.Appli.eci Research and --... _-.-.-. -.--- .._.-. : .. -- -. llESTlUm;---N& to be released outside the General AccoudngofpIcC mrless specifhJly approved b-y the Offke of (kngredonal R&tiOlWJ. _._-.-- GAO :R(‘ED-9O-148HR united states GAO General Accounting Office Washington, D.C. 20648 Resources, Commuhity, and Economic Development Division B-239103 May 24,199O The Honorable Marilyn Lloyd Chairman, Subcommittee on Energy Research and Development Committee on Science,Space,and Technology House of Representatives Dear Madam Chairman: On August 31,1989, you requested information on the Department of Energy’s (DOE) processfor allocating energy research and development (R&D) funds. In fiscal year 1990, DOE'S budget for R&Defforts encompass- ing programs in fossil, nuclear, solar, fusion, and renewable energy sourcesas well as basic energy sciencesand energy conservation was over $4 billion. Section 1 contains a short history of DOE's energy R&D efforts. Specifically, you asked us how DOE prioritizes and coordinates funding requests among the various research and development program areas, including the role, if any, of the Office of Managementand Budget (OMB) and DOE advisory groups. You also asked how priorities have evolved over the past 10 years, how the overall DOE funding for RNI has been distributed between basic research and applied research and develop- ment, and how much DOE has invested in major demonstration projects over the past 10 years. We briefed your office on the information in this report on February 15, 1990. In summary, we found the following: . OMBbudgetary targets and DOE'S budget processdetermine how R&D funds are allocated. Funding priorities are set within the program areas according to budget guidance and general policy statements. According to DOE officials, DOE has had no good way to establish budget priorities. However, DOE is developing a national energy strategy which it plans to submit to the President by December1990. During the 1980s OMB budg- etary targets played an important role in reducing funding for the applied technology areas of fossil, nuclear, conservation and renewable energy R&Dwhich was in accordancewith the policy of undertaking long-term, high-risk research. DOE primarily coordinates its R&D agenda during the budget processthrough analyses of energy areas for broad issuesthat cut acrossprogram areas.The major advisory group in DOE 5333103 was the Energy ResearchAdvisory Board which, at the Secretary’s request, advised and made recommendations on various energy R&D issues,(Seesection 2.) . Over the past 10 years, energy R&D priorities have shifted from the energy technology program areas of fossil, nuclear, conservation, and renewable R&Dto the basic energy research program areas of general scienceand basic energy sciences.* While the energy technology program areas decreasedalmost 45 percent from 1980 to 1990, the basic energy research program area increased over 140 percent. In addition, from fis- cal year 1983 to 1990, congressionalappropriations for the energy tech- nology areas influenced priorities becausethey were generally greater than DOE requested, although not at a level sufficient to maintain the funding levels of the early 1980s.(Seesection 3.) l Over the past 10 years, funds for basic research have increasedgreatly, while funds for applied research have increased slightly and funds for development have decreasedsignificantly. DOE’S budget for basic research increased over 186 percent during this period, while the applied research budget increased about 17 percent and the develop- ment budget decreased39 percent. (Seesection 4.) . From the mid 1970sthrough 1990, over $6 billion has been invested in demonstration projects. Of the 41 projects, 16 were terminated, 9 were completed, and 17 are ongoing. Of the 16 terminated projects, 10 were terminated becausethe previous administration decided not to fund demonstration projects. Of the other five, two were terminated due to production problems, two were terminated due to a lack of financing on the part of the private enterprises proposing to do the projects, and one was terminated by the Congress.(Seesection 6.) Appendix I contains a detailed list of DOE’s demonstration projects. We conducted our review from September 1989 to February 1990 in accordancewith generally acceptedgovernment auditing standards. Our objectives, scope,and methodology are contained in section 6. In discus- sions with DOE, they generally agreed with the results of our work. As arranged with your office, unless you publicly announceits contents earlier, we plan no further distribution of this report until 30 days from the date of this letter. At that time, we will send copies of this briefing report to the appropriate House and Senatecommittees, the Secretary of ‘The energytechnologyprogramareasgenerally perfom~applied researchand development, althoughasmallportionoftheirfundsareusedtocanyoutbasicresearch. P8ge 2 GAO/BCBD-W148BBDOE’sAhc.ation of B&D Funds B333103 Energy, and the Director, Office of Managementand Budget. Copieswill also be made available to other interested parties who request them. Should you have questions or need additional information, please con- tact me on (202) 275-1441. Major contributors are included in appendix II. Sincerely, Victor S. Rezendes Director, Energy Issues P8ge 3 GAO/RCBD4&143BR DOR’r Allocation of B(u) Funds Contents Letter 1 Section 1 8 Background Section 2 10 DOE’s Prioritization OMB Role in Allocating R&D Funds Budget ProcessDetermined Priorities 10 10 Processfor R&D Coordination of ResearchAgenda 13 Program Areas Role of Advisory Groups in Allocating R&D F’unds 13 Section 3 16 Evolution of DOE R&D BasicActivities Energy Researchand Supporting Research 18 Priorities From 1980 Energy Technologies 20 to 1990 Section 4 27 Distribution of Basic, Basic Research Applied Research 28 31 Applied, and Development 35 Developmental Research Section 5 DOE’s Major Demonstration Projects Section 6 Objective, Scope,and Methodology Appendixes Appendix I: DOE Major Demonstration Projects 42 Appendix II: Major Contributors to This Briefing Report 45 Page 4 GAO/BCED-W148BBDOE%Allocation of RBD F’unda Contents - Tables Table 1.1: Program Areas for DOE R&D and Funding for 9 Fiscal Year 1990 Table 3.1: Changein Fossil R&D Funding From Fiscal 22 Years 1980 to 1990 Table 3.2: Changein Conservation R&D Funding From 24 / Fiscal Years 1980 to 1990 Table 3.3: Changein Solar and RenewableEnergy R&D 26 Funding From Fiscal Years 1980 to 1990 Table 5.1: Summary by Program Area of DOE Major 39 Demonstration Project Activity - Figures Figure 3.1: Percent Changein Funding for Energy R&D 17 Programs Between 1980 and 1990 (In Constant 1989 Dollars) Figure 3.2: Change in Percent of Total for Energy R&D 18 Programs From 1980 to 1990 Figure 3.3: RequestedVersus Actual Appropriations for 19 Basic’Energy Researchfor Fiscal Years 1981 to 1990 Figure 3.4: RequestedVersus Actual Appropriations for 21 Nuclear Energy R&D for Fiscal Years 1981 to 1990 Figure 3.5: RequestedVersus Actual Appropriations for 23 Fossil Energy R&D for Fiscal Years 1981 to 1990 Figure 3.6: RequestedVersus Actual Appropriations for 25 Conservation R&D for Fiscal Years 1981 to 1990 Figure 3.7: RequestedVersus Actual Appropriations for 26 RenewableEnergy R&D for Fiscal Years 1981 to 1990 Figure 4.1: Funding for Basic and Applied Researchand 27 Development From Fiscal Years 1980 to 1990 Figure 4.2: Percent of Total Energy R&D Budget for Basic, 28 Applied, and Development-Fiscal Year 1980 Figure 4.3: Percent of Total Energy R&D Budget for Basic, 28 Applied, and Development-Fiscal Year 1990 Figure 4.4: Basic ResearchBudget for Fiscal Years 1980 29 Through 1990 Figure 4.5: Program Area Share of Basic Research 29 Budget-Fiscal Years 1980 Through 1990 Figure 4.6: Office of Energy ResearchBasic Research 30 Budget Figure 4.7: Applied ResearchBudget 32 Figure 4.8: Applied ResearchFunding by Program Area 33 Page 5 GAO/WED-gM48BR DOE%Allocation of R&D Funda C4mtente Figure 4.9: Program Area Share of Applied Research 