Where Bush would steer energy R&D

If new technology is a key answer to global warming and America's addiction to oil, then President Bush's proposal to boost federal spending on energy R&D – by no less than 30 percent in fiscal 2008 – would seem a welcome step.

In the new $2.7 billion budget plan, R&D dollars allotted to the US Department of Energy (DOE) continue a transition toward research that will help cut greenhouse gases.

But overall federal spending on energy research in real dollars is only one-third what it was at its 1978 peak, according to a Harvard University analysis. Some also question the administration's emphasis on nuclear research, saying other promising technologies could be applied sooner to climate and energy-security issues.

"The new DOE budget doesn't reflect the big increase in public concern about greenhouse gases," says energy expert Richard Newell, formerly a senior economist on the President's Council of Economic Advisers, now at Duke University in North Carolina.

Because the federal government remains the largest investor in energy R&D, its spending priorities are of keen interest to scientists, environmentalists, energy entrepreneurs, utilities, and the general public – especially as concerns rise about both climate change and energy security. As might be expected, the new budget proposal has a host of critics. Among the concerns:

•Next year's budget request would boost funding for biofuel, clean-coal, battery, and solar technologies. But it eliminates research for hydropower and geo-thermal, two renewable energy sources.

•Spending on energy-efficiency programs, which in the past led to low-power refrigerators and energy-saving compact fluorescent bulbs, would drop.

•There would be a fourfold increase from 2006 in spending for nuclear-fuel reprocessing, a practice that many experts say does little to replace oil and remains years from commercialization.

Taken together, the budget request breaks little new ground in terms of fighting global warming or the nation's reliance on foreign oil, many experts say.

"There simply is no new sense of urgency in this energy R&D budget," says Kelly Gallagher, director of the Energy Technology Innovation Project at Harvard University. "Growth for solar, biofuels, and clean-coal research is positive. But overall funding is not nearly equal to the challenge."

Resources devoted to climate change and energy security "are largely anemic," says Jason Grumet, executive director of the National Commission on Energy Policy, a group of energy experts that recommends doubling federal energy-research funding.

Energy Department officials disagree.

"This year's budget request supports the president's energy initiative to accelerate the deployment of renewable energy technology, such as biomass, hydrogen, and solar energy," says Megan Barnett, a DOE spokeswoman. The budget "builds on our commitment to strengthen global energy security by making investment to diversify our energy resources, expand our nation's scientific know-how, and continue to invest in energy that can reduce our carbon footprint," she says.

The overall decline in federal research dollars since the late 1970s is troubling to many, but not to everyone. Some argue that government is best left out of the energy research business because it's no good at picking winning technologies. The nation has received little in return for its massive investment in energy-technology research since 1978, these analysts say.

"If the utility industry wants clean coal, they can figure out themselves how to have cleaner coal," says Myron Ebell of the Competitive Enterprise Institute, a Washington think tank. "We don't think government-sponsored technology has a very good track record. Markets work better."

Others cite studies that indicate benefits to government involvement. A 2004 National Research Council (NRC) study calculated a historically good return on several categories of energy technology investment. Energy efficiency, for instance, showed a $30 billion return on investment of $7 billion – or $4 for every $1 invested in it since 1978, according to the report.

Innovations flowing from federal research include compact fluorescent light bulbs and refrigerators that use only one-third the electricity of earlier models. These and other gains have helped slash America's "energy intensity," the amount of energy spending per dollar of economic output, economists say.

Funding for energy-efficiency technology at DOE has seen a "substantial decline" during the Bush years, says Ms. Gallagher. Even renewable-energy funding has been only about flat, after inflation is considered, she says. She and others question whether funding for nuclear technology is robbing efficiency and renewable research budgets – and even funds for "clean" coal.

The ability to capture carbon dioxide (the major gas tied to global warming) from future coal-fired power plants and store it underground is critical to the future of using massive US coal reserves. If research doesn't reveal how CO2 can be held underground, then those reserves are at risk, experts say.

Even so, funding for "carbon sequestration" research is up a modest 7 percent since last year to $79 million. That's dwarfed by a $395 million budget request for nuclear-fuel reprocessing – a 400 percent jump from 2006. The request for nuclear-fusion research is up 34 percent from this year, to $428 million.

"There's no way fusion is going to be commercial even in decades – and we should not be robbing Peter to pay Paul," says Carol Werner of the Environmental and Energy Study Institute in Washington. "We should be deploying technology that can delivered now and over the next 15 years. Fusion is not one of those."

Still, she's glad to see clean-coal research getting more funding. DOE plans to build an almost-emissions-free "FutureGen" plant, a $1 billion coal-fired power plant, in Texas or Illinois by 2012. It would capture carbon dioxide – a precursor to storing the gas underground.

FutureGen would get $109 million, double last year's request. Likewise, funding for biomass research, which includes ethanol made from switchgrass and crops other than corn, would double since 2006, and solar funding would rise 80 percent. It's good, but it's not enough, say experts.

Federal R&D funding is vital for pilot projects for noncorn-based ethanol and carbon sequestration, in particular, says Robert Nordhaus, an expert on energy technology research at Van Ness Feldman, a Washington law firm. "We're ... betting on carbon sequestration for keeping coal going without really moving quickly ahead on the sequestration project," he says.

A major problem has been that priorities and funding levels change continually, "which makes it difficult to have a coherent technology program," Mr. Nordhaus says.

A report last week by the Electric Power Research Institute, the industry's research arm, cited the urgency of energy research to addressing global warming. CO2 emissions from the coal-burning US electric-utility sector could be cut to 1990 levels within 25 years, the report said. But that can happen only with "accelerated investment in electric technology R&D and aggressive deployment of the resulting technologies," the EPRI report states.