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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.

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