34 Budget-Fiscal Years 1980 Through 1990 Figure 4.10: Development ResearchFunding by Program 36 Area Figure 4.11: Program Area Share of Development 37 ResearchBudget-Fiscal Years 1980 Through 1990 Abbreviations Department of Energy Energy ResearchAdvisory Board National Energy Strategy Office of Energy Research Office of Management and Budget research and development mw6 GAo/lKTEBa14sBRDoErAlloauonofBSDFund6 P8ge 7 GAO/RCElM@148BBDOE’sAllocation of R&D Funds Section 1 Background Federal support for civilian energy research and development (R&D) has moved through several phasessince the early 197Os,reflecting changes in both international energy markets and government policy. During the 1970sthe federal government focused its support on the nation’s devel- oping civilian nuclear reactor industry. However, this limited federal energy MD role increased greatly after the Arab oil embargo and subse- quent energy crises during the 1970s.The government retained its nuclear R&D role and developed and expanded programs in renewable energy, fossil energy, and conservation through the end of the decade. The government not only increased its support for R&Don alternative energy technologies but also broadened its role in energy to support demonstration and commercialization of emerging technologies.As a result, the energy RW budget increased from $622 million in 1973 to about $4.7 billion in fiscal year 1981, a nearly eightfold increase. In January 1981, the new administration had a different philosophy of the government’s role in energy. It proposed an energy program which significantly altered the previous administration’s program. It believed that the government’s energy program should be limited to performing only long-term, high-risk, and high-payoff R&Dwhich industry could not be expected to undertake. It was predicated on the assumption that as a technology moves closer to demonstration and commercialization, the government’s role should be curtailed with industry providing financial support. Thus, the free marketplace was expected to supply the capital investments required to support the demonstration and commercial introduction of new and alternative energy technologiesinto the econ- omy. The administration believed that the marketplace could achieve this introduction more efficiently and effectively than the government, especially if energy prices were allowed to reflect their true replacement costs. In support of this belief, budget authority for DOE’S Basic Energy Researchprogram and supporting research activities rose from $1.2 bil- lion in the fiscal year 1980 budget to $2.4 billion in the fiscal year 1990 budget-an increase of 93.2 percent. Budget authority for the other energy technologies- fossil, renewable, conservation, and nuclear R&D-- dropped about 46 percent during the sameperiod from $3.1 billion to about $1.6 billion. For fiscal year 1990, DOE received total R&Dappropri- ations of over $4 billion. Table 1.1 shows the program areas and their fiscal year 1990 appropriations. Page 8 GAO/BCED~14SBR DOE’sAllocation of B&D F’unda Tabto 1.1: Program Areas for DOE R&D and Funding for Fiscal Year 1990 Program Area Appropriation Total Basic Energy Research General Science $1993,316 Basic Enerav Sciences 569,837 $1663,153 Supporting Research Activities Bioloaical and Environmental Research 308.693 Other Supporting Research Activities 96,527 405,220 Magnetic Fusion 320,259 Nuclear Enerav 341.847 Clean Coal Technology 554,ooo Fossil Energy R&D Coal 275.259 Gas 14,429 Petroleum 39,913 Other Fossil 88,670 418.271 Conservation and Renewables Conservation 194,069 Solar 89,659 Renewables 47,952 331,680 TOtd s4,034,430 Page 9 GAO~l4iSBR DOE’sAllocation of R&D Funds DOE’sPrioritization Processfor R&D Program Areas OMBbudgetary targets and DOE’Sbudget processdetermine the allocation of funds appropriated for R&D.Priorities are set within the program areas according to DOEand OMB budget guidance and general policy statements. DOE’sresearch agendais primarily coordinated during the budget process.The Energy ResearchAdvisory Board made recommen- dations to the Secretary of Energy on various aspectsof energy research and development which were adopted to someextent by DOE. OMBplays an important role in the allocation processthrough its setting OMB Role in of budgetary targets. According to DOEofficials, DOEprovides out-year’ Allocating R&D F’unds budget projections to OMB during the annual budget process.According to DOE’sController, these out-year projections are developed using the budget year as a baseline and adjusting for inflation and for whether program requirements are expected to go up or down. OMEI reviews and adjusts DOE’S projections and provides DOEwith budget planning ceilings, i.e., targets, in annual budget guidance letters, which state the adminis- tration’s goals in broad terms. For example, for fiscal year 1988, the letter stated that “The 1988 Budget continues to emphasize longer term, high risk Non-Nuclear Energy Research and Development that broadly supports private development of new energy production and conservation technologies. Within Fossil Energy, there is a relatively greater emphasis on acid rain-related technologies and enhanced oil recovery.” [Emphasis in original.] The guidance letters also contain out-year estimated targets. For exam- ple, the 1990 budget guidance letter contained out-year numbers for 1991 through 1993. The out-year number becomesthe starting point for the next year’s budget. The targets are updated in the late summer before the next fiscal year begins. According to OMBofficials, the new target is based on the previous year’s budget, and the out-year numbers are projected assuming the policies and programs of the current year. c Process Budget responsible for setting the priorities within their areas baaedon budget Determined Priorities guidance and administration policy. DOEpublished a National Energy Policy Plan in 1981,1983, and 1986, and a report entitled Energy Secur- ity in 1987, which contained general policy statements on energy &arch and development. Throughout the 19SOs,the policy was to ‘Out years are future budgetyears. P8ge 10 GAO/RCEDSO-148BRDOE'sAUogation ofBSDFunda Section 2 DOE’s Prioritization Frocesafor B&D RorpMl-- undertake long-term, high-risk research and to concentrate federal energy R&Din areas where the incentives for and availability of private investment were severely limited or nonexistent. Under these policy plans, program areas were not compared and priorities were not set acrossthe range of programs. DOEstated in its posture statement to its fiscal year 1991 budget overview that “the Department had no road map for developing top-down policy guidance. There was no Depart- ment-wide five-year program plan and no good way to establish budget priorities.” For fiscal year 1991, DOE stated that it would no longer focus only on “long-term, high-risk R&D”but would reflect a proper balance of basic and applied R&Dspecifically directed toward national energy goals. Also, the research programs should look for areas with the greatest potential for a scientific or technological breakthrough that could significantly advance the technology and competitiveness in the market. DOE also stated that the objective in prioritization should be to look for the best pay-off in achieving energy, environmental, and safety and health goals. At the beginning of the budget process,the DOE Under Secretary issuesa budget guidance memorandum that includes OMBtargets for each pro- gram area. For fiscal year 1991 the guidance stated, among other things, how the budget would be focused and how the priorities would be set. The fiscal year 1991 budget guidance stated that each program would be developed to show how it contributed to achieving DOEgoals in the near term, mid term, and long term. The national goals were to promote health and safety, a clean environment, energy security, U.S./world competitiveness, and national defense. Using the Under Secretary’s budget guidance, the assistant secretaries