the committee
developed its own evaluation framework, described in detail
in Appendix D.
American Council for an Energy-Efficient Economy
(ACEEE). 1992. Achieving Greater Energy Efficiency
in Buildings: The Role of DOEs Office of Building
Technologies. Report of the Building Energy Efficiency Program Review Group, ACEEE and the Alliance to Save Energy (July). Washington, D.C.:
ACEEE. Summary available at <http://aceee.org/pubs/
a922.htm>.
Antonelli, A. 1998. Results Act Hands Congress Five Reasons to Pull the Plug on the Department of Energy.
Backgrounder Executive Summary No. 1191 (June
16). Washington D.C.: The Heritage Foundation.
Arthur D. Little (ADL). 1999. Distributed Generation: Understanding the Economics. Cambridge, Mass.: ADL.
Ballanoff, Paul. 1997. On the Failure of the Market Failure. Regulation 22(2).
Bradley, R. 1997. Renewable Energy: Not Cheap, Not
Green. Policy Analysis No. 280. Washington, D.C.:
Cato Institute.
Brown, M.A., and C.R. Wilson. 1993. R&D Spinoffs: Serendipity vs. a Managed Progress. Technology Transfer 18(3 and 4): 5-15.
79
80
APPENDIX C
The Policy Challenge and Current Programs; Chapter

2Current and Proposed Spending Programs and Tax
Policies Directly Linked to Climate Change; Chapter
3Other Federal Spending Programs and Tax Policies Associated with Climate Change (August). Washington D.C.: Congressional Budget Office. Available
at <http://www.cnie.org/nle/eng-16.html#19>.
CBO. 2000. Budget Options (March). Available at <http://
www.cbo.gov/showdoc.cfm?index=1845&sequence=
0&from=1>.
Congressional Research Service (CRS). 1996. Fossil Energy
Research and Development: Whither Coal? Larry
Parker, Environment and Natural Resources Policy
Division (November 20). Washington, D.C.: Congressional Research Service. Available at <http://
www.cnie.org/nle/eng-19html #Issues for Coal>.
CRS. 1996. The Partnership for a New Generation of Vehicles (PNGV). Fred Sissine, Specialist in Energy,
Science, Technology, and Policy, Science Policy Research Division. 96-191 SPR (February 28). Available
at <http://www.cnie.org/nle/eng-9.html.>.
CRS. 1998. Energy Efficiency: Key to Sustainable Energy
Use. Fred Sissine, Science, Technology, and Medicine
Division. Available at <http://www.cnie.org/nle/eng16.html#N 52>.
CRS. 1999. Department of Energy: Programs and Reorganization Proposals (September 17). RL30307. Coordinated by Carl E. Behrens and Richard E. Rowberg.
Available at <http://www.cnie.org/nle/agency-33.html
#N 52>.
Department of Energy (DOE). 1992. Draft Strategic Plan,
Office of Conservation and Renewable Energy (July).
Washington, D.C.: Department of Energy.
DOE. 1994. Draft Strategic Plan, Office of Energy Efficiency and Renewable Energy, June 1994. Washington, D.C.: DOE.
DOE. 1996. Memo on Report Audit of Department of
Energys Activities Designed to Recover the Taxpayers Investment in the Clean Coal Technology Program. IG-0391, June 6. Washington, D.C.: DOE.
DOE, Office of the Inspector General. 1996. Audit of Department of Energys Activities Designed to Recover
the Taxpayers Investment in the Clean Coal Technology Program. June 6. Washington, D.C.: DOE.
DOE. 1997. Semiannual Report to Congress: April 1 to September 30, 1997. DOE/IG-0006(97). Washington,
D.C.: DOE.
DOE. 1998. Comprehensive National Energy Strategy.
DOE/S-0124. Washington, D.C.: DOE.
DOE. 1999. Energy Resources. DOE Research and Development Portfolio, Vol. 2 of 5. April. Washington,
D.C.: DOE.
DOE. 1999. Energy Resources R&D Portfolio Analysis.
Volume I: Summary Report. Panel Report to the Re-
search & Development Council, August. Washington,

D.C.: DOE.
Volume II: Definition of Strategic Goals, Technology
Categories, and Program ElementsVital Issues.
Panel I Report. Panel Report to the Research & Development Council, August. Washington, D.C.: DOE.
Volume III: Contributions of the R&D Portfolio to
Strategic GoalsVital Issues. Panel II Report. Panel
Report to the Research & Development Council, August. Washington, D.C.: DOE.
DOE, Office of Energy Efficiency and Renewable Energy.
1999. Office of Industrial Technologies: Summary of
Program Results, Turning Industry Visions into Reality. Washington, D.C.: DOE.
DOE, Office of Fossil Energy. 1999. Environmental Benefits of Advanced Oil and Gas Exploitation and Production Technology. Washington, D.C.: DOE.
DOE, Office of the Inspector General. 1999. The Department of Energys Implementation of the Government
Performance and Results Act (February). Washington,
D.C.: DOE.
DOE, Offices of Energy Efficiency and Renewable Energy;
Transportation Technologies; and Advanced Automotive Technologies. 1999. 1999 Annual Progress Report, Energy Conversion Team: Advanced Automotive Technologies; Advanced Combustion and Emission Control; Fuel Cells for Transportation; Advanced
Petroleum and Alternative Fuels; Advanced Propulsion Materials. Washington, D.C.: DOE.
Transportation Technologies; and Advanced Automotive Technologies. 1999. 1999 Annual Progress Report, Energy Management Team: Advanced Technology Development. Washington, D.C.: DOE.
DOE. 2000. DOE Research and Development Portfolio: Energy Resources. Volume 1 of 4. February. Washington, D.C.: DOE.
DOE. 2000. Strategic Plan. Available at <http://www.cg\fo.
doc.gov/stratmgt/plan/DOE-SP.pdf>.
DOE, Office of Energy Efficiency and Renewable Energy.
2000. Budget-in-Brief, Fiscal Year 2001, Clean Energy for the 21st Century, DOE/EE-0212. Washington, D.C.: DOE.
DOE, Office of the Undersecretary. 2000. Energy Resources
R&D Portfolio Analysis, Definition of Overarching
Objective, Adequacy, Strategic Goals and Associated
Issues, Technology Categories and Program Elements,
Report of the Vital Issues Panel I, January 12-13.
Washington, D.C.: DOE.
R&D Portfolio Analysis, Portfolio Adequacy in Addressing Strategic Goals, Report of the Vital Issues
Panel II, February 22-25. Washington, D.C.: DOE.
81
APPENDIX C

R&D Portfolio Analysis, Summary Report of the Vital
Issues. Panel Meetings, January 12-13, February 2225, and May 24-25. Washington, D.C.: DOE.
Transportation Technologies; and Advanced Automotive Technologies. 2000. 1999 Annual Progress Report, Energy Management Team: Power Electronics
and Electric Machines. Washington, D.C.: DOE.
Transportation Technologies; and Advanced Automotive Technologies. 2000. 1999 Annual Progress Report, Vehicle Systems Team: Lightweight Vehicles
Systems Materials. Washington, D.C.: DOE.
Electric Power Research Institute. 1999. Electricity Technology Roadmap, Powering Progress, 1999 Summary
and Synthesis, July 1999.
Elliott, R.N., S. McGaraghan, and K. Wang. 1997. Impact of
Three Industrial Technologies Developed by DOE,
American Council for an Energy-Efficient Economy,
August. Available at <http://aceee.org/pubs/ie971.
htm>.
Energy Research Advisory Board. 1987. Geosciences Research for Energy Security. Prepared by the ERAB
Solid Earth Sciences Panel. DOE/S-0056, February.
Ford Foundation. 1974. A Time to Choose. Energy Policy
Report of the Ford Foundation. Cambridge, Mass.:
Ballinger Publishing Company.
Fulkerson, W., S. Auerbach, A.T. Crane, D.E. Kash, A.M.
Perry, and D.B. Reister. 1989. Energy Technology
R & D: What Could Make a Difference? Part 1, Synthesis Report, ORNL 6541, V1. Oak Ridge, Tenn.:
Oak Ridge National Laboratory.
Geller, H., and S. McGaraghan. 1996. Successful Government-Industry Partnership: The U.S. Department of
Energys Role in Advancing Energy-Efficient Technologies, Executive Summary. February. Available
online at <http://aceee.org/pubs/e961.htm>.
General Accounting Office (GAO). 1977. First Federal Attempt to Demonstrate a Synthetic Fuel Technology
A Failure. EMD-7 7-59, August. Washington, D.C.:
GAO.
GAO. 1978. Fossil Energy Research, Development, and
Demonstration: Opportunities for Change. EMD-7857, September. Washington, D.C.: GAO.
GAO. 1978. The Role of Demonstrations in Federal R&D
Policy, July. Washington, D.C.: GAO.
GAO. 1982. DOE Funds New Technologies Without Estimating Potential Net Energy Yields. IPE-81-1, July.
Washington, D.C.: GAO.
GAO. 1982. Electric Vehicles: Limited Range and High
Costs Hamper Commercialization. EMD-82-38,
March. Washington, D.C.: GAO.
GAO. 1986. Energy R&D: Current and Potential Use of

Enhanced Oil Recovery. RCED-86-181BR, June.
GAO. 1989. Fossil Fuels: Commercializing Clean Coal
Technologies. Report to the Chairman, Subcommittee
on Energy and Power, Committee on Energy and Commerce, U.S. House of Representatives. Washington,
D.C.: GAO.
GAO. 1990. Energy R&D: Conservation Planning and Management Should Be Strengthened. GAO/RCED-90195, July. Washington, D.C.: GAO.
GAO. 1990. Fossil Fuels: Outlook for Utilities Potential Use
of Clean Coal Technologies. GAO/RCED-90-165,
May. Washington, D.C.: GAO.
GAO. 1990. Fossil Fuels: Pace and Focus of the Clean Coal
Technology Program Need to Be Assessed. GAO/
RCED-90-67, March. Washington, D.C.: GAO.
GAO. 1991. Balanced Approach and Improved R&D Management Needed to Achieve Energy Efficiency Objectives. Testimony before the Subcommittee on Environment, Committee on Science, Space, and Technology, U.S. House of Representatives. GAO/T-RCED91-36, April. Washington, D.C.: GAO.
GAO. 1991. Fossil Fuels: Improvements Needed in DOEs
Clean Coal Technology Program. GAO/RCED-92-17,
October. Washington, D.C.: GAO.
GAO. 1992. Energy Conservation: DOEs Efforts to Promote Energy Conservation and Efficiency. GAO/
RCED-92-103, April. Washington, D.C.: GAO.
GAO. 1992. Energy Issues. Transition Series. GAO/OCG13TR, December. Washington, D.C.: GAO.
GAO. 1993. Federal Budget: Choosing Public Investment
Programs. AIMD-93-25, July. Washington, D.C.:
GAO.
GAO. 1993. Fossil Fuels: The Department of Energys Magnetohydrodynamics Development Program. Letter report. GAO/RCED-93-174, July. Washington, D.C.:
GAO.
GAO. 1993. Fossil Fuels: Ways to Strengthen Controls Over
Clean Coal Technology Project Costs. GAO/RCED93-104, March. Washington, D.C.: GAO.
GAO. 1994. Fossil Fuels: Lessons Learned in DOEs Clean
Coal Technology Program. GAO/RCED-94-174, May.
GAO. 1995. Electric Vehicles: Efforts to Complete Advanced Battery Will Require More Time and Funding.
GAO/RCED-95-234, August. Washington, D.C.:
GAO.
GAO. 1996. Energy R&D: Observations on DOEs Success
Stories Report. GAO/T-RCED-96-133, April. Washington, D.C.: GAO.
GAO. 1996. Energy Research: Opportunities Exist to Recover Federal Investment in Technology Development
Projects. Report to the Chairman, Subcommittee on
Energy and Environment, Committee on Science,
82
APPENDIX C
House of Representatives. GAO/RCED-96-141, June.

GAO. 1996. Letter to the Honorable John Kasich, Chairman, House Committee on the Budget. GAO/RCED96-120R, April. Washington, D.C.: GAO.
GAO. 1997. Measuring Performance: Strengths and Limitations of Research Indicators. GAO/RCED-97-91,
March. Washington, D.C.: GAO.
GAO. 1998. Department of Energy: Proposed Budget in
Support of the Presidents Climate Change Technology Initiative. Report to the Chairman, Committee on
the Budget, House of Representatives. GAO/RCED98-147, April. Washington, D.C.: GAO.
GAO. 1999. Climate Change: Observations on the April
1999 Report on Climate Change Programs. Statement
of Peter F. Guerrero, Director, Environmental Protection Issues, Resources, Community, and Economic
Development Division. Testimony before the Subcommittee on Energy Research, Development, Production
and Regulation, Senate Committee on Energy and
Natural Resources, and the Subcommittee on National
Economic Growth, Natural Resources, and Regulatory
Affairs, House Committee on Government Reform.
GAO/T-RCED-99-199, May. Washington, D.C.:
GAO.
GAO. 2000. Cooperative Research: Results of the U.S.-Industry Partnership to Develop a New Generation of
Vehicles. GAO/RCED-00-81, March. Washington,
D.C.: GAO.
GAO. 2000. GPRA: Information on Science Issues in the
Department of Energys Accountability Report for
FY99 or Performance Plans for FY00 and FY01.
RCED-00-268R, August. Washington, D.C.: GAO.
GAO. 2000. Letter ReportObservations on the Department
of Energys Fiscal Year 1999 Accountability Report
and Fiscal Year 2000/2001 Performance Plans to the
Honorable Fred Thompson, Chairman, The Honorable
Joseph I. Lieberman, Ranking Minority Member,
Committee on Governmental Affairs, United States
Senate. GAO/RCED-00-209R, June. Washington,
D.C.: GAO.
GAO. 2000. Observation on the U.S. Department of Energys Fiscal Year 1999 Accountability Report and
Fiscal Year 2000/2001 Performance Plans. GAO/B285479. Washington, D.C.: GAO.
Geller, H., J.P. Harris, M.D. Levine, and A.H. Rosenfeld.
1987. The Role of Federal Research and Development in Advancing Energy Efficiency: A $50 Billion
Contribution to the U.S. Economy. Annual Review of
Energy and the Environment 12: 357-395.
Geller, H., and S. McGaraghan. 1998. American Council for
an Energy-Efficient Economy, Successful Government-Industry Partnership: The U.S. Department of
Energys Role in Advancing Energy-efficient Technologies, Energy Policy 26(3): 167-177.
Geller, H., and J. Thorne. 1999. U.S. Department of Energys

Office of Building Technologies: Successful Initiatives of the 1990s, Executive Summary. Available
online at <http://aceee.org/pubs/a991.htm>.
Greene, D.L. 1997. The Value of R&D. Proceedings of
the Thirty-Second Intersociety Energy Conversion Engineering Conference, Vol. 3, Energy Systems, Renewable Energy Resources, Environmental Impact,
Policy Impacts on Energy, July 27-August 1, Honolulu, Hawaii. New York: American Institute of Chemical Engineers.
Greening, L.A., A.H. Sanstad, and J.E. McMahon. 1997.
Effects of Appliance Standards on Product Price and
Attributes: An Hedonic Pricing Model. Journal of
Regulatory Economics 11: 181-194.
Greening, L.A., W.B. Davis, and L. Schipper. 1998. Decomposition of Aggregate Carbon Intensity for the
Manufacturing Sector: Comparison of Declining
Trends from 10 OECD Countries for the Period 19711991. Energy Economics 20: 43-65.
Greening, L.A., D.L. Greene, and C. Difiglio. 1999. Energy Efficiency and Consumption: The Rebound Effect: A Survey. Energy Policy 28: 389-401.
Longwell, J.P. 1982. Fuel Science and Technology. Pp.
619-662 in National Research Council, Outlook for
Science and Technology: The Next Five Years. San
Francisco: W.H. Freeman.
Martin, B., and A. Salter, with D. Hicks, K. Pavitt, J. Senker,
M. Sharp, and N. von Tunzelmann. 1996. The Relationship Between Publicly Funded Basic Research and
Economic Performance. Report prepared by Science
Policy Research Unit, University of Sussex, for HM
Treasury, July. England: HM Treasury.
McKie, J.W. 1984. Federal Energy Regulation. Annual
Review of Energy and the Environment 9:321-349.
Nadel, S., and H. Geller. Market Transformation Programs:
Past Results and New Initiatives. Available online at
<http://aceee.org/pubs/e962.htm.>.
National Science Board. 1998. Science and Engineering Indicators. NSB98-1. Arlington, Va.: National Science
Foundation.
National Research Council (NRC), Committee on Processing and Utilization of Fossil Fuel, Ad Hoc Panel on
Advanced Power Cycles. 1977. Assessment of Technology for Advanced Power Cycles. Washington,
D.C.: National Academy Press.
NRC, Committee on Processing and Utilization of Fossil
Fuel, Ad Hoc Panel on Direct Combustion of Coal.
1977. Assessment of Advanced Technology for Direct
Combustion of Coal. Washington, D.C.: National
Academy Press.
Fuel, Ad Hoc Panel on Liquefaction of Coal. 1977.
Assessment of Technology for the Liquefaction of
Coal. Washington, D.C.: National Academy Press.
83
APPENDIX C

Fuel, Ad Hoc Panel on Low-Btu Gasification of Coal.
1977. Assessment of Low- and Intermediate-Btu Gasification of Coal. Washington, D.C.: National Academy Press.
Fuel, Ad Hoc Panel on Coal Mining Technology.
1978. Coal Mining. Washington, D.C.: National Academy Press.
NRC. 1979. Report of the Conference on Synthetic Fuels.
NRC, Committee on Nuclear and Alternative Energy Systems. 1980. Energy in Transition, 1985-2010, and 11
subsidiary panel reports. Washington, D.C.: National
Academy Press or W.H. Freeman and Co.
NRC, Energy Engineering Board, Committee on Advanced
Fossil Energy Technology. 1984. Research Priorities
for Advanced Fossil Energy Technologies. Washington, D.C.: National Academy Press.
NRC, Energy Engineering Board, Committee on Cooperative Fossil Energy Research. 1984. Stimulating Cooperative Research in Fossil Energy at Universities.
NRC, Energy Engineering Board, Committee on Energy
Conservation Research. 1986. Planning for Energy
Conservation R&D: A Review of the DOEs Planning
Process. Washington, D.C.: National Academy Press.
NRC, Energy Engineering Board, Committee on Innovative
Concepts and Approaches to Energy Conservation.
1986. Innovative Research and Development Opportunities for Energy Efficiency. Washington, D.C.: National Academy Press.
NRC, National Materials Advisory Board, Committee on
Bioprocessing for the Energy-Efficient Production of
Chemicals. 1986. Bioprocessing for the Energy-Efficient Production of Chemicals. Washington, D.C.:
National Academy Press.
NRC, Board on Chemical Sciences and Technology, Panel
on Future Directions [of] Fossil Energy. 1987. Future
Directions in Advanced Exploratory Research Related
to Oil, Gas, Shale, and Tar Sand Resources. Washington, D.C.: National Academy Press.
NRC, Energy Engineering Board. 1987. A Review of the
State of the Art and Projected Technology of Low Heat
Rejection Engines. Washington, D.C.: National Academy Press.
NRC, Committee on Alternative Energy Research and Development Strategies. 1990. Confronting Climate
Change: Strategies for Energy Research and Development. Washington, D.C.: National Academy Press.
NRC, Committee on Production Technologies for Liquid
Transportation Fuels. 1990. Fuels to Drive Our Future. Washington, D.C.: National Academy Press.
NRC, Committee on Fuel Economy of Automobiles and
Light Trucks. 1992. Automotive Fuel Economy: How
Far Can We Go? Washington, D.C.: National Academy Press.

NRC, Energy Engineering Board. 1992. Review of the Strategic Plan of the U.S. Department of Energys Office
of Conservation and Renewable Energy. Washington,
D.C.: National Academy Press.
NRC, Board on Chemical Sciences and Technology, Committee on Applied Research Needs Related to Extraction and Processing of Oil and Gas. 1993. Advanced
Exploratory Research Directions for Extraction and
Processing of Oil and Gas. Washington, D.C.: National
Academy Press.
NRC, Energy Engineering Board, Committee on the Strategic Assessment of the U.S. Department of Energys
Coal Program. 1995. Coal: Energy for the Future.
NRC. 1996. Maintaining Oil Production from Marginal
Fields: A Review of the Department of Energys Reservoir Class Program. Washington, D.C.: National
Academy Press.
NRC. 1996. Review of the Research Program of the Partnership for a New Generation of Vehicles: Second Report. Washington, D.C.: National Academy Press.
Fuel, Ad Hoc Panel on Advanced Power Cycles. 1997.
Assessment of Technology for Advanced Power
Cycles. Washington, D.C.: National Academy Press.
NRC, National Materials Advisory Board, Panel on Intermetallic Alloy Development. 1997. Intermetallic Alloy Development: A Program Evaluation. Washington, D.C.: National Academy Press.
NRC, Board on Energy and Environmental Systems. 1998.
Effectiveness of the United States Advanced Battery
Consortium as a Government-Industry Partnership.
Review of the Research and Development Plan for the
Office of Advanced Automotive Technologies. Washington, D.C.: National Academy Press.
Review of the Research Program of the Partnership
for a New Generation of Vehicles: Fourth Report.
Industrial Technology Assessments, Panel on Manufacturing Process Controls. 1998. Manufacturing Process Controls for the Industries of the Future. Washington, D.C.: National Academy Press.
for a New Generation of Vehicles: Fifth Report. Washington, D.C.: National Academy Press.
Review of the Research Strategy for Biomass-Derived
84
APPENDIX C
Transportation Fuels. Washington, D.C.: National

Academy Press.
NRC, Board on Energy and Environmental Systems, Committee to Review DOEs Office of Fossil Energys
Research Plan for Fine Particulates. 1999. Review of
the U.S. Department of Energy Office of Fossil
Energys Research Plan for Fine Particulates. Washington, D.C.: National Academy Press.
Industrial Technology Assessments. 1999. Industrial
Technology Assessments: An Evaluation of the Research Program of the Office of Industrial Technologies. Washington, D.C.: National Academy Press.
Industrial Technology Assessments, Panel on Separation Technology for Industrial Reuse and Recycling.
1999. Separation Technologies for the Industries of
the Future. Washington, D.C.: National Academy
Press.
for a New Generation of Vehicles: Sixth Report.
NRC, Board on Energy and Environmental Systems, Committee on R&D Opportunities for Advanced FossilFueled Energy Complexes. 2000. Vision 21: Fossil
Fuel Options for the Future. Washington, D.C.: National Academy Press.
Oak Ridge National Laboratory (ORNL). 1994. Weatherization Works: Final Report of the National Weatherization Evaluation. ORNL/CON-395, August. Oak Ridge,
Tenn.: ORNL.
ORNL. 1996. The Energy-Related Inventions Program: Continuing Benefits to the Inventor Community. ORNL/
CON-429, August. Oak Ridge, Tenn.: ORNL.
ORNL. 1999. Commercial Progress and Impact of Inventions and Innovations. ORNL/TM-2000/67, August.
Oak Ridge, Tenn.: ORNL.
Office of Technology Assessment (OTA). 1976. Comparative Analysis of the 1976 ERDA Plan and Program.
May. Washington, D.C.: OTA.
OTA. 1977. Analysis of the Proposed National Energy Plan.
Washington, D.C.: OTA.
OTA. 1978. An Analysis of the ERDA Plan and Program.
October. Washington, D.C.: OTA.
OTA. 1982. Selected Economic and Technical Comparisons
of Synfuel Options. OTA 8224, October. Washington,
D.C.: OTA.
OTA. 1985. New Electric Power Technologies: Problems
and Prospects for the 1990s. OTA E-246, July. Washington, D.C.: OTA.
OTA. 1992. Building Energy Efficiency. Report no. OTAE-518 [OTA 9204]. Washington, D.C.: OTA.
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.
85
APPENDIX C
Shock, R.N., W. Fulkerson, M.L. Brown, R.L. San Martin,

D.L. Greene, and J. Edmonds. 1999. How Much Is
Energy Research and Development Worth As Insurance? Annual Review of Energy and the Environment
24: 487.
Spencer, D.F. 1996. A Screening Study to Assess the Benefit/Cost of the U.S. DOE Clean Coal R/D/D Program.
For the U.S. Department of Energy, Fossil Energy
Office, September. Washington, D.C.: DOE.
Sutherland, R. 1999. The Feasibility of No Cost Efforts to
Reduce Carbon Emissions in the U.S. Issue analysis
no. 106, May. Washington, D.C.: American Petroleum
Institute.
Task Force on Strategic Energy Research and Development,
Secretary of Energy Advisory Board. 1995. Energy
R&D: Shaping Our Nations Future in a Competitive
World. Washington, D.C.: DOE.
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.
Measuring the Benefits and Costs of the Department of

Energys Energy Efficiency and Fossil Energy R&D Programs
SUMMARY OF THE GENERAL FRAMEWORK
possible. Specifically, it is expected that most of the options,

knowledge, and security benefits will be qualitative in nature.
The criteria for the cells of the matrix are discussed below.
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
The Rows: Economic Net Benefits, Environmental Net

Benefits, and Security Net Benefits
The rows of the matrix are based on three fundamental
objectives that have guided energy policy at least since the
energy crisis of 1973-1974: economic improvement, environmental protection, and energy security. A complete assessment of total U.S. net benefits requires inclusion of each
of these three types of benefits.
Although the three types could in principle be aggregated,
using dollars as the common denominator, the committee
believed that a better understanding of the nature of the benefits derived from DOE activities would be possible if the
three benefit classes were assessed separately. Therefore, the
three rows of the matrix correspond to these three objectives
of U.S. energy policy. They will be discussed more fully in
what follows.
Realized Benefits
and Costs
Options Benefits
and Costs
Economic benefits
and costs
and costs
Security benefits
and costs
FIGURE D-1 Matrix for assessing benefits and costs.
86
Knowledge Benefits
and Costs
87
APPENDIX D
Economic Net Benefits

refers to conditions absent energy disruptions or other energy shocks. The benefit must be measured net of all costs.
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 allow additional valuable outputs to be
produced by the economy. Economic benefits are characterized by changes in the valuations based on market prices.
This estimation must be computed on the basis of comparison with the next best alternative, not some standard or average value.
Environmental Net Benefits

quality of the environment that will (or may) occur as a result of the technology. These changes are possible because
the technology may allow regulations to change or it may
improve the environment under the existing regulations.
Environmental net benefits are typically not directly measurable by market prices but instead by some measure of the
valuation society is willing to place on changes in the quality
of the environment.
Security Net Benefits

would adversely impact the overall economy or the environment, although traditionally, economic impacts have been
the primary security issue. Typically, the events would be
transient energy disruptions or transient large price increases,
but they might also be low-probability, nontransient events.
Security net benefits are a special class of economic net benefits or environmental net benefits, differentiated from those
Technology
Economic/
Developed
Policy Conditions
categories of benefits by their low likelihood or their infrequency of occurrence.

The Columns: Realized Net Benefits, Options Net
Benefits, and Knowledge Benefits
The three columns in the framework matrix (Figure D-1)
reflect different degrees of uncertainty about whether the
particular benefits will be realized or not. The committee
derived them by considering two fundamental sources of
uncertaintytechnological uncertainties and uncertainties
about economic and policy conditions (see Figure D-2).
Technological uncertainties can be differentiated as follows: (1) the technology has been developed, (2) the technology development is still in progress, or (3) the technology development 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. And until a technology is fully developed, there is some uncertainty about whether it will be
successful. However, even if the 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 the economic and policy conditions are favorable for its commercialization, there is a reasonable degree of confidence that
future benefits will be obtained. 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 come about, but the
probability is lower. Finally, it may be virtually certain that
the economic and policy conditions will never become favorable and that the technology itself will never be adopted
but that the knowledge associated with the technology development can be applied in other ways, possibly resulting
in benefits, but these future benefits are very uncertain.
Rather than attempting to fully characterize the uncertainty of benefits, the committee used the two kinds of uncertaintiesthe state of technology development and the
in Progress
Technology
Development Failed

commercialization
Realized benefits
Knowledge benefits
Knowledge benefits

Options benefits
Knowledge benefits
Knowledge benefits
Knowledge benefits
Knowledge benefits

FIGURE D-2 Derivation of columns for the benefits matrix.
88
APPENDIX D
favorability of economic and policy conditionsto derive

the three columns of its matrix. The first column of the matrix (Figure D-1), realized benefits, is reserved for benefits
that are almost certain: those for which the technology is
developed and for which the economic and policy conditions are favorable for commercialization of the technology.
The second column of the matrix, options benefits, is reserved for 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, the committee designated knowledge benefits.
Knowledge benefits thus form a very broad category, including knowledge generated by programs still in progress,
programs terminated as failures, and technological successes
that will not be adopted because economic and policy conditions will never become favorable.
Realized Net Benefits

Realized net benefits are economic, environmental, or
security net benefits that flow from technologies for which
R&D has been completed, that have been or are ready to be
commercialized on an economic basis, under current economic, regulatory, and tax conditions.
Options Net Benefits

Options net benefits are economic, environmental, or security net benefits that could come from technologies for
which R&D has been completed and that are ready to be
commercialized were they not constrained by current economics or other circumstances. These technologies could be
adopted under some plausible future economic, regulatory,
and tax conditions.
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.
DISCUSSION OF THE ROWS

Economic Net Benefits
Estimating Economic Net Benefits

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-
89
APPENDIX D
tee typically assumed not that the technology would never

have been developed absent DOE efforts but simply that the
technology would have been developed at a later time by
another entity. In rare cases it is very reasonable to believe
that the technology would never have been developed absent
DOE involvement. In those cases, a cutoff date later than
2005 is used, and the reasons for the later cutoff date are
documented.
Thus, total benefits consist of the life-cycle benefits resulting from all capital stock installed through 2005, except
in a limited number of cases in which later installations are
also included.
When quantified in monetary terms, all estimates of costs
and benefits are expressed in constant 1999 dollars, and the
deflators used are gross domestic product (GDP) deflators as
calculated by the Bureau of Economic Analysis of the Department of Commerce. The same deflators are applied to
the historical R&D expenditures for each program as are
applied to other costs and benefits.
All estimates of future benefits are based on conditions
forecast at the time of writing, as indicated in the EIA base
case scenario.1 Examples of economic net benefits are discussed next.
The Increased Value of Economically Recoverable Natural Resources. A technology that increases the ability of the
United States to find and extract natural resources from deep
deposits would have net benefits measured by the value of
the additional resources net of the costs of the exploratory,
development, and production activities needed to find and
extract those resources.
Reduced Costs of Finding and Extracting Natural Resources. A technology that reduces the costs of secondary or
tertiary recovery of oil or gas would have net benefits measured by the reduced costs of the recovery that are expected
to occur with the technology.
A technology that increases drilling efficiency, thereby
reducing the costs of developing resources, would have net
benefits measured by the reduction in cost of the drilling
activity using that technology.
Reduced Economic Costs of Energy Services. A technology that reduces the cost of producing a given amount of
electricity, gasoline, or other fuel would have benefits measured by the cost per unit reduction multiplied by number of
units of energy produced.
A technology that reduces the amount of electricity, gaso-
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.
line, or other fuel required to produce a given amount of

energy services (cooling or heating of a home, miles driven,
etc.) would have benefits measured by the reduction in the
amount of required energy multiplied by the market value of
that energy. The appropriate market value should directly
reflect the change in economic resources that are used. This
issue is particularly important for electricity, whose delivered price typically includes a portion of the fixed costs of
local distribution services. Since the fixed costs are not
changed by changes in the use of electricity, the delivered
(retail) price of electricity is not the relevant market value.
Rather, the wholesale price of electricity, which includes
both incremental generating costs plus the costs of additional
line losses but excludes the fixed distribution costs, is a more
appropriate price.
Changes in the unit costs of providing energy service
could create incentives for consumers to purchase more of
those energy services. This rebound effect has been widely
discussed in the energy economics literature, but the committee has chosen not to include any estimates for it. A consumer who chooses to buy more of the energy service as a
result of a reduction in its price obtains a benefit from the
additional services and faces a cost from the additional expenditures. For the rational consumer, the additional cost and
benefit should be roughly equal and the net additional benefits from the rebound effect should therefore be very small
or zero. Even if the prices of the energy services the consumer faces do not fully capture all costs of that service, the
committee expected that the net benefits of the rebound effect would be relatively small and could be reasonably ignored in the estimations. Thus, benefits would be ascribed as
follows:
A technology that leads to reduced capital costs of
equipment to convert energy to energy services would have
benefits measured by the market value of the reduction in
capital costs.
A technology that reduces the amount of energy required to produce a given amount of energy services but
requires more costly capital equipment would have net benefits measured by the difference in the changes in these two
components of life-cycle costs.
A technology that reduces the operating costs of energy-using industrial processes would have benefits measured by the reduction in these operating costs for each industrial process, summed across all the processes to which
the technology is applied.
Increased or Decreased Productivity of Workers. An energy-using technology that, when implemented, either increases or decreases the productivity of workers would have
benefits or costs measured by the economic value of this
increased productivity or, equivalently, by the decreased
amount of labor required to produce the same output. For
example, such impacts could be associated with changes in
90
APPENDIX D
commercial lighting that made workers more productive and

less productive.
Marketed Intellectual Capital (e.g., Licensing Revenue).
One of the benefits of a technology that can be licensed
would be measured by the net revenue earned by the licensing activity. This benefit would be in addition to any other
net benefits discussed above.
Exported Technology. A technology embodied in equipment that is exported from the United States would have a
component of benefits equal to the incremental profits from
the increased exports of the equipment, net of the reductions
in incremental profits from the resulting reduction in exports
of other equipment.
For example, an increase in labor productivity due to more
efficient lighting could make U.S. technology more competitive internationally. However, it would have to be determined that the increased labor productivity resulted from the
changed lighting and not some other factor (one such is the
Hawthorne effect, whereby labor productivity changes when
the working environment is altered in any way simply because of the departure from the norm).
Retrofitted Plants. Changes in the costs of retrofitting
existing plants when the retrofit could be expected, should
be compared to the cost of the next-best alternative. However, it must be recognized that the next-best alternative may
be not to retrofitthat is, to shut down the plant and build a
new one.
The Sources of Economic Net Benefits

Net benefits can accrue for at least two reasons. First,
DOE R&D activity can change the timing of a technology
advance. This would be measured by estimating how much
earlier the technology would have moved into the realized
category if there had been no DOE involvement. In general,
the committee assumed that if an R&D program was successful, it accelerated commercialization of the technology
by 5 years, except in rare cases, as was discussed above.
Second, DOE R&D activity can increase the market penetration of a technology by improving the product and making it more attractive to customers.
All of the net benefits must be measured relative to what
would have happened absent the DOE R&D program. This
assessment requires careful judgment and analysis, and assumptions must be stated explicitly and justified as well as
possible.
Factors That Will Not Be Considered in Estimating

Economic Benefits
The committee did not include certain factors sometimes
incorporated into benefits calculations because, in its opin-
ion, they do not constitute benefits legitimately attributable

to energy R&D programs.
First, macroeconomic stimulationthe creation of jobs
under normal, full-employment conditionsare not considered to be an economic benefit stemming from the R&D
program. The U.S. economy is controlled at the macroeconomic level by monetary and fiscal policy. A policy that
creates jobs or that stimulates the economy would result in
compensating changes in monetary or fiscal instruments in
order to keep the economy as close as possible to the macroeconomic policy targets. As a result, the apparent macroeconomic stimulation or job creation would not in fact lead to
additional economic output or additional employment.
However, the macroeconomic costs of energy disruptions
can be counted as economic costs, since they can be controlled only very imperfectly through the existing economic
institutions. This issue is discussed more fully in the section
describing security benefits.
Further, even if the millions (or billions) of dollars expended on an energy R&D program can have significant
macroeconomic stimulation and jobs creation effects, an
equivalent amount of money expended on other types of programs will have similar effects. Thus, these effects are not
uniquely attributable to the energy R&D program.
Second, regional redistributions of wealth or earnings
cannot be included as benefits. Net benefits should be measured at the national level. Activities that simply redistribute
wealth or earnings across regions of the United States would
have positive benefits in some regions and negative benefits
elsewhere, all summing to zero for the United States as a
whole. They thus do not constitute net economic benefits.
Third, total sales, except as input to the calculations
above, are not included as economic benefits.
Fourth, unintended improvements of unrelated technologies should not be included as benefits, unless a strong case
can be made that in a particular line of R&D there is a much
greater likelihood of such unintended improvements than in
the other areas in which R&D can be conducted. In that case,
the measure of benefits is only the net increase in such unintended improvements over and above the improvements that
could be expected were the R&D to be conducted in other
typical lines of R&D. This net increase is highly subjective
and difficult to estimate.
Finally, the Hawthorne effect, whereby labor productivity changes due to the introduction of any change in the
working environment simply because it represents a change
from the norm, will not be included as an economic benefit
attributable to an energy R&D program.
Tax revenues are not counted as economic benefits because they are tranfer payments and represent both a benefit
and an equal offsetting cost. However, if the data underlying
the calculation include taxes as a cost, then the same amount
of taxes must be included as a benefit in order to correctly
include the net benefits. This might happen, for example,
when royalties and severance taxes for oil and gas produc-
91
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
Estimating Environmental Benefits

Environmental net benefits are based on changes, not already internalized, in the quality of the environment that will
(or may) occur as a result of the technology. These changes
can occur because the technology allows regulations to
change or because the environmental consequences will be
improved voluntarily under existing regulations. Environmental net benefits are often not directly measurable by market prices but by the value society is willing to place on
changes in quality of the environment. These valuations are
often qualitative in nature and may be controversial. Thus, it
is very important that the assumptions that underlie the valuations are stated explicitly and justified. Examples of
changes in environmental impacts are discussed below.
Changed Releases of Harmful Materials into the Air,
Water, or Land. A technology that reduces the release of
harmful materials into the air, water, or land has environmental benefits equal to the reduction in the amount of the
materials released, multiplied by some measure of the value
society is willing to place on a unit reduction of those emissions. Examples include toxics, acid rain or smog precursors, or greenhouse gases. Here again, the committee included only those installations expected prior to the year
2005, except in rare cases, as discussed above.
A technology that increases some emissions and decreases others has net environmental benefits amounting to
the difference between the benefits of the emissions reductions and the costs of the emissions increases (e.g., when
emissions into the air are reduced by converting the materials to solid waste).
Cost Saving on Remediation Leading to More Complete
Remediation. Cost savings on remediation constitute an environmental benefit:
The improvement in the degree of remediation would
result in an environmental benefit, measured by the social
valuation of the improvement. However, there is no good
method for measuring such costs.
The savings in cost for a given amount of remediation
would be included as an economic benefit, not as an environmental benefit.
For example, the Office of Fossil Energy says that some
of its technologies strengthen the scientific basis of environ-
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.
The Sources of Environmental Benefits

Environmental benefits accrue for the same reasons as
economic benefits. In addition, however, a technology may
allow stricter environmental standards to be adopted and met.
The calculation of environmental benefits of that technology
would then include an evaluation of the environmental consequences of the stricter standards, and the calculation of its
economic benefits would include the cost of meeting those
standards. In principle, the expected estimated environmental benefits can exceed the estimated economic costs, if such
92
APPENDIX D
a procedure is completed consistently. However, in practice,

it is often easier to quantify economic costs than to quantify,
in monetary terms, environmental benefits, and this may lead
to an estimating inconsistency. Therefore, in those cases
where the technology has led to stricter environmental standards, it is particularly important to make the environmental
and economic estimates in a consistent manner.
Factors That Will Not Be Considered in Estimating

A reduction in the cost of a fixed, regulated amount of
environmental improvement is included among the economic benefits. Only a reduction in adverse impacts on the
environment is included as an environmental benefit. (A
technology that merely reduces the cost of meeting an environmental standard does not produce an environmental benefit, in and of itself. Only environmental benefits beyond
what is required by regulation count as such. The cost reduction does not improve the environment but increases the
quantity of goods and services that can be produced in the
economy. Therefore, counting the cost reduction as an environmental benefit would result in double-counting.)
Guidance on Measuring Environmental Benefits

All impacts should be measured relative to what would
have happened absent DOE. In doing so, if the technology
allowed another agency (such as EPA) to promulgate and
enforce stricter environmental standards, then the technology should be credited with the environmental improvement.
It is also important to do the following:
Use incremental, or marginal, impacts whenever possible. However, where the incremental impacts cannot be
identified, the national fuel-use mix should be used for calculating net benefits.
Identify significant international environmental impacts of the technological changes, particularly those expected to have important ramifications for the United States.
in the cost or availability of energy. These would include the

following:
Changes in the economic impact of a given magnitude
of international oil shock. The impact would be less severe if
oil use can be made to account for a small proportion of
overall economic activity, as measured by GDP.
Changes in the probability of large international oil
shocks. The probability may be reduced by extracting a
smaller fraction of world oil from unstable regions of the
world or by increasing excess producing capacity in stable
regions of the world.
Increased reliability of energy infrastructure. Increased
reliability would translate into a reduced probability of widespread blackouts and of losses due to interruptions in electricity or natural gas service.
Increased protection for end users against shortages of
electricity. Such protection reduces the cost to the economy
of such shortages and reduces the cost of increasing
supply-side reliability.
Long-Run Security Benefits

Long-run security benefits reduce costs in the long run
and have a low probability of changing the cost or availability of energy. These benefits would be an option benefit not
a realized benefit. They would come from an increased ability to substitute energy sources in response to a long-term,
but relatively low-probability, change in the cost of energy,
or in the negative environmental impacts of energy use.
DISCUSSION OF THE COLUMNS

Realized Benefits and Costs
Realized benefits and costs are the positive and negative
consequences of technologies for which R&D has been completed, that have been or are likely to be commercialized
soon, under currently projected economic, regulatory, and
tax conditions. There are two categories of realized benefit:
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.
Short-Run Security Benefits

Short-run security benefits are created by the reduced
costs of relatively short-duration impacts of sudden changes
Benefits seen alreadythat is, benefits resulting from

the life-cycle value of all capital stock installed through
2000.
Benefits expected under normal situationsthat is,
benefits resulting from the life-cycle value of capital stock
expected to be put in place from 2001 to 2005.
Realized costs are expressed in constant 1999 dollars, and
realized benefits are estimated on a life-cycle basis using the
EIA base case forecast assumptions. Further, and importantly, realized benefits must be computed taking into account all economic effects, positive and negative.
Discounting for future and past benefits and costs is a
93
APPENDIX D
difficult issue, since standard discounting procedures are

likely to distort the value of programs implemented in early
years relative to that of the more recent programs. Therefore,
estimates of the time path of benefits and costs are desirable
(all expressed in 1999 dollars) whenever possible. Several
different approaches to summing benefits and costs across
programs and across time periods are possible, including the
approach that reports undiscounted aggregates of future and
past benefits and costs.
Options Benefits
Options benefits are the positive and negative consequences of technologies for which R&D has been completed,
that are ready to be commercialized but are constrained by
current economics or other circumstances, and that could be
adopted under some plausible future economic, regulatory,
and tax conditions. The types of technologies classified as
yielding options benefits include the following:
Deployable technologies not likely to be commercialized under the most likely economic, policy, and tax condition but likely to be commercialized under some set of reasonably plausible conditions.
Technologies for which the technological challenge has
been met but for which the normal costs of improving a technology in the course of its commercialization have not yet
been expended and for which the commercialization process
can be expected under some set of reasonably plausible conditions.
An options benefit is closely associated with a technology that is on the shelf and is not commercially viable
under current economic conditions. Thus, for example, indirect coal liquefaction may have significant options value
because it has been developed and may become commercially viable if oil prices reach and remain well above $30 or
$40 per barrel. On the other hand, magnetohydrodynamics
may not have options value because the R&D program was
terminated before the technology was fully developed.
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.
INTERPRETATION AND APPROPRIATE USE OF THE

FRAMEWORK
The matrix approach developed here is useful for placing
the benefits and costs of energy R&D programs in a consistent and comprehensive framework that will permit objective comparison across programs and technologies. However, several caveats are in order with respect to the use of
this approach.
First, there may be a tendency to concentrate on the information contained in the northwest cell of the matrixrealized economic benefits and costsbecause it is often the
simplest to identify and quantify. Nevertheless, when evaluating federal R&D, it would be shortsighted to concentrate
excessively on the data in this cell of the matrix. The other
criteria developed here are also meaningful and important in
assessing the costs and benefits of the DOE R&D programs
and must be objectively valued in context of the national
interest. In addition, technology developments promising to
provide short-run economic benefits are more likely than
technology development providing only environmental or
security benefits to be pursued by private sector corporations. Therefore, it is programs that promise those environmental or security benefits that are most likely to need government support.
There is another problem with concentrating on realized
economic net benefits: doing so tends to favor R&D programs that were successfully completed many years ago and
had time to produce substantial realized economic benefits,
at the expense of more recent or current programs. Thus, the
energy efficiency R&D program to develop electronic ballasts for fluorescent lights, conducted in the late 1970s and
the early 1980s, had produced substantial realized net economic benefits by 2000, whereas the PNGV program, which
began in the late 1990s, is not expected to begin generating
economic benefits until after 2005. Focusing on realized economic benefits alone would inappropriately bias the assessment in favor of R&D on electronic ballasts and against R&D
through the PNGV program. In other words, estimates orga-
94
APPENDIX D
nized within the framework matrix must consider R&D work

in progress as well as R&D programs that are largely or entirely complete in order to avoid inadvertently biasing the
results against the former classes of programs.
Second, and closely related, placing the benefits or costs
of a DOE R&D program in a particular row or column of the
matrix does not constitute a judgment on the value of the
program. It is not desirable to have the benefits of DOEs
R&D programs concentrated disproportionately in any rows
or columns. For example, while realized benefits are of obvious importance, options values are also important. In fact,
a strong argument can be made that a major goal of the DOE
R&D programs should be to provide options benefits for the
nation relating to technology availability, potential fuel diversity, and future energy choices.
Similarly (but row-wise), while economic benefits are
important, environmental and security benefits are too. Indeed, for federal government programs, a strong case can be
made for emphasizing them:
Environmental benefits, while often difficult to estimate precisely and quantitatively, have become increasingly
significant in recent decades and are not generally accounted
for in private market transactions.
National security benefits are also significant and are
not accounted for in the private market.
Both types of benefit represent externalities and public
goods that are often not accounted for in the private market
and may require government intervention in the market. In
general, therefore, it is probably not advisable to have the
benefits and/or costs of the DOEs energy efficiency and

fossil energy R&D programs concentrated in any particular
cell or cells of the matrix. An appropriate evaluation of the
programs must take into account the entire benefits/costs
framework.
Finally, it must be recognized that the decision to place a
cost or benefit of an R&D program in a particular cell of the
matrix can be somewhat subjective and can change depending on circumstances. For example, the reliability of our
nations energy infrastructureespecially of the electricity
grid and the natural gas transmission systemhas become
of increasing concern in recent years and has recently been
given higher priority at DOE. However, energy reliability
has aspects that apply to most cells in the matrix: The reliability of the energy infrastructure has obvious security implications, but, especially in the new high-tech information
and manufacturing economy, even very short interruptions
in energy supplies can have enormous economic costs.
Another example of the potential fluidity of the matrix
criteria relates to R&D programs designed to address greenhouse gas emissions. At present, the costs and benefits of
these programs should be placed in the environmental row
of the matrix. However, if stringent international controls are
instituted and greenhouse gas emissions are taxed and priced,
then the costs and benefits of the R&D programs addressing
greenhouse gases would shift from the environmental benefits
and costs row to the economic benefits and costs row. Of
course, in this case, the benefits themselves would not have
changed only their position within the matrix. This shows, once
again, the importance of looking at the entire matrix framework when evaluating energy R&D programs.
Case Studies for the Energy Efficiency Program
DOEs energy efficiency (EE) R&D program1 focuses on

three sectors: buildings (both residential and commercial),
industry (manufacturing and cross-cutting technologies), and
transportation (primarily automotive and heavy-duty trucks).
The committee decided to analyze a group of technologies
from each sector that would be representative of the overall
program and that would demonstrate the range of benefits
and costs of the program, given that the buildings and industry sectors tend to have many smaller projects and thus account for a small portion of the overall budget.
From all the programs and technologies in the buildings
sector, the following were chosen:
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
Advanced compressors for refrigerator-freezers,

