Federal Energy Research and Development for the Challenges of the 21st Century

Abstract

High on the list of the proper aims of national technology policy is nurturing technological innovations— and promotion of the transfer of these to the marketplace— of types that (1) are likely to be important in improving and sustaining economic prosperity, environmental quality, and national security for this country''s citizens; and (2) are unlikely, without the federal government''s participation, to be developed and applied to these ends in a timely fashion by other actors such as state and local governments, private firms and consortia, and other nongovernmental organizations. I argue in this chapter that innovations in energy technology resoundingly satisfy the first condition and that they often satisfy the second. I also address how and why it has happened, nonetheless, that energy research and development have received such scant attention in discussions of national technology policy (and such scanty shares of the federal science and technology budget) over the past fifteen years— a period in which the inadequacies of this country''s energy system in relation to the likely energy challenges of the first part of the twenty-first century were becoming increasingly obvious. The chapter concludes with a discussion of the prospects for reviving the government''s interest in and support for energy research and development during the second Clinton term.

(1) Why the United States Needs a Coherent Energy R&D Strategy

The arguments for a coherent national energy R&D strategy reside in the connections between energy and the economic, environmental, and national-security dimensions of the well-being of our citizens; in the potential for serious difficulties early in the twenty-first century arising from inadequacies of the current mix of energy options in relation to these connections; and in the constellation of reasons that the private sector, on its own, will do only a part of the energy R&D needed to address those inadequacies. Developing these arguments requires some understanding of recent and possible future trajectories of U.S. and world energy supply and demand, to which I now turn.

(2) U.S. and World Energy Supply and Demand

In 1995, the 5.7 billion people then on the planet were using inanimate energy forms at a rate of about 14 terawatts, which can also be expressed as 14 terawatt-years per year, or 420 quadrillion Btus per year, or 2.5 kilowatts per average person in the world population.1 Of this total 1995 energy supply, about 53 percent was derived from oil and gas, 22 percent from coal, 13 percent from biomass fuels (i.e., fuelwood, charcoal, crop wastes, and dung), and 6 percent each from hydropower and from nuclear fission.2 (The contributions from geothermal energy, windpower, and direct use of solar energy totaled less than half a percent.) About two thirds of the total supply went to the 1.2 billion people living in industrialized countries, and about one third went to the 4.5 billion people living in less developed countries (LDCs).3 Approximately 30 percent of the 14-terawatt world primary-energy supply was used to make some 12.5 trillion kilowatt-hours of electricity, nearly 80 percent of it used in the industrialized countries.

The global demand for energy in 1995 was more than four times larger than in 1950 and ten times larger than in 1900; and between 1900 and 1995 the annual amount of energy supplied by fossil fuels grew by sixteen-fold.4 Under "business as usual" assumptions about the energy future, world energy demand in 2025 would be about twice as large— and that in 2050 about three times as large— as the 1995 figure, and fossil-fuel use would increase over these periods by similar factors.5 (The "business-as-usual" scenarios entail real rates of global economic growth averaging about 3 percent per year to 2025, falling gradually thereafter toward 2 percent per year, and rates of improvement of macroeconomic energy efficiency— i.e., real economic product per unit of energy use— averaging 1 percent per year indefinitely.)

The United States, which with 4.6 percent of the world''s population in 1995 accounted for about 22 percent of the energy demand, is even more fossil-fuel-intensive than the world as a whole: 85 percent of U.S. energy in 1995 was supplied by fossil fuels (versus 75 percent for the world), 8 percent by nuclear energy, 4 percent by hydropower, and 3 percent by biomass fuels; 38 percent of the total was oil, half of it imported.6 U.S. energy demand in 1995 was 2.6 times larger than in 1950 and eight times larger than in 1900; in the 1990s it has been growing at an average rate of 1.4 percent per year while real economic growth was about 1.9 percent per year, implying a rate of increase of macroeconomic energy efficiency of 0.5 percent per year. (For comparison, in the thirteen years from 1973 to 1986 U.S. macroeconomic energy efficiency increased at an average of 2.7 percent per year.)

(2) Economic Challenges in Our Energy Future

The challenges posed by the energy future to the economic well-being of the United States are of at least three kinds: controlling consumer costs for energy and energy-intensive products; reducing oil-import bills; and building international markets for U.S. energy technologies and other products.

Expenditures for energy— electricity and fuels— by individuals and organizations in the United States amounted in the mid-1990s to approximately $500 billion per year or about 7.5 percent of GNP.7 U.S. energy prices are low both by historical standards and in comparison with other countries, but there is no guarantee that they will remain so. They could be driven up by increasing competition for world oil output, by manipulation of the world oil market, by political instability in the Persian Gulf, by environmentally motivated requirements to reduce emissions from fossil-fuel combustion, and by other eventualities of both foreseeable and unforeseeable types. As the oil-price shocks of the 1970s abundantly demonstrated, large and sudden energy-price increases produce not only immediate adverse effects in the form of erosion of purchasing power but also can drive the global economy into recession, at immense economic cost. The challenge to energy research and development here is to provide additional energy-supply and energy-efficiency options that can reduce U.S. dependence on the imported oil supplies that are subject to sharp price increases, to develop options that can shrink the cost of reducing emissions from fossil fuels (which includes the possibility of replacing some fossil-fuel use with non-fossil-fuel options less costly than those that would be available for this purpose today), and more generally to develop options that can "backstop" existing energy-supply technologies— that is, provide the possibility of substituting for them if their costs escalate beyond the cost of the "backstop" option.

U.S. oil imports in 1995 were a $60 billion item on the deficit side of this country''s balance-of-payments ledger. The U.S. Department of Energy''s "reference" forecast shows the U.S. oil-import bill reaching $108 billion per year (1995 dollars) by 2015— at which time this country will be importing 50 percent more oil than in 1995.8 (This forecast assumes that U.S. use of oil will increase from 18 million barrels per day in 1995 to 22 million in 2015, while domestic production falls from 9 million to 8 million barrels per day.) Clearly there is the possibility of a substantial economic benefit from energy R&D (or other measures) that could lead to reducing U.S. oil imports over the next twenty years to below the trajectory forecasted in the DOE''s reference case.