develop their program area budgets. As part of this budget formulation process,priorities are set at three levels-at a decrement, at target, and at program planning. The decrement is the difference between the target and a percent reduction from the target, and program planning level consists of proposed initiatives above the target. In the past the decre- ment level was 10 percent, but for fiscal year 1991 the decrement level was increased to 16 percent. Each assistant secretary receivesbudget- ary targets from the Under Secretary that are basedon the targets set by OMB.The targets are by decision unit which DOEdefines as a program entity for which various funding requests may be developed.Examples of decision units would be light water reactors under Nuclear Energy R&Dand coal liquefaction under Fossil R&D.The assistant secretaries can Page 11 GAO/BCBMO-148BR DOE’sAllocation of B&D Funds Se&on 2 DOE’sPrioritization Procwa PorB&D -An- rerank the funds for their decision units as they seefit; however, the bottom line total must tie directly to the target. According to DOE’S Controller, during the 1980sany changesto the pri- orities set by the assistant secretaries were done “at the margin,” i.e., the interval between the target and the lo-percent decrement. The budget office would scrutinize each assistant secretary’s budget, chal- lenge new initiatives, and recommend a funding level below the target. This difference resulted in discretionary funds which the Secretary of Energy could move from one program area to another. The assistant sec- retaries could appeal decisionsnot to fund projects, but the Secretary made the final funding decisions on each program. However, according to the Controller, individual program initiatives were not compared acrossprogram areas. The idea was to do someresearch in each of the program areas. In addition, according to a DOE policy official, the Secre- tary did not have any master plan for energy programs. The Controller stated that during the fiscal year 1991 budget cycle, the Secretary had a prebudget review in which he discussedthe near-, mid-, and long-term goals for each program area with the responsible assis- tant secretary and the DOE Office of Budget and provided guidance on each program area’s ideas. The assistant secretaries then put together their budgets. After the budget office reviewed the budgets, the assis- tant secretaries could appeal any budget office revisions to the Secre- tary. The Secretary made the final decisions after listening to the assistant secretaries who had issuesto resolve. In July 1989, DOE announcedthe development of a National Energy Strategy (NES) that is intended to be a blueprint for energy policy and government program decisions.The objectives of the NESare to . rely on market principles to the greatest extent possible, . encouragea mixed and balanced set of energy supply resources, l promote increased energy efficiency where cost effective, and . minimize potential effects to the environment from energy production and use (including acid rain and global warming) wherever this is cost effective or justified for other reasons. DOE issued an interim report in April 1990 and is scheduled to issue a final submission to the President by December1990. A DOE policy offi- cial told us that the NES will be used to make program and budget deci- sions and will be out in time to influence fiscal year 1992 budget decisions. P8ge 12 GAO/lKXD9@14SBR DDE’s Allocation of B&D Funds Section 2 DOE’sPrioritization Proms6 for B&D Progr8m Areaa DOE coordinates the R&D agendasamong the various researchprogram Coordination of areas during the budget processto avoid duplication of funding and ResearchAgenda research effort. At that time, the budget office coordinates R&D issues acrossprogram areas (crosscutting) by preparing an analysis of that issue with input from the program offices. This analysis involves (1) identifying other program offices that do research on the sameissue (e.g., high temperature superconductivity, geosciences,global climate change,acid rain, and biofuels), (2) determining how much funding each office obtains for that issue, and (3) determining each office’s research focus. For example, biofuels* is an issue in which two offices carry out research-Energy Researchand Conservation and RenewableEnergy. The analysis for this issue stated that the Office of Energy Research focused its research on providing fundamental biological information on plants and microorganisms for new energy biotechnologies while Con- servation and RenewableEnergy focused its research on the growth of feedstock-wood and plants-and new conversion processes.Thus, this particular analysis concluded that each of the program areas focuseson a different level of research effort. We also found that somecoordination is done by the program areas outside of the budget process.For example, a planning official in the Office of Fossil Energy told us that his office coordinates with Conser- vation on fossil technology. He believed that aside from this there was not much danger of Fossil R&Doverlapping other R&D within DOE. In addi- tion, an Office of Energy Researchofficial told us that at the request of the assistant secretaries,the Office of Energy Researchroutinely con- ducts evaluations of programs to identify gaps and overlapping research areas. These evaluations are internal and are issued to the assistant sec- retaries for their action. 1 DOE’S major advisory group for energy R&D was the Energy Research Role of Advisory Advisory Board (ERAB). The Board’s role in the allocation processwas to Groups in Allocating advise the Secretary on issuesrelating to DDE’S R&D. In this role ERAB R&D Funds issued three reports concerning the priorities for DDE’S R&D. The first report made recommendations for budgetary priorities; however, the secondand third reports did not. The first report, Federal Energy R&DPriorities, was dated November 1981. The report evaluated four major energy sectors for overall federal “Biofueis are fuels obtained from living matter, especially plants and plant products. Biofuels involves growing more and better vegetation and converting this vegetation to fuel. Page 13 GAO/BCED-3Cb148BB DOE’sAllocation of R&D Fund8 Se&on 2 DOE%Rioritiation Procew for RAkD Rorpun- energy R&D priorities for: electric supply, liquid fuels and gas supply, conservation and utilization, and scienceand technology base.It con- cluded that funding for R&D for electric supply and liquid and gas supply technologies was higher than needed,that funding for conservation should be increased, and that funding for certain areas of the science and technology baseshould be increased. In August 1986, DOE’S Argonne National Laboratory issued CaseStudies of DOE Responseto ERABRecom- mendations: A Retrospective Analysis which stated the following conclusions: . In scienceand technology base,DOE apparently agreed with ERAB’S gen- eral high priority assessments. l In electric supply, funding had dropped significantly, especially in areas mw assigneda low priority. . In liquid and gas supply, DOE funding patterns had been in general agreement with EFM recommendations. . In conservation and utilization, EXABhad in general indicated a higher priority than was evident in DOE appropriations. ERAB’S February 1983 report, The Federal Role in Energy Researchand Development, considered only one criterion, appropriateness of the fed- eral role, and evaluated each of DOE’S major energy R&Dprograms against this criterion. It contained no specific funding recommendations. It categorized the federal role as primary, complementary, or minimal. The August 1986 casestudies report concluded that in the years since the 1983 report, DOE funding shifted to reflect these role definitions, and in fiscal year 1987, the items that ERABranked primary received the strongest budget recommendations,while funding for those ERABranked minimal had been significantly reduced. EXAELS December 1986 report entitled Guidelines for DOE Long-Term Civilian ResearchAnd Development