Compact fluorescent lightbulbs,
DOE-2 program,
Electronic ballast for fluorescent lamps,
Free-piston Stirling engine-drive heat pumps,
Indoor air quality, and
Low-emission (low-e) glass.
From the programs and technologies in the industry sector, the committee selected the following:
Advanced lost foam technology,

Advanced turbine systems,
Black liquor gasification,
Forest products Industries of the Future program, and
The oxygen-fueled glass furnace.
It selected the following technologies and programs from

the transportation R&D sector:
Advanced batteries for electric vehicles,
Catalytic conversion for cleaner vehicles,
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).
1EE refers throughout this appendix to the energy efficiency component

of DOEs Office of Energy Efficiency and Renewable Energy (EERE).
95
96
APPENDIX E
Funding and Participation

Total funding from 1978 through 1981 for refrigerator
compressor R&D was $0.83 million, in current year dollars.
Converting this to 1999 dollars with the implicit price deflator yields a total of $1.56 million (Table E-1). The research
was cost-shared with industry through a competitive solicitation. The winning contractor, Columbus Products Company (CPC), contributed $0.276 million in direct costs over
the course of the program (the Office of Energy Efficiency
and Renewable Energy could not provide the year-by-year
data), or $0.55 million in 1999 dollars. However, the successful deployment of the technology in the marketplace required substantial outlays by CPC and other companies in
the refrigerator industry.
Results
Figure E-1 presents one of the last half-centurys more
remarkable technological achievements in the energy field:
a reduction of more than two-thirds in the average electricity
consumption of refrigerators over about 25 years, even as
average unit sizes increased, performance improved, and
ozone-depleting chlorofluorocarbons were removed. In the
commercial sector, DOE-funded improvements in supermarket refrigeration systems fundamentally transformed that
marketplace: Without DOEs financial and technical assistance, it is unlikely that the companies would have actively
pursued what were then perceived as high-risk, uncertain
technologies (Geller and McGaraghan, 1998).
These outcomes reflect sustained industry and government cooperation, based on the integration of R&D, incentives for customers to purchase efficient models, and government efficiency standards at both state and federal levels.
While many institutions were involved, DOE was an early
and effective leader, starting with its 1977 launch of a program of appliance product development. DOEs initial investment of some $772,000 helped demonstrate the feasibilTABLE E-1 Funding for Advanced Refrigerator-Freezer
Compressors
DOE Cost
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
SOURCE: Office of Energy Efficiency. 2000a. OEE Letter response to

questions from the Committee on Benefits of DOE R&D in Energy Efficiency and Fossil Energy: Advanced Refrigerator/Freezer Compressor Program. December 12.
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
Improvements from R&D in Refrigerator-Freezer

Compressors
In the late 1970s and early 1980s one of the DOE laboratories, Oak Ridge National Laboratory (ORNL), began to
work on improving the efficiency of major residential and
commercial appliances. The refrigerator was one of these.
ORNL subcontracted a major manufacturer of compressors
to investigate how to improve the efficiency of these machines. By implementing a series of low-cost measures, compressor efficiency was improved from 3.6 Btu/Wh in 1980,
to 4.2 Btu/Wh in 1981 and to 5.4 Btu/Wh in 1989. The
manufacturers cost per compressor was estimated by ORNL
to be in the range of $3 to $8 per unit. In the commercial
market, this could have been as high as $15 to $40 per compressor (Baxter, 2001). ORNL provided technical support
for various models of refrigerators to help manufacturers
estimate the impacts of technical improvements (including
the compressor). This R&D eventually included work to determine the impacts of HCFC substitutes and investigated
how to reduce the performance degradation penalty to about
zero.
To estimate the benefits from compressor improvement,
the committee sent a data request to DOE and received in
response a spreadsheet analysis of the energy savings and
net energy cost savings to consumers due to the purchase of
more efficient refrigerators. In this analysis, DOE used the
sales-weighted average annual energy use of refrigerators
sold by year over the period 1981 to 1990. It was further
assumed that the sales-weighted annual energy use per unit
sold in 1979 should be used as a base number from which to
calculate the impact of improved compressors. In 1979, the
energy use was 1365 kWh/year, and by 1990 it had decreased
to 916 kWh/year, or about 33 percent improvement. It was
estimated that one-half of the reduction in the use of energy
97
APPENDIX E
3
Adj. Volume, ft
2,200
22
Average energy use per unit per year(kWh)
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.
was due to improved compressors. This assumption derives

from the opinions of two different expert analysts (Baxter,
2001). The assumption is reasonable since the corresponding improvement in compressor efficiency was 50 percent
and the DOE compressor contractor seemed to lead the field
and pull improvements from other manufacturers.
The cost of efficiency improvements to the consumer was
assumed to be $170 (Rosenfeld, 1991), and half this cost
was assumed to be for the improved compressor. Thus, the
cost of the compressor improvements was $85, which is
likely too high for the reasons mentioned above. The lifetime of the refrigerators was assumed to be 20 years
(Rosenfeld, 1991).
For each year from 1981 through 1990, the annual energy
use reduction compared to 1979 was used to calculate the
energy savings due to advanced compressors and the total
life-cycle savings for units sold that year. From these savings and the national average residential cost of electricity,
the life-cycle energy cost savings were calculated for units
sold in each year. From this cost savings, the incremental
cost of the compressors was subtracted and the net life-cycle
savings were calculated and summed over the decade. The
result was about $9 billion in energy cost savings and primary energy savings of about 2.2 Q. In addition, the committee applied its 5-year rule. To calculate realized benefits,
half of the efficiency savings per unit in 1981 was applied to

the units sold in 1986, and for 1987, half the energy savings
per unit in 1982 was multiplied by the number of units sold
in 1987, and so on for each year to 1990. Life-cycle energy
savings were subtracted for each year from the previous savings for that year and the results summed to obtain a cumulative effect. This reduced net energy savings attributable to
improved compressors from 2.2 to 1.3 Q, and the energy
cost savings were reduced from $9 billion to $7 billion. The
simple payback varied over a period beginning in 1981 for
about 10 years and lessened to about 5 years in 1990.
The analysis assumed that half the annual energy use reduction measured by the industry for models sold in a particular year was due to improved compressors. Additional
assumptions were made for the consumer cost of buying
improved compressors. Nevertheless, the committee believes
the cost savings and energy savings are reasonably attributable to improved compressors, and that the DOE R&D investment played an important role in bringing continuously
improving compressors to market.
Improvements Resulting from Regulatory Standards

From 1990 through 2005, improvements in refrigeratorfreezers have continued and will continue to occur. A princi-
98
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
DOE R&D costs: $1.6 millionb

Substantial benefits: Approximately
$7 billionc
Design modifications to compressorsd
Facilitated efficiency standardse
Applications softwaref
Minimal: technology has been

commercialized and deployed
R&D on system optimizationg

R&D helped develop and define future
refrigerator efficiency
R&D on energy-saving components and features
Research findings were applied to air conditionersh
Environmental
benefits/costs
Substantial emissions reductionsi

Reductions in energy consumptionj
Minimal: technology has been

commercialized and deployed
Benefits could be large as technology is

disseminated.
Security
benefits/costs
Improved electric system reliability

Minimal benefits, since most of the electric
energy saved displaced fossil, nuclear,
or hydro, and little oil was displaced
Benefits are relatively small,

Successful technology transfer to other nations
because little oil would be displaced
could substantially increase worldwide energy
efficiency and reduce environmental emissions
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.
99
APPENDIX E
ply the introduction of the models based on DOE research,

regardless of how well they sold or whether or not they were
imitated by other manufacturers, is relevant to the development of standards and ultimately to overall improvements
in energy efficiency (Goldstein, 2000).
From this perspective, what is most important about the
DOE technologies is not so much their ultimate commercial
success but their role in influencing efficiency standards
(which may themselves prompt other innovations that preempt the DOE precursors). The capacity of ambitious technology demonstrations to influence standards is suggested
by the extent to which each DOE standard departed from
industry-average efficiencies prevailing at the time of enactment: a full 30 percent reduction in each of the three iterations (1990, 1993, and 2001) (see Figure E-1).
COMPACT FLUORESCENT LAMPS

Compact fluorescent lamps (CFLs) were developed and
introduced in the 1980s, principally by several European
firms, as a more efficient replacement for standard incandescent lamps, which consume 85 percent of the lighting energy
in U.S. residential applications. Since fluorescent lamps are
four to five times more efficient than incandescent lamps,
finding ways to replace existing incandescent lighting applications with CFLs could yield substantial energy savings and
has become a key goal of the DOE lighting R&D program.
Nevertheless, DOE did not have a program targeted at CFLs
until 1997.
In the two decades since their commercial introduction,
CFLs have been continuously improved and sales have
grown, but slowly. CFLs are now widely used in commercial buildings in many applications that traditionally used
incandescent lampsfor example, in recessed downlights.
However, CFLs have not penetrated the residential market
significantly, nor have they have replaced incandescent
lamps in some commercial applications such as lighting in
retail establishments and hotels, although some major hotel
chains have replacement programs under way. In recognition of the potential energy savings, DOE decided, in 1997,
to sponsor work on technology to reduce the cost and size of
CFLs and hasten their commercial deployment.
The principal barrier to widespread penetration of CFLs
in the residential marketplace is the combination of cost and
bulk of the ballast. The bulk of 1980s vintage CFL units is a
particular problem when installing CFLs in portable light
fixtures such as table lamps, which are widely used in residences and hotels. While more modern unitized lamp-ballast
products minimize bulk, they tend to be expensive because
both the lamp and the ballast are replaced when the product
wears out. Separable lamp-ballast products are far less expensive overall since just the lamp can be replaced, leaving
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.
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.
100
APPENDIX E
TABLE E-3 Funding for the Compact Fluorescent Lamps

Program (thousands of 1999 dollars)
Fiscal Year
DOE Cost
Contractor Cost
Total
1999
2000 to 2001
Total
1172
579
1751
293
462
755
1466
1040
2506
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: Compact Fluorescent Lightbulbs Program. December 12.
Benefits and Costs

The principal benefits of the DOE CFL program are in
the area of options and knowledge for future development,
as shown in the benefits matrix (see Table E-4). The target
market for CFLs, as noted earlier, is enormous, which provides the rationale for continuing the projects.
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.
DOE-2 ENERGY ANALYSIS PROGRAM

DOE-2 is a computer program for evaluating the energy
performance and associated operating costs of buildings.
DOE-2 is applicable to both new buildings and retrofits to
existing buildings. Although the computer program has been
used primarily to predict energy use associated with design
alternatives for nonresidential buildings (e.g., offices,
schools, and hospitals), it has also been used to predict the
energy performance of residential buildings. It has also been
used to simulate the performance of new technologies and to
TABLE E-4 Benefits Matrix for the Compact Fluorescent Lamps (CFLs) Programa
Economic
benefits/costs
DOE R&D costs: $1.8 million

Industry costs: $755,000
Benefits may be large: Market

potential is significant, and
industry appears interested
in further commercializing
the productb
R&D on halogen lights and CFL prototypes

Increased knowledge of circuit designs and heat dissipation
methods to meet an extreme size and durability constraint
Research on miniaturizing the ballastc
Development of lower-cost CFLsd
Environmental
benefits/costs
CFLs produce twice as much

light and consume only 25%
as much electricity as
conventional halogen lights
Potential benefits are largee
Research on lighting, given its importance in terms of energy

consumption and energy savings potential
Avoided emissions of carbon, SO2, and NOxf
Reduced hazards from reduced heat output in some applications
Security
benefits/costs
Benefits are small to date
Potential benefits are large
R&D on reducing electricity demandg

With widespread use, possible under some future scenarios,
deployment of CFLs will reduce electric system peak loads.
aUnless
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
101
APPENDIX E
guide research by estimating the impact of alternative R&D

proposals. However, the most significant uses of DOE-2
have probably been for support of demand-side management
and rebate programs by utility companies, support for the
development and implementation of voluntary and mandatory energy efficiency standards, and as a tool for teaching
and research in architectural and engineering schools (DOE,
2000a).
The first version of DOE-2, which was released by the
Lawrence Berkeley National Laboratory (LBNL) in 1978,
evolved from previous versions that were developed in the
public sector. In the early 1970s, the National Bureau of
Standards Load Determination (NBSLD) program was released. The first dynamic simulation model for whole-building analysis, it supported the development of American Society of Heating, Refrigerating and Air-Conditioning
Engineers (ASHRAE) Standard 90-75: Energy Conservation
for New Building Design. In the mid 1970s, the program
developed for the U.S. Postal Service added a life-cycle cost
component to the NBSLD program. The Energy Research
and Development Administration (ERDA) adopted the program for use in other federal buildings and promulgated
ERDA-1. The California Energy Commission further developed it as CALERDA (Hunn, 2001). These predecessor programs focused on load determinations and had only basic
capabilities to simulate the performance of heating, ventilating, and air conditioning systems. When LBNL assumed responsibility for updating the CALERDA program, one of
the first improvements was to provide a set of system simulation models (Hunn, 2001). Since then, this computer program has been continually updated and improved.
In 1994, LBNL released version DOE-2.1E, which incorporated new models for ice storage systems and evaporative
cooling systems, desiccant cooling systems, and variablespeed heat pumps; an enhanced energy cost calculation to
simulate complex rate structures; and a link to the WINDOW-4 program that simulates custom glazing (LBNL,
1994a; LBNL, 1994b). During the 1990s, personal computer
versions of DOE-2 were released by the private sector, and a
lighting simulation program, RADIANCE, was developed
at LBNL and linked to DOE-2 (LBNL, 1992). Also in the
1990s, an indoor air quality simulation program, COMIS,
which LBNL had developed together with the International
Energy Agency, was linked to DOE-2 (Fisk, 2001). In October 2000, a beta 4 version of a new generation program,
EnergyPlus, was released; it combines features of DOE-2
and BLAST (Building Loads Analysis and System Thermodynamics, developed by Department of Defense) (OEE,
2000c).
program was about $8 million during that time (investment

reported in 1999 dollars) (OEE, 2000d). Approximately 20
percent of this external funding was provided by the Electric
Power Research Institute, Southern California Edison Co.,
and the Gas Research Institute for the development of algorithms for thermal storage sizing methods, evaporative cooling methods, and gas-fired desiccant and gas-fired cooling
models. The remainder of the external funding was from
third-party resellers of versions of DOE-2 (OEE, 2000e). The
level of funding for support of DOE-2, which peaked from
1993 through 1995, has receded since 1996. EE provided no
information on investments for other simulation programs
that have been developed within DOE or with other government agencies or the private sector.
Results
In addition to DOE-2 and BLAST, at least eight programs
developed by the private sector dynamic simulation energy
analysis programs are now available for commercial and
large buildings, and at least 15 versions of DOE-2 adapted
for commercial use are available with various interfaces.
As an alternative to prescriptive procedures, energy efficiency codes and standards for new buildings in the private
and public sectors typically allow the use of simulation programs to demonstrate compliance with comparable performance criteria. During the last 25 years, these standards and
the simulation programs needed to demonstrate compliance
have evolved in an iterative manner. Thus, as the criteria for
energy efficiency have become more restrictive, the computer programs have become more sophisticated in order to
accommodate these changes.
According to EE surveys, DOE-2s rate of penetration
increased from 0.6 percent in 1984 to 25 percent in 1994,
with a leveling off since then for new nonresidential building applications, and from 0.2 percent in 1984 to 1.5 percent
in 1997, with a leveling off since then for existing residential
building applications. EE did not estimate the penetrations
of DOE-2 for new or existing residential buildings, nor did it
estimate the penetration of other simulation programs developed by the public or private sectors for commercial or residential buildings.
The estimates of penetration provided by EE were not
confirmed in interviews conducted with three consulting engineers who have extensive design experience of new and
existing buildings throughout the United States.3 These interviews revealed that the penetration of DOE-2 as a design
tool in professional practice is minimal due for two reasons:
(1) DOE-2 has been difficult for architects and consulting
engineers to use and (2) energy use, or energy efficiency,

According to the information provided by EE, DOE has
invested about $23 million in the development of DOE-2
since 1978, and external funding to LBNL in support of this
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.
102
APPENDIX E
is seldom the primary or final parameter in design decisions.

These interviews also revealed that commercial or proprietary computer programs were most commonly used by consulting engineers to determine thermal loads in the buildings, to aid in the determination of the required system
capacities, and, when required, to perform energy analyses.
Estimates have not been provided by EE on the prevalence of the use of DOE-2 for the development of standards
and codes, rebate programs, and other policy making decisions. However, the interviews revealed that DOE-2 has been
used extensively and has been influential in the development
of voluntary national standards for energy efficiency, such
as ASHRAE 90.1 and 90.2, since 1989.4 DOE-2 has also
been used in the development of state building codes and
regulations such as Californias Title 245 and international
building codes and standards in Australia, New Zealand,
Canada, Mexico, Saudi Arabia, Kuwait, Switzerland, China,
and Brazil (Talbott, 2001).
Benefits and Costs
The benefit and cost estimates for the DOE-2 program
are shown in Table E-5. Realized economic benefits associated with the use of DOE-2 are estimated to be substantial
but indeterminate. DOEs estimates of net life-cycle cost savings as a result of using DOE-2 are based on two assumptions: (1) that by 1994 the penetration of DOE-2 as a design
tool throughout the United States was 25 percent and will
remain at that rate until 2005 and (2) incremental annual
energy savings achieved in new and existing nonresidential
buildings were 22.5 percent from 1983 to 1994 and are expected to be 25.5 percent from 1995 to 2005. These potential
energy savings are likely to be overestimates for the following reasons: (1) as reported by EE, the latest survey response
to 3000 inquiries was only 2.6 percent, (2) LBNL validation
studies (Sullivan and Winkelmann, 1998) indicated that
DOE-2 substantially overestimated the energy savings (i.e.,
by as much as 100 percent) in monitored buildings that were
not operated as initially assumed in the DOE-2 simulations,
(3) interviews with three practicing consulting engineers indicated that DOE-2 is not the primary computer program
used as a design tool in the United States, and (4) contiguous
annual incremental savings of 25 percent, compared to nextbest alternatives (e.g., evolving building codes and standards), are not likely. Moreover, the second assumption
double-counts the energy savings attributable to the improvement of the actual technology or the use of the system being
simulated (e.g., low-e windows, compact fluorescent lamps,
desiccant cooling systems, and variable-speed heat pumps).
Conversely, DOE also has probably underestimated the ben4ASHRAE Standards 90.1-1989 and 90.1-1999, and others have all used
DOE-2 to evaluate candidate changes.
5California Code of Regulations. California Energy Code, 1998. Title
24, Part 6.
efit of DOE-2 as it did not estimate assumed energy savings

in new or existing residential buildings or assumed energy
savings associated with the promulgation of codes and standards or rebate programs, based on DOE-2 simulations.
To account for the next-best simulation tool, DOE has
reduced its projected savings by 50 percent, which would
mean that DOE-2 is twice as effective as the next-best simulation tool. This effectiveness was not demonstrated by DOE
and was not supported in the interviews with the practicing
consulting engineers. As the energy savings are dependent
on the selection of alternative components in the design process and not necessarily on the computer program that was
used for the analysis, the incremental energy savings attributable to DOE-2 rather than a next-best alternative program
are suspect.6
A more likely realized benefit is that the use of DOE-2
confirmed to decision makers that substantial energy could
be saved by incorporating and assuring the performance of
certain sets of building systems, subsystems, and components into the building design, retrofit, or operations. Unfortunately, DOE has provided no data to show that the energy
savings predicted with DOE-2 were actually realized and
sustained. However, the 1998 report by Sullivan and
Winkelmann indicated a tendency for DOE-2 simulations to
overestimate monitored energy consumption in a set of
buildings. Furthermore, this validation study did not examine the potential for degradation of energy savings owing to
value engineering, construction defects, changing occupancy patterns over time, or deficient operating or maintenance procedures.
DOEs estimates of realized environmental and security
benefits are based on the same assumptions of causal results
of using DOE-2. Thus, for the same reasons as described
above, the realized environmental and security benefits associated with the use of DOE-2 are estimated to be substantial but indeterminate.
As shown in Table E-5, the enabling power of the DOE2 computer program is demonstrated in the benefits that have
accrued from its development. The program is in the public
domain and has been continually upgraded to incorporate
new technologies and operational schemes. Thus, it has been
widely used as a reference for establishing government standards, motivating government programs such as Energy Star,
and estimating impacts of rate structure scenarios and rebate
programs.
Lessons Learned
The evolution of the DOE-2 computer program shows the
importance of tools that allow designers, policy makers, and
6Published comparisons of the analytical results of most major programs
indicate small deviations in estimated outcomes. These comparisons also
indicate that more error can be expected from different operators of the
same program than from one operator using different programs.
103
APPENDIX E
TABLE E-5 Benefits Matrix for the DOE-2 Programa

Economic
benefits/costs
DOE R&D costs: $23 millionb

Industry costs: $8 milliond
Substantial benefitse
Ability to cost-effectively adjust efficiency
choicesf
Ability to tailor efficiency choices to local
markets and building practices
Ability to minimize first-cost impacts of
buildings improvements
Improved building codes and standards
Better building designsg
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
Substantial avoided emissionsh

Used to help implement new ventilation
standards for indoor air quality with
minimum energy or construction cost
impacts
Tool for assessing impacts of proposed

buildings energy policies on the
environment
Tool for reducing emissions related to
building energy use
Means of including the buildings sector in
Clean Development Mechanism and
other greenhouse gas emission credit
options
Reduced global environmental impactsi
Ability to assess the air emissions impacts

and trade-offs of building design
choices and policies
Ability to identify least-cost means of
realizing specific environmental benefits
in the buildings sector
Ability to target building-related
environmental research to areas with
greatest opportunity
Security
benefits/costs
Reduced peak-load electricity consumptionj

Reduced need for new generating capacity
and for natural gas
Opportunity to target peak demand

reductions to alleviate transmission and
distribution congestion
Provides ability to incorporate distributed
energy resources in building designs
Ability to model peak-load reduction

strategies
Ability to model distributed energy
resource technologies
Ability to model load-shifting strategiesk
aUnless
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
the components perform as an integrated whole system is

difficult to evaluate without simulation tools. The primary
lesson to be learned from this example is that the energy
savings for a complex system are likely to be very uncertain
104
APPENDIX E
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
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
high-efficiency electronic components, the combined effect

of improved lamps and ballast efficiency results in as much
as a 30 percent increase in lighting energy efficiency over
traditional fluorescent lighting. Moreover, more advanced
electronics also lends itself to dimming, remote control, and
other energy-saving features not possible with magnetic ballasts. The potential impact can be seen from the fact that in
the United States, the energy associated with commercial
lighting costs businesses on the order of $25 billion per year
and accounts for about 26 percent of the total annual commercial building energy consumption.
The DOE work in this program over the years was conducted largely through subcontracts to industry and R&D
firms and in-house research at LBNL. From 1977 to 1981,
DOE supported the development, evaluation, and market
introduction of electronic ballasts into the U.S. marketplace.
The fluorescent lamp electronic ballast that emerged from
this work in 1983 impelled industry to proceed with largescale commercial development and has become arguably the
most successful initiative in the entire DOE energy efficiency
portfolio. In the early years of the program, DOE established
contracts with three small businesses to develop and test prototypes. Interestingly, those contracts were the result of a
competitive solicitation that received no responses from the
major ballast manufacturers. One of the small businesses
developed into a significant, independent ballast manufacturer.
In the 1970s, either before or shortly after the establishment of the DOE R&D program, all of the major firms in the
ballast industry had considered but rejected introducing an
electronic ballast into their lighting products businesses. The
principal reason for this rejection was the strong disincentive to produce solid-state ballasts: a substantial capital investment would be required and the existing unamortized
infrastructure for manufacturing magnetic ballasts would
have to be retired early and replaced. Moreover, at the time,
the market for magnetic ballasts was highly concentrated,
with nearly 90 percent of it dominated by two firms. One of
these firms actively sought to prevent the introduction of the
electronic ballast by acquiring the technology from one of
the small R&D firms DOE had supported and then preventing its dissemination. In 1990, after 6 years of litigation and
a $26 million damage award, control over the technology
was partially reacquired by the originating small business.
Accompanying the DOE-initiated path of electronic ballast technology development, the state of California promulgated the first efficiency standards for fluorescent lighting
ballasts in 1983. Other states followed suit: New York in
1986, Massachusetts and Connecticut in 1988, and Florida
in 1989. However, it turned out that the standards could be
met by improved conventional magnetic ballast technology,
so they did not spur further development or more widespread
use of the electronic ballast. As a result, without the DOE
program for research and demonstration of the electronic
ballast technology, it is unlikely that manufacture of elec-
105
APPENDIX E
tronic ballasts would have taken place as early as it did or

even at all. As the technology develops, however, the benefits of the electronic ballast have become so compelling
that all major lighting manufacturers have been obliged to
adopt and continue to develop the technology.
Over the years since the lighting program was introduced
in 1977, sponsored activities have covered a wide range of
energy-saving opportunities in lighting. In recent years, the
overall strategy and individual activities have been organized
into three distinct program thrusts: (1) light sources, (2) lighting applications (lighting design, fixtures and controls), and
(3) lighting impacts. Light sources accounted for approximately half of overall program funding.
Total funding for the electronic ballast program from
1977 through the early 1980s was $3.2 million in currentyear dollars, or about $6.0 million in 1999 dollars (Table
E-6). The research was cost-shared with industry through a
competitive solicitation for development of a reliable, efficient, and cost-effective ballast. As mentioned above, three
small firms won the solicitation, and these awards served as
important catalysts for DOEs early cost-shared program
with industry, even though it was terminated in 1983. Ultimately, as the technology became proven through these early
joint DOE-industry efforts, industry was satisfied the technology had a bright future. Indeed, the successful deployment of the technology in the marketplace required very
large capital outlays by ballast manufacturers, which they
would not have made had they not been so confident. While
no data are available on the magnitude of these investments,
they have been quite substantial.
Results
Fluorescent lamp electronic ballast technology has produced a permanent and fundamental change in the lighting
TABLE E-6 DOE Funding for the Fluorescent Lamp
Electronic Ballast Program (thousands of dollars)
Fiscal Year
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.
marketplace, both in the United States and worldwide. In

some sense this development is not surprising, since its adoption did not require any significant change to the fluorescent
lamp itself. Electronic ballasts can be used in retrofit applications easily and are now routine in most new commercial
and industrial lighting applications because the life-cycle
cost savings are so substantial given the very low incremental capital costs over magnetic ballast alternatives. As the
technology continues to develop and penetrate residential
markets in both retrofit and new applications, the nations
energy saving benefits will grow even more. Moreover, as
significant as the efficiency savings are, the dimming and
other control features of the technology can also enhance the
quality of lighting applications and accelerate adoption of
the technology even when energy prices are low.
Even though electronic ballasts entered the market in the
late 1970s, they did not achieve substantial sales until 1985,
largely for the market intervention reasons described earlier.
However, after a slow start, market penetration has now
reached about 40 percent of all ballast sales and is expected
to be 50 percent of sales by 2005. Moreover, as a result of
the recent DOE-proposed minimum efficiency standard,
nearly all ballasts will probably have to be of the electronic
type by 2010.
Benefits and Costs

The DOE work on electronic ballasts derives from the
work of the lighting research group at LBNL that began in
1976. Two small companies that won a solicitation from
LBNL did the research on ballasts, and prototypes were fieldtested in 1978 and 1979. Substantial energy savings of about
25 percent were demonstrated, but reliability and other problems remained to be worked out. In addition, the major
manufacturers of magnetic low-frequency ballasts actively
resisted the electronic high-frequency innovation. It was not
until 1988 that the new ballasts began to penetrate the market, and now they have captured about a 40 percent share
(Geller and McGaraghan, 1998).
Electronic ballasts have the added advantage of electronic
control, including dimming. The efficiency of magnetic ballasts has been improved, and they are the next-best technology. They are also cheaper per unit, but the difference in cost
has been decreasing. The capital investment involved in
manufacturing the electronic ballasts on a large scale is considerable, which is another reason for the delay in penetration.
The DOE provided a spreadsheet analysis of the benefits
of the electronic ballasts calculated from its sales, the energy
savings per unit, and the average hours of use per year of
fluorescent lights in commercial buildings. DOEs number,
3200 hr/year, is now thought to be an underestimate by 500
hr/year, so this is a source of underestimation for energy
savings.
106
APPENDIX E
The lifetime of the ballasts was assumed to be 15 years,

so life-cycle savings were calculated by multiplying the energy saved per unit in the year sold times 15, and the average
cost savings were life-cycle energy savings times the average cost of electricity to commercial and industrial customers averaged over the 15-year lifetime minus the added capital cost of the ballast compared with the next-best alternative,
the magnetic ballast. The electricity prices were from EIA
historical data and forecast prices from the EIA reference
scenario. From these, the average electricity price for each
15-year period was calculated. This was multiplied times the
life-cycle savings of ballasts sold in each year to give a total
life-cycle cost, from which the added cost of the ballasts was
subtracted.
It was then assumed that the electronic ballasts would
have been introduced into the market with the same penetration rate, but 5 years later if there had been no DOE program.
This offset penetration curve was substracted from the first
curve to give a net cumulative energy and cost savings associated with the DOE R&D and technical support efforts. The
cumulative energy cost savings were $32 billion and primary energy savings were 5.5 Q. After substracting the 5year offset curve, the net cumulative energy cost savings
were $15 billion and primary energy savings were 2.5 Q.
Also, as noted earlier, DOE estimates that between the
efficiency standard and wider commercial availability of
electronic ballasts, the technology will gradually come to
dominate the marketplace over the next 5 years and will be
required in essentially all new applications by 2010.
The other benefits attributable to the DOE electronic ballast technology R&D program are listed in the benefits matrix shown in Table E-7.
The committee concludes that the energy and cost savings from the early entry of electronic ballasts into the marketplace was substantial and that DOE R&D involvement
was highly significant for this outcome. The undiscounted
economic benefits to consumers are given in Table 3-4 together with energy reduction and associated pollution reduction benefits.
Lessons Learned
The DOE energy efficiency program has a number of excellent examples of how a carefully developed standards effort, when coupled with a technology development program,
can accelerate commercial deployment of new technologies
very effectively.
Such is the case with fluorescent electronic ballasts. Perhaps another key to the success of this program was the nature of the joint development efforts with industry. This case
study proves that it is not always necessary to work with
major manufacturers to fundamentally transform a market.
As noted above, the major manufacturers were highly resistant to the idea of adding the electronic ballast to their product offerings, forcing DOE to work initially with small, in-
novative firms to introduce the technology in the late 1970s.

Now, 20 years later, the electronic ballast will soon have a
50 percent market share. This experience suggests that DOE
should seek input and guidance from a wide range of industry participants and should critically evaluate their response
in terms of their competitive position within the industry and
the impact of the intended program on their businesses.
FREE-PISTON STIRLING ENGINE HEAT PUMP

(GAS-FIRED)
Heating and air-conditioning account for 36 percent of
the energy used in residential and commercial buildings.
Natural 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. The goal of the R&D
is to develop and demonstrate basic technologies that could
result in a technically sound and commercially viable natural gas heat pump technology for residential and light commercial buildings.
A gas heat pump can be constructed using various heat
engine and refrigeration cycles. The DOE strategy in the late
1970s and 1980s was to explore a number of technology
options and begin to identify the most likely paths to a commercial product. In addition to free-piston Stirling engines,
DOE also funded the development and evaluation of other
gas heat pump technologies including Brayton cycles, the
free-piston internal combustion engine, and absorption
cycles. DOE and the Gas Research Institute (GRI), jointly
and in parallel, funded R&D contracts with a number of research firms. DOE often examined the more risky technologies with potentially greater payoff. This portfolio approach
resulted in one or two gas heat pump concepts being identified as worthy of continued work and likely to achieve commercial success. Other technology paths have been dropped
as they encountered specific technological difficulties or
proved to be less effective than another emerging gas heat
pump approach. Specifically, attempts to use the free-piston
Stirling engine to drive a heat pump were discontinued by
DOE in 1992. Since then, the DOE program has focused
almost exclusively on absorption technology.
The DOE Role

In parallel with its development of other technologies, for
a natural gas heat pump, DOE supported the development of
three different mechanical design concepts for the free-piston Stirling engine heat pump from 1976 through 1992. The
projects focused on residential and small commercial buildings. Two of them were jointly funded by the gas industry.
In parallel, there was considerable effort by NASA to de-
107
APPENDIX E
TABLE E-7 Benefits Matrix for the Fluorescent Lamp Electronic Ballast Programa
Economic
benefits/costs

Benefits are substantial: $15 billionc
Electronic ballasts had captured about 25%
of the $1 billion ballast market by 1998
Improved lighting quality (less flicker and
hum)
Benefits may be substantial: Nearly all

ballasts will be required to be of the
electronic type by 2010, and by 2015,
electronic ballasts are expected to
capture 75% of the marketd
Enabling application of dimming and other
lighting controlse
Future electronic ballasts may incorporate
Internet addressable features coupled
with wireless control
Development of advanced control systems

incorporating advanced ballast
technologies, chips, wireless control,
integrated daylight and occupancy
sensing, etc.
Facilitate subsequent development of
electronic ballasts for high-intensitydischarge lamps
Contributed to broadening of lighting
R&D through development of
commercial lighting roadmap
Environmental
benefits/costs
These ballasts save about 25% of the energy

required by conventional magnetic
ballasts, reducing energy requirements
and the resulting environmental impacts
Substantial reduced emissions of carbon,
NOx, and SO2f
Avoided emission of suspended particulates
from reduced coal emissions
Benefits may be substantial: Lighting

consumes 4.8 quads, about 14% of the
energy used in buildings.
Increased lighting efficiency will decrease
energy requirements and pollutant
emissions of carbon, NOx, and SO2g
May reduce the number and severity of
nonattainment incidents, resulting in
improved health
Provides increased flexibility in
responding to future environmental and
energy regulations
Benefits may be substantial if technologies

are widely disseminated and diffused
Security
benefits/costs
Improved electric system reliability during a

period in which electricity infrastructure
is expected to be strained
Increased demand-side flexibility to reduce

peak loads on congested T&D systemsh
Provided technical basis for additional

research into controllable ballasts
aUnless
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
velop free-piston Stirling technology for space power applications.
Why Stirling?
Internally, several factors supported the choice of the freepiston Stirling engine as a leading candidate technology to
achieve a gas heat pump:
Before DOEs involvement in Stirling, the American

Gas Association (AGA) assessed various gas heat pump approaches and concluded that the Stirling was most attractive.
AGA (later GRI) approached DOE for support for a joint
R&D program.
A DOE-sponsored study by Arthur D. Little in 1983
(Teagan and Cunningham, 1983) concluded that stationary
(as opposed to transport) applications such as heat pumps,
108
APPENDIX E
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:
tionale for gas heat pumps included source energy efficiency,

environmental benefits, peak-load reduction, infrastructure
utilization, and foreign competition. The willingness of the
natural gas industry to cost share substantial portions of the
work significantly increased the credibility of the industrys
arguments. The shift in R&D policy to long-range, high-risk
research in 1982 did not impact funding for gas heat pump
R&D, because the work was technically risky and costly and
a significant government role appeared to be justified.
DOE spent $30 million in 1999 dollars on free-piston
Stirling engine R&D for gas heat pump applications from
1977 through 1992. Table E-8 indicates annual funding in
nominal and 1999 dollars. Industry cost-sharing contributions during the years 1984 through 1992 (the only years for
which data are readily available) totaled 50 percent of the
total (DOE + industry) program costs.
The program was nearly terminated in 1982 when initial
efforts were not successful. It was rejuvenated as a result of
significant continued interest by GRI and the identification
of new business partners with different approaches.
Results
Initial efforts with one contractor led to a design that did
not work. That project was terminated in 1982. The interest
in the free-piston Stirling heat pump was renewed from 1983
to 1992 through a partnership between DOE, GRI, and an
industrial partner. This second phase resulted in two con-
TABLE E-8 DOE Funding for the Free-Piston Stirling

Engine Heat Pump Program (thousands of dollars)
Fiscal Year
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
The level of DOE funding for free-piston Stirling engine

R&D was influenced primarily by the efforts of the natural
gas industry to educate Congress and administration officials about the importance of gas-fired heat pumps. The ra-
SOURCE: Office of Energy Efficiency. 2000g. OEE Letter response to

questions from the Committee on Benefits of DOE R&D in Energy Efficiency and Fossil Energy: Case Study on Heat Pumps: Free-piston Stirling
Engine-driven Heat Pumps (failure). November 22.
It is less costly for low power outputs.

It has a longer life, is more durable, and needs less
maintenance.
These advantages are particularly relevant to the residential gas heat pump application. In contrast, the larger power
output and much shorter lifetime requirements of automotive use tend to favor the kinematic type.
109
APPENDIX E
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.
from the program (see Table E-9). There were no realized

environmental or security benefits.
Without DOE support, the technology would have developed much more slowly. Industry would have continued to
invest in the technology, but overall funding would have
been reduced. The critical information necessary to make
informed decisions about the future technical and market
potential of the technology would either have not been developed or would have been developed at a much later date.
There would be considerably more uncertainty about the
potential of the free-piston Stirling engine, and favorable
viewpoints about the technology would have persisted.
Lessons Learned
It is the nature of R&D that not all concepts investigated
prove successful. In this case, the most important lessons are
that risky R&D efforts should (1) be undertaken on a portfolio basis to avoid the risk of betting on the wrong technology
and (2) be structured to identify potential losers as early as
possible to minimize wasted efforts.
The natural gas heat pump experience documents the importance to energy R&D efforts of a portfolio approach to
addressing energy needs. In this case, the value of achieving
a better seasonal distribution of both natural gas and electricity loads is clear. Utilizing natural gas to provide air conditioning would certainly accomplish this goal, but an early
bet on any single technology would not have provided the
opportunity to ensure that the best technology could emerge.
Competing technologies are often investigated concurrently until one emerges as superior to the others; research
on the inferior options is halted, and resources are then focused on the more promising ones. In this case, the development program for the Stirling engine heat pump was terminated after it was judged to be inferior to the gas absorption
heat pump and because budget constraints forced a choice to
be made at the time the Stirling engine heat pump was
dropped.
The time and cost required to develop and successfully
commercialize important new products in the mature HVAC
market are easy to underestimate. For instance, despite more
than a decade of emphasis on absorption heat pumps, these
have not yet penetrated the market.
Another lesson learned is that with a new technology the
fundamental barriers need to be more fully explored before
systems are constructed. Two such barriers are seals and
magnetic or other indirect coupling approaches.
INDOOR AIR QUALITY, INFILTRATION, AND

VENTILATION
Research was begun before 1978 by DOE and its predecessors to address increased concerns about decreased in-
110
APPENDIX E
TABLE E-9 Benefits Matrix for the Stirling Engine Heat Pump Programa
Economic
benefits/costs

Industry costs: >$14 millionb
No realized economic benefits
Minimal benefits, but the technology can

be resurrected for further development.
One company may be interested.c
Niche applicationsd
Potential to save energy and reduce
electricity peak loadse
Advances in the technologyf

Development of three different mechanical
design concepts
Thermal performance goals achievedg
Basic knowledge with various
applicationsh
Technical potential demonstrated
Understanding of key technical issues and
R&D needs
Environmental
benefits/costs
None
Minimali
Some applications of FPS engine
technologyj
Combustion effluents well understood for

natural gas
Use of environmentally benign working
fluid (hydrogen) has been proven
Security
benefits/costs
None
Minimal
Minimal
aUnless
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
door air quality (IAQ) caused by the design and retrofit of

buildings to save energy. For this case study, EE provided
information to the committee on the main research and technology transfer program on indoor air quality, which became
a recognized budget activity in 1985.9 As indicated by EE,
the goal of this program was twofold: (1) to provide a building science foundation for the national response to the IAQ
issue and (2) to develop ways to harvest the large energy
savings potential from reduced infiltration and ventilation,
without degrading the resulting indoor environment. According to EE, the objectives of this program were to (1) quantify
the relationships among infiltration, ventilation rate, build-
9IAQ
research was funded under a much larger set of budget activities

and not specifically identified before 1985. In 1985, IAQI&V became a
distinct budget line, and budget numbers from that point are readily identifiable and official.
ing characteristics, indoor pollutant source, and acceptable

indoor environments and (2) disseminate the results.
To achieve the objectives, EE conducted both basic and
applied research projects in the Indoor Air Quality, Infiltration, and Ventilation (IAQI&V) program. Results were disseminated in scientific and technical papers10 and through
active participation in the development of national consensus standards including the following:
ASTM Standard D5116. Standard Guide for Small
Scale Environmental Chamber Determination of Organic
Emissions from Indoor Materials/Products.
10Sherman. 1995a; Sherman, 1995b; Burch and Chi, 1997; Seppanen et
al., 1999; Sherman and Dickerhoff, 1994; Sherman and Matson, 1993; Nero
et al., 1985; Grimsrud et al., 1987; Turk et al., 1987; Daisey et al.,1994;
Fisk, 2000; Mendell et al., 1996; Mendell et al., 1999; and Ten Brinke et al.,
1998.
111
APPENDIX E
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.
et al., 1999). The validity of these claims is discussed in the

Results section.
According to the information provided to the committee
by EE, DOE invested about $34 million (in 1999 dollars) for
basic and applied research in the IAQI&V program between
1985 and 2000. The amount invested by DOE for IAQI&V
research between the years 1978 and 1984 was not reported
but has been estimated at $7 million.12 The total investment
for IAQ research by federal agencies, including DOE, between 1987 and 1999 was reported by EE as $622 million (in
1999 dollars). This number is consistent with the GAO estimate, but GAO also reports that 10 federal agencies13 invested $1.1 billion (in nominal dollars) for indoor pollution
research during this time, including IAQ (54 percent), lead
(24 percent), radon (17 percent), and asbestos (4 percent)
(GAO, 1999). Furthermore, according to the GAO report,
about 64 percent of the federal funding for indoor pollution
research during those years was accounted for by work conducted within four NIH institutes. Thus, research that focused on the interactions of IAQ and energy efficiency,
IAQI&V, accounted for approximately 3 percent of the federal investment for indoor pollution research from 1987 to
1999. It is recognized that nongovernmental organizations,
such as ASHRAE, EPRI, and ARI, have sponsored independent research on IAQ.
EE also reported that the annual DOE investment in
IAQI&V research generally decreased since 1987 and that
the amount received in 1999 was one-third of that received
in 1987 (in 1999 dollars). EE reported that, at the same time,
the total annual investment for IAQ research by federal agencies increased 175 percent, with most of the funding focused
on health perspectives rather than energy perspectives. The
committee is, however, aware that 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), somewhat offsetting the reduction in DOE investment, but the amount of this funding
was not reported to the committee. Also, as reported by EE,
the IAQI&V research at LBNL after 1994 was aggregated
with other activities into a larger program area, Design
12This estimate is based on subsequent input from DOE at the request of
the committee but is not an official budget item.
13The 10 agencies (and funding levels from 1987 to 1999) are the National Institute of Environmental Health Sciences ($399.7 million); National
Heart, Lung, and Blood Institute ($175.2 million); Environmental Protection Agency ($140.4 million); Department of Energy ($136.5 million); National Institute of Allergy and Infectious Diseases ($93.7 million); Department of Housing and Urban Development ($75.7 million); National Cancer
Institute ($19.5 million); Consumer Product Safety Commission ($16.8
million); National Institute for Occupational Safety and Health ($14.6 million); and NIST ($5.9 million).
112
APPENDIX E
Tools and Strategies, and is no longer featured as a distinct

budget line item. It should also be noted that DOE did not
give the committee an estimate of the amount the private
sector had invested in IAQ and energy efficiency research
from 1978 to 1999.
Results
The IAQI&V program has met its first goal, providing a
building science foundation for the national response to the
IAQ issue. Research conducted in the program served as the
scientific and technical basis for the development of
ASHRAE Standards 136-1993, 119-1988 (reaffirmed as
119-1993), and 129-1997, and it was influential in the development of ASTM Standard D511b and ASHRAE Standards
62-1999 and 62P (in progress). The considerable influence
of this research is documented in the reference sections of
these standards.
As for the second goaldeveloping ways to harvest the
large energy savings potential from reduced infiltration and
ventilation without degrading the resulting indoor environmentconsiderable technical progress has been made, but
further work is needed to catalyze broader market use of the
four IAQ-related technologies that were the focus of the
IAQI&V program from 1985 to 1999:
1. EE reported that three North American manufacturers14 now sell more than a thousand blower doors per year
(Anderson, 1995). These devices are used by building diagnosticians to determine the air leakage rate in buildings.
However, EE did not give the committee the numbers of
investigations per year in which these devices are used, the
energy saved by mitigating the air leakage rates, or the effects on IAQ and occupant health and performance. Blower
doors have been used since the 1980s in weatherization and
nonfederal programs for improving residential energy efficiency. Sherman and Dickerhoff (1994) published an analysis of data taken in the 1980s; their analysis showed the average house in the United States was quite leaky and that
currently accepted standard methods of remediation typically
reduce infiltration by 25 percent. The database contained
about 12,000 measurements obtained throughout the United
States. A statistical analysis of these data predicted a potential annual savings of 1 quad from the residential building
stock in the United States (Sherman and Matson, 1993).
2. In addition to identifying the primary pathway for radon entry into a house, DOE research in the 1980s also characterized experimentally, and by modeling, how radon entry
rates depended on other factors that caused the pressure differences driving soil gas entry (Nero et al., 1985). DOE was
the main sponsor of the research on radon entry, while DOE
and EPA substantially supported the research on radon miti-
14The
Energy Conservatory, Infiltec, and Retrotec.
gation. This research provided the basic knowledge needed

to devise radon mitigation strategies that work by preventing
or reducing the rate of soil gas entry into buildings. These
strategies are now used in nearly all instances of radon mitigation and typically reduce indoor radon concentrations by a
factor of between 2 and 10 (Fisk et al., 1995). However, the
number of mitigation system installations and the effects on
average radon concentrations in the United States are not
known. Moreover, the committee was not given any quantitative data that demonstrated the effects of these strategies
on residential energy use or health.
3. If DOEs research on the reduction of unwanted moisture in buildings and buildings materials led to changes in
the design or operation of buildings or reduced indoor mold
concentrations, adverse health effects, reduced damage to
property, or energy savings, these results were not reported
to the committee.
4. The claims that DOE research had helped to stimulate
the development or refinement of a broad range of instruments and sensors for ventilation control and diagnostic purposes were not supported with documentation on specific
products or market penetration. However, DOEs research
on indoor air quality has helped to document the importance
of the indoor environment for human health and performance
and has helped to identify the important determinants of
these effects (Grimsrud et al., 1987; Turk et al., 1987; Daisey
at al., 1994; Fisk, 2000).
As knowledge about the importance and determinants of
indoor environmental quality advances and is incorporated
into standards, guidelines, and handbooks (e.g., through
ASHARE and ASTM), the private sector has developed an
IAQ consulting/service industry that focuses primarily on
problem mitigation, an industry that markets a broad range
of instrumentation and sensors related to IAQ. However, the
size of these consulting/service and instrumentation industries in the United States is not known, and DOE has not
quantified the impact of its research on the development of
these industries, even though the committee considers it to
be significant.
EE also reported that research co-funded with NIOSH
and EPA has led to a better understanding of the causes of
sick building syndrome (SBS) and to the development of
mitigation options. In a cross-sectional survey of office
buildings cosponsored by NIOSH (Mendell et al., 1996), data
were obtained on the prevalence of SBS in a set of office
buildings. The study also identified certain building-related
risk factors such as HVAC type, concentrations of volatile
organic compounds, increased use of carbonless copy paper
and photocopy machines, as well as personal and job-related
risk factors. In another study cosponsored by NIOSH
(Mendell et al., 1999), decreases in indoor concentrations of
submicron particles did not significantly reduce the intensity
of SBS symptoms, but increased air temperatures were associated with significant increases in their intensity. DOE has
113
APPENDIX E
also supported the statistical analysis of data from the EPA

Building Assessment and Evaluation (BASE) study to investigate the relationship between SBS symptom prevalence
and indoor concentrations of carbon dioxide and volatile organic compounds (VOCs) (Ten Brinke et al., 1998). By focusing on the most irritating VOCs and using principal component analyses, new VOC metrics were identified. These
studies support the DOE claim that there is a relationship
between occupant symptoms and complaints and indoor air
quality, but they have not provided much information about
corresponding building performance, mitigation options, or

energy efficiency.
Benefit and Costs
The benefits and costs of the IAQI&V program are estimated in Table E-10. Calculations of realized economic benefits that have resulted from DOEs influence on standards
and from the market penetration of blower door technologies, radon and moisture mitigation methods, and new sen-
TABLE E-10 Benefits Matrix for the Indoor Air Quality Programa
Economic
benefits/costs
DOE R&D costs: $34 million (through

2000)
Other R&D costs: $585 millionb
Benefits are large and are likely to
substantially exceed DOE costs.
Helped facilitate the establishment of the
blower door testing industryc
Facilitated development of radon mitigation
industry
Stimulated development or refinement of
instruments and sensors used for building
control systems
Facilitated development of consensus
industry standards
Potential for reduced energy consumption

owing to residential tightening
measuresd
Increased knowledge about causes of sick

building syndrome
Increased knowledge about source of
radone
Increased knowledge about how tight
building envelopes can bef
Increased knowledge of moisture
migration and transmission in buildings
and development of mathematical
models and other tools for moisture
prediction
Assisted in development of MOIST
program for estimating moisture
transmission through building envelopes
Environmental
benefits/costs
Enabled industry and homeowners to avoid

or mitigate many indoor environmental
and related health problems through
changes in materials, building design, and
operation and maintenance practices
Potential for avoided emissions of carbong

Potential for avoided emissions of SO2 and
NOx at power plantsh
Potential for avoided emissions of other
criteria pollutants including particulates
and heavy metals, especially from coalfired power plants
Research demonstrated importance of

building ventilation and indoor air
quality and identified the important
pollutants
Security
benefits/costs
Reduction in electricity demand due to

reduced AC loads; some reduction in
energy consumption for heating
Reduction in peak electricity demand due

to reduced AC loads; some reduction in
heating oil use
Minimal
aUnless
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
114
APPENDIX E
sor technologies were not provided by DOE. However, the

economic benefits from the development of these standards
and technologies, in terms of the energy cost savings associated with improved infiltration and ventilation control and
the reduced health care costs associated with improved indoor environmental quality, are likely to have substantially
exceeded the DOE costs of the IAQI&V programapproximately $2 million per year since 1978 (Fisk, 2000; Sherman,
1995b).
The options benefits that might be realized from more
general compliance with the voluntary, consensus standards
that have recently been promulgated and from increased care
in the design, construction, and operations of buildings are
reported to offer the potential for a saving of tens of billions
of dollars annually in energy and health care costs (Fisk,
2000).
Realized and options environmental and security benefits
of the IAQI&V program are gained both indoors and outdoors. Improved air quality can directly affect the health and
safety of building occupants. Several of the other federal
agencies conducting IAQ research have focused on the
health issues, but DOE has focused its research on energyefficient ways of achieving acceptable IAQ. Although the
realized benefits are estimated to be substantial, they are also
uncertain, because of the inherent difficulties of quantifying
them, the limited resources for quantifying what might be
reasonably quantifiable, the highly dispersed nature of the
benefits, and the dearth of documentation, described earlier.
Lessons Learned
DOEs IAQI&V program is a good example of a successful, yet complex, relationship between several federal agencies that have different missions and research agendas. In
this case study, research that focused on the interactions of
IAQ and energy efficiency accounted for diminishing
amounts (less than 3 percent in 1999) of federal investment
for indoor pollution research from 1987 to 1999. Yet, the
potential not only for energy savings but also for reduced
health care costs and improved productivity from this research far exceeded the cost of the program. The primary
lesson to be learned from this case study is that health and
safety issues may be more important public goals than energy efficiency. Thus, the slightest perception of negative
health consequences from increased energy efficiency can
damage the credibility of the Office of Energy Efficiency
and Renewable Energys mission of reducing energy use.
However, a corollary to this lesson is that energy efficiency,
health, safety, and productivity are not mutually exclusive
issues. Therefore, DOE should not only remain cognizant of
the possible indoor environmental consequences of energyefficient technologies and practices but should also work
with other federal agencies on basic and applied research to
enhance occupant health and well-being through these technologies and practices.
A second important, and maybe related, lesson to be

learned from this case study is that credible cost and benefit
analyses are required. Analyses of the impact of energy-efficient technologies and practices on the health and wellbeing of the public are not credible when they are based on
simplistic assumptions about building performance or on
less-than-complete information on the costs incurred to realize the outcomes. A more credible approach to the study of
health and performance effects of energy-efficient environments would be acquisition of measured data through statistically based experimental designs that are generally used in
health and social science research.
LOW-EMISSION (LOW-E) WINDOWS

The low-emissions (low-e) window program was initiated by DOE in 1976. The objective of this program was to
reduce energy consumption by reducing heat loss through
the glazing component15 of windows designed for residential buildings in cold climates. To achieve this objective, the
program initially focused on the development of coatings
that could increase reflection by reducing the emission of
infrared energy that irradiated the glazing from the room
side.
From 1976 through 1983, DOE sponsored research at its
Lawrence Berkeley National Laboratory (LBNL) and at several small research firms on suitable coating systems and
deposition processes. A small business attracted venture
capital and built the first production facility for applying lowe coatings to thin plastic films. By 1980, this firm was working closely with several window manufacturers to develop
and refine a fabrication technology that incorporated a lowe coating on a plastic film that could be applied to the window glazing. Subsequently, processes were developed to
deposit the coatings directly onto the glass.
In 1983, the industry and DOE, through LBNL, began
investigating modifications to the low-e coatings that could
enhance nighttime performance of the window glazing and,
more importantly, reflect most of the Suns near-infrared
energy. The objective of these enhanced coatings was to produce a window that provided clear vision and reduced the
cooling load (i.e., heat gain) in the room. By 1992, one nationally known window manufacturer had converted its entire line of standard windows to include glazing with these
spectrally selective coatings. Glazing with these coatings
transmitted nearly the same amount of daylight as untreated
15The glazing, or glass, is one of three major components of a window.

