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Date:03/05/2009
Session:111th Congress (First Session)
Witness(es):Robert M. Fri
Credentials:  Visiting Scholar, Resources for the Future and Vice-Chair, Board on Energy and Environmental Systems, Division on Engineering and Physical Sciences, National Research Council, The National Academies
Chamber:Senate
Committee:Energy and Natural Resources Committee, U.S. Senate
Subject:Future Directions of Energy Research and Development

Energy Research and Development and America’s Energy Future

Statement of

Robert M. Fri
Visiting Scholar
Resources for the Future
and
Vice-Chair, Board on Energy and Environmental Systems
Division on Engineering and Physical Sciences
National Research Council
The National Academies

before the

Committee on Energy and Natural Resources
U.S. Senate

March 5, 2009

Good morning, Mr. Chairman and members of the committee. I am Robert Fri, a Visiting Scholar at Resources for the Future. Today, however, I am representing the National Research Council, where I have been active in a succession of Council studies of energy and energy R&D over the last decade. I currently serve as vice-chair of the Council’s Board on Energy and Environmental Systems.

As you know, the National Research Council is nearing the end of a major energy project, America’s Energy Future. Reports from the first phase of that study will soon be available to the Congress. For purposes of today’s discussion, however, I want to draw on three other Council projects – our retrospective and prospective assessments of the benefits of fossil fuel and energy efficiency R&D programs at the Department of Energy; an evaluation of the nuclear energy research program at DoE; and the first product of the America’s Energy Future project, the summary of the National Academies Summit on America’s Energy Future held a year ago. Thank you, Mr. Chairman, for joining us at the Summit last March. For the record I have included summaries of these three reports.

My task today is to distill from these reports, and from my own experience with energy research and development, some lessons that may be useful as you consider the programs that your committee is in the process of reauthorizing.

The first lesson is a familiar one. Taken together, all of these studies forcefully remind us that it’s still too soon to pick the winners in our search for energy technologies that will adequately address the challenges of energy security, economic stability, and climate change. For this reason, the fundamental objective for the research programs this committee is considering remains the same – to sustain and advance a portfolio of technology options from which the nation can ultimately select those that best meet our energy goals.

Although the importance of a broad research portfolio is a familiar observation, these Council reports also strike a new theme – that the nation is getting closer to the point at which we can in fact distinguish a few winners and losers. For the essential next step in several key fossil, nuclear, and electric grid technologies is to build them at a scale that will demonstrate their cost and performance for commercial deployment. Integrated gasification combined cycle (IGCC) coal-fired power plants, carbon capture and storage (CCS) technology, the next generation of nuclear power plants, and so-called smart grid technology are at this point in their development.

The Council’s analyses of prospective benefits of the IGCC and CCS technologies suggest that the benefits of government investment in critical research areas greatly outweigh the costs. Specifically:

• Our assessment of gasification technology suggests that federal investment in research to improve the efficiency of the process – especially of the carbon capture step – would yield on the order of $4-7 billion in net present value of economic benefit under almost any scenario of deployment. If natural gas prices rise, this benefit could be several times larger.

• Similarly, federal investment in the development of carbon sequestration technology could yield discounted economic benefits on the order of $2-4 billion. This result assumes only a modest acceleration of the availability of the technology, recognizing that the private sector would have a strong incentive to develop carbon sequestration in the event of a national policy to reduce net carbon emissions. Under some scenarios, the benefit could be much larger.

In addition, the Council’s evaluation of the DoE nuclear R&D program assigns the highest budget priority to the NP2010 program and to research in support of the commercial fleet of nuclear power plants. And the report on the Summit on America’s Energy Future is one of several sources stressing the centrality of the electric grid in delivering economic and reliable electricity. Furthermore, the so-called “smart grid” is essential to realizing the potential for energy efficiency, to bring renewable energy on line, and to managing carbon and other emissions.

The Summit report also underscores the importance of getting on with these programs with a real sense of urgency. To quote the Summit report, “many speakers . . . asked whether the urgency being expressed by the public and by policymakers is sufficient”. In my view, the year since the Summit has seen our collective sense of urgency grow substantially. Nevertheless, it is important to realize that there is no benefit in delaying the demonstration of these key technologies. We need to know how new fossil, nuclear, and grid technologies perform, and we need to get them on the experience curve of continuing efficiency improvement. Waiting will not answer these crucial questions, only make more difficult applying the answers when we finally get them.

But as important as these first commercial projects are, they will not be the final answers to our energy problems. We will depend on innovations yet unknown to create technologies that are even more efficient and environmentally friendly. My own analysis of technology innovation convinces me that basic research is the foundational source of this needed innovation. Moreover, basic research is the canonical example of a public good that won’t get done unless government supports it. A vigorous basic research program is an essential part of the energy research portfolio, and I applaud committee’s support of this essential program.

Finally, the Council’s research, and especially our retrospective study of DOE’s energy R&D programs, provides some insight into managing the energy research enterprise successfully.1

As noted earlier, fossil, nuclear, and grid technologies are at the point of conducting demonstration that will provide information that the private sector needs to invest in commercial plants. As such, government research needs to be surgically targeted on removing market failures that inhibit private sector investment. As an example, consider the large benefits that our studies assigned to research into carbon capture technologies. The major reason is that the private sector does not now have a strong incentive to develop this technology, and will not until a carbon price is established. Yet current IGCC technology pays a stiff economic premium because of the inefficiency of the carbon capture step. Federal investment can accelerate improvements in this very specific process step that, in turn, will make the IGCC technology more affordable sooner when a carbon control regime is finally established.

The history of energy research developed in our retrospective study shows that government programs with clearly focused goals can yield substantial benefits. The converse is true, as well; a lack of focus is often associated with lackluster results. While in its early days, DOE programs often lacked this focus, in my opinion it has improved greatly. I commend the Climate Change Technology Program strategic plan as an excellent roadmap for actions that DOE and other departments can constructively take.

Managing basic research is an entirely different matter, of course. Unlike the applied research discussed above, basic research cannot be tied to specific technologies. On the other hand, it has to have some relevance to national energy goals. A good way to walk this line is to identify the physical limits that must be overcome to create technologies that are more efficient and less polluting than exist today. The report of DOE’s Basic Energy Sciences Advisory Committee New Science for a Secure and Sustainable Energy Future is an admirable example of this kind of thinking. Similar thinking should be extended to the application to energy issues of scientific disciplines not usually thought of as energy research. The committee’s consideration of the Grand Challenges Research Initiative seems to be in this spirit.

That concludes my remarks, Mr. Chairman, and I would be happy to respond to the committee’s questions.

*****
ENDNOTES

1. The discussion of managing DOE’s energy research is based on views I have developed from Council studies and other research. A more complete summary of my conclusions is available in the Fall 2006 issue of Issues in Science and Technology (http://www.issues.org/23.1/fri.html )

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