summarized the work of four sub- panels that dealt with energy supply, energy demand, energy research, and DOE F&Dinfrastructure. ERABrecommendedthree high priority national goals to (1) reduce U.S. long-term dependenceon foreign oil; (2) assure an adequate supply of economical, safe and environmentally acceptableelectric power; and (3) to continue the development of a strong national basic sciencebase.ERAB also recommendedthat DOE dra- matically upgrade its research and development management capabilities. The August 1986 casestudies report stated that becauseof the recent- ness and complexity of the 1986 ERABreport, an analysis of DOE’s P8ge 14 GAO/BC2ZWWlIIIBB DOE’sAllocation of B&D Funds section2 DOE’s Prioritbtion ProcessPorB&D -Areas responseswas not possible. Our analysis of the 1985 report showed that DOE’S responseto the recommendations was mixed. For example, one specific recommendation was that DOE scale up research in geosciences. A DOE official told us that an Office of GeoscienceResearchhas been established within the Office of Fossil Energy. In the area of renewable energy, ERM stated that certain technologies warrant substantial DOE support. Funding for renewable energy continued to decline through the late 1980s. In the 1986 report, ERAB recommendedthat DOE establish a strategic planning processas the primary means for determining its R&D goals and for establishing R&D priorities. However, in its fiscal year 1989 Federal Managers’ Financial Integrity Act report, DOE stated that it had no com- prehensive strategy for conducting its energy programs. DOE’S proposed corrective action is to develop the National Energy Strategy by Decem- ber 1990. In addition, a DOE Office of Energy Researchofficial told us that the National Energy Strategy, currently being developed by DOE, is indirectly carrying out someof the recommendations in the 1985 ERAB report. In addition to ERAB,two other groups- the National Petroleum Council and the National Coal Council-do studies at the Secretary’s request. A representative of these groups told us that neither Council influences the process for allocating FUkD funds in DOE. Page 15 GAO/RCEDBW4SBB DOE’sAllocation of R&D Funds Evolution of DOE R&D Priorities From 1980 to 1990 Although DOE's policy plans did not state specific priority areas for energy R&D, requested and actual appropriations clearly show that DOE'S priority shifted during the last 10 years toward the Basic Energy Researchprogram area and away from research in energy technology program areas. In addition, from fiscal year 1983 to 1990, congressional appropriations for the energy technology program areas influenced pri- orities becausethey were generally greater than DOE requests, although not at a level sufficient to maintain the funding levels of fiscal years 1981 and 1982. In examining DOE appropriations, we found that, in actual dollars, fund- ing for Basic Energy Researchincreased almost 140 percent from $694.8 million in fiscal year 1980 to $1.7 billion in fiscal year 1990. The Basic Energy Researchprogram area includes research activities in basic energy science,high energy physics, nuclear physics, and biological and environmental sciences.The research is generally basic in nature, which DOE defines as systematic, fundamental study directed toward fuller sci- entific knowledge or understanding of subjects bearing on national energy needs. From fiscal year 1980 to 1990, research and development funding decreasedfor the program areas directed toward specific energy tech- nologies, which includes Fossil, Nuclear, RenewableEnergy, and Conser- vation R.&D.Fossil Energy R&Dfunding decreasedover 60 percent, Conservation R&Ddecreased34 percent, and RenewableEnergy F&D funding decreasedover 83 percent. Nuclear Energy R&Dfunding also decreasedover 68 percent. The research in the energy technology pro- gram areas is generally applied and development in nature. DOE defines applied research as systematic study directed toward fuller scientific knowledge or understanding for direct use in fulfilling specific energy requirements. DOE defines development as the development and test of systems and pilot plants judged to be technically and economically desir- able as a means of achieving principal departmental goals. As figure 3.1 shows, the percent change in funding for energy R&D pro- grams adjusted for inflation from fiscal year 1980 to fiscal year 1990 was dramatic.’ In addition, as shown in figure 3.2, Basic Energy Research’sshare of total energy R&Dappropriations increased from 16.2 percent in fiscal year 1980 to 41.2 percent in fiscal year 1990. lA~bnents for inflation are madeto provide a clearercomparisonof appropriationsover time. Page 16 GAO/RCED&MI(IBp DOE’sAllocation of R&JJFnnda Section 3 Evolution of DDE B&D F’riorities From 1930 to1990 Figure 3.1: Percent Change in Funding ,- ,-, -- for Energy R&D Programs Between 1980 and 1990 (In Constant 1989 Dollars) 100 Pwcwnt 75 “I 25 Ih Page 17 GAO/RCED-9!&143BBDOE’sAllocation of R&D Funds Evolution of DOE B&D Prloritiem From lS80 to1888 Figure 3.2: Chango in Percent of Total for Enorgy RID Programs From lffl to 1890 60Fofcalt I 1 FbalYamlORO FkQiYlulQW Basic Energy Research actual dollars of almost 149 percent - from $694.8 million in fiscal year and Supporting 1980 to $1.7 billion in fiscal year 1990. Adjusting for inflation, this ResearchActivities increase in funding was over 62 percent. Programs included in this cate- gory are General ScienceResearchand Basic Energy Science.General scienceactivities consist of three major programs: High Energy Physics, Nuclear Physics, and the Superconducting Supercollider, all of which are concernedwith basic research into the fundamental forces of nature. The Basic Energy Sciencesprogram is responsible for generic, long-range energy related research in support of both nuclear and nonnuclear energy technologies. The administration showed its support for these Page 18 GAO/BCED-W148BRDOE’sAllocation of B&D Funds !kction 3 Evolution of DOE R&D Priorities From 1930 t.01930 areas in budget requests. Figure 3.3 shows the difference in the adminis- tration’s request and the actual appropriations for these areas from fis- cal year 1981 to fiscal year 1990.2 Figure 3.3: Requested Venus Actual Appropriation; for 6aric Energy 1800 Wf#ondM Research for Fiscal Years 1991 to 1990 Supporting ResearchActivities also fared well with an increase in actual dollars of over 100 percent, from $191.3 million in fiscal year 1980 to over $406 million in fiscal year 1990. Ac@sted for inflation, the increase was about 36 percent. Supporting ResearchActivities include such areas as biological and environmental research, university research support, and multiprogram energy laboratories facility support. Biological and environmental research, which seeksto develop the knowledge neces- sary to identify, understand, and anticipate the long-term health and environmental consequencesof energy use and development, receives the largest proportion of the funds. ‘For requested versus actual appropriations, the years 1981 to 1990 are used becau.w (If I hc*unavail- ability of earlier data. Page 19 GAO/lUXMO-143BR DOE’sAllocation of R&D Funds section3 Bvolutlon of DOE B&D Prloritiea From 1930 to1990 Funding in actual year dollars for magnetic fusion, which seeksto estab- lish the scientific and technological base required for the production of magnetic fusion energy, was $360.3 million in fiscal year 1980 and $320.3 million in fiscal year 1990-a decreaseof 8.6 percent. However, adjusted for inflation, funding decreasedalmost 42 percent. Between 1980 and 1990, funding rose to a high of $468.4 million in fiscal year 1984. The difference in requested and actual appropriations ranged from 12.6 percent less than requested in fiscal year 1986 to 3.2 percent more than requested in fiscal year 1983. Specific energy technologies include nuclear, fossil, conservation, and Energy Technologies renewables R&II.Following administration policy of funding only long- term, high-risk research, total funding in