Each has significant heat loss and heat gain pathways. The other two components are the framing and connection to the building, and the framing and
connection to the glazing.
115
APPENDIX E
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).
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
literature. These methods draw significantly on the computer

modeling and field test data that were generated at LBNL.
DOEs involvement in the development of low-e technologies for glazing and windows was critical in (1) publicizing the concept, (2) leading and supporting the development of technologies for applying the coatings to thin films
and subsequently for directly depositing them on the glazing, (3) continuing support and encouragement for the development of spectrally selective coatings, (4) developing
computer models and field test methods that formed the basis of rating standards, and (5) developing tools for design
calculations that are now available in the published literature
(ASHRAE, 1997a).
Benefits and Costs
The benefit and cost estimates of the low-e program are
shown in Table E-11. Rather than using its WINDOWS 4.1
or DOE-2 programs in calculating the benefits associated
with the DOE RD&D investment for the committee, DOE
used the obsolete Heating Degree Day (HDD) Method (65
F Base) to estimate the energy savings and corresponding
consumer net energy cost savings for the residential market
only and for heating energy savings only. The commercial
buildings market was not considered nor was the impact of
low-e glass on reducing the cooling load in residences. To
this extent, the energy savings benefits probably are overestimated for reductions in residential heating loads and underestimated for reductions in cooling loads for residences
and commercial buildings.16
Calculating heat load reduction depends on knowing the
impact of low-e coating on the effective heat transfer coefficient of the low-e double-glazing compared with doubleglazed windows without the coating. The double-glazed window without coating was assumed to be the next-best
technology for which the low-e windows substituted. The
effective heat conductance (U-value) of the windows was
decreased, from 0.48 to 0.32 Btu/hr ft2 F by the low-e coating. Low-e windows are used predominantly in the colder
regions of the country, and the average of the degree-days17
weighted by region and by sales was 5200. Multiplying 5200
by (0.48-0.32) times 24 hours/day gives the heat loss reduction of 20,000 Btu/ft2 per year using low-e coating and
double-glazing with a 12-in. air space (see ASHRAE, 1997,
16The committee realizes that the HDD method for estimating energy
savings due to application of low-e glass is a rather gross approximation.
More sophisticated techniques exist, including some that DOE itself sponsored, such as DOE-2, that it could have and should have used, especially
when it expects others to. Not all members of the committee agreed with
using the HDD method, but most members did agree that the HDD method
was adequate for the committees purposes.
17This 5200 value is for a 65F base. If a more energy-efficient base
(e.g., 50F) is assumed, the value would be closer to 3000 degree days and
the projected energy savings would be approximately 12,000 Btu/ft2 per
year (see Chapter 28, ASHRAE, 1993a).
116
APPENDIX E
TABLE E-11 Benefits Matrix for the Low-emission (Low-e) Windows Programa
Economic
benefits/costs

Benefits are substantial: approximately
$8 billionc
Reduced ultraviolet light damage to
furniture and carpets
Increased occupant thermal comfort from
reduced air flow
Manufacturers have widely adopted low-es,
and low-es have captured 1/3 of the
residential market
Spectrally selective glazings are now
available for all buildings
Standardized methods for rating low-e
glazing and window assemblies with
low-e glass are now available in the
literature
Potential benefits are large, in both new

and retrofit marketsd
Reduced air conditioning costs in the
southern and southwestern United
States and increased comfort in
vehicles, from applications of
specialty-selective glazings
Reduced gasoline use from application of
extended specialty glazings to airconditioned vehicles
Ability to include different types of
glazing in local building codes
R&D on spectrally selective coatings,

methods for measuring glass properties,
simulations and tests of monitored
buildings, and ratings, labeling, and
certification procedures
Improved understanding of the application
of coating to glass
Software to evaluate the benefits of
different types of coatings
Development of objective test data and
energy ratings for windows
Improvements in varying the ability to
filter different wave-lengths and
associated heat and light products
through glass Potential spin-off
applications for photovoltaics and other
technologies that utilize differing
portions of the visible and infrared
spectrum
Environmental
benefits/costs
Substantial reduced emissionse
Associated emissions reduction from

reduced energy usef
Reduced incidents of nonattainmentg
Increased ability to control indoor

environment
Development of insulated shipping
containers
Security
benefits/costs
Reduced oil dependence from reduced use

of heating oilh
Reduced winter peak demandi
Reduced pressure on electricity

infrastructure
Reduced oil dependence
Technology transfer to other nations could

reduce oil use and environmental
emissions
aUnless
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).
117
APPENDIX E
for center of glass values). Then it was assumed that the

home heating system was 60 percent efficient (heat source
efficiency was assumed to be 75 percent and duct distribution efficiency, 80 percent), so the heating energy that was
saved by the low-e window was 20/0.6, or 33.2 kBtu/ft2 per
year (Selkowitz, 2001). This is a ballpark number, but in the
opinion of the committee, it is an adequate estimate. This
number was then multiplied by the square footage of low-e
windows sold for residential applications per year, and national averages of fuel and electricity mixes for home heating were used to calculate the electricity, natural gas, fuel
oil, etc., savings in the year the windows were sold. These
energy savings were then multiplied by the average national
cost of fuels and electricity. This process was then repeated
for each year from 1983 to 2000. The data were then extrapolated to 2005 assuming market share increased from 40
percent in 2000 to 45 percent in 2005. Market penetration
data for low-e glass were obtained from Ducker Research
Company, Inc. (DRC, 2000) and other sources.
The average lifetime of the windows was assumed to be
30 years. For each year, the total life-cycle energy saving
was calculated and the energy cost savings were calculated.
From these, the incremental capital cost of the low-e glass
was subtracted to obtain the net life-cycle cost savings of the
windows sold for each year and summed to obtain a calculated net cost saving of $37 billion. The incremental cost of
low-e glass was taken as $1.25 per square foot in nominal
dollars. This added investment had a simple payback of 4 to
5 years. Additionally, the committee applied its 5-year rule,
assuming that the DOE-associated R&D impact on energy
was the introduction of low-e glass to the market 5 years
earlier than it would otherwise have occurred given only private sector initiative. The penetration of low-e windows into
the market 5 years later was assumed to take the same penetration curve, and the energy use and dollar savings were
calculated and subtracted from the original calculations. The
result was that the energy cost savings were reduced from
$37 billion to $7.7 billion and the total primary energy saved
was reduced from 6.1 Q to 1.2 Q. The associated pollution
reduction and security benefits were similarly reduced in the
numbers reported in Table 3-4. It should be noted that the
large impact of the 5-year rule was because the penetration
of low-e glass stabilized rather quickly, at about 35 percent
of window sales by 1993. The 5-year offset meant that the
two penetration curves coincided after about 1997.18
The committee can think of various reasons why these
benefits may be overestimated. For one thing, the windows
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.
may not last 30 years in the field. If they lasted on average

only 20 years, the net life-cycle cost savings would be reduced to $5.1 billion, about $3 billion less. Another is that
the average number of heating degree days used in the analysis is too high. Also, one might speculate that reducing the
thermal conductance of windows encourages people to design more glass into new residences than they would have
before low-e glass. Thus, although the home is more livable
and pleasant, not as much energy is saved as was estimated,
that is, there is a rebound effect (Greening et al., 2000).
The committee can also think of reasons why the $7.7 billion
figure may be an underestimate. The principal reason is that
the calculations ignore the impact on energy use in commercial buildings and in reducing cooling loads. These are indeed substantial and real benefits. Another reason may be
that the 5-year rule is unrealistically strict. It should be noted
that major window manufacturers were not interested in the
low-e glass until it was proven relative to manufacturing
technique and performance. If a 10-year offset were assumed, the overall net life-cycle energy cost savings would
have been $20 billion instead of $7.7 billion, and the lifecycle cumulative primary source energy saving would have
been 3.3 Q rather than 1.2 Q. Another possible reason for
underestimation concerns the rate of penetration of low-e
windows, which was undoubtedly helped by the work of
LBNL and DOE in establishing testing and rating methods
and design tools that helped the entire industry.
The reduction of ultraviolet light damage to furniture, carpeting, and, especially, valuable artifacts is another realized
economic benefit from the application of low-e technology
that is likely to be substantial, but this benefit is unquantified.
Similarly, the reduction in radiant asymmetry between occupant and low-e glazing surface temperatures may be another
benefit measurable by its effect on occupant performance or
productivity.
In conclusion, the committee believes the DOE investment in RD&D to develop low-e glass and to encourage its
adoption in the marketplace was highly significant in the
early commercialization of this energy-saving technology.
The undiscounted numbers are reported in Table 3-4. The
committee feels confident that the $7.7 billion and the cumulative life-cycle primary energy savings of 1.2 Q are conservative estimates of the realized economic benefit. Furthermore, the committee believes that use of low-e glass has
had a very large impact on improving the energy efficiency
of buildings, and its overall effect is likely much larger than
the committees estimate. Realized/option environmental
and security benefits of DOEs low-e RD&D program are
also estimated to be substantial, but indeterminate, because
of the same limitations on the basic assumption of energy
savings that were described previously. Because of the early
involvement of DOE in the development of low-e technologies, DOE contributed substantially to the realized economic,
environmental, and security benefits that may have been realized. Moreover, DOEs sustained support of the basic and
118
APPENDIX E
applied research, development of software tools and field

test facilities, and testing protocols contributed significantly
to the knowledge base that is now available to researchers,
manufacturers, and designers of glazings and window systems.
Lessons Learned
DOEs low-e RD&D program is a good example of a
successful, yet complex, relationship between the public and
private sectors in the development and commercialization of
a technology that is perceived to provide substantial economic, environmental, and security benefits. DOEs early
recognition and conceptualization of a novel technology attracted a small business and venture capital for the development of the technology in the face of some industry reluctance. After 4 years of development and sustained support
from DOE, the success of the small business attracted the
attention and cooperation of several manufacturers, which
began to develop further enhancements of the technology.
During this development stage, DOE worked on software
and field test facilities that enabled the promulgation of test
standards and design tools. Ten years after conceptualization,
the technology was estimated to have achieved a market penetration of 10 percent, and 20 years after conceptualization,
this market penetration had leveled off at approximately 35
percent. The primary lesson to be learned from this example
is that significant time and effort are required to gain wide
acceptance for a change in technology in the building sector
that is not perceived to benefit building owners directly.
A second important, and maybe related, lesson to be
learned from this case study is that credible cost/benefit
analyses are required. The impact of changes in performance
of building components cannot be assessed on simplistic assumptions of whole-building performance and less-thancomplete information on the costs incurred to realize the outcomes. A more rational approach would be to analyze a range
of scenarios that can be described with sets of credible assumptions on whole-building performance, as influenced by
the component change and by other likely changes in occupant or building performance.
port to the thin refractory layer. Molten metal is then poured

into the mold, and the molten metal melts and vaporizes the
foam. The solidified metal, which is a nearly exact replica of
the pattern, is then machined as required to produce the desired finished shape. Proper controls must be exercised in
each step of the process to assure consistently high-quality
castings. A lack of in-depth understanding of the measures
necessary for proper control slowed adoption of the lost foam
casting process.
Metal casting is an energy-intensive industry. DOE began funding research in 1989 in recognition of the significant energy-savings potential and other benefits of the lost
foam process compared with the traditional means of metal
casting. Before 1989, the lost foam process had been tried,
even by a major automotive manufacturer, but was very little
used owing to the difficult technical challenges that remained.
Lost foam casting has dramatic productivity and environmental advantages in addition to its energy-savings benefitsproductivity increases and much less waste is produced. The lost foam process even enables metal casters to
produce complex parts that often cannot be made using other
methods, and it allows designers to reduce the number of
parts and the machining and to minimize assembly operations.
To improve the competitive position of domestic metal
casters, Congress enacted the Department of Energy Metal
Casting Competitiveness Research Act of 1990. The act required the Secretary of Energy to establish a metal casting
competitiveness research program. DOE helped establish an
industry consortium and utilized university research centers
to address the mission of the Metal Casting Act. In the mid1990s, this lost foam program was subsumed as part of the
Industries of the Future (IOF) program for metal casting.
Research cofunded by DOE and an industry consortium
of more than 30 partners and in large part being performed at
the University of Alabama at Birmingham, which has a Lost
Foam Technology Center, and the University of Missouri,
Rolla, has resulted in significant improvements to the lost
foam process, which are being used by the industry.
LOST FOAM TECHNOLOGY

The lost foam process consists of first making a foam
pattern having the geometry of the desired finished metal
part. The pattern is dipped into a water solution containing a
suspended refractory. The refractory material coats the foam
pattern, leaving a thin, heat-resistant layer that is air-dried.
When drying is complete, the coated foam is suspended in a
steel container that is vibrated while sand is added to surround the coated pattern. The sand provides mechanical sup-
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.
119
APPENDIX E
Funding commenced in 1989 and is still being provided.

Federal funds spent, in 1999 constant dollars, are given in
Table E-12. No funding was provided in 1994, 1996, and
1998, when carryover funds were used.
In 1995, chief executive officers and presidents from the
foundry die-casting and foundry supply industries developed
a Vision as part of the IOF process. Guided by priorities in
the Metal Casting Act, the Vision provides a framework for
addressing industry needs in six important areas besides increasing energy efficiency:
Production efficiency,
Recycling,
Pollution prevention,
Application development,
Process control, and
New technology development.
Specific industry goals were also identified in the Vision:

Improve the use of casting in existing markets (by as
much as 10 percent), recapture lost markets (by 25 to 50
percent), and increase new market entries.
Develop materials technologies by improving the variety, integrity, and performance of cast-metal products.
Develop advanced manufacturing technologies to increase productivity by 15 percent, reduce average lead time
by 50 percent, and reduce energy consumption by 20 percent.
Environmental goals are to achieve 100 percent preand postconsumer recycling, 75 percent beneficial reuse of
foundry by-products; and the complete elimination of waste
streams.
Results
DOE sponsorship of lost foam research removed a number of important technical barriers that had been impeding
commercialization. Examples of some of the barriers to lost
foam were 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 pat-
TABLE E-12 Funding for the Lost Foam Program

(thousands of 1999 constant dollars)
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
SOURCE: Office of Energy Efficiency. 2000i. OEE Letter response to

questions from the Committee on Benefits of DOE R&D in Energy Efficiency and Fossil Energy: Advanced Lost Foam Technology Program. December 13.
Benefits and Costs

This has been a cost-effective program. As with many
industrial technologies that are process-related, the savings
from the use of lost foam technology will vary greatly by the
application. Nevertheless, it is apparent that lost foam tech-
120
APPENDIX E
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
Economic
benefitsb/costs

Industry costs: $4 million
Substantial benefits, circa $60 milliond
Removed a number of important technical
barriers that had been impeding
commercializatione
Enables production of complex parts with
greater dimensional accuracyf
Enables new products to be cast that could
not previously be cast
Substantially reduced materials and
machinery requirementsg
Nearly eliminates the need for coresh
Significant potential benefitsc
Significantly advanced understanding and

control over the lost foam process
Research on a single-stage air gauging
system, instruments and transducers,
distortion gauges, fill gauges, and
compaction gauges
Procedure developed to measure the liquid
absorption characteristics of liquid
pattern pyrolysis into castings
R&D applied to the iron and aluminum
industries and to steel castingsi
Environmental
benefits/costs
Reduced energy use and environmental

emissionsj Reduced solid wastek
Reduced energy requirementsl
Improves ability of localities and states to

meet air pollution standards
Increased comfort and reduced need for
end-of-pipe emissions approaches
Research on reducing the materials and

energy requirements of castings
Security
benefits/costs
Minimal
Security of supply for critical cast parts in Minimal

transportation, defense, and other sectors
aUnless
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
121
APPENDIX E
on reasonably simple cored items and of 45 to 50 percent on

complex castings.
The next-best alternative to lost foam casting is assumed
to be sand casting, and all benefits calculations are being
made with reference to conventional sand-casting technology, which has been the dominant technology in the industry. There are capital costs associated with retrofitting an
existing facility for the lost foam process. These are difficult
to estimate since they would be company- and plant-specific
and would depend largely on the production capacity of the
particular facility. Retrofit costs would largely be one-time
costs.
Comparing initial capital costs of a lost foam casting facility with the initial capital costs of a sand casting facility is
also difficult. The information is often company-specific and
proprietary. Because the lost foam process significantly reduces core-making, postcast operations, and other steps in
the casting process, initial capital costs may be lower than
those for sand casting.
Lost foam casting is rapidly increasing market penetration. Aluminum lost foam castings increased 105 percent
from 1984 to 2000; iron had a 325 percent increase. Over the
next two decades, as more new plants are built and older
ones retrofitted as needed: lost foam should become the predominant casting technology. The adoption rate will vary by
end-user industry, but DOEs role in addressing unique technological challenges and educating companies about the
technology clearly accelerates that rate. All experts consulted
considered that the formation of the industry consortium and
the addressing of several technological challenges by DOEsponsored research have been critical to the successful development of the technology and its market penetration.
Lessons Learned
Although the lost foam technology has very significant
savings in energy, this was not in most cases the primary
reason it was adopted by industry. The productivity improvements and environmental benefits in terms of waste minimization outweighed the importance of energy savings to industry. The ability to make parts that could not be made using
other casting methods also was a driving force for its adoption. The lost foam technology for casting is a revolutionary
development and is recognized by the industry as such.
Adoption strategies must, as DOEs strategies did, recognize the drivers for industrys adoption of technology. DOE
must always focus on the energy impacts to ensure that the
technologies being developed meet a threshold criterion for
significant energy benefits.
DOE can be a catalyst for bringing industry together to
address precompetitive common concerns that are inhibiting
the development of a promising energy-efficiency technology. The convening power of DOE is not to be underestimated when industry is an active participant in the visioning
and roadmapping. Bringing industry together helps make the
federal research cognizant of industry drivers and concerns,

and a true partnership is developed to address research needs
and facilitate technology adoption. The current DOE partnership with the metal casting industry includes over 250
participants. The DOE must ensure that public purposes are
being served, and care has to be taken that the research is not
applied purely for short-term gain. This will be a continuing
challenge given the nature of the IOF partnerships, but DOE
appears to be aware of the importance of this balancing act.
DOE and industry are using universities for much of the
research, especially those with a center of excellence in the
relevant field. DOEs part in this effort, which is helping to
develop and train future engineers and scientists for industry, was commended by industry participants.
ADVANCED TURBINE SYSTEMS PROGRAM

DOE, in partnership with gas turbine manufacturers, universities, and national laboratories, initiated the Advanced
Turbine Systems (ATS) program in 1992 to produce the next
generation of gas turbine systems for electric power generation. A comprehensive ATS program plan was submitted to
Congress in July 1993 (DOE, 1994). As stated in the plan,
the goal of the ATS program was to produce commercial
turbine systems by the end of the decade that would do the
following:
Be 15 percent more fuel efficient than the 1991 baseline
of 29 percent,
Be cleaner (demonstrate 10 percent lower NOx emissions than the best turbine system available then25 parts
per million), and
Lower the cost of electricity by 10 percent compared
with conventional systems meeting the same environmental
requirements.
From its beginning, the ATS program consisted of two
main parts: (1) an industrial gas turbine (<15 MW) program
under the direction of the Office of Energy Efficiency and
Renewable Energy (EERE) whose original scope covered
clean electric and combined-heat and power-generation systems for manufacturing, commercial buildings, institutions,
and district energy applications and (2) a central-station,
combined-cycle gas turbine program under the direction of
the Office of Fossil Energy (FE), which covered utility-scale
applications. The following discussion pertains to the EERE
portion of the ATS program.
The ATS program was implemented under a memorandum of understanding (MOU) within DOE between EERE
and FE. Specifically, EERE was to manage the following
key activities:
Development and testing of two advanced industrial
122
APPENDIX E
gas turbine designs,

Development and testing of advanced ceramic parts,
components, and subsystems for both advanced and retrofit
applications,
R&D in strengthening the technology base for turbine
systems and advanced materials and manufacturing, and
Investigation of the fuel-flexibility possibilities of biomass fuels and applications.
As a result of these activities, major cost-shared contracts
were competitively awarded to the following companies:
Solar Turbines, Inc., San Diego, California, and RollsRoyce, Indianapolis, Indiana, to develop advanced distributed-generation gas turbines;
General Electric and Solar Turbines for the development of advanced ceramics materials for turbine components
and subsystems;
Siemens-Westinghouse and Pratt & Whitney for the development of advanced thermal barrier coatings; and
PCC Airfoils, Inc., and Howmet Corporation for the
development of advanced castings for gas turbines blades
and vanes.
The thermal barrier coating contracts and advanced casting contracts were part of the technology-base efforts managed for EERE by the University of Tennessee-Battelle Oak
Ridge National Laboratory.
The focus of EEREs participation in the ATS program
has been enabling gas turbine manufacturers and other
RD&D performers to develop advanced systems that perform substantially better than existing systems, well beyond
what could be expected from the incremental improvements
that were part of the industrys long-term RD&D plans. In
fact, the federal governments role has been to fund more
innovative and higher-risk concepts to obtain specific improvements that will benefit the public interest in areas such
as energy efficiency and environmental quality, which would
not have been undertaken by industry otherwise. In fact, the
performance targets for energy efficiency and environmental emissions of the advanced turbine systems that are the
cornerstone of the ATS program were well beyond what the
industry had considered attainable (at acceptable cost) in its

own RD&D plans.
The ATS program cross-cuts several of the subsectors
addressed by the EERE technology development programs.
The benefits matrix covers the potential application of advanced turbine systems in a variety of end-use sectors based
on marketing studies done by Solar Turbines as it developed
the Mercury 50 (OEE, 2000j). The primary markets identified by Solar Turbines include the following:
Industrial: oil and gas exploration, petrochemical, pulp
and paper, pharmaceuticals, cement, and textiles.
Commercial/institutional: universities and colleges,
hospitals, and airports.
The economic benefits of avoiding outages and spikes
and sags in voltages can amount to millions of dollars a day
for industries that rely on e-commerce or that produce sensitive products such as silicon-based devices, pharmaceuticals,
and specialty chemicals and metals (see Table E-14). By
avoiding outages and production losses and reducing consumer complaints, productivity and profits will be higher.
The result of rolling brownouts and blackouts in California
in January 2001 provided real evidence of economic losses
by industry.
The overall goals of the EERE portion of the ATS program have been achieved, although all manufacturers did
not achieve all of the goals. Several products have resulted
directly from the EERE portion of the ATS program, and
some are nearing commercialization, including the following:
The primary product, the Mercury 50 advanced turbine
system, was developed by Solar Turbines, Inc.;
Howmet and PCC have demonstrated a low-sulfur melt
process as a result of the casting RD&D initiative;
Pratt & Whitney and Siemens-Westinghouse are currently demonstrating two advanced thermal barrier coatings;
Solar Turbines will reach a world record in January
2001 for the 15,000 hours of continuous service of its advanced ceramic-composite combustor liner;
Rolls-Royce achieved over 800 hours of continuous
service for ceramic vanes; and
TABLE E-14 Selected Outage Costs (dollars per hour)

Industry
Average Cost of Downtime
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
123
APPENDIX E
Solar Turbines achieved over 1000 hours of continuous

service for its ceramic blades.
With these achievements, FY 2000 was the final year for
the federally funded portion of the EERE ATS program. The
culminating activity in FY 2000 was the field demonstration
of the Mercury 50 that began during the summer of 2000 at
Rochelle Municipal Utilities (July 2000). The field test is a
24,000-hour test that has accumulated 900 hours of service
to date. The Mercury 50 and the other ATS products mentioned above exemplify a successful government-industry
RD&D partnership and set an industrywide standard of leadership in assuring clean, efficient, and reliable electricity.
The EERE ATS program has its roots in the policy directives contained in the National Energy Strategy (NES) and
the Energy Policy Act of 1992 (EPAct). The effort received
steady and bipartisan support from the appropriations committee of Congress. This support meant that annual appropriations were generally close to requested levels, but unfortunately lower than the requirements outlined by the DOEs
1994 program plan to Congress. Funding limitations placed
constraints on the annual budget request to Congress.
However, one aspect of the generally consistent funding
support from Congress has been the industry-driven structure of the program, which has been a key element since the
inception. For example, during the initial planning workshop
for the ATS program that was held in 1992, industry and
government participants reached agreement on several fundamental principles, including the need to improve the energy efficiency of power generation in the United States,
which had been largely stagnant since the 1960s, and the
need to improve environmental quality and reduce emissions. The participants at the planning workshop believed
that a well-designed industry-government RD&D partnership could achieve these aims while lowering costs.
The EERE portion of the ATS program was originally
developed under the Cogeneration Program in the Office of
Industrial Technologies (OIT). In 1995, OIT was reorganized
under a new strategy that targeted the Offices RD&D activities at the Industries of the Future (IOF). Under the IOF
strategy, the cogeneration and ATS programs were designated crosscutting, with a strengthened focus on application
in the nations most energy-intensive industries. This meant
that somewhat less emphasis was given to ATS applications
in buildings, institutions, and district energy applications.
In March 2000, the ATS program, then in its final stage,
was moved from OIT to the Office of Power Technologies
(OPT). This move was part of an overall effort to improve
coordination throughout EERE on distributed energy resources. At that point, the EERE portion of the ATS program had completed its original technical mission of developing the next-generation advanced turbine system.
However, the move from OIT to OPT has led to a broader

scope and has enabled program participants once again to
devote their attention to the full suite of potential applications, which includes manufacturing, buildings, institutions,
and district energy systems, as well as the Industries of the
Future.
Significant changes in market conditions affected the
programs directions and priorities. For example, after the
program plan was finalized but before significant development activities were under way, SCONOx technology was
introduced as the lowest-achievable emissions rate (2.5 ppm)
for gas turbines in California in 1995, based on 6 months
operation of a General Electric combustion turbine. This
change led the program to reassess the emissions goals and
place greater emphasis on achieving single-digit emissions
of NOx. To address this change, each of the RD&D performers had to reconsider the cost/benefit trade-offsfor example, efficiency vs. cost and emissions vs. costin achieving stricter targets for emissions.
Another market condition that is affecting the program is
the restructuring of the electric power industry in the United
States, which began in the mid-1990s. As of January 2001,
24 states and the District of Columbia had enacted comprehensive electricity restructuring legislation or regulatory orders. Restructuring is opening energy markets and allowing
customers to choose their energy providers, delivery methods, and an array of other services. Restructuring is also creating market demand for more energy-efficient equipment
and systems to provide increased reliability and reduce onpeak operating costs. Market forces are beginning to favor
small, modular, distributed energy systems that can provide
an economic hedge against peak energy prices, grid reliability problems, and future emissions costs.
DOE spent $184.70 million (constant 1999 dollars) over
a 9-year period from 1992 to 2000. The private sector contributed almost 50 percent of total program cost share, or
about $171.80 million. Table E-15 lists annual funding for
government and industry through the various R&D stages.
NASAs High Speed Civil Transport program also provided support to the ATS program under a DOE-NASA
MOU. Under the terms of the MOU, no formal cost sharing
or funds transfer were used, but NASA did provide critical
pioneering technologies for ceramic combustor liners, which
DOE-sponsored RD&D teams scaled to full-size products
and tested successfully. The ceramic combustor liners have
accumulated more than 15,000 hours of operations at an industrial facility. The ATS program was initiated in 1992 and
was completed, as planned, in FY 2000, the final year of
federal funding.
During the various phases of the ATS program, certain
projects were started and terminated for a number of reasons, including the completion of intermediate products,
changes in direction, unproductive RD&D pathways, and
funding limitations. For example, the engine manufacturers
conducted several assessments of the potential for biomass
124
APPENDIX E
TABLE E-15 Funding for the Advanced Turbine Systems Program (Energy Efficiency Component)
Fiscal Year
Actual Federal Funding

(millions of nominal $)
Federal Funding
(millions of constant 1999 $)
Estimated Private Cost Share

(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
Development and field testing
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.
fuel to be used in ATS engines. A total of $6.8 million was

allocated to investigate alternative concepts. One critical issue was the need to clean up the biomass-derived fuels prior
to their direct firing in gas turbines. A project was initiated
to address this issue, but funding limitations, as well as the
DOE decision to focus on emissions reductions rather than
fuel flexibility, led to its termination. The plan had been to
undertake this RD&D jointly with DOEs Biomass Power
program, with field tests at the Biomass Gasification Project
in Burlington, Vermont. It is estimated that an additional
$10 million would have been needed to accomplish this, but
no funding was appropriated.
Results
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
also provided capabilities for the thermophysical evaluation

(environmental effects) of advanced materials in gas turbine
environments at ORNL, accessible to all engine manufacturers. In addition to providing new standards for the development of sulfur measurements (low-sulfur alloys for gas turbine components) through NIST, the program also developed
precompetitive teams (including the national laboratories,
NASA, DOE, the Office of Naval Research, and industry) to
demonstrate new coated-ceramic composite materials. The
EE ATS program also provided a measurable difference in
outages, spikes, and sags.19,20
The program has also contributed to the development of
effective government-industry-university partnerships, including industry/laboratory fellowships. It has helped to raise
awareness of the regulatory and institutional barriers to the
expanded use of distributed energy resources and combined
heat and power systems. Participants have included poten-
19The first ATS system, Solar Turbines Mercury 50 turbogenerator,

started in the summer of 1999 at Rochelle Municipal Utilities. The city of
Rochelle, Illinois, is 75 miles west of Chicago. With a growing industrial
base and facing escalating wholesale prices and transmission line constraints, the city recognizes a need for more reliable, efficient power generation, especially during summer demand peaks. The city is extremely
vulnerable to the summertime capacity problems that have occurred. (See
Department of Energy, Power Outage Study Team, Findings and Recommendations to Enhance Reliability from the Summer of 1999, March 20,
Final Report. The study team was brought together by the Secretary of
Energy.) The Mercury 50 ensures reliable power at stable prices. The natural-gas-fueled turbine is more energy- and cost-efficient than companion
diesel units. The turbines emissions are consistently below regulated limits. The additional generation capacity of the Mercury 50 also provides
offsets to charges for capacity reservations with the utility.
20 The Mercury 50 actually came to the rescue when Clemson
Universitys Taurus 60 failed to start due to a lube oil pump and lube oil
temperature problem (now repaired). Using the Mercury 50, Clemson was
able to generate 4138 kW for peak shaving during the hour ending 0800,
saving approximately $40,000.
125
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.
Products Being Commercialized in Other Than the Original

Program
Rolls-Royce has decided not to commercialize its 701 engine, which was its RD&D effort under the ATS program.
The 701 never proceeded to field demonstration (phase 3).
The products intended for the 701 engine are now being
evaluated by Rolls-Royce for potential application in its current fleet of engines, including the 601 and the 501 series.
The most promising products include thermal barrier coatings, advanced disc alloys, and low-emission technologies.
The recuperator developed by Solar Turbines for the Mercury 50 is potentially applicable to other turbine designs,
including microturbines under the Advanced Microturbine
Systems program, which was launched by the EERE in FY
2000. Solar Turbines is a major supplier of recuperators to
the various microturbine manufacturers.
As mentioned above, the primary product of the ATS program has been the Mercury 50. The Mercury 50 features a
4.2-MWe, energy-saving cycle that achieves 38 percent energy-generating efficiency (measured at the bus bar) and
ultralow exhaust emissions (current Centaur efficiency is 29
percent). This engine is the first engine of its class (i.e., having access to the combustor) to be recuperated.
The low-emission technology and ceramic materials developed under the ATS program are only now beginning to
be commercialized. These technologies are currently being
evaluated by both Solar Turbines and Rolls-Royce for other
applications on other engines in their respective product
lines.
Role of DOE Funding

The DOE contribution is significant. Without the ATS
program, the Mercury 50 would not have been developed
and there would not be six engines under long-term testing
today. While it is likely that the gas turbine manufacturers
would have developed new turbine products in the time
frame covered by the ATS program, the manufacturers say
that they could have accomplished only incremental improvements to lower installation and operating costs. Most
manufacturers did not expect to improve beyond the baseline
for energy efficiencythe Centaur 50S baseline of 29 percent efficiency. The federal RD&D funding gave the industry an incentive to go beyond incremental improvements and
aim at public benefits such as energy efficiency and environmental protection. In the face of the highly competitive global market for power generation equipment, which is be-
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.
126
APPENDIX E
Benefits and Costs

The primary benefits to be derived from federal investments in advanced turbine systems are in the form of reduced energy consumption and costs and reduced environmental emissions. The estimated benefits take into account
efforts to develop advanced turbine systems, advanced ma-
terials (ceramics and castings) for turbine components and

subsystems, and low-sulfur alloys for turbine components
and subsystems, and thermal barrier coatings for turbine,
components, and subsystems. Table E-16 summarizes the
benefits of the ATS programs.
All in all, the ATS program is a good example of a successful industry-government R&D program. The focus on
TABLE E-16 Benefits Matrix for the Advanced Turbine Systems Program (Energy Efficiency Component)a
Economic
benefitsb/costs
DOE funds: $185 million

Private industry funds: $172 million
Substantial energy savings: approximately
$400 millionc
Prevents outages and spikes and sags in
voltaged
Mercury 50 appears to be close to

commercialization
Rolls-Royce products are being
reevaluated
Low-emission technology and ceramic
materials are beginning to be
commercialized
Recuperator is potentially applicable to
other turbine designs.
Low-sulfur melt process is nearing
commercialization (155,000 lb produced
as of 9/00 by Howmet)
Advanced thermal barrier coatings may be
commercialized (in final testing)
Improvements in the manufacture of

advanced materials: ceramics, lowsulfur alloys, and thermal barrier
coatingse
Enhanced knowledge of advanced design
options and cooling for components;
combustion and premixing; process
manufacturing and coating of ceramics;
thermophysical properties of ceramics;
designing and engineering ceramic
components; low-sulfur measurement
techniques and standards; castability of
low-sulfur alloys; repair issues; and
refurbishment and failure mechanisms
Increased understanding of the effect of
sulfur on protective coatings and of
lifetime models
Environmental
benefits/costs
9793 tons of NOx reductionsf
Technologies commercialization could

increase efficiency and reduce
emissionsg
Potential applications that could increase

efficiency and reduce emissions in a
wide variety of other types of industrial
combustion processes
Security
benefits/costs
Minimal
Little impact on oil importsh

Potential impact on the reliability and
security of the power system
Could lead to the use of biofuels and to the

displacement of oil
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.
127
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.
BLACK LIQUOR GASIFICATION

Description and History of Program
21During
the course of the ATS program, one of the participants,

AlliedSignal, purchased Honeywell, Inc. (June 1999), which is now being
acquired by General Electric. Another participant, Westinghouse, was purchased by Siemens (August 1998). A third participant, Allison Engine Co.
was purchased by Rolls-Royce (March 1995).
The papermaking process produces a waste product called

black liquor, composed of chemicals used in the pulping process and (depending on the process) roughly half the carbon
from the initial organic input. For most of the 20th century,
128
APPENDIX E
TABLE E-17 Predicted Environmental Emissions from

the MTCI/StoneChem Steam Reformer and from a
Tomlinson Recovery Boiler
Emission
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,
total reduced sulfur; ppmv, parts per million by volume.

