Federal Research Funds for Renewables vs. Fossil Fuel Projects: What
Should the Ratio Be?
From the so-called House ‘minibus’ energy bill the recent annual
congressional appropriations for renewable energy research were cut by nearly
half from $2 billion to $1.1 billion while funds for fossil fuel research was
kept the same at $668 million. In this scenario fossil fuel research goes from
1/3 of total energy research to about 61%. The Trump budget sought to roll back
renewables research further (by 70%) to slightly less than fossil fuels
research. They also sought to cut fossil energy research by 55%. It should
perhaps be noted that the renewable funds go to the Office of Energy Efficiency
and Renewable Energy (EERE) and so include energy efficiency measures, some of which
involve fossil energy and other efficiency upgrades that do not involve
renewable energy – so this makes the renewables share less than the numbers
above depict. Apparently, some Democrats favored keeping the renewables
research funding as is while cutting fossil energy research funding.
Fossil fuel research is mainly devoted to carbon capture and
sequestration projects and related coal gasification. There are other important
projects including ones related to increasing the efficiency of gas turbines.
The DOE’s National Energy Technology Laboratory (NETL) has done some great work
in the past with fossil energy including the various gas shales projects which
yielded valuable information that helped the fracking revolution to develop. The
National Renewable Energy Laboratory (NREL) is also involved in some great
research improving wind turbine and solar panel output and efficiency.
Any emphasis on decarbonation will favor low-carbon fuel
sources. Wind, solar, battery storage, underground thermal storage, and
geothermal technologies continue to get cheaper albeit by small increments.
Fossil fuel technologies have also gotten cheaper and increased efficiency.
There is of course considerably more benefit to favoring low carbon and low
pollution fuel sources if one considers carbon emissions, air quality, waste-management
issues, and potential public health issues – which are all more problematic
with fossil energy. The mere incentive to limit those issues argues for
significantly higher funding for renewables. If the so-called ‘social costs of
carbon’ are as high as some suggest then there is another incentive. The bill scrubbed
any funds related to the social costs of carbon research.
One aspect of government research funding is the technical
and economic viability of projects underway. One might think of the government
losses due to bankruptcies of companies receiving federal funding like Solyndra
during the ‘solar bubble.’ Of course, this was due to unforeseen market
conditions. More recently the out-of-control costs and subsequent abandonment
of the Kemper coal gasification CCS project in Mississippi shows that federally-funded
fossil energy projects share similar risks of economic failure. New nuclear
facilities in South Carolina have also been plagued by massive cost overruns and
construction has recently been halted. In fact nuclear is having considerable
economic difficulty in the U.S. as currently running plants are unprofitable in
relation to natural gas plants and need to be subsidized and the few new
projects having sometimes insurmountable construction costs like the South
Carolina reactors.
What Should Guide Quantities and Percentages Appropriated and Where
Should They Be Focused
A simple chart of relative costs and relative benefits
suggests several things: 1) Natural gas and coal are the most economic and thus
the less in need of monetary research assistance, 2) A carbon tax would hurt
coal the most but natural gas would probably remain economic, 3) Renewables and
nuclear as non-carbon fuels have the most potential benefit going forward and
thus should be encouraged and subsidized as they currently are or greater – not
less, 4) The benefits of CCS and coal gasification are below the costs which
will remain uneconomic without a high carbon tax – it is cheaper currently to
develop subsidized wind and solar for greater benefit so so-called “clean coal”
technology should not be a top priority research investment; another issue is
that economics, scale, geography, and feasibility of different CCS projects
suggest that only a small percentage of coal stack emissions could be utilized;
CCS and coal gasification research does
have the potential to yield major benefits in parts of the developing like
China and India, 5) Subsidies make uneconomic energy sources marginally
economic and we most subsidize by far clean energy sources – here nuclear and
wind/solar – this is logical, 6) Focus on reducing carbon emissions and
environmental footprint of natural gas can help (green the yellow); focus on
increasing efficiency of gas turbines can further improve both economics and
environmental footprint; CCS projects
are subsidized and landfill gas and anaerobic digester biogas are modestly
subsidized, so should methane leak reduction also be modestly subsidized?, 7) While
the environmental footprint of nuclear is debatable and subsidizing of existing
plants is useful in terms of both clean energy and baseload power, building new
reactors can be quite uneconomic, 8) Really wind, solar, and other renewables technologies
along with energy efficiency offer the most potential benefit in ‘bang-for-the-buck’
terms; fossil fuels, being generally economic are not a priority for research
even though research has been historically important and continues to be
important – thus it should not be increased and any reductions should come
before reducing renewables, 9) The Trump plan calling for large reductions in
both renewables and fossil fuels research ignores both the economic and
environmental gains that historic research has influenced and the potential for
future gains – for both fossil fuels and renewables; the call by some Democrats
to reduce fossil fuel research funding is also short-sighted for the same
reasons, 10) Energy efficiency, with
or without economic assistance is typically a good investment but rates of
return are often lower than business RORs and vary much by project – utilities
and their regulatory boards may choose to incentivize efficiency measures which
can potentially decouple power sales from profit. This typically happens at the
state and/or regional power market level. Efficiency research is thus very
important. Since it is often already economic without subsidization, research
could make it even more economic so that more improvements are made. Efficiency
improvements are one major reason that U.S. electrical use and demand has
stabilized over the last decade. According to very recent analysis by the EIA
30 states plus D.C. have adopted energy efficiency policies and most are energy
efficiency resource standards (EERS) similar to renewable portfolio standards
(RPS). Energy use and/or peak energy demand may be targeted for reductions.
Close to 45% of U.S. electricity sales are covered by some variety (there are
many variations) of EERS deal.
Fuel Source
|
Decarbonization Measure
|
|||||
Natural Gas
|
Nuclear
|
Coal
|
Fossil Fuels (Combined)
|
Renewables (Wind & Solar)
|
CCS/Coal Gasification
|
Energy Efficiency
|
economic
|
uneconomic
|
economic
|
economic
|
uneconomic
|
uneconomic
|
economic
|
light carbon
|
non-carbon
|
heavy carbon
|
med-carbon
|
non-carbon
|
reduces carbon
|
reduces carbon
|
M efp
|
L efp
|
H efp
|
M/H efp
|
L efp
|
reduces efp
|
reduces efp
|
References:
House slashes funding for clean energy, restores funding for fossil
fuel research – by Mark Hand, in Think Progress, July 28, 2017
Mississippi realizes how to make a clean coal plant work: run it on
natural gas – by Joe Romm, in Think Progress, June 22, 2017
Many states have adopted policies to encourage energy efficiency – by Energy
Information Administration, Today in Energy, Aug 3, 2017
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