Introduction

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 2000 (AEO2000), 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 2000, and new building shell efficiencies are fixed at 2000 levels. In the industrial sector, the efficiencies of new plants and equipment are constant at 2000 levels. New equipment is fixed at 2000 efficiencies for all transportation modes, and the cost and performance characteristics of all electricity generation technologies are held to 1999 levels.

• Second, for most of the 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 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 AEO2000 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; the Partnership for a New Generation of Vehicles (PNGV) in the transportation 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, performance, costs, 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 AEO2000 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 2000 levels. The comparison shows that, in 2010, projected energy consumption in the buildings sector is 700 trillion British thermal units (Btu), or 2 percent, lower in the reference case than in the frozen technology case, and projected carbon emissions from the sector are 12 million metric tons (1.8 percent) lower.⁽⁴⁶⁾

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)

To demonstrate the impact that the PATH program could have if it were 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 single-family 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 2001-2004 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 28 shows the energy, carbon, and energy bill savings projected to come from meeting the goals of the PATH program as described above. In 2010, annual energy savings relative to the reference case are projected at 96 trillion Btu (0.8 percent), saving Americans $898 million and reducing carbon emissions by 1.9 million metric tons (0.6 percent). In 2020, the projected savings are 278 trillion Btu (2.2 percent of the reference case projection), $2.5 billion in consumer energy bills, and 5.7 million metric tons of carbon emissions (1.5 percent).

Table 28. Projected Energy Savings and Carbon Emissions Reductions for Successful PATH Program Goals in New Housing, 1998, 2005, 2010, and 2020

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 2001 budget calls for new funding to support the launch of new Energy Star product lines and promote the Energy Star labeling program in 6 to 10 export markets.⁽⁴⁷⁾ Possible candidates for the Energy Star label include commercial ice makers, ventilation fans, and water coolers. 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.⁽⁴⁸⁾ EPA plans to strengthen the MOU to a 1 watt restriction within the next several years. The AEO2000 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 97 trillion Btu of electricity will be saved (cumulatively), accumulating $2.1 billion dollars of energy bill savings, and abating 5.0 million metric tons of carbon emissions cumulatively. In 2010, the program is projected to save 17.5 trillion Btu of delivered electricity (0.4 percent of residential electricity use) and to reduce carbon emissions by 0.8 million metric tons (0.2 percent) relative to the reference case projections (Table 29). These estimates of savings are about half those in last year's analysis of the CCTI for fiscal year 2000 because more recent data from EIA's Residential Energy Consumption Survey 1997 show that TVs use less electricity than previously assumed.

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.⁽⁴⁹⁾ 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.⁽⁵⁰⁾

Table 30 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 30.

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 September 30, 1999, the program reported 3,037 organizations participating in the partnership. The program focuses first on energy-efficient lighting upgrades, typically the most cost-effective improvement for commercial buildings. EPA reports 44.1 billion pounds of carbon dioxide emissions prevented and $1.4 billion in energy costs saved, cumulatively, from the completed upgrades.⁽⁵¹⁾ The NEMS commercial module includes the effects of this program in its reference case assumptions.

Energy Smart Schools is a campaign of DOE's Rebuild America 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 help cut schools' energy bills by up to 25 percent, 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 Clean Cities, 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 Energy Policy Act of 1992 (EPACT) and Executive Order 13123 in 1999. 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 13123 requires agencies to achieve a 30-percent reduction by fiscal year 2005, and a 35-percent reduction by 2010 relative to the 1985 baseline. Under the executive order, each Federal agency also has the goal to reduce greenhouse gas emissions attributed to facility energy use by 30 percent by 2010 compared to 1990 levels.

FEMP activities to help agencies meet their energy goals include creation of partnerships, resource leveraging, technology transfer, and training and support. The fiscal year 2001 budget request includes an increase in funding of $6 million (23 percent) over the 2000 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. Preliminary numbers from FEMP's forthcoming Annual Report to Congress for fiscal year 1998 indicate that:

• By the end of fiscal year 1998, the Government had decreased energy consumption in buildings by 18.7 percent per square foot since 1985--more than halfway to its goal of achieving a 30-percent reduction by 2005.

• Energy efficiency efforts have contributed significantly to a 17-percent decrease in the cost for energy in buildings compared to a 1985 baseline.