these areas, in actual dollars, declined about 46 percent from $3.1 billion in fiscal year 1980 to $1.6 billion in fiscal year 1990. Adjusted for inflation, the decline was almost 66 percent. Nuclear Energy R&D Funding for Nuclear Energy R&D,in actual dollars, declined 68 percent from $1.1 billion in fiscal year 1980 to $341.8 million in fiscal year 1990. Adjusted for inflation, the decline was almost 80 percent. During this period funding for developing the Clinch River breeder reactor was ter- minated. Nuclear Energy FUDincludes research in, among other things, light water reactors, advanced reactors, and nuclear facilities. The Light Water Reactor program supports industry-led efforts to revitalize and advance the light water reactor technology. The Advanced Reactor Researchand Development program supports development of highly innovative reactor systems with the potential for breakthroughs in eco- nomics, safety, licensability, and waste managementoptions. Nuclear energy facilities are to provide safe, reliable, and economical testing capabilities for the development and verification of nuclear power sys- tems for space and defensepower systems and civilian applications. After fiial year 1983, requested funds ranged within less than 1 per- cent to about 16 percent of actual appropriations. Figure 3.4 shows this difference in dollars, The difference in actual versus requested appro- priations for fiscal years 1981 and 1982 was attributable to funding for the breeder reactor program. Page20 GAO/BCEM@l43BR DOE’sAllocation of B&D Funds Section 3 Evolution of DOE R&D Priorities From 1980 tO1930 Figure 3.4: Requested Versus Actual Appropriations for Nuclear Energy R&D 9oo for Fiscal Years MS1 to 1990 800 Fossil Energy R&D Fundmg for Fossil R&Ddeclined 61 percent in actual dollars from $847.4 million in fiscal year 1980 to $418.3 million in fiscal year 1990, not including Clean Coal Technology.3Adjusted for inflation, funding declined almost 69 percent. Coal research programs supported R&D on technologies to expand coal utilization in an environmentally sound manner. Petroleum research concentrateson enhancedrecovery of light and heavy oils. The Gas program assiststhe private sector in developing cost-effective diagnostic and extraction technologies which are required to produce gas efficiently and economically from unconventional gas resources.Funding in each area of Fossil R&D declined as shown in table 3.1. %lean Coal Technology was funded at $1.2 billion from fmaJ year 1986 to 1990. These funds are separate from Fossil Energy’s Coal program funds. The Clean Coal Technology program provides financial assistance to industry to demonstrate the commercial applications of emerging technologies that would enhance the use of coal but in both a more efficient and environmentally acceptable manner. Page 21 GAO/RCEM@143BR DOE’sAllocation of R&D Funds Section3 Bvolution of DOE B&D Priorities From 1980 to1990 Table 3.1: Change in Foaell R&D Funding From Fiscal Yews 1990 to 1990 Actual year dollars in millions Percent Program 1980 1990 change Coal $754.9 $275.3 -63.5 Gas 30.7 14.4 -53.1 Petroleum 61.7 39.9 -35.3 Other Fossil a 88.7 aAppropriatiins for “Other Fossil” in fiscal year l%O were included under the coal, petroleum, and gas programs. As shown in figure 3.6, from fiscal years 1983 through 1990, DOE requests were less than actual appropriations for Fossil R&D.These requested budgets reflected DOE’s policy that it would withdraw federal support from near-term development and demonstration programs which could and should be carried forward by private industry. DOE stated that government research funding could then be directed toward solving fundamental problems and toward generic research in such areas as advanced coal cleaning, coal conversion, and enhancedoil recovery. P8ge 22 GAO/BCBDdW14SBBDOE’s Allocation of 6 Funds Section 3 Evolution of DOE R&D Priorities From 1980 to1990 Figure 3.5: Requested Versus Actual Appropriations for Fossil Energy RID for Fiscal Years 1991 to 1990 Yii4bm of Ddlan 1600 1600 1400 1300 1200 Conservation R&D Conservation R&D’S budget in actual dollars decreasedover 34 percent from fiscal year 1980 to fiscal year 1990. Adjusted for inflation, Conser- vation’s R&Dbudget decreasedover 58 percent. Conservation R&D includes buildings and community systems, industry, transportation, and multi-sector. The Buildings and Community Systemsprogram sup- ports generic research in building systems, with the goal of encouraging optimal energy use in new and retrofitted structures. The Industry pro- gram supports research and development of technologies in such areas as waste energy reduction and improved processefficiency which have the potential to increase energy use efficiency in private industry. The Transportation program focuseson research to improve the energy effi- ciency of vehicle systems. The Multi-Sector program supports basic research and exploratory development of new conceptsthat offer increased efficiencies in energy conversion and utilization. Table 3.2 shows the decreasefor each area funded under Conservation R&D. P8ge 23 GAO/RCEMN&l48BR DOE’sAllocation of R&D Funds Section 3 Bvolution of DOE B&D Priorities From lI#)o t.01920 Table 3.2: Change in Conservation RID Fundfng From Fiscal Years 1990 to 1990 Actual year dollars in millions Percent Program 1990 1990 change Transportation $113.4 $65.0 -42.7 industrial 60.2 50.9 -15.4 Buildings and Community Systems 104.4 38.8 -62.8 Multi-Sector 16.8 36.0 114.3 As shown in figure 3.6, Conservation R&Drequested budgets were less than actual budgets for fiscal years 1983 through 1990. For fiscal year 1983, the requested budget for Transportation, Industrial, and Buildings and Community Systems was zero, which was in keeping with the previ- ous administration’s policy to withdraw support from technology pro- grams where sufficient market incentives existed, i.e., consumer products, advanced automotive engine development, demonstration of electric and hybrid vehicles, and industrial processefficiency. Although funds were appropriated for these areas, the funding was at reduced levels from fiscal years 1981 to 1982. Page 24 GAO/BCEb8M48BB DOE’sA&x&ion of B&D Funds Section 3 Evolution of DOE B&D Priorities From 1939 to 1999 Figure 3.6: Requested Versus Actual Appropriations for Conservation RID for Fiscal Ybars 1961 to 1990 350 200 Solar and Renewable The budget for Solar and RenewableEnergy R&Ddecreasedin actual dol- Energy R&D lars over 83 percent from 1980 to 1990. The Solar Energy program sup- ports generic and long-range research in photovoltaics, biofuels, wind, solar thermal and solar building technologies. RenewableEnergy UD includes geothermal, electric energy systems, and electric storage sys- tems. Geothermal Energy research programs support research in energy from geothermal resources.Electric energy systems directs research toward solving mid- to long-term problems in electric energy transmis- sion and distribution and integrating renewable energy resourcesinto the utility network. Energy storage systems supports generic research into electrochemistry and applied battery research into a variety of spe- cific battery types. Table 3.3 shows the decreasein funding from 1980 to 1990 for Solar and RenewableEnergy R&D. Page 25 GAO/BCED&H48BR DOE’sAllocation of B&D Funds JZvolntion of DOE It&D Rioritie~ Ram 1980 t019SO Table 3.3: Change in Solar and Renewable Energy R&D Funding From Actual year dollars in millions Fiscal Yoan 1990 to 1990 Percent Program 1990 1990 chanae Solar Enemy $559.2 $89.7 -843 Renewables 273.5 48.0 -82.5 As shown in figure 3.7, from fiscal year 1983 to 1990, except for fiscal year 1986, requested funds were consistently less than actual appropri- ations, which was in keeping with the previous administration’s policy that the overall objective of the Solar and Renewableprograms was to contribute scientific and engineering knowledge to the renewable energy technology baseso that industry could develop systems for transform- ing renewable resourcesinto energy