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, December 12.
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).
displaced, this corresponds to a reduction of 31 million tons

of carbon equivalent per year.
Black liquor gasification has been investigated in both
the United States and Scandinavia for several decades. Commercializing BLGCC requires solving some hard technical
problems. One set of issues involves the temperature of gasification: if it is low, tars form that inhibit the gasification
process; if high, both chemical recovery and gas cleanup are
more problematic. Producing either sufficiently clean gas or
sufficiently robust gas turbines is another focus of research.
Like coal gasification, the specific characteristics of the fuel
(here, the type of black liquor) have implications for the viability of the process, and serious questions remain about
how well the process will scale up and whether it will operate reliably under commercial conditions. The characteristics of both black liquor gasification and the forest and paper
industry suggest that, absent government intervention, commercialization of the technology would proceed slowly. The
paper and pulp industry in the United States has been challenged by intense international competition, increasingly
stringent environmental requirements, and low profits.
In addition to the low profits, the uncertainty over both
demand (the industry is very cyclical) and future regulations
has caused long-term investment in the industry to decline
sharply (Finchem, 1997; Jensen and Rockhill, 2001). Currently, there is overcapacity in the industry, and the past 5
years have witnessed significant consolidation. One consequence is that research spending by the industry, never high,
declined in the past half decade, in sharp contrast to the trend
for U.S. industry overall. The prospects for sponsoring or
demonstrating an expensive and risky new technology, even
if the bulk of the research and development is conducted by
a supplier industry, are not, therefore, good.
The Tomlinson boiler is the largest single investment in a
pulp mill and costs $150 million. It is a long-lived investment. Eighty percent of the boilers now in use in the United
States are over 20 years old and will need to be replaced over
the next 20 years. This is seen as an opportunity for the gasification process that may be missed by purely private-market-driven commercialization, which would rely on incremental additions and a slow accumulation of experience at
pulp mills. Although black liquor gasifiers can be used as
incremental capacity in a mill that has a Tomlinson boiler
(and is being done in at least two plants in Sweden and one
in the United States), the energy efficiency advantages of the
process, and in particular a BLGCC, accrue when it is used
instead of, rather than in addition to, a Tomlinson boiler. But
the size of the investment make the risks large and unattractive. Hence the importance of demonstrations and the reluctance of any single mill to host one.
BLGCC commercialization was identified as a priority
by the forest and paper industry (American Forest and Paper
Association, 1994). The program received a boost in 1999,
when Congress approved funding of the Biomass and Black
Liquor Gasification Demonstration Initiative, part of Presi-
129
APPENDIX E
dent Clintons BioEnergy Initiative. Congress authorized

$100 million for the program over 8 to 10 years. While Congress has appropriated about $15 million per year for the
program, DOE is still planning for the demonstrations
and has spent less than $2 million a year to date (see Table
E-18).
Three gasification technologies are being considered for
demonstration. Farthest along is the steam reforming technology, which DOE has supported since 1987. The pulse
combustor-based, indirectly heated process (steam reforming) was developed by MTCI and is now licensed in the
United States to StoneChem, a subsidiary of TRI and Stone
& Webster. MTCI has been involved in the Clean Coal Technology program at DOE and participated in the coal gasifi-
cation demonstrations with analogous technology. DOE

sponsored two pilot plants using the MTCI/StoneChem technology. A plant capable of processing 25 tons per day was
tested at the Inland Container mill in Ontario, California, in
1992, using paper mill sludge. The experience led to design
and operation of a 50-ton-per-day (tpd) plant at the
Weyerhaeuser plant in New Bern, North Carolina. Experience with these plants suggested a number of problems remained with the technology and particularly using it in conjunction with a gas turbine. OIT (Office of Industrial
Technologies) has since supported a group of projects at the
national laboratories and universities investigating generic
issues that arise in black liquor gasification (not exclusively
from the steam reforming process), including a project on
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
Black Liquor GasificationPulse Combustion

Advanced Technologies for Biomass Energy
Utilization in the Pulp and Paper Industry
Biomass Gasification Combined Cycle Study
Biomass Gasification Combined Cycle Study
Tars Produced During Black Liquor Gasification
Tars Produced During Black Liquor Gasification
Gas Cleanup for Combined Cycle Systems
Black Liquor Gasification Kinetics
Gas Cleanup for Combined Cycle Systems
Black Liquor Gasification Kinetics
Development of Materials for Gasification
Engineering Study for a Full Scale Demonstration
of Steam Reforming Black Liquor
Black Liquor Gasification
Kinetics Catalysts for Destruction of Tars in Gasification
Engineering Study for a Full Scale Demonstration of
Steam Reforming Black Liquor
Appropriated funding for Biomass and Black Liquor
Gasification Demonstration projectsproposals
under evaluation
Catalysts for Destruction of Tars in Gasification
Development of Materials for Gasification
Appropriated funding for Biomass and Black Liquor
Gasification Demonstration projectsproposals
under evaluation
1996
1997
1998
1999
2000
2001
OIT Funding
(thousands of $)
Industry Cost Share

(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
130
APPENDIX E
handling tars produced during black liquor gasification, gas

cleanup for combined-cycle systems, black liquor gasification kinetics, and development of materials for gasification.
In 1999 the Georgia-Pacific Corporation announced that
it would replace the smelters at its Big Island, Virginia, mill
with the MTCI/StoneChem gasification technology. This is
the first demonstration funded under the BioEnergy Initiative. OIT has committed $1.75 million for engineering studies, of which $700,000 had been spent by FY 2001. GeorgiaPacific and OIT anticipate that DOE will pay for 50 percent
of the project, which is projected to cost $36 million (versus
$25 million that the traditional technology would have cost)
and have operating expenses of $2.1 million per year (versus
$2.5 million).23 This is a semichemical mill, not a kraft mill,
but Georgia-Pacific plans to run tests in the facility using
kraft black liquor. (The kraft black liquor will be imported,
and while the test is in progress the plant would use its old
smelters for its own production.) The demonstration does
not involve using the product gas in a gas turbine.
The narrow demonstration value of the projectshowing
that the technology works in commercial operation for a reasonable length of time to encourage adoption by other
millsis quite limited, as only about a dozen other mills in
the United States have the relevant characteristics of the Big
Island mill (called a semichemical mill). However, it is an
attractive demonstration opportunity, both because the technology has been investigated on smaller scales and because
of the intense interest in the project by its sponsoring mill.
Georgia-Pacifics primary interest in the demonstration at
its Big Island mill is environmental. The mill is over a hundred years old, and the current smelters are 50 and not capable of satisfying the Cluster Regulations maximum achievable control technology (MACT-II) regulations. However,
the Cluster Regulations have a provision (for which IOF gets
some creditsee the IOF-Forest case study) allowing regulatory flexibility to encourage the use of innovative technology that may be better than traditional regulatory approaches.24 In this case, the EPA agreed that if delays ensue
in the installation of the technology, or if it fails to be as
environmentally sound as expected, the company will receive an extension beyond the MACT-II deadline to install
alternative technology. Furthermore, the company has permission to use its old smelters when the kraft black liquor
test is conducted. The Big Island project is one of the first
projects approved under Project XL (for excellence and leadership). In its filing with the EPA, the company stated that it
would assume financial responsibility for the project if DOE
withdraws from it, although presumably in this case it would
23Cost estimates are inconsistent across sources. Newspaper accounts

project the cost at $65 million (Fales, 2000). The lower estimate is from
Georgia-Pacifics filing with the EPA, Final Project Approval.
24Section 112 of the Clean Air Act.
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.
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
25Georgia-Pacific Corporation. 2000. Big Island, Virginia, Project XL,

Final Project Agreement, at <www.epa.gov/projectxl/georgia/finalpa.pdf>.
May 31, p. 24.
26Champion International was recently acquired by International Paper,
which has caused some concern about the fate of this project. The usual
pattern is for R&D activities to be cut when companies in this industry
merge.
131
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.
Factors that will influence its adoption include the price of

electricity and the stringency of the final MACT-II environmental regulations. A third factor of importance is the extent
to which carbon emissions will be regulated.27
The technology thus yields benefits in the options and
knowledge categories (see Table E-19). Substantial options
benefits accrue in the environmental category. The market
27Industry
participants quoted in Swann (2000).
TABLE E-19 Benefits Matrix for the Black Liquor Gasification Programa
Economic
benefits/costs

Industry costs: $2.2 million
No realized benefits: technology has not yet
been proven to be commercially
successful on a full scaleb
Program has helped to bring gasification

technology to the point where it can be
commercially demonstrated
Large potential for the technologyc
Increased energy productiond
Technology can provide the same critical
energy and chemical recovery functions
as a Tomlinson boiler at the same cost
and with many advantagese
Development of a pulse combustor-based,
indirectly heated process for the
gasification
Development of the MTCI/StoneChem
steam reforming technologyf
Basic research on the kinetics of black

liquor gasification, development of
corrosion-resistant gasifier materials,
analysis of the formation and control of
tar deposits, and studies of the
technology and economics of black
liquor and biomass gasification
Testing of the PulseEnhanced Steam
Reformer using a variety of fuels,
including sawdust, paper mill sludge,
and municipal solid waste
Engineering study to design a full-scale
steam reformer demonstration project
Research on the DOE BioEnergy Initiative
Engineering study of a full-scale
demonstration of StoneChems
PulseEnhanced Steam Reformer
technology
Environmental
benefits/costs
None
Large potential reduction in fuel

consumption and CO2 emissionsg
Technologies produce significantly less
environmental emissions than the
MTCI/StoneChem steam reformer or a
Tomlinson recovery boiler
If technology can be demonstrated to be

fully reliable and able to meet all
environmental regulations, it is likely
that the industry will use these systems
to replace the less-efficient, lowerpower-output Tomlinson boilers
Security
benefits/costs
None
Minimal oil displacement
Minimal
aUnless
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
132
APPENDIX E
depends more on the regulatory regime than on successful

integration with combined-cycle generation. In the knowledge category, the current demonstrations and IOF-funded
projects may contribute to development of BLGCC. Potential economic and environmental benefits would then accrue
due to the increased efficiency of biomass electricity production and its displacement of fossil-fuel-generated electricity.
ing the 2002 Cluster Regulations emissions standards with

DOE cost-sharingtogether, of course, with the Cluster
Rules themselvescreated the incentive for GeorgiaPacifics interest in the new technology. Coordinating strategies works to the benefit of both environmental goals and
innovation.
Results
Description and History of the Program
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-
OIT initiated the IOF program in response to the EPAct,

which provided DOE with a mandate to work with the largest energy users in the industrial sector to develop new energy-efficient technology. OIT approached the challenges of
technological development and transfer in this program by
inviting nine energy-intensive industries to develop a vision
of how the industry would evolve over the next 20 years and
the technological advances necessary to accomplish it. These
documents would form the basis for project selection and
prioritization. The philosophy of the program thus goes beyond industry participation in project definition and costsharing-standard features of federal technology programs in
the 1990s in its attempt to formulate a research program
around a set of strategic goals that derive from an industrywide context.
The forest products industry was the first industry to respond to the initiative with a technology vision and strategy
(AFPA, 1999). By the early 1990s, the industry was suffering from low-cost competition from South America, South
Africa, and Indonesia and cyclical demand downswing
(AFPA, 1994). On p. 5, Agenda 2020, written in 1994, says,
Technological leadership, once clearly owned by the U.S.
industry, has also been shifted towards Canada and the Scandinavian countries over the past 20-30 years. Finally, regulatory pressures were clearly mounting. The average share of
capital expenditures for environmental protection increased
from 8 percent in the 1980s to 14 percent (AFPA, 1998).
The EPA was in the process of formulating new air and
water regulations for the industry, known as the Cluster
Regulations, that were anticipated both to be costly and to
require greater energy use by the industry.
Given these problems, the IOF framework appeared very
attractive to the industry. The forest products industry is the
third-largest industrial energy consumer in the United States
(3.2 quads per year). By 1994 it produced 57 percent of the
energy that it consumed (AFPA, 1994). Thus, both improvements in energy production within the industry and reductions
in energy consumption can yield substantial productivity gains.
Moreover, with R&D spending at about 1 percent of sales, the
forest products industry is among the lowest R&D performers
in the U.S. manufacturing sector (NSF, 1997). With little individual R&D competition among firms in the industry, a consortium-based precompetitive program had considerable latitude and generated little internal opposition.
INDUSTRIES OF THE FUTURE PROGRAM
133
APPENDIX E
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.
134
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.
The DOE Role

Tables E-20 and E-21 contain budgetary information on
the IOF/Forest program, including funds associated with the
Black Liquor Gasification demonstration. To date, the largest expenditures have been in the environmental performance
and sensors areas, with somewhat smaller totals in energy
performance and sustainable forestry and relatively modest
(to date) expenditures in the remaining areas of recycling
and capital effectiveness. It should be noted that there is considerable overlap in the areasfor example, black liquor
projects appear in both the capital effectiveness and energy
performance categories; recycling projects tend to overlap
as well. However, the categories do indicate to some degree
the priorities of the program and reflect the combination of
industry and public sector priorities.
While real resources devoted to the program have been
stable, priorities have shifted. Expenditures on projects associated with the environmental performance category have
The DOE program caused the forest products industry to

establish a unified technology strategy. While specific technologies await further development, the governments influence in catalyzing the industrys assessment of its technological needs and options is considered by all of the
participants in the process to be a major step toward achieving energy efficiency, environmental improvements, and industrial competitiveness in the industry.
DOE financial support has been leveraged by industry
contributions; the industry anticipates further leveraging of
its R&D portfolio to other precompetitive arenas outside
DOEs traditional agenda, through joint projects with the
Forest Service, NSF, and the Department of Education. Thus,
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.
135
APPENDIX E
TABLE E-22 Participation in IOF/Forest Program Then

and Now (percent)
Share of Projects with
Participation by
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
participants, their actual deployment remains speculative, so

that the benefits belong in the knowledge rather than the
options category at this time. Anticipated results will improve the energy efficiency, capital utilization, and overall
productivity of plants and mills; develop infrastructure (e.g.,
sensors) to further improve operations and understanding of
the manufacturing processes; and improve forest sustainability practices.
Benefits and Costs
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.
TABLE E-23 Changes in Participation by Share of Budget

(percent)
Fiscal Year
Share of Budget for Projects
with Participation by
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
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.
DOE can be characterized as having helped establish an

R&D infrastructure in the wood products industry.
Notwithstanding these institutional achievements, a critical contribution of DOE to this RD&D effort is financial.
DOE pays for about two-thirds of the RD&D performed under this program. This contribution has not redirected or extended industry research activities. At this time, it represents
a very major share of the R&D and is close to all of the
research undertaken by the industry.
Results
The IOF/Forest program (technology) results to date lie
in the knowledge category (see Table E-24). In part, this
reflects the programs focus on projects led by universities
and national laboratories. DOE, however, identifies a set of
technologies that is expected to result in deployable technologies over the next 5 to 10 years. According to project
Benefits of the program remain speculative, but it is easy

to reach a general conclusion that the program is valuable
(see Table E-24). Given low-cost competition from developing economies and technological competition from Canada
and Scandinavia, the continued competitiveness of the forest
products industry may rely on technological advances. And
given the industrys cost structure and other public imperatives, these advances will contribute to the energy efficiencies goals of the EE program. Finally, given the industrys
tradition of very little research, public support has been critical in establishing institutions for the conduct of R&D.
The program was established to allow industry management as well as direction and input. It also appears to have
the flexibility to continue strategic planning beyond the
precompetitive research phase to consider issues of commercial development and deployment. Thus, the structural aspects of the program appear well designed to meet the very
considerable challenges of successful technology development.
OXYGEN-FUELED GLASS FURNACE

The U.S. glass industry is a large user of energy in furnaces to produce glass containers, float glass for windows in
construction and automobiles, glass fiber insulation and
other specialty products, such as TV tubes, fiber-optic cables,
and lightbulbs. Furnaces for these products have traditionally burned natural gas or oil with preheated air to produce
about 30 to 1000 tpd of glass. The high temperatures
(>2800F) required for glass manufacture and the raw materials used in glass result in significant emissions of NOx and
particulates.
DOE began an R&D program in 1985 to explore the feasibility of using oxygen instead of air in the combustion process in the furnace for midsize glass facilities. Oxygen furnaces had been used in extremely small applications (<10
tpd), but both technical and economic challenges remained
to adapt it for larger uses (>25 tpd). This change in the process reduces the amount of energy required per ton of glass
produced, reduces NOx emissions, reduces levels of other
gases, and reduces the capital costs for furnace regenerators
and emissions control equipment.
136
APPENDIX E
TABLE E-24 Benefits Matrix for the IOF/Forest Programa

Options Benefitsb/Costs
Economic
benefits/costs
DOE R&D costs: $53.6 millionc

No economic benefits as yet
Development of the XTREME cleanere
Introduction of better process technologies
to the mills
Technologies offer substantial advantage

over conventional alternativesd
Reduced capital, operating, and
maintenance costs
Improved forest productivity
Potential to make the paper industry a net
power producerf
Served as a catalyst for a wide array of

research partnerships that otherwise
would probably never have materialized
Improved knowledge of technology
performance and benefits in operating
biomass boilers
Improved knowledge of commercial-scale
performance of fiber optic sensor for
web scanning with applications to other
web manufacturing processes
Improved knowledge of sensor systems
that combine computer control systems,
analytical chemistry, and chemometrics
in commercial applications
Environmental
benefits/costs
Provided assistance to EPA in formulation

of 1997 Cluster Regulations
Reduced energy consumptiong
Reduced environmental emissionsh
Reduced emissions of SO2, NOx, CO,

VOCs, SOx, and greenhouse gases
Reduced energy and water consumption
Reduced process wastes and reduced
landfill requirements
Reduced smelt-water explosion hazards
Improved knowledge of how to control

orientation and flow of pulp slurry using
pressure pulses
Improved understanding of how to
separate suspended solids from the
liquid phase of pulp slurries,
whitewaters, and process filtrates
Improved knowledge of using radio
frequency/microwaves in industrial
applications for drying and material
pretreatment
Security
benefits/costs
Minimal
Minimal
Minimal
aUnless
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.
A three-phase program was begun by DOE with Praxair

(then part of Union Carbide) to evaluate the technical and
economic feasibility of using oxygen-enriched combustion
for industrial applications in midsize applications. Technical
research, such as burner testing and combustion modeling,
and economic studies were conducted initially.
A vacuum-pressure swing adsorption (VPSA) system was
developed to produce oxygen at reduced costs. The VPSA
process, introduced in 1991, is a point-of-use oxygen supply
process that makes the use of 90 to 95 percent pure oxygen
more economical and convenient. DOE then cofunded a
demonstration project at Gallo Glass Company in Califor-
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
137
APPENDIX E
on complementary oxy-fuel technologies even though the

original technology has been commercialized. The reasons
for the continued research include further potential significant energy savings, improvements in the industrys competitive posture, further reductions in environmental loadings from the glass manufacturing process, and its
applicability to other industrial sectors.
These research efforts focus on (1) a better understanding
of the heat flux fundamentals and the characterization and
modeling of the process, (2) reductions in the cost of producing oxygen through improvements in existing processes or
the development of new ones or waste-heat-recovery
schemes, (3) sensing and control instrumentation to better
monitor and optimize the melting process, (4) refractories
that are exposed to the oxy-fuel combustion environment,
(5) batch and cullet preheating to utilize exhaust heat, and
(6) burners used in oxy-fuel furnaces.
Participation and Funding
DOE began looking at enriched combustion methods in
the late 1970s, first with air and later with oxygen. DOE
recognized that lower-cost oxygen production technologies
would be needed to enhance the commercial viability of
oxygen-enriched combustion for industrial applications.
While Corning had proven oxy-fuel firing technology for
very small, specialized furnaces, DOE opened the door for
expansion of the technology to larger furnaces by sponsoring research on combustion modeling and related technical
challenges, as well as by providing cofunding for demonstration of the new technology on larger furnaces. Without
the DOE program, the commercialization and penetration of
the oxy-fuel furnace for large glass furnaces would have been
substantially delayed.
Commercial-scale glass furnaces represent large capital
investments ($20 million or more per unit, although the fuel
system, burners, and related equipment represent only a portion of this total), with the majority of the burners running
continuously for 5 to 10 years. Therefore, testing the viability of a new furnace represents a substantial risk. The DOE
provided about $1.3 million, with cofunding from the glass
industry, for the first demonstration projects and also provided the initiative for technical cooperation between glass
producers and material suppliers. Restriction in the standards
for the emission of NOx as well as particulates strongly impacted the industry. The decision by glass companies to use
oxy-fuel firing was dependent on their individual situations.
Initially, the primary reason for employing oxy-fuel firing
was either for NOx reduction to meet standards or for energy
savings. Additional reductions in the cost of oxygen during
the 1990s also increased the likelihood of utilizing oxy-fuel
firing. More recently, the increase in production rate that
accompanies oxy-fuel firing has been a deciding factor for
several manufacturers.
Table E-25 indicates the DOE obligations and cost-shar-
TABLE E-25 General Funding for the Oxy-fueled Glass

Furnace Program (thousands of dollars)
Constant 1999 Dollars
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
NOTE: While DOE-sponsored research began before 1988, the amounts

provided by DOE before that year are believed minimal.
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.
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
138
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
High-luminosity, low-NOx burner
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
Diagnostics and modeling of corrosion of

refractories for oxy-fuel glass furnaces
1998
1999
2000
264
325
325
101
120
155
260
325
325
100
120
155
Modeling of glass processes
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.
savings seen by glass manufacturers. On a net basis, energy

requirements are still reduced.
Productivity improvements of as much as 10 percent (including product quality and throughput increases), as well as
environmental benefits, in particular NOx reductions, are also
achieved when converting to oxy-fuel.
As of September 2000, 114 glass furnaces had been converted to oxy-fuel firing in the United States. This represents
about 28 percent of U.S. commercial scale glass furnaces, a
significant increase from the 11 percent converted by 1995.
As other air-gas furnaces are rebuilt at the end of their cur-
TABLE E-27 Oxy-fuel Penetration and Characteristics by

Glass Industry Segment
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
SOURCE: OEE. 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.
rent useful life, more conversions to oxy-fuel firing are likely

both in the United States and abroad.
Table E-27 depicts the penetration of oxy-fuel firing by
U.S. glass industry segment. The flat glass industry has the
lowest penetration, as it still has concerns about the potential
for bubbles, and many of the flat glass facilities are located
in rural areas that have less-stringent environmental regulations. Efforts are currently under way to determine the applicability of this technology in other industries where heating
or firing at high temperatures is required. For example, the
technology has been tested in a batch steel reheat furnace at
an integrated steel plant through a DOE cofunded project
(NICE3) with Bethlehem Steel and North American Manufacturing (Reed, 1997). A privately funded demonstration
project is testing oxy-fuel firing in an aluminum smelter as
well. Other potential applications have been identified in
many other industries, including steel, aluminum, copper,
petroleum, and chemicals.
Other potential applications include the production of
chemicals such as ethylene oxide, propylene oxide, vinyl
chloride monomers, titanium oxides, and sulfuric acid. Oxygen could also be used in sulfur recovery in the petroleum
refinery industry. Other environmental applications include
wastewater treatment and hazardous waste incineration. The
paper and pulp industry and the health care industry also will
benefit from these technologies. Finally, industries that depend on various partial oxidation processes during production will benefit from the ongoing development of oxygenproduction technologies initiated by the oxy-fuel-fired
furnace.
139
APPENDIX E
Costs and Benefits

The project does have positive energy, environmental,
and productivity benefits that clearly outweigh its costs. Scientific knowledge has also been advanced in several areas.
The DOE clearly accelerated the adoption of this technology
through both its research and its sponsorship of key demonstrations. The benefits matrix presented in Table E-28 repre-
sents national benefits and costs for oxy-fuel firing in glass

furnaces.
Lessons Learned
The demonstration of the technology was critical to its
successful adoption by industry. DOEs research on oxy-
TABLE E-28 Benefits Matrix for the Oxy-fueled Glass Furnace Programa
Economic
benefits/ costs

Industry cost share: $527,000c
Energy savings of 128 trillion Btu and
reductions in energy costs of
approximately $300 milliond
By 1999, about 30% of all glass made in
U.S. used this technology
Reduced capital expenditures for furnace
regenerators and emission control
equipmente
Increased productivityf
Benefits are moderate since technology

has been commercialized and has
already captured 30% of the market
Improved cost competitiveness by reducing
fuel requirements
Offers a simpler way of melting and
refining glassg
Oxy-fuel systems can be installed at
reduced capital costs with rapid
paybackh
Potential applications in other industriesi
Development of burner designs, sensors,

modeling, expert systems controls, and
refractories
Improved technical understanding of hightemperature processing industries, such
as steel
R&D on applications in other industries
where heating or firing is required at
high temperatures
Applications in the production of ethylene
oxide, propylene oxide, vinyl chloride
monomers, titanium oxides, and sulfuric
acid
Related R&D benefitsj
Environmental
benefits/costs
Reduced air emissions of about 3.3 million

tonsk
Process reduces NOx, CO, and particulate
emissionsl
Reduced landfill disposal of regenerator
refractories
Reductions in furnace energy requirements
of 15% to 45%
Assistance in adherence to CAAA 1990,

Improved information on emissions and
particularly concerning NOx
opportunities to reduce emissions
Improved air quality and other
Application to sulfur recovery in
environmental benefitsm
petroleum refining
Facilitates meeting permitting requirements Batch and cullet preheating to utilize
to continue glass production
exhaust heat
Applications to wastewater treatment and
hazardous waste incineration
Security
benefits/costs
Reduced net fossil fuel demandn
Minimal
aUnless
Minimal
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
140
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.
ADVANCED BATTERIES FOR ELECTRIC VEHICLES

Electric vehicles have a long history dating to the beginning of the 20th century. The internal combustion engine
quickly displaced most engines because of its better performance, longer range, and lower cost. Only very small niche
markets for electric vehicles survived through most of the
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
141
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.
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.
TABLE E-29 DOE Funding for Advanced Battery R&D

(millions of 1999 dollars)
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
142
APPENDIX E
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
Economic
benefits/costs
DOE R&D costs: $376 million

Private industry cost share: $169 millionb
Few benefits thus far: electric vehicles have
achieved little market penetration.
Niche markets for nickel metal hydride
battery powered vehicles. (NiMH
batteries are 150 lb lighter than lead acid
batteries and store twice as much energy)
Economic benefits probably negative, since
electrics cost more than conventional
vehicles
Potential expanded markets for NiMH

and/or lithium-based systems if cost of
alternatives increases (EE contends that
a doubling of gasoline prices would
render the technologies cost-effective)
Economic benefits may be negative, if
electric vehicles are forced into the
market by regulation, since they cost
more than conventional vehicles.
Battery costs are far above target values
Cooperative R&D through the USABC

avoids duplication of R&D costs.
R&D on lithium polymer and lithium ion
batteries for future applications could
provide economic benefits.
U.S. battery industry in intense
competition with Asian industry
Environmental
benefits/costs
Benefits have been minimal to date
Benefits are potentially large: mobile

sources generate substantial pollution,
and many urban areas require cleaner
vehicles to achieve environmental
compliance
Zero-emission-vehicle mandates in
California and the Northeast
Potential waste management problems
associated with battery life-cycle
management
Increased scientific understanding

developed in exploratory research
primarily at the national laboratories and
universities
Batteries have a variety of other
applications and commensurate potential
environmental benefits
Batteries can provide the opportunity for
emission-free power generation in
buildings and other closed areas where
immediate air quality is a concern
Research on infrastructure and recycling
issues
Security
benefits/costs
Benefits have been minimal to date
Benefits are potentially large: if

commercially successful, electric
vehicles could displace substantial
amounts of imported oil and increase
fuel diversity
Technology transfer to other nations could

reduce worldwide demand for oil
Potential military applications
aUnless
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
143
APPENDIX E
Benefits and Costs

As indicated in the benefits matrix (see Table E-30), there
have been minimal realized economic impacts from this program to date, and those that do exist are probably negative.
However, if petroleum prices increase dramatically and/or if
zero emission vehicles become the required standard in the
nation, then electric cars may become competitive with the
alternatives in spite of their current shortcomings and could
have a significant impact in improving the environment and
energy security.
Additional electricity generating facilities would undoubtedly be required for a large population of electric vehicles. It is generally recognized that emissions of sulfur
oxides could increase in some regions if high-sulfur fuels are
used by the generating electric utility and there are no sulfur
dioxide scrubbers on the generating facilities. However, if
the best available pollution control technology is used in the
generation of the electricity, then this should not be a problem for electric vehicles. Domestically available energy
sources such as coal, nuclear, natural gas, and renewable
resources can always be used in place of imported oil.
The DOE program, through its knowledge benefits, has
maintained effective competition in the critical area of advanced batteries for automotive applications. The best example of what would happen in advanced batteries without
DOE support can be seen in battery technology for the consumer electronics industry. The consumer electronics rechargeable battery market has been dominated by Japanese
producers. Most NiMH and lithium-based battery technology found in these products comes from Japanese companies. Only recently have other companies begun to enter this
marketplace, and in most cases they are still dependent on
Japanese suppliers for critical materials and manufacturing
equipment.
Overall, it appears to the committee that the insurance
provided by potential environmental and security benefits
and the knowledge benefits of the DOE program are well
worth the $376 million expended to date. Even if the electric
car never extends beyond niche markets, the carryover of battery R&D knowledge to PNGVs hybrid engine-electric and
fuel cell vehicles will remain a significant insurance benefit.
Lessons Learned
Among the lessons learned from this program is the need
for regularly evaluating the technologies under development
and, when barriers to further progress are encountered, to
consider conducting more scientific research on new concepts in options that lie beyond current technology performance: life, abuse tolerance, and cost (in the case of batteries).
Also, it was realized that it is necessary to consider detailed manufacturing cost estimates and infrastructure issues
such as recycling for each technology.
There were numerous delays in the program caused by

paperwork and complicated negotiations arising from government policies and procedures. Streamlining these processes would benefit the program greatly.
CATALYTIC CONVERSION OF EXHAUST EMISSIONS

Compression-ignition direct-injection (CIDI) engines
that is, diesel engineshave the highest thermal efficiency
of any proven automotive power plant. They are currently
widely used in heavy-duty vehicles and are candidates for
use in conventional or hybrid electric vehicle propulsion systems in passenger cars and light-duty trucks. The Partnership for a New Generation of Vehicles (PNGV) in 1997
targeted CIDI engines as one of the most promising technologies for achieving 80 miles per gallon (mpg) fuel
economy in a lightweight hybrid vehicle while adhering to
future emissions standards and maintaining such attributes
as performance, comfort, and affordability.
However, in 1999, tier 2 emission standards were promulgated that are much more stringent than those that existed in 1997. Before widespread use of CIDI engines in the
domestic light-duty vehicle market can become a reality,
their emissions must be reduced. To date, diesel engines have
had low enough hydrocarbon, CO, and NOx emissions that
exhaust emission control devices (such as the catalysts required for gasoline vehicles) were not required. But to meet
future vehicle emissions standards, it will be necessary to
develop catalytic emission control devices for CIDI engines.
To overcome this technical barrier, advanced materials for
catalyst-based systems that reduce NOx and particulate matter (PM) emissions from CIDI engines are being developed
by the DOE in cooperation with DaimlerChrysler, Ford, and
General Motors. If emissions can be reduced, CIDI engines
could increase fuel economy by up to 35 percent compared
with present-day gasoline engines with no other changes to
the design of the vehicle. Hybrid power trains with diesel
engines could perhaps also meet the PNGV goal of 80 mpg
(gasoline equivalent) for a midsize family sedan.
Both NOx and PM emission control devices will have to
achieve conversion efficiencies of 80 to 95 percent so that
light-duty vehicles with CIDI engines will be able to meet
the strict tier 2 emission standards for volume production
that are being phased in starting in 2004 (Federal Register,
2000). It is widely acknowledged that emissions of nonmethane hydrocarbons (NMHCs) and carbon monoxide
(CO) are likely to be within standards given the emission
control technologies being developed to control NOx and
PM. Diesel fuel with reduced sulfur content is required to
enable most of the NOx emission control devices to work
properly and will make emission control devices more efficient through reduced production of sulfate PM.
144
APPENDIX E
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.
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-
TABLE E-31 DOE Funding for the Catalytic Conversion

Program (thousands of 1999 constant dollars)
Fiscal Year
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
SOURCE: Office of Energy Efficiency. 2000o. OEE Letter response to

questions from the Committee on Benefits of DOE R&D in Energy Efficiency and Fossil Energy: Catalytic Conversion of Cleaner Vehicles Program. December 15.
ward those goals has been made. Meeting tier 2 emission

standards appears to require an 80 percent to 95 percent reduction in NOx and particulate emissions, and while some
bench tests approach these figures, no such performance has
yet been attained for extended periods under real automotive
diesel exhaust conditions.
Work largely at the national laboratories (OTT, 2000a)
has demonstrated 20 percent to 55 percent reduction in NOx
in exhaust from a diesel vehicle over five operating points
using plasma-assisted catalytic conversion and injected hydrocarbon fuel (a 6 percent fuel economy penalty is incurred). Several promising new catalyst materials have been
developed with very high NOx conversion in bench tests. A
new dopant for silica-doped hydrous titanium oxide-supported Pt (Pt/HTO:Si) catalysts has been identified that lowers the light-off temperature and widens the temperature
window for appreciable NOx reduction. Investigation is also
under way to increase the conversion rate and durability of
urea injection system catalysts in the selective reduction of
NOx, as well as adsorber catalysts that store and reduce NOx
on their surfaces. A variety of emissions detection and measurement systems are under development as well as catalyst
surface diagnostics. Considerable basic research on catalyst
behavior is also under way.
Diesel fuel with drastically reduced sulfur content is required to enable NOx emission control systems to work. The
EPA recently promulgated a standard requiring diesel fuel
sulfur content to be reduced from present values, near 500
ppm, to a maximum of 15 ppm. However, it has been reported (DOE, 2000b) that no emission control devices have
demonstrated the capability for full useful life certification
at any fuel sulfur level.
The catalytic converters do not contribute directly to fuel
savings, but they are critical enablers for market introduction of the engine technology. DOEs role has accelerated
the development of these devices, contributed much to the
fundamental understanding of emission control processes,
and obviated duplicative R&D among the numerous auto
and engine manufacturers. Without DOE involvement, it is
unlikely that industry alone would work to develop lightduty CIDI catalytic emission control technology to meet U.S.
tier 2 standards because of the cost and technological risk
involved. It is also likely that the DOE contributions to catalytic emission control technology have saved industry much
of the cost of R&D to date.
Many of the R&D results for catalytic conversion derived
from PNGV efforts are equally applicable to heavy-duty
vehicles and are now carried over into the new 21st Century
Truck program. In addition, the technology to reduce NOx
from CIDI engine exhaust has been employed on stationary
CIDI engines, where conditions are more favorable and the
control system much less complex. One technology supported by DOE (microwave reduction of PM) is being commercialized on a separate path to reduce emissions from restaurants and dry-cleaning operations.
145
APPENDIX E
TABLE E-32 Benefits Matrix for the Catalytic Conversion Programa

Economic
benefits/costs
DOE cost 1994-2000: $19.325 million None yet

Industry cost share: $16.144 million
No benefits yet
U.S. industry is in the forefront of development of such devices and

could benefit from worldwide sales. However, direct economic
benefits for diesels with catalyzed emission controls will be
negative since they cost more than uncontrolled engines.
Environmental
benefits/costs
None yet
None yet
Catalyzed emission controls, if they meet tier 2 standards, will

drastically reduce emissions of toxics and particulates from current
levels. Can also be used on stationary engines and other lean-burn
engines and fuels.
Security
benefits/costs
None yet
None yet
PNGV vehicles or conventional diesel engines using this emission

control technology, if successful, will reduce petroleum
consumption.
aUnless
Benefits and Costs

As indicated in Table E-32, the economic benefits from
this catalytic conversion R&D are likely to be negative, because the emission control systems are expensive and are
added to otherwise conventional engines. However, the potential benefits in the environmental and energy security areas that are bought with these economic costs are substantial. If these catalytic conversion systems are successful in
permitting CIDI engines to be used in either conventional or
hybrid power trains, very stringent emission standards will
be met, and improved fuel economy will reduce greenhouse
gas (CO2) and dependence on imported petroleum. (This assumes that the catalytic conversion systems do not reduce
too much the fuel economy advantage of the engine over
gasoline engines.)
The dollar savings from reduced petroleum consumption
is not expected to cover the initial cost premium of CIDI
engines with catalytic emission control in conventional or
hybrid configurations when compared with conventional engines (see discussion in the PNGV case study).
Given a successful catalytic conversion system and the
success of the PNGV program (including solving the
affordability problem), CIDI vehicles could penetrate the
market very rapidly. Currently, about 30 percent of all new
vehicle sales in Europe are diesels with CIDI engines; in
Austria, Belgium, and Spain the penetration is more than 50
percent (Automotive Industry Data Newsletter, 2000). The
customer perception of diesels in the United States is adversely colored by the failed introduction of diesels following the oil shortages and price spikes of the 1970s. Although
they still cost more than gasoline engines, several advances
in diesel engines since then have made them similar to gasoline engines in terms of performance and noise, and they
retain a significant fuel economy advantage.
Development of catalyzed emission control devices is key
to enabling the widespread use of CIDI vehicles in the United
States, and as such it is a necessary component of PNGV as

long as that engine is considered a viable option.
Lessons Learned
The principal lesson learned to date in this program is that
goals, objectives, and R&D direction must be sensitive to
changing policies and external constraints. The selection of
the CIDI engine as the top candidate for PNGV vehicles in
1997 changed the direction of catalytic system R&D from
gasoline engines to CIDI engines, and the promulgation of
tier 2 emission standards in 1999 greatly increased the pressure for more radical emission control system designs.
Another lesson is that in a large R&D program like
PNGV, effort must be focused intensely on overcoming the
formidable barriers to success. The tier 2 emission standards
are likely to rule out the use of CIDI engines completely in
both conventional and hybrid electric vehicle power trains
unless successful catalytic conversion of its exhaust emissions can be accomplished; this technology therefore is a top
priority for the PNGV.
PARTNERSHIP FOR A NEW GENERATION OF

VEHICLES
The Partnership for a New Generation of Vehicles
(PNGV) is one of DOEs larger efforts, involving almost 13
percent of EEREs budget (DOE, 1999). The program attacks one of the nations largest consumers of energy, the
highway transportation sector, which consumes about 75
percent of all petroleum used in transportation in the United
States and half of the nations total petroleum demand and
which accounts for nearly all of the nations petroleum imports (DOT, 2000a; EIA, 1999a).
PNGV was formed by a Presidential Initiative in Septem-
146
APPENDIX E
ber 1993, as a partnership between the federal government

and the United States Council for Automotive Research
(USCAR). The federal partners are the Departments of Energy, Commerce, Transportation, and Defense; the Environmental Protection Agency, the National Science Foundation,
and NASA. The USCAR members are Ford, General Motors, and Chrysler Corporation (now DaimlerChrysler).
The goals of PNGV are (1) to improve national manufacturing competitiveness, (2) to implement commercially viable technologies that increase the fuel efficiency and reduce the emissions from conventional vehicles, and (3) to
develop technologies for a new class of vehicles with up to
three times the fuel efficiency of 1994 midsize family sedans
(80 mpg) while meeting emission standards and without sacrificing performance, affordability, utility, safety, or comfort (EIA, 1999a). Concept vehicles were scheduled to be
built by the year 2000 and production prototypes by 2004.
Although the R&D focused on midsize passenger cars, the
technologies clearly are applicable to most segments of highway transportation, some even to heavy trucks and buses.
The jointly funded R&D was to be precompetitive, with
the government portfolio of projects to focus on longer-term,
high-risk technologies while industry focused on nearer-term
development efforts aimed at commercialization.
The National Research Council (NRC) has conducted a
peer review of the program annually, and the observations
and recommendations of this committee have played a significant role in the formulation and prioritization of the research portfolio (NRC, 1994; NRC, 1996; NRC, 1997; NRC,
1998; NRC, 1999; NRC, 2000).
Since Congress did not initially authorize new funds for
PNGV, to a considerable extent PNGV was a consolidation
of R&D projects already under way in the various agencies.
Total federal funding for PNGV has ranged between about
$220 million and $309 million per year, of which about $120
million to $135 million was provided by DOE, the remainder by the other six federal agencies (OEE, 2000p; OEE,
2000q). Virtually none of the current government funding
goes to the automobile companies; most goes to the 21 national laboratories, along with a number of universities and
supplier companies. It has been reported by both the GAO
(GAO, 2000) and industry representatives that most of the
non-DOE federal funded R&D is not directly relevant to
PNGV goals and is poorly coordinated with industry R&D
(DOE claims that although it is not coordinated, it is relevant). On the other hand, industry representatives say the
DOE funding at the national laboratories has been very helpful to their industry programs. At the 2000 Detroit Auto
Show, Vice Chairman Harry Pearce of General Motors said,
It was the Department of Energy that took fuel cells from
the aerospace industry to the automotive industry, and they
should receive a lot of credit for bringing it to us.
The distribution of DOE funding among the various

PNGV technologies varied considerably over the years of
the program. Figure E-2 (NRC, 2000) shows DOEs Office
of Advanced Automotive Technologies (OAAT) funding of
PNGV from 1995 through 2000 (according to DOE there
were only minor changes in 2001).
The three automobile companies claim to have spent together about $980 million per year on PNGV-related R&D
during each of the past 3 years. This represents essentially
all of their R&D on energy, environment, and safety. The
auto companies cost share for PNGV, which was intended
to be nominally 50 percent in the original agreement, was
included in this figure, but the actual cost share is uncertain.
According to DOE, about $130 million total was spent by
industry from 1997 through 1999 on direct cost sharing in
support of DOE R&D (GAO, 2000), but this was predominantly from the supplier community.
One might wonder why the automobile industry agreed to
enter into this partnership when it had been opposing fuel
economy and emission standards for years, and demonstration of technologies for an 80 mpg car could lead to new
corporate average fuel economy (CAFE) standards at that
very high level. From discussions with industry representatives it can be speculated that top management in the auto
companies had as a motive the public good, the idea that
energy security of the nation, the environment, and climate
change were at risk, and what is good for the nation is good
for their companies. In addition, although customers have
been unwilling to pay much for technologies that increase
fuel economy, society (represented by the government) was
clearly pushing for petroleum conservation, and the public
did want a clean and safe environment. Also, it may have
appeared to be a good idea to get some technology in place
to meet future regulation ahead of the regulation, as opposed
to past practice, when regulation often preceded technology.
The companies may also have believed that the national laboratories could be of help in this effort and that government
assistance in this public good was not inappropriate. That
the program allowed industry technical staff to provide direct input to government representatives in planning the
R&D of the national laboratories along lines relevant to
PNGV was a great advantage.
The goal for fuel economy in PNGV put forward by the
industry was as much as a twofold increase (about 60 mpg),
but in negotiation it finally accepted the stretch goal of up
to three times. The other constraints in the goalsthat the
resulting vehicle must not sacrifice performance, affordability, utility, safety, and comfort of 1994 midsize family
sedansmade them acceptable to industry by recognizing
up front the realities of marketing.
Would industry have done this R&D without government
involvement? It appears to the committee that probably most
of the $980 million per year spent by the three auto companies (all but the amount directly matching DOE) would probably have been spent anyway in the industrys ongoing pro-
147
APPENDIX E
50.0
45.0
OAAT PNGV Funding ($ Millions)
40.0
35.0
Hybrid Propulsion Systems

High-Power Batteries
Power Electronics
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.
grams in fuel economy, environment, and safety in response

to regulations or the threat of regulation. But this would probably have occurred at a slower rate, in a more traditional and
evolutionary way rather than in the quantum-leap manner of
PNGV.
Results
Since the partnership does not end until 2004, final results are not known and overall success cannot be determined. However, there have been some interim successes
and failures, as indicated in Table E-33. With respect to goal
3 of PNGV, concept cars from each of the three auto companies were built and demonstrated to the public in 2000. These
vehicles have not met all requirements of goal 3. In particular, only one reached 80 mpg (the others were about 70 mpg).
Although not expected in concept cars, none met the
affordability requirement (DaimlerChrysler predicted at least
a $7500 price premium), and none met the expected strict
tier 2 emissions requirement for volume production. Also,

none met the cargo capacity requirement (two came close).
However, all three demonstrated functioning hybrid power
trains, light-weight materials, exceptional aerodynamics, and
satisfactory performance, comfort, and safety. Altogether the
concept cars represented a triumph of technology by demonstrating the technical feasibility of very efficient passenger
cars.
The concept cars all used diesel-electric hybrid power
trains, but the future use of diesel engines is in serious doubt
because of their current inability to meet the recently promulgated tier 2 emission requirements for NOx and particulates. Intensive research is under way to overcome this barrier. A fall-back technology would use a gasoline engine,
which should meet tier 2 standards, in a similar hybrid power
train, but it would have lower fuel economy than the diesel.
It now appears to the committee unlikely that the 2004 production prototype vehicles will meet the goal 3 requirement
of affordability or that they will closely approach 80 mpg.
Goals 1 and 2 both have to do with implementing tech-
148
APPENDIX E
TABLE E-33 Benefits Matrix for the PNGV Programa

DOE cost (1995-1999) approximately

$371 million. Total federal funding
approximately $1.3 billion. Industry cost
share: substantial but indeterminate.
Lightweight materials are generally more
expensive than steel, giving negative
economic benefits. However, improved
manufacturing processes, fuel savings,
and reduction in subcomponents can
sometimes compensate for higher
material costs. (For example, the
Chevrolet pickup bed has a positive
economic benefit, as much as 2%, if
compared with steel at annual volumes
less than 75,000, but a negative benefit
at higher volumes due to tooling
replacement. Customer saves about $12
in fuel cost per year. Benefit is positive
if compared with a composite
aftermarket liner.)
Some manufacturing technologies in use
have positive economic benefits (e.g.,
welding, forming, drilling, springback).
Lightweight materials
Aluminum
Magnesium
Composites
Chevrolet Pickup Bed
Jeep Hardtop
When eventually applied, option economic

benefits will be positive for the
following:
Improved body structure
Design
Manufacturing technologies
Casting
Painting
Ion-implantation
Induction heating
Adhesive bonding
Rapid prototyping
Combustion diagnostics
Phosphor thermometry
Simulation/modeling
Virtual reality
Recycling
Because they appear to be more expensive
than the corresponding conventional
technologies they replace, when and if
eventually applied to automobiles,
option economic benefits may be
negative for the following:
Hybrid power train
High-power batteriesb
Materials
Ni-aluminide dies
Diamond-like coatings
Lightweight airbag
Hybrid power train technology
High-power batteriesb
Materials
Ni-aluminide dies
Diamond-like coatings
Lightweight airbag
Gaining knowledge collaboratively

reduces duplication of effort and
corresponding cost.
Recycling
Gas turbines/ceramics
Fuel cellsb
Fuel reformers
Stirling enginesb
Exhaust catalystsb
Plasma treated
Vacuum insulated
Lean burn
Lightweight engines
Alternative fuels
High-power energy storage
Highpower batteriesb
Ultracapacitors
Flywheels
Pneumatic/hydraulic
Power electronics
Diesel injection pump
Diesel emission control
Modified diesel fuel
Variable compression ratio engine
Air conditioners
Lightweight interiors
Aerodynamic drag
Environmental
benefits/costs
Reduced weight gives improvement in fuel

economy and reduced CO2 emission.
Pickup bed gives 1.3 percent vehicle weight
reduction, or 0.18 mpg fuel economy
improvement.
Reduced weight and more efficient vehicle

gives improvement in fuel economy and
reduced CO2 emission.
Reduced weight and more efficient vehicle

that meets emission requirements gives
improvement in fuel economy and
reduced CO2 emission.
Security
benefits/costs
Same as environmental
Improved fuel economy reduces demand for
imported oil.
Improved fuel economy reduces demand
for imported oil.
Improved fuel economy reduces demand
for imported oil.
Knowledge applicable to military use.
Economic
benefits/costs
aUnless
bSee
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
vehicles and so are directly relevant to goal 3, but they are

already being used in production vehicles. Some specific
examples are weight reductions of 23 lb in a Jeep Wrangler,
50 lb in a Chevrolet Silverado, and 188 lb in a Lincoln LS
(USCAR, 2000).
Hybrid power train technology has reached the point
where the auto companies are planning production and mar-
149
APPENDIX E
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
research that led Honda and Toyota to introduce vehicles

with hybrid propulsion systems that achieve significant improvements in fuel economy, though falling short of PNGVs
original objectives in many respects, notably fuel economy
and cost. The Toyota Prius has fuel economy of 58 mpg,
about 1.5 times that of the comparable Corolla vehicle, and
the two-passenger Honda Insight has 76 mpg, about 1.7 times
that of the less-comparable four-passenger Civic (Vyas et
al., 2001).
Benefits and Costs
The benefits from PNGV are summarized and illustrated
in Table E-33. They reflect the successes and failures mentioned in the previous section. Since few of the PNGV technologies have been commercialized so far, it is necessary to
rely on somewhat uncertain projections to estimate what
benefits might eventually result.
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,
150
APPENDIX E
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-
counted at 8 percent, the savings would be $2963. If the

customer happens to be an economist and recognizes this
$1068 gain or $37 loss, it might affect his or her purchase
decision. If the new car purchaser keeps the car only for 3
years, which is more typical, the savings will be much less,
and the loss will be over $2000. In any case, considering
customers traditional concerns with initial cost and minor
concern with fuel economy, it is unlikely that they will buy
without some other incentive, such as regulation, subsidies,
or rebates.
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
151
APPENDIX E
R&D. There is no final value, since the program is still in

progress, and in any case it will always be difficult to determine, since the net benefits (positive and possibly negative)
are ill-defined. However, the total potential environmental
and security benefits are immense, and to the committee they
seem well worth the cost of the program to date.
The current annual cost of PNGV-related R&D is made
up roughly of the total federal and industry funding, $240
million per year plus $980 million per year, plus the $130
million supplier industry contribution, totaling $1350 million. DOEs contribution to PNGV might be taken as the 50
percent matching with industry that was planned when
PNGV was formed. However, the potential benefits of
PNGV (environmental and security) are more nearly the result of the total program costs, so perhaps a better ratio for
DOEs contribution to the benefits is 130 divided by 1350,
or 10 percent. Figures are not available to match DOEs
funding with the specific degrees of success and failure in
the benefits matrix chart, but DOEs funding was specifically aimed more at basic enabling research than at product
development, and 10 percent might be considered a typical
percentage for basic research in any major R&D effort. On
the other hand, DOEs contribution is much more than its
dollar input. The government involvement in PNGV certainly served as a catalyst to accelerate industrys R&D on
fuel economy, and the expertise of the national laboratories
has a value beyond dollars. On these bases the committee
believes that the potential benefits of PNGV measure favorably against the expenditures of DOE since 1993.
STIRLING AUTOMOTIVE ENGINE PROGRAM

The transportation sector is the dominant user of oil in the
United States, accounting for more than 60 percent of the
nations oil demand and using more than is domestically produced. Passenger cars are the most energy-intensive subsector of the transportation sector, consuming over one-third
of all transportation energy; they consumed 8743 trillion Btu
out of the total 24,411 trillion Btu consumed in the transportation sector in 1997. These data are taken from the 1999
Transportation Energy Data Book, which is published annually by the Oak Ridge National Laboratory and DOE (Davis,
1999).
DOEs Office of Transportation Technologies (OTT)
worked for many years to develop Stirling engines for automotive applications. The rationale for this work included the
potential for high average thermal efficiency, multifuel capability, low maintenance requirements, smooth operation,
and low emissions. None of the efforts to date has resulted in
the development of a commercial product in the intended
use or other uses.
The first DOE Automotive Stirling Engine program was

initiated in response to the energy crisis of the mid-1970s.
The OPEC action spurred the examination of a wide range
of alternative propulsion systems for autos. At that time, it
was felt that the Stirling engine was attractive for an automotive engine because it offered high efficiency and multifuel capability, the latter point being particularly attractive
because of the gasoline shortages and price volatility of the
time. The Stirling engine was actually invented in 1816. In
the late 1930s the Phillips Company in the Netherlands revived the engine and continued independent development
for the next 20 years. In the late 1940s, General Motors
started research on the engine and in 1958 signed a formal
agreement with Phillips for cooperative R&D. By May 1969,
GM had accumulated over 22,000 hours of operation on
Stirling engines from 2 to 400 hp. Because the Stirling engine uses an external continuous combustion process, it can
be designed to operate on virtually any fuel. Several automotive concepts were developed and evaluated along with
the Stirling engine. The second foray into Stirling engine
development came about as a result of the PNGV program.
OTT worked with Mechanical Technology Incorporated
(MTI) from 1978 until 1987 to develop an automotive
Stirling engine. The goals of the program included a 30 percent fuel economy improvement, low emission levels,
smooth operation, and successful integration and operation
in a representative U.S. automobile. At the culmination of
the program, the engine was demonstrated in a 1985
Chevrolet Celebrity, meeting all the program technical goals.
The Stirling engine was never put into production for a number of reasons, including commensurate improvements in
Otto cycle engines, high manufacturing cost, and lack of interest from the mainstream automobile manufacturers. Subsequent to DOEs involvement, NASA supported further
development of the MTI Stirling engine for a few years but
then eventually abandoned it.
From 1993 until 1998, General Motors teamed with
Stirling Thermal Motors (STM) to develop and demonstrate
a Stirling engine for hybrid vehicles as part of the PNGV
initiative. The engine was designed to drive a generator in a
series hybrid configuration. Six engines were eventually
built by STM, and three were delivered to General Motors
for testing. By the end of the program, the Stirling hybrid
propulsion system was integrated into a 1995 Chevrolet Lumina. The Stirling hybrid vehicle failed to meet several key
requirements. Specific shortcomings included lower-thanexpected thermal efficiency, high heat rejection requirements, poor specific power, and excessive hydrogen leakage. The engine did meet its emission target, demonstrating
half the ultralow-emission-vehicle (ULEV) standard. There
are no plans for further development of the Stirling hybrid
concept with GM or any other auto manufacturer. STM is
working to commercialize a small Stirling-powered generator for commercial use.
152
APPENDIX E
TABLE E-34 MTI Stirling Engine Development Project

Budgets (millions of constant 1999 dollars)
Year
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.
TABLE E-35 General Motors STM Stirling Engine

Development Project Budgets (millions of constant 1999
dollars)
Year
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.