• Carbon emissions from energy used in buildings have decreased by 15.8 percent since 1990.

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; addressing Federal energy opportunities arising from utility restructuring and green power; and other FEMP activities.⁽⁵²⁾

Energy-Efficient Buildings Technologies

The CCTI budget proposes an increase of $33 million (29 percent) over the 2000 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 for industry and has recently reported that its programs reduced 1999 consumption in the industrial sector by 176 trillion Btu.⁽⁵³⁾ 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. The proposed budget is $184 million, an increase of $9 million over 2000.⁽⁵⁴⁾ The DOE funding request for industrial programs in CCTI is summarized in Table 31.

One indication of the possible impacts of these programs is provided by the AEO2000 projections. A frozen technology case for the industrial sector projects 860 trillion Btu (2 percent) more energy consumption in 2010 than in the reference case,⁽⁵⁵⁾ 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 AEO2000 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 estimated that the programs included in the Climate Change Action Plan could reduce annual electricity consumption by 25 billion kilowatthours and annual fossil fuel consumption by 65 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.⁽⁵⁶⁾ 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 reduce energy intensity by 25 percent in 2010 compared with 1990.⁽⁵⁷⁾ The AEO2000 forecast for industrial energy consumption in 2010 is 39.1 quadrillion Btu.⁽⁵⁸⁾ In AEO2000, EIA projected energy intensity to decline by 2 percent to 23 percent for selected Industries of the Future.⁽⁵⁹⁾ Consequently, the 25-percent reduction goal, while ambitious, could be achievable.

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 AEO2000 projections, the CHP Challenge goal appears to be quite ambitious. For example, over the 1998 to 2010 period, projected CHP additions total 6.5 gigawatts in the reference case.⁽⁶⁰⁾ 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 $63 million, an increase of $41 million from fiscal year 2000. 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.⁽⁶¹⁾ 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.

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 $378 million, an increase of $68 million over the 2000 budget. In the AEO2000 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 6 percent higher than the 1998 level, and fuel efficiency for new heavy trucks in 2010 is approximately 7.9 percent above the 1998 level. In comparison with the frozen technology case, transportation energy consumption in the reference case is 0.7 quadrillion Btu (2.1 percent) lower in 2010.⁽⁶²⁾

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⁽⁶³⁾ 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.

The CCTI research and development initiatives for fiscal year 2001 include a proposed funding increase of $30 million for the PNGV program, which was funded at $225 million in fiscal year 2000. The National Research Council (NRC), which evaluates the PNGV program each year, has recommended that additional funding be provided. This appears particularly important because the PNGV diesel technologies can not meet Tier II emissions standards as currently formulated. Research on advanced catalysts and other exhaust after-treatment technologies combined with advanced high quality fuels needs funding. The NRC summarizes some of the most important reasons for increased funding: "U.S. government and industry investments in research and development (of fuel cells) should, therefore, be continued at current levels or even be increased for an extended period. The government should significantly expand its support for the development of long-term PNGV technologies that have the potential to improve fuel economy, lower emissions, and be commercially viable."⁽⁶⁴⁾

Through the PNGV technology selection process, two of the most promising technologies are hybrid electric vehicles and fuel cell vehicles. Hybrid electric vehicles may use either a gasoline or diesel engine in combination with an electric motor, and fuel cell vehicles are currently designed to operate using hydrogen stored on the vehicle or processed with a gasoline or methanol reformer on board.

The National Alternative-Fuel Vehicle Survey, funded by DOE's Office of Transportation Technologies, revealed that consumers of advanced technology vehicles, such as the PNGV technology vehicles, make purchasing decisions on the following criteria: vehicle price, cost of driving per mile, vehicle range, availability of refueling stations, luggage space, vehicle maintenance costs, and vehicle acceleration or performance measured in seconds from 0 to 60 mph. Other factors that may limit vehicle purchases are the commercial availability dates and the availability of vehicle technologies in various sizes and vehicle types. Some technologies are limited in their application due to size requirements, and others are constrained by cost considerations, such as electric vehicles with the size of a cargo van.

