Analysis of The Climate Change Technology Initiative - Research and Development Support

Report#:SR/OIAF/99-01

Introduction

The Administration's Climate Change Technology Initiative (CCTI) proposes fiscal year 2000 funding for a number of programs for the research, development, and deployment of energy-efficient and renewable technologies, more efficient electricity generation technologies, and carbon sequestration research--many of which are continuations or expansions of ongoing programs. The total budget request for CCTI research, development, and deployment programs is almost $1.4 billion, an increase of $347 million over the estimated fiscal year 1999 budget. The initiatives include basic research and development for buildings, industry, transportation, and electricity generation technologies and carbon sequestration, as well as a variety of programs to encourage the adoption and deployment of the technologies, including voluntary and information programs, partnerships, and consultations.

Because it is difficult to relate levels of funding for research and development directly to specific improvements in the characteristics, benefits, and availability of energy technologies, the analysis in this chapter does not attempt to assess the overall impact of the proposed $1.4 billion funding. It is likely that some of the technologies for which research and development would be funded under the CCTI program will be more successful than the goals while others may not be successful at all, but it is difficult to foresee which specific technologies eventually will succeed. Similarly, it is difficult to isolate the effects of information and voluntary programs on technology development and deployment either in the past or in the future.

Some of the programs that would receive CCTI support are ongoing research efforts funded by the U.S. Department of Energy (DOE), the U.S. Environmental Protection Agency (EPA), and the Department of Housing and Urban Development (HUD), and information about their goals and accomplishments to date is available. This chapter reviews the CCTI programs sector by sector. To provide as much insight as possible into the potential efficacy of the CCTI research, development, and deployment initiatives, the following analytical approaches are used:

First, for each sector--buildings, industry, transportation, and electricity generation--a quantitative estimate of the overall impact of technology advances based on current levels of research and development is given through the technological improvements in the reference case. The reference case projections in this report, like the reference case for the Annual Energy Outlook 1999 (AEO99), include energy savings (reductions in energy use) that are expected to result from technology advances arising from research and development programs currently in place. To provide an estimate of the savings attributable to expected efficiency improvements in each sector, reference case projections are compared with projections from "frozen technology" cases. In the frozen technology case for the buildings sector, all future equipment purchases are based on equipment available in 1999, and new building shell efficiencies are fixed at 1999 levels. In the industrial sector, the efficiencies of new plants and equipment are constant at 1999 levels. New equipment is fixed at 1999 efficiencies for all transportation modes, and the cost and performance characteristics of all electricity generation technologies are held to 1999 levels.

Second, for ongoing research programs that would receive CCTI funding and for which specific program goals have been published, this analysis includes quantitative assessments of the effects that each program would have on energy use, expenditures for energy purchases, and carbon emissions if the goals of the program were fully realized. The appropriate modules of the National Energy Modeling System (NEMS) were used in standalone mode for these assessments, comparing a reference case with a special case reflecting the assumption that the program goals will be met. Such quantitative assessments are provided in this chapter for the following research, development, and deployment programs: Partnership for Advanced Technology in Housing (PATH) and Million Solar Roofs in the buildings sectors; and, in the transportation sector, the Partnership for a New Generation of Vehicles (PNGV) and advanced technology programs for light and heavy diesel trucks. These analyses do not reflect the specific effects of the proposed CCTI spending levels but, rather, the impacts that the programs themselves would have if they came to fruition.

Third, for those energy research and development programs that were specifically included in the AEO99 reference case, quantitative estimates of their effects are provided, based on standalone sectoral analyses in NEMS (with no feedback from other sectors or the overall economy). Program impacts are estimated by comparing reference case results with the results from cases which exclude the improvements that result from a specific program in the reference case. The following programs are addressed with this methodology: Energy Star TVs and VCRs (buildings sector) and ethanol from biomass (transportation).

Fourth, for programs not susceptible to quantitative analysis by the methods above, qualitative discussions of their goals and likely impacts are provided. Qualitative analyses of the following programs are included in this chapter: Energy Star refrigerated vending machines, Energy Star Buildings and Green Lights Partnership, Energy Smart Schools, Federal Energy Management Program (FEMP), and DOE's Building Technology Program for the buildings sector; DOE's Industries of the Future, Advanced Turbine System, and CHP Challenge programs and EPA's Climate Wise program for the industrial sector; and a variety of technology research, development, and deployment programs for the electricity generation sector, encompassing efficient fossil fuel technologies, carbon sequestration, solar photovoltaics, solar thermal technology, biomass power systems, wind energy, geothermal energy, hydropower, nuclear power, hydrogen fuels, and high-temperature superconductivity.

Funding for research and development may provide benefits by encouraging research into more efficient and advanced technologies that otherwise might not emerge, or in accelerating such research. The research, development, and deployment programs are intended to develop new technologies, reduce costs, and improve operating characteristics of existing technologies to make them more competitive, and to encourage the deployment of advanced technologies. In addition to helping to lower energy consumption and carbon emissions, these programs, if successful, could have additional benefits in terms of lower consumer energy expenditures, improved air quality, international competitiveness, energy security, and the overall quality of life.

Successful development of advanced technologies may not lead to immediate penetration in the marketplace. A number of factors may slow technology penetration, including low prices for fossil energy and conventional technologies, lack of information, unfamiliarity with the use and maintenance of new products, and uncertainties concerning the reliability and further development of new technologies. Gradual stock turnover can also slow the penetration of improved technologies, so that significant changes in the average stock of equipment may take a long time. Information programs, collaborative efforts for development and diffusion, and incentives to enhance the cost-effectiveness of new technologies all may help to encourage technology penetration. Subsequently, the initial penetration may have the additional impact of reducing costs through learning, establishing the infrastructure, and increasing familiarity with new technologies.

These barriers do not mean that the impacts could not be substantial over time. Some of the CCTI programs could provide more benefits in the long term as the capital stock gradually turns over, and some are likely to achieve success beyond the 2020 horizon of the analysis.

Buildings

The CCTI proposal includes $273 million in funding for buildings technology research, development, and deployment. CCTI funding for DOE, EPA, and Department of Housing and Urban Development (HUD) programs in fiscal year 2000 represents a 59-percent increase over fiscal year 1999 spending on buildings technology. Initiatives range from efficiency standards, to voluntary efficiency and partnership programs (such as Energy Star Products and Energy Star Buildings), to programs for new and renewable technologies (such as advanced lighting, space conditioning, and photovoltaic energy systems).

The AEO99 reference case includes expected energy savings from research programs in place at the time the forecasts were developed. Because it is difficult to represent such programs explicitly in the NEMS modeling framework, their impacts are generally represented as declines in costs for efficient equipment and marginal improvements in building shell efficiency over time. The programs discussed below, to the extent that they existed at the time the reference case was developed, all contribute to the projected increase in efficiency over time. To illustrate the amount of energy savings due to increased efficiency in the buildings sector as a whole, the reference case can be compared with a frozen technology case, which holds equipment and building shell efficiencies at their respective 1999 levels. The comparison shows that, in 2010, projected delivered energy consumption in the buildings sector is 580 trillion Btu (3 percent) lower in the reference case than in the frozen technology case, and projected carbon emissions from the sector are 16 million metric tons (2.6 percent) lower.⁽⁶²⁾

The following discussion describes some of the CCTI research, development, and deployment initiatives for the buildings sector and the approaches used to analyze their potential impacts on residential and commercial energy use and carbon emissions. The energy efficiency appliance standards program is addressed separately in Chapter 4. The programs described are just a sampling of the many initiatives included in the CCTI proposal for buildings technology.

Partnership for Advancing Technology in Housing (PATH)

The goal of the PATH program is for Federal agencies to "work with the buildings industry to develop, demonstrate, and deploy housing technologies to make newly constructed homes 50 percent more energy-efficient within a decade and to enable the retrofitting of at least 15 million existing homes within a decade to make them 30 percent more efficient." In addition, DOE's Building America program will help build 2,000 energy-efficient homes and disseminate the results to the builders of 15,000 other houses. The goals associated with this program are similar to those outlined in the tax credit proposal for energy-efficient new homes; however, the incentives provided by the program are less clear.

To demonstrate the impact that the PATH program could have if it were fully successful, a case was developed in the NEMS residential module, assuming that the goals of the PATH program for new construction would be fully realized. By 2010, 70 percent of all new homes constructed were assumed to be 50 percent more energy-efficient in heating and cooling than today's new homes. (It should be noted that any homes built under the PATH program during 2000-2004 would qualify for the energy efficient new home tax credit mentioned in Chapter 2, although the tax credit analysis in Chapter 2 did not consider the PATH goals.) Table 25 shows the energy, carbon, and energy bill savings projected to come from meeting the goals of the PATH program. In 2010, annual energy savings relative to the reference case are projected at 140.7 trillion Btu (1 percent), saving Americans $1.4 billion and reducing carbon emissions by 3.1 million metric tons (1 percent). In 2020, the projected savings are 307.8 trillion Btu (2 percent of the reference case projection), $2.9 billion in consumer energy bills, and 6.7 million metric tons of carbon emissions (2 percent).

Energy Star Products

The Energy Star Products program promotes the use of energy-efficient appliances through labeling efficient products and educating consumers about the benefits of energy efficiency. Current programs cover products such as air conditioners, televisions, and office equipment. Many Energy Star programs have the potential to produce carbon emissions reductions in addition to those projected for measures contained in the reference case. Others are already represented in the reference case.

The proposed fiscal year 2000 budget calls for new funding to support the launch of 25 new Energy Star product lines.⁽⁶³⁾ Possible candidates for the Energy Star label include compact fluorescent lamps, ventilation fans, ducts, water coolers, and internal power supplies. Because the products that would be added to the Energy Star lineup have not been identified as yet, the extent of the potential energy savings is not quantifiable. Two examples of recent additions can, however, be used to illustrate possible savings.