The third major U.S. economic stake in the energy future has to do with this country''s capacity to sell both energy equipment and other products in international markets. With respect to energy equipment, the value of the world''s energy-supply system today— the power plants, oil refineries, pipelines, drilling rigs, transmission lines, and so on— is in the range of $10 trillion at replacement cost.9 If the average lifetime of these facilities is thirty years, then mere replacement of attrition in a system of constant size would entail investments of some $300 billion per year. To meet the "business as usual" projection of a doubling in energy use by 2025, however, the global energy system would need to double in size in the next thirty years, entailing an additional $300 billion per year in investments (assuming that the cost of a given quantity of energy-supply capacity does not change, which of course may not be true). As a very rough estimate, in any case, the world market for energy equipment and energy-facility construction over the next thirty years is going to be in the range of several hundred billion dollars per year. The challenge for U.S. energy R&D in this connection is to develop energy technologies of sufficient attractiveness— in relation to those being offered by others— to maintain a substantial share of this immense market (including the market in the United States, where if we are not diligent we could lose market share to, e.g., Japan, Germany, South Korea, and who knows who else). Part of this challenge, of course, is to shape some of our R&D to the economic and environmental needs of the most rapidly growing parts of the international market, such as China and India, rather than just developing energy options tailored only for U.S. conditions.

With respect to the capacity of the United States to sell other products in international markets, the connection to energy R&D is through the links between suitable energy technologies and economic growth. Adequate supplies of economically affordable and environmentally tolerable energy are an essential ingredient of increased economic prosperity around the world. To the extent that U.S. energy R&D can contribute to this end, it will be building potential markets for all of the products that the United States might like to export.

(2) Environmental Challenges in Our Energy Future

Energy is perhaps the most intractable part of the planet''s environmental problems, both because the impacts of energy systems are the dominant drivers of many of the most dangerous and difficult environmental problems at every geographic scale from the local to the global, and because the energy-system characteristics that cause these problems are often costly and time-consuming to change.10 Environmental concerns, similarly, may well prove to be the heart of the energy problem, in the sense that environmental constraints and the costs of coping with them, much more than resource scarcity or the monetary costs of energy technology other than those arising from environmental considerations, may turn out to dominate society''s choices about how much energy should be supplied from what sources.11

At the local level, the most pervasive and troublesome environmental problems include acute air pollution both in the outdoor environment of the world''s cities (to which problem the hydrocarbons and particulates emitted in burning fossil and biomass fuels are invariably major contributors, albeit not the only ones) and in the indoor environment of poorly ventilated dwellings in both the urban and rural sectors of developing countries (where coal, fuelwood, charcoal, cropwastes, and dung are burned for heating and cooking). The latter problem is, in light of the combination of extremely high pollutant concentrations and large numbers of women and children exposed to them during a high proportion of the hours of the day, quite clearly a much more consequential problem for global public health than is the outdoor air-pollution problem.12 Among the world''s many local water-pollution problems, those produced by coal-mine drainage, oil-refinery emissions, oil spills from pipelines and tankers, and leakage into groundwater from underground fuel-storage tanks (this last problem one of the most pervasive bad actors in putting toxic-waste sites on the Superfund list) are prominent contributions from the energy sector.13

At the regional level, air-basin-wide smogs from the interaction of hydrocarbons and nitrogen oxides share the top of the air-pollution-hazard list with acidic hazes and fogs fed by varying combinations of nitrogen and sulfur oxides. The dangers include damage to crops and forests as well as to public health; the culprits are overwhelmingly fossil fuels burned in vehicles and power plants. Emissions of oxides of nitrogen and sulfur are also the primary sources of acid precipitation, arguably the dominant form of regional water and soil pollution in areas where soils and surface waters are poorly buffered (a description that applies to tens of millions of square kilometers of the world''s land area), with potential impacts on forest health, fish and amphibian populations, nutrient cycling, and mobilization and uptake of toxic trace metals.14

At the global level, the emissions of greenhouse gases from fossil-fuel use— carbon dioxide and nitrous oxide from combustion of all fossil fuels, and methane from fossil-fuel production and natural-gas transport— are the dominant contributors to the threat of greenhouse-gas-induced climate disruption. There is no scientific doubt that the global composition of the atmosphere with respect to these climate-shaping gases has been significantly altered by human activities, above all fossil-fuel use, and there is an increasingly robust scientific consensus that the consequences of this human impact on the atmosphere are already evident in global climatic patterns.15 Nor is there any doubt that the world is committed, by virtue of the long lifetime of anthropogenic greenhouse gases in the atmosphere and the difficulty of restraining their emission, to substantial further growth in their concentrations; the scientific arguments are only about degree and detail— the timing, severity, and geographic pattern with which the resulting changes in climate will unfold.

Notwithstanding the uncertainties about these aspects, a good case can be made that fossil-fuel-driven climate change is the most dangerous and intractable environmental problem on the planet. It is the most dangerous because climate change could reduce the productivity of farming, forestry, and fisheries around the globe; increase the virulence and geographic scope of important human diseases; increase the frequency and intensity of destructive storms; raise sea level; and accelerate the loss of planetary biodiversity (among other impacts).16 It is the most intractable because the human activity that drives it— the mobilization and combustion of the coal, oil, and natural gas that supply three-quarters of the energy used by civilization— is a crucial contributor to economic well-being worldwide and very difficult to modify to reduce the offending characteristic, and because the evolution of the problem responds only slowly to changes in the human input.

Ameliorating the environmental problems caused by energy supply is partly a matter of improving the management practices of energy industries and partly a matter of developing appropriate incentives and regulations (and institutions for implementing these) to guide the behavior of energy producers and consumers alike. Much progress has been made along these lines in the last twenty-five years, in the United States and elsewhere. But improvements in energy technology itself are also essential for addressing environmental problems, and can often alleviate the burdens and economic inefficiencies that would be associated with stringent environmental regulations in the absence of technological advances. This is the environmental challenge to energy R&D: to provide energy options that can substantially ameliorate the local, regional, and global environmental risks and impacts of today''s energy-supply system, that can do so at affordable costs and without incurring new environmental (or political) risks as serious as those that have been ameliorated, and that are applicable to the needs and contexts of developing countries as well as industrialized ones— and the sooner the better. It is a big order.

(2) National-Security Challenges in Our Energy Future

The most demanding national-security challenges associated with energy are three: minimizing the dangers of conflict over access to oil and gas resources; controlling the links between nuclear-energy technologies and nuclear-weapons capabilities; and avoiding failures of energy strategy with economic or environmental consequences capable of aggravating or generating large-scale political instabilities.