forms suitable for widespread application. Figure 3.1: Requested Vereur Actual Approprhtions for Renewebb Energy RID for Fiwrl Years1991 to 1990 la0 wMmlsdDo(fm P8ge 26 GAO/Rc’0MM48BR DOE%Auoution of R&D Funds Distribution of Basic,Applied, and DevelopmentalResearch From fiscal year I980 through 1990, DOE’S civilian energy R&D funds for basic research have generally increased while funds for applied research have increased slightly and funds for development have gener- ally decreasedsignificantly. l Figure 4.1 shows these changes.In addi- tion, as shown in figures 4.2 and 4.3, basic research’sshare of the R&D pie has grown from 13 percent in fiscal year 1980 to 39 percent in fiscal year 1990. At the sametime, from fiscal year 1980 to 1990, the Office of DefensePrograms applied research budget increased 88.9 percent from $178.2 million to $336.7 million and its development budget increased 124.4 percent from $713.6 million to $1.6 billion. Figure 4.1: Funding for Basic and Applied Reuarch and Development From Fiscal Years 1990 to 1990 3000 Dotbn In YIIW ‘All funds are in actual dollars. Page 27 GAO/XED-R%148BR DOE’sAllocation of RBD Fun& Se&on 4 Dlstrlbutlon of MC, Applied, aud Developmental Besearch Figure 4.2: Percent of Total Energy R&D BudBet for Basic, Applied, and Development-Fiscal Year 1900 Figure 4.3: Percent of Total Energy R&D Budget for Be&c, Applfed, and Development-Fisoal Veer 1990 Development DOE’S total civilian basic research budget from fiscal year 1980 through Basic Research 1990 was $10.4 billion. As shown in figure 4.4, from 1980 to 1990, DOE’S total basic research budget increased i86.S percent, from $622.4 million to $1.5 billion, due in large part to a 173~percentincrease in the Office of Energy Research’s(OER)budget. Figure 4.6 shows a breakout of the total basic research budget by program area. Page 28 GAO/BCBD-W14SBBDOE’sAllocation of B&D Funds Section 4 Distribution of Basic, Applied, and Developmental Research .-,_- ,. ,, Figure 4.4: Bask Research Budget for flual Yban ISa0 Through 1990 15m Dollsn in Millions 1400 1300 1200 1100 1000 ooo SW 700 so0 so0 400 200 #w) 100 0 L L 1900 lsm lm2 FbdYSUS figure 4.5: Program Area Share of Bark Rewarch Budget-Fiscal Years 19W Through 1990 \ 95.7% - - Energy Research Page 29 GAO/ICED-W149BR DOE’sAllacation of f&D Funds Office of Energy Research From fiscal year 1980 through 1990, OERreceived an averageof 96.7 percent of DOE’s basic research money. These funds have been concen- trated in High Energy Physics, Nuclear Physics, and Basic Energy Sci- encesprograms. OERreceived a total budget of $9.9 billion during this period, of which $3.9 billion was for High Energy Physics, $3.5 billion was for Basic Energy Sciences,and $1.6 billion was for Nuclear Physics. As shown in figure 4.6, the Office of Energy Research’sbasic research budget has increased 173 percent from $619.8 million in fiscal year 1980 to $1.4 billion in fiscal year 1990. This increase was due to a steady rise in funding for High Energy Physics, Nuclear Physics, and Basic Energy Sciences. Flgum 4.& Oflko of Enorgy Raaowch mnicRo8ufchBudget lsw DdlnhYlonr 1400 lsQ0 1200 1100 loo0 900 ow 7m coo 500 400 a00 200 100 0 Office of Fossil Energy The Office of FossiI Energy received an average of 3.2 percent of DOE’S basic research budget from fiscal year 1980 through 1990. Its budget increased from $.6 miIIion in fiscal year 1980 to $62.8 million in fiscal year 1990, an ahnost 106-fold increase, due to increasesin the Coal pro- gram. Of Fossil’s total basic research budget from fiscal year 1980 to 1989 of $300.9 million, $266.2 million was concentrated in the Coal prOgI-aIll. *Data for fiscal year 1990was not brokenout for the Coalpmgram. P4e 80 GAO/BCEDU%l4SBRDOE’sAllocation of R&D F’unds Section 4 Distxllmtion of B&c, Applied, and Developmental Beaearch Offices of Nuclear Energy From fiscal year 1980 through 1990, the Offices of Nuclear Energy and and Conservation and Conservation and Renewablesreceived an average total of 1.1 percent of DOE'S basic research budget. Nuclear Energy’s budget dropped from $2.0 Renewables million in fiscal year 1980 to $0 in fiscal year 1986 and has remained at $0 through 1990. Renewablesincreased from $0 in fiscal year 1980 to $21.5 million in fiscal year 1986 and generally remained steady until it dropped to $14.8 million in fiscal year 1990. Conservation R&D received no basic research money from fiscal year 1980 through 1990. Applied Research through 1990 was $9.2 billion. As shown by figures 4.7 and 4.8, DOE'S total civilian applied research budget fluctuated. It increased 109.8 per- cent from fiscal year 1980 to 1983 mainly becauseof increasesin OER'S Magnetic Fusion program and Fossil Energy’s Coal program. In addition, Nuclear Energy’s Naval Reactorsapplied research program was funded only in fiscal years 1983 and 1986 which resulted in a decreasein applied research in general of 23.9 percent in fiscal year 1984 and an increase of 47.3 percent in fiscal year 1986. Applied research funding decreased50.3 percent from fiscal year 1986 to 1990 primarily because of decreasesin OER’S Magnetic Fusion program and in Renewable Energy’s Solar Energy program. Figure 4.9 shows a break out of the applied research budget by program area. Page 91 GAO/BCED-W14BBRDOE’sAllocation of B&D Funds Section4 Distdlmtlon of Basic, Applied, and Developmental Recleuch Ffguro 4.1: Appllad Roamarch budgat 1400 DobminYUlbtm 1300 r 1200 1100 1000 w w I#) r 600 500 400 am 200 loo 0 Pye 82 GAO/BCBMO-148BB DOE’sAllocation of B&D Punds Section 4 Distribution of Basic, Applied, and Developmental Besearch Figure 4.8: Applied Research Fundlng by - -.. ,,,,. Program Area 200 DaUusInNMlom IS0 100 50 0 - FomilEnaqy mm-1 NudauEtwgy M canswaual nnnn Rsnsw8blm Page 33 GAO/WBD-B&148BRDOE’sAllocation of B&D Funds Flgun 4.9: Program ha shue d --.-- ,- ~. -,. ,~-- - ,.-- --- m--@-v- 1mThmugh 1#8 69% Nudoar Energy 5.7% conoervatiotl Food Energy Note: Applii budget totals 99% due to rounding. Office of Energy Research The Office of Energy Researchreceived an averageof 66.2 percent of DOE’S applied research money from fiscal year 1980 through 1990. OER'S applied research budget increased 63.8 percent from fiscal year 1980 to 1984 from $351.4 million to $640.6 million and decreased33.3 percent from fiscal year 1986 to 1900 from $621.1 million to $347.7 million. F’rom fiscal year 1980 through 1990, $1.6 billion of OER’Sapplied research budget of $4.9 billion was concentrated in biological and envi- ronmental research and $3.3 billion was in magnetic fusion. Office of Conservation and F’rom fiscal year 1980 through 1990, the Office of Conservation and Renewablesreceived an average of 19.4 percent of DOE'S applied Renewables research funds. Renewablesmade up 13.7 percent of the applied research budget, with the Solar program accounting for an average of ahno& 76 percent of the Renewable&budget from fiial year 1980 to 1000. bnservation RBDmade up an average of 6.7 percent of the applied research budget from fiscal year 1980 to 1990. In fiscal years P-84 GAO/EEDS@l48BR DOE’sAllocation of R&D F’unds Section 4 Distribution of B&c, Applied, and Developmental Research 1981 and 1985, the office’s total applied research budget peaked prima- rily due to an increase in Solar Energy program funding. From fiscal year 1986 to 1990, the office’s total budget decreased31.1 percent pri- marily becauseof decreasesin the Solar Energy program. Office of Fossil Energy The Office of Fossil Energy received an average of 17.4 percent of DOE'S applied research money from fiscal year 1980 through 1990. Fossil’s budget increased 146.5 percent from $76.2 million in fiscal year 1980 to $187.1 million in fiscal year 1986. Fossil’s budget then decreased36.6 percent to $120.4 million in 1987. From fiscal year 1988 to 1990, Fossil’s budget increased 33.9 percent from $129.2 million to $173 million. From fiscal year 1980 to 1989,82 percent of Fossil’s research budget was con- centrated in the Coal program.3 Office of Nuclear Energy From fiscal year 1980 through 1990, the Office