The Energy Star TVs and VCRs program was implemented in 1998 to cut the amount of power each device uses while in standby mode. The current Memorandum of Understanding (MOU) between the manufacturers and EPA is to restrict standby power to 3 watts for TVs and 4 watts for VCRs. Currently, EPA reports that TV shipments show a 30-percent compliance rate with the program.⁽⁶⁴⁾ EPA plans to strengthen the MOU to a 1 watt restriction within the next several years. The AEO99 reference case explicitly added an estimate for the effect of the current MOU in residential households. Over the next 10 years, it is projected that 168 trillion Btu of electricity will be saved (cumulatively), accumulating $3.9 billion dollars of energy bill savings, and abating 8.9 million metric tons of carbon emissions cumulatively (Table 26). In 2010, the program is projected to save 30 trillion Btu of delivered electricity (0.7 percent of residential electricity use) and to reduce carbon emissions by 1.5 million metric tons (0.4 percent) relative to the reference case projections.

Another Energy Star program just getting started has the goal of improving the energy efficiency of refrigerated vending machines by 25 percent. One recent estimate puts annual electricity consumption by refrigerated vending machines at about 7.5 billion kilowatthours per year.⁽⁶⁵⁾ If the program goals were met, annual electricity consumption for the machines would be reduced to about 5.6 billion kilowatthours per year, saving about 1.9 billion kilowatthours per year. The energy savings would translate into 0.3 million metric tons of carbon emissions avoided in 2010. Because the typical lifetime of a vending machine is 7 to 10 years, it would take a minimum of 7 to 10 years from the time the efficient vending machines are widely available for the entire 25 percent savings to be possible. Some energy savings could be realized earlier if owners decide to install energy-efficient lighting components when existing machines are refurbished (normally after 3 to 5 years of service). The success of the program may depend ultimately on the willingness of bottlers, who typically own the vending machines, to buy new machines that are more expensive initially but have lower maintenance costs. Any energy bill savings would go to the company that pays the utility bills where the vending machine is located, rather than to the owner.

As the above examples illustrate, many Energy Star programs can produce carbon savings in addition to those projected to result from measures included in EIA's reference case. As with many voluntary programs, however, it is possible that many of the actions are included in the reference case and do not create additional savings.

Million Solar Roofs

DOE's Million Solar Roofs (MSR) program is an example of a national voluntary program aimed at increasing the penetration of photovoltaic and solar thermal technologies. The MSR program goal is to facilitate the installation of 1 million solar roofs by 2010. Among the activities fostered to accomplish this goal, the program commits its partners to a variety of actions. Some of the actions MSR partners can undertake include:

Committing to install solar equipment in a certain number of structures

Undertaking activities to reduce barriers to the adoption of solar technologies by identifying financial incentives for solar installations, establishing net metering for photovoltaics, and modifying codes and standards for solar installations

Implementing training and information-sharing programs.⁽⁶⁶⁾

Table 27 shows the total energy, carbon, and energy bill savings projected to result from successful realization of the MSR program goals. It should be noted that a portion of the committed units are included in the reference case to account for the energy savings associated with installations under the MSR program. Savings included in the reference case are included in the totals shown in Table 27.

The impacts of the following programs are difficult to quantify because of the voluntary, informational, and/or cross-cutting nature of their activities. A qualitative discussion is presented to describe the types of services and benefits that could come from the programs.

Energy-Efficient Buildings and Energy Smart Schools

Energy Star programs also exist for commercial buildings and newly constructed homes. The Energy Star Buildings and Green Lights Partnership is a voluntary partnership between U.S. organizations, DOE, and EPA to promote energy efficiency in commercial and industrial facility space. Participants receive technical information, customized support services, public relations assistance, and access to a broad range of resources and tools. Program literature states that U.S. organizations could save an estimated $130 billion by 2010 and reduce their buildings' energy use by up to 30 percent. By 2010, EPA expects this partnership to achieve reductions in greenhouse gas emissions of at least 24 million metric tons carbon equivalent. As of November 1998, the program reported 3,000 organizations participating in the partnership. The program focuses first on energy-efficient lighting upgrades, typically the most cost-effective improvement for commercial buildings. It has enjoyed some success, with 2.8 billion feet of commercial and industrial floorspace upgraded (primarily lighting upgrades) by the end of 1997. EPA reports $514 million in annual energy cost savings from the completed upgrades.⁽⁶⁷⁾ The NEMS commercial module includes the effects of this program in its reference case assumptions.

Energy Smart Schools is a new program announced in October 1998 that would garner some of the benefit of the proposed increase in CCTI funding. The initiative proposes to bring together public and private sector resources to cut schools' energy bills 25 percent by 2010, providing savings to be reinvested in education. Energy Smart Schools is primarily an informational and outreach program. This program cuts across several other DOE programs, helping individual schools access existing programs such as Rebuild America, Energy Star, the Million Solar Roofs initiative, and other national, State, and local programs that provide direct technical assistance, tools, and training to schools. Although the program goal is explicitly stated, the potential effects of any informational program are difficult to quantify. Projecting the effects of this program is complicated by the fact that many of the actual savings would be the direct result of other programs and would be counted by those program sponsors as well.

Federal Energy Management Program

The mission of the Federal Energy Management Program (FEMP) is to reduce the cost of government by advancing energy efficiency, water conservation, and the use of solar and other renewable technology. This mission has been shaped by several Federal laws and Executive Orders, including the Federal energy reduction goals set forth in the National Energy Policy Act of 1992 (EPACT) and Executive Order 12902 in 1994. EPACT mandates a 20-percent reduction in energy consumption in Federal buildings by fiscal year 2000, when measured against a fiscal year 1985 baseline on a Btu-per-square-foot basis. Executive Order 12902 requires agencies to achieve a 30-percent reduction by fiscal year 2005.

FEMP activities to help agencies meet their energy goals include creation of partnerships, resource leveraging, technology transfer, and training and support. The fiscal year 2000 budget request includes an increase in funding of $8 million (34 percent) over the 1999 FEMP budget. The nature of FEMP as an organization providing services to other Federal agencies makes it difficult to quantify the effects of additional funding. However, an indication of the benefits gained through FEMP funding can be provided by outlining the progress made toward helping Federal agencies meet their energy reduction goals:

By the end of fiscal year 1998, the Government had decreased energy consumption in buildings by 15.2 percent per square foot since 1985--halfway to its goal of achieving a 30-percent reduction by 2005.

Energy efficiency efforts have resulted in cumulative savings of $6.3 billion in the Government's energy bill compared to a 1985 baseline.

Carbon emissions from energy used in buildings fell by 2 million metric tons from 1985 to 1996.

Funding increases are aimed at accelerating the use of innovative multi-billion-dollar contracts that leverage private-sector funds for Federal savings; increasing procurement of energy efficiency and renewable energy products; expanding the opportunities for solar power; and addressing Federal energy opportunities arising from utility restructuring and green power; other FEMP activities.⁽⁶⁸⁾

Energy-Efficient Buildings Technologies

The CCTI budget proposes an increase of $49 million (51 percent) over the 1999 budget for the DOE Building Technology Program in fiscal year 2000. Included in this request is funding for programs such as Building America, Rebuild America, enhanced appliance standards, and research and development for more efficient building equipment and appliances. Key technologies in the DOE program include low-power sulfur lamps, advanced heat pumps, chillers and commercial refrigeration, fuel cells, insulation, building materials, and advanced windows.

It is difficult to assess the impact that increased funding for research and development might have on future energy consumption. Predicting winners and losers in technological development is far from a science (for example, predicting the outcome of Beta versus VHS for videotape recording). Solar photovoltaics, for example, have had extreme cost declines over the past decades, but their market share remains small. Accordingly, no attempt will be made here to estimate energy savings from a dollar amount spent on technology-related research and development. Successful research and development can, however, play a major role in improving the economics of most of the other programs included in the CCTI proposal. If major short-term progress is made in developing price-competitive energy-efficient alternatives to today's technologies, then all the CCTI programs stand to benefit with increased market penetration. For example, price-competitive superinsulating windows can go a long way toward achieving the goal of reducing energy consumption by 50 percent in new housing, providing an economical way to qualify for the tax credits described in Chapter 2.

Industry

Background

DOE supports a wide variety of research, development, and deployment programs and has recently reported that its programs have reduced current energy consumption by 115 trillion Btu.⁽⁶⁹⁾ Other benefits from the programs are reduced emissions and improved industrial productivity. DOE's CCTI program for industry would expand efforts to develop innovative technologies and production methods, with specific emphasis on the Industries of the Future program and combined heat and power (CHP) programs. The proposed budget is $172 million, an increase of $15 million over 1999.

One indication of the possible impacts of these programs is provided by the AEO99 projections. A frozen technology case for the industrial sector projects 630 trillion Btu (2 percent) more delivered energy consumption in 2010 than in the reference case,⁽⁷⁰⁾ and a portion of the difference is due to inclusion of the energy effects of the DOE programs.

This analysis does not attempt to quantify the energy or emissions impacts of DOE research, development, and deployment programs; however, the AEO99 reference case projections embody trends in energy efficiency improvements resulting, in part, from past and ongoing programs. In most cases it is difficult to distinguish the efficiency improvement effects of the industry programs from those resulting from economic forces and autonomous technological progress, not necessarily because the effects are inconsequential but rather because the industrial sector is a dynamic, internationally competitive arena where increased productivity is essential to corporate survival. In this setting, some portion of the technological progress concurrent with public policy initiatives would have occurred in their absence. The aggregate impacts of government programs are included in the reference case, however, as appropriate. For example, EIA has previously assumed that the programs included in the Climate Change Action Program could reduce annual electricity consumption by 41 billion kilowatthours and annual fossil fuel consumption by 90 trillion Btu in 2010.

Industries of the Future

The Industries of the Future program works with the most energy-intensive industries to develop technologies to increase efficiency, lower greenhouse gas emissions, and improve industrial competitiveness.⁽⁷¹⁾ The industries currently included in the program are aluminum, steel, metal casting, glass, mining, agriculture, chemicals, forest products, and petroleum. Industries of the Future includes specific programs that fund collaborative research and development, as well as the development of industry vision statements for future technology trends. The programs are targeted to a number of industries. The aluminum industry is developing an advanced aluminum reduction cell that would use 27 percent less energy than the current technology. A major steel industry initiative involves near-net-shape casting. The development of this technique would significantly reduce the energy required to produce finished steel products. In the pulp and paper industry, development and demonstration of black-liquor gasification technologies could lead to a large increase in electricity production at pulp mills.