The proposition that states may go to war over access to resources is solidly rooted in history; and, while there are few instances in international affairs in which a single factor explains everything, it is clear that in this century access to energy resources has more than once been a significant motivator of major conflict.17 Certainly this was a factor in the aspirations of Germany and Japan leading up to World War II; and few would doubt that control of Kuwaiti oil was one of Saddam Hussein''s primary goals in invading Kuwait, or that denying him this was one of the U.S.-led coalition''s primary goals in throwing him out. The Persian Gulf, which remains one of the world''s more unstable regions politically, today accounts for half of all the world''s oil exports, and according to the forecast of the U.S. Department of Energy, this figure is likely to reach 72-75 percent by 2015.18 Although exact allocations of the purposes of military spending are not possible, the widely repeated estimates that a quarter or more of the $270 billion per year U.S. defense budget is attributable to the need to be prepared to intervene in the Middle East are probably not far wrong.

The complexity of the international-security dimensions of world oil is certain to increase with the rapid growth of China''s presence in the oil market. China shifted from being a net exporter to a net importer of oil in late 1993, by late 1996 was importing some 600,000 barrels per day, and could easily be importing 3 million barrels per day by 2010 and 10 million barrels per day by 2025 (more than the United States is importing today).19 To suppose that oil-import-dependency of these magnitudes will not affect Chinese foreign and military policy would be naive, just as it would be naive to suppose that the increasingly strident and politically problematic Chinese territorial claims extending to the southern rim of the South China Sea have nothing to do with the potential undersea energy resources of that region. Chinese military spending has been rising— by 1995 it exceeded that of Japan, South Korea, Taiwan, Indonesia, Maylaysia, the Philippines, and Thailand combined, and was equal to one-third that of the United States— and growing along with it is China''s capacity to project military force at increasing distances from her boundaries.20

To say that growing tensions and potential problems for the national-security interests of the United States are likely to arise from intensifying competition for world oil and gas supplies is not to recommend that the United States and other nations pursue energy independence, which is neither feasible nor, in today''s multiply interdependent world, even desirable. But it is desirable to try to limit the tension-producing potential of overdependence on imports (especially on imports from regions of precarious political stability), as well as the tension-producing potential of resources of disputed ownership, by working to diversify sources of supply of oil and gas (including domestic supplies in the major importing regions), to develop further the non-oil-and-gas sources of portable fuels and electricity, and to increase the efficiency of energy end-use. Clearly energy R&D has roles to play in all of these connections although, equally clearly, it is not the only leverage point.

Nuclear energy is a partial answer to the import-dependence, air-pollution, and climate-change liabilities of fossil fuels which has been embraced by a number of countries,21 but it carries significant national-security liabilities of its own in the form of the difficult-to-manage linkages between nuclear-energy technology and nuclear weaponry. The key point is that while any major country determined to acquire nuclear weapons could choose to do so without resorting to civilian nuclear-energy facilities for help, nuclear energy does bring together skills and technologies that could ease the path to weaponry (and lower its cost), and approaches to nuclear energy that involve the use of highly enriched uranium or the separation and recycle of plutonium provide particularly direct routes to weapons— including by theft of these materials by agents of radical states lacking their own nuclear technology, by terrorists, or by middlemen feeding an international black market.22

The scale of the global nuclear-energy enterprise has grown much more slowly than was widely forecast a few decades ago, partly because of slower-than-expected growth in the electricity sector overall, partly because of nuclear energy''s particular problems at the intersection of cost and reactor-safety concerns, and partly because of wider public worries about radioactive waste management and nuclear weapons proliferation. Growing concerns now about the climate-change liabilities of fossil fuels might help produce a new surge of growth in nuclear power, but it is likely to be very limited in magnitude and duration unless concerns about cost, safety, wastes, and proliferation are convincingly addressed. All of these issues are challenges not only to the management and regulation of nuclear energy, but also to R&D. In my view the biggest challenge of all of them will be achieving the high degree of decoupling that society should and probably will insist upon between nuclear-energy generation and the spread of nuclear weapons, and this will require not only better regulation and management but new technology.

Probably the most fundamental and enduring source of conflict in the world is material deprivation or the threat of it; accordingly, it may well be that the most fundamental and enduring links between energy and international security are those in which energy decisions (or the absence of them) either ameliorate or aggravate widespread economic or environmental impoverishment or the threat of these. Because affordable energy is an indispensable ingredient of material prosperity, it is not to hard to see that this energy-economy-security connection must be taken seriously. In light of what is now known or suspected about the potential for large-scale and widespread damage to human well-being from energy-related environmental impacts— above all from greenhouse-gas-induced global climate change— the energy-environment-security connection increasingly must be taken seriously as well.23

On the basis of all of the energy-security linkages just described, one can make a decent argument that the security of the United States is considerably more likely to be imperiled in the first half of the next century by the consequences of inadequacies in the energy options available to the world than by inadequacies in the capabilities of U.S. weapons systems. This makes it all the more striking that the federal government spends about twenty times more R&D money on the latter problem than on the former.

(2) Is "Business As Usual" Practical?

The energy-related economic, environmental, and national-security challenges just described are formidable separately and are even more so in combination. A "business as usual" energy future— entailing a world in 2050 with half again as many people as in 2000, using three times as much energy, deriving nearly the same fraction of it as today from fossil fuels, and using a mix of energy-conversion and end-use technologies only modestly different from today''s— is not likely to be the solution. Indeed, it is so likely to be massively problematic economically, environmentally, and politically that it cannot be achieved even it is attempted. It would not provide enough affordable energy in the developing countries for them realize their economic aspirations (while providing more energy in the industrialized nations than would be required there if they gave appropriate emphasis to improving end-use efficiency); it would generate immense environmental problems from expanded fossil fuel use (including, above all, potentially intolerable impacts on global climate from the associated greenhouse-gas emissions); it might, even so, also entail the expansion of nuclear energy generation more rapidly than the technologies, trained personnel, and institutional machinery needed to operate these systems safely and proliferation-free could be propagated; and it would entail sharply increased global dependence on oil from the Persian Gulf, with attendant vulnerabilities and multi-nation political and military maneuvering to try to protect access to these and the other richest remaining sources of oil and natural gas.