With the benefit of economies of scale, the incremental cost of the hybrid electric and fuel cell vehicles above a gasoline vehicle at full market production may be approximately $4,000 and $6,000, respectively. The hybrid electric full production vehicle price is based on current production levels of the gasoline-electric hybrid vehicles that are offered or soon to be offered in the United States. The fuel cell vehicle full production vehicle price is achieved in 2020 because there are no plans for a production prototype fuel cell vehicle until 2004. Shortly after 2004, manufacturers would be able to produce reasonable quantities of fuel cell vehicles if demanded; however, reaching the full production volumes that correspond to the incremental vehicle price of $6,000 would require very large sales volumes and some significant breakthroughs in the deployment of fuel cell vehicles. Both hybrid electric and fuel cell vehicles will require approximately two to three refinement cycles of three to four years each before these vehicles are expected to have the consumer attributes that are needed to reach full production volumes.

In addition to the initial vehicle price, there are other obstacles to the penetration of these vehicles. For example, fuel cells have achieved considerable size and weight reductions, but they have not been enough to completely eliminate the luggage space and interior volume displacement from the fuel cell, the hydrogen storage tanks, and the reformers. In addition, the infrastructure for the production and distribution of hydrogen and methanol do not currently exist on a national level. Other infrastructure issues, including vehicle parts, trained mechanics, and safety issues associated with hydrogen, methanol, and methyl tertiary butyl ether (MTBE) storage will also need to be resolved. MTBE is a precursor to methanol that is used to produce methanol; however, EPA has recently announced its intention to ban MTBE as a gasoline additive because of the past experiences with contamination of groundwater in many States.

It is likely that the fuel economy of the hybrid electric and fuel cell vehicles offered to the public will not achieve the PNGV goal of three times the gasoline vehicle fuel economy, which represents the upper range of technological feasibility. Consumer demand for higher performance will lower the fuel economy of the vehicles offered. When the actual fuel economy levels are combined with much higher projected prices for hydrogen and methanol relative to gasoline, the cost of driving these vehicles will not be competitive compared to gasoline vehicles. Maintenance costs on the hybrid electric may also be considerably higher, compared to a gasoline vehicle, due to battery replacement. Replacement can cost from $2,000 to $10,000, lasting three to five years, depending on the percentage of the driving time that the vehicle uses the electric motor and battery.

For hybrid vehicles, there are difficulties with emissions standards. American manufacturers, who have not yet made their versions of the hybrid electric available, all use diesel fuel. At this time, Tier II emissions regulations set by EPA cannot be met by diesel-electric hybrids. In the future, engine redesign, high-quality, low-sulfur fuel, and after-treatment with advanced catalysts may lead to advanced diesels compliant with the Tier II standards, but at a higher cost.

There are additional technical issues associated with fuel cell vehicles. Engine startup times currently approach three minutes although the goal is one minute. Water loss in the self-enclosed fuel cells has been a problem and can also lead to operational problems in freezing outdoor temperatures. As noted above, the weight and size of fuel cells need further improvement, and technological breakthroughs are also needed for the gasoline and methanol on-board reformers because of the complexity of refining these fuels into hydrogen. Finally, safety issues are a concern with hydrogen storage due to the flammability and potential leakage from the embrittlement of the storage tanks, and methanol is highly toxic even in very small quantities, is very corrosive, and has an invisible flame during combustion.

If the cost, efficiency, and performance goals of the PNGV program are realized, it is likely that these vehicles will begin to capture a significant portion of the market. However, continued additional funding will be necessary for the success of the program in order to overcome the technical and consumer acceptance obstacles.

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 0.04 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 developing a new direct injection diesel automobile (the Lupo) with a fuel efficiency goal of 78 mpg. For model year 2000, Volkswagen is again offering the turbo direct injection engine in the Golf, Jetta, and Beetle.

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.⁽⁶⁵⁾ On average, a heavy truck travels 37,600 to 86,500 miles each year.⁽⁶⁶⁾ 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 1998.

The stated goal of the CCTI proposal for light trucks is a 35-percent improvement in fuel efficiency above conventional gasoline vehicles by 2003 while meeting strict emissions standards. For heavy trucks the goal is to achieve a fuel efficiency of 10 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.⁽⁶⁷⁾ 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 2003 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

The results for the CCTI analysis case show that diesel direct injection light truck sales in 2010 total approximately 162,000 vehicles, an increase of about 47,000 sales above the reference case (Table 32). Projected carbon emissions from light-duty vehicles in the CCTI case are reduced by 0.4 million metric tons in 2005 and 0.6 million metric tons in 2010 from reference case levels. Carbon emissions in the CCTI case are slightly higher than in the reference case in 2020 because diesel fuel consumption displaces gasoline and alternative fuels. Since diesel fuel has a higher carbon emissions factor than gasoline and alternative fuels, the carbon emissions rise slightly above the reference case in 2020.