The Industries of the Future program also has incorporated several existing cross-cutting programs, including Motor Challenge, Steam Challenge, and Compressed Air Challenge, which provide technical expertise and information on how to use specific energy sources more efficiently. The programs are coordinated with several other efforts, including Industrial Assessment Centers and the National Industrial Competitiveness through Energy, Environment, and Economics (NICE3) program. There is also an Inventions and Innovations program that provides grants to individuals and small companies to develop novel methods to improve energy efficiency or environmental performance.

The goal of the Industries of the Future program is to achieve annual carbon reductions of 29 million metric tons by 2010.⁽⁷²⁾ While this goal cannot be evaluated directly, it would seem to imply that energy consumption would be about 2 quadrillion Btu less than otherwise (neglecting any reductions from process emissions). The AEO99 forecast for industrial energy consumption in 2010 is 39.4 quadrillion Btu.⁽⁷³⁾ If industrial energy intensity had stayed constant at its 1997 level, energy consumption would have been 6 quadrillion Btu higher in 2010 than was projected. Thus, it appears feasible that the Industries of the Future programs could make a significant contribution to future emissions reductions.

Industrial Combined Heat and Power

The Advanced Turbine System program is expected to result in a 15-percent increase in turbine efficiency. With other developments in the cogeneration area, DOE states that its program goal is to result in systems that are 15 percent more energy efficient and 80 percent cleaner than conventional power stations, while also reducing electricity costs by 10 percent. DOE and EPA are also jointly supporting the CHP Challenge program, with the goal of eliminating barriers to dissemination of CHP technology and adding 50 gigawatts of additional CHP capacity by 2010.

In terms of the AEO99 projections, the CHP Challenge goal appears to be quite ambitious. For example, over the 1997-2010 period, projected CHP additions total 5 gigawatts in the reference case.⁽⁷⁴⁾ While it is reasonable to expect the CHP Challenge and research programs to have some impact, it seems unlikely that the rate of additions implied by the goal could be achieved. Achieving the technical increase in turbine efficiency looks more likely.

Other Programs

The proposed budget for EPA's industry programs is $54 million, an increase of $33 million from 1999. The EPA is a participant in the CHP Challenge program, with a particular emphasis on modifying environmental regulations that unnecessarily impede expansion of CHP. EPA also participates in Climate Wise, which is a voluntary program to encourage businesses to increase energy efficiency and reduce greenhouse gas emissions. EPA estimates that companies participating in the program will realize annual savings of $240 million by 2000.⁽⁷⁵⁾ As with any other voluntary deployment program, it is not clear to what extent the projected savings can be attributed to the Climate Wise program.

EPA's goal for its industry programs is to reduce annual carbon emissions by 37.9 million metric tons by 2000.⁽⁷⁶⁾ The average projected industrial energy price was $4.67 per million Btu in the AEO99 reference case. Energy expenditure savings of $240 million would imply reduced energy consumption of about 51 trillion Btu. Unless there are substantial contributions from other programs, this change in energy consumption would not yield the carbon reduction goal. Alternatively, it is not clear what starting point for the reductions was used.

The proposed budget for industry programs in the U.S. Department of Agriculture, which were not funded in 1999, is $10 million. The programs are focused on reducing greenhouse gas emissions through improved agriculture and forestry techniques and assessing the impacts of climate change on agriculture.

Transportation

The CCTI proposal for transportation research, development, and deployment consists of two major programs: additional funding for the Partnership for a New Generation of Vehicles (PNGV) and an Advanced Diesel Technologies program. The proposed budget for transportation programs at DOE and EPA is $377 million, an increase of $86 million over the 1999 budget. In the AEO99 reference case, implicit levels of research and development are included for light-duty vehicles and heavy-duty freight trucks. Fuel economy for new light-duty vehicles in 2010 is projected to be 12 percent higher than the 1999 level, and fuel efficiency for new heavy trucks in 2010 is approximately 7.5 percent above the 1999 level. In comparison with the frozen technology case, transportation energy consumption in the reference case is 1.1 quadrillion Btu (3.2 percent) lower in 2010.⁽⁷⁷⁾

Partnership for a New Generation of Vehicles

Background

The PNGV program, a consortium of U.S. automakers and government partnerships, has set a fuel efficiency goal of 80 miles per gallon (mpg) for a mid-sized sedan, with no loss of performance or increase in cost⁽⁷⁸⁾ from a current mid-sized sedan while meeting or exceeding Federal safety and emissions standards. A prototype is expected by 2000 and a production prototype by 2004. Commercial sale of the vehicles would potentially come 1 to 3 years later, making the technology available between 2005 and 2007.

Analytical Approach

For this analysis, the PNGV goals were assumed to be met in the CCTI case by the year 2006 for the three fuel cell vehicle types (gasoline, methanol, and hydrogen) represented in the NEMS model. The incremental vehicle cost above a comparable gasoline vehicle for each EPA size class was assumed to be approximately $2,000, based on an estimate from DOE's Office of Transportation Technologies. Each of the three fuel cell vehicles was also assumed to meet the fuel efficiency goal of three times the fuel efficiency of a similar sized gasoline vehicle.

The CCTI research and development initiatives include a proposed funding increase of $24 million for DOE's role in the PNGV program, which was funded at $240 million in 1999, with additional funding at EPA. It is not clear, however, that a 10-percent increase in the PNGV budget will lead to attainment of the PNGV goals. The PNGV Committee has made significant progress in the development of advanced technologies, and its efforts have led to several manufacturer announcements of PNGV production prototypes by 2004; however, the National Research Council (NRC), which reviews the PNGV program goals and achievements each year, has made the following assessments:^(79),(80) (1) Unless the PNGV program receives significantly more funding, its goals most may not be met. (2) The goal of a fuel-efficient mid-sized vehicle with costs similar to those of a conventional gasoline vehicle most likely will not be met.⁽⁸¹⁾

Results and Discussion

In the CCTI case for this analysis, fuel cell vehicle sales are projected to rise significantly, to 274,000 units in 2010 and almost 425,000 units in 2020 (Table 28), representing more than 2.8 percent of all light-duty vehicle sales in 2020. Electric vehicle and diesel-electric hybrid vehicle sales decline slightly relative to the reference case (by about 2.9 percent in 2010 and 1.4 percent in 2020) because of the increased competition from fuel cell vehicle sales.

Fuel consumption for light-duty vehicles is projected to be 49 trillion Btu lower in the CCTI case than in the reference case in 2010 and, because of the heavy volume of sales between 2010 and 2020, 196 trillion Btu lower in 2020 (Table 29). However, these fuel savings result in only a 0.15-percent reduction in total transportation fuel consumption in 2010.

Carbon emissions in the CCTI PNGV case are 0.9 million metric tons lower than the reference case projection in 2010, but in 2020, as sales volumes accumulate in the vehicle stock, they are 3.9 million metric tons lower (Table 30). Even in 2020, however, the carbon emissions reductions amount to only 0.56 percent of the total transportation carbon emissions projected in the reference case.

Advanced Diesel Technologies for Light and Heavy Trucks

Background

The CCTI research and development initiatives include a proposal to provide funding for government and industry partnerships to develop advanced diesel cycle engine technologies for pickup trucks, vans, and sport utility vehicles and engine and vehicle technologies to improve the fuel efficiency of new heavy trucks. In 1998, diesel-powered light-duty vehicles captured only 0.01 percent of total U.S. light-duty vehicle sales, significantly below their highest shares of 6.1 percent of auto sales in 1981 and 5.0 percent of light truck sales in 1982.

In 1997, Volkswagen began offering a Jetta sedan with a turbocharged direct injection diesel engine (44.95 mpg) in U.S. markets. Although the new diesel engine provided a 60-percent increase in fuel economy over the conventional gasoline Jetta (27.85 mpg), it was soon withdrawn from the market due to lack of sales. Volkswagen is now working on a new direct injection diesel automobile (the Lupo) with a fuel efficiency goal of 78 mpg. For model years 1998 and 1999 Volkswagen is again offering the turbo direct injection engine in the Jetta and the Beetle, with the intention of eventually offering it in the Passat. Preliminary sales of turbo direct injection technology have been slow, according to a few Volkswagen dealers in the Washington metropolitan area.

Heavy trucks are an integral part of U.S. commerce and economic growth. In 1995, total expenditures for highway freight transportation (local and intercity trucks) were over $348 billion, accounting for 79 percent of the Nation's freight bill and approximately 4.8 percent of gross domestic product.⁽⁸²⁾ On average, a heavy truck travels 37,600 to 86,500 miles each year.⁽⁸³⁾ Heavy trucks account for 79 percent of freight truck fuel usage, and freight truck travel represented 16 percent of all fuel use in the transportation sector in 1997.

The stated goal of the CCTI proposal for light trucks is a 35-percent improvement in fuel efficiency above conventional gasoline vehicles by 2002 while meeting strict emissions standards. For heavy trucks the goal is to achieve a fuel efficiency of 12 mpg by 2004 for new diesel trucks while still meeting prevailing emissions standards.

Light Trucks

Analytical Approach

For this analysis, the NEMS transportation module was used to model the CCTI research and development initiative.⁽⁸⁴⁾ The following assumption was made in modeling the CCTI analysis case: the date of commercial availability for turbo diesel fuel injection technology was advanced to 2002 from 2005, with no change in vehicle prices. The expected sale price for turbo direct injection vehicles is approximately $1,200 higher than that for conventional gasoline vehicles. With large sales volumes approaching 25,000 units per year, the incremental cost could decline to about $800.

Results and Discussion

The results for the CCTI analysis case show that diesel vehicle sales amount to less than 2 percent of total light truck sales in 2010 (Table 31). Consequently, projected light-duty vehicle fuel consumption in the CCTI case is 25 trillion Btu lower than the reference case level in 2010--a reduction of less than 0.15 percent (Table 32). The corresponding reduction in projected carbon emissions from transportation energy use in the CCTI case relative to the reference case is only about 0.1 million metric tons in 2005 and 0.4 million metric tons in 2010--representing just 0.06 percent of total projected carbon emissions for the transportation sector in the reference case (Table 33).

Emissions issues may pose problems for direct injection diesel vehicles. Advances in diesel technology have significantly reduced their noise and emissions of particulates, but high levels of nitric oxides and particulates still present significant health problems. EPA is currently revising its NO_x and particulate emissions standards as mandated by Congress under the Clean Air Act Amendments of 1990, and recent regulations passed by the California Air Resources Board are expected to eliminate diesel technologies from further consideration as solutions to higher fuel economy unless they use advanced catalysts and/or new types of low-sulfur or reformulated diesel fuel.

