U.S. Hasn't Gotten Much Mileage Out of Energy Research Spending

TIMES STAFF WRITER

The federal government has spent more than $110 billion on energy research in the last half-century. Tax breaks and other subsidies to encourage development of various sources of energy--for everything from oil wells to nuclear plants to wind turbines--easily double that figure.

Scientists have tried to replicate the power of the stars inside doughnut-shaped reactors, brew fuel alcohol in huge caldrons of fermenting corn and harness the sun's energy through giant magnifying mirrors in the Mojave Desert.

Yet all that spending has failed to produce what has become the Holy Grail of the modern era: a cheap, inexhaustible source of power. The vast majority of energy we consume is still pumped and mined out of the earth.

"We make the wrong bet," said Daniel M. Kammen, a UC Berkeley physicist. "We use R&D; money to try to pick winners by pouring tons of money into big projects, rather than funding lots of different research and letting the marketplace pick the winners."

In the coming months, the Bush administration and Congress will determine what new bets to place as they hash out a revised federal energy policy. Republican lawmakers favor efforts to expand domestic production of oil, natural gas and coal, as detailed in a comprehensive energy bill introduced Monday by Senate GOP leaders. Democrats lean toward developing renewable sources, such as solar and wind power, and improving energy efficiency.

Whatever choices are made, Kammen thinks the Department of Energy, preoccupied with monitoring nuclear reactors and their radioactive waste, is ill-equipped to lead the sort of comprehensive research initiatives that could achieve significant breakthroughs.

Indeed, stacks of government reports from the department itself and the Congressional Research Service point to the same conclusion: The money taxpayers have plowed into energy research and development in the last 50 years--$111.5 billion when adjusted to 1999 dollars--has done little to increase the country's energy self-sufficiency.

Nearly 70% of that funding went into just two areas of research--nuclear energy ($66 billion) and renewable sources ($12 billion). Those technologies account for about 16% of U.S. energy production and about 22% of its electrical generation, according to the federal Energy Information Administration.

Even now, the source of electricity for most Americans remains water-driven steam turbines or some form of coal, gas or oil--the same sources developed at the dawn of the electrical age a century ago to turn heat energy into a stream of electrons.

One problem, said Paul Georgia of the Competitive Enterprise Institute in Washington, is that politics, rather than market forces, often sets the agenda for government research efforts.

"That's how you get boondoggles like clean coal, which is profitable only when the price of oil reaches $50 to $100 a barrel," said Georgia, an environmental policy analyst. Since 1988, the government has spent nearly $2 billion on such research, which seeks ways to burn coal more efficiently and with fewer emissions.

The biggest gains from government-sponsored research have come from the comparatively small $8 billion spent on energy efficiency, said Howard Geller, former executive director of the American Council for an Energy-Efficient Economy. That money has paid off in refrigerators that are larger yet use just a third of the electricity of those 25 years ago, and more efficient indoor lighting, auto engines and even steel factories, Geller said.

The United States uses 42% less energy per unit of gross domestic product than in 1970, Geller said.

He said that's a far greater return than from the $66 billion the government has spent on research for nuclear power, which today accounts for 11% of the country's energy production.

The government has further subsidized energy research by plowing billions into incentives and tax credits. One of the most frequently criticized beneficiaries of such subsidies is ethanol, a would-be gasoline substitute made from corn.

"It is an agricultural subsidy program masquerading as an energy project," Kammen of UC Berkeley said.

Ethanol consumes 6% of the nation's corn crop and is "almost entirely a result of federal subsidies and regulations," according to a report issued in June by the Congressional Research Service. The report concluded that the market for ethanol as a fuel--it is made from fermenting the sugar in corn, and until it is denatured is the identical chemical in alcoholic beverages--would die quickly without government support.

What's more, the ethanol program makes many food products more expensive by adding anywhere from 4 to 23 cents to the price of a bushel of corn, depending on the size of the crop, the congressional study concluded.

The U.S. consumes about 1.4 billion gallons of ethanol a year, about 1% of gasoline consumption. But ethanol decreases overall fuel efficiency. Autos using gasohol--the typical blend of ethanol and gasoline--experience a 3% decrease in fuel efficiency, according to the study. Meanwhile, ethanol tax exemptions cost the government about $700 million in motor fuel taxes annually.

From the late 1940s until the oil crisis of 1973, nearly four of five federal energy research dollars went to developing nuclear power. Most of the rest went to fossil fuel ventures. But the specter of long lines at gas pumps during the Arab embargo, and later spikes in crude oil prices, sparked a boom in research spending in new energy concepts.