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 has revised the NO_x and particulate emissions standards via Tier II regulations 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 DaimlerChrysler 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 low volume of sales for direct injection diesel vehicles from Volkswagen and the current low level of sales for diesel light-duty vehicles, which made up 0.04 percent of all light-duty vehicle sales in 1998.

Heavy Trucks

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 1 to 4-year payback period, depending on the technology, 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 2009. 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,⁽⁶⁸⁾ 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. There is a plan to reduce cab drag by replacing the mirrors with video cameras, but 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

The heavy-duty truck technology characteristics in Tables 33 and 34 are 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 33 and 34, 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.

Table 34. Heavy Truck Diesel Technology Characteristics in the Advanced Diesel Program

In 2010, the heavy truck diesel stock fuel efficiency improvement in the CCTI case relative to the reference case is approximately 0.18 mpg, which results in a reduction of 120 trillion Btu of heavy truck diesel fuel use and a carbon emissions reduction of 2.6 million metric tons (Table 35). Reductions in fuel use and carbon emissions both 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 the late commercial availability date (Table 34), one of the most promising technologies, advanced engines, is projected to have limited market penetration--1.0 percent--by 2010 (Table 36). 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 6.54 mpg in the CCTI case, compared with 6.02 mpg in the reference case (a 9-percent improvement). The difference has the effect of reducing heavy diesel fuel consumption from 4,125 trillion Btu in the reference case to 3,791 trillion Btu in the CCTI case, for a net fuel savings of 334 trillion Btu and carbon emissions reductions of 7.4 million metric tons, or 1.0 percent of the total for the transportation sector.

Table 35. Projected Impacts on Heavy Trucks from the Advanced Diesel Program, 1998-2020

Table 36. Projected Penetration of Heavy Truck Technologies in New Trucks from the Advanced Diesel Program, 2005, 2010, and 2020

Fuel efficiency in Table 35 refers to both the on-road stock average under real driving conditions and the new fuel efficiency average. In the CCTI analysis case, the fuel efficiency of new heavy trucks is projected to be 5.91 mpg in 2005 and 6.71 mpg in 2010. With the exception of lightweight materials, all heavy truck technologies are expected to reach their maximum potential by 2020. Partly due to new emissions standards, electronic engine controls are projected to achieve a penetration of 71 percent by 2010.⁽⁶⁹⁾ The advanced engine is a low-emission, high-efficiency, heavy-duty diesel engine, with technical targets developed by DOE with industry input. Since the initial introduction date is expected to be 2009, this engine will not have a significant penetration and impact on fuel economy until later in the forecast.⁽⁷⁰⁾

Table 37 provides a summary of the fuel savings and carbon emissions reductions projected from implementing the CCTI light truck and heavy truck technology proposals simultaneously.

Table 37. Projected Impacts on Light and Heavy Trucks from the Advanced Diesel Program, 2005, 2010, and 2020

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.⁽⁷¹⁾ 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 1998, 58,000 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.⁽⁷²⁾

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 January 2000, for example, the subsidy lowered the price of ethanol by almost half, from $1.22 per gallon to 68 cents per gallon, compared to the methyl tertiary butyl ether (MTBE) spot price of 90 cents per gallon.⁽⁷³⁾ 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. Because the ethanol tax exemption has been extended several times since its introduction in 1979, most recently to 2007, extensions of the tax exemption through 2020 are assumed in the reference case for this analysis.⁽⁷⁴⁾ Without the subsidy, ethanol's share of the market would likely be much smaller.⁽⁷⁵⁾

Several projects are currently being developed in partnership with DOE. BC International is building a facility in Louisiana that is designed to convert sugarcane residue to ethanol. BC International is also involved in two projects in California. One is slated to use wood waste as feedstock while the other will use rice straw. Arkenol is also working to establish a commercial facility in Sacramento, California, to convert rice straw to ethanol. Masada Resource group is planning a municipal solid waste-to-ethanol plant in New York. Sealaska Corporation, with support from both DOE and the State of Alaska, is exploring the possibility of using low-value wood resources to produce ethanol in Southeast Alaska. In addition, DOE is working with the traditional corn-based ethanol industry to define the technical and economic issues involved in using corn stover as a primary feedstock along with corn starch in ethanol production.