Emissions issues are especially problematic for direct injection diesel technologies. Reduction of both NO_x and particulates has proven difficult, because reduction of one often increases the emissions of the other. Particulate traps are expensive and marginally effective in emissions reduction. Advanced catalysts are being developed, but they are very expensive. Two different avenues of catalyst research and development are currently being pursued: Argonne National Laboratory has developed a plasma membrane that can separate NO_x emissions into pure nitrogen and oxygen, and Daimler-Chrysler has developed an emissions after-treatment procedure that shoots a fine mist of urea into the exhaust, chemically changing NO_x to nitrogen and oxygen. Both catalysts are in the early stages of research.

Advanced low-sulfur, low-benzene, and reformulated fuels in combination with advanced catalysts are currently being explored, and Fischer-Tropsch fuels (derived from refinery waste products and natural gas) also are potential candidates for use with advanced diesel technologies. Studies have shown that these advanced diesel fuels and derivatives can reduce both NO_x and particulate emissions by as much as 80 percent. At present, however, the fuels are not cost-competitive with either gasoline or diesel fuel.

Current diesel technology may not be accepted quickly by the public because of the reliability issues that arose for diesel technology during the 1970s and 1980s. This is evident from the current lack of sales for direct injection diesel vehicles from Volkswagen and the current low level of sales for diesel light-duty vehicles, which made up only 0.01 percent of all light-duty vehicle sales in 1997.

It is also important to note that electric, fuel cell, electric hybrids, and turbo direct injection vehicles are in direct competition with each other for market share. Model runs with the turbo diesel direct injection technology initiative but without the CCTI tax incentives described in Chapter 2 resulted in a drop in fuel cell vehicle sales of almost 2,000 units (42 percent) in 2010. In the CCTI tax incentives case, turbo diesel sales were 50,000 units (28 percent) lower in 2010 than projected in the turbo diesel direct injection technology case.

Heavy Trucks

Analytical Approach

The NEMS freight truck module is a stock model that includes existing and future fuel-saving technologies as well as alternative-fuel vehicles. The model uses projected sales of freight trucks, fuel prices, and output for selected industries from the macroeconomic module to estimate freight truck travel demand, purchases and retirements of freight trucks, and fuel consumption. Sales of new trucks are estimated according to the assumed market penetration rates for existing and future technologies, competition with other technologies, sensitivity to fuel prices, and fuel economy improvement. Relative fuel economies are used to determine the market share of new truck purchases for each technology in each year of the projection period. Capital costs are converted to an equivalent fuel price at which each technology is considered cost-effective, based on an assumption of a 3-year payback period with a 10-percent discount rate applied to the average distance traveled per truck.

For the CCTI analysis case, the following characteristics of heavy trucks were added to the available technology choices:

Engine Efficiency: Currently the best engines have nominal efficiencies of 46 percent. In order to achieve the CCTI goals, it was assumed that engine efficiencies would be increased to 55 percent or higher (an improvement of about 20 percent). The direct injection diesel engine is the most viable near-term engine technology expected to be commercially available by 2006. For this technology to be commercialized, several underlying integrated technologies must also be developed: improved design for cylinders to handle higher pressures, additional exhaust heat utilization through improved turbo systems,⁽⁸⁵⁾ improved thermal management (less heat rejection), and lower engine friction.

Emissions controls are the greatest barrier to the adoption of the direct injection diesel technology, especially with regard to NO_x and particulate matter. As the fuel efficiency of diesel engines improves, NO_x emissions also increase. To address this problem, three approaches are used: (1) in-cylinder process (combustion, air handling) to change the way the fuel is burned; (2) exhaust after-treatment to capture NO_x and particulates; and (3) altered fuel properties to reduce sulfur, which shortens the life of a catalytic converter. Current research on exhaust after-treatment includes particulate filters, NO_x catalysts, and plasma systems. To date, a prototype particulate filter has been developed, small NO_x catalysts have exceeded 50-percent reductions, non-thermal plasma devices have exceeded 70-percent reductions on a small scale, and engine efficiencies of approximately 52 percent have been achieved in test engines. In production engines, reductions of more than 50 percent for NO_x and 80 percent for particulate matter have been achieved.

Vehicle Design: In order to achieve the CCTI goals, it was assumed that fuel efficiency improvements of between 5 and 19 percent would be achieved through improvements in the design of heavy trucks. Several technologies are currently under investigation: reduced aerodynamic drag, reduced rolling resistance, and reduced losses related to auxiliaries and operating modes. To date, a research and development plan on heavy vehicle aerodynamic drag has been developed with industry, and a program has been started to compile data on the heating and cooling of the truck cab, with the goal of reducing idling time.

In the area of aerodynamic drag, the goal is to reduce drag coefficients from the current value of 0.60 to less than 0.50. Cab and trailer modifications must be cost-effective and must not hinder maintenance, payload, or the ability to meet government regulations and overall size restrictions. Current research is focusing on computational analysis tools for use in cab and trailer development. In the near term the trailer, which traditionally has received less attention than the cab, will be the focus. The main goal is to reduce the backdraft, or vacuum, at the end of a trailer that creates drag. Examples of work being done include curving the top of the trailer and creating a cone at the end; however, in the first case, haulers are unwilling to give up freight capacity to create a curved trailer, and in the second case the trailer may not meet safety regulations or may become a maintenance issue. Another, more promising example is the use of compressors to blow air into the vacuum, creating an airfoil. Similar types of work are being done on rolling resistance, such as the use of "super single" tires to replace the common two-tire set.

Some of the major obstacles to rapid market penetration of these advanced technologies are ensuring that all State and Federal regulatory standards will be met, and ensuring that the return on investment will be realized within a short period of time.

Results and Discussion

The heavy-duty truck technology characteristics in Tables 34 and 35 make up a representation of the technologies considered to meet the increased efficiency goal. These characteristics were used in the NEMS transportation freight truck model, which is economically price driven. The adoption of a technology, once introduced, is assumed to gain market share over time. It is also important to note that the trucking industry is very sensitive to fuel prices and demands a relativity short payback period. The fleet owners also place a high value on reliability, which will cause their technology adoption decisions to differ from decisions that would be made on economics alone.

In Tables 34 and 35, the date of commercial availability is the first year in which a technology has been or is expected to be offered by the manufacturers for possible purchase. Maximum potential market share is the highest percentage of trucks that could employ a given technology. Some technologies will never be utilized in certain vehicle applications regardless of cost. For example, garbage trucks probably will never be equipped with advanced drag reduction technologies.

In 2010, the stock fuel efficiency improvement in the CCTI case relative to the reference case is approximately 0.22 mpg, which results in a reduction of 128 trillion Btu of heavy truck diesel fuel use and a carbon emissions reduction of 2.4 million metric tons (Table 36). Reductions in both fuel use and carbon emissions amount to 0.4 percent of the total for the transportation sector. Two factors cause the projected reductions in fuel consumption and carbon emissions to be relatively small. First, because of their late commercial availability dates (Table 35), two of the most promising technologies, reduced rolling resistance and improved engine efficiency, are projected to have only limited market penetration by 2010 (Table 37). The second factor is the slow turnover rate for the stock of freight trucks. Even by 2020, the fuel economy of the truck stock is only 6.45 mpg in the CCTI case, compared with 5.78 mpg in the reference case (a 12-percent improvement). The difference has the effect of reducing heavy diesel fuel consumption from 4,554 trillion Btu in the reference case to 4,121 trillion Btu in the CCTI case, for a net fuel savings of 433 trillion Btu and carbon emissions reductions of 8.6 million metric tons, or 1.2 percent of the total for the transportation sector.

Fuel efficiency in Table 36 refers to both the on-road stock average under real driving conditions and the new fuel efficiency average. With the CCTI new technology characteristics supplied by DOE's Office of Transportation Technologies, the fuel efficiency of new heavy trucks is projected to be 6.09 mpg in 2005 and 6.40 mpg in 2010.

Improved accessories has a larger market share than improved engine efficiency in 2010 because of its earlier availability date. By 2010, improved accessories will have been on the market for 12 years, whereas improved engine efficiency will have been available for only 4 years (Table 35). By 2020 the market share of improved engine efficiency technologies is projected to reach 86 percent of new sales and improved accessories 50 percent (Table 37).

Table 38 provides a summary of the fuel savings and carbon emissions reductions projected from implementing the CCTI light truck and heavy truck technology proposals simultaneously.

Ethanol from Biomass

Ethanol is a renewable source of energy that has been primarily produced domestically. Since 1979, its use as a motor gasoline blending component has been encouraged through tax credits and subsidies, extending the supply of gasoline and thus reducing oil import requirements.⁽⁸⁶⁾ Gasoline can contain up to 10 percent ethanol without significantly reducing the performance of a standard gasoline vehicle engine. In addition, a new engine design that burns 85 percent ethanol and 15 percent gasoline has been developed, and its usage is projected to grow in the future.

Ethanol also contains oxygen and, with the onset of the oxygenated gasoline program in 1992 and the reformulated gasoline program in 1995, has been used to increase the oxygen content of gasoline, helping to lower carbon monoxide emissions. In 1997, 50,000 barrels per day of ethanol were blended into traditional and oxygenated gasoline, and another 32,000 barrels per day were blended in the production of reformulated gasoline.

Because it is a renewable fuel, ethanol can help reduce carbon dioxide emissions. Most of the ethanol currently used in gasoline blending is produced through a corn fermentation process. The carbon in the fuel does not increase net carbon emissions, because an equivalent amount of carbon will be absorbed from the atmosphere by the next rotation of crops. On the other hand, corn cultivation, fertilizer manufacture, and the distillation of alcohol are energy-intensive processes that generate significant greenhouse gas emissions.⁽⁸⁷⁾

Ethanol can also be made from cellulose biomass, such as agricultural residues, switchgrass, and wood residues. Cellulose ethanol is an attractive alternative to corn ethanol for carbon reduction because switchgrass and woody crops require less cultivation and fertilizer than corn. In addition, solid byproducts from the processing of cellulose ethanol can be burned as fuel to cogenerate steam and electricity required to run the ethanol plant. Other advantages of cellulose ethanol include an inexpensive feedstock and possible wider regional distribution. It may be possible to locate the plants much closer to major refining and gasoline-consuming areas than is possible for corn-based ethanol, which is produced primarily in the Midwest.