Budgets nearly doubled in the next 25 years, with money going into a broader array of technologies. But the results of that spending often followed the pattern of the synthetic fuel industry, whose efforts to transform coal into liquids proved to be too expensive.

Spending on renewable forms of energy went from zero to an average $1.5 billion a year by the late 1970s, but with spotty results.

"All the money spent on renewable energy has resulted in less than a 2% market share for electricity," said Jerry Taylor, director of natural resources and environmental studies for the Cato Institute in Washington. "That doesn't make much difference in the overall energy market."

But Kammen, director of Berkeley's Energy Resources Group, said past spending on renewable energy is starting to pay off, even if it has yet to show up in power supplies.

"Wind energy is among the cheapest forms of energy you can buy today if you are putting in a new power plant," he said.

Technical innovations, such as computers that automatically position windmill turbine blades to take the best advantage of wind conditions, have brought the cost down to 5 to 8 cents a kilowatt-hour, about the same as for natural gas-fired turbines before the current power crunch. Solar power, by comparison, still runs about 18 cents a kilowatt-hour despite advances that have slashed costs by half in the last decade, Kammen said.

In any energy policy debate, nuclear technology remains highly contentious.

Taylor believes that if it were not for "government intervention in nuclear energy, there would not be a single nuclear power plant in the United States today."

Before California's electricity crisis, nuclear power was widely regarded as a dead industry, despite the money poured into research and billions more in government subsidies. The cost of building new nuclear power plants is not competitive with other forms of electricity generation.

No nuclear plants have been ordered since 1978, and more than 100 reactors have been canceled, according to a congressional report issued in November.

While public concern over safety and waste disposal have tarnished the industry, the biggest reason nuclear power has fallen out of favor is cost. The price tag for a nuclear-fueled power plant can reach $6 billion, or $3,000 per kilowatt of electricity-generating capacity, according to congressional estimates. That compares with $500 to $700 per kilowatt for a natural gas-fired plant.

But in the last year, rising natural gas prices and a shortage of generating capacity have given the nuclear power industry a reprieve, as seen in rising sale prices for existing nuclear plants. The industry has received a further boost from concerns over the burning of coal, oil and other fossil fuels, which produces so-called greenhouse gases believed to contribute to global warming.

Kammen, who stresses that he does not advocate nuclear power, nonetheless said government-funded research has led to safety improvements that could make the technology viable if there were a "competent" federal agency whose sole purpose was to monitor the industry.

Many critics, however, believe that any more government money spent on nuclear power research would be a waste. They point out that about $27 billion has gone to research in fusion energy and breeder reactors, technology that still supplies no meaningful amount of electricity to the national power grid.

"They have consumed huge amounts of money for essentially zero results," said Scott Denman, executive director of the Safe Energy Communication Council, an energy policy watchdog. "I don't think you will be able to find anyone who will argue that we got something out of the breeder reactor program."

The potential for an eventual payoff in fusion remains remote, he said, noting: "They have been saying fusion is 30 or 40 years away for decades."

Perhaps because of the past failure of government-funded research to yield breakthrough energy technology, annual federal spending on energy research and development has declined steadily from more than $6 billion annually in the late 1970s to about $2 billion in the late 1990s. The Pentagon, by contrast, spends $40 billion to $50 billion a year on research and development.

Moreover, energy companies tend to be among the tightest funders of R&D; of any industry, Kammen said. Energy companies spend barely 0.5% of their net sales on research. That compares with about 5% for the chemical industry and 10% or more for the drug and communications equipment industries.

Still, others are concerned by the decrease in federal spending on energy research, despite the government's spotty track record.

"This is an important part of our economy, and we are starting to see a variety of energy crises break out," said Geller, the efficiency expert. "We have the power crunch in California, natural gas prices double what they were a year ago nationally and gasoline prices that have risen by a third to about $1.60 a gallon over the past 18 months."

Given all that, he said, "we should not be backing away from R&D; into advanced energy technologies of all sorts and in particular energy efficiency, where we have had huge returns."

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Return on Investment

Although most federal research money goes to study nuclear power, the nation still depends primarily on fossil fuels. The fraction of research and development spending on energy efficiency yields a significant return.

*

Spending on R&D;

Nuclear power: 59%

Fossil fuels: 23%

Renewable: 11%

Energy efficiency: 7%

*

Energy Sources

Fossil fuels: 80%

Nuclear: 11%

Renewable*: 5%

Hydro: 4%

*

Household Energy Consumption

*--*

Year Millions of BTUs/household 1997 101 1978 138

*--*

*

*Includes geothermal, solar, wind, wood and waste products

Sources: Energy Information Administration, Congressional Research Service; researched by NONA YATES/Los Angeles Times

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