of Nuclear Energy received an average of 6.9 percent of DOE'S applied research budget. This average reflects the fact that from 1987 to 1990 the Office of Nuclear Energy received no applied research money. Nuclear Energy received a total of $885.2 million in applied funds of which $732.2 million was for naval reactors. DOE'S total civilian development budget from fiscal years 1980 through Development 1990 was $17.1 billion. DOE'S total development budget decreased72.9 percent from $2.8 billion in fiscal year 1980 to $760.9 million for fiscal year 1986. As illustrated in figure 4.10, these decreasesare attributable largely to decreasesin the Conservation and Renewables,Fossil, and Nuclear Energy program areas. From fiscal year 1986 to 1990, the development budget increased 126.1 percent from $760.9 million to $1.7 billion. The increasesoccurred in Fossil’s Clean Coal Technology pro- gram and Nuclear Energy’s Naval Reactorsprogram. %ata for fiial year 1990 was not broken out for the Coal program. P8ge35 GAO/EED-9&146Blt DOE's Allocation of R&D Funda Dbt.rhtlon of MC, Applied, and Developmental Besear& Flgure 4.10: Development Research Funding by Program Area 1400 Dolkn In Yillhm 1300 1200 l mmmm'l mmmm**% %A wo 500 400 SW 200 100 0 lolo 1912 l@M lW# lS80 1HO Flaal Yam Development research generally had the highest total research budget from fiscal year 1980 to 1990. Figure 4.11 shows a breakout of the total development budget by program area. P8ge iM GAO/WED-gthl4tJBR DOE’s Allocation of B&D Funds Section 4 Distribution of Basic, Applied, and Developmental Research Figure 4.11: Program Area Sham of Development Research Budget-Fiscal Yearn 1980 Through 1990 Fossil Energy Nuclear Energy .6% Energy Research 7.1% Conservation Office of Nuclear Energy From fiscal year 1980 through 1990, the Office of Nuclear Energy received an averageof 66.6 percent of DOE'S development budget. Nuclear Energy’s budget decreased22.5 percent from $1.2 billion in 1980 to $952.6 million in 1990. This can be attributed to a 58.1-percent decreasein the Nuclear Energy R&D program and a 100~percentdecrease in the Remedial Action and WasteTechnology program. Office of Conservation and The Office of Conservation and Renewablesreceived an average of 15.8 percent of DOE’S development funds from fiscal year 1980 through 1990. Renewables RenewablesR&Daccounted for an average of 8.6 percent of the develop ment budget, and Conservation R&D accounted for an average of 7.1 per- cent of the development budget. From fiscal year 1980 to 1989, the Office of Conservation and Renewables’budget dropped 88.5 percent from $860.1 million to $99.1 million. This was attributable to a 7 1.2- percent reduction in Conservation R&Dfrom $262.1 million to $75.6 mil- lion, a 92.7~percentreduction in the Geothermal program, and a 98.8- Page 37 GAO/RCBD-W14SBRDOE’sAllocation of R&D F’unda section 4 D&trlbntlon of Basic, Applied, and Developmental lbmearch percent reduction in the Solar Energy program. In fiscal year 1990 the Office of Conservation and Renewablesbudget increased39.2 percent from 1989 due to a 43.9~percentincrease in the Conservation R&D program. Office of Fossil Energy The Office of Fossil Energy received an average of 17.1 percent of DOE’S development funds from fiscal year 1980 through 1990. From fiscal year 1980 to 1986, Fossil Energy’s total development budget decreased 89.2 percent from $652.1 million to $70.2 million. This was primarily due to a decreasein the Coal program from $679.1 million to $60.1 mil- lion. However, from fiscal year 1986 to 1990, Fossil’s budget increased 288 percent from $161.8 million to $628.4 million, primarily due to the Clean Coal Technology program which was first funded in 1986. Office of Energy Research The Office of Energy Researchreceived an average of .6 percent of the development budget. From fiscal year 1980 to 1990, the budget decreased97.9 percent from $61.1 million to $1.3 million due to the elimination of development funding for the Magnetic Fusion program from 1982 to 1990. P8ge 38 GAO/BcED8014SBR DOE%Allocation of R&D Funds Section 5 DOE’sMajor Demonstration Projects From the mid-1970s through 1990, DOE invested a total of $6.0 billion in major demonstration projects.’ Demonstration projects are defined as the evaluation and verification of large scale energy systems in opera- tional circumstances for their commercial application. Table 5.1 summa- rizes the number, cost, and status of DOE’S major demonstration projects by program area. Seeappendix I for a detailed list of the major demon- stration projects. Table 5.1: Summary by Program Area of DOE Major Demonstration Project Dollars in millions ACtiVity Projects Projects Projects terminated completed ongoing Program No. Amount No. Amount No. Amount Total Conservation 3a $115.1 2b $151.4 $266.5 Nuclear 1C 1 .&lo.0 1 $949.3 2549.3 Fossil 9d 495.4 7e 2,213.0 2,708.4 Clean Coal 2' 4.2 16 486.7 490.99 Total 15 $2,214.7 9 $2364.4 17 $1,436.0 $6,015.1 aA Conservation official defined a terminated project as a project that was aborted, usually wlthout fully achieving its goals and objectives. The Wind Energy Demonstration - Field Evaluation Program was terminated because of the prior administration’s policies. The Heber and Baca Geothermal Demonstra- tion Projects were terminated because of production problems. bA Conservation program official defined a completed project as a project that was continued to Its planned completion date. CThe Clinch River Breeder Reactor was terminated by the Congress in fiscal year 1984 dA Fossil Energy official defined a terminated demonstration project as a project that IS stopped because of a change in level of appropriations available, mission need, program objectlves or project goals or unsatisfactory performance towards established goals. Two Coal Llquefactlon and seven Sur- face Coal Gasification Projects were terminated prior to construction because of the pnor admlnlstra- tion’s policies. eA Fossil Energy official defined a completed demonstration project as the design, construction. testing. operation and evaluation of nearer to full scale modules under conditions more approxlmatlng commer- cial permitting and operations. ‘The Underground Coal Gasification Project and the Advanced Coal Gasification Combined Cycle Power Generation Plant were terminated because industry sponsors were unable to obtain flnanclng The Indi- cated funding was obligated, but no additional funds will be spent. QThis total does not include the eight clean coal projects under negotiation, totaling $252 1 mtlllon. ‘This total does not include eight clean coal projects which are under negotiation as (1t’ t‘t+ I 1, 1990. Page 39 GAO/RCBD-9@14SBR DOE’s Allocation of R&D Funds Section 6 . Objective,Scope,and Methodology The objective of this assignment was to determine how DOE allocates applied R&D funds. We were asked specifically: (1) How does DOE prioritize funding requests among the various research and development areas?What are the underlying criteria and philoso- phy for such decisions?