Gasoline containing 10 percent ethanol currently receives a tax exemption of 5.4 cents per gallon, which translates into 54 cents per gallon for ethanol. This has a significant impact on the price of ethanol. In November 1998, for example, the subsidy lowered the price of ethanol by about half, from $1.08 per gallon to 54 cents per gallon, compared to the methyl tertiary butyl ether (MTBE) spot price of 62 cents per gallon.⁽⁸⁸⁾ The tax exemption is pro-rated for blends of less than 10 percent and also applies to ethanol used in the production of ethyl tertiary butyl ether (ETBE). In addition, some States provide tax incentives for the production of ethanol. The ethanol tax exemption has been extended several times since its introduction in 1979, most recently to 2007. Without the subsidy, ethanol's share of the market would likely be much smaller.⁽⁸⁹⁾ In the reference case for this analysis, extensions of the tax exemption are assumed through 2020.

The Office of Fuels Development (OFD) in DOE's Office of Transportation Technologies manages the National Biomass Ethanol Program, which encompasses research and development projects aimed at facilitating the evolution of a competitive domestic cellulosic biomass-to-ethanol production industry. OFD works with DOE national laboratories, other DOE organizations, the U.S. Department of Agriculture, universities, and corporations to develop the technological innovations needed to propel a biomass ethanol industry to market maturity. The major research and development programs focus on biomass feedstock development and ethanol conversion processes.

In 1998, the Nation's first cellulosic biomass-to-ethanol demonstration plant opened in Jennings, Louisiana. DOE's industry partner, BC International, is converting a former grain-to-ethanol plant to a plant that uses agricultural residues as feedstock. In addition, BC International and the City of Gridley, California, are working with a biomass power company, DOE, and others in planning for another ethanol plant using local wood and rice straw as feedstocks. Another DOE partner, the Masada Resources Group, has selected a site in New York State for the final feasibility study of a solid waste recycling and ethanol production facility using municipal solid wastes. These projects are expected to result in commercial ethanol production plants in the 2001-2003 time frame.

The CCTI is not expected to have a large additive affect on the biomass ethanol program but will support the ongoing research and development efforts for this technology. Little additional funding for the ethanol program is expected, although biomass conversion may be included in a series of workshops sponsored under the auspices of the CCTI. The effect of the biomass ethanol program is already incorporated in the reference case. Although the impact of the research and development efforts on the market penetration of cellulose ethanol has not been directly modeled, the reference case assumes that the cost of producing ethanol from biomass will decline by 20 percent from current levels by 2020.⁽⁹⁰⁾ The cost decline reflects a learning function consistent with the one used in NEMS for the construction of new types of electricity generation plants.⁽⁹¹⁾

Ethanol production from corn is projected to increase slightly in the early years of the reference case projections, then fall back to near current levels by 2020. Cellulose ethanol, on the other hand, rises steadily through the forecast, reaching 57,000 barrels per day by 2010 and 127,000 barrels per day by 2020 (Table 39), thus surpassing the level of corn-produced ethanol. Ethanol from cellulose is a relatively new technology, and cost reductions are expected to occur at a much faster pace than for corn ethanol, giving ethanol from biomass a greater impetus for growth. At the same time, because cellulose ethanol is a new industry, investments would be considered higher risk and involve greater uncertainty. For these reasons, a limit was placed on the rate of capacity growth. Cellulose ethanol production capacity was allowed to grow by 50 million gallons per year (about 3,300 barrels per day) from 2001 to 2005. After 2005, if the economics are favorable, up to 250 million gallons per year (about 16,300 barrels per day) of capacity can be added. In those regions where State subsidies for ethanol production are provided in addition to the Federal tax exemption, the State subsidies induce capacity expansion for cellulose ethanol.⁽⁹²⁾

Carbon emissions reductions resulting from the displacement of gasoline by cellulose ethanol are projected at 0.3 million metric tons in 2005 (0.05 percent of transportation petroleum carbon emissions), 1.8 million metric tons in 2010 (0.3 percent of transportation petroleum carbon emissions), and 3.9 million metric tons in 2020 (0.6 percent of transportation petroleum carbon emissions).

The blending characteristics of ethanol may impede its future growth. As a motor gasoline blending component, ethanol has many attractive qualities. It is high in octane and contains no aromatics, benzene, or olefins. On the other hand, it has a high Reid vapor pressure (Rvp) blending value and is water soluble. The high Rvp indicates a higher tendency for emissions of volatile organic compounds, which would hinder its use in summer gasoline with tighter Rvp specification limits. Because of their water solubility, ethanol blends are not transported via pipeline. Consequently, ethanol use is restricted to splash blending at terminals near final points of gasoline distribution. In the reference case, the use of ethanol for splash blending is projected to remain close to current levels through 2010, increasing to 106,000 barrels per day by 2020 (Table 40).

In addition to its direct use as a gasoline blending component, ethanol is used to produce another gasoline blending component, ETBE. ETBE is similar to MTBE, a methanol-derived ether used extensively by refiners for oxygenated and reformulated gasoline. ETBE does not have the high Rvp and water solubility problems that hinder ethanol's use. The cost of producing ETBE and the distance from major ethanol-producing areas to major refining centers has limited its use, but it is expected to increase as gasoline specifications become tighter in the future. Ethanol use for ETBE production is projected to increase slowly but steadily in the reference case, to 51,000 barrels per day in 2010 and 65,000 barrels per day in 2020 (Table 40). Ethanol for E85 also increases throughout the forecast, rising to 32,000 barrels per day in 2010 and 46,000 barrels per day in 2020.

Electricity Generation

The CCTI funding request for research, development, and deployment initiatives includes support for continued development for solar energy, biomass power, wind energy, geothermal power, and hydropower; the Renewable Energy Production Incentive and renewable energy demonstration projects; the International Solar Program; improvements in the quality and reliability of power service; distributed generation; hydrogen production and storage; superconducting technology; life extension of nuclear power plants; development of more efficient coal and natural gas generation; and research into the capture and storage of carbon dioxide. Nearly all the programs that would receive new or additional CCTI funding have long-term goals for which quantitative analysis of potential benefits is not feasible. They are described here in general terms, with emphasis on the stated goals of the programs and their reported progress and accomplishments to date.

In the AEO99 reference case, significant improvement over the next 20 years was assumed for the cost and performance characteristics of electricity generation technologies. Those assumptions were based in part on current private and public research and development efforts, including many of the federally funded programs that are associated with the CCTI proposal. Without the assumption of continued technology improvements, the projections for both electricity sector fuel use and carbon emissions would be higher.

In the frozen technology case for the electricity generation sector, which assumed that the cost and performance characteristics of generating technologies--including fossil and renewable technologies--would stay at 1999 levels, projected fossil fuel use in the electricity sector was 2 percent higher in 2010 and 3 percent higher in 2020 than in the reference case. Similarly, electricity sector carbon emissions were 11 million metric tons (2 percent) higher in 2010 and 28 million metric tons (4 percent) higher in 2020 than in the reference case. It is difficult to estimate the degree to which each of the programs described below might individually affect future electricity fuel use and carbon emissions; however, if total research and development efforts decline significantly from historical levels, the technology improvements assumed in the reference case probably would not be fully realized.

Fossil Fuel Technologies

DOE's Office of Fossil Energy (FE) has requested $37 million in 2000 for climate change funding, a $13 million increase over the 1999 budget (Table 41). Significant increases are requested for research on efficient generating technologies ($9.7 million)--including coal integrated combined-cycle, coal pressurized fluidized bed, fuel cells, gas turbines, and Vision 21 power facilities--and carbon control and sequestration technologies ($3.3 million).

Efficient Electricity Generating Technologies

Background

The proposed CCTI budget requests an increase of $3.85 million for research on more efficient coal-fired generating technologies. In total, the proposed budget for coal technology research and development, $122 million in fiscal year 2000, is slightly less than the 1999 budget of $123 million. However, past efforts have focused primarily on reducing SO₂, NO_x, and particulate emissions from existing plants, whereas future efforts are expected to focus on improving efficiency of the next generation of plants in order to lower their per-kilowatthour carbon emissions.

Technologies such as advanced gasification combined-cycle, pressurized fluidized bed, and gasification fuel cell generating units may lead to significant improvements in efficiency. In addition, FE has begun work on a new generation of plants referred to as Vision 21 facilities. As stated in the FE fiscal year 2000 budget request, "Vision 21 is an extension or continuation of ongoing R&D to lower the cost and dramatically improve the environmental performance and efficiency of coal plants that will lead to the deployment of a family of plants that converts a combination of feedstocks (e.g., coal, natural gas, biomass, opportunity fuels, petroleum residuals, wastes) to electricity, heat (e.g., steam), a suite of high-value products that may include synthesis gas, hydrogen, liquid fuels, chemicals, and by-products (e.g., sulfur and ash or slag)."

For gas-fired generating technologies, the proposed CCTI budget includes $5.0 million for research on fuel cells and $0.8 million for turbine systems. The expenditures would be focused on the development of Vision 21 power plants.

Analysis

EIA has included the improvements in efficiency expected from coal technology research and development in recent analyses. Both in AEO99 and, previously, in an analysis of the Kyoto Protocol, new advanced coal plants were projected to approach 47 percent efficiency. Even with those improvements, however, new plant additions are expected to be dominated by gas-fired technologies in the next 10 to 15 years. New natural-gas-fired combustion turbines and combined-cycle plants are, in most cases, the most economical options available when new plants are needed. New efficient coal plants are not expected to be added in significant numbers until after 2010, gradually becoming economical as their construction costs decline and the gap between coal and gas prices widens.⁽⁹³⁾

If limits were placed on U.S. carbon emissions in the future, it is unlikely that new coal-fired plants would be economically attractive over the next 20 years without the development of an economical carbon sequestration technology. Currently, coal-fired power plants produce more than half of U.S. electricity generation, and their average operating costs are under 2 cents per kilowatthour. They also account for nearly 90 percent of the carbon emissions produced in the generation sector. Even with fairly significant efficiency improvements, the carbon intensity of new coal plants would far exceed that of other options, including other fossil fuels (Table 42). Present-day coal plants produce more than 2.5 times as much carbon per megawatthour of output as do conventional combined-cycle gas-fired plants, and the ratio is expected to remain over 2 to 1 for the next generation of advanced coal plants and advanced gas combined-cycle plants.