The initial automotive Stirling Engine program was generously funded from 1978 through 1987 as a result of the oil
embargos (see Table E-34). The second program, in which
the Stirling engine was an alternative prime mover, was
funded as part of the PNGV, which has enjoyed government
and industry support (OEE, 2000r)33 (see Table E-35).
PNGV required a 50 percent cost share from industry. Most
of the work in both programs was applied research. Both
33All
budget data came from DOE in response to the committees requests for information (OEE, 2000r).
programs focused on developing specific engines meeting

prestated requirements.
Results
Both programs eventually reached the demonstration
stage, when they were demonstrated in driveable passenger
cars. However, both had significant technical and market
barriers that prevented the technology from reaching commercial success. The MTI Stirling engine was supported and
further developed by NASA for several years after DOE
ended its project. The NASA effort did not result in any commercial or government applications. MTI initiated a program
called APSE (Advanced Production Stirling Engine), which
was funded within MTI and which utilized the capabilities
of the United Stirling and Riccardo Consulting Engineers.
The team also included MASCO, a broad-based manufacturing company with automotive product lines (and a major
MTI shareholder). It attempted to design a cost-competitive
engine. Although it potentially improved the manufacturability of an automotive Stirling engine, it could not come close
to being a true competitor to the Otto cycle, even on paper.
The STM Stirling engine is currently under development
as a generator system. STM is on the verge of forming a joint
venture with an industrial partner to assist with this commercial application. The generator will use an engine block different from the DOE hybrid Stirling engine, but some of the
research on hydrogen containment, engine kinematics, and
control will be embodied in the generator if it reaches commercial success.
Benefits and Costs
There have been no realized economic environmental or
security benefits since no commercial products or spin-offs
have been developed or introduced into the marketplace (see
Table E-36). For MTI Stirling engine program, it is likely
that none of the research and development would have occurred had there been no funding from DOE. MTI would not
have had the means to carry out a research project of this
scope for so many years without DOE support. After DOE
support was discontinued, NASA continued to work with
MTI for a year or two but eventually abandoned the project
as well. MTI tried in vain to interest the natural gas industry
in providing funding to support further development for other
applications. No further work on the MTI Stirling engine
was performed.
For the STM stirling engine project, the answer is essentially the same. STM is a small R&D firm that does not have
the resources to independently support a project such as the
one DOE funded. Although General Motors cofunded this
project with DOE, it is unlikely that even those funds would
have been expended on this technology had DOE not agreed
to share the costs and the risks of the project.
153
APPENDIX E
TABLE E-36 Benefits Matrix for the Stirling Automotive Engine Programa
Economic
benefits/costs

Industry costs: $17 millionb
No benefits resulted, since no commercial
products were developed
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)
Benefits are indeterminate: substantial

R&D progress made, but overall the
program was not successful
Developed improvements in Stirling
engine technologies
Alternative engine concepts were
developed and evaluated along with the
Stirling engine
R&D on the Stirling hybrid vehicle project
as part of the PNGV program
Some technology spin-off to NASAg
Security
benefits/costs
None
None
None
aUnless
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
and engine kinematics, instead of on engine design, build,

and testing, the go/no-go decisions might have been easier.
After a second run at the effort with minimal matching funds
from industry, a no-go decision was finally made by PNGV
in 1997.
The chance for a radically different power plant like the
Stirling engine to displace the internal combustion engine in
the automobile industry is small unless the new power plant
brings a dramatic improvement in performance, fuel
economy, convenience, or cost, or meets a severe new social
requirement unattainable by conventional means. The auto
industry has so much plant, equipment, and experience devoted to the manufacture and service of gasoline and diesel
engines that incremental improvements by competing technologies do not justify the cost and logistic difficulty of introducing an entirely new engine type. In addition, the internal combustion engine is a moving target since it has
dramatically improved in power density, fuel consumption,
and emissions over the past 20 years and continues to do so.
All this does not mean, however, that the auto industry and
154
APPENDIX E
the DOE should not continue to fund R&D on promising

alternative power plants and implement them if the potential
benefits are appropriate.
TABLE E-37 Funding for Transportation PEM Fuel Cell

Power Systems
Fiscal Year
PEM FUEL CELL POWER SYSTEMS FOR

TRANSPORTATION
The Transportation Fuel Cell Power Systems program focuses on polymer electrolyte membrane (PEM)also sometimes referred to as proton exchange membranefuel cell
technology for automotive applications. Projects within the
program focus on removing technical barriers that limit or
inhibit PEM technology commercialization in the transportation market. A complete description and progress report
for each project in the program is contained in the 2000 Annual Progress Report (OTT, 2000c).
The mission of the R&D program for PEM fuel cells for
transportation power systems is to develop technology for
highly efficient, low- or zero-emission automotive fuel cell
propulsion systems. DOE has selected PEM as its leading
fuel cell technology candidate because of its high power density, quick start-up capability, and simplicity of construction, attributes that closely match the requirements of an automotive power plant.
The program supports the PNGV program (see the PNGV
case study), which has targeted PEM fuel cell power systems as one of the promising technologies for achieving the
objective of an 80-mpg automobile (a threefold improvement). It is the next generation of technology after the
frontrunner, the CIDI, or diesel engine in a hybrid configuration. The fuel cell is considered not quite ready for prime
time because it still requires a major R&D effort aimed at
primarily cost reduction.
The program focuses effort in three major areas: (1) fuel
cell power systems development, (2) the fuel processing subsystem, and (3) the fuel cell stack subsystem. Fuel cell power
systems development efforts consist of activities to integrate
component technologies into complete systems, including
systems modeling, cost analysis, and systems control. Fuel
processing subsystem activities address key barriers to the
onboard processing of conventional and alternative fuels to
produce hydrogen of PEM fuel cell stack quality. Fuel cell
stack subsystem development activities address the development of critical stack component technology such as advanced membranes, bipolar plate technology, and electrode
catalyst development.

General Electric developed the PEM fuel cell for NASA
about 40 years ago. GE sold it when NASA needs declined,
and the PEM fuel cell did not seem to have any immediate
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-
155
APPENDIX E
thirds takes place under cost-shared contracts with industry

partners. The cost share for these efforts varies between 20
and 50 percent (average cost shared is estimated at 25 to 30
percent). In addition, in the last 3 years both the auto manufacturing and fuel cell supplier industries have initiated large
R&D fuel cell efforts that include no government cost share.
Negative budget growth from FY 1995 to FY 1997 can be
attributed to general tightening of federal spending during
that time to achieve a balanced budget.
Results
DOE R&D investments in PEM transportation applications have led to tremendous interest in the stationary power
area (residential and small commercial buildings). Early
demonstrations of the technology are under way, and announcements of commercialization efforts have been made.
At least three U.S. companies (Plug Power, International
Fuel Cells, and Honeywell) have announced intentions to
commercialize the technology. Each of these companies was
supported early in its development of PEM technology by
DOE and would not likely be poised for commercialization
without DOE assistance. The committee expects that fuel
cells will increasingly become part of the heavy-duty vehicle market, including urban transit buses and service vehicles. U.S. automobile manufacturers are heavily involved
in PEM development due to early DOE interest and support.
In January 2000, General Motors unveiled the Precept, its
fuel cell concept car, at the North American Auto Show in
Detroit. (The car shown was not operational, but it demonstrated packaging of the fuel cell stack in the space generally
occupied by the internal combustion engine). It is fueled by
hydrogen stored on board as a hydride. When he introduced
the Precept, Harry Pearce, vice chairman of General Motors,
said, It was the Department of Energy that took fuel cells
from the aerospace industry to the automotive industry, and
they should receive a lot of credit for bringing it to us. This
is an unusually strong endorsement of a government-supported technology and reflects both the potential of the program as well as the key role DOE has played as a catalyst for
industry activity.
DOE has had a major role in the development of PEM
fuel cell technology. Therefore, it is likely that significant
differences would be noted in the absence of the DOE program:
The U.S. industry base would be virtually nonexistent.
Companies such as: Plug Power, Energy Partners, and
NUVERA exist primarily because of early DOE solicitations
and support. Other larger U.S. companies such as 3M, International Fuel Cells, and Honeywell have instituted PEM programs primarily because of DOE R&D support. For example, in 1992 DOE funded Arthur D. Little to perform a
fuel chain analysis and identify appropriate reforming technologies for fuel cells. This work led to a partial oxidation
(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
156
APPENDIX E
momentum is under way, what is needed are policies by DOE

and DOT that will stimulate the deployment of fuel cell vehicles.
Benefits and Costs
Fuel cell vehicles have the potential to reduce harmful
emissions and the consumption of nonrenewable energy
sources because they are clean and efficient. Fuel cells are a
technology that could, if economically developed, power automobiles with little or no tailpipe emissions, provide energy to homes and factories with virtually no smokestack
pollution, and use renewable, domestic energy at high efficiency.
Fuel cells may provide significant energy, environmental, and economic benefits at the national, regional, and local
level. These benefits include the following:
Reduced dependence on foreign oil;
Reduced local, regional, and global environmental impacts of transportation while maintaining a high level of
mobility;
Fuel cell technology leadership that will help domestic
automotive companies and their fuel cell suppliers capture
larger market share not only in international markets but also
in markets for electricity generation in buildings and industry.
Accelerating the growth of stationary fuel cells through
shared technology development, leading to system reliability through distributed power.
Because fuel cells in vehicles (or stationary applications)
are not yet commercialized, there are no realized benefits yet
(see Table E-38). Also, because fuel cell systems are still
undergoing intensive R&D, the committee does not consider
the technology as being commercially available. Therefore,
there are no option benefits at this stage. This conclusion is
arguable, but it is what the committee believes is the current
state of the development, despite the fact that fuel cell-powered buses have been demonstrated in various cities, there
are experimental fuel cell cars, and stationary sources are
being tested.
For the purposes of this discussion, the benefits are classified as knowledge benefits (see Table E-38).
The principal advantages of the PEM fuel cell are its
cleanliness and its efficiency even at part loads. Its disadvantages are its cost and the infrastructure costs associated
with hydrogen (and methanol) production, distribution, and
fueling.
Fuel cell vehicles using gasoline, methanol, and hydrogen have been compared to other advanced light-duty vehicles in three recent studies (Wang et al., 1998; Weiss et al.,
2000; ORNL, 2000). The Clean Energy Future (CEF) study
(ORNL, 2000) looked at market penetration most extensively. In that study it was concluded that the fuel cell lightduty vehicle would not penetrate the market substantially
before 2020. However, if much more intensive R&D can

make the fuel cell learning curves substantially steeper than
is assumed for the business-as-usual and moderate scenarios,
then substantial penetration of the market is projected to occur by 2020, i.e., up to 2 million new vehicles out of 14
million. For this to occur, the cost of the fuel cell vehicle
must be equal to or less than the cost of a standard evolved
internal combustion engine vehicle. The MIT study indicates
that this is unlikely, but it is possible. Even with favorable
economicsfor example, lower life-cycle costspolicy is
often needed to initiate market penetration, allowing manufacturing scale-up and allowing the technology to move
along the learning curve.
Why is this possibility important? If a situation develops
in which constraints on greenhouse gases are required, then
the fuel cell with onboard hydrogen is the only alternative
(except electric) that is free of carbon emissions. This implies that the hydrogen will have to come from electrolysis
using electricity free of carbon emissions or from the reforming of fossil (or biomass) fuels with carbon capture and
sequestration. In such a situation, the fuel cell vehicle can be
thought of as an insurance policy for lowering the cost of
meeting the greenhouse constraint (see Box 3-6).
There is one other future situation that may be important.
If the CIDI (diesel) engine (in either a hybrid or conventional vehicle) turns out not to be able to meet tier 2 standards, then the fuel cell vehicle becomes more important.
The CEF study considered this case. The result of stripping
diesel from the mix of advanced technologies was that fuel
cell vehicle penetration increasing from 2 million to 2.8 million new vehicles sold in 2020 under the advanced (i.e., steep
learning curve) scenario. The gasoline internal combustion
engine hybrid takes up the rest of the slack. This is in qualitative agreement with the cost ranges reported in the MIT
study (Weiss et al., 2000). The one technology not considered was a compressed natural gas hybrid vehicle, which
may be the best of all. Recent progress on controlling diesel
emissions indicates that this situation may be remote.
One further point should be made. Stationary applications
may be commercialized before vehicle applications. The stationary source must have much longer life under continuous
operating conditions, but the constraints on reforming and
capital cost per kilowatt may be relaxed. Stationary applications will benefit from the development of higher-temperature membranes that will make combined heat and power
applications more prevalent.
Lessons Learned
An important lesson is that systematic and repeated peer
review pays off. The project benefits from this continuity, as
measured by the ability of the program and its projects to
prioritize and focus.
The DOE transportation programs PEM is part of the
yearly peer review process of the PNGV program. The Na-
157
APPENDIX E
TABLE E-38 Benefits Matrix for the Transportation PEM Fuel Cell Power System Programa
Options Benefits/ Costs
Economic
benefits/costs

Private industry R&D cost share:
$54 millionb
Industry is now investing much more on
this technology than the government for
both stationary and mobile applications
There are no realized economic benefits to
date as the technology has not been
commercialized
Likely minimal,
depending on
circumstancesc
Substantialsee below
Environmental
benefits/costs
None realized to date, since the product has

not been commercialized
Minimal since R&D is

ongoing
Benefits are potentially large, because fuel cell vehicles have

very low emissions (much lower than tier 2 EPA emission
limits (1/100) for gasoline-fueled PEM
The DOE program contributed importantly to the acceleration
in PEM fuel cell technologyd
Various fuel cell prototype vehicles from cars to buses have
been tested: e.g., GM introduced an experimental prototype
of its Zafira concept minivan in 1998 and the Precept
concept car in 2000 and R&D is ongoing on reduction in
size and weight, reduction of manufacturing costs,
improving rapid start and transient performance, increasing
durability and reliability, achieving higher-temperature
membranes, and improving fuel processing, including
further development of fuel-flexible fuel processing and
better on-board storage of hydrogen, although there is
no breakthrough yete
Stationary PEM fuel cell systems are being developed
for building applications by a variety of companiesf
Security
benefits/costs
None since the product has not been

commercialized
Minimal since R&D is

ongoing
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
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
158
APPENDIX E
tional Research Councils Standing Committee to Review

the Research Program of the Partnership for a New Generation of Vehicles performs this review and publishes its findings (NRC, 2000). DOE has found this external peer review
process helpful and has typically responded to the findings
of the committee through changes in the program. Most recently, the NRC PNGV committee recommended that DOE
focus more on high-risk, long-term PEM R&D and less on
systems development activities. DOE agreed with this assessment and responded in the current R&D solicitation by
eliminating full-scale systems development work and emphasizing more fundamental R&D, such as the development
of a membrane that operates at higher temperatures.
Within the PEM program, specific projects are brought to
conclusion when targets have been met or when progress is
insufficient to justify continuing the effort. One example of
success has been DOEs work with the Institute of Gas Technology to develop composite bipolar plate technology for
fuel cell stacks. This project no longer requires research into
basic plate properties or composition, and work has progressed to the point where it focuses only on the development of high-volume production techniques.
An example of termination of effort is the work in fuel
cell air management, in which four different technologies
were investigated. This air management work was the subject of a peer review convened by DOE to evaluate DOE
work in the area and make recommendations for future activities. Based on the recommendations of the review committee, DOE will downselect to retain one or two development efforts in this area. This downselection was partially
completed by allowing two existing projects to terminate; it
was to have been completed in the spring of 2000.
Another example of termination of effort is work that was
supported for direct ethanol fuel cell technology. This work
was terminated and has not been continued by other government or industry organizations. It was terminated for lack of
progress in demonstrating adequate power density and catalyst activity for the automotive application. Approximately
$200,000 was spent on the program in 1997 and 1998.
There are no instances in which elements of the DOE
transportation programs fuel cell were continued after first
commercial sale since no true commercial sales have yet occurred. However, it is the general strategy of the program
not to pursue areas of R&D that are being adequately pursued by industry. One example of this has been the decision
to eliminate systems integration activities to demonstrate
full-scale, integrated PEM power systems. During the last 2
years, industry initiated a number of projects in this area,
eliminating the need for DOE financial participation.
Instead, the program is focusing more on R&D areas that
are high risk, high payoff. DOE has significantly increased
the efforts to develop a high-temperature membrane. This
membrane is needed to solve three problem areas for fuel
cells: (1) greatly increase tolerance of the fuel cell stack to
carbon monoxide poisoning, (2) eliminate the need for stack
humidification, and (3) significantly improve system heat

rejection by increasing the temperature differential between
the fuel cell operating temperature and the ambient temperature.
Conclusion
DOEs PEM fuel cell program has been very effective. It
has been a leader in the technology development and at kindling the interest of the automotive companies and the many
other firms that now invest more heavily than the government. Are the public benefits (or potential benefits) worth
the government investment? At this stage of development,
the answer is a judgment call, but the committee believes the
insurance value against the risk of climate change (and urban air quality degradation risks) does justify the government investment. The PEM fuel cell is not the only way to
provide this insurance; indeed, OTT is pursuing other options. But the fuel cell surely is promising for both vehicles
and stationary electric source applications. It also holds potential for reducing the oil dependence risk (oil price shock)
in the long run.
REFERENCES
American Forest and Paper Association (AFPA). 1994. Agenda 2020: A
Technology Vision and Research Agenda for Americas Forest, Wood
and Paper Industry. Washington, D.C.: American Forest and Paper Association.
AFPA. 1998. 1998 StatisticsData Through 1997. Washington, D.C.:
American Forest and Paper Association.
AFPA. 1999. Agenda 2020: The Path Forward: An Implementation Plan.
Washington, D.C.: American Forest and Paper Association.
American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE). 1993. Standard 136-1993. Method of Determining
Air Change Rates in Detached Dwellings.
ASHRAE. 1997a. ASHRAE Handbook: Fundamentals. I-P Edition, Chapter 29: Fenestration Table 5, Page 29.8. Atlanta, Ga.: ASHRAE.
ASHRAE. 1997b. Standard 129-1997. Measuring Air Change Effectiveness.
ASHRAE. 1998. Standard 119-1988 (reaffirmed as 119-1993), Air Leakage Performance for Detached Single-Family Residential Buildings.
ASHRAE. 1999. Standard 62-1999. Ventilation for Acceptable Indoor Air
Quality.
ASHRAE. In progress. Standard 62.2P. Ventilation and Acceptable Indoor
Air Quality in Low-Rise Residential Buildings.
Anderson, A. 1995. The History of the Blower Door. Home Energy Magazine (November/December).
Arasteh, D., et al. 1994. WINDOW 4.1: A PC Program for Analyzing Window Thermal Performance in Accordance with Standard NFRC Procedures. LBL Report No. 35298.
ASTM Standard D5116-97. 1997. Standard Guide for Small Scale Environmental Chamber Determination of Organic Emissions from Indoor
Materials/Products. West Conshohocken, Pa.: American Society for
Testing and Materials.
Automotive Industry Data Newsletter. 2000. Well-Oiled: Europes Voracious Appetite for Oil-burning Cars Is Still Spiraling. April 17, No.
0007.
Baxter, Van David, Oak Ridge National Laboratory, personal communication, June 6, 2001.
Birkel, A., and J. Hunter. 1998. 1997 Market Survey of Lost Foam Found-
159
APPENDIX E
ries, prepared for the Lost Foam Casting Technology Consortium and
American Foundrymens Society, February 18.
Ten Brinke, J., S. Selvin, A.T. Hodgson, W.J. Fisk, M.J. Mendell, C.P.
Koshland, and J.M. Daisey. 1998. Development of New VOC Exposure Metrics and Their Relationship to Sick Building Syndrome Symptoms. Indoor Air 8(3): 140-152.
Burch, D., and Chi J. 1997. MOIST: A PC Program for Predicting Heat and
Moisture Transfer in Building Envelopes, Release 3. National Institute
of Standards and Technology, Special Publication 917. Washington,
D.C.: U.S. Government Printing Office.
Cook, J. 2000. Statement to the Committee on Energy and Natural Resources of the U.S. Senate, July 13. Available at <www.eia.doe.gov/
pub/oil_gas/petroleum/presentations/2000/sen071300/sen071300.htm>.
Daisey, J.M., A.T. Hodgson, W.J. Fisk, M.J. Mendell, and J.A. Ten Brinke.
1994. Volatile Organic Compounds in Twelve California Office Buildings: Classes, Concentrations, and Sources. Atmospheric Environment
28(22): 3557-3562.
Davis, S.C. 1999. Transportation Energy Data Book. Prepared by the Center for Transportation Analysis, ORNL, for DOE (Office of Industrial
Technologies). Washington, D.C.: Department of Energy.
Department of Energy (DOE). 1994. Comprehensive Program Plan for
Advanced Turbine Systems, DOE/FE-0279-1, February. Washington,
D.C.: DOE.
DOE, Office of Energy Efficiency and Renewable Energy. 1999. Clean
Energy for the 21st Century, Budget in Brief. Washington, D.C.: DOE.
DOE, Office of Energy Efficiency and Renewable Energy. 2000a. Computer Software Programs for Commercial/Large Building Energy
Analysis, December. Available online at <www.eren.doe.gov/
consumerinfo/refbriefs/v102.html>.
DOE. 2000b. Impact of Diesel Fuel Sulfur on CIDI Engine Emission Control Technology. Washington, D.C.: DOE.
DOE, Office of Energy Efficiency and Renewable Energy. 2000c. Scenarios for a Clean Energy Future, November.
Department of Labor, Bureau of Labor Statistics. 2000. Car Quality Improvements 1968-2000. Washington, D.C.: Department of Labor.
Department of Transportation (DOT). 2000a. Ultra Clean Transportation
Fuels: Program Plan, February.
DOT. 2000b. Motor Vehicle Registrations by State.
Ducker Research Company (DRC). 1996. U.S. Market for Windows and
Doors1995. June. Prepared for American Architectural Manufacturers Association (AAMA) and Window and Door Manufacturers Association (NWWDA).
DRC. 1998. U.S. Market for Windows and Doors1997, June. Prepared
for AAMA, NWWDA, and CWDMA (Canadian Window and Door
Manufacturers Association).
DRC. 2000. Executive Report: Study of the U.S. and Canadian Market for
Windows and Doors. Prepared for AAMA, NWWDA, CWSMA (April).
Energy Information Administration (EIA). 1999a. Weekly Petroleum Status Report: Finished Motor Gasoline for June 2000.
EIA. 1999b. 1999 Annual Energy Outlook. Washington, D.C.: Department
of Energy.
Environmental Protection Agency (EPA). 2000. Georgia-Pacific Corporation Big Island, May 31, 2000. Virginia Project XL, Final Project Agreement. Available online at <www.epa.gov/projectxl/georgia/
finalpa.pdf>.
Fales, G. 2000. G-P to Install New Technology to Control Air Emissions.
PIMAs North American Papermaker 82(7).
Federal Register. 2000. Control of Air Pollution from New Motor Vehicles:
Tier 2 Motor Vehicle Emissions Standards and Gasoline Sulfur Control
Requirements. Federal Register 65(28): 6697-6870. (February 10).
Washington, D.C.: Government Printing Office.
Ferris, James, Institute of Paper Science and Technology, personal communication, 2001.
Finchem, Kirk. 1997. Mills Explore Capacity Options to Extend Recovery
Boiler Life. Pulp and Paper 71(2): 49.
Fisk, William J. 2000. Health and Productivity Gains from Better Indoor
Environments and Their Relationship with Building Energy Efficiency.
Annual Review of Energy and the Environment 25(1): 537-566.
Fisk, William, Lawrence Berkeley National Laboratory, Indoor Environment Division, personal communication, 2001.
Friedman, David, American Forest and Paper Association, personal communication, 2001.
General Accounting Office (GAO). 1999. Indoor Pollution: Status of Federal Research Activities. GAO/RCED-99-254. Washington, D.C.: GAO.
GAO. 2000. Cooperative Research: Results of U.S.-Industry Partnership to
Develop a New Generation of Vehicles. GAO/RCED-00-81, March.
Geller, H., and J. Thorne. 1999. U.S. Department of Energys Office of
Building Technologies: Successful Initiatives of the 1990s, January.
Washington, D.C.: ACEEE.
Geller, H., and S. McGaraghan. 1996. Successful Government-Industry
Partnership: The U.S. Department of Energys Role in Advancing Energy-Efficient Technologies February. Washington, D.C.: ACEEE.
Geller, H., and S. McGaraghan. 1998. Successful Government-Industry
Partnerships: The U.S. Department of Energys Role in Advancing Energy-Efficient Technologies. Energy Policy 24(3): 167-177.
Goldstein, D. 1996. Appliance Efficiency Standards. Testimony before
House Commerce Committee on Energy and Power, U.S. House of
Representatives (July 25).
Goldstein, David, Energy Program, Natural Resources Defense Council
(NRDC), personal communication, 2000.
Goldstein, D.B., and H.S. Geller. 1999. Equipment Efficiency Standards:
Mitigating Global Climate Change at a Profit. Physics & Society 28(2).
Greene, D.L., and N.I. Tishchishyna. 2000. Costs of Oil Dependence: A
2000 Update, Oak Ridge National Laboratory, ORNL/TM-2000/152,
May. Oak Ridge, Tenn.: ORNL.
Greening, L.A., D.L. Greene, and C. Difiglio. 2000. Energy Efficiency
and ConsumptionThe Rebound EffectA Survey. Energy Policy
28: 389-401.
Grimsrud, D.T., B.H. Turk, et al. 1987. Effects of House Weatherization
on Indoor Air Quality. Proceedings of the 14th International Conference on Indoor Air Quality and Climate. Berlin: Institute for Water,
Soil, and Air Hygiene.
Hunn, ASHRAE, personal communication, 2001.
Jensen, K.P., and R.A. Rockhill. 2001. Spending Restraint Continues, Focus on Environmental Compliance Projects. Pulp and Paper 75(1).
Klems, J., and H. Keller. 1987. Thermal Performance Measurements of
Sealed Insulated Glass Units with Low-E Coatings Using the MoWitt
Field Test. ASHRAE Trans. Vol. 93, Part 1.
Lawrence Berkeley National Laboratory (LBNL). 1992. Scientists Develop
Tools for Architects and Engineers, fall/winter. Available online at
<www.lbl.gov/Science-Articles/Archive/energy-efficient-architecturalsoftware.html>.
LBNL. 1994a. LBNL Releases Improved Computer Program for Energy
Efficient Buildings, August. Available online at <www.lbl.gov/ScienceArticles/Archive/DOE-2-software.html >.
LBNL. 1994b. Economic Impact Analysis. VIII. Impact of Energy Efficient Programs and Partnerships. Available online at <www.lbl.gov/
Tech-Transfer/econ_impact/enereff2.html>.
LBNL. Impacts of U.S. Appliance Standards to Date. Report number 45825.
Levine, M., J. Koomey, J. McMahon, A. Sanstad, and E. Hirst. 1995. Energy Efficiency Policy and Market Failures. Annual Review of Energy
and the Environment, pp. 543-544.
Martin, E. 2000. Process Should Be Breath of Fresh Air for Big Island.
Richmond Times-Dispatch, June 12.
McMahon, J. Appliance Energy Standards. Lawrence Berkeley National
Laboratory, Energy Analysis Program. Available online at <http://
eetd.lbl.gov?CBS/NEWSLETTER/NL6/Apps.html>.
McMahon, J.E., P. Chan, and S. Chaitkin. 2000. Impacts of U.S. Appliance Standards to Date. Second International Conference on Energy
160
APPENDIX E
Efficiency in Household Appliances and Lighting, Naples, Italy, September 27-29, 2000. Naples, Italy: AIEE (Italian Association of Energy
Economists).
Mendell, M.J., W.J. Fisk, J.A. Deddens, W.G. Seavey, A.H. Smith, D.F.
Smith, A.T. Hodgson, J.M. Daisey, and L.R. Goldman. 1996. Elevated
Symptom Prevalence Associated with Ventilation Type in Office Buildings: Findings from the California Healthy Building Study-Phase 1.
Epidemiology 7(6):583-589.
Mendell, M.J., W.J. Fisk, M.X. Dong, M. Peterson, C.J. Hines, D. Faulkner,
J.A. Deddens, A.M. Ruder, D. Sullivan, and M.F. Boeniger. 1999. Enhanced Particle Filtration in a Non-problem Office Environment: Preliminary Results from a Double-blind Crossover Intervention. American Journal of Industrial Medicine 1:55-57.
Nero, A.V., R.G. Sextro, S.M. Doyle, B.A. Moed, W.W. Nazaroff, K.
Revzan, and M.B. Schwehr. 1985. Characterizing the Sources, Range
and Environmental Influences of Radon-222 and Its Decay Products.
The Science of the Total Environment, 45: 233-244.
National Research Council (NRC). 1994. Standing Committee on the Review of the Research Program of the Partnership for a New Generation
of Vehicles. First Report. Washington, D.C.: National Academy Press.
NRC. 1996. Standing Committee on the Review of the Research Program
of the Partnership for a New Generation of Vehicles. Second Report.
of the Partnership for a New Generation of Vehicles. Third Report.
of the Partnership for a New Generation of Vehicles. Fourth Report.
of the Partnership for a New Generation of Vehicles. Fifth Report.
of the Partnership for a New Generation of Vehicles. Sixth Report.
National Science Foundation (NSF). 1997. Survey of Industrial Research
and Development. Arlington, Va.: National Science Foundation/Statistical Research Service.
Oak Ridge National Laboratory. 2000. Scenarios for a Clean Energy Future. November 2000. Report of the Interlaboratory Working Group on
Energy Efficient and Clean Energy Technologies, prepared for the Office of Energy Efficiency and Renewable Energy. Available online at
<http://www.ornl.gov/ORNL/Energy_ eff/CEF.htm, ORNL/Con 476
and LBNL 44029>.
Office of Energy Efficiency (OEE). 2000a. OEE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency and Fossil Energy: Advanced Refrigerator/Freezer Compressor
Program, December 12.
OEE. 2000b. OEE Letter response to questions from the Committee on
Benefits of DOE R&D in Energy Efficiency and Fossil Energy: Compact Fluorescent Light Bulbs Program, December 12.
OEE. 2000c. Computer Software Programs for Commercial/Large Building Energy Analysis, December. Available at <www.eren.doe.gov/
consumerinfo/refbriefs/v102.html>.
OEE. 2000d. OEE Letter response to questions from the Committee on
Benefits of DOE R&D in Energy Efficiency and Fossil Energy: DOE-2
OEE. 2000e. OEE Letter response to questions from the Committee on
Benefits of DOE R&D in Energy Efficiency and Fossil Energy: Estimate of Energy Savings for New Buildings Designed and Existing
Buildings Retrofitted Using DOE-2, December 12.
OEE. 2000f. OEE 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.
OEE. 2000g. OEE Letter response to questions from the Committee on

Benefits of DOE R&D in Energy Efficiency and Fossil Energy: Case
Study on Heat Pumps: Free-piston Stirling Engine-driven Heat Pumps
(failure), November 22.
OEE. 2000h. OEE Letter response to questions from the Committee on
Benefits of DOE R&D in Energy Efficiency and Fossil Energy: Lowemission (Low-e) Glass Program, December 12.
OEE. 2000i. OEE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency and Fossil Energy: Advanced
Lost Foam Technology Program, December 13.
OEE. 2000j. OEE 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.
OEE. 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, December 12.
OEE. 2000l. OEE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency and Fossil Energy: Forest Products Industry of the Future (IOF) Program, December 12.
OEE. 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.
OEE. 2000n. 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.
OEE. 2000o. OEE Letter response to questions from the Committee on
Benefits of DOE R&D in Energy Efficiency and Fossil Energy: Catalytic Conversion of Cleaner Vehicles Program, December 15.
OEE. 2000p. OEE Letter response to questions from the Committee on
Benefits of DOE R&D in Energy Efficiency and Fossil Energy: PNGV
OEE. 2000q. OEE Letter response to questions from the Committee on
Benefits of DOE R&D in Energy Efficiency and Fossil Energy:
PNGVAll Government Budget, December 12.
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.
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.
OEE. 2001. OEE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency and Fossil Energy: Indoor Air
Quality, Infiltration and Ventilation, February 22.
Office of Transportation Technologies (OTT). 2000a. Combustion and
Emission Control for Advanced CIDI Engines, 2000 Annual Progress
Report, November. Washington, D.C.: DOE, Office of Transportation
Technologies.
OTT. 2000b. Program Analysis Methodology, Quality Metrics 2001, February 23. Washington, D.C.: DOE, Office of Transportation Technologies.
OTT. 2000c. Transportation Fuel Cell Power Systems. 2000 Annual
Progress Report. Washington, D.C.: DOE, Office of Transportation
Technologies.
Organization for Economic Cooperation and Development (OECD)/ International Energy Agency (IEA). 2000. ENATEC: Power Generation in
Every Home. CADDET Newsletter Special Edition on the Netherlands,
September.
Partnership for a New Generation of Vehicles. 1999. Answers from the
PNGV to questions from the Standing Committee to Review the Partnership for a New Generation of Vehicles, December 17.
Pearson, Richard, Pearson Consulting Engineers, personal communication,
2001.
161
APPENDIX E
PIMAs North American Papermaker. 1999a. When Tried and True Wont
Do (Last Word), February 1.
PIMAs North American Papermaker. 1999b. Adara: A New Star in Pulp
and Paper Machinery. July 1.
Raymond, Delmar, Weyerhaeuser Company, personal communication,
2001.
Reed, J.E. 1997. Ripple Effects: Commercial Histories of Five OIT Technologies. Report to the Office of Industrial Technologies, U.S. Department of Energy. Washington, D.C.: DOE.
Robinson, Valri, Office of Industrial Technologies, DOE, personal communication to Linda Cohen, member of the committee, 2001.
Rosenfeld, Arthur R.. 1991. The Role of Federal Research and Development in Advancing Energy Efficiency. Testimony before Subcommittee on Environment, Committee on Science, Space and Technology,
U.S. House of Representatives (April).
Selkowitz, Steven E, LBNL, personal communication to James Woods,
member of the committee, June 6, 2001.
Seppanen, O.A., W.J. Fisk, M.J. Mendell. 1999. Association of Ventilation Rates and CO2 Concentrations with Health and Other Human Responses in Commercial and Institutional Buildings. Indoor Air 9: 226252.
Sherman, M.H. 1995a. The Use of Blower-Door Data. Indoor Air 5:215224.
Sherman, M.H. 1995b. Residential Ventilation and Energy Characteristics. ASHRAE Trans. 103(1): 717-730.
Sherman, M.H., and D.J. Dickerhoff. 1994. Airtightness of U.S. Dwellings. Proceedings, 15th AIVC Conference: The Role of Ventilation. 1:
225-234. Coventry, Great Britain: Air Infiltration and Ventilation Centre.
Sherman, M.H., and N.E. Matson. 1993. Ventilation-energy Liabilities in
U.S. Dwellings. In: Proceedings, 14th AIVC Conference. Pp. 23-41.
Coventry, Great Britain: Air Infiltration and Ventilation Centre.
Spielvogel, Lawrence, Lawrence G. Spielvogel Inc., personal communication, 2001.
Sullivan, R., and F. Winkelmann. 1998. Validation Studies of the DOE-2
Building Energy Simulation Program (June). LBNL-42241. Berkeley,
Calif.: LBNL.
Swann, C.E. 2000. Pulping, Bleaching, Recovery: How Far Can We Go.
PIMAs North American Papermaker 82(10). Mount Prospect, Ill.:
PIMA Online.
Talbott, John, OEE Buildings Program, personal communication, 2001.
Teagan, W.P., and D.R. Cunningham. 1983. Stirling Engine Application
Study (March). Report No. DOE/NASA/0254-1. Washington, D.C.:
DOE.
Turk, B.H., D.T. Grimsrud, et al. 1987. Commercial Building Ventilation
Rates and Particle Concentrations. ASHRAE Trans. 95(1): 422-433.
United States Council for Automotive Research (USCAR). 2000. Information distributed at the public celebration of PNGV with Vice President
Al Gore, March 30, 2000.
Vyas, F., J. Anderson, and D. Santini. 2001. Evaluating Commercial and
Prototype HEVs, SAE Paper 2001-01-0951. SAE 2001 World Congress,
Detroit, Mich., March 5-8.
Wang, M. , M. Mintz, M. Singh, K. Stork, A. Vyas, and L. Johnson. 1998.
Assessment of PNGV Fuels Infrastructure, Phase 2 Report: Additional
Capital Needs and Fuel-Cycle Energy and Emissions Impacts, August.
Center for Transportation Research, Energy Systems Division, Argonne
National Laboratory.
Weiss, Malcolm A., John B. Heywood, Elisabeth M. Drake, Andreas
Schafer, and Feliz A. AuYeung. 2000. On the Road in 2020: A Lifecycle Analysis of New Automotive Technologies, October. MIT Energy Laboratory Report # EL-00-003.
BIBLIOGRAPHY
Cuttica, John, University of Illinois at Chicago, personal communication to
William Fulkerson, Board on Energy and Environmental Systems
(BEES) liaison to the committee, 2001.
Fairchild, Phil, Oak Ridge National Laboratory, personal communication to
William Fulkerson, BEES liaison to the committee, 2001.
Greenhill, Craig, General Hydrogen, personal communication to William
Fulkerson, BEES liaison to the committee, 2001.
Marthew, Frank, General Motors Global Alternative Propulsion Center,
personal communication to William Fulkerson, BEES liaison to the
committee, 2001.
Mathur, V.K., S. Tomellini, and S. Tsao. 1997. Thermal Swing Adsorption Process for Oxygen Separation from Air. Oxy-fuel Issues for
Glassmaking in the 90sProceedings of Presentations and Discussions
at the Workshop, February 27. Washington, D.C.: DOE.
Office of Energy Efficiency (OEE). 2000. OEE Letter response to questions
Fossil Energy: ATS R&D Funding Summary in Current $ (Millions),
December 12.
OEE. 2000. OEE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency and Fossil Energy: EERE GAO
and Program Savings, December 13.
OEE. 2000. OEE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency and Fossil Energy: Office of
Industrial Technology Overview, November 22.
OEE. 2000. OEE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency and Fossil Energy: P-4 for
Manufacturing of Automotive Composite Structures Program, December 15.
OEE. 2000. OEE Letter response to questions from the Committee on Benefits of DOE R&D in Energy Efficiency and Fossil Energy: Steel IOF
Office of Industrial Technologies (OIT). 1996. Industries of the Future.
Glass: A Clear Vision for a Bright Future. Report from the Advisory
Committee to the Glass Industry, Office of Industrial Technologies.
OIT. 1999. Impacts: Turning Industry Visions into Reality. DOE/EE-0184.
Washington, DC: DOE.
Ogden, Joan, Princeton University, personal communication to William
Otto, Neal, president, World Fuel Cell Council, personal communication to
Reed, J.E. 2000. Revisiting 32 Technically Successful Projects Supported
by OIT 1980-1988. Report to the Office of Industrial Technologies.
Rothwell, Bruce, Xcellsis: The Fuel Cell Engine Company, personal communication to William Fulkerson, BEES liaison to the committee, 2001.
Ryan, John, DOE Office of Energy Efficiency, personal communication to
Steric, Jim, Xcellsis: The Fuel Cell Engine Company, personal communication to William Fulkerson, BEES liaison to the committee, 2000.
Uselton, R.B, Lennox Industries, Inc., personal communication to William
Vitale, Nicholas, Foster Miller Technologies, personal communication to
Wood, Gary, Sunpower, Inc., personal communication to William
Case Studies for the Fossil Energy Program
To facilitate and rationalize the assessment of the Office

of Fossil Energy (FEs) R&D benefits, the committee divided the fossil energy technologies into four categories:
(1) coal and gas conversion and utilization, (2) environmental characterization and control, (3) electricity production,
and (4) oil and gas production. These are logical groupings
of fossil energy technologies recurring in the Office of Fossil Energys research portfolio.
Coal and gas conversion and utilization subsume the following technologies:
Enhanced gas production from coal-bed methane,

Well drilling, completion, and stimulation,
Downstream fundamentals,
Enhanced gas production from Eastern gas shales,
Enhanced oil recovery,
Field demonstrations of extraction technologies,
Fuel production from oil shale,
Seismic technology, and
Enhanced gas production from Western gas sands.
The case studies are treated in this appendix in the same

order they are listed here.
Coal preparation for cleaner coal production,

Direct liquefaction,
Atmospheric and pressurized fluidized-bed combustion
(FBC) for electricity production,
Gas-to-liquid fuels (GTL),
Indirect liquefaction, and
Integrated gasification combined cycle (IGCC) for fuel
and electricity production.
COAL PREPARATION
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 environmental characterization and control group encompasses the following:

Environmental control technologies (flue gas desulfurization and NOx emissions control),
Mercury and other air toxics emissions, and
Coal combustion waste management and utilization.
Electricity production includes the following three technologies:
Advanced turbine systems (ATS),
Stationary fuel cells, and
Magnetohydrodynamics (MHD) electricity production.
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
163
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.
ments for certain Eastern coals to users without additional

costs of deep cleaning.
Advanced dewatering technologies for the fine particle
fraction are being investigated as part of the Solid Fuels and
Feedstocks Grand Challenge Program, with a target cost of
$1 per ton of coal treated to improve the marketability of the
fine fraction.
While the advanced technologies have reached at least
pilot scale development, they have proven to be expensive
alternatives to conventional practice. Discussions with two
major coal suppliers and FE representatives suggest that the
FE program has had only a marginal influence on coal cleaning technology as practiced today.
Coal cleaning generally is not applied to Western lowsulfur coal but remains an element in some Eastern coal processing. Perhaps equally important is DOEs role in supporting coal preparation technology development in academia,
which helps to train technical people for the industry.
Benefits and Costs
Since coal cleaning and beneficiation add to the costs of
pulverized coal supplies, there evidently is no current economic benefit for the application of the advanced technologies developed by DOE. However, as natural gas and oil
prices increase, greater demand for deep-cleaned coal supplies may increase, and the use of DOEs technology options
may expand. However, the present high-volume market for
coal focuses mainly on a low-cost supply. The market for
high-quality or washed coal fills niches in the marketplace
but does not represent a large segment by volume (mass).
The benefits matrix for coal preparation (Table F-1) indicates that economic benefits exist in the options and knowledge categories, but in the near term, the application of available optional technologies is not anticipated. The benefits in
the knowledge category have led to spin-off applications of
the Microcel flotation column for mineral recovery operationsfor example, applications to copper, kaolin, and
graphite processing. The Microcel column technology has
been installed in about 70 plants worldwide for processing
coal and other mineral resources. Other spin-offs of the DOE
technology include mineral processing, application of the
air-sparged hydrocyclone to fiber de-inking, and copper ore
processing using the continuous packed column separator.
The tribo-electric separator has been applied to unburned
coal separation from fly ash used in cement production, as
well as waste plastic recycling.
With increased environmental concerns about the collection and sequestration of ash, minerals, and sulfur from coal,
deep coal cleaning may one day be used to separate waste
material prior to combustion. This may become particularly
important for removal and sequestration of heavy metals,
including mercury. To account for this contingency, industry continues to support at least a minimal academic-style
program in the coal preparation area.
164
APPENDIX F
TABLE F-1 Benefits Matrix for the Coal Preparation Programa

Economic
benefits/costs
DOE costs: $292 million

Industry costs: unknown, but probably
minimalb
Benefits: Nonec
Micronized-magnetite cycloning and

advanced fine-coal dewatering
technologies
Development of cleaning processes for
demineralization of pulverized coal,
which could be used as one element of a
total environmental control system
None
Environmental
benefits/costs
None
Potential supplies of deeply cleaned coald
Coal-cleaning equipment evaluations

Developed a variety of concepts to remove
contaminants from finely ground coal
Security
benefits/costs
None
None
None
aUnless
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
DIRECT COAL LIQUEFACTION
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.