Of course, pursuit of business-as-usual until this approach collapses is not the only possible energy future. An alternative can be envisioned entailing lower energy growth rates in the industrialized countries (not from economic sacrifice but from faster increases in the efficiencies of energy-conversion and end-use), greater availability of affordable energy options matched to the needs of developing countries, reduced-emission fossil-fuel technologies, improved technology and management for nuclear energy, and more rapid improvement and deployment of renewable energy technologies. Attaining this alternative future will require a combination of leadership, management, and technical innovation. These ingredients can and will come partly from the private sector. But because the requirement for them is driven in substantial measure by "public goods" considerations (environment, security, and societal economic benefits beyond those that firms would pursue for themselves in an unregulated market), they must come from government as well. The remainder of this chapter looks in more detail at the energy R&D component of what is required, at recent patterns of energy R&D spending both in government and in the private sector, and at the reasons these patterns diverge from what one might expect in light of the evident challenges and opportunities facing the energy system.

(1) What Energy R&D Is Needed?

I find it useful to divide the possible focuses for energy R&D into two categories: "low-risk" possibilities, meaning there is a high probability that at least parts of the effort will bear fruit in the form of innovations that find significant commercial application; and "high-risk" possibilities, where the probability of success (by the foregoing definition) is lower but the potential payoff is high enough to make the work worth pursuing in the context of a balanced energy R&D portfolio. These two categories are treated here in turn.24

(2) Low-Risk Energy R&D

Energy efficiency. The cornerstone of an energy strategy aimed at holding down monetary costs, environmental impacts, and oil imports is achievement of more rapid increases in energy efficiency (i.e., reductions in the ratio of energy to economic product) than the 1 percent per year long-term historical average typically used in forecasting. Improvements in energy efficiency are the equivalent of new energy supply, in that the energy "saved" by increased efficiency in one application can be used in another; and expansion of this efficiency "supply" occurred in many countries in the 10-15 years following the 1973 oil shock at 2-3 percent per year.25 A large literature indicates that the potential for further cost-effective improvements in energy end-use efficiency is large in all sectors— residential and commercial buildings, industrial processes, agriculture, and transportation— and in industrializing and developing countries alike.26 Achieving this potential is a matter of overcoming barriers to the implementation of already extant and cost-effective energy-efficiency options (and how to do this is itself an appropriate focus of research),27 as well as of private-sector and public-sector investment in energy-efficiency-technology R&D to bring new options to the point of cost-effectiveness. The rates of return to federal government investments in energy-efficiency R&D, including through various forms of government/industry/national-laboratory partnerships, have been unusually well documented and appear to be very high.28 In my judgment these high rates of return are likely to persist.

Improved fossil-fuel and biomass technologies. Harvesting, transport, processing, and combustion of fossil and biomass fuels are responsible, as indicated above, for many of the most damaging and dangerous environmental impacts of human activity. These damages and risks are amenable to reduction by improved technologies for dealing with these fuels, from harvesting through combustion, focused on increased extraction and conversion efficiencies and lower emissions.29 Cleaner technologies for electricity generation from coal— perhaps most importantly integrated-gasification combined-cycle (IGCC) systems— will be of particularly critical importance in light of the continuing heavy reliance on coal in high-energy-growth regions in Asia as well as elsewhere. Another promising line of development likely to come to significant commercial fruition in the next two decades is fuel cells, which can extract energy from hydrogen (derivable from fossil and biomass fuels alike) at about twice the efficiencies typically attained in combustion-based systems.30 Also productive to date and promising for the future are improvements in the technology for finding and harvesting conventional and unconventional deposits of natural gas, which is intrinsically the cleanest, lowest-CO2 fossil fuel and the easiest to use at high efficiency.31 Cooperative efforts with China to find more gas there could be especially important. The gas resources that have been discovered in China to date are exceptionally small in relation to that country''s land area and geologic circumstances.32 Finding more gas and using it with high-efficiency, low-emissions technologies would be one of the more promising ways to reduce the environmental and political impacts likely to result from the massive growth in coal use and oil imports currently expected to take place in China over the next twenty-five years.

Higher-efficiency and/or lower-cost photovoltaic, solar-thermal, and wind energy systems. The cost of delivered energy from photovoltaic, solar-thermal (electric and nonelectric), and wind-electric energy systems has fallen sharply over the past two decades.33 Wind is the closest of these to being competitive commercially with fossil-fueled electricity generation today— indeed it is already competitive at good wind sites where cheap natural gas is not available— and the worldwide potential for wind-electricity generation is probably comparable to that of hydropower. Solar-thermal systems are the next closest to competitiveness and have larger ultimate potential. Photovoltaics have the largest potential of all, but also the largest distance still to travel in order to be competitive for large-scale electricity generation. The leverage against the energy challenges of the next century likely to be gained from additional R&D on all three of these classes of renewable energy sources is large.

(2) High-Risk Energy R&D

Improved Fission Energy Options. Energy from nuclear fission, having achieved by 1995 an 18 percent share of world electricity generation delivered by some 425 operating power reactors, is no longer growing appreciably anywhere in the world except Asia. (In the United States, no new nuclear plant has been ordered since 1978, and nuclear output will soon start to shrink as retirements of older plants accelerate.) Whether the growth of nuclear energy will be sustained even in Asia depends, like the prospects for a revival of growth elsewhere, on the evolving characteristics of competing fossil-fuel and renewable energy options, on the evolution of the climate-change issue and attendant incentives to reduce dependence on fossil fuels, and on the future performance of nuclear-energy systems with respect to cost, safety, waste management, and protection of nuclear-weapon materials. Many critics of nuclear energy''s prospects have argued that the outcome is already clear: that fission''s cost will remain too high and its safety, waste-management, and materials-protection problems too intractable for it to play a significantly expanded role in the global energy future, even if the climate-change issue develops in such a way as to increase sharply the incentives for deploying non-fossil-fuel options.34 In my view, however, no one''s crystal ball is clear enough to allow such a conclusion to be reached with confidence: it is possible that the combination of demand for non-fossil-fuel energy-supply options and capacities of renewable energy technologies to meet these demands on attractive terms will evolve in a way that leaves room for a considerably expanded contribution from a nuclear-energy system with characteristics that might, with effort, be attainable. Prudence dictates that this possibility should be pursued by exploring, through R&D on advanced nuclear-energy technologies and on improved approaches to nuclear-energy management, how and by how much the characteristics of nuclear-energy systems could be improved with respect to cost, safety, waste management, and nuclear-materials protection. These problems are difficult enough, in my judgment, to warrant characterizing such R&D as "high-risk" in terms of the probability of achieving results that could transform fission''s prospects, but there is no shortage of ideas about directions that ought to be explored.35

