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Solar Surprise

Analysis by co-author of Hirsch Report discovers surprising support for renewable energy R&D at federal level.

By Roger H. Bezdek and Robert M. Wendling

Reprinted from ASPO USA weekly Peak Oil Review.

The federal government has historically encouraged and supported the development of domestic U.S. energy resources in many diverse ways. Federal incentives for energy production have taken the form of direct subsidies, regulation, tax incentives, market support, demonstration programs, R&D funding, procurement mandates, information generation and dissemination, technology transfer, directed purchases, and other types of actions.

Of the $644 billion (2003 dollars; all estimates quoted here are in constant 2003 dollars, unless otherwise noted, and refer to actual expenditures in the relevant year) in total federal energy-related incentives provided between 1950 and 2003, R&D funding comprised about 19 percent— $121 billion.

Table 1 The Total Cost of Federal Incentives for Energy Development Through 2003 (Billions of 2003 Dollars)

Nuclear Hydro Coal Oil Gas Solar Geothermal TOTAL Percent
R&D $60.6 $1.2 $27.3 $6.7 $5.6 $16.4 $ 2.9 $120.7 18.7
Regulation 9.9 4.1 6.2 106.1 2.9 0 0 129.2 20.1
Taxation 0 10.5 26.7 155.4 75.6 11.7 1.4 281.3 43.7
Disbursements -8.3 1.4 6.4 2.1 0 1.5 0 3.1 0.5
Government Services 1.2 1.3 12.6 27.2 1.3 1.7 0 45.3 7.0
Market Activity 0 54.1 1.7 4.5 1.7 1.3 1.4 64.7 10.0
TOTAL $63.4 $72.6 $80.9 $302.0 $87.1 $32.6 $5.7 $644.3

Percent 9.8 11.3 12.6 46.9 13.5 5.1 0.9 100.0

Source: Management Information Services, Inc., 2006.

The 'Big Three'
The R&D funds were not distributed evenly among technologies. Three energy technologies—nuclear energy, coal, and solar and renewable energy—have received 86 percent of all federal R&D support. These R&D programs are the subject of this analysis.

Federal involvement and intervention in energy markets has been pervasive for most of the past century, especially with respect to regulatory, price, R&D, and tax policies. Beginning in the 1950s, as a result of the Atomic Energy Act, the Federal government began to expand its energy-related R&D, particularly as it related to commercialization of nuclear energy as a source of electricity. While Federal support of energy research and development pro-grams began during the 1950s, Federal support of energy R&D became a major national priority after the first "energy crisis" of 1973/74.

Due to the 1973 Arab oil embargo and the resulting rapid increases in oil prices, energy R&D changed from being a peripheral Federal interest to a major concern:

Federal support for energy R&D grew exponentially after the energy shocks of 1973-74. In terms of federal R&D funding, 1976 was a watershed year, as this was the first budget year in which the new "reformed" federal energy organizations were fully in place and the first year in which federal energy R&D funding priorities were broadly redirected.

Here we analyze federal energy R&D expenditures since 1950, with particular emphasis on the 1976–2003 period. We also estimate the cost, through 2003, of all federal incentives for energy development.

Energy R&D Priorities
Analysis of federal budget data over the past four decades shows:

There is insufficient information dating back to 1950 to derive detailed ex-penditure estimates for all programs, but these data are available for two current, well-developed electricity-producing technologies—light water reactors and photovoltaics:

Since 1976, when federal energy R&D priorities were reordered, R&D spending for solar PV ($2.9 billion) has been twice that for the nuclear LWR ($1.5 billion).

Over the past decade, 1994-2003, R&D spending for solar PV ($770 million) ex-ceeded LWR spending ($480) by more than 50 percent.

In terms of support for electric generation technologies, cumulative R&D expenditures between 1976 and 2003 favored renewables technologies.

Support in Perspective
To place these findings in perspective, the three energy sources currently provide 71 percent of the nation's electricity and 43 percent of the nation's total energy consumption:

The major conclusions derived here include:

Bezdek and Wendling are the authors of "A Half Century of Federal Energy Incentives: Size, Distribution, and Policy Implications," published in January 2006 by Management Information Services, Inc. Washington, D.C.

Times Article Viewed: 10653
Published: 01-May-2006


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