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. Some additional funding for the ethanol program is expected, which will contribute to the development of advanced technologies for more cost-effective biomass production and harvesting and improved pretreatment and enzymes for hydrolyzing biomass to various sugars that can be converted to ethanol fuel. 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 38 percent from current levels by 2020.⁽⁷⁶⁾

Table 38. Projected Ethanol Consumption and Resulting Carbon Emissions Reductions in the Reference Case, 1998, 2005, 2010, and 2020

Carbon emissions reductions resulting from the displacement of gasoline by cellulose ethanol are projected at 0.2 million metric tons in 2005 (0.04 percent of transportation petroleum carbon emissions), 0.4 million metric tons in 2010 (0.07 percent of transportation petroleum carbon emissions), and 1.2 million metric tons in 2020 (0.2 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 rises slowly to 107,000 barrels per day in 2010, increasing to 131,000 barrels per day by 2020 (Table 39). Ethanol for E85 also increases throughout the forecast, rising to 35,000 barrels per day in 2010 and 49,000 barrels per day in 2020.⁽⁷⁸⁾

Table 39. Projected Uses of Ethanol in the Reference Case, 1998, 2005, 2010, and 2020

In an analysis of cellulose ethanol, a high technology case was developed in which the conversion cost of cellulose ethanol was assumed to decline 66 percent based on the successful development of an advanced conversion process.⁽⁷⁹⁾ It was also assumed that market penetration would occur at a more rapid pace than in the reference case. With these assumptions, cellulose ethanol consumption is projected to increase to 22,000 barrels per day in 2010 and 185,000 barrels per day in 2020. In contrast to the reference case, however, cellulose ethanol takes market share from corn ethanol in this case. Corn ethanol consumption declines over the last ten years of the forecast period, falling to 89,000 barrels per day in 2020. In the high technology case, carbon emission reductions resulting from the displacement of gasoline by cellulose ethanol amount to 0.5 million metric tons in 2010 (0.08 percent of transportation petroleum carbon emissions) and 4.1 million metric tons in 2020 (0.6 percent of transportation petroleum carbon emissions).

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 AEO2000 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 fossil generating technologies would stay at 1999 levels, projected fossil fuel use in the electricity sector was 1 percent higher in 2010 and 2 percent higher in 2020 than in the reference case. Similarly, electricity sector carbon emissions were 2 million metric tons higher in 2010 and 12 million metric tons 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) requested $38 million in 2000 and $56 million for 2001 for climate change funding (Table 40). Significant increases are requested for research on efficient generating technologies--including coal integrated combined-cycle, coal pressurized fluidized bed, fuel cells, gas turbines, and Vision 21 power facilities--and carbon control and sequestration technologies.

Efficient Electricity Generating Technologies

Background

The proposed 2001 CCTI budget requests for research on more efficient coal-fired generating technologies is very similar to the 2000 budget. However, the proposed budget for coal technology research and development is slightly less than the 2000 budget. In the 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)."

Table 40. Office of Fossil Energy CCTI Funding, 1999, 2000, and 2001

For gas-fired generating technologies, the proposed 2001 CCTI budget includes $15 million for research on fuel cells and $3 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 AEO2000 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 natural gas prices widens.⁽⁸⁰⁾

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. This fact is recognized in the 2001 CCTI request which more than doubles the budget for carbon sequestration research. 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 41). 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. The efficiency goals for the DOE Vision 21 program are 60 percent for new coal plants and 75 percent for new natural gas plants by 2015. Carbon emissions from these advanced technologies would be 323 pounds per megawatthour for coal and 145 pounds per megawatthour for natural gas. However, there would be no significant penetration of these advanced plants by 2020, the time frame of this analysis.