Sequestration of Carbon-Dioxide from Fossil Fuels. Combustion of fossil fuels produces carbon dioxide in such immense quantities as to raise considerable doubt about the practicality of evading the climatological impact of this effluent by capturing it and storing it away from the atmosphere: world CO2 emissions from fossil-fuel combustion in the mid-1990s were about 22 billion metric tonnes, equivalent to 11,000 cubic kilometers of carbon dioxide gas at standard temperature and pressure. Nonetheless, it clearly is possible in principle to capture much of the CO2 from the stack gases of large combustion facilities such as coal-fired power plants or, alternatively, to capture CO2 in the course of converting fossil fuels to hydrogen for use in large and small combustion devices alike, and then to store this captured CO2 underground or by dissolving it in the deep layer of the oceans; the issue is the cost. Increasingly serious attention to these possibilities in the past few years has led to cost estimates for electricity-generation options in the range of $20-40 per tonne of CO2 for capture and $15-50 per tonne for disposal, translating to cost penalties ranging from 2-4 cents per kilowatt-hour for advanced natural-gas-fired, coal-gasification, and fuel-cell generation technologies to 7-12 cents per kilowatt-hour for traditional pulverized-coal-fired electricity generation.36 Cost estimates for CO2 sequestration as part of a fossil-fuel-to-hydrogen approach to dispersed fuel uses vary over an even wider range, depending on assumptions about various aspects of system performance.37 It is far from clear that incentives for reducing CO2 emissions and the options for doing so by means other than sequestering the CO2 from fossil fuels will develop in ways that make sequestration attractive, but the possibility is great enough to warrant further R&D on sequestration options, including the environmental impacts of large-scale disposal of CO2 in the oceans.

Fusion. Harnessing nuclear fusion (the process that powers the stars and produces most of the bang in thermonuclear bombs) as a practical terrestrial source of electricity and fuel has long been a sort of Holy Grail in energy research; in principle, fusion energy technology could unlock stores of energy in ordinary sea water adequate to power an energy-intensive civilization for millions to billions of years, and could do so with safety, waste-management, and proliferation risks much easier to manage than those of nuclear fission.38 As is well known, however, fusion energy technology has proven extremely difficult to master. Cumulative U.S. expenditures on fusion-energy research from the inception of this activity in the early 1950s through 1995 amounted to about $15 billion (1995 dollars), and the worldwide total was perhaps $40 billion; yet no fusion-energy experiment has yet demonstrated an energy output exceeding the energy input needed to operate the device, let alone the considerably higher output that is a necessary (although still not sufficient) condition for making fusion a commercially attractive energy source.39 In light of the magnitude of the scientific and technological challenges still to be overcome, it seems likely that at least another forty years and another $40-60 billion would be required to bring fusion to commercial application, and even then there is no absolute guarantee of success: fusion could prove even more difficult than we now think and, on this time scale, breakthroughs in other essentially inexhaustible energy options might make fusion uncompetitive. But that outcome is not assured, either; and if fusion should turn out to be even moderately superior, in its combination of economic, environmental, and political characteristics, to other large-scale energy options available after the mid-twenty-first century, its benefits would be immense in relation to the size of the R&D investments that had been needed to acquire it.

Some "Long Shots." A number of energy-supply possibilities that are in the embryonic stage of development have a chance of coming to fruition toward the middle of the next century and would seem to warrant at least a modest continuing effort to clarify their potential. Prominent in this category are "hot dry rock" geothermal energy (which unlike the isolated deposits of hot water and steam exploited by the world''s few commercial geothermal energy operations today, is an energy source that is both widely distributed and considerably larger in magnitude than the fossil fuels) and systems for producing hydrogen directly from sunlight, either by catalyzed thermochemical processes or in abiotic systems that imitate photosynthesis.40 In contrast, ocean thermal energy conversion (OTEC), while sometimes mentioned in the same context with these other "long shots," has been sufficiently investigated to reveal quite formidable and fundamental obstacles to its ever achieving competitiveness with other long-term energy options— above all the high cost of building and maintaining, in the hostile marine environment, equipment that because of the low energy-density of the resource must be of vast scale in relation to the useful energy extracted.

(1) What Energy R&D Is Being Done?

U.S. Department of Energy budget authorizations for energy-technology R&D from 1978 to 1997 are shown in Figure 12-1 in constant 1997 dollars.41 The "energy technology" category of R&D funding as defined here includes research, development, and demonstration activities dealing with energy end-use efficiency ("conservation"), fossil fuels, nuclear fission, nuclear fusion, and renewable energy; it does not include the Department of Energy''s research in "Basic Energy Sciences," in "Biomedical and Environmental Research," and in "General Science."42 Table 12-1 gives the actual numerical data and includes the "Basic Energy Sciences" and "Biomedical and Environmental" categories, facilitating comparisons with other studies that sometimes include these latter categories in "energy R&D."

Figure 12-1. Budget authority for DoE energy-technology R&D, 1978-96
Source: OMB, Budget of the United States, Fiscal Year 1998

Table 12-1. DOE energy R&D budget authority 1978-97 (million 1997 dollars)

Source: OMB, Budget of the United States, Fiscal Year 1998.
The picture of energy-technology R&D over the past twenty years painted by these data is one of quite stunning decline, alleviated only by a modest bulge produced by the "clean coal" development and demonstration program— a joint venture of the Department of Energy and industry— between 1988 and 1994. Corrected for inflation, the DOE''s total budget authority for energy-technology R&D in Fiscal Year 1997 was only 20.9 percent of the corresponding figure in FY 1978, a drop of nearly five-fold. As percentages of FY 1978 levels, DOE fission-energy R&D in FY 1997 was 2.8 percent, renewables R&D 18.5 percent, and fossil-energy R&D 21.0 percent. If Basic Energy Sciences R&D is included in the total, then the drop in inflation-corrected energy R&D was from $6.55 billion (1997 dollars) in FY 1978 to $1.93 billion (1997 dollars) in FY 1997, a 3.4-fold decrease.

In longer historical perspective, the high levels of federal energy R&D at the end of the 1970s are seen to be an anomaly that resulted from the upsurge of attention to energy produced by that decade''s oil-price shocks: data shown here in Figure 12-2 indicate that U.S. government energy R&D funding fluctuated in the range of $1.5-2.0 billion (1997 dollars) per year from 1960 to 1974, when the sharp climb toward the 1978-80 peak of $6-7 billion (1997 dollars) per year began.43 Of course, as a fraction of U.S. GDP, $2 billion (1997 dollars) was a much bigger number in 1962 than it is now— real GDP in this country nearly tripled 1962-97— so by this standard current federal energy R&D funding is, by a substantial margin, the lowest in the last thirty-five years.

