	DOE’s Budget Authority for Renewable, Fossil, and Nuclear Energy R&D Has Substantially Declined in Real Terms Since 1978

DOE’s budget authority for renewable, fossil, and nuclear energy R&D  dropped by 92 percent from $6 billion  in fiscal year 1978 to $505 million in  fiscal year 1998 (in inflation-adjusted terms) before bouncing back to $1.4  billion in fiscal year 2008. As shown in figure 2, R&D budget authority in  renewable, fossil, and nuclear energy peaked in the late 1970s and fell  sharply in the 1980s. A comparison of  DOE’s fiscal year 2009 budget request with the fiscal year 2008  appropriation shows that renewable energy R&D would decline slightly,  while fossil energy R&D and nuclear energy R&D would increase by 34  percent and 44 percent, respectively (see app. Because the Office of Science funds basic research in materials sciences,  for example, many of its R&D programs may have useful applications for  energy R&D. The Office of Science also funds fundamental research in such areas as  high energy physics, nuclear physics, and fusion energy. DOE Faces Key Challenges in Developing Advanced Energy Technologies for Deployment

There are key technical, cost, and environmental challenges in developing  advanced renewable, fossil, and nuclear energy technologies to address  future energy challenges. Investors’ concerns about high up-front capital costs  are among the most significant challenges in deploying photovoltaic or  concentrating solar energy technologies. DOE’s R&D Challenges for Advanced Fossil Energy Technologies

Since fiscal year 2006, DOE has proposed eliminating its R&D in oil and  natural gas and, in January 2008, announced a restructuring of its coal  R&D program. Natural gas technologies. For new power plant applications,  DOE is developing and demonstrating advanced integrated gasification  combined cycle (IGCC) technologies. Concluding Observations

In the current wake of higher energy costs and the growing recognition  that fossil energy consumption is contributing to global climate change,  the nation is once again assessing how best to stimulate the deployment of  advanced energy technologies. However, despite DOE’s energy R&D  funding of $57.5 billion over the last 30 years, the nation’s energy portfolio  remains heavily reliant on fossil fuels. Our December 2006 report suggested that the Congress  consider further stimulating the development and deployment of a  diversified energy portfolio by focusing R&D funding on advanced energy  technologies. However, because it is unlikely that DOE’s energy R&D  funding alone will be sufficient to significantly diversify the nation’s  energy portfolio, coordinating energy R&D with other federal programs,  policies, incentives, standards, and mandates that can impact the nation’s  energy portfolio will be important for targeting any desired goals to  change the nation’s energy portfolio. In addition, state and local  governments and other nations, along with a worldwide private sector,  will play a role in developing and deploying advanced energy technologies  both here and throughout the global energy market. This is a work of the U.S. government and is not subject to copyright protection in the  United States.
Why GAO Did This Study

For decades, the nation has benefited from relatively inexpensive energy, in the process growing heavily reliant on conventional fossil fuels--oil, natural gas, and coal. However, in the current wake of higher energy costs and environmental concerns about fossil fuel emissions, renewed attention is turning to the development of advanced energy technologies as alternatives. In the United States, the Department of Energy (DOE) has long conducted research, development, and demonstration (R&D) on advanced renewable, fossil, and nuclear energy technologies. DOE's Office of Science has also funded basic energy-related research. This testimony addresses (1) funding trends for DOE's renewable, fossil, and nuclear energy R&D programs and its Office of Science and (2) key challenges in developing and deploying advanced energy technologies. It is based on GAO's December 2006 report entitled Department of Energy: Key Challenges Remain for Developing and Deploying Advanced Energy Technologies to Meet Future Needs (GAO-07-106). In doing that work, GAO reviewed DOE's R&D budget data and strategic plans and obtained the views of experts in DOE, industry, and academia, as well as state and foreign government officials.

What GAO Found

Between fiscal years 1978 and 1998, DOE's budget authority for renewable, fossil, and nuclear energy R&D fell 92 percent when adjusted for inflation (from its $6 billion peak in fiscal year 1978 to $505 million in fiscal year 1998). It has since rebounded to $1.4 billion in fiscal year 2008. Energy R&D funding in the late 1970s was robust in response to the 1973 energy crisis caused by constricted oil supplies. However, R&D funding plunged in the 1980s as oil prices returned to their historic levels. DOE's fiscal year 2009 budget, as compared with 2008, requests slightly less budget authority for renewable energy R&D, while seeking increases of 34 percent for fossil energy R&D and 44 percent for nuclear energy R&D. In addition, DOE is requesting $4.7 billion for basic research under its Office of Science. The development and deployment of advanced energy technologies present key technical, cost, and environmental challenges. DOE's energy R&D program has focused on reducing high up-front capital costs; improving the operating efficiency of advanced energy technologies to enable them to better compete with conventional energy technologies; and reducing emissions of carbon dioxide, a greenhouse gas linked to global warming, and pollutants that adversely affect public health and the environment. However, while DOE has spent $57.5 billion over the past 30 years for R&D on these technologies, the nation's energy portfolio has not dramatically changed--fossil energy today provides 85 percent of the nation's energy compared to 93 percent in 1973. Because DOE's energy R&D funding alone will not be sufficient to deploy advanced energy technologies, coordinating energy R&D with other federal energy-related programs and policies will be important. In addition, other governments and the private sector will play a key role in developing and deploying advanced energy technologies that can change the nation's energy portfolio.