U.S. power producers would be expected to rely on natural gas and, to a lesser extent, renewable fuels to reduce their carbon emissions if limits were imposed.⁽⁹⁴⁾ No new coal plants are projected to be built in any of the carbon reduction cases EIA has analyzed. It is possible that new efficient coal plants may be attractive in foreign countries where natural gas and renewable resources are limited, and the cleaner, more efficient coal plants developed in the United States could be helpful as part of an overall strategy to reduce global carbon emissions. In addition, in the longer run, if domestic gas and renewable resources become more expensive than expected, efficient coal-fired plants combined with carbon sequestration technologies currently in the early stages of development could be important in the United States as well.

With respect to new gas-fired technologies, EIA expects new power plant additions to be dominated by relatively efficient gas plants. In AEO99, new advanced gas-fired generating plants are expected to reach efficiencies of nearly 54 percent. As with the new generation of coal plants, Vision 21 gas plants are not expected to play much of a role in the time frame of the Kyoto Protocol. In the longer run they could be important, but their future may also depend on the development of economical carbon sequestration technologies if carbon reductions beyond those called for in the Kyoto Protocol are eventually needed.

Carbon Sequestration

Most discussions of carbon emissions reduction options focus on improving energy efficiency and increasing the use of low- or zero-carbon fuels. A third option is to capture and store the carbon emitted from fossil-fired power plants. Potential storage options include depleted oil and gas reservoirs, deep underground saline reservoirs, and the ocean. Norway is currently sequestering carbon dioxide (CO₂) in a saline aquifer below the North Sea, and CO₂ injection is being used at about 70 sites worldwide for tertiary oil recovery. Some hazardous wastes are also being placed in long-term storage, but their volumes are extremely small relative to the amounts of carbon (mostly as CO₂) produced by U.S. power plants.

An alternative approach to sequestering carbon is to enhance natural biological processes that remove CO₂ from the atmosphere. Options in this category include forest management, increasing soil carbon content, and increasing ocean biomass productivity (with sequestration by sedimentation of bio-carbon).

The fiscal year 2000 DOE coal technology research and development budget request calls for spending approximately $9 million on carbon sequestration research and development. In addition, the DOE basic science program, the EPA, and the U.S. Department of Agriculture (USDA) have requested funding increases for CO₂ removal and sequestration programs. In total, the CCTI request includes $39 million for these programs, an increase of $25 million over the 1999 appropriation, with increases of $3 million for DOE's FE budget, $13 million for DOE's basic science, $4 million for EPA, and $6 million for USDA.

If natural gas and/or renewable resources turn out to be more expensive than expected, or if carbon reductions beyond the Kyoto Protocol targets are required, technologies that remove and store carbon produced by fossil plants may be needed. At present, technologies for removing carbon from the flue gas of fossil power plants are very expensive. Most use a capital-intensive monoethanolamine (MEA) solvent process that can more than double the cost of building a conventional pulverized coal plant and the cost of the power it produces. It should be possible to lower the costs of carbon removal for newer combustion technologies such as coal gasification combined-cycle or fuel cell units with improved CO₂ capture approaches, but much work is needed before the technologies will be economical. Further research is also needed to explore the economics and long-term viability of CO₂ storage. Recent research suggests that the volumes that could be stored in some reservoirs are quite large.

Carbon sequestration technologies are not expected to contribute to carbon emissions reductions in the time frame of the Kyoto Protocol. If their economics can be improved significantly and long-term storage proves viable, they could provide an additional reduction option in the post-2015 time period.

Renewable Technologies

Solar Photovoltaics

Costs for photovoltaics are declining, and it is expected that they will be used more widely for off-grid and niche applications, especially where electric power is highly valued and alternative sources are expensive. U.S. manufacturers and marketers of photovoltaic modules are likely to find ready and growing markets outside the United States, especially where utility grids are weak or nonexistent. Both domestically and abroad, where solar conditions are favorable, and where grid-connected or fossil-fueled generation is unavailable or too expensive, photovoltaics can provide electric power for refrigeration, lighting, monitoring and measuring devices, pumps, communications, and other essential services. However, their costs remain orders of magnitude greater than those of electric utility power for all but a few U.S. applications.

On average, U.S. retail residential electricity prices are expected to remain well below 8 cents per kilowatthour (in 1997 dollars) through 2020. Peaking prices--such as on hot summer days--could occasionally exceed 15 cents per kilowatthour. In comparison, costs for photovoltaic power today probably exceed 25 cents per kilowatthour in most applications. EIA estimates suggest that even in the most efficient (large-scale) wholesale applications, their costs will exceed 10 cents per kilowatthour through 2020, while the costs for more reliable electricity supplies from natural-gas-fired power plants remain at 4 cents per kilowatthour or less.

Consumer costs for electricity from photovoltaic modules, especially if they are installed in very small units by retail commercial installers or include energy storage systems (batteries), are likely to remain multiples of retail electricity rates. Therefore, where grid-supplied electricity is offered, it will almost always be much less expensive and far more reliable than photovoltaic power. Even if notable cost reductions are achieved, it is unlikely that increased research and development will markedly change the relative economics of photovoltaics in the near term or that they will become a significant component of overall U.S. electric power supply before 2020.

For thin-film photovoltaics, the DOE goal for 2000 is to have module efficiency reach 13 percent in prototype CIS or CdTe modules. Progress in thin-film photovoltaics is critical for future U.S. market success, both in achieving further significant drops in capital costs and in providing cost-effective performance. In addition to prototype performance, marked improvements will be needed in commercially available units. DOE estimates current costs at around $9,000 per kilowatt of capacity, with goals of $5,300 per kilowatt by 2000 and $1,500 per kilowatt by 2010. Capacity factors currently are reported at about 21 percent.⁽⁹⁵⁾ Given that current crystalline silicon solar technologies are reported to cost about $5,000 per kilowatt and have higher capacity factors than thin-film photovoltaics, accelerated cost reductions for thin-film technologies are needed if they are to replace crystalline technologies and markedly expand U.S. and world applications. It is unlikely, however, that meeting the goals of the DOE research and development program for photovoltaic technology will result in significant penetration of overall U.S. electricity markets.

Solar Thermal

The DOE goal for dish/Stirling (concentrating) solar thermal energy systems for 2000 is to achieve 1,000 hours of unattended operation of a single dish/Stirling system during field testing. The main objective of the DOE program in the near term is to prove the reliability of the system and increase the time of unattended operation. The dish/Stirling solar electricity technology is attractive in providing clean renewable energy, in being modular, and in potentially offering essential electric power to distributed grid-connected or off-grid applications. Applications may be most promising outside the United States, such as for village power, where solar conditions are favorable and grid-connected power is unavailable. However, the dish/Stirling technology is far from commercial today, with test unit capital costs estimated at $10,000 to $20,000 per kilowatt. Goals for the technology include reducing capital costs to around $5,500 per kilowatt by 2000, $3,000 by 2005, and $1,600 by 2010, with capacity factors increasing from an assumed 13 percent today to 50 percent by 2000,⁽⁹⁶⁾ and possible beginning penetration of U.S. green power markets.

The dish/Stirling technology faces large challenges in contributing to U.S. electricity supply before 2010. Meeting year 2000 goals, either in cost or performance, is unlikely, making the challenge of meeting later goals all the greater. Even if all goals are met, dish/Stirling will remain more expensive than almost all fossil and renewable energy alternatives. Moreover, its cost-effective applications are likely to be restricted to small, high-cost applications in the U.S. Southwest. International prospects for the technology are better, and it may eventually compete successfully for rural essential electricity supply--including for both individual and small village service--against fossil fuels, wood, and other renewables, including wind and photovoltaics.

Biomass

The goal of DOE's Biomass Power Systems program is to integrate sustainable biomass feedstock production with efficient biomass power generation and establish a cost-competitive power supply, with construction of 3,000 megawatts of new biomass capacity in all sectors by 2004. The EIA reference case projections indicate that roughly one-third of the new capacity goal is likely to be achieved.

The CCTI budget request for fiscal year 2000 includes $39 million for the Biomass Power Systems research, development, and deployment program, representing an increase of $7.5 million (24 percent) over the allocation for fiscal year 1999 (Table 43). There are three major technology areas in the program: (1) co-firing biomass with fossil fuels, (2) small modular biomass power systems, and (3) advanced biomass gasification. Additional program elements, which generally are supportive of and integrated with the three technologies, include thermochemical conversion research, energy crop development, and the Regional Biomass Program.

DOE has several co-firing projects underway with power producers in a variety of stages. The two primary projects that are cost-shared are in the early stages and are planned for expansion with dedicated sources of biomass. The New York project goal is to have up to 600 acres of willow planted. The co-firing will be tested and the retrofit of two coal plants will be completed. In Iowa, the goal is to have up to 3,600 acres of switchgrass established by 2000 and be generating power in 2000. The program will also seek to expand the use of co-firing with additional cost-shared co-firing demonstrations. Data from retrofitting and testing at four established sites will be used to develop confidence in the method. A goal for co-firing is to reduce carbon emissions by 4 million metric tons per year by 2006. The EIA analysis indicates that half that goal is likely to be reached by 2005. Co-firing coal technology with biomass is discussed in Chapter 2.

The DOE program for small modular systems is directed at commercializing systems providing power in the 5 kilowatt to 5 megawatt size, either gasification or direct-fired systems. They are likely to be employed in industrial applications, possibly as a retrofit of existing biomass units. Funding is to be used for feasibility studies, demonstration units and developing full system integration, with a goal of testing 2 to 3 units. In the AEO99, EIA projects an expansion of biomass systems in the industrial sector, where biomass cogeneration capacity increases from 5.5 gigawatts in 1997 to 7.4 gigawatts in 2020.