Figure 12-2. Trends in non-defense R&D by function, FY 1960-98
Outlays for the conduct of R&D, constant FY 1997 $ billions

Source: AAAS, based on OMB Historical Tables.
Constant dollar conversion based on GDP deflators.
The precipitous decline in U.S. government funding of energy R&D has not been without parallels in other industrialized nations. As indicated in Table 12-2, similar trends are evident in figures compiled by the International Energy Agency for the period 1984-94 for Germany, Italy, the United Kingdom, and Canada.44 Data for 1984 were not available for France, but the trend from 1990 to 1994 was downward in that country. The only G-7 country not experiencing a decline in government energy-technology R&D in this period was Japan. It is worth noting that the 1994 figure for Japan is more than twice the corresponding figure for the United States and is more than four times the U.S. figure if expressed as a fraction of purchasing-power-parity-corrected GDP.

Table 12-2. Energy-technology R&D in the other G-7 Countries, 1984-94 (million 1997 dollars)

Source: International Energy Agency, Energy Policies of the IEA Countries (1995)

The sharpest decline in U.S. government spending on energy-technology R&D took place during the eight years of the Reagan administration (FY 1981-89), when President Reagan was expressing the view (and, on the government side, implementing it) that any energy R&D worth doing would be done by the private sector. But the expenditures of the U.S. private sector on energy-technology R&D also fell in this time period and thereafter, most sharply from 1985 to 1988 and then again from 1991 onward: the Department of Energy estimates that U.S. industry investments in energy R&D in 1993 were $3.9 billion (1997 dollars), down 33 percent in real terms from 1983''s level;45 a study at Battelle Pacific Northwest Laboratory shows U.S. private-sector energy R&D falling from $4.4 billion (1997 dollars) in 1985 to $2.6 billion in 1994, representing a drop of about 40 percent in this period.46

The differences in these figures for industry energy R&D spending arise from the difficulty of obtaining complete data on this subject and, presumably, from varying assumptions by different analysts about what categories of spending in what types of organizations should count as energy R&D. The trends appear to be consistent across all choices about what categories to include, however. Thus it is quite clear that the private sector did not pick up the energy R&D that the government dropped in this time period. It is also clear, whichever figure one chooses for mid-1990s industry spending on energy R&D in the United States, that the energy business is one of the least research-intensive enterprises in the country measured as the percent of sales expended on R&D. Average industrial R&D expenditures for the whole U.S. economy in 1994 were about 3.5 percent of sales; for software the figure was about 14 percent, for pharmaceuticals about 12 percent, and for semiconductors about 8 percent. For energy, using the DOE''s 1993 estimate of $3.5 billion (current dollars) for industrial R&D against energy sales of $493 billion in the same year indicates that energy R&D was 0.7 percent of sales; using the Battelle estimate of $2.4 billion for industrial energy R&D in 1993 makes it just 0.5 percent.

Consideration of the rationales for the government to undertake certain classes of R&D that are in the society''s interest to get done, even though not in the private sector''s interest to do, makes it plain that the private sector should not have been expected to compensate for much of the government''s post-1980 decline in support for energy R&D. These rationales for government participation in R&D in general— and in energy R&D in particular— include the following:

First, some kinds of innovations that would lower costs for all consumers— hence are in society''s interest— are not pursued by individual firms because the innovations are judged unlikely to be appropriable. That is, the firm that does the R&D to develop these innovations will get little advantage over competitors who can adopt the innovations nearly as fast as the firm originating them, but without paying for them. This "free rider" problem can be and is overcome to some extent within the private sector by research consortia, including industry-wide consortia such as the Gas Research Institute and the Electric Power Research Institute. But even in the context of such consortia, it remains an important reason that basic research and even much applied research tend to be eschewed by industry in favor of shorter-term product development.

Second, some kinds of innovations are not pursued by the private sector because they relate to production or preservation of public goods— national security, for example— that are not reflected in the profit-and-loss statements of firms. Still other kinds of innovations are not pursued by firms because they relate to reduction of externalities— above all, environmental externalities— which if not at least partly internalized by regulations, emissions charges, or other mechanisms do not generate economic incentives for energy producers.

Third, research that is costly and has a high chance of failure may exceed the risk aversion of the private sector, even though from a societal point of view a certain number of such projects in the national R&D portfolio is worthwhile because the occasional successes can bring very high gains. And research that will take a long time to complete is likely to fall short of the private sector''s requirement for a rate of return attractive to investors, even if confidence of success is high. Fusion energy R&D provides an example where the chance of failure is substantial and the time scale would probably be too long for the private sector even if success were assured, but where the potential benefits of the technology are so large and the prospects of other very long-term energy options so uncertain that the government''s investing in it is clearly in society''s interest.
If it is not surprising that industry did not step in to compensate for diminishing government engagement in these roles in the period after 1980, however, one still may wonder why industry''s R&D investments in industry''s traditional domains actually declined in this time period. It is to the task of explaining that decline— as well as explaining why government funding for energy R&D did not strongly rebound after President Reagan and his ideological opposition to government activity in this area passed from the scene— that I turn in the next section.

(1) Why Isn''t There More Energy R&D?

Of course, expenditures on energy R&D— and ratios of expenditures divided by energy sales or by GDP— are not the only way to measure how much is going on, and knowing how much is spent is not the same thing as knowing how effectively it is spent. Spending is only an input measure of R&D, and ideally one should prefer output measures: papers published (or citations of these), patents granted, innovations finding application in the marketplace, or rates of return based on productivity gains or other cost savings from such innovations. Analyses looking at such output measures can be found in the literature, but they are incomplete and difficult to interpret, and attempting to summarize them is beyond the scope of this chapter.47 Suffice it to say that I find it implausible (and I have not seen any analyses that assert) that the use of output measures would show an increase in the output of energy-technology R&D in this past twenty-year period when public and private investments in such R&D were falling so sharply. No doubt some ill-conceived and badly run projects were canceled, and probably the productivity of energy R&D (output per dollar of input) has increased overall. But these effects can hardly have been enough to compensate for the nearly five-fold decrease in public funding for energy-technology R&D in this period; and even the cited drop of 30-40 percent in private-sector energy R&D in a period of just a decade seems unlikely to have been wholly offset by productivity gains.