The DOE direct liquefaction program in the 1970s and
early 1980s consisted primarily of large-scale demonstration
projects with broad industry participation in response to the
energy crisis perceived at that time. Since U.S. coal reserves
are huge and coal prices were judged likely to remain relatively modest, the DOE and participants from the electric
power and oil industries set out to demonstrate the best-available technology for directly converting coal to liquid fuels.
A smaller-scale, more fundamental R&D process improvement program with less industry participation followed these
demonstrations through most of the 1980s and the 1990s.
After a series of budget reductions, the direct liquefaction
R&D program was eliminated in 2000. Over 88 percent of
the expenditures in direct coal liquefaction since 1978 occurred prior to 1983. This pattern is generally consistent with
the rise and fall of projected crude oil prices and with the
change in the administrations view of government energy
R&D following the elections in 1980.
This case study is based on information provided by DOE
to the committee in a meeting held June 21, 2000, and in a
more detailed written response by DOE to committee questions transmitted on January 18, 2001, as well as technical
and economic information contained in the NRC report Fuels to Drive Our Future (NRC, 1990).
In the direct liquefaction technology pursued by the DOE
and industry participants, hydrogen is added to coal in solvent slurry at elevated temperatures and pressures. This gen-
165
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.
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
TABLE F-2 DOE Appropriations and Industry Cost

Sharing for Direct Liquefaction (millions of 1999 dollars)
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.
sharing (mainly from the electric power industry) of $55

million (OFE, 2001b).
Results
The demonstration projects, with plant sizes up to 200
tons/day (tpd), proved the technical feasibility of direct liquefaction with successful operation of process equipment
such as ebulated bed reactors, letdown valves, de-ashers, and
preheaters of sufficient size to permit scale-up with reasonable confidence. The program also identified problems typical of coal processing, such as corrosion, erosion, and fouling, that needed further study. The economics of the
processes demonstrated were unattractive as a result of low
yields, poor product quality, and high capital costs, among
others. For example, DOE estimates liquid products produced from H-Coal cost about $65/barrel (bbl) on a crudeoil-equivalent basis (in constant 1999 dollars).
The DOE estimates the cost for technology developed
from process-improvement R&D to be half that of H-Coal.
The committee estimates that industry would require crude
oil prices above $45/bbl to commercialize this technology in
the United States. If environmental concerns such as the high
level of CO2 produced per product Btu and the aromatic nature of the resulting liquid fuels are addressed, this cost will
increase. The improvement in economics over H-Coal is attributable to an accumulation of small improvements over
the years rather than a major breakthrough. Key cost reductions include the following: (1) controlled precipitation was
developed that eliminated an expensive filtering step; (2) the
portion of recycled product liquid used to slurry the feed
coal was bypassed around the solids removal unit, increasing the efficiency of the process; (3) catalytic reactors were
added in series to improve control of the liquefaction chemistry; (4) improved catalysts were developed; and (5) less
complex reactors were developed. In addition, materials of
construction and improved designs were found to solve the
processing problems identified in the demonstration projects.
The combination of these process improvements led to
lower capital cost, increased liquid yields, improved product
quality, more effective hydrogen utilization, and greater reactor throughput. Further reductions in costs can be achieved
if coal is mixed with heavy crude oil or refinery bottoms in a
coprocessing configuration.
Benefits and Costs
There are no realized economic benefits, because the direct liquefaction technology developed in the DOE/industry
program has not been commercialized (Table F-3). Direct
liquefaction technology is a possible option for the future.
Use of this option in the United States will likely require
additional improvements in environmental impacts and economics (further cost reduction and/or higher crude oil
prices). The current conventional wisdom is that indirect liq-
166
APPENDIX F
TABLE F-3 Benefits Matrix for the Direct Liquefaction Programa

Economic
benefits/costs
DOE R&D costs: $2.3 billion

Industry costs: $1.2 billionb
Technology has not been commercialized
Developed to the point that with some

scale-up risk, may be commercially
viable if the price of oil increases
sufficientlyc
Technology can be used for heavy and
extra-heavy petroleum processing
Enhanced base of chemistry, catalysis,

product, design, and processing
knowledge developed relating to coal
and petroleum residuumd
Demonstrated successful operation of key
pieces of process equipmente
Environmental
benefits/costs
None
None
None
Security
benefits/costs
No benefits, since technology has not been

commercially deployed
Fuels from coal would displace oil use
None
aUnless
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
industry, mainly through EPRI.

cA variety of process concepts were examined on a small scale, and three were tested on a large scale in the late 1970s and early 1980s: SRC-II (solventrefined coal) in Tacoma, Washington; EDS (Exxon donor solvent) in Baytown, Texas; and H-Coal in Catlettsburg, Kentucky. Following the demonstrations,
the Advanced Coal Liquefaction R&D facility in Wilsonville, Alabama, and the HRI/HTI pilot facility were used to develop process improvements. The cost
of direct hydro-liquefaction of coal was reduced by about 50 percent. The committee estimates that crude oil prices of at least $45/bbl are required for industry
to commercialize in the United States. China is considering the option of importing U.S. technology for coal processing.
dSuch as supported dual-pore catalysts and improved ebulated-bed reactors, letdown valves, and preheaters, and operating know-how related to corrosion,
erosion, and fouling.
eSuch as ebulated-bed reactors, letdown valves, and preheaters. The program also demonstrated ways to overcome problems typical of processing coal, such
as corrosion, erosion, and fouling.
uefaction technology is favored over direct liquefaction. This

is because, although more expensive, indirect liquefaction
has been commercialized and represents less risk. Further,
the main components of the indirect liquefaction process,
gasification to syngas and syngas conversion, are continuing
to be improved for integrated gasification combined cycle
(IGCC) and natural-gas-to-liquids processing, respectively.
On the other hand, China seems to be seriously considering
the direct coal liquefaction option. HTI has a signed a trade
agreement with the Shenhua Group. The Chinese State Planning Commission has apparently narrowed the technology
choices to the United States (HTI) and Japan (New Energy
Development Organization). HTI claims the U.S. process is
superior and estimates a project to produce diesel and gasoline in China will result in an 18 percent return on investment with its process.
Improved reactor designs and improved catalysts resulting from the direct liquefaction program are also options for
improved processing of heavy oil, such as from Canadian oil
sands and the Orinoco belt in Venezuela.
Other benefits from the direct coal liquefaction program
are contained in the knowledge base created in coal chemistry, catalysis, and the operating experience from process
demonstration. This knowledge will be valuable should
R&D begin in this area in the future.
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
The fluidized-bed combustion (FBC) program consists of
two related but different technologies: (1) atmospheric bub-
167
APPENDIX F
bling and circulating atmospheric fluidized-bed combustion

(AFBC) and (2) pressurized and advanced pressurized fluidized-bed combustion (PFBC). The technologies utilize similar combustion principles; however, one operates in atmospheric pressure (AFBC) and the other under pressure
(PFBC).
FBC technology was developed in the mid- to late 1960s
by the Department of the Interiors Office of Coal Research
to produce a compact coal boiler that could be pre-assembled
at the factory and shipped to a plant site at lower cost than
conventional technology. In the 1970s the governments
R&D was driven by rising costs of petroleum and natural
gas, by pressures to reduce oil imports, and by a desire to
capture sulfur compounds during the combustion process
(OFE, 2000a). As a result, research focused on use of the
technology as a substitute for primarily oil-fired industrial
boilers and to improve FBC efficiency and environmental
performance. Some work was done on using anthracite culm
in Pennsylvania as a feedstock for the technology.
In the 1980s, the program focused heavily on demonstration of AFBC technologies and development of advanced
pressurized fluidized-bed combustion systems. The latter,
built on research begun in England (some of which had been
done in collaboration with DOE), was developed primarily
for energy security reasons (i.e., utilization of domestic energy resources) and growing environmental pressures. EPA
was also involved in the early development of FBC technology.
By 1990, first-generation atmospheric FBC technologies
were commercial. The emphasis of the AFBC program
turned to special applications for the technologies (e.g., lowcost, low-valued fuels such as medical wastes, waste tires,
and petroleum coke), with much of the work being conducted
on commercial products.
PFBC technology development became focused on improving its energy efficiency and environmental performance and on reducing its capital cost to allow it to compete
against the use of coal in IGCC systems. Both AFBC and
PFBC technologies were (and continue to be) demonstrated
in the Clean Coal Technology (CCT) demonstration program. However, it is the view of the committee, based upon
discussions with representatives of the private sector, that
the market potential for FBC will be limited by continued
tightening of environmental requirements, continued technical issues, and the high capital costs in comparison with other
electric power options.
From 1978 through 1999, DOE invested a total of $843
million (in constant 1999 dollars) on FBC research, development, and demonstration (RD&D); $298 million on AFBC
systems; and $545 million on PFBC systems. Of this amount,
it invested approximately $39 million in AFBC and $118
million in PFBC to demonstrate the technologies in the CCT
demonstration program. Cost sharing for the program came

primarily during the demonstration phase of the program,
with industry providing $408 million ($223 million for
AFBC and $185 million for PFBC) (OFE, 2000a). Although
information is quite limited on other private sector investments in the development and demonstration of the technologies, it is expected that the investments are very significant.
Expenditures on AFBC R&D (excluding demonstration)
were $259 million. The major subprograms of the AFBC
program included the following:
Early industrial and utility demonstrations, $227 million;
Advanced concepts, $12 million; and
Advanced research, $7 million.
DOE has not been allocated money for AFBC RD&D since
1993.
Expenditures on PFBC R&D (excluding demonstration)
were $427 million. The major subprograms of the PFBC program included the following:
Test rigs and pilot plants, $96 million;
International Energy Agency (IEA)/Grimethorpe (collaborative RD&D with Great Britain and Germany), $82
million;
Advanced concepts, $61 million;
Wilsonville test facility, $50 million; and
Hot gas cleanup, $46 million.
The current PFBC program, funded at approximately $15
million, revolves around testing of advanced system configurations, including hot gas cleanup at the Wilsonville test
facility in support of Vision 21.
Results
AFBC technology is now commercially available. Every
U.S. boiler manufacturer (and many foreign boiler manufacturers) offers the system in its product line. Over 400 modern, industrial-scale AFBC boilers are in operation throughout the world, 170 of them in the United States, primarily
using low-cost fuel and waste as their feedstocks. DOE estimates that more than $6 billion in domestic sales and nearly
$3 billion in overseas sales have resulted from the public and
private investment in AFBC technology. Demonstrations up
to 300 MW are under way to prove the technology for coalbased utility applications (Robert Wright, DOE, e-mail communication, January 4, 2001). For dispatch and availability
reasons, most operators prefer AFBC systems to be between
250 and 400 MWe. The ability of AFBC systems to meet
future environmental requirements and remain economically
competitive may hamper commercial use of the technology
for utility applications. However, it will continue to play a
168
APPENDIX F
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.
Conversations with private sector FBC vendors and utility

technology managers indicate broad acceptance of the critical role played by DOE in the advancement of the technologies. Without DOEs involvement, AFBC technology would
have lagged by several years. Without DOEs involvement,
PFBC technology may not have ever advanced to its current
stage because of the high technical risks and high costs associated with its development.
Benefits and Costs

The benefits and costs of the FBC program are shown in
Table F-4. The realized economic benefits of DOEs FBC
RD&D programs are estimated to be moderate. PFBC technologies have not been used commercially and therefore
have provided no realized economic benefits thus far. Considering the high costs and significant competition facing
first-generation PFBC systems, the committee questions
whether realized benefits will ever be realized. Likewise,
considering the extremely difficult technical and economic
challenges facing second-generation PFBC systems, the
committee questions the potential of this technology as well.
In addition, compared with the next-best alternative, pulverized coal boilers with stack gas cleanup, AFBC systems using coal offer no economic advantages. However, when using low-value fuels that pulverized-coal technology cannot
efficiently and economically burn, AFBCs have an economic
advantage (estimated to be $0.25/MMBtu in fuel cost).
Therefore, realized economic benefits can be assigned to
TABLE F-4 Benefits Matrix for the Fluidized-bed Combustion (FBC) Programa
Realized Benefitsb/Costs
Economic
benefits/costs
DOE RD&D costs: $843 million, 19781999

Benefits from combustion of Pennsylvania
culm banks: $750 millionc
Realized benefits result from AFBC, not
PFBC
AFBC is available as an option for

alternative feedstocks; PFBC is not
Development of new information on in

situ sulfur recovery, waste fuel
preparation, feeding, combustion, and
hot gas particulate removal technology
and materials
Environmental
benefits/costs
Benefits from excess NOx reductions:

cumulative 900,000 tonsd
Cleanup of unwanted wastes currently
disposed of in landfills
Use of waste products as a fuel
FBC wastes neutralize coal field acid water
runoff
Expands the potential to use waste fuels at

lower NOx emission levels
Mine acid neutralization, utilization of

FBC wastes for roadbed materials and
cement aggregates
Security
benefits/costs
None
None
None
aUnless
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
169
APPENDIX F
early (1978 to 1983) DOE RD&D investments that allowed

anthracite culm to be used as the feedstock for producing
power and heat. Six FBCs using 8.4 million tons of anthracite culm were in operation in 1996. These and FBC anthracite culm plants planned to be built by 2005 are the basis for
realized economic benefits. Assuming a 30-year life cycle,
these projects are estimated to save $1.5 billion in cumulative fuel costs (constant 1999 dollars). Attribution of these
benefits to DOE is difficult to determine. However, since
DOE did play an influential role in developing the technology, the committee believes that it is reasonable to attribute
one-half of these ($750 million) savings to it.
The committee believes that realized environmental benefits may also be attributed to DOEs AFBC RD&D investment. Many of the AFBC combustors built in the United
States prior to 1995 (i.e., 5200 MW) inherently emitted significantly less NOx than required by law. DOE calculates
that NOx emissions from AFBC plants were approximately
one-half those from conventional pulverized coal plants that
probably would have been used as the next-best alternative
had AFBC technology not been available. Because DOE
played such an important role in development of the technology, one-half of the NOx reduction benefits (900,000 cumulative tons) is attributed to DOEs research.
The committee believes that especially when using lowrank coals, AFBC systems provide economic and environmental benefits as options to pulverized-coal boilers with
flue gas desulfurization systems, the other technologies that
can service the specialty industrial market. When using lowcost, low-valued fuels, AFBC systems can show economic
advantages over the next-best alternative, small combinedcycle or simple-cycle gas turbine plants. These AFBC systems using waste fuels also emit less NOx than alternatives
that burn waste fuels. Other environmental benefits result
from the cleanup of unwanted wastes that are currently disposed of in landfills.
PFBC systems do not offer these benefits, since they will
compete with IGCC and large-scale gas turbine combinedcycle gas plants that are being evaluated and which should
have better economic and environmental performance. In
addition, PFBC is not commercially available at this time
and therefore does not fit the committees definition of an
option.
The committee is of the opinion that RD&D conducted
by DOE in both the AFBC and PFBC areas added significantly to the knowledge base. Knowledge benefits include
important new information on the following:
Basic coal science;
In situ sulfur recovery;
Waste fuel preparation, feeding, and combustion;
Mine acid water neutralization (utilizing FBC wastes
for neutralizing coal mine acid water runoff);
Utilization of FBC wastes for roadbed materials, cement aggregates, and other uses; and
Hot gas cleanup technology and materials that can be

used for many industrial applications in addition to PFBC.
No security benefits are attributed by the committee to
DOEs RD&D on FBC since they do not meet the security
criteria defined by the committee.
Lessons Learned
In the opinion of the committee, DOEs FBC RD&D program is a good example of a successful public/private sector
partnership to develop technology for a variety of applications. DOEs involvement in the conceptualization and early
proof of concept attracted industry to conduct its own research and to provide significant cost sharing to DOE as the
technologies advanced to pilot and demonstration scales.
The program also illustrates the long period of time and
significant costs required to develop coal-based technology
and bring it to market (25 years in the case of AFBC). Over
the many years that are required to develop and demonstrate
such technologies, market conditions change, creating either
opportunities or disappointments. In the case of FBC, tightening environmental requirements and the development of
competing technologies reduced the market potential considerably. However, the availability of low-cost opportunity
fuels that could be economically combusted in AFBCs while
meeting environmental requirements has created market opportunities for the technologies domestically and internationally.
In the committees opinion, the PFBC program also illustrates a DOE initiative that was initiated to support industry
efforts to meet important national needs, namely environmental requirements (especially as an alternative to reduce
SO2 emissions from coal-fired power generators) and as a
hedge against rising oil and gas prices. However, it is an
example of a research program that may have been supported
too long. Over the life of the program, environmental concerns changed, as did the factors that drive electric utility
generation decisions. At the same time, other more promising technological options that meet the same national needs
advanced. The basic PFBC technology has been demonstrated at a reasonable scale. Research over the last several
years is viewed to have valuable knowledge benefits but will
probably not ever have realized economic benefits, even if
current research goals are met. This is an example of a program that would have benefited from a critical peer review
before significant expenditures were made on full-scale demonstrations.
GAS-TO-LIQUIDS TECHNOLOGY
The Gas-to-Liquids Technology program is part of the
Natural Gas Processing and Utilization program, which has
170
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.
TABLE F-6 DOE Investments in the Gas-to-Liquids

Program, 1999 (millions of 1999 dollars)
Program
DOE Investment
Liquefied natural gas

Novel conversion
Systems and economic studies
Total
0.8
0.5
0.6
1.9
and Fossil Energy: Gas-to-Liquids Technology, December 4.
separate oxygen from air to reduce the cost of synthesis gas

manufacture.
Fischer-Tropsch Synthesis
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.
Research has been directed toward laboratory and pilot

plant studies on novel iron-based Fischer-Tropsch catalysts
and new reactor concepts.
Liquefied Natural Gas

Research work is directed toward the development of a
thermoacoustic Stirling hybrid engine to produce refrigeration that would improve the efficiency of the liquefied natural gas liquefaction process.
Novel Conversion Technology
Results
Research work is directed toward the use of an electric

field to activate and enhance methane conversion.
Synthesis Gas Production

Research work has been directed toward improved methods for producing synthesis gas from natural gas. For example, ceramic membrane technology is being developed to
TABLE F-5 DOE Investments in the Gas-to-Liquids

Program, FY 1978 to FY 2000 (millions of 1999 dollars)
Program
DOE Investment
Synthesis gas production

Fischer-Tropsch synthesis
Liquefied natural gas
Novel conversion technology
Oxyhydrochlorination
System and economic studies
Total
25
4
3
33
1
3
79
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.
Systems and Economic Studies

System studies have been carried out to evaluate how gasto-liquids technologies compare with other options.
Benefits and Costs

The program is a mix of effort, from exploratory research
projects (such as the use of an electric field to activate methane) to scale-up studies (such as Fischer-Tropsch reactor
171
APPENDIX F
TABLE F-7 Benefits Matrix for the Gas-to-Liquids Programa

Options Benefitsb/Costs
Economic
benefits/costs

Industry costs: $45 millionc
No realized benefits
None
Research on novel methods to produce

syngas, to activate methane, and to
liquefy natural gas
R&D on improved methods for producing
synthesis gas from natural gasd
Laboratory and pilot plant studies on novel
iron-based Fischer-Tropsch catalysts
and new reactor concepts
Development of a thermoacoustic Stirling
hybrid engine to produce refrigeration to
improve efficiency in the LNG
liquefaction process
Research on the use of an electric field to
activate and enhance methane
conversion
R&D on oxyhydrochlorinatione
Systems and economic studiesf
Environmental
benefits/costs
None
None
None
Security
benefits/costs
None
None
Noneg
aUnless
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
design). To date there have been no economic benefits (Table

F-7). One of the underlying assumptions in this program is
that upgrading stranded natural gas to liquid products, particularly to high-quality diesel fuel, by Fischer-Tropsch synthesis will at some future time be feasible in the United
States. Cited prominently in the DOE justifications is the
potential for conversion of stranded natural gas from the
North Slope of Alaska to a liquid fuel, allowing its transport
to the lower 48 states in the existing pipeline.
The assumption that any significant quantity of natural
gas in the United States could ever be valued (relative to oil)
low enough to justify its conversion to liquid fuels by conventional gas-to-liquids technologies seems questionable.
This doubt stems from the low thermodynamic efficiency

(less than 65 percent) for conversion of gas to liquids. An
earlier NRC study recommended modest funding for gas-toliquids technologies and that it be limited to fundamental
and exploratory research (NRC, 1990). Also, the recent increase in gas prices has 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
(Bloomberg Press Release, 2000).
While the upgrading of natural gas to liquid fuels in the
United States is unlikely, the exploratory work on novel
methods to produce synthesis gas, novel ways to activate
methane, and novel methods to liquefy natural gas add to our
172
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.
IMPROVED INDIRECT LIQUEFACTION

The primary goal of the improved indirect liquefaction
program is to produce clean hydrocarbon fuels and/or oxygenated compounds such as methanol from coal. This is part
of the DOE Clean Fuels Program conducted jointly by the
Office of Fossil Energy and the Office of Energy Efficiency
and Renewable Energy.
Currently, technologies exist for the indirect liquefaction
of coal. Coal is first converted to synthesis gas, carbon monoxide, and hydrogen. The carbon monoxide and hydrogen
can then be converted to Fischer-Tropsch liquids or to methanol using commercially available technologies. The FischerTropsch liquids can be refined into high-quality diesel fuel
and gasoline. Methanol can be used as a fuel or chemical
directly or converted to gasoline using the MTG process.
In 1981, DOE started a program to improve the indirect
liquefaction technologies. One goal of the program was to

improve the Fischer-Tropsch process by improving the catalysts used and by improving the reactor design by utilizing
the concept of a slurry bed. Another goal was to reduce the
cost of methanol synthesis by using a liquid slurry bed approach similar to that developed for use in the FischerTropsch process. Another goal was to study the feasibility of
coproducing fuels and electricity to minimize costs.
The total R&D expenditure by DOE from 1981 to the
present is $176 million in as-spent dollars and $224 million
in constant 1999 dollars. Cost sharing amounted to about 17
percent of total project costs. Expenditures were about $7
million in 2000 (OFE, 2000c).
In addition to the R&D expenditures, $96 million (constant 1999 dollars) was provided for the Liquid Phase Methanol Clean Coal demonstration project from 1993 to 1998.
Cost sharing of the demonstration project amounted to 57
percent of the total cost of the project.
Results
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
173
APPENDIX F
phase fixed-bed reactor. This technology was selected for

commercial-scale demonstration under round three of the
DOEs Clean Coal Technology program in an agreement
between DOE and the Air Product Liquid Phase Conversion
Company, a partnership formed by Air Products and
Eastman in 1989. The demonstration project is being conducted in the Eastman Chemical manufacturing complex in
Kingsport, Tennessee. The Kingsport project, which has a
capacity of 260 short tons per day of methanol, is now in the
fourth year of successful operation with availability exceeding 98 percent.
Other Oxygenates. Studies were carried out of the synthesis of other oxygenates, such as dimethyl ether; however,
no novel leads were found.
Coproduction of Fuels and Electricity

The production of fuels and electricity simultaneously
from coal offers economic benefits over producing fuels
alone.
Benefits and Costs

This program was a mix of R&D projects, such as catalyst research, and process and reactor development. It also
scaled up the liquid-phase methanol process to a 260 tpd
demonstration unit. Although there were substantial technical achievements, there were no realized economic benefits
(Table F-8).
The scale-up of the liquid-phase methanol process makes
it a technological option for the conversion of coal to methanol when economic conditions become favorable. Methanol
could then be used directly as a fuel, converted to gasoline or
dimethyl ether, or used as a chemical.
While not yet having any benefit, the coproduction of fuels and electricity appears to be a more promising option
than converting coal to fuels alone.
Indirect liquefaction has the additional advantage of having a highly concentrated stream of CO2 available from the
synthesis-gas-generation section, which could be sequestered to minimize CO2 discharge into the atmosphere.
TABLE F-8 Benefits Matrix for the Improved Indirect Liquefaction Programa
Economic
benefits/costs
DOE RD&D costs: $320 millionb

Industry cost share: $164 millionc
No realized economic benefits
Improved state-of-the-art technology could

be deployed when economics are
favorable and the price of oil increases
sufficientlyd
Plant integration to coproduce fuels and
electricity improves economics
Liquid Phase Methanol Process
demonstratede
Enhanced knowledge of novel catalysts

and reactor designs
Advances in gas separations, FischerTropsch synthesis, carbon sequestration
technology, and reductions in process
contingencies
Advances relating to petroleum
hydroprocessing
Environmental
benefits/costs
No benefits
If CO2 is sequestered, total fuel cycle

Development of knowledge base to
emissions are less than for petroleum,
produce clean fuels from coal in an
and there are potential significant carbon
environmentally acceptable manner
savings compared with other
conventional coal and gas options.f
Can produce gasoline and diesel fuels that
exceed proposed EPA tier 2 sulfur
specifications
Security
benefits/costs
No benefits
Fuels from coal would displace oil use
aUnless
None
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
174
APPENDIX F
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.
INTEGRATED GASIFICATION COMBINED CYCLE

The development of an integrated coal gasification combined-cycle (IGCC) system has been an important component of DOEs FE RD&D program for more than 20 years.
Electricity production from IGCC development was a natural outgrowth of DOE-industry gasification and turbine
RD&D that began in the 1970s with the national concern for
energy supply alternatives. The perceived goals of the IGCC
program include the following: (1) provide a high-efficiency,
environmentally benign option for electricity production to
ensure the viable use of coal and residual petroleum carbon
as a stable energy source, (2) enhance U.S. national manufacturing competitiveness for electricity generation systems,
and (3) develop the potential for integrating energy production with commercially useful chemical by-products, including liquid fuel production. The IGCC program has not only
represented a long-term investment in coal-fueled energy
options, but represents an important option in DOEs Vision
21 program for the development of advanced power generation systems for commercial applications beyond 2015. Basically, the IGCC technology integrates the advances in highpressure gasifiers with a combination of advanced gas turbine designs and conventional steam turbines to produce
electricity at thermal efficiencies at least 10 percent greater
than conventional steam power plants. The fuels that can be
used include coal, residual oils and tars, and petroleum coke.
Though gasification technology has existed for 200 years,
pressurized gasifiers producing (combustible) synthesis gas
suitable for use in gas turbine combined-cycle applications
were not designed until the late 1960s. Also, gas cleanup
technology to minimize pollution emissions, as required by
todays environmental regulations, was not effectively
coupled with the pressurized gasification process until the
mid-1970s.
Aside from the advances in thermal efficiency of the
IGCC plants, their operations offer the opportunity to reduce
currently regulated air, water, and solid wastes to very low
levels, an achievement that cannot be matched with any other
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.
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
175
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.
Currently gasifiers producing a total of 12,000 MW are

operating worldwide. There are plans to build at least 20
IGCC plants in the next 5 years using mainly current U.S.
and European technology. Perhaps the most extensive market penetration is enjoyed by the Texaco technology. Despite its viability, IGCC systems remain in competition with
natural-gas-fired, turbine-based technology and PFBC technologies. While the FBC systems cannot achieve the environmental quality levels of IGCC, they are estimated to be
less costly than IGCC plants. The two primary barriers to
increased interest in IGCC technology for power production
are the ability to compete with natural gas power generation
and siting and construction issues. Present costs for IGCC
systems are $1000 to $1500 per kilowatt. If natural gas prices
remain at or below current levels ($4.32 per Mcf),2 IGCC
systems need to reduce costs to the $800 per kilowatt range.
The cost reduction is expected to derive from continued development of a number of the integrated components of
IGCC systems. DOE expects to share in these developments
through investments in the Vision 21 program (NETL,
1999).
Results
Benefits and Costs
As a result of more than 20 years investment on the part

of DOE and industry, modern technology for the gasification of coal and other fossil fuels to produce synthetic natural gas has reached a stage of commercializable technology
for applications worldwide. The concept of thermally efficient and environmentally benign electricity production from
different kinds of coal using a IGCC system also has been
demonstrated at the commercial scale using three different
gasification technologies. Thermal efficiencies in excess of
40 percent have been obtained, with the prospect of 50 percent for advanced turbine systems. Current efficiencies are
well above the 35 percent levels of conventional plants, and
emissions of air pollutants are only a small fraction of U.S.
New Source Performance Standards, with recovery of sulfur
as a commercial by-product. Emissions of air toxic compounds is minimal, contaminated water discharges are negligible, and solid wastes are produced as vitrified material
impervious to leaching in storage. The IGCC plants also offer a significant opportunity for the capture and sequestration of CO2, a greenhouse gas. Technologies to achieve this
goal are being investigated in DOEs program.
As a practical matter, coal-based IGCC plants directly
compete with combined-cycle natural gas plants. While
IGCC represents a primary option for efficient, environmentally compatible electricity production using domestic coal
resources, its future application beyond niche markets will
depend on natural gas prices, combined with IGCC component price reductions. The latter are likely to derive from
continued efforts to increase overall efficiency through the
integration of advanced turbine systems (ATS) and, possibly, fuel cell electricity production in the long term.
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.>.
176
APPENDIX F
TABLE F-9 Benefits Matrix for the Integrated Gasification Combined-Cycle (IGCC) Programa
Realized Benefitsb/Costs
Economic
benefits/costs

DOE demonstration and deployment costs:
$1281 millionc
Private industry R&D costs: $2200 milliond
No realized benefits; benefits may be
realized by 2005 depending on choices
for new power production.
Provides a potentially efficient and

environmentally acceptable option for
expanding electric power production
Provides for flexible developments in
chemical processing, including indirect
liquefaction, and adds an important
dimension to U.S. technology markets
abroad
Offers opportunity for continuing

improvement in thermal efficiency and
environmental performance of coalbased power plants far into the future
Offers the potential for combined power
production and chemical processing
using synthesis gas
Environmental
benefits/costs
Cumulative emission reduction benefits:

267,000 tons of SO2, 275,000 tons of
NOx, 48 million tons of CO2e
Preserves the option for coal-based

electricity while reducing environmental
impact to minimum levelsf
With CO2 capture and sequestration, IGCC
can offer worldwide options for
electricity production with minimal
greenhouse gas emissions.
Provided critical knowledge for improved,

cost-effective emission reduction
technologies, including hot gas cleanup
Security
benefits/costs
None
None
None
aUnless
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
through improved efficiency of power production, combined

with efficient CO2 capture and sequestration.
IGCC technology also offers important opportunities for
the development of coal-based chemical processing as an
adjunct to electricity production and significant improvements in petroleum refining and specialized high-temperature gas conditioning. Among the opportunities of interest
are the high-pressure and high-temperature gasification and
processing of biomass.
Lessons Learned
IGCC development and demonstration provide a good
example of a long-term, sustained cooperative public- and
private-sector-funded program that has taken important steps
to achieving national strategic goals. The benefits of this
R&D investment are not yet positive economically, but it
does give the United States a practical option for maintain-
ing a coal-based electricity resource while meeting environmental objectives.

The experience gained from the IGCC program points to
the need to consider national investment in RD&D at three
levelsnational strategy, technological priorities, and critical selection of options. At the first level, national strategy,
the history of gasification and its application to IGCC shows
the results of a wavering and inconsistent national energy
policy through the last 30 years. 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 the availability of cheap
fuels, dictated by the international marketplace, and to increasingly stringent environmental constraints. The longterm viability of a stable and inexpensive energy supply
based primarily on domestic resources has been a low priority. If this objective had remained the top priority, IGCC
might well be farther along in its applications.
177
APPENDIX F
In the past, many publicly funded projects were funded

on the basis of perceived value in basic and applied component research at the presystem scale. This agenda has proven
to be inefficient in the creation of energy production facilities that require inherently large capital investments. Early
conceptual recognition of the potential of IGCC systems
(which integrate chemical processing technology with thermodynamically staged, advanced power generation) provided a focus on component research specifications. This
physical and intellectual integration of researchers and
manufacturers served to set priorities for R&D investment
early on, enabling a focus on solving key problems.
As development progressed on IGCC systems, it became
clear in the early scale-up demonstrations that the technology would leapfrog end-of-stack environmental controls for
existing plants and would supersede other generation options
based on incremental advances of conventional boiler technologies. Had this been recognized early in the CCT initiatives, the selection of technologies for demonstration might
have focused more on the IGCC options than on other options.
The experience gained from IGCC developments indicates that the successful development and demonstration of
energy production technologies that require large capital investment are greatly enhanced with public and private partnerships, particularly for accelerating technology development to practice. DOEs main contribution to IGCC resulted
from developing a close working relationship with industry
to move the technology through the commercial demonstration stage. This is very critical to commercial acceptance in
the electricity production sector, where reliability of technology is a primary consideration. Industry is increasingly
averse to using its limited capital funds for precommercial
demonstrations of new coal-based energy technologies. A
degree of risk sharing, with public funds injected at the scaleup demonstration stage, assures that new approaches to energy production will experience a smooth transition from
bench-scale to full-scale commercialization.
EMISSION CONTROL TECHNOLOGIES

In response to the requirements for stringent emissions
limits on fossil-fueled power plants imposed by the Clean
Air Act (CAA) and its amendments (CAAA), DOE expanded
its RD&D program in the mid-1980s to seek improved options for control technology to control the stack effluents of
power plants. The CAA historically focused on the criteria
pollutantsparticulate matter (PM), sulfur dioxide (SO2)
and nitrogen oxides (NOx)that are relevant to power plant
emissions, especially coal-fired plants. Emission control
technology has been commercially available for all three of
these pollutants since the 1970s. The technologies for PM
have been proven with respect to high collection efficiency
(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.
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.
178
APPENDIX F
proximately $100 million. In the mid-1980s, DOEs CCT

demonstration component amounted to $103 million. The
industrial counterpart to this investmentincluding the investments of electric utilities and vendorsis uncertain, especially if one goes back further than 1970. The industrial
cosponsorship of the CCT program was $264 million exclusive of the site sharing, in-kind expense. The industrial research component of EPRIs program alone included more
than $12 million for the high-sulfur test facility (HSTF), and
a cumulative RD&D budget over a decade exceeding $25
million.
Compared with FGD, DOEs R&D budget for low-NOx
combustion technology and postcombustion NOx reduction
technology is $67.2 million (1999 dollars). The large private
sector investment in RD&D for NOx reduction is estimated
at $107 million (1999 dollars), dating back to the 1970s.
This included, for example, Exxon technology development
for SCR for petroleum combustion sources.
Exclusive of PM emission control RD&D, the total investment in SO2 and NOx emission reduction technology for
large coal-fired boilers amounts to more than $525 million
since the late 1970s. These costs of advancing a range of
retrofit technology options for use in extending the life of
the current fleet of coal-fired power plants were underwritten mainly by the public through government funding and
the electricity ratepayer.
Results
The RD&D to produce advanced or second-generation
emission control technologies is driven by environmental
regulation. The sustained investment of DOE in emission
control technologies has supported significant advances in
FGD collection efficiencies and reliability at reduced costs
over the first generation of equipment. The investment also
has provided major improvements in reliable NOx reduction
in the combustion process as well as in postcombustion options for a range of U.S. coals and boiler configurations.
Both wet and dry FGD technology matured to internationally commercial status after the 1980s. The RD&D effort in basic and applied research on FGD chemistry, mass
transfer rates, corrosion-resistant materials, and design standardization has led to configurations that generally meet the
tests of reliability and collection efficiencies exceeding 95
percent with reductions to capital and operating expenses of
$200 to $300 per kilowatt installed and 10 to 15 mills per
kilowatt-hour, respectively. A key contribution of DOE to
wet scrubber technology was its support for the development of forced oxidation limestone technology, paralleling
EPAs R&D on organic additives to achieve high collection
efficiencies. In the dry scubbing area, the use of DOEsupported direct reagent injection into the postcombustion
regime added a potentially efficient and space-saving capability to the FGD portfolio. Even though reliable FGD technology is available today, many utilities have not exercised
this retrofit option to address the 1990 CAAA requirements.

Lower costs associated with fuel switching and emissions
trading have fulfilled most of the needs for SO2 reduction in
the first phase of the acid rain control effort. It remains to be
seen what role FGD will play in the second phase of required
SO2 reductions after 2000 (OFE, 2000e).
Low-NOx combustion technology has significantly reduced NOx emitted from large utility boilers since the 1980s,
with reductions ranging from 40 to 60 percent depending on
the boiler design. Important contributions to the advancement of burner technology in the 1980s included basic studies of the fluid dynamics of combustion, bench- and pilotsale testing that led to designs customized for different boiler
configurations, and a computer optimization program supported by DOE and EPRI, GNOCIS.4 The capital costs for
burner installation amount to about $9 per kilowatt, with
about 0.3 mill per kilowatt-hour operating expenses (OFE,
2000f).
Accompanying the introduction of low-NOx burner technology was the introduction of reburning or overfiring in the
1980s. Fuel staging of the reburning involves primary combustion in a fuel-lean stream, followed by the staged injection of added fuel and air into a lower-temperature region of
the boiler to complete combustion. Overfiring involves a
fuel-rich primary combustion zone followed by the injection
of air into elevated, cooler zones of the boiler. Reburning
and/or overfiring can improve the reduction of NOx in the
flue gas to levels 65 percent below the levels in a boiler
without controls. Added capital costs are $15 to $40 per kilowatt, with 2 to 3 mill per kilowatt-hour added operating costs.
In the 1970s, the requirements for NOx emission reductions exceeding about 60 percent stimulated interest in
postcombustion technologies; much of the development of
these postcombustion technologies derived from European
and Japanese experience. The two classes of technologies,
selective catalytic reduction (SCR) and selective noncatalytic reduction (SNCR), have been tested extensively and
were recently demonstrated commercially for application to
U.S. coals. The foreign technology has been advanced with
support from DOE and the private sector to investigate basic
chemistry, different reduction catalyst and catalyst support
performance, minimization of excess reducing reagent, minimization of SO2 oxidation, with removal efficiency for different U.S. coals. Current technology gives a better than 80
percent NOx reduction in effluent gas for SCR, but SNCR
has lower removal efficiencies, 60 to 70 percent. SCR and
SNCR are considerably more expensive in terms of capital
costs and operating costs than combustion technology. Typically, SCR capital costs are $50 or more per kilowatt, with
4GNOCIS is an EPRI developed (with DOE support) computer software

package for computer control of combustion systems to minimize NOx
emissions.
179
APPENDIX F
operating cost of 2.5 mill per kilowatt-hour. SNCR costs

will be somewhat less, with lower removal efficiencies.
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:
Working with EPA and EPRI to develop the use in FGD

of forced air oxidation and organic acid additives to increase
collection efficiency of SO2 to 95 percent and above;
Improvements in flue gas absorbent contacting to enhance the mass transfer of SO2 to absorbents, reducing the
size and pressure drop in FGD scrubbing units;
Development of dry sorbent injection technology as a
means of SO2 removal;
Optimization of multiple burner array design, combined
with overfiring; and
Conceptual development of hybrid SO2 and NOx removal technology (one example uses a copper oxide catalyst
system).
Benefits and Costs
The benefits associated with DOE RD&D are summarized in Table F-10 for FGD emission control technologies
and in Table F-11 for NOx emission controls. Basically,
DOEs RD&D effort is driven by the environmental protection requirements of the CAA. In some sense, the value of
advances in low-cost NOx emission controls through CCT
and other developments has surpassed that of FGD options
in terms of market penetration. The investment in improved
reliability and lowered costs of FGD systems resulting from
public and private investment is judged to have resulted in a
realized benefit of about $1 billion. Partly because of the
CCT subsidization and the CAA regulation requirements,
NOx control options are judged to have had no realized economic benefits. However, both FGD and NOx have environmental benefits from reduction in emissions, as noted in
Tables F-10 and F-11. The advancement of emission control
technology preserves the existing emphasis on coal as a viable fuel for power generation using conventional boiler
technology or advanced systems like AFBC and PFBC. The
demonstration of a variety of second-generation emission
control technologies for SO2 and NOx probably accelerated
their commercial viability by several years. The investment
probably has given the electric power generation industry
sufficient options to meet the current requirements of the
CAA in a timely manner.
The long-term utilization of U.S. coal reserves is important economically and from an energy security viewpoint.
The best alternative to the current practice of the existing
fleet of coal-fired power plants, which use technologies that
erode thermal efficiency and add cost to electricity, would
be to shift to high-efficiency, benign technologies such as
IGCC systems, but it is not known when (or if) this shift will
occur.
Lessons Learned
DOEs investment in basic and applied research underlying the development of commercial options for FGD and
NOx emission reductions provided useful but not critical sup-
180
APPENDIX F
TABLE F-10 Benefits Matrix for the Improvement of the Flue Gas Desulfurization (FGD) Programa
Economic
benefits/costs

DOE Clean Coal Technology
Demonstration costs: $117 million
Private industry R&D costs: $37 million+c
Private industry Clean Coal Technology
Demonstration costs: $264 milliond
Estimated benefits: $1 billione
DOE has demonstrated higher removal

efficiency than first-generation
technology; advanced multipollutant
emission control technologies at lower
capital cost than the first-generation
FGD system
Research conducted in chemistry,

thermodynamics, reaction kinetics,
sorbent structural properties, and
process control instrumentation
Environmental
benefits/costs
Technology improvements result in

2-million-ton reduction in SO2f
Second-generation FGD technology has

been demonstrated and is ready for
full-scale deployment
Advanced FGD technology is available for
retrofit, and new plants with 90+%
removal efficiency for full range of U.S.
coals, as well as some trace toxic
species such as selenium, cadmium, and
organic compoundsg
Developed advanced technologies for

multipollutant emission control at
>90% efficiency
Security
benefits/costs
None
None
None
aUnless
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.
MERCURY AND AIR TOXICS

The release of airborne toxic compounds from industrial
sources and the combustion of fossil fuels has been a concern for many years and was regulated as hazardous air pollutants (HAPs)as National Emission Standards for HAPS
in the CAAA of 1977. Fossil-fueled power plants were exempt from HAPs regulation until the CAAA of 1990,
wherein Congress requested EPA investigate these emissions
and determine if further regulation was needed. Separately,
in 1990 Congress requested a study of the environmental
impact of mercury emissions from coal combustion.
Since the estimates of HAPs emissions from large utility
boilers were outdated and known to be imprecise, DOE and
EPRI undertook a major emissions characterization effort in
the 1990s as an outgrowth of studies initiated earlier by
EPRI. The investigation of mercury emissions was included
in the broader HAPs investigations. The field sampling program included a range of plant configurations and fuels and
181
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.
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,
DOEs program became a high-profile national effort aimed

mainly at seeking methods for mercury emission reduction.
Between 1993 and 1995, DOE invested $31 million in this
program. Since 1995, its investment has been about $17 million, with 20 to 30 percent cost sharing by industry (OFE,
2000g).
The DOE emission control program has focused on four
areassampling and measurement development for mercury
compounds in stack effluents; mercury sorbent characterization; coal cleaning; and mercury emission control technology, including stabilization in ash.
Results
The DOE/EPRI HAPS emissions program of the early
1990s produced a large database for estimating emissions
from more than 600 domestic utility boilers. These data were
used in an EPA and parallel industry risk assessment of the
significance of exposure to HAPs from power plant emissions. The results of these analyses indicated that the risk of
adverse health effects from utility HAPs emissions generally was insignificant and required no regulatory action. The
possible exception was mercury as a bioaccumulating toxic
TABLE F-11 Benefits Matrix for the NOx Control Programa

Economic
benefits/costs

DOE demonstration costs: $48.6 million
Private industry R&D costs: $107 millionc,d
CAAA-regulation-driven; no direct
benefitse
Provide second-generation LNB options to

meet CAAA requirements. Estimated
40-60% NOx reductions from 175,000
MW, coal-fired capacity
Estimated SCR installation up to 100,000
MW by 2005 with 90% NOx reduction
Extensive knowledge of optimized

combustion configurations,
postcombustion technologies, and
control instrumentation
Environmental
benefits/costs
CAAA-drivenestimated additional
cumulative reduction of 25 million tons
of NOx over new source performance
standards baseline plantf
CAAA-driven; provides options for NOx

Improved knowledge of combustion
emissions reductions to meet 1999
chemistry, catalyst performance, and
standards call and to aim at an emissions
computerized optimization for burner
standard of 0.15 lb NOx/MMBtu
design
Advanced burner and air injection achieves
NOx reduction of 40-60%; postcombustion
technologies available to achieve 90%
reduction
Security
benefits/costs
None
None
aUnless
None
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
182
APPENDIX F
species, human exposure to which comes mainly from the

consumption of contaminated fish. EPA subsequently focused attention on mercury contamination in natural waters
and expects to make a regulatory determination for emission
shortly. The DOE/industry program to find a practical means
for the removal of mercury from power plant effluents anticipated such regulation: It provided conceptual options for
mercury control, such as sorbent injection into flue gas, but
will require further development to reduce to practice.
Benefits and Costs
The economic significance of this program lies principally in the avoidance of any costs that might have been
imposed for added emission control technology on existing
plants to reduce HAPs emissions (Table F-12). These costs
could be large if EPA were to determine that the hazard to
exposure of HAPs from power plants is of concern. The benefits of the mercury characterization and emission control
options accumulate mainly in the knowledge category since
the control technology options have not yet been demonstrated at full scale.
Lessons Learned
This program, together with the waste management and
utilization program, illustrates well the value of DOE-industry cooperation to generate new or improved information
about environmental issues. There are many examples of
relatively uninformed regulation that adversely affects the

economics of energy production. The extensive studies of
HAPs emissions derived from this program were instrumental in lending credibility to industrial measurements that resulted in EPAs informed analysis precluding further HAPs
regulation for large utility boilers. Since EPAs ability to
conduct such field measurements is increasingly limited, the
generation of new data and information falls to industry and
to the DOE as a third-party assessor. DOEs programs that
are mainly environmental protection-oriented should continue to be coordinated with EPA and should actively support the necessary development of improved, contemporary
information about power plant performance.
The mercury emission control technology component of
this program also embodies an important principle that could
be included in DOEs R&D planning. From communications
between EPA and industry, it became clear in the mid-1990s
that mercury emissions were of increasing environmental
concern and that there was no practical technology for
mercurys removal from stack gas. New technology will be
difficult to develop because of the extremely low concentration of mercury in stack gas and its different speciation.
DOEs sharing of the costs of development in this case represents an investment of public funds as a means of maintaining coal-based energy production while reducing the risk
of contamination from a ubiquitous contaminant. DOEs
work with industry to develop such technology will substantially accelerate the availability of such a technology should
regulation be forthcoming.
TABLE F-12 Benefits Matrix for the Mercury and Air Toxics Programa
Economic
benefits/costs

Avoidance of substantial costs that could

have been imposed for reduction of air
toxic emissions and for disposal of
collected wastes designated potentially
hazardous
Development of mercury sampling

methods
Database for estimating emissions from
more than 600 domestic utility boilersc
Environmental
benefits/costs
None
Potential for further reductions in mercury

and hazardous air pollutant emissions
Improved knowledge of hazardous air

pollutant emissions from fossil fuel
combustion in large boilers
Improved conceptual knowledge of
mercury emission reduction
technologies
Security
benefits/costs
None
None
None
aUnless
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
183
APPENDIX F
WASTE MANAGEMENT/UTILIZATION TECHNOLOGIES

The use of coal and the operation of power plants produce
large volumes of solid wastes that potentially create significant hazards to the environment. These include ash from
combustion and sludge from the scrubbers used in flue gas
desulfurization. These wastes amount to annual production
of hundreds of millions of tons of material, so that their emplacement involves large areas of land or, alternatively, the
use of large amounts of mineral material. The disposal of
these wastes is regulated under sections of the Resource
Conservation and Recovery Act (RCRA). They also represent potentially valuable by-products that are useful for the
replacement of cement or gypsum, as soil amendments, and
as highway base material and fillers for certain plastic products. Establishing the nonhazardous nature of these highvolume wastes has been particularly important, because a
very large cost could accrue to industry if special measures
were to be required for sequestering the ash and sludge
wastes at power plant sites.
As a continuing effort to ensure the economic and environmental viability of coal use, DOE has invested in studies
to characterize the chemistry of the stored or utilized byproducts of coal used to produce electricity. The main goal
of the DOE program is to ensure that the use of coal for
energy production remains viable and is based on the latest
information on solid waste chemistry and the technologies
for disposal of coal-related solid waste.
The DOE program was initiated in 1979. Since the mid1980s, this effort has concentrated on four principal activities: (1) sampling and characterizing the compounds present
in solid wastes from coal combustion at commercial plants
and from advanced combustion technologies and facilities
using these technologies, (2) monitoring waste disposal sites
to assess risk, (3) decontaminating waste disposal sites (soil
attenuation of toxic species), and (4) evaluating disposal
methods, including fixation and stabilization and the development of waste-based lining materials. Later, in the 1990s,
the program was expanded to include field monitoring of
waste disposal sites from CCT programs and to explore ways
to expand the use of combustion by-products.