Advanced gasification development is focused on two projects that are part of the Biomass Power for Rural Development program. They constitute nearly half the budget and are cost-shared with private investors. Program objectives include: (1) facilitating the transition from using residues to the use of dedicated crops, (2) supporting the expansion of large-scale crop production, and (3) developing a more environmentally benign source of power. The Vermont Gasifier project, which has been operating as a gasifier only, will add a combined-cycle generation system and hot-gas cleanup unit. The program goal for the integrated system will be to operate it for 1,000 hours at a capacity of 8 to 12 megawatts. The Minnesota plant will use alfalfa stems and market the leaves as animal feed. Construction of the 75-megawatt unit will begin in 2000, and startup is scheduled for 2001. The EIA analysis described in Chapter 2 characterizes the biomass gasification technology incorporated in AEO99; because it is not assumed to be commercially available until 2005, no further penetration under the CCTI tax incentive program is projected. Modest growth in the use of other biomass capacity eligible for the credit is projected, with a minimal effect on carbon emissions by 2004 (when the CCTI tax credits would expire).

The feedstock development program overlaps with other Biomass Power Systems programs in that feedstocks are an important part of the economics of biomass utilization. The NEMS model incorporates biomass resources by way of supply curves, which could be affected by the success of the programs; however, with energy crops not currently projected to be available on a large scale before 2010, no effects would be seen until that time.

Thermochemical conversion programs are a set of longer term research projects. One is for research on gas cleanup options for both large and small gasification systems, a multi-year laboratory program that would support testing at the Thermochemical User Facility of the National Renewable Energy Laboratory. Another project is focused on minimizing problems from the high alkali metal content of many biomass fuels, which can lead to fouling and slagging in boilers and furnaces. The research results are linked to the co-firing performance measures. A third project will evaluate the impact of restructuring in the electricity generation industry on technology development by modeling effects on NO_x emissions and assessing the need for incentives. Finally, some funding will be used for the purchase of analytical equipment as part of the laboratory program.

Wind

The CCTI proposes funding for accelerated research and development of wind power technology, with the goal of developing wind turbines able to produce power at 2.5 cents per kilowatthour (unsubsidized) in good wind conditions by 2002.⁽⁹⁷⁾ Wind technologies continue to improve, and extensive global investment in research and development suggests further cost declines in the future. Wind turbine component costs are expected to go down, and improvements in the licensing, siting, and construction of wind projects are expected to continue. Concurrent with growing industry experience worldwide, increased funding for research and development may contribute to lower costs for electricity generated from wind power. Nevertheless, the likelihood of reaching an unsubsidized cost of 2.5 cents per kilowatthour for wind power in good wind conditions by 2002 appears remote.

First, the goal of 2.5 cents appears optimistic in light of DOE characterizations of future wind costs. Current DOE estimates cite a goal of 4.3 cents per kilowatthour for 2000 in "good" (class 4) wind conditions, progressing to 3.1 cents by 2010. A cost of 2.5 cents is estimated only for "excellent" (class 6) winds and not until 2010.⁽⁹⁸⁾ Exceeding DOE's 2010 class 4 goal by nearly 20 percent 8 years in advance seems unlikely, unless current costs are already well below published expectations. The current capital costs for wind power generation technologies are almost certainly not below, but markedly above, published expectations. The DOE estimates for 2000 assume capital costs of about $750 per kilowatt. Available information for recent installations shows actual wind facility costs, excluding substation and interconnection costs, nearer to $1,000 per kilowatt, consistent with DOE estimates of about 6.4 cents per kilowatthour.

Second, EIA has not observed recent rates of cost decline or noted clear technological advances suggesting near-term large drops of the type necessary to support the 2.5 cent per kilowatthour wind power cost projection. Whereas the published technology characterizations identify a decline from $1,000 per kilowatt in 1997 to $750 in 2000, installed system costs through 1998, including substation and interconnection costs, appear to average $1,200 per kilowatt. To EIA's knowledge, no generally recognized breakthroughs markedly lowering wind power costs have been publicly demonstrated as of early 1999.

Finally, the 2.5 cent goal may understate the costs to tax-paying entities--those eligible for the production tax credit. The goal of 2.5 cents assumes low-cost, tax-exempt municipal financing, which would not be available to projects eligible for the CCTI tax credit. Cost estimates assuming investor financing raise levelized costs to as much as 3.2 cents per kilowatthour.

Another DOE goal for U.S. wind-powered generating capacity (using technologies developed by DOE) is to increase installed capacity from 1,859 megawatts on line in 1998 to 2,300 megawatts in 2000. EIA's AEO99 projects that the United States will substantially exceed the target, with 2,800 megawatts of U.S. wind-powered generating capacity on line by 2000.⁽⁹⁹⁾ Whereas in 1998 almost all U.S. wind capacity was in California, most of the additional capacity will be built outside California. By the end of 2000, large projects will also be operating in the Midwest, Southwest, and Northwest. The expansion is part of investments of more than $9 billion in wind power worldwide during the 1990s from public and private research and development efforts, in response to environmental concerns, and in order to meet experimentation, testing, mandates, and other national, regional, local, and utility objectives. Worldwide, wind generating capacity is increasing rapidly, estimated to have grown from around 2,000 megawatts in 1990 to about 9,600 megawatts in 1998.⁽¹⁰⁰⁾

Wind power appears to be gaining market interest and to be poised for additional investment and growth, both in the United States and abroad. It is likely, however, that costs will decline more slowly than suggested by the goal of 2.5 cents per kilowatthour goal by 2002.

Geothermal

The mission of DOE's Geothermal Energy Program is to work with industry to establish geothermal energy as a sustainable, environmentally sound, economical source of energy. The proposed research and development program is directed at various approaches to reducing the overall costs of delivering power to consumers. The program has four main elements: reservoir technology, exploration, drilling technology, and energy conversion.

The reservoir technology program element is aimed at improving the understanding of reservoirs and exploring means to improve performance by techniques such as water reinjection. The expected result would be to extend field life so as to establish a more sustainable resource. EIA currently assumes some plant retirements in its projection as a result of enthalpy decline, and this program activity could reduce or possibly eliminate such retirements. The CCTI budget proposal would increase the funding for reservoir technology research from $5.5 million to $8.0 million.

Exploration research is aimed at reducing the number of nonproductive wells drilled, through research on improved seismic methods. At present, the characterization of geothermal fields through seismic strategies remains a high-risk activity, leading to the need for more expensive exploratory drilling. The proposed budget would increase funding for this component from $5.5 million to $7.0 million.

The drilling technology program will complete the testing of high-performance drill bits and other drilling technologies. The effort is aimed at reducing drilling costs, which can constitute up to half the capital costs of a geothermal power unit, with a goal of improvement from exponential cost increases with well depth to linear increases with well depth. The CCTI budget proposal would increase funding for the drilling technology program from $5.0 million to $7.5 million.

The energy conversion program has two principal elements. The first would initiate a cost-shared project to construct and test an 8-megawatt Kalina-cycle binary power plant, which would be more efficient and could expand the low-temperature resource base. The second would continue research and development on small-scale modular power plants, which could help maintain grid voltages and match loads and could also support "mini-grids" in remote applications. Funding for these projects is proposed to increase from $6.0 million to $7.0 million. The overall geothermal energy budget proposal, increasing from $22.0 million to $29.5 million, is aimed at broad incremental cost improvements. The stated goal of lowering levelized costs from $0.035 per kilowatthour to $0.030 per kilowatthour could be achieved if many of the individual programs were successful.

Hydropower

DOE is funding the development of a new generation of hydropower turbines that would reduce dangers to fish. In fiscal year 2000, DOE will complete pilot-scale testing of a new conceptual design, budgeting $7 million, up from $3.25 million appropriated in fiscal year 1999.

Conventional hydropower is by far the Nation's largest source of renewable energy for electricity generation, currently providing about 10 percent of all U.S. electricity and more than 80 percent of electricity from renewable energy sources. It is the dominant source of electric power supply in some areas, particularly in the Northwest. Conflicts with hydropower are increasing, however, especially with regard to its dangers to fish populations. As a result, prospects are growing for stalled or even declining U.S. hydroelectric output. Almost no new generating capacity is projected through 2020, and restrictions reducing output from existing hydroelectric facilities are increasing. Future increases in production from other renewables may be in large part offset or even eliminated by decreases in U.S. hydroelectric output, possibly yielding a net decline in overall U.S. electric power production from renewable energy sources.

If conventional hydroelectric power is to retain or increase its contribution to U.S. electricity supply, methods of enhancing its productivity must be found. Among the more attractive prospects is the introduction of safer, "fish friendly" hydroelectric turbines, presumably retrofitted into existing facilities as part of refurbishment and repowering activities.

EIA has not evaluated the prospects for success of DOE's hydroelectric turbine program, and the marginal economic benefits of the specific proposals in the CCTI could not be quantified. Any evaluation of the newer turbines would require additional information on likely costs and performance, particularly the extent to which the safer turbines would sacrifice (or gain) efficiency relative to existing technologies.

Nuclear Power

DOE's Office of Nuclear Energy plans to spend $5 million in 2000 on its Nuclear Energy Plant Optimization (NEPO) program. The goal of the program is "reducing barriers to efficient and safe operation--increasing plant capacity from 71 percent in 1997 to 85 percent in 2010 and addressing issues associated with plant aging." If successful it is hoped that the program will increase the number of nuclear plants for which license renewals are sought at the end of their current operating lives, which in turn would reduce the need for new fossil-fired capacity and the increased carbon emissions that might be associated with it.

Without license renewal a large number of existing nuclear plants will reach the end of their current operating licenses by 2020. In AEO99, just over one-fourth of the existing U.S. nuclear capacity is projected to be retired by 2010 and over half by 2020. Plants are expected to be retired rather than relicensed because the costs of their continued operation exceed the costs of power from other sources. In recent years, several nuclear plants have been retired before license expiration when utilities were faced with the need to make large capital expenditures. It is impossible to predict when or if other plants might face the need for expensive maintenance or upgrades.

EIA has incorporated similar capacity factor assumptions in recent analyses. In fact, in the AEO99 reference case, the capacity factor for nuclear plants is assumed to be slightly higher than 85 percent in 2010. The AEO99 also included cases based on alternative assumptions about the costs of maintaining U.S. nuclear power plants. The impact on carbon emissions could be important, especially in the years after 2010. In the case where lower costs were assumed, carbon emissions were projected to be 11 million metric tons lower in 2010 and 31 million metric tons lower in 2020 than projected in the reference case.