If it is accepted that the United States has been settling for declining investment in long-term energy-technology possibilities as well as, probably, a diminished stream of short-term energy-technology innovations, what are the possible explanations? Here are some factors that I think have been important.

(2) Cheap oil and natural gas

The average cost of domestic crude oil in the United States in 1995 was $14.65 per barrel, which compares to $13.30 per barrel in 1960 (in 1995 dollars); costs of imported oil in 1995 were $15-17 per barrel.48 In 1981, when U.S. government energy R&D expenditures were near their peak, the cost of domestic oil in the United States averaged $52 per barrel and imported oil cost $57-62 per barrel (1995 dollars), about four times costlier than in 1995. Clearly, high oil prices encourage investments in R&D to develop alternatives to this costly oil, and low prices discourage such investments. Similarly, domestic natural gas in 1981 cost $2.72 per million Btu (1995 dollars) at the wellhead, compared to $1.44 per million Btu in 1995. This exceptionally low cost for the cleanest burning of the fossil fuels— which lends itself not only to direct use in industry and for space heating, water heating, and cooking in residential and commercial buildings, but also to low-emission, high-efficiency electricity generation in power plants much cheaper to construct than coal-burning or nuclear plants— will tend to discourage R&D investments in other energy options (including in energy end-use efficiency) wherever and whenever such cheap gas is available. Cheap oil and gas, which contributed 63 percent of U.S. energy supply in 1995, are probably the most important single reason for the decline in energy R&D in both the public and private sectors.

(2) Deregulation of the electricity sector

There is abundant evidence that deregulation of the electricity business has caused sharp declines in energy R&D spending by the electric-utility industry in the European countries where deregulation has been underway for some time, and the same thing is now occurring in the United States.49 The declines in overall R&D spending are being accompanied by shifts in the R&D portfolios of utilities toward short-term, low-risk projects. These shifts appear to be a result of deregulation''s exposing the utilities to the day-to-day competitive pressures of "the bottom line," in contrast to the longer-term, public-interest orientation of many of the utility industry''s former regulators.

(2) Overall budgetary stringency in the federal government

The drive to constrain Federal spending in order to balance the budget and perhaps to cut taxes has apparently become so solidly entrenched in American politics that arguments for a substantial increase in any category of government expenditures face automatic and formidable opposition. General lack of confidence in government activities and programs, fueled in part by the propensity of national politicians in recent elections to run essentially "against the government," has contributed to maintaining the budget-cutting atmosphere. The pressure on so-called "discretionary" government spending— which of course includes government support for R&D of all kinds— has been especially intense, because until recently political leaders have been reluctant to go after the larger entitlements that are of direct benefit to so many voters.50

(2) Budgetary constraints on the Department of Energy

Within the atmosphere of reining in government overall, the Department of Energy has been singled out by opponents of "big government" as an example of a federal agency that is at least oversized and perhaps unnecessary, hence deserving of downsizing for certain and arguably a candidate for abolition. This position has been reinforced by vestiges of the Reagan view that any energy activities (including R&D) that are worth undertaking should and will be undertaken by the private sector, and by widely repeated ridicule of certain government energy initiatives of the energy R&D "boom" years of the late 1970s and early 1980s (such as the Synfuels corporation and DOE''s development and demonstration projects on multi-megawatt windmills), which are easy to portray as failures. In my view, good counter-arguments can be made: (a) while certainly there were some badly run programs, much of what is now ridiculed in hindsight was the result of bad guesses about the persistence of high oil prices (a misjudgment in which the DOE had much good company in the private sector and in academia); (b) the overall record of effectiveness of DOE energy-technology R&D research is quite good and contains many striking success stories (well documented, for example, in the Secretary of Energy Advisory Board''s 1995 report on energy R&D); 51 (c) abolition would generate sizable short-term costs (because most of the functions of the DOE, which by any reasonable conception of the responsibilities of government are necessary, would simply have to be relocated in other governmental departments) and little if any long-term benefits; and (d) abolition would send absolutely the wrong public signal at this particular moment about the importance of energy to national well-being. Nonetheless, bad-mouthing of the Department and threats to dismantle it have been taken seriously enough by the Clinton administration to motivate attempts to reduce the size of the target by shrinking the DOE''s total budget.

(2) Inability to re-allocate DOE funds within the Department

The problem of DOE''s overall budgetary constraint is compounded by the circumstance that, within that total budget, energy R&D accounts for only a very modest share ($2.5 billion in FY 1995, with "Basic Energy Sciences" included, out of a total of $17.6. billion). This share cannot easily be increased at the expense of larger parts of the budget (such as the $6.6 billion in the FY 1995 budget for environmental cleanup in the nuclear-weapons production complex and $4.6 billion for nuclear-weapons research and "stockpile stewardship"), because these enjoy protection by statute and by high-level political bargains (as, for example, an administration commitment to protect "stockpile stewardship" that was made in pursuit of weapon-laboratory and Pentagon assent to the Comprehensive Test Ban Treaty).

(2) "Eat your siblings" energy constituencies

Advocates of each class of energy options (e.g., nuclear fission, fossil fuels, renewables, energy end-use efficiency) tend to disparage the prospects of the other classes of options; these tendencies are aggravated, of course, by the zero-sum or declining-sum game characteristics of energy R&D funding. Thus the energy community itself formulates the arguments ("renewables are too costly," "fossil fuels are too dirty," "nuclear fission is too unforgiving," "fusion will never work," "efficiency means belt-tightening and sacrifice or is too much work for consumers") that the budget-cutters cheerfully employ to cut energy R&D programs one at a time. There is no coherent energy-community chorus calling for a responsible portfolio approach to energy R&D that seeks to address and ameliorate the shortcomings of all of the options.

(2) "Allergies" to nuclear energy and to energy taxes.

The prospects for such a portfolio approach have been further dimmed by two "allergies" afflicting contemporary American energy politics, namely an allergy to nuclear energy, which is judged so unpopular politically or so unpromising in terms of economics, safety, waste, and proliferation that few politicians have been willing to associate themselves publicly with providing funding to try to solve these problems; and an allergy to energy taxes, which although they are seen as sensible by virtually all energy economists and virtually all environmentalists are nonetheless seen as unspeakable if not unthinkable by contemporary politicians. As shown in Figure 12-1 and Table 12-1, R&D in nuclear fission has suffered deeper proportional cuts than any other class of energy options, having been nearly eradicated. But without nuclear fission in the portfolio, the chance of developing consensus on a portfolio approach to energy R&D seems next to nil in both the energy community and the Congress (some of the most informed and respected members of both of which are advocates of trying to fix nuclear fission, against the possibility that it will be badly needed, rather than forgetting it without further ado). A responsible portfolio approach to energy R&D would be easy to fund with very modest energy taxes: funding for a quadrupling of current U.S. federal support for energy-technology R&D could be garnered from a gasoline tax of less than five cents per gallon, for example.52 The constraints upon and within the DOE make it unlikely that any substantial increase in energy R&D can be achieved without an earmarked increase in revenues of this sort.