DOE has been an active participant in researching waste
utilization and management technologies with the coal and
electricity industry for many years and has invested a total of
about $53 million in current dollars since 1979, with about
half having been committed between 1979 and 1984; since
then, the budget has stayed between $1 million and $2 million annually. Industry has complemented this expenditure
for example, EPRI committed at least $5 million a year in
the 1980s. Since 1991, industry is estimated to have ex-
pended about $12 million in this area, compared with DOEs

$19 million investment (OFE, 2000h).
The DOE program has made significant contributions,
along with those of the electric utilities, to knowledge about
the nature and sequestered behavior of potentially hazardous
materials in high-volume wastes in landfills and in mine emplacements, as well as sequestered material from CCT technology developments. The DOE work has also contributed
significantly to knowledge about the characteristics of utilized waste material in a variety of applications, including
cement products, highway base material, and wallboard
manufacture.
Results
The combined efforts of DOE and industry have been
crucial in supplying the knowledge that enabled EPA to determine in 1993 that regulatory treatment of coal combustion wastes (CCBs) was unwarranted under Title C of
RCRA. Had the CCBs been designated a hazardous waste
under Title C, major new efforts would have been necessary
to store and sequester these wastes at power plant sites. Further ash and sludge material would have been precluded from
use in a number of by-product applications that exist today.
The declaration of the nonhazardous character of CCBs resulted in electric utilities across the country avoiding very
large sequestration costs. While there are no guarantees that
EPA will not reverse its decision in the future, the present
regulation ensures that coal continues to be an economically
and environmentally viable fuel for electricity production in
the United States.
Continuing work on the utilization of CCBs since the
1980s has stimulated CCB-user industries to employ increasing amounts of material for a variety of applications, many
of them in cement production. For example, the American
Coal Ash Association estimates that production of fly ash
from combustion in conventional boilers increased from 83.7
to 107.1 million short tons from 1988 to 1999 and that the
proportion of fly ash used increased from 24.6 to 30.8 percent (cited by DOE). Use of fly ash from fluidized-bed combustion also increased, from 1.6 to 5.9 million tons between
1990 and 1995, with fractional use increasing from 62.8 percent to 74.5 percent, according to the Council of Industrial
Boiler Operations (cited by DOE). As scrubber sludge becomes increasingly available, it is used more and more as a
source of gypsum in preference to the mineral supply mined
directly.
Benefits and Costs
The DOE waste management and utilization program
obviously has been designed for relatively short-term benefits. In this sense, it has not been aimed at the development
of advanced technologies for coal utilization. The knowledge base accumulated in the program has focused on the
184
APPENDIX F
characterization of solid waste material in an impoundment

setting, documenting its mobilization potential. One of the
benefits associated with the determination of CCBs as nonhazardous rather than hazardous material in connection with
the 1993 RCRA is the avoidance of cost to the coal combustion industry. These benefits are estimated to be very large,
amounting to tens of billions of dollars through 2005, and
they alone could well justify the expenditures to date by
DOE.
Alternatively, the benefits accrued from using CCBs as
substitutes for mineral resources that need extraction and
processing are also substantial. DOE estimates a CCB utilization value, for example, of $25 billion through 2005. One
can debate the assumptions made in creating these estimates,
but qualitatively there is no doubt that the benefits accrued
from using large volumes of CCB material for building and
highway construction amounts to an economic benefit far
exceeding the investment in this program.
Environmental benefits from this program are difficult to
rationalize, according to DOE. However, qualitatively, the
committee recognizes that some value should be placed on
the diversion of land use that might have been required for
sequestering wastes if they had been deemed hazardous.
Further, there is benefit in the displacement of limestone by
fly ash in reduction of pollutant emissions from kilns, including NOx and CO2. In the committees judgement, an
avoided cost of $3 billion can be counted as a realized economic benefit with the assumptions listed in Table F-13.
Qualitatively, there are potential benefits beyond 2005
based on both the assessment of CCBs as nonhazardous and
their projected use in the economy. Perhaps equally impor-
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
Economic
benefits/costs

None
Industry costs: Approximately $100 millionb
Avoided sequestration costs associated with
RCRA nonhazardous determination:
estimated at $3 billionc
Development of materials utilized from

FGD sludge and ash
Characterization of waste material in
storage and in utilized material
Environmental
benefits/costs
None
Avoided costs of diversion of land for

storage of hazardous material
Design manual for clean coal by-product

management and landfill design for
combustion ash
Security
benefits/costs
None
None
None
aUnless
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
185
APPENDIX F
ADVANCED TURBINE SYSTEMS
provides the government/industry partnership that facilitates

development of these new-generation systems, while maintaining U.S. supremacy in the highly competitive international gas turbine market.
Two classes of gas turbine are being developed under the
ATS program. Simple-cycle industrial gas turbines, less than
20 MW in capacity, are being developed for distributed generation, industrial, and cogeneration markets. Gas turbine
combined-cycle systems are being developed for large,
baseload, central station, electric power generation markets.
The technology is designed to be fuel-flexible, allowing a
coal-derived gas or a renewable biomass-based gas to be
used as well as natural gas. The utility-scale ATS program
includes objectives for (1) operation on natural gas to achieve
60 percent efficiency or more in a combined-cycle mode,
(2) NOx emission levels less than 9 ppm, and (3) a 10 percent
reduction in the cost of electricity. General Electric and Siemens-Westinghouse are conducting the major systems development work. Each is developing its own concept under
separate cost-shared cooperative agreements with DOE.
The Office of Fossil Energy (FE) has responsibility for
the utility-based systems, and that part of the program will
be the subject of this review.

As suppliers have increased the efficiency and reliability
of gas turbines in recent years, gas turbine combined cycles
have become the system of choice for new power generation
additions. This power generation system has the advantage
of high efficiency, short installation times, and low initial
capital costs. These characteristics have been extremely attractive to both the regulated and deregulated portions of the
electrical utility industry. Before the mid-1990s, the advances in the gas turbines were based on technology that
was derived from the aircraft industry. The aircraft engines
evolved with technical assistance from programs funded by
the Department of Defense. Many of the performance advances were derived from materials and cooling technology
that allow increased combustion gas temperatures entering
the gas turbine, thus resulting in higher efficiencies and
higher power densities (potentially lower capital costs). The
improvement in gas turbine technology through input from
aircraft engine experience was extremely significant to the
development of this power generation system. However,
with the introduction of tighter emissions standards (NOx
control) and the desire to control NOx during the combustion
process, the direct use of aircraft engine technology in the
next generation of industrial/utility gas turbines was no
longer possible. The simultaneous desire to meet tight emission standards and still increase the turbine inlet temperatures required the evaluation and development of new gas
turbine technology and design concepts.
The Advanced Turbine Systems (ATS) program was initiated by DOE in 1992 to produce 21st-century gas turbine
systems that are more efficient, cleaner, and less expensive
to operate than todays gas turbine systems. The program

The FE and Energy Efficiency turbine program began in
1992 with the ATS program. The ATS program is a multiyear effort, estimated to total (in constant 1999 dollars) $469
million, approximately $315 million of which is the government share (industrial contracts, internal DOE and other
laboratories investigations, and DOE overhead expenses)
and approximately $154 million of which is cost-shared by
industrial participants. Table F-14 shows a breakdown of
TABLE F-14 Funding for the Advanced Turbine Systems Program (Fossil Energy Component) (millions of 1999 dollars)
Fiscal Year
Major Subprogram
1992 1993 1994 1995 1996 1997 1998
Innovative cycle development

Concept definition
0.3
Utility system development and demonstration
Component development
Demonstration
Industry/university
0.5
Manufacturing technology
Combustion
National Energy Technology Laboratory (in-house)
Coal applications
Total/average
0.8
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.
186
APPENDIX F
ATS funding and industrial cost sharing for the FE programs

by major subprogram in constant 1999 dollars.
The ATS program is a new R&D modela model supported by Congress and the administration. At the start of
the program, DOE and the major equipment suppliers developed and set stretch performance and environmental
goals for the program. DOE selection of the ATS program
participants was based on the ability of the organizations
to commercialize the results of the program if successful
and to provide financial support. The program structure
provides for multiple phases, from conceptual development to ultimate full-scale demonstration. The level of cost
sharing required from participants increases as the technology risk decreases. The directed exploratory work that was
to be carried out in university laboratories was coordinated
with major industrial program participants in order to ensure a path for the implementation of the research results.
This also ensured that the parallel laboratory work was focused on real technical issues for the major systems that
were the objective of the overall program.
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.
Benefits and Costs

Although the complete ATS system will not go into major commercial service until after the year 2005, there are
spin-off technologies that will have an impact on improvements to the gas turbines systems now in commercial service. It is difficult to accurately ascribe realized benefits to
the ATS program since the benefits can only occur after these
systems are placed into commercial service (see Table
F-15). The gas turbine combined cycles now in commercial
service were established before the ATS program was begun, and DOE had little impact on their development. The
ATS development work is properly focused on a critical national energy goalthe more efficient use of fuels and, at
the same time, a significant reduction in environmental impact. Although the initial developments in this program are
focused on natural gas as the primary fuel source, DOE has
maintained a design goal of fuel flexibility. This will permit
coal (and other nonclean fuels) to be used in these gas turbines when they are integrated with gasification/gas cleanup
subsystems into an IGCC concept. This integrated system
will be the most efficient and environmentally acceptable
way to use coal for power generation and will be an important benefit for the environment and for the nation as a whole
if it is to rely on coal as a major energy source.
Lessons Learned
The ATS program is an excellent example of a government/industrial program focused on achieving a long-term
benefit for the country. When the program is complete, its
results will likely be used to establish a power generation
system for the 21st century that is both efficient and fuelflexible and that has the lowest possible environmental impact from fossil fuels. The ultimate success of this program
will come from the way DOE initially set up the program. It
was recognized that in order to meet the future needs for new
power generation systems that are both more efficient and
more environmentally acceptable, a significant change
would be required in gas turbine technology and design.
DOE set goals, that, if successful, would result in major benefits. However, it did this in consultation with industry to
ensure buy-in of the objectives. The environmental goals
were coordinated with EPA to ensure consistency with proposed future emission standards. In the contract award stage,
DOE required significant cost participation in the program
and selected vendors that had the technical and manufacturing resources to bring the results of the program to a state of
commercial acceptability. No matter how technically successful a program is, it has to be implemented on a commercial scale in order to achieve a national benefit. If the
vendors do not have the resources to manufacture at a commercial scale, the R&D efforts will have no impact and
achieve no national benefit. DOE cannot assume the role of
establishing an industrial manufacturing base for new prod-
187
APPENDIX F
TABLE F-15 Benefits Matrix for the Advanced Turbine System (ATS) Program (Fossil Energy Component)a
Realized Benefitsb/ Costs
Economic
benefits/costs

Private industry R&D costs: $155 million
(33 percent cost share)
No realized benefitsc
Technology may produce significant

economicd and energye savings
Potential integration with gasification/gas
cleanup subsystems into an IGCC
concept. May help retain coal as a
power generation option.
Assisted in the development of new gas

turbine cooling concepts
Development of improved turbine blade
life, materials for higher operating
temperatures, and three-dimensional
viscous aerocomputational techniques
U.S. capability to manufacture thin-walled,
complex, single-crystal castings for
advanced gas turbines
Environmental
benefits/costs
None
New concepts to improve dry, low-NOx

combustion
Security
benefits/costs
None
None
aUnless
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
ucts. Instead, it must rely on the industrial partners of such a

program to accomplish this critical and capital-intensive
step.
The early phases of the program focused on conceptual
designs. This permitted both DOE and its industrial partners
to assess, in detail, the concepts that would be followed in
the program and was critical to ultimate program success
since it reduced the potential to follow paths that had little
chance for success. Although the early phases of the program focused on technology and component development,
DOE provided for program phases that would take the machines through to full-scale demonstration. Full-scale demonstration is the most difficult and costly phase of a program, and DOEs willingness to participate in this phase will
help ensure a commercially acceptable product. DOE also
insisted on increasing the industrys cost share as the program moved through the various stages, with the largest
share in the demonstration phases. This ensured that the industrial partners were committed to commercialization of
the final program product.
The overall ATS program has elements of focused, applied fundamental research, which is often conducted in uni-
versity and government laboratories. However, DOE made a

major effort to ensure that these more fundamental elements
of the overall program enjoyed the involvement of the industrial partners who were responsible for the total ATS system
development. Although this was difficult to achieve, the research results will have a higher probability of being successfully employed.
In summary, the ATS program was well conceived by
DOE and had (1) good goals with industrial and government
buy-in, (2) conceptual assessment before major funding
commitments are made, (3) industrial partners that could take
the developments to a commercial stage, (4) coordination of
applied research with the prime contractors, and (5) program
phases that will support the development through full-scale
demonstration.
STATIONARY FUEL CELL PROGRAM

The DOE Office of Fossil Energy has supported fuel cell
technologies for electrical generation whereas, traditionally,
188
APPENDIX F
DOEs Office of Energy Efficiency and Renewable Energy

has supported low-temperature fuel cells (proton exchange
membrane, or PEM). FE has funded three types of fuel cells
for stationary electricity generation since 1976. The fuel cells
can be characterized by the temperatures at which they
operate: low, ~200C; intermediate, ~650C; and high,
~1000C. They can also be characterized by their electrolyte
(that is, phosphoric acid, molten carbonate, or solid oxide).
The phosphoric acid fuel cell (PAFC) has an aqueous electrolyte solution of phosphoric acid. This concept made its
market entry in 1992 with the sale of 200-kW units manufactured and marketed by International Fuel Cells (IFC). The
attempt to commercialize the fuel cell concept was supported
by the DOEs buy-down program. DOE stopped funding the
low-temperature fuel cell after this commercialization attempt. Molten carbonate fuel cells (MCFCs) use a mixture
of carbonates that are liquid at the operating temperature.
The developer, FuelCell Energy (FCE), is in the demonstration phase of the program, has field-tested a 2-MW system,
and is now field-testing a 250-kW, near-commercial system.
Solid oxide fuel cells (SOFC) employ an electrolyte that is a
solid ceramic material. It remains solid at the operating temperature of 1000C. The developer, Siemens Westinghouse
Power Corporation (SWPC), is in the demonstration phase
of the program and is field testing a 100-kW fuel cell system
and a 220-kW fuel cell/gas turbine hybrid system. DOE support is continuing for both the intermediate- and high-temperature fuel cell concepts.
A fuel cell is an electrochemical device that produces
electric power from a fuel. 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. However, for
the fuel cell to function as a complete system, it requires
several supporting subsystems: (1) a fuel processor to clean
and convert the as-delivered fuel to a hydrogen-rich fuel and
remove trace contaminants like sulfur and (2) the power sectionthe fuel cell stacks and the power conditionerrequired to convert the produced DC electricity to AC for practical applications. In addition to these critical subsystems,
the fuel and oxidant must be handled at the operating temperature of the fuel cell, which may be in excess of 500C,
which is higher than typical temperatures in commercial
steam turbines for power generation.
The attractiveness of fuel cells for power generation has
been the claim of high efficiencies with reduced environmental impact. However, as with gas turbine combined
cycles, these claimed efficiencies can only be achieved in
combination with other power generation systems, i.e., combined-cycle operation. Although fuel cells are normally discussed as if they are similar devices, the applications and
operational characteristics of the three different types of fuel
cells are quite different. Low-temperature fuel cells have the
potential for distributed power applications but will be at
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.
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
TABLE F-16 Funding for the DOE Fuel Cell Program,

FY 1978 to FY 2000 (millions of 1999 dollars)
Budget Line Item
Appropriation
Stage
Phosphoric acid fuel cells

Molten carbonate fuel cells
Solid oxide fuel cells
(advanced concepts)
Fuel cell systems (includes
MCFC, SOFC)
Multilayer ceramic technology
Advanced research
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.
189
APPENDIX F
need to be quite different and would require development

efforts. The fuel cells for stationary applications would need
to operate with readily available fuels and use air as an oxidant in lieu of ultrapure hydrogen and oxygen. More importantly, stationary fuel cells would have to be much lower in
capital cost. As developers undertook the task of commercializing fuel cells, it was clear that they could not do this on
their own because of the high technological and financial
risks. Many of the vendors were small companies dedicated
to the application of fuel cells for industrial/utility power
generation. These companies had shown that they were not
able to sustain fuel cell development without significant
DOE/FE support. Although significant effort was put into
low-temperature and mid-temperature fuel cells in the 1980s,
a large-scale commercial application of these technologies
never developed. While the PAFC program in the early
1990s resulted in the sale of several hundred small units, this
was achieved with the aid of government funding. High-temperature fuel cells have also been under development in laboratories since the early 1970s. These fuel cells, while possessing attractive operational characteristics, have never
been developed to a commercial scale.
During more than 30 years of fuel cell development, many
of the large suppliers of power generation equipment elected
to terminate their company-sponsored programs in fuel cell
technology. The organizations that continued to work in fuel
cell development did so mainly with financial support from
the DOE program. As a result, there are a number of companies that now view fuel cells as having a potentially significant future market. These organizations have initiated the
development of fuel cell support systems, e.g., fuel reformers, on their own, without DOE financial support.
Benefits and Costs

The portion of the Fuel Cell program that was terminated
between 1978 and 2000 was for low-temperature fuel cells.
FE support for this technology was not maintained because
the effort was successfully completed. PAFC power systems
were judged to be commercial in 1992, and two hundred
~200-kW units were supplied worldwide, in large part as a
result of the U.S. government buy-down program, which
subsidized about one-third of the initial capital cost. Although other fuel cell R&D programs were continued, there
have been no commercial products introduced from these
programs.
DOE/FE funding for fuel cells was originally a part of the
coal budget sector. In FY 1994, the fuel cell program became part of the natural gas budget sector. Cumulative totals
for each are $845.8 million within the coal sector and $321.4
million within the natural gas sector (Table F-17) (OFE,
2000k).
DOE support is continuing and is claiming the possibility
of commercial entry in niche markets by about 2003, with
large-scale production (400 MW per year capacity) anticipated by 2005. It is questionable if this goal can be achieved
on DOEs stated timeline. Since there will not be a substantial number of units in service before 2005 (the guideline of
this study for realized benefits), no benefits can be attributed
to this program.
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
Economic
benefits/costs
DOE R&D costs: $1167 million through

2000 for three fuel cell technologies
(PAFC, MCFC, SOFC)
The early low-temperature fuel cells, which
were subsidized, produced no economic
benefit
Potential market by 2003; 400-MW per

year manufacturing plant expected by
2005
Could be used as back-up and stand-alone
power sources
Development of compact fuel reformers,

electrolyzers, critical materials and
processes, and multilayer ceramic
technology
Environmental
benefits/costs
None
Fuel cells provide clean power and emit

60 percent less global warming gases
than combustion engines
Potentially higher efficiency and lower
NOx emissions than small single-cycle
gas turbines
None
None
None
Distributed generation could provide

improved grid stability
Security
benefits/costs
aUnless
190
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
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
(MHD) technology for 16 years because of its perceived

potential as a major technology for electric power generation using coal. The program successfully proved the concept of using MHD technology but was discontinued in 1993
because of the high cost of designing, constructing, and operating a complete MHD system.
Both an MHD power generator and a conventional generator are based on the electromagnetic induction principle.
A conductor moves through a magnetic field inducing an
electric field in the conductor. While a conventional generator relies on the copper windings of the rotating conductor,
an MHD generator uses the gaseous products of combustion
that are ionized by raising them to sufficiently high temperatures in seeded conductive material. Thus, a perceived advantage of the MHD concept is the absence of moving parts.
The DOE R&D concept for a central-station electric
power station based on MHD technology consisted of two
cycles in seriesan MHD topping cycle, from which power
would be extracted directly, and a steam bottoming cycle, in
which power is produced in a conventional steam turbine
cycle:
In the topping cycle, coal is burned in a pressurized
combustor with preheated air or oxygen-enriched air to produce a combustion gas having a temperature of 2482C to
2760C. At this temperature, the combustion gas is only
slightly conductive due to thermal ionization. An easily ionized seed material such as potassium is added to increase
conductivity, and the combustion gas is expanded through
the MHD generator, located in the magnetic field. As the gas
exits the generator, it is decelerated in a diffuser and discharged at approximately 1982C into a steam boiler.
In the bottoming cycle, NOx emissions are controlled
by tailoring the time-temperature profile within the radiant
boiler to keep the NOx content within allowable levels and
by fuel-rich combustion. SOx is removed from the gas stream
by reaction with potassium seed from the topping cycle to
form a recoverable solid product. Use of an electrostatic precipitator or a baghouse at the exit of the boiler controls particulate emissions. Spent seed removed from the bottoming
cycle is supplied to a regeneration system, where it is converted to a non-sulfur-containing form for reinjection into
the topping cycle.
Initial MHD research in the United States was conducted
primarily at universities and private companies. Early government interest in MHD was directed at developing power
sources for space and military applications and centered in
agencies such as the Department of the Interiors Office of
Coal Research, the National Science Foundation, the Atomic
Energy Commission, the National Aeronautics and Space
Administration, and the Department of Defense. The energy
crises of the early 1970s focused more attention on MHDs
potential as a central-station power-generating concept using abundant coal resources, leading to increased R&D sup-
191
APPENDIX F
port by DOEs predecessor agency, the Energy Research and

Development Administration (ERDA). After the creation of
DOE in 1977, MHD quickly became one of its major technology programs.
DOEs MHD program was focused on the development
of two major test facilitiesthe Component Development
and Integration Facility (CDIF) and the Coal-Fired Flow
Facility (CFFF). The CDIF, in Butte, Montana, was designed
for testing the MHD topping cycle and subsystems at a scale
of up to 50 MW. The CFFF, at Tullahoma, Tennessee, emphasized the testing of bottoming cycle components and subsystems at a nominal scale of 28 MW. The R&D program at
the test facilities went through three phases. The initial phase
involved facility design, construction, and testing. The second phase involved scale-up and preliminary testing of components. The third and final phase was initiated in 1984 and
involved a multiyear effort targeted at achieving integrated
proof of concept testing at CDIF and CFFF.
Between 1978 and 1993, DOE expenditures for the MHD
program totaled about $680 million, or $1020 million in constant 1999 dollars. Over this same period, private industry
cost sharing totaled about $61 million. Cost sharing began in
1986, when private industry was required by legislation to
cost share, initially at 10 percent, but increasing to 35 percent by the end of the proof-of-concept program, in 1993.
Almost half of the DOE expenditures for MHD R&D occurred in the first 4 years, from 1978 to 1981, during design
and construction of the test facilities. A review of DOE requests and congressional appropriations for the MHD program shows that in those years Congress funded the program
close to the level requested by DOE. The record also shows
that, with the exception of 1985, DOE did not request any
funds for the MHD program from 1982 to 1993, when the
program was finally terminated. In those years, the funding
came from direct congressional line item additions to the
DOE budget. The MHD funding history is shown in Table
F-18 in actual and constant 1999 dollars.
Results
As noted above, funding of the MHD R&D program was
terminated after 1993. While the MHD program was modestly successful in the proof-of-concept phases, system
evaluation studies were indicating that the cost to design,
construct, and operate a central station MHD power generation facility was much higher than the corresponding cost for
other coal-fired power generation options. In addition to the
high costs, the claim for high-cycle efficiencies was questionable. This raised real doubts that the MHD system could
compete on an efficiency basis with the advanced gas turbine combined cycles used by the utility industry. These
doubts ultimately led to program termination. As discussed
TABLE F-18 DOE Funding for the

Magnetohydrodynamics Program (millions of dollars)
Fiscal Year
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
192
APPENDIX F
TABLE F-19 Benefits Matrix for the Magnetohydrodynamics (MHD) Programa

Economic
benefits/costs
DOE R&D costs: $1.02 billionb

Industry costs: about $90 millionc
No benefits, since the technology
was not deployed
None
Provided databases for technologies that

require the injection of solids into
pressurized chambers, for pressurized
high-temperature gas heaters, and for
boiler tube fabrication in a corrosive
environment
Contributed to combustor development for
subsequent clean coal technology
projects
Developed a materials research database
for boiler tube fabrication in a corrosive
environment
R&D on regenerative air heaters and
database for pressurized highertemperature air heaters
Environmental
benefits/costs
None
None
None
Security
benefits/costs
None
None
None
aUnless
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.
the MHD technology program. The only contribution would

be additions to the knowledge base for high-temperature
components.
Lessons Learned
MHD was one of several early DOE R&D programs focused on finding ways to make greater use of domestic natural resources for energy. In the late 1970s and early 1980s,
the government played a key role in funding demonstration
of the technology.
The funding history clearly shows that substantial funds
continued to be spent after 1981 to prove the MHD concept
in the face of data that were showing significant technical
barriers to the successful development of the concept. At the
same time, studies indicated that even if developed, the MHD
power generation system would not be competitive on an
efficiency or cost basis with alternatives that were already in
use by the utility industry. The data suggest that this information led to DOEs decision not to request funding after
1981, except for 1985. However, Congress continued to fund
the program through 1993, an indication of the strength of
congressional support for MHD.
In looking at this history, we need to keep in mind the

government role in technology demonstration on the heels
of the energy crises of the 1970s. Once an investment had
been made in large-scale proof-of-concept experimental facilities, there was pressure to use the R&D facilities to prove
the concept even with data suggesting that the costs of deploying the technology would be too high. Several lessons
can be learned from this experience:
Private sector interest in developing a technology, as
evidenced by a willingness to cost share in the demonstration process, must be considered. In MHD, some cost sharing was mandated by the congressional appropriation acts
that kept the program going (10 percent starting in 1986,
growing to 35 percent by termination in 1993), but there was
no cost sharing in the design, construction, and early operation of the costly large-scale facilities.
There must be an understanding of where a technology
fits in an R&D portfolio from a priority standpoint, so that
decision makers at all levels can be provided with all the
information they need to make the best decisions in the interest of the overall R&D program.
Difficult decisions to terminate programs must be made
193
APPENDIX F
as early as possible and available funds redirected to the areas of greatest potential.
COAL-BED METHANE
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.
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.
TABLE F-20 Funding for the Coal-bed Methane Program

(millions of 1999 dollars)
Year
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.
resource, as DOE acknowledges, attributable to the R&D

efforts of GRI, which made CBM research a high priority, to
industry activity, and to the provision of tax credits as incentives for development of the resource. The tax incentives no
longer exist, but together with basic and applied research,
they were able to establish an industry that is thriving without tax credit incentives and that has been competitive in
recent years in a market of relatively cheap natural gas.
Nonetheless, DOE played a critical role in recognizing the
commercial potential of CBM, in initially assessing the magnitude of the resource, and in certain pilot field tests.
Costs and Benefits
DOE calculates realized economic benefits of $499 million (1999 dollars) in increased revenues and cost savings to
producers, primarily from the Warrior and San Juan basins,
with a benefit to cost ratio of l6.6. In addition, $91 million
(1999 dollars) is credited from royalties on federal lands and
from increased state severance taxes due to displacement of
imports. If DOE were credited with one-third of the benefits,
this would amount to about $200 million (see Table F-21).
Lessons Learned
The DOE CBM program demonstrates that even with a
modest amount of funding over a relatively short period,
early involvement of public research can prove beneficial.
The initial work led GRI to take up CBM R&D and make it
a top priority, and it stimulated industry interest, which
coupled with production incentives in the form of tax creditscreated an entirely new supply of natural gas.
DRILLING, COMPLETION, AND STIMULATION

PROGRAM
Results
DOEs CBM program was relatively short-lived and modestly funded, with much of the fuller development of this
DOE has a long history of involvement with the oil and

gas industry. The Drilling, Completion, and Stimulation pro-
194
APPENDIX F
TABLE F-21 Benefits Matrix for the Coal-bed Methane Programa

Economic
benefits/costs

Industry cost share: significant but
indeterminatec
Substantial economic benefits:d
$200 million
Verified substantial undeveloped resource
basee
Increased gas supply
Given the termination of DOEs R&D,

there are minimal options benefits
Future application of the basic science
established by the DOE program may
enable new domestic (and international)
coal-bed methane basins to become
productive
Provided an essential scientific knowledge

basef
Conducted pilot field tests and projectsg
Experiments that demonstrated hydraulic
fracture stimulationh
Basic science on coal-bed methane storage
and production mechanisms
Environmental
benefits/costs
Reduced methane emissions to the

atmospherei
Potential to reduce greenhouse gasesj
Provided guidance to EPA on coal-bed

methane emission control mechanisms
Security
benefits/costs
None
Minimal
Increased understanding of the size of the

domestic natural gas resource base
aUnless
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
gram goes back to the drilling research program initiated in

1975 following the Arab oil embargo. The program focused
on developing drilling technology to increase domestic oil
and gas production. In 1993 it was separated into oil and gas
subsections. The gas research program focuses on technology to increase natural gas production.
The current Drilling, Completion, and Stimulation program is designed to develop technology to reduce drilling
costs, minimize formation damage, lower environmental
risks, reduce surface footprint of onshore and offshore drilling, and improve access to culturally and environmentally
sensitive areas. The program has consisted of a very large
number of relatively small projects covering almost every

facet of the drilling, completion, and stimulation technologies. Among the many research projects were research on
the use of titanium pipe in extended-reach drilling; expandable metal packers; matrix and fracture acidizing; in situ rock
stress measurements; geomechanics for sand control;
geomechanics of horizontal completions; polycrystalline
compact diamond drill bit technology; underbalanced drilling technology; mud pulse telemetry; and high-temperature
measurements while drilling.
Historically, much of the technology covered under this
program is implemented in the oil industry by service com-
195
APPENDIX F
panies. The technologies are developed primarily by the oil

service companies and oil companies. The oil companies
usually make the technology they develop available to the
industry by licensing it to the service industry. However, in
recent years research by oil companies in this area has significantly declined. This was due in part to industry
downsizing. It was also due to the difficulty of justifying
research in a technology field where it is difficult to maintain a proprietary position.
DOE has historically worked closely with the industry in
partnership programs such as the Natural Gas and Technology Partnership and in the Drilling, Completion and Stimulation Technology Forum. Through such partnership, industry gains access to the capabilities of the national laboratories
in electronics, instrumentation, materials, computer hardware and software, etc. In 1992, DOE reorganized the program to make it more accessible and to stimulate more joint
development projects.
Industry has indicated its interest in these programs by
funding 29 percent of the total expenditures from 1978 to
1999 (see Table F-22). The programs had a wide range of
participants from the oil field service industry, the oil industry, universities, and the national laboratories.
Funding for this program has undergone the usual fluctuations due to changes in administration priorities. For example, funding was curtailed in 1982, reflecting the
administrations position that government should not be involved in development of a resource base. In 1992, the administration directed DOE to conduct R&D to increase the
natural gas resource base. In 1993, an administration program, the Natural Gas and Oil Initiative, led to a significant
increase in the natural gas R&D program. At the same time
the focus was shifted from developing a resource base to
developing technology, particularly to meet the challenge of
drilling in deeper and hotter rocks.
TABLE F-22 Total Funding for the Drilling, Completion,

and Stimulation Program, FY 1978 to FY 1999 (millions
of 1999 dollars)
Oil programs
Gas programs
Total
DOE
Industry Cost Share
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.
Drill System Development Projects

Polycrystalline diamond compact drilling bit. DOE
played a significant role in the development of the polycrystalline diamond compact drilling bit (PDC). DOE funded
work at Sandia National Laboratory and at General Electric
to improve the bit design. It also funded field tests to demonstrate the technology. Penetration rates were three to five
times faster than with conventional diamond bits. Today
these drill bits account for about one-third of the worldwide
drill bit market and enjoy sales of over $200 million per
year.
Pressure coring system. Technology was developed to
improve coring under pressure to preserve the fluid characteristics of the core.
Mud pulse telemetry. DOE played a significant role in
the development of mud pulse telemetry. It supported a field
demonstration of the technology in its very early and critical
phase of development. This important technology led to the
development of the measurement-while-drilling and logging-while-drilling service industry.
Electrodril. DOE participated in the development of
the Electrodril system, which uses an electric motor
downhole. While the Electrodril system was never commercialized in the United States, technology that was developed
to transmit the power downhole was essential to the future
development of the measurement-while-drilling and logging-while-drilling technologies.
Microdrilling. DOE has been active in the development
of microdrilling, the drilling of holes of 1 in. diameter.
Microdrilling can be cheaper and more environmentally sensitive for exploratory drilling. The concept was demonstrated
with coil tubing.
Drill Fluids and Underbalance Drilling Projects

SOURCE: Office of Fossil Energy. 2000m. OFE letter response to questions on the Drilling, Completion, and Stimulation Program from the Committee on Benefits of DOE R&D on Energy Efficiency and Fossil Energy,
December 4.
Air, mist, and foam aerated drilling. DOE developed

new tools and a simulator for modeling the flow of compressible drill fluids and cuttings in a well bore.
196
APPENDIX F
Surface Operations Projects
Drilling System Efficiency
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.
Underbalanced Drilling Systems

Integrated directional drilling system. DOE has supported the development of an electromagnetic measurement
while drilling system and the development of a commercially
viable underbalanced drilling system using this technology.
Underbalanced drilling systems have been shown to increase
the rate of penetration and minimize formation damage.
New Concept Drilling Systems
The gas programs can be divided into five program areas

(Table F-23). Several of the projects in the gas programs are
summarized below to indicate the scope and depth of this
program.
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-
TABLE F-23 ADCS Gas Project Organizational Charta

Drilling System Efficiency
High-power slimhole
drilling system
High-pressure slimhole
pump assist drilling system
Conventional mud hammer
High-temperature MWD
High-temperature LWD
Mud-hammer optimization
Composite drill pipe
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)
simulator
Steerable air percussion

system
Advanced drilling system
development
High-pressure CT drilling
system
Advanced mud-hammer
drilling system
Advanced TSP bits by
microwave brazing
Microwave processing
Hydraulic pulse drill
Supporting Research
Horizontal well technology
(DEA-44)
Coiled-tubing and slimhole
technology (DEA-67)
technology (DEA-101)
Deep water riser wear study
(DEA-137)
Advanced Completion and

Stimulation Systems
Fracture fluid
characterization facility
(FFCF)
Perforation dynamics study
CO2/sand fracture study
New nondamaging drill-in
fluids
Real-time downhole
stimulation monitoring
and control system
downhole fluid analyzer
Ultradeepwater completion
system
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.
197
APPENDIX F
pected to drill two or three times faster than conventional

coil tube drilling systems. Field trials are scheduled.
Advanced mud-hammer drilling system. DOE is supporting the development of advanced concepts in mud hammer drilling to reduce drilling costs for hard rock formations.
Supporting Research
DOE supports industry projects in such areas as horizontal drilling, coil tubing and slimhole drilling, and underbalanced drilling.
Advanced Completion and Stimulation Systems

Real-time downhole stimulation monitoring and control system. DOE is participating in the development of technology to monitor reservoir stimulation procedures in real
time and to mix fracturing fluids downhole. Together these
technologies can be used to increase the production of natural gas by increasing the efficiency and reducing the cost of
fracturing tight gas-bearing sands. Field tests in which fracture fluids and sand were mixed downhole indicate significant potential for this technology.
Ultradeepwater completion system. DOE is participating with industry in the development of deepwater production technology to allow subsea separation of oil, gas, and
water.
Benefits and Costs
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.
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).
Security Benefits, Options Benefits, and Knowledge Benefits
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.
Since these programs are all directed at increasing the

production of oil and gas in the United States, they directly
contribute to national security. In addition to the projects
already commercialized, there are many still in the pipeline
that could provide significant future economic benefits (options). Moreover, a substantial number of the projects in this
program added to the knowledge base.
Lessons Learned
The oil service industry, which is the primary user of technology developed in this program, is dominated by a large
number of small and medium-size firms. Many of these firms
have limited R&D budgets. Also, in the oil industry, technology disperses quickly, making it difficult to capitalize on
R&D investments. Therefore, high-risk research is either
avoided or done by consortia. The government can play an
effective role with a relatively small investment in high-risk
projects to stimulate advances in technology that can have a
large positive impact on the industry and benefit the nation.
The key to an effective program is interaction with and feedback from the industry.
198
APPENDIX F
TABLE F-24 Benefits Matrix for the Drilling, Completion, and Stimulation Programa
Economic
benefits/costs

Industry costs: $32 million (29 percent cost
share)c
Substantial realized economic benefits of
approximately $1 billiond
In addition to the projects already

completed, there are many still in the
pipeline that will provide significant
future economic benefitse
Makes technologies immediately available
to the entire industry, including small
and medium-size firms that have limited
R&D budgets
Allows drilling for deeper and/or
unconventional gas
Potential to enhance the net value of gas
resources
Permits accelerated and incremental
production
R&D on the use of titanium pipe in

extended-reach drilling, expandable
metal packers, matrix and fracture
acidizing, in situ rock stress
measurements, geomechanics of sand
control, geomechanics of horizontal
completions, polycrystalline compact
diamond drill bit technology,
underbalanced drilling technology, mud
pulse telemetry, high-temperature
measurements while drilling, and other
areasf
Environmental
benefits/costs
Smaller footprints, enhanced well control,

protection of sensitive environments,
reduced noise, toxicity, and fuel use, and
othersg
Requires fewer wells to be drilled and thus

reduces volume of wastes produced
Allows drilling in environmentally
sensitive areas
R&D on the utilization of drill cuttings for

wetland restoration
R&D on slimhole technologies and
underbalanced drillingh
Security
benefits/costs
Increase in U.S. production of oil and gas
Potentially large increase in domestic U.S.

oil and gas production and reserves
DOE involvement ensures the technology

is widely available to increase oil and
gas production and reserves
aUnless
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
DOWNSTREAM FUNDAMENTALS RESEARCH

PROGRAM
The Downstream Fundamentals Research program has a
long and illustrious history. It was started as a research fa-
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
199
APPENDIX F
TABLE F-25 Summary of Environmental Benefits of Drilling Technology Advancesa

Fewer
Wells
Coiled tubing
Horizontal drilling
MWD
Multilateral drilling
Slimhole drilling
Synthetic drilling fluids
PDC bits
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,
measurement while drilling; PDC, polycrystalline diamond compact (drill bits).

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.
conducted under the auspices of the National Institute for

Petroleum Energy Research (NIPER) in Bartlesville. In
1997, the NIPER facility at Bartlesville was closed. Much
of the equipment was moved to the Oak Ridge National
Laboratory (ORNL), where work in this area continues.
The program can be characterized by three major subdivisionsThermodynamic Data and Engineering Properties, Fuels Chemistry, and Process Fundamentals. The
programs are designed to develop the fundamental thermodynamic data used by engineers to design chemical and refinery processes, to characterize crude oil feedstocks, and
to develop techniques and data to improve processes and
solve product quality problems.
The program underwent several major changes as a result of changing administrations, changing circumstances
in the petroleum business, and changes in the type of fundamental information needed. From 1978 to 1983, the
laboratory was run as a government research laboratory
with essentially no cost sharing by private industry. During
this period, heavy emphasis was on developing fundamental data on nonconventional fuels such as shale oil and tar
sands. During the late 1980s, the first of two government
efforts to privatize this facility occurred. At that time cooperation with industry expanded, DOE funding declined significantly, and there was a shift in program emphasis to
near-term applications. In the 1990s DOE funding increased. The program was redirected from the characterization of synthetic fuels to the characterization of heavy
petroleum. Significant increases in industry participation
occurred.
Results
Program
DOE Expenditures
Industry Cost Share
Total
1978 to 1999
2000
Total
46
2.6
48.6
5 (10%)
1 (28%)
6 (11%)
51
3.6
54.6
Historically, industry participation in the fundamentals

program was low. However, in the most recent programs,
industry participation is significant (28 percent) (Table
F-26).
Thermodynamic Data and Process Engineering Properties

Since its founding in 1943, the program has been responsible for many significant advances. For example, the original rotating bomb calorimeter was designed in the
Bartlesville laboratory. A major accomplishment was the
determination of the thermodynamic properties of the sulfur
compounds contained in U.S. light crude oil. The program
also allowed the calculation of many chemical bond energies of interest to the military and civilian sectors.
Since 1978, the Thermodynamic Data and Process Engineering Properties program has 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 to useful products, to calculate yields, and to develop process simulations.
Fuels Chemistry
The primary accomplishments in fuels chemistry is the
development of unique analytical methods and separation
TABLE F-26 Funding for the Downstream Fundamentals

Program (millions of 1999 dollars)
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.
200
APPENDIX F
techniques and their application to provide fundamental data

on the changing slate of liquid fuels feedstocks. This includes, for example, characterization of light cycle oil, a refinery by-product blended into diesel fuel, to determine
which compounds were causing fuel instability.
In addition, an extensive and unique analytical database
containing the analysis of thousands of domestic and foreign
crudes was developed and maintained on a Web site.
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.
EASTERN GAS SHALES PROGRAM

Naturally fractured shales containing natural gas within
fractures have long been known in the Appalachian, Illinois,
TABLE F-27 Benefits Matrix for the Downstream Fundamentals Programa

Economic
benefits/costs

Significant value, but so far back in the
scientific chain that it is hard to quantifyc
None
Analytical techniques and thermodynamic

data for petroleum, coal liquids, shale
oil, and tar sands
Development of fundamental thermodynamic data used to design and
operate refining and petrochemical
processesd
Research on process fundamentals and on
fuels chemistrye
Development of an extensive and unique
database containing the analysis of
thousands of domestic and foreign
crudes
Environmental
benefits/costs
None
None
None
Security
benefits/costs
None
None
None
aUnless
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
201
APPENDIX F
and Michigan basins. In fact, they have been a minor source

of natural gas since the early part of the 19th century and
have been produced commercially since the 1920s. The gas
reservoirs are shallow and easily accessible, but yields are
low and a large number of wells must be drilled. Historically, the shales have been the site of a significant number of
U.S. gas wells, although their contribution to U.S. production is minor.
During the mid-1970s, at the time of widely perceived
and actual shortages of natural gas, production from the Eastern gas shales amounted to only about 70 Bcf yearly. Drilling and completion practice was low cost but technically
simple and ineffective.
The Eastern Gas Shales program was initiated in 1976 by
the ERDA, assumed by DOE in 1978, and continued until
1992. It was designed to assess the resource base, in terms of
volume, distribution, and character, and to introduce more
sophisticated logging and completion technology to an industry made up mostly of small, independent producers. The
goal was to substantially increase production from these basins at a time when increased national supply was critically
important.

DOE expenditures from l978 through termination of the
program in 1992 amounted to $137 million (1999 dollars),
with about two-thirds of the total having been expended between 1978 and 1982 (OFE, 2000o). Prior to DOE assumption of the program, ERDA had expended in excess of $20
million and the GRI had invested about $30 million in Eastern gas shale R&D. The DOE and GRI effort was well coordinated, with DOE focusing on basic research and assessment and GRI concentrating on applications.
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.
Increases in production from the Eastern gas shales since

the l970s have been significant. By 1998, 6 years after the
program was terminated, annual gas production had reached
380 Bcf, up from 200 Bcf in 1992 and 70 Bcf in 1978. Proved
reserves were nearly 5 Tcf, with another 2 Tcf having been
produced in the 6 years from 1993 to 1998. By 2010, annual
gas production from shale formations, including the Fort
Worth Basin as well as the Eastern basins, is projected to
reach 800 Bcf and, by 2020, approach 1 Tcf.
The increased gas production, proved reserves, and pace
of drilling in gas shales reflect the contribution of industry
and GRI (especially in the Michigan Basin), but the strong
presence of the DOE program seems particularly significant
to the increased production that is taking place.
Benefits and Costs
While the knowledge benefits of the program are substantial, especially in advancing ability to detect and predict
fracture density and distributionimportant in many hydrocarbon reservoirs other than shalesthe direct benefits come
from the increased production from the shale formations
(Table F-28). These benefits were quantified by estimating
the volumes of incremental shale gas production DOE attributes 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
1743 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 (1999 dollars). With a program expenditure of $148 million, the calculated benefit to cost ratio is 4.8
to 1. In addition, DOE calculates $33 million (1999 dollars)
from royalties on federal lands and from increased state severance taxes due to the displacement of imports and over $8
billion in consumer savings due to lower gas prices.
Lessons Learned
Although the in-place shale gas resource base in the
United States is large, it is marginal and produced in relatively small increments. At the time ERDA, and later DOE,
began the program in the Eastern gas shales, the conventional wisdom was that any significant expansion of production would require relatively high gas prices and that technology in these formations could do little to substitute for
high prices. But incentives through tax credits, combined
with optimum deployment of advanced technology, served
to revive a domestic gas province in decline. This combina-
202
APPENDIX F
TABLE F-28 Benefits Matrix for the Eastern Gas Shales Program (EGSP)a
Economic
benefits/costs

Private industry R&D costs: $35 millionc
50 additional Bcf of natural gas being
produced annually, 1260 additional Bcf
of natural gas supplies produced, and
3200 additional wells drilled
About $600 million in economic benefitsd
Offers potential for expanded shale gas

production if natural gas prices risee
Discovery of Bass Island Trend

Development of coring and fractigraphic
analysisf
Development of foam fracture technology,
downhole video camera, and massive
hydraulic fracturing stimulation
Increased ability to detect and predict
fracture density and distributiong
Assessment of the resource baseh
Development of methods for geologic
integration of well logs, core data,
geophysical survey results, and remote
sensing interpretations; production of
maps and cross sections; bibliography of
Devonian shale technologies;
distribution of core samples and well
logs; and development of methods of
integrating technological data
Environmental
benefits/costs
More environmentally benign method of

drilling shale wells
Decreased environmental impact of

expanded shale gas production
None
Security
benefits/costs
None
None
None
aUnless
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.
tion has allowed production to expand long after termination

of both the R&D program and tax credit incentives and to do
so in a period of relatively lowmuch lower than had earlier been projectedgas prices. In a significant way, technology can and does substitute for price in marginal resources, and the Eastern Gas Shales program proved that
critical point.
ENHANCED OIL RECOVERY

Conventional methods of oil recovery, including primary
and secondary recovery, achieve, on the average, about 35
percent recovery of the original oil in place, less if the oil is
heavy or viscous. The volume of oil remaining in already-
203
APPENDIX F
discovered reservoirs in the United States is on the order of

340 billion barrels. Conventional wisdom in the 1970s held
that additional recovery would involve a physical or chemical change in the reservoir or its contained fluids to move oil
that was immobile.
Common enhanced recovery methods include chemical
methods (use of surfactants, alkaline-enhanced chemicals,
and polymers and gels); gas flooding methods, generally
using CO2 and enriched natural gas (to develop miscibility)
and flue gas and nitrogen (generally to maintain reservoir
pressure); microbial enhanced oil recovery, where the action
of microbes ferments hydrocarbons and produces a by-product that is useful in oil recovery; and thermal methods to
reduce the viscosity of heavy oils, most commonly by injecting steam (steam flooding) or by the introduction of heat in
the reservoir by burning part of the oil in a reservoir (in situ
combustion).
Initial work by DOE in enhanced oil recovery was a part
of field demonstration projects started by the U.S. Bureau of
Mines in 1974 and taken over by DOE in 1978. Twelve of
the field projects involved chemical floods, five involved
carbon dioxide injection, and six were thermal/heavy oil
projects. These projects were initiated after the Arab oil
embargo and were conducted at a time when imports were
increasing and stated national policy was to increase domestic production. Applying advanced technology to the large
base of unrecovered oil in existing domestic reservoirs was
an obvious strategy to enlarge domestic production. The
strategy was embraced by both industry and government, as
the program was cost shared.
With the exception of steam flooding, the early demonstration of enhanced oil recovery (EOR) techniques was
largely uneconomic, with some, but not significant, incremental oil recovery. The most significant information coming from these early experiments with EOR was the knowledge that the geological and engineering parameters of
individual fields were insufficiently known. Most reservoirs
were much more geologically complex than then judged.
The DOE Enhanced Oil Recovery program was significantly redirected in FY 1979. The programs that had been
basically oriented to commercialization were to be phased
out and funding for the EOR demonstrations went to zero in
FY 1989. Since then, the program has focused on research,
although some small-scale pilot projects have been conducted and some assistance is provided to independent operators. The program is designed to involve academia, government research organizations, and industry with programs
in chemical methods, gas flooding, microbial methods,
heavy oil recovery, novel methods, and reservoir simulation.
The EOR demonstration programs managed by DOE
from FY 1978 through FY 1989 expended of approximately
$110 million, with industry cost sharing amounting to about
$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-
204
APPENDIX F
TABLE F-29 Benefits Matrix for the Improved Enhanced Oil Recovery Programa
Economic
benefits/costs

Improved waterflooding and wettability
Benefits: $700 millionb
Reserve growth from existing fields and
recovery of larger amounts of movable oil
Research on understanding and control of

CO2-based enhanced oil recoveryc
Fundamental research on miscibility of
multicomponent systems
New technologies for thermal-based
enhanced oil recovery
Development of microbial enhanced oil
recovery
Research on chemical methods, gas
flooding, microbial methods, heavy oil
recovery, novel methods, and reservoir
stimulation
Knowledge of geological and engineering
parametersd
Recognition of the importance of reservoir
characterization in the deployment of
EOR strategies
Changed view of reservoirs and fluid
behaviore
Environmental
benefits/costs
Application of chemical EOR technology to

water control problems, reducing water
disposal and water pollution
Microbial technology used for cleanup and
remediation
None
Research on CO2 sequestration in geologic

reservoirs
Security
benefits/costs
Reduced oil imports
None
None
aUnless
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
tation of CO2-based EOR technology to CO2 sequestration

in geologic formations.
Lessons Learned
The principal lesson learned from DOEs activities in
EOR programs stemmed from the marginal results obtained
by the early EOR field demonstration programs. The conclusion drawn was simply that reservoirs were much more geologically complex than had previously been believed. Enhanced oil recovery techniques that worked well in the
laboratory were difficult to deploy effectively in complex
reservoirs. This led to programs in field demonstration that

would substantially enlarge the ability to characterize complex reservoirs and the important finding that as much as
half of the unrecovered oil in complex reservoirs could be
recovered without expensive EOR techniques, if the reservoir and its fluid behavior could be properly understood.
Consequently, reserve growth from exisiting fields with the
recovery of larger amounts of movable oil has become a
major element in U.S. production and in the projected resource base. For example, the Department of the Interior now
estimates a resource base for oil and gas such that future
reserve growth exceeds future new field discovery by 3 to 1
205
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.
FIELD DEMONSTRATION PROGRAM

The Field Demonstration program, as the name implies,
seeks to test different technologies and concepts at the field
level. Such tests will result in incremental production and be
classed as successful or they will fail. Field tests can also be
technical successes but commercial failures.
The Field Demonstration program has had a long and
varied history, reflecting changed views about how reservoirs and the fluids within them behave, the evolution of
different deployable technologies, and, of course, varying
oil prices.
The original Field Demonstration program was begun by
the Bureau of Mines in 1974 and transferred to DOE in l978.
It was designed to test the efficacy of different EOR technologies. The conventional wisdom of the time, shared by
government and industry, was that oil remaining in reservoirs after conventional primary and secondary recovery was
residual or immobile oil, that is, the reservoir or the fluids
within the reservoir must be either physically or chemically
modified to render the oil mobile and recoverable. This was
acknowledged to be an expensive process due to the cost of
EOR techniques, but oil prices were historically high at the
time and widely expected to be much higher.
Twelve of the original field projects tested chemical
floods, five involved CO2 injection, and six were thermal/
heavy oil projects. The projects directly involved industry
with substantial cost sharing. While some incremental oil
was produced from some of the projects, most were uneconomic, especially those with chemical floods, and to a lesser
extent, those involving steam and gas injection. These early
EOR field tests were to show dramatically that the geological and engineering parameters of individual fields were
poorly understood. Most reservoirs, especially those containing large volumes of unrecovered oil, were much more complex geologically than had been expected. This recognition,
plus the policies of the incoming administration in the early
1980s, led to a substantial reduction and redirection of the
program.
In the early 1980s, analyses by the Texas Bureau of Economic Geology of the 450 largest reservoirs in Texas were
to show that about half of the oil remaining in existing reservoirs and classed as unrecoverable was, in fact, mobile oil
and that the volume of remaining unrecovered mobile oil
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.
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.
206
APPENDIX F
TABLE F-30 Benefits Matrix for the Field Demonstration Programa

Economic
benefits/costs
DOE R&D cost: $259 millionb

Estimated benefits of $2.2 billionc
None
Postmortems of enhanced oil recovery and

thermal recovery processes suggest
directions for future applications and
future research
Enhanced recovery screening models and
software programs for use by industry
Reservoir characterization and class
definitiond
Determined that the geological and
engineering parameters of individual
fields were poorly understoode
Data used to predict domestic industry
productivity and potentialf
Mobilized the technical expertise of
domestic industry to improve efficiency
and made it widely available
Environmental
benefits/costs
Reduced air emissions, surface footprints,

and waste volumes
Reduced water productiong
Demonstration of technologies with

minimal impact in harsh and sensitive
environments
Subsurface imaging and chemical

treatments that could be applied to nearsurface or surface environmental
problems
Security
benefits/costs
Increased U.S. oil production
Maintenance of U.S. oil industry

infrastructure and ability to increase
production if required
None
aUnless
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.
Benefits and Costs

Based on the above, the committee assigned a benefit to
DOE of $2.2 billion (see Table F-30).
Lessons Learned
The basic lesson learned early on was that oil and gas
reservoirs, with very few exceptions, were much more complicated that previously believed. With that recognition came
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-
207
APPENDIX F
ized, and it is generally regarded in industry and the research

community as one of DOEs most successful programs.
Another important lesson learned in the program was the
need to reflect changed perceptions of the nature of unrecovered oil and to adjust to wide swings in oil and gas prices.
OIL SHALE
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,
and the use of in situ techniques on Eastern oil shale, both of

which were unsuccessful. The government also supported
the Unocal project through a Treasury Department price
guarantee for each barrel of oil produced. Before project termination in 1991, 4.7 million barrels of oil (total) were produced. The high cost of a project modification for an external carbon combustor led to termination of the Unocal
project.
Upgrading/refining. A critical refining issue for Western shale is the removal of nitrogen. Given the shale recovery issues, DOE has not done much in this area, although
some bench-scale tests have been done on nitrogen removal.
Specialty by-products. From 1978 through 1982, DOE
did some research on adding high-nitrogen-content Green
River shale oil to paving asphalt binder to achieve a longerlife asphalt pavement. Small contracts have been used to examine ways to extract high-value nitrogen compounds from
Green River oil shale. Tests have also been done on using
spent shale as a support layer for asphalt pavement, as a way
of reducing spent shale disposal costs.
Environmental. Almost one-third of DOE R&D funding for oil shale involved environmental studies because of
the potential impacts on air quality, water quality, and soil
revegetation.
DOEs funding history for oil shale is shown in Table
F-31. As Table F-31 shows, more DOE funds were spent in
TABLE F-31 Funding for the Oil Shale Program

Year
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.
208
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.