Other Energy-Related Research

Hydrogen Fuels

The CCTI proposal includes funding for DOE to accelerate research on low-cost hydrogen production and storage, prerequisites to the widespread use of hydrogen as a fuel. A hydrogen-fueled economy would have many environmental benefits over the current fossil-based system, because the chief byproduct of the combustion of hydrogen is water. In addition, hydrogen is very flexible and could be used in mobile as well as stationary applications. Interest in hydrogen as a fuel grew during the energy crises of the 1970s, when it was believed that fossil fuel prices would continue to grow for the foreseeable future and new nuclear plants were expected to be "too cheap to meter." The prospect of using new nuclear plants to produce hydrogen for use in mobile and stationary applications looked promising under those circumstances.

The conditions described above have not materialized. As a result, there are several major hurdles that must be overcome before a hydrogen-fueled economy could become a reality. The major hurdles involve improving the economics of hydrogen production, fuel distribution and handling, and storage systems. In addition, there is concern about technologies for handling and storing hydrogen safely. Today, the cost of these activities far exceeds the cost of fossil fuel alternatives. As a result, it is unlikely that increased use of hydrogen as a fuel will contribute significantly to efforts to reduce U.S. carbon emissions over the next 10 to 20 years. As stated in the Hydrogen Program Overview prepared by Sandia National Labs, "Unfortunately, the widespread use of hydrogen energy is not currently feasible because of economic and technological barriers."⁽¹⁰¹⁾ However, if these barriers can be overcome the long-run benefits could be quite large.

Currently most of the hydrogen used in industrial processes is produced from natural gas through a steam reforming process. In the most economical large plants, hydrogen can be produced for $7 to $8 per million Btu. This does not compare well with the direct combustion of natural gas, which sells for $2.20 to $2.30 per million Btu at the wellhead. In addition, because natural gas is used in its production hydrogen from the process is not carbon free. It is possible to produce hydrogen using electricity (produced from renewables to eliminate carbon) and water, but that process is even more expensive--around $30 per million Btu. New photobiological and photoelectrochemical production processes are being studied, but they are in the very early stages of research and development. DOE plans to demonstrate a solar-to-hydrogen conversion system with 12-percent efficiency in 2000.

Similar economic hurdles exist for hydrogen storage systems. Again, as stated in the Hydrogen Program Overview, "Current storage methods are too expensive and do not meet the performance requirements of the various applications. This is especially true for hydrogen's potential use as a transportation fuel, where there is a need for high energy density--energy content per unit of space--and lightweight mobile storage." This is a significant hurdle because hydrogen has a very low energy density at normal temperature and pressure conditions. As a result, mobile fuel tanks will have to operate at very high pressure--perhaps as much as 2,000 to 2,500 pounds per square inch or more. Current systems that can handle such pressures are large and heavy. Researchers are now testing the use of new materials (lightweight graphite), but more work is needed.

In the long run, post-2020, hydrogen could be an important source of energy in the United States. Less costly production processes using low-cost renewable electricity offer the potential for a carbon-free energy sector, particularly if economical fuel cells under development for use in hybrid vehicles--most notably the proton exchange membrane (PEM) fuel cell--are successful. It remains unlikely, however, that the use of hydrogen as a fuel will contribute significantly to reducing anthropogenic carbon emissions over the next 10 to 20 years.

High-Temperature Superconductivity

DOE supports industry-led projects to capitalize on recent breakthroughs in superconducting wire technology, aimed at developing devices such as advanced motors, power cables, and transformers. These technologies would allow more electricity to reach the consumer without an increase in fossil fuel input.

The use of superconductive materials in electric power applications would provide an opportunity to reduce electricity losses and the fuel use and emissions associated with them. The discovery of high-temperature superconductive materials in the late 1980s fundamentally changed the economics of the technology. Before their discovery, superconducting materials had to be cooled to below -400^oF, whereas in recent years materials with superconductive properties at temperatures near -200^oF have been developed. Although temperatures of -300 to -200^oF are still exceedingly cold, they are much less expensive to maintain than the temperatures required for low-temperature superconductors, because relatively inexpensive liquid nitrogen can be used in place of liquid helium.

Even with the advances that have been made since the late 1980s, however, significant technological and economic challenges must be overcome before the use of high-temperature superconductive materials will be widespread. In addition, the losses that occur in the electrical coils in conventional motors and generators are quite small, often 5 percent or less, and the potential savings in fuel and emissions from the introduction of superconducting coils are not large.

The costs of superconductive materials are still quite high. As stated in DOE's Superconductivity Program Overview, "Materials used to produce high-temperature superconducting wire are inherently difficult to process into usable forms for electric power applications. This situation is the opposite of that for typical metallic electrical conductors, such as copper. And this fact presents processing obstacles that must be overcome to manufacture devices that can actually be used in electric power system applications."⁽¹⁰²⁾ The cost reductions required for them to be competitive are quite large. Again, from the program overview, "the cost of long-length, high-temperature superconducting wire needs to be reduced by 10 to 100 times to be competitive with other technologies."⁽¹⁰³⁾ It is possible that high-temperature superconductive materials could eventually lead to lower electricity losses and, thereby, contribute to reducing U.S. carbon emissions. Over the next 10 to 20 years they may find their way into some high-value applications, but it is unlikely that they will play a significant role in U.S. efforts to reduce carbon emissions.

Conclusion

Historically, research and development programs have helped to develop more efficient and advanced technologies at lower cost than might otherwise occur, and to reduce the costs and improve the operational characteristics of existing technologies. Thus, these programs have been successful in accelerating the availability of improved technologies in the marketplace. In addition, there have been a number of information programs, voluntary programs, partnerships, and similar initiatives to encourage the penetration and adoption of improved technologies, some of which appear to have achieved some success. In general, these initiatives have contributed to improvements in energy efficiency, carbon emissions, air quality, energy security, international competitiveness, and quality of life.

EIA incorporates the impacts of ongoing research, development, and deployment programs into its reference case, assuming support for these activities at historic levels. Therefore, reductions in these programs over time could lead EIA to raise its projections of energy consumption and carbon emissions, and new or expanded programs could lead to a reduction in the EIA estimates.

While recognizing the success of past and current research, development, and deployment programs, it is difficult to establish a quantitative relationship between levels of funding and specific improvements in the characteristics, availability, and adoption of energy technologies. By its nature, research and development is highly uncertain. Seemingly plausible avenues of research may not achieve success; however, breakthrough developments are also possible.

In addition, successful development of new technologies may not lead to immediate penetration in the marketplace. A number of factors may serve to slow adoption, including consumer preference for product attributes other than fuel efficiency or reduced emissions; higher costs for new technologies; low prices for fossil energy and conventional technologies; unfamiliarity with the benefits, use, and maintenance of new products; and uncertainties concerning the reliability and further development of new technologies. Some of the barriers may be reduced by some of the CCTI initiatives. In any case, these barriers do not mean that the impacts of the research, development, and deployment programs could not be substantial over time. Continued technology development may lower costs or improve technology efficiencies, reliability, or other attributes, so that the technologies become more economically competitive and attractive in the market. Also, gradual penetration may increase familiarity with technologies, establish the supporting infrastructure, and help reduce technology costs.

Some of the research, development, and deployment programs are discussed qualitatively in the analysis, or the impacts of ongoing programs in the reference case are presented. EIA also quantitatively evaluated some of the CCTI programs with specific program goals. For these programs, EIA assumed that the goal was realized and analyzed the impact on energy consumption and carbon emissions. Assuming the success of the PATH program for efficiency improvements in new homes resulted in energy and emissions reductions of about 1 percent in the residential sector in 2010 and about 2 percent in 2020. Carbon emissions were reduced by 3.1 and 6.7 million metric tons in 2010 and 2020, respectively, as a result of the realization of the PATH goals as stated by the Administration; however, the projected impacts of the Administration's goals for the Million Solar Roofs programs were considerably less, only 0.9 million metric tons in both years.

In the transportation sector, EIA assumed that the goals of PNGV programs were achieved, saving about 0.15 percent of total transportation energy in 2010 and 0.53 percent in 2020. As a result, projected carbon emissions could be reduced by 0.9 million metric tons (0.14 percent) in 2010 and by 3.9 million metric tons (0.56 percent) in 2020. EIA also analyzed the potential impacts of the advanced diesel program for light and heavy trucks by assuming the successful achievement of program goals for the underlying technologies. It is projected that this program would save 0.42 percent of total transportation energy in 2010 and 1.22 percent in 2020, reducing carbon emissions by 2.8 million metric tons (0.45 percent) in 2010 and 8.8 million metric tons (1.26 percent) in 2020, if the development of the technologies met the target goal.

Some of the CCTI programs for technology research, development, and deployment may achieve benefits only in a long time frame beyond 2020, or they may not achieve success at all. Even if technology development is successful new equipment may penetrate slowly, and significant changes in the average stock of equipment may take a long time. Although many of the programs for residential and commercial buildings have the potential for success, the goal of the Million Solar Roofs program is unlikely to be reached because of high equipment costs. Some of the industrial programs also have the potential for success; however, the capacity expansion goals of the CHP Challenge program appear too ambitious, given that equipment stock turns over slowly in this sector and that this sector expects a relatively short payback. For the transportation programs, the most recent report by the NRC evaluating the PNGV programs is skeptical about the prospect for success in meeting its goals, and while technology is improving, the goals appear optimistic to EIA as well. Advanced diesel light trucks may have difficulties with both emissions requirements and public acceptance. Assuming that technology development for heavy trucks is successful, the average efficiency of new heavy trucks could be improved from 6.1 to 7.5 miles per gallon in 2020, raising the average stock efficiency from 5.8 to 6.5 miles per gallon, but that would still be short of the stated efficiency goal of 12 miles per gallon because of slow stock turnover and late introduction dates for some technologies.

Many of the programs for electricity generation may have longer-term success, even beyond the 2020 time frame of the analysis, including the fossil technology programs for efficiency improvements and carbon sequestration. Hydrogen and superconductivity are also much longer-term programs. Some of the renewable technology programs may be successful; however, the goal of reducing the cost of wind technology to 2.5 cents per kilowatthour by 2002 appears unlikely. Even if the renewable programs are successful, they may not make a significant impact by 2020 due to high technology costs relative to fossil fuel technologies and limited opportunities for some of the renewable technologies. On the other hand, higher energy prices or other changing market conditions may serve to make any of the CCTI programs more economically attractive and improve their success. Also, efforts to meet carbon reducti