(2) Under-rated links between energy and well-being

I return here to the rationales adduced for energy R&D in the first section of this chapter. Most citizens and most politicians do not care about Btus and kilowatt-hours per se (absent gasoline lines, blackouts, or high prices); and they do not understand, because no one has explained it to them persuasively, how inadequacies in the menu of energy options for the future are likely to influence the economic, environmental, and security values that they do care about. Until these connections are somehow made clearer— whether by articulate opinion leaders or by painful experience— inadequacies in the public investments devoted to energy R&D are likely to persist almost no matter what happens to the other R&D-inhibiting factors I have listed above.

(1) The Challenge for the Second Clinton-Gore Term

As a result of the foregoing phenomena, the United States government does not have an energy R&D program remotely commensurate with the magnitude of the energy-linked challenges likely to emerge early in the next century to the economic, environmental, and international-security dimensions of our well-being. Neither does any other major government in the world have such a strategy (although Japan is closer than the others, at least in overall level of spending). While it is possible to hope that the private sector will do more in energy R&D than it is doing now, moreover, there are fundamental reasons (summarized above) that it will never do remotely as much as societal prudence requires. Without sensible incentives, regulatory guidance, and suitable partnerships with the government, the private sector will not even approach its potential.

A detailed treatment of how the obstacles to the creation of a responsible energy R&D strategy for the United States (not to mention other countries) might be overcome is well beyond the scope of this chapter, although some of the ingredients of an approach will be apparent to readers from the way I have described the problem. Certainly any such effort will require a considerable measure of political leadership, starting with the president and the vice president. Notwithstanding the current vice president''s exceptionally sophisticated appreciation of the challenges posed nationally and globally by the intersection of problems of energy, economic well-being, environment, and security, and notwithstanding the exceptional background, as a world-class energy analyst, of the current incumbent in the position of special assistant to the president for science and technology,53 it was difficult during the first Clinton-Gore term to get the energy issue onto the administration''s policy agenda. The reasons for that are largely those adduced in the preceding section, compounded by the administration''s first-term preoccupations with health-care policy, welfare policy, budget-balancing debates, nuclear-weapons-proliferation issues, and NATO expansion and, probably, by the view of the administration''s political advisors that there would be little electoral mileage in pushing the energy issue at that time.

But there is reason not only to hope but to believe that this situation might change in the second Clinton-Gore term. Toward the end of the first term, the vice president conveyed to the President''s Committee of Advisors on Science and Technology (PCAST) the president''s request that PCAST set forth its views on the issues in science-and-technology policy that it deemed worthy of increased administration attention in a second term. On December 6, 1996, PCAST conveyed in a letter to the president its conviction that five such issues were particularly compelling, of which the first mentioned in the letter was "a national strategy for energy R&D."54 (The other four were improved understanding and management of biological resources, research and technology to improve education and training, industry-government-university partnerships for technological innovation, and improved protection, management, and disposition of nuclear materials.) The text of the part of the PCAST letter dealing with energy was as follows:

Adequate and reliable supplies of affordable energy, obtained in environmentally sustainable ways, are essential to economic prosperity, environmental quality, and political stability around the world; and energy-supply and energy-efficiency technologies represent a multi-hundred-billion dollar per year global market. There is considerable doubt whether the world, which gets three-quarters of all its energy supply from oil, coal, and natural gas, can continue to rely on these fossil fuels to this degree through the expected economic growth of the next few decades without encountering intolerably disruptive climatic change caused by the resulting greenhouse-gas emissions. Yet the United States— which is the world''s largest energy consumer, the largest greenhouse-gas emitter, is 85-percent dependent on fossil fuels, and imports nearly half of its oil at a cost of $50 billion per year— has allowed Federal spending on energy R&D to fall more than 3-fold in real terms in the past 15 years, a period in which private funding for energy R&D also was falling.

Government spending on energy R&D is more than twice as high in Japan as in the United States in absolute terms, and about four times as much as a fraction of GNP.

• We recommend a substantial and sustained increase in Federal expenditures on energy R&D, coupled with measures to encourage increased energy R&D in the private sector; this effort should include greatly increased work on renewable energy options and energy end-use efficiency; restoration of fusion R&D funding to the levels recommended by PCAST last year; exploration of whether and how an expanded contribution to world energy supply from nuclear fission can be achieved; and an expanded effort on clean-fossil-fuel technologies.
  President Clinton responded to PCAST''s "priorities" letter with a letter to PCAST Co-Chair John Young on January 14, 1997, in which the section treating the energy issue said:

In response to your recommendations, I have asked [Presidential Science Advisor] Jack Gibbons to work with the new Secretary of Energy, once he is confirmed by the Senate, to review the current national energy R&D portfolio, and make recommendations to me by October 1, 1997, on how to ensure that the United States has a program that addresses its energy and environmental needs for the next century. The analysis should be done in a global context, and the review should address both near- and long-term national needs including renewable and advanced fission and fusion energy supply options, and energy end-use efficiency.55

A twenty-one-member PCAST Panel on "Energy R&D for the Challenges of the 21st Century" has been formed to address the president''s request, with representation from the energy-supply and energy-equipment industries, from academia, and from the public-interest sector, and with task forces on end-use efficiency, fossil-fuel technology, nuclear energy, and renewables. This Panel, which I have the privilege of chairing, is receiving the full cooperation of the Department of Energy in addressing the sweeping agenda proposed by the president. Its report, which will build on the solid foundation developed in the Secretary of Energy Advisory Board''s 1995 report on energy R&D, will make recommendations concerning the federal government''s portfolio of energy R&D investments, incentives for private-sector energy R&D, and U.S. commitments to international cooperation in energy R&D.

Of course, the commissioning of such a report is not the same thing as a commitment to lead a reshaping of public policy. But it could be a beginning. I hope that all those who understand the connection of adequate energy options to economic prosperity, environmental sustainability, and international security will join the effort to seize this opportunity by urging the administration and the Congress to push ahead.