The remarkable advances in digital computation capability over the past several decades have resulted in tremendous
improvements in the acquisition and processing of reflection
seismic data. With more precise, higher-resolution imaging
of the subsurface, success rates in oil and gas exploration
have improved substantially; in some areas, such as the offshore Gulf of Mexico, 50 percent exploration success is common, and in some areas, rates are even higher. High-resolution, three-dimensional (3D) seismic shots over old existing
fields show that reservoirs generally are much more complex and compartmentalized than had previously been
thought, allowing strategic infield drilling and substantial
increases in oil and gas recovery or reserve growth. Timelapsed 3D seismic (so-called 4D seismic) allows assessing
fluid movement and behavior in a producing reservoir, an
assessment that permits greater and more efficient recovery.
The principal results have been to reduce significantly the
cost of finding hydrocarbons and to situate wells for optimum productivity.
The advances in seismic technology have been developed
mostly by industry, although certain aspects of the DOE program have improved seismic technology. Seismic technology development became a major focus for DOE in 1988
with the creation of the Oil Recovery Technology Partnership, designed to bring the scientific expertise of the national
laboratories to bear on to the challenge of improving oil recovery. The producing industry involved in the partnership
established that seismic technology, particularly cross-well
209
APPENDIX F
TABLE F-32 Benefits Matrix for the Oil Shale Programa

Economic
benefits/costs
DOE costs: $448 millionb

Industry investments: $3 billionc
No realized economic benefitstechnology
not commercialized
Oil shale technology available if economic

conditions permit exploitation of U.S.
shale oil resourcesd
R&D on mining and comminutione

Research on retortingf
R&D on specialty by-productsg
The blasting models developed are widely
used for blasting operationsh
Development of the water-jet-assisted
mineri
Development of information and databases
necessary to facilitate productionj
Environmental
benefits/costs
None
SOMAT paving would reduce emissions

in highway maintenance, but overall the
challenge will be to eliminate the
environmental impacts of oil shale
recovery
Extensive environmental R&Dk
Security
benefits/costs
None
Less imported crude oil
aUnless
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
seismic, should receive the most program attention. Further

impetus for the application of seismic technology came with
the Reservoir Class program, in which the various field
projects began to adopt seismic technology for the reservoir
characterization phase. The Seismic Technology program
has also involved the development of new processing algorithms written to resolve some of the problems inherent in
3D subsalt imaging and a project in 4D seismic with the
Lamont Doherty Earth Observatory.
The initial justification for DOEs role in the Seismic
Technology and Technology Partnership was to provide the
oil industry, especially independent operators, with a mechanism to access expertise, facilities, and technology at the
national laboratories. This was followed in 1995 by the Advanced Computational Technology Initiative to increase industry access to seismic technology and to the high-performance computational power established by the national
laboratories for defense purposes.

The Seismic Technology program expended $106 million (1999 dollars) from 1989 to 2000 and plans to expend
$161 million (1999 dollars) more through 2005 (see Table
F-33). Funds to date have been distributed to industry ($4.9
million), to universities ($5.6 million), to DOE national laboratories ($32.6 million), and to the Class Reservoir program
($62.5 million). Outside cost sharing amounted to $109 million (1999 dollars), with $850,000 coming from industry,
$2.2 million from universities, $29.1 million from the DOE
laboratories, and $76.8 million from the Reservoir Class program (OFE, 2000s).
Results
The Seismic Technology R&D program has developed a
series of products that have become commercially viable.
210
APPENDIX F
TABLE F-33 Benefits Matrix for the Seismic Technology Programa

Economic
benefits/costs

Industry cost share: $3 millionc
Benefits of $600 milliond
Produced incremental oil and natural gase
None
Knowledge base of reservoir propertiesf

Knowledge base of seismic acquisition,
processing, and interpretationg
R&D on 3D/3C and 4D seismich,i
Algorithm development
Environmental
benefits/costs
Fewer wells drilled, reducing potential

environmental impacts and reduced water
production from drilling
None
Development of technology to reduce

environmental impact and costs of
future oil exploration and drilling
Near-surface and deeper seismic imaging
may be applied to resolve environmental
problems
Security
benefits/costs
Reduced oil imports

As technologies are shared with other
nations, oil supplies and reserves could
be increased, prices stabilized, and U.S.
oil imports diversified
None
None
aUnless
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.
Benefits and Costs

DOE estimates the overall benefit to industry of seismic
technology to be $6 billion per year. Industry spending on
seismic applications and technical services is high, although
there is some spending for R&D. Of the total estimated benefit from seismic technology, DOE calculates its contribution in the range of 4 to 6 percent based on modeling analysis. Industry spends about $1.5 billion per year on all
research, and DOE estimates that the industry spends about
$180 million per year on basic and long-term research. DOE
211
APPENDIX F
funding for seismic projects has averaged $5 million per year

(exclusive of Field Demonstration projects), or 3 percent of
industrys spending on long-term research. On this basis, the
DOE contribution to seismic technology has a benefit of $2.2
to $4.4 billion. The investment in the program is $161 million, which would yield a gross return on investment between 14:1 and 28:1. Applying the 17.5 percent net to gross
revenue ratio that was applied to other resource-based programs, the DOE Seismic Technology program would have a
benefit/cost ratio of between 2.4 and 4.9. That gives a benefit of about $600 million (Table F-33).
In another calculation of benefit/cost ratios, DOE credited the Seismic Technology program with 3 percent of total
domestic oil production and 1 percent of total domestic natural gas production. With an average net revenue at 17.5 percent of sales revenues, a realized economic benefit of $4145
million (1999 dollars) was calculated using a benefit/cost
ratio of 39. The range 2.4 to 4.9 is more nearly consistent
with calculated ratios of other resource-based programs and
yet represents a very good return on investment for the program.
Lessons Learned
The principal lesson learned from the DOE Seismic Technology program is that even with a technology in which the
private industry has invested massively, federal government
funding geared to certain niche areasfor instance, crosswell seismic, utilization of special expertise and facilities
such as the high-performance computing capabilities of the
national laboratories, or the support of seismic surveying for
independent operators with the capability of processing
seismic datais a useful adjunct to a major private sector activity.
WESTERN GAS SANDS PROGRAM

The early 1970s recorded peak production of natural gas
in the United States at a time when demand had been increasing significantly for 20 years. After peaking, most projections showed conventional gas production to decline
steadily. The Natural Gas Policy Act, which Congress passed
in 1977, restricted or prohibited certain uses of natural gas.
With the widespread view that conventional sources of natural gas were dwindling, attention turned to so-called nonconventional sourcesnatural gas from coal beds, methane
dissolved in geopressured waters, and natural gas in lowpermeability, or tight, formations. Heretofore, these occurrences of natural gas were not included in estimates of the
U.S. natural gas resource base.
The Western Gas Sands program was designed to accelerate the development of domestic gas resources. It was di-
rected at the development of new and improved techniques

for recovering gas from low-permeability (tight) gas reservoirs that at the time of initiation of the program could not be
economically produced. The purpose of the program was to
encourage and supplement industry efforts to develop technology and demonstrate the feasibility of producing from
tight reservoirs.
The initial federal effort to explore the potential of lowpermeability sands was undertaken by the Bureau of Mines
in 1974 with a Single Well Test program to deploy massive
hydraulic fracturing of tight sands. Fracturing was generally
successful in uniform, blanket sands but poor in lenticular
reservoirs, whose character was not understood.
Congress established the Western Gas Sands program in
1978, and the initial effort was to better characterize the lowpermeability formations through an extensive coring and
mapping program. This led to the Multiwell Experiment
(MWX), conducted from 1981 to 1988 in the Piceance Basin
in western Colorado, aimed at characterization of reservoirs.
The goal was to investigate how fracturing technology could
be deployed in the context of a characterized reservoir. Previous experiments had been conducted on 640- or 320-acre
spacing of wells, appropriate if the reservoir was uniform
but too widely spaced to evaluate the continuity of lenticular
reservoirs. The MWX experiment was designed with a
closely spaced three-well pattern (110- to 125-ft spacing)
and was the basis for better understanding hydraulic fracture
growth and gas production mechanics in lenticular sands,
where most of the western U.S. resource occurred. Once the
MWX was in place, the Western Gas Sands program focused on resource assessments establishing the reservoir
properties of the massive volumes of gas in place in the basin-centered formations; reliable hydraulic fracture diagnostics technology; and technology for predicting and finding
the naturally fractured sweet spots in tight gas reservoirs.
DOE expenditures in the Western Tight Gas Sands program from 1978 through 1999 amounted to $185 million
(1999 dollars) (see Table F-34). The program peaked in
1981, when the annual budget was $20.8 million (1999 dollars) and was the lowest in 1992 at $3.6 million; since it then
has averaged a little over $5 million annually. From 1983 to
1988, most of the budget was used to fund basic research
and sample analysis through the national laboratories. When
the project emphasis changed from basic research to applied
research in 1989, more funds were directed to actual procurements with private research companies and industry.
Prior to 1992, the program was funded entirely by DOE. As
the program became more product-oriented, a larger percentage of funding came from industry. By the late 1980s, most
of the research money was being spent in actual field demonstration projects. In the basic and applied stages of the
program, DOE expenditures led industry by 2 to l; in the
212
APPENDIX F
TABLE F-34 Benefits Matrix for the Western Gas Sands Program (WGSP)a
Economic
benefits/costs

Benefits: DOE made substantial
contribution to $800 million in increased
net revenues, royalties, and cost savingsd
Incremental natural gas produced from the
five Rocky Mountain foreland basinsf
Potential for large volumes of marginal

resources to be added to the resource
base
Development of new and improved
techniques for future gas recovery from
low-permeability (tight) gas reservoirse
R&D on tight gas science, technology, and

development
Theoretical work on natural gas fracturesc
Improved characterization and extraction
technology
Tailoring of well spacing to specific
reservoir geometriesg
Characterizations of basin-centered
accumulations throughout the western
United States
Advanced the understanding of complex,
lenticular reservoirs and how fracturing
is deployed in such reservoirs
Environmental
benefits/costs
Reduction in the number of wells required

to produce a given gas supplyh
None
None
Security
benefits/costs
None
None
None
aUnless
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.
demonstration stage, industry led DOE by nearly 3 to l (OFE,

2000t).
Results
The Western Gas Sands program 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 production exceeded 700 Bcf, a fourfold increase.
By 2005, production should approach 800 Bcf. In addition to
increased production, the program has significantly ad-
vanced understanding of complex, lenticular reservoirs and

how fracturing is deployed in them. A much larger part of
the vast in-place resource in the basin-centered gas formations of the Rocky Mountain basins is now considered economically accessible.
Benefits and Costs
DOE credits 70 percent of the increased gas production in
the Rocky Mountain gas basins since l987 to the Western
Gas Sands program. Overall, the program is credited with
developing technology and stimulating 35 percent of the
213
APPENDIX F
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-
214
APPENDIX F
efits of DOE R&D in Energy Efficiency and Fossil Energy: Coal-bed

Methane Program, January 10.
Spencer, D. 1995. A Screening Study to Assess the Benefit/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.
Robert, Wright, DOE, e-mail communication, January 4, 2001.
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
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.
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.
tors, commercial water heaters, and heating, ventilation,

and air-conditioning systems. It also allowed for the future development of standards for many other products.
The Department of Energy (DOE) is responsible for establishing the standards and the procedures that manufacturers must use to test their models.
atmospheric pressure: The pressure of the air at sea level;
one standard atmosphere at 0C is equal to 14.695 psi
(1.033 kg/cm2).
avoided cost: The incremental cost to an electric power producer of generating or purchasing a unit of electricity or
capacity or both.
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.
battery: An energy storage device composed of one or more

electrolyte cells.
bbl: A barrel is the standard unit of measure of liquids in the
oil industry; it contains 42 U.S. standard gallons.
biomass: Organic material of a nonfossil origin (living or
recently dead plant and animal tissue), including aquatic,
herbaceous, and woody plants, animal wastes, and portions of municipal wastes.
anthracite culm: Waste product produced when anthracite

is mined and prepared for market. Primarily rock and some
coal.
appliance standards: Standards established by Congress for
energy-consuming appliances in the National Appliance
Energy Conservation Act (NAECA) of 1987, as amended
in the National Appliance Energy Conservation Amendments of 1988 and the Energy Policy Act of 1992 (EPAct).
NAECA established minimum standards of energy efficiency for refrigerators, refrigerator-freezers, freezers,
room air conditioners, fluorescent lamp ballasts, incandescent reflector lamps, clothes dryers, clothes washers,
dishwashers, kitchen ranges and ovens, poll heaters, television sets (withdrawn in 1995), and water heaters. The
EPAct added standards for some fluorescent and incandescent reflector lamps, plumbing products, electric mo-
bituminous coal: Type of coal most commonly used for

electric power generation, with a heating value of 10,500
Btu per pound, a carbon content of 45 to 86 percent, and a
moisture content of less than 20 percent. It is soft, dense,
and black with well-defined bands of bright and dull material. It is mined chiefly east of the Mississippi River.
black liquor gasification: Black liquor gasification offers
pulp and paper mills the most efficient method for converting biomass energy to electric power, with thermal
efficiencies of 74 percent compared with 64 percent in
modern recovery boilers. Black liquor gasification also
has environmental benefits, such as fewer CO2 emissions
215
216
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.
CO: Carbon monoxide is a colorless, odorless but poisonous

combustible gas. It is produced in the incomplete combustion of carbon and carbon compounds such as fossil fuels
(i.e., coal and petroleum) and their products (e.g., liquefied petroleum gas and gasoline) and biomass.
CO2: Carbon dioxide is a colorless, odorless gas that is produced when animals (including humans) breathe or when
carbon-containing materials (including fossil fuels) are
burned.
coal-bed methane: In general terms, coal-bed gas is formed
by biochemical and physical processes during the conversion of plant material into coal. Methane accounts for most
of the gases created during the conversion process, and
the term coal-bed methane has been used by industry
for gas from this source. Coal-bed methane is similar to
conventional natural gas but is produced from low-pressure underground coal formations rather than from underground sandstone or carbonate rock formations. It is
mainly composed of methane but, like other conventional
natural gases, it may contain very small quantities of other
paraffin series hydrocarbons such as ethane and propane.
Coal-bed methane has been referred to as a sweet gas because it typically contains very few impurities such as
hydrogen sulfide and carbon dioxide normally found in
natural gas. In some cases, it can be input directly into
natural gas pipelines or other gathering systems with little
processing. However, in other cases, the few impurities
present must be removed before being input into a gathering system.
coal preparation: The treatment of coal to reject waste. In
its broadest sense, preparation is any processing of mined
coal to prepare it for market, including crushing and
screening or sieving the coal to reach a uniform size,
which normally results in removal of some noncoal material. The term coal preparation most commonly refers to
processing, including crushing and screening, passing the
material through one or more processes to remove impurities, sizing the product, and loading it for shipment. Many
of the processes separate rock, clay, and other minerals
from coal in a liquid medium; hence the term washing
is widely used. In some cases, coal passes through a drying step before loading.
combined cycle: An electric generating technology in which
electricity is produced from otherwise lost waste heat exiting from one or more gas (combustion) turbines. The
exiting heat is routed to a conventional boiler or to a heatrecovery steam generator for utilization by a steam turbine in the production of electricity. Such designs increase
the efficiency of the electric generating unit.
combustion turbine: A gas turbine is a heat engine that uses
high-temperature, high-pressure gas as the working fluid.
Part of the heat supplied by the gas is converted directly
217
APPENDIX G
into mechanical workhigh-temperature, high-pressure

gas rushes out of the combustor and pushes against the
turbine blades, causing them to rotate. In most cases, hot
gas is obtained by burning a fuel in air, which is why gas
turbines are often referred to as combustion turbines. Because gas turbines are compact, lightweight, and simple to
operate, they are widely used in jet aircraft and for electricity generation. Gas turbines are also used in university
and industrial settings to produce electricity and steam. In
such cases, simple-cycle gas turbines convert a portion of
input energy to electricity and use the remaining energy to
produce steam in a steam generator. For utility applications, which require maximum electric power, a combined-cycle steam turbine is added to convert steam to
electricity. Advanced turbines being developed now use
natural gas as the fuel but will later be designed for use
with fuels derived from coal, biomass, and other energy
resources. The ATS program goal is to produce more-fuelefficient, cleaner, and lower-cost electricity turbines.
crude oil: Unrefined petroleum that reaches the surface of
the ground in a liquid state.
DCS: The goal of DOEs drilling, completion, and stimulation program is to conduct R&D that will help reduce drilling costs, minimize formation damage, lower environmental impacts, and improve federal lands. Well drilling,
completion, and stimulation account for the great bulk of
industrys capital costs for developing oil and natural gas
and provide a rich target for cost reductions and improved
practices.
direct liquefaction: In direct liquefaction, coal is liquefied
by reacting it with hydrogen under pressure and temperature in a process-derived solvent. This technology has not
been commercially practiced except in Germany during
the Second World War to produce mostly aviation gasoline using inefficient, very-high-pressure technologies. At
the end of the war, the U.S. government had a demonstration program to assess those early, first-generation direct
liquefaction technologies. The fuels were found to be
much too expensive, particularly in comparison to crude
oil from the newly opened Middle Eastern oil fields. The
U.S. governments interest was rekindled in the 1960s,
starting with limited research and development programs
sponsored by the Department of the Interior (Office of
Coal Research, Bureau of Mines). The program was
stepped up significantly with the oil embargo of 1973.
DOE-2: DOE-2 is a computer program that helps evaluate
the energy performance and associated operating costs of
buildings through computer simulations. The computer
program can also be used to evaluate the performance of
new technologies and to guide research by estimating the
impact of alternative R&D. Such information helps architects and developers to design and construct energy-efficient buildings in a cost-effective manner.
downstream fundamentals program: The goal of the

downstream fundamentals area of research is to develop
and publish fundamental scientific data on thermodynamics, crude oil characterization, and refinery process improvements. Of particular emphasis is to provide this information to companies, universities, and laboratories that
do not have internal capacity to develop the data individually.
DSM: Demand-side management programs are instituted by
utilities. They include schemes such as rebates to customers for installation of energy-efficient appliances and reduced rates for nonpeak-load use of electricity to encourage customers to reduce electricity consumption overall
or at certain periods.
Eastern Gas Shales Project: The Eastern Gas Shales
Projects technology and information have achieved significant cost reductions in gas shale development and production. The reductions have helped revitalize gas shale
drilling in the Appalachian Basin and foster new activity
in other gas shale basins. Today, gas shales provide over
400 Bcf per year of natural gas production from numerous
basins, up from 70 Bcf in 1978. Through its basic R&D,
the project discovered and demonstrated that adsorption is
the main gas storage mechanism and that natural fractures
provide the essential flow paths in gas shales. The project
also developed a series of high-value products that are
now widely used by the private gas shale industry, including foam and massive hydraulic fracturing technology,
oriented coring and fractigraphic analysis, and well logging in air-filled holes.
electronic ballasts: A fluorescent lamp ballast is an electrical device required for starting and operating a fluorescent lamp. The ballast provides the high voltage needed to
start the lamps by initiating its discharge and then limits
the current to a safe value when the discharge is established. An electronic ballast improves lighting energy efficiency by 25 percent compared with conventional magnetic ballasts. Each electronic ballast saves 20 W by replacing an 80-W magnetic ballast/lamp combination consuming 60 W. In addition, electronic ballasts are lighter
and easier to install. They eliminate the flicker or hum that
is sometimes experienced with magnetic ballasts.
emission control technologies: Combustion processes produce emissions that can be reduced by emission control
technologies. These technologies are designed to adjust
emissions from burning fuels by applying control factors
such as electrostatic precipitators and filters, or combustion modification processes.
Environmental Technology: The Environmental Technology Program sponsors research on technologies that reduce the costs of environmental compliance for the oil
and natural gas industry. In addition, the program pro-
218
APPENDIX G
vides scientific data for identifying lower cost options for

formulating or implementing regulations.
EOR: Several techniques for enhanced oil recover include
the injection of steam, polymers, surfactants, carbon dioxide, and other agents into the oil-bearing formation. The
objective of the Enhanced Oil Recovery Program is to develop technology that is capable of improving the recovery of oil beyond that recoverable by conventional methods. Conventional primary and secondary recovery operations often leave two-thirds of the oil in the reservoir at
the time of abandonment. Enhanced oil recovery methods
have the potential for recovering much of the remaining
oil. However, the challenges are great because the remaining oil is often located in regions of the reservoir that are
difficult to access and is also bound tightly into the pores
by capillary pressures.
FBC: Fluidized-bed combustion is an advanced way of burning crushed coal (or other fuels) by suspending the coal on
an upward stream of hot air. In the fluid-like mixing process, limestone can be injected into the bed (floating
layer) of coal to absorb sulfur pollutants before they can
escape out of the smokestack. The mixing process also
lowers the temperature of the burning coal below the point
where nitrogen oxides, another pollutant, are formed.
fluorescent lamp: A tubular electric lamp that is coated on

its inner surface with a phosphor and that contains mercury vapor whose bombardment by electrons from the
cathode provides ultraviolet light, which causes the phosphor to emit visible light either of a selected color or
closely approximating daylight.
Forest Products IOF: The goal of the Forest Products Industries of the Future program is to improve the energy
efficiency, productivity, and environmental performance
of the forest, wood, and paper industry by better aligning
R&D resources and technical assistance with industry
problems and priorities. The industry itself leads the process.
fossil fuel: Any naturally occurring fuel of an organic nature
formed by the decomposition of plants or animals; includes coal, natural gas, and petroleum.
fenestration: In simplest terms, windows or glass doors.

Technically fenestration is described as any transparent or
translucent material plus any sash, frame, mullion, or divider. This includes windows, sliding glass doors, French
doors, skylights, curtain walls, and garden windows.
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.
field demonstration: The goal of the Field Demonstration

Program is to accelerate the field application of technology developed by industry and DOE. In the near term, the
objective is to transfer technology that will enable the industry to recover 15 billion bbl of mobile oil, using currently available and proven technologies, before these resources and fields are abandoned. The midterm objective
is to prove and demonstrate advanced enhanced oil recovery (EOR) technologies that will enable the industry to
recover an additional 61 million bbl. An essential feature
of the program is the transfer of information and technology from specific projects to industry, particularly the independent segment of the industry.
gas-to-liquids: The gas-to-liquids technology program is

part of the Natural Gas Processing and Utilization Program, which has the goal of supporting the development
of advanced gas upgrading and conversion processes to
bring low-grade gas up to pipeline standards and to convert remote gas to more readily transportable high-value
liquid fuels and feedstocks. The gas-to-liquids portion of
this program has the primary objective of lowering the
cost of converting natural gas to liquid hydrocarbons.
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
219
APPENDIX G
which may or may not include a capability for cooling.

This reverse-cycle air conditioner usually provides cooling in summer and heating in winter.
hybrid vehicle: Usually a hybrid electric vehicle, a vehicle
that employs a combustion engine system together with
an electric propulsion system. Hybrid technologies expand
the usable range of all-electric vehicles using batteries
only.
hydrocarbons: A class of compounds containing hydrogen
and carbon formed by the decomposition of plant and animal remains. These compounds include coal, oil, natural
gas, and other substances occurring in rocks.
IGCC: Integrated gasification combined-cycle technology
uses a coal gasifier in place of the traditional combustor,
coupled with a key enabling technologythe advanced
gas turbineto produce clean, efficient electric power. In
an IGCC plant, coal is combined with steam and oxygen
to produce a synthesis gas that is cleaned of particulate
and sulfur impurities and used to produce power in a gas
turbine. Waste heat from the process is used in a steam
turbine to generate more electricity. Integrating gasifier
technology with a combined cycle in this way offers high
system efficiencies, low costs, and ultralow pollution levels.
indirect coal liquefaction: In indirect coal liquefaction, coal
is first gasified to produce a synthesis gas (hydrogen and
carbon monoxide), which is cleaned to remove acid gases
(hydrogen sulfide and carbon dioxide). This synthesis gas
is then converted either to oxygenates and chemicals or to
a range of hydrocarbon products using Fischer-Tropsch
synthesis. R&D for the production of the clean synthesis
gas from coal is the responsibility of the Gasification
Technologies Program. The Indirect Liquefaction Program is responsible for R&D that deals with the synthesis
of the products, their characterization and testing, and their
upgrading.
in situ processing: The extraction of a product such as shale
oil or bitumen from the ore while it is in its original location underground.
life-cycle costs: The total costs of an energy device. Total
costs from procurement operation, maintenance, and disposal at end of life are considered for comparison using
present dollars.
life extension: Life extension is achieved by maintaining or
improving the operating status of an electric power plant
within acceptable levels of availability and efficiency, beyond the originally anticipated retirement date.
liquefaction: Processes that convert coal into a liquid fuel
similar in nature to crude oil and/or refined products.
longwall mining: An automated form of underground coal

mining characterized by high recovery and extraction
rates, feasible only in relatively flat-lying, thick, and uniform coalbeds. A high-powered cutting machine is passed
across the exposed face of coal, shearing away broken
coal, which is continuously hauled away by a floor-level
conveyor system. Longwall mining extracts all machineminable coal between the floor and ceiling within a contiguous block of coal, known as a panel, leaving no support pillars within the panel area. Panel dimensions vary
over time and with mining conditions but currently average about 900 feet in width (coal face width) and more
than 8000 feet in length (the minable extent of the panel,
measured in the direction of mining). Longwall mining is
done under movable roof supports that are advanced as
the bed is cut. The roof in the mined-out area is allowed to
fall as the mining advances.
lost foam casting: Lost foam casting has significant cost
and environmental advantages and enables metal casters
to produce complex parts often not possible using other
methods. The process allows designers to reduce the number of parts, reduce machining, and minimize assembly
operations. It also allows foundries to reduce solid waste
and emissions. The lost foam process consists of first
making a foam pattern having the geometry of the desired
finished metal part. The pattern is dipped into a water solution containing a suspended refractory. The refractory
material coats the foam pattern, leaving a thin, heat-resistant layer that is air-dried. When drying is complete, the
coated foam is suspended in a steel container that is vibrated while sand is added to surround the coated pattern.
The sand provides mechanical support to the thin refractory layer. Molten metal is then poured into the mold, and
the molten metal melts and vaporizes the foam. The solidified metal leaves a nearly exact replica of the pattern
that is machined as required to produce the desired finished shape.
low-e: A special coating that reduces the emissivity of a window assembly, thereby reducing the heat transfer through
the assembly.
low-e windows: Low-emission windows save heating and
cooling loads in residential and commercial buildings.
They reflect the infrared back into the room instead of
absorbing and transmitting it to the outside.
Mcf: One thousand cubic feet of natural gas, having an energy value of 1 million Btu. A typical home might use
6 Mcf in a month.
mercury and air toxics: Mercury and other air toxics (chlorine, sulfur, ash, etc.) are defined as hazardous by-products from the combustion of fossil fuels. The DOE Mercury Measurement and Control Program developed as a
result of findings from the comprehensive assessment of
220
APPENDIX G
hazardous air pollutant studies conducted by DOE from

1990 through 1995, with some efforts through 1997. The
overriding finding of these studies was that mercury is not
effectively controlled in coal-fired utility boiler systems.
EPA also concluded that a plausible link exists between
these emissions and adverse health effects. The ineffective control of mercury by existing coal technologies was
due to a number of factors, including variation in coal
composition and resulting variability in the form of the
mercury in flue gases. The volatility of mercury was the
main reason for less removal. In addition, it was determined that there was no reliable mercury specification
method to accurately distinguish between the elemental
and oxidized forms of mercury in the flue gas, which act
differently with respect to their removal by the air pollution control devices utilized by the coal-fired utility industry.
MHD: Magnetohydrodynamics is a means of producing
electricity directly by moving liquids or gases through a
magnetic field.
natural gas: A mixture of gaseous hydrocarbons, composed
primarily of methane and occurring naturally in the earth,
often among petroleum deposits. It is used as fuel.
NOx: Oxides of nitrogen; a mix of nitrous oxide (NO) and
nitrogen dioxide (NO2).
NOx control: Techniques for reducing NOx emissions from
fossil-fuel-fired boilers can be classified into two categories: combustion controls and postcombustion controls.
Combustion controls reduce NOx formation during the
combustion process, while postcombustion controls reduce NOx after is has been formed.
O3: Ozone is a bluish, toxic gas with a pungent odor. It is
formed by three oxygen atoms rather than the usual two.
Ozone occurs in the stratosphere and plays a role in filtering out ultraviolet radiation from the suns rays. At ground
level, ozone is a major component of smog.
OAPEC: The Organization of Arab Petroleum Exporting
Countries was established in 1968 with permanent headquarters in Kuwait. It is an instrument of Arab cooperation whose objective is to provide support to the Arab oil
industry. Its activities are developmental in nature, and its
membership is restricted to Arab countries with oil revenues that constitute a significant part of their GNPs.
OPEC: The Organization of Petroleum Exporting Countries,
founded in 1960 to unify and coordinate the petroleum
policies of the members. The headquarters is in Vienna,
Austria.
oxy-fueled glass furnace: The glass industry is a large user
of energy in furnaces to produce glass containers, float
glass for windows in construction and automobiles, fiber
glass insulation, and other specialty products. The high
temperatures required for glass manufacture and the raw
materials used in glass result in significant emissions of

NOx and particulates. The oxy-fuel furnace substitutes
oxygen for air in the combustion process. This change in
the process significantly reduces NOx emissions, reduces
the amount of energy required per ton of glass produced,
reduces levels of other gases, and reduces the capital costs
for furnace regenerators and emissions control equipment.
P-4: The Programmable Powdered Preform Process is a way
of fabricating a preform that is essentially the fibrous skeleton of a composite structure. Chopped reinforcement fibers and resin powder are simultaneously sprayed onto a
heated screen mandrel by robots that control the placement, depth, and orientation of the fibers. The resin powder melts, causing the fibers to stick together enough for
the preform to be removed whole from the mandrel. The
preform is placed in a mold, where it is infused with more
resin, compressed, and heat-cured to form the final product. P-4 is highly automated and results in finished parts
with good dimensional stability, strength, and corrosion
and wear resistance. It is also much faster than most composite preform processes.
peak load: Peak load (usually in reference to electrical load)
is the maximum load during a specified period of time.
Peak periods during the day usually occur in the morning
hours from 6 to 9 A.M. and during the afternoons from
4 P.M. to about 8 or 9 P.M. The afternoon peak demand
periods are usually higher, and they are highest during
summer months when air-conditioning use is the highest.
PEM fuel cell: A PEM (proton exchange membrane, also
called polymer electrolyte membrane) fuel cell uses a
simple chemical process to combine hydrogen and oxygen into water, producing electric current in the process.
PFBC: Pressurized fluidized-bed combustion is one of several advanced approaches for substantially improving the
efficiency of coal-fired power systems while significantly
reducing emissions. In contrast to the atmospheric fluidized-bed combustion (AFBC) system, in a PFBC system,
the boiler, cyclones, and other associated hardware are
encapsulated in a pressure vessel. This compact boiler in
a bottle is about one-fourth the size of a pulverized coal
boiler of similar capacity. PFBC units are intended to give
an efficiency value of over 40 percent and low emissions,
and developments of the system using more advanced
cycles are intended to achieve efficiencies of over 45 percent.
PNGV: Partnership for a New Generation of Vehicles was
established in September 1993 as a collaboration between
the federal government and the United States Council for
Automotive Research (USCAR), which represents
DaimlerChrysler, Ford, and General Motors. The PNGVs
goal is to develop technologies for a new generation of
energy efficient and environmentally friendly vehicles.
221
APPENDIX G
psi (psig): Pounds per square inch (psig indicates gauge pressure, that is, pressure above atmospheric pressure).
enormous cost and logistic difficulty of introducing an

entirely new type of engine.
pyrolysis: Thermal decomposition of a chemical compound

or mixture of chemical compounds.
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
Subbituminous coal: Coal with a heating value of 8,300 to

11,500 Btu/lb, a carbon content of 35 to 45 percent, and a
moisture content of 20 to 30 percent.
syngas: Synthetic natural gas made from coal.
synthesis gas: Mixture of carbon monoxide and hydrogen
and other liquid and gaseous products.
Synthetic Fuels Corporation: Organization established by
the Energy Security Act of 1980 to facilitate the development of domestic nonconventional energy resources.
tax credits: Credits established by the federal and state government to assist the development of the alternative energy industry.
turbine: A machine that has propeller-like blades that can
be moved by flowing gas (such as steam or combustion
gases) to spin a rotor in a generator to produce electricity.
21st Century Truck Program: Multiagency and industry
partnership designed to cut fuel use and emissions by
buses and trucks, while enhancing their safety, affordability and performance. It was created as a response to
U.S. climate change policy.
waste management: Waste products from the combustion
of fossil fuels for power generation include by-product
materials from scrubbers and fly ash. The Waste Management Utilization Program is oriented toward providing
improved methods of waste characterization and handling,
advances in resource recovery and reutilization techniques, and sound management and/or disposal of combustion and other fossil wastes in compliance with environmental regulations.
well: A hole drilled or bored into the earth, usually cased
with metal pipe, for the production of gas or oil. Also, a
hole for the injection under pressure of water or gas into a
subsurface rock formation.
Western Gas Sands: The Western Gas Sands Program has
enabled industry to commercially develop the geologically
complex, high-cost tight gas resource in the Rocky Mountains. Today, annual tight gas production from Rocky
Mountain gas basins is over 700 Bcf, up from 160 Bcf in
1978 and 220 Bcf in 1987, when the R&D program is
judged to have begun having a significant impact.
Acronyms and Abbreviations
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
Clean Air Act

Clean Air Act Amendments
corporate average fuel economy (standards)
coal combustion waste
clean coal technology
component development and integration facility
chlorofluorocarbons
coal-fired flow facility
compact fluorescent lamp
combined heat and power
compression-ignition direct-injection
carbon monoxide
carbon dioxide
Office of Coal and Power Systems
cooperative research and development
agreement
DC
DCS
direct current
drilling, completion, and stimulation
DERD
DOC
DOD
DOE
DOT
DPCA
directed exploratory R&D

Department of Commerce
Department of Defense
Department of Transportation
Distributed Power Coalition of America
EDS
EE
EERE
EV
Exxon donor solvent

energy efficiency
Office of Energy Efficiency and Renewable
Energy
Eastern gas shale program
Energy Information Administration
enhanced oil recovery
Environmental Protection Agency
Energy Policy Act
Electric Power Research Institute
Energy Research and Development
Administration
electric vehicle
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
General Accounting Office

gross domestic product
General Motors
gross national product
Gulf of Mexico
Government Performance and Results Act
gas turbine combined cycle
EGSP
EIA
EOR
EPA
EPAct
EPRI
ERDA
222
223
APPENDIX H
GTI
GTL
Gas Technology Institute (formerly Gas

Research Institute (GRI))
gas-to-liquids
HAP
HCFCs
HSTF
HTI
HVAC
Hz
hazardous air pollutant

hydrochlorofluorocarbons
high-sulfur test facility
Hydrocarbon Technologies, Inc.
high-voltage alternating current
hertz
IAQ
IAQI&V
ICE
IEA
IFC
IGCC
IGT
IOF
IPST
indoor air quality

indor air quality, infiltration, and ventilation
internal combustion engine
International Energy Agency
International Fuel Cells
integrated gasification combined cycle
Institute for Gas Technology
Industries of the Future
Institute of Paper Science and Technology
kW
kWh
kilowatt
kilowatt hour
LBNL
LDV
LEW
LNG
Lawrence Berkeley National Laboratory

light-duty vehicle
low-emissivity window
liquefied natural gas
MCFC
MHD
MMBtu
MMTCE
MOU
mpg
MRI
MTG
MW
MWX
molten carbonate fuel cell

magnetohydrodynamics
million British thermal units
millions of tons of coal equivalent
memorandum of understanding
miles per gallon
magnetic resonance imaging (equipment)
methanol-to-gasoline (technology)
megawatt
Multiwell Experiment
NAECA
NASA
NBSLD
National Appliance Energy Conservation Act

National Aeronautics and Space Administration
National Bureau of Standards Load
Determination
New Energy Development Organization (Japan)
National Energy Strategy
natural gas combined cycle
Office of Natural Gas and Petroleum
Technology
National Institutes of Health
nickel metal hydride
National Institute for Petroleum and Energy
Research
National Institute of Standards and Technology
NEDO
NES
NGCC
NGPT
NIH
NiMH
NIPER
NIST
NMHCs
NMOGs
NOx
NRC
NSF
nonmethane hydrocarbons
nonmethane organic gases
oxide of nitrogen
National Science Foundation
OAAT
OIT
OPEC
OPT
ORNL
OTT
Office of Advanced Automotive Technologies

Office of Industrial Technologies
Organization of Petroleum Exporting Countries
Office of Power Technologies
Oak Ridge National Laboratory
Office of Transportation Technologies
PAFC
PDC
PEM
PFBC
PM
PNGV
P4
ppm
phosphoric acid fuel cell

polycrystalline diamond compact (drilling bit)
proton exchange membrane/polymer electrolyte
membrane
pressurized fluidized-bed combustion
particulate matter
Partnership for a New Generation of Vehicles
Programmable Powdered Preform Process
parts per million
quad
RCRA
R&D
RD&D
RDD&D
ROI
Resource Conservation and Recovery Act

research and development
research, development, and demonstration
research, development, demonstration, and
deployment
return on investment
SCR
SFC
SHGC
SIDI
SMES
SNCR
SO2
SOFC
SRC-II
STM
SUV
SWPC
selective catalytic reduction

Synthetic Fuels Corporation
solar heat gain coefficient
spark-ignited, direct-injection
superconductivity magnetic energy storage
selective noncatalytic reduction
sulfur dioxide
solid oxide fuel cells
solvent-refined coal
Stirling thermal motors
sport utility vehicle
Siemens Westinghouse Power Corporation
TBC
Tcf
T&D
TORIS
tpd
thermal barrier coatings

trillion cubic feet
transmission and distribution
total oil recovery information system
tons per day
UGR
ULEV
UPS
unconventional gas resources

ultralow-emission vehicle
uninterruptible power supply
224
USABC
USAMP
USCAR
APPENDIX H
United States Advanced Battery Consortium

United States Automotive Materials Partnership
United States Council for Automotive Research
VOCs
VPSA
volatile organic compunds

vacuum-pressure swing adsorption
WGSP
Western gas sands program

NRC Energy Research at DOE - Was It Worth It - Energy Efficiency and Fossil Energy Research 1978 To 2000

Caricato da

Informazioni sul documento

Titolo originale

Copyright

Formati disponibili

Condividi questo documento

Condividi o incorpora il documento

Opzioni di condivisione

Hai trovato utile questo documento?

Questo contenuto è inappropriato?

Copyright:

Formati disponibili

NRC Energy Research at DOE - Was It Worth It - Energy Efficiency and Fossil Energy Research 1978 To 2000

Caricato da

Copyright:

Formati disponibili

Energy Research at DOE: Was It Worth It?

Energy Research at DOE

Committee on Benefits of DOE R&D on Energy Efficiency and Fossil Energy

NATIONAL ACADEMY PRESS

Copyright National Academy of Sciences. All rights reserved.

NATIONAL ACADEMY PRESS

2101 Constitution Avenue, N.W.

Additional copies are available for sale from:

Copyright 2001 by the National Academy of Sciences. All rights reserved.

Copyright National Academy of Sciences. All rights reserved.

National Academy of Sciences

Copyright National Academy of Sciences. All rights reserved.

COMMITTEE ON BENEFITS OF DOE R&D ON ENERGY EFFICIENCY AND FOSSIL ENERGY

Committee Subgroup on Energy Efficiency

Committee Subgroup on Benefits Framework

MAXINE L. SAVITZ, Co-chair

JAMES L. SWEENEY, Chair

Committee Subgroup on Fossil Energy

= Member, National Academy of Engineering

Copyright National Academy of Sciences. All rights reserved.

BOARD ON ENERGY AND ENVIRONMENTAL SYSTEMS

= Member, National Academy of Engineering.

Copyright National Academy of Sciences. All rights reserved.

Copyright National Academy of Sciences. All rights reserved.

Copyright National Academy of Sciences. All rights reserved.

Copyright National Academy of Sciences. All rights reserved.

FRAMEWORK FOR THE STUDY

EVALUATION OF THE ENERGY EFFICIENCY PROGRAMS

EVALUATION OF THE FOSSIL ENERGY PROGRAMS

OVERALL FINDINGS AND RECOMMENDATIONS

Copyright National Academy of Sciences. All rights reserved.

BIOGRAPHICAL SKETCHES OF COMMITTEE MEMBERS

PRESENTATIONS AND COMMITTEE ACTIVITIES

BIBLIOGRAPHY RELEVANT TO DOE R&D POLICY, CONGRESSIONAL

MEASURING THE BENEFITS AND COSTS OF THE DEPARTMENT OF

CASE STUDIES FOR THE ENERGY EFFICIENCY PROGRAM

CASE STUDIES FOR THE FOSSIL ENERGY PROGRAM

Copyright National Academy of Sciences. All rights reserved.

Enhanced Oil Recovery, 202

ACRONYMS AND ABBREVIATIONS

Copyright National Academy of Sciences. All rights reserved.

Copyright National Academy of Sciences. All rights reserved.

Tables and Figures

Fossil Energy Budgets for the 22 Programs Analyzed by the Committee, 46

Funding for Advanced Refrigerators-Freezer Compressors, 96

Copyright National Academy of Sciences. All rights reserved.

TABLES AND FIGURES

Benefits Matrix for the Low-emission (Low-e) Windows Program, 116

Copyright National Academy of Sciences. All rights reserved.

TABLES AND FIGURES

Matrix for assessing benefits and costs, 14

Funding for DOEs Office of Fossil Energy, FY 1978 to FY 2000, 45

Matrix for assessing benefits and costs, 86

Electricity consumed by refrigerators, 1947 to 2001, 97

Copyright National Academy of Sciences. All rights reserved.

Copyright National Academy of Sciences. All rights reserved.

Copyright National Academy of Sciences. All rights reserved.

ENERGY RESEARCH AT DOE: WAS IT WORTH IT?

Energy Efficiency Programs

Fossil Energy Programs

EVALUATION FRAMEWORK AND CASE STUDIES

Copyright National Academy of Sciences. All rights reserved.

Environmental net benefits are based on changes in the