(Seesection 2.) (2) To what extent does DOE coordinate its R&CD agenda among participat- ing internal DOE organizations? (Seesection 2.) (3) What role, if any, do the Office of Management and Budget and the various advisory groups play in allocating funds among DOE research programs? (Seesection 2.) (4) How have DOE priorities evolved over the past 10 years? (See section 3.) (6) How has the overall DOE funding for R&Dbeen distributed between fundamental or basic research and applied or project oriented research, development and demonstration? In energy IUD has there been a change in emphasis from applied R&D to basic research over the past decade? (Seesection 4.) (6) How much has DOE invested in major demonstration projects over the past 10 years? How many of these projects have been terminated before completion, and what was the basis or criteria for the termination? (See section 5.) To answer these questions, we spoke with cognizant agency officials in DOE's budget office and assistant secretary-level offices to determine their processesfor planning and allocating energy R&Dfunds for the period 1980 to 1990. In addition, we obtained pertinent DOE orders and memoranda concerning the allocation process.We also examined DOE policy plans for the years in which they were available-1981,1983, 1985, and 1987-to determine what guidance DOE issued on its priorities for energy R&n.DOE also provided appropriation history data for its R&D programs which we used to determine trends in research areas over the period fiscal year 1980 to 1990. Becauseof time constraints, we did not verify this data. To provide a clearer comparison of appropriations over time, we adjusted the dollar amounts to account for the effects of infla- tion. We also spoke with OMBofficials concerning their role in the alloca- tion processand obtained OMB guidance on the energy F&Dbudget process.We spoke with the executive director of the Energy Research section 6 Objective, Scope,and Methodology Advisory Board and a representative of the National Petroleum Council and the National Coal Council to determine what role they play in the R&D allocation process.We also examined 1981, 1983, and 1985 EFIAB reports for their recommendations on the allocation of R&D funds. For the 1985 report we analyzed several recommendations for DOE actions. We did not analyze every recommendation due to time constraints and the voluminous nature of the ERAE!report. DOE provided data on the distribution of funds for basic, applied, and development research for the period 1980 to 1990 by program office. The data for 1980 to 1989 was dated January 1989 and the 1990 data was dated January 1990. Due to time constraints, we did not indepen- dently verify the data. We conducted our review from September 1989 to February 1990 in accordancewith generally acceptedgovernment auditing standards. We discussedthe draft report with cognizant DOE officials. They gener- ally agreed with its contents. Page 41 GAO/RCEDBl%148BBDOE’sAllocation of B&D Funds Appendix I . DOE Major Demonstration Projects Dollars in millions -w-date’ Statuab B8sis for termination DOE cost prognm ~WPI- conauvrtion Heber Geothermal Demonstration Terminated. Negotiations in Insufficient reservoir production. Project pro ress to sell-plant which will 9/80 lea lY to government recuperation of 7/87 part of its investment. $64.5 BaPyoG=.thermal Demonstration Terminated by DOE, UNOCAL, and Only one half of the necessary -1--- Public Service of New Mexico. DOE steam was available from the 9 8 awaitin final payments from drilled wells. 1bi 2 powerp Bant equipment sales. $47.0 Barstow Solar Thermal 9/77 Completed. c Demonstration Project 9188 $140.0 Field Evaluation Program Wind 197: Terminated. Reports published. Prior administration’s policy. Energy Demonstration Project $3.6 Sl\;iey Diesel Cogeneration 9/79 Completed. Four major units sold c 6f04 and operating. $11.4 NUC1.W Clinn;tvar Breeder Reactor 1973 Terminated. Congress eliminated funding. FY 1984 $1,600.0 Atomic Vapor Laser Isotope Ongoing. c Separation Program 1972 $949.3 Foaoil Solvent Refined Coal Demo Plant I 3rdF$u$;; Terminated prior to construction. Prior administration’s policy. El&l $190.7 Solvent Refined Coal Demo Plant II 3rdFygrt; Terminated prior to construction. Prior administration’s policy. ._._ 7/8t $70.8 High BTU “A” lo/75 Terminated prior to construction. Prior administration’s policy. 7/81 $53.7 High BTU “B” lo/15 Terminated prior to construction. Prior administration’s policy. 7181 $77.8 Low/Med BTU Fuel Gas Industrial FY 1976 Terminated prior to construction. Prior administration’s policy. v83 $11.7 Low/Med Industrial BTU “A” FY 1976 Terminated prior to construction. Prior administration’s policy. 7101 $65.6 Low-BTU Fuel Gas Utility !3$: Terminated prior to construction. Prior administration’s policy. $7.8 Low-BTU Fuel Gas-Small Industry ;; 1;;; Terminated prior to construction. Prior administration’s policy. $17.3 Low-BTU Fuel Gas -Utility B ;; ;99; Terminated prior to construction. Prior administration’s policy. Not available Ft. Lewis Pilot Plant Completed. No Ion er needed to FY 1975 support Solvent Re9n‘ned Coal 7/81 demonstration project. $20.0 P8ge 42 GAO/BCBD-W14SBRDOE’sAllocation of B&D Funds -1 DOE Major Demonstration Project8 Progmm area/project -g..! Stetusb Basis for termination DOE cost H-Coal Pilot Plant Completed. Successfully c 12/77 demonstrated plant operability 9/82 using ILL. #6 and Wyodak Coal. $277.9 EXXON Donor Solvent Pilot Plant Completed. Successfully c l/76 demonstrated plant operability with 12105 3 coals. $163.3 Methanol Conversion Pilot Plant 3/80 Completed. Operation successfully c 3/86 completed, plant dismantled. $11.2 BI-Gas Pilot Plant FY 1972 Completed. General Services c 12/82 Administration sold facility. $113.6 HY-Gas Pilot Plant Completed. Turned over to Institute c 7/77 of Gas Technology, then 12180 mothballed. $72.1 Gr;;Jjzins Coal Gasification Completed. Sponsors defaulted on c overnment loan guarantee. FY 1982 8 overnment operated plant until 10188 sold 10/31/80. $1555.0 Clean coal woamm Round 1 Pressurized Fluidized Bed Ongoing. c Cornbuster 2107 $60.2 Circizting Atmospheric Fluidized Ongoing. c 8188 $19.9 Circ;id$ing Atmospheric Fluidized Under negotiation. c $65.0 Underground Coal Gasification Terminated. Energy lntl could not obtain financing? $3.3 Integrated Gasification Combined Terminated. M.W. Kellogg could not obtain Cycle financing.e $.9 Liru;z Injection Multistage Ongoing. c 6107 $7.6 Advanced Cyclone Combuster 2107 Ongoing. c S.5 Gas Reburning and Sorbent Ongoing. c Injection 7187 $14.9 Prototype Commercial Coal/Oil Co- Ongoing. c Processing Plant 12/87 $45.0 Advanced Slagging Combustor 1 l/88 Ongoing. c $23.5 Advanced Coal Cleaning Process Under negotiation. c $28.0 Advanced Coal Cleaning Process Under negotiation. c $7.7 Round 2 Integrated Gasification Combined Under negotiation. c Cycle Repowering $129.4 Philip S rn Pressurized Fluidized- Ongoing. c Bed l?ombustor 4190 $184.8 12189 Ongoing. c $15.7 WSA-SNOX Flue Cleaning Demo. Sox-Nox-Rex-Box Flue Gas Ongoing. c Cleaning Demo. 12189 $4.9 (continued) P8ge 43 GAO/RCED@l4SBE DOE% Allocation of R&D Funda **I DOE Mqjoc Demomtmtion ProJecta Start/end DOE Progmm area/project date Statusb Barir for termination cost LN&;i;fer for Cyclone Fired Under negotiation. c $6.8 CT 121 Flue Gas Disulfurization 4190 Ongoing. c $17.5 Advanced On-site Flue Gas Ongoing. c Disulfurization 12189 $63.4 Limestone Scrubber Cement Kiln Ongoing. c Gas Cleaning 12189 $4.8 Coke Oven Gas Cleaning 1l/09 Ongoing. c $13.5 Otisca Fuel Demo Project Under negotiation. c $3.5 Advanced Wall-Fired Combustion 12189 Ongoing. c $5.2 Selective Catalytic Reduction Under negotiation. c $7.5 Advanced Tang.-Fired Combustion Under negotiation. c $4.2 Coa&FIe~rning in Cyclone-Fired Ongoing. c 4l99 $5.1 Vates are as provided by DOE. bSee table 5.1 for definitions of terminated and compfeted projects. CNotapplicable. dThe indicated funding has been obligated and no additional funding will be spent P&ge 44 GAO/IKZD-W148BB DOE’s Allocation of R&D Funds Appendix II Major Contributors to This Briefing Report Resources, Robert E. Allen, Jr., Assistant Director Community, and Edward E. Young, Assignment Manager Ilene Pollack, Evaluator-in-Charge Economic Development Ditision, Elise Bornstein, Evaluator Washington, D.C. (301333) Page 45 GAO/lUXD4@148BR BOE’rr Allocation of B&D Funda , 7 --- I__-- -- Requests for copies of (;A() reports should be sent to: Q’S General Accounting Office P4,st Office Box 6015 (Gait hersburg, Maryland 20877 Tht~ first five copies of each report wt. fire. .~ddit.ional copies are WOO each. There is a Z:‘,“C,discount on orders for 100 or more copies mailed to a siugle address. Orders must be prepaid by cash or by check or money order made out to the Superintendrut of Docutnents.
Energy R&D: DOE's Allocation of Funds for Basic and Applied Research and Development
Published by the Government Accountability Office on 1990-05-24.
Below is a raw (and likely hideous) rendition of the original report. (PDF)