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.⁽⁸¹⁾ 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-fired 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 natural 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 natural gas-fired technologies, EIA expects new power plant additions to be dominated by relatively efficient natural gas plants. In AEO2000, new advanced natural gas-fired generating plants are expected to reach efficiencies of nearly 54 percent. As with the new generation of coal plants, Vision 21 natural 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 produced by U.S. power plants (mostly as CO₂).

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 2001 DOE coal technology research and development budget request calls for spending approximately $19.5 million on carbon sequestration research and development. In addition, the DOE basic science program, EPA, and USDA have requested funding increases for CO₂ removal and sequestration programs.

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 finding 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 1998 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 8 cents per kilowatthour through 2020, while the costs for more traditional electricity supplies from natural gas-fired power plants remain close to 3.5 cents per kilowatthour or less.

Consumer costs for electricity from small-scale photovoltaic modules, especially if they are installed 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 less expensive and 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, DOE plans to increase the efficiency of thin-film modules in multi-megawatt production from 7 percent to 12 percent and to reduce module manufacturing costs from $2.50 to $1.50 per watt. The DOE goal for 2001 is to have module efficiency reach 14 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. In 1997, DOE estimated 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.⁽⁸²⁾ 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 dish/Stirling technology faces large challenges in contributing to U.S. electricity supply before 2010. The technology remains far from published 2000 goals, 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 essential rural 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 and biobased products and bioenergy by 2010. This would result in 3,000 megawatts of new biomass capacity by 2010. The EIA reference case projections indicate that roughly one-third of the new capacity goal is likely to be achieved.

The Salix Consortium project in New York supports commercial development of willows for generating electricity. The fast-growing willows will be co-fired with coal in existing power plants. Led by Niagara Mohawk Power Corporation, the Salix Consortium's objectives are to establish willow as a commercial biomass energy crop in the Northeast and Upper Midwest (the Consortium will attempt to develop a reliable market for willow at a cost of less than $2 per million Btu by 2001) and to demonstrate and quantify the environmental and economic benefits of co-firing willow with coal in existing electric power plants. Test burns of willow have been conducted at New York State Electric and Gas Company's (NYSEG) Greenridge Station, now owned by AES Corporation of Arlington, Virginia. This plant is capable of co-firing up to 5,000 tons of willow per year grown on 400 acres of land near the plant. Co-firing tests at Niagara Mohawk's Dunkirk Station are planned for 2001. Willows will be grown on 400 acres near the 600-megawatt plant. The energy input from biomass is expected to provide about 10 to 20 percent of the total energy requirement for this plant.

DOE is supporting another co-firing project in partnership with Chariton Valley Resource Conservation and Development, Inc. (RC&D) in Centerville, Iowa. This project is aimed at developing switchgrass as an energy crop. The Chariton Valley Project's goal is to develop enough switchgrass to generate 35 megawatts of power by co-firing with coal at the Alliant Power Company's Ottumwa generating station. This represents 5 percent of the total capacity of the power plant, rated at 650 megawatts, and will require 200,000 tons of biomass harvested from 40,000 to 50,000 acres of switchgrass. It is anticipated that eventually as many as 500 local farmers will have the opportunity to raise and sell energy crops for power production. Modifications at the power plant to accommodate co-firing are scheduled for late 1999 through early 2000.

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 AEO2000, EIA projects an expansion of biomass systems in the industrial sector, where biomass cogeneration capacity increases from 6.0 gigawatts in 1998 to 8.5 gigawatts in 2020.

The Minnesota AgriPower project is designed to demonstrate the feasibility of electric power production fueled by alfalfa stems. The Minnesota Valley Alfalfa Producers (MnVAP) is a farmers cooperative that manages this project and plans to enlist as many as 2,000 farmers to grow 680,000 tons of alfalfa annually on 180,000 acres of farmland. MnVAP will collect alfalfa grown by member farmers and separate the alfalfa leaves from the stems. The leaves will be used as a high-quality animal feed product that will be marketed by MnVAP. The stems will be utilized as a fuel for a biomass gasifier and combined-cycle gas turbine facility. The integrated gasifier and gas turbine process will be capable of generating 75 megawatts of electricity. A power purchase agreement between MnVAP and Northern States Power Company of Minneapolis, Minnesota, has been signed guaranteeing the long-term sale of electricity starting December 31, 2001. The City of Granite Falls, Minnesota, has donated 100 acres of land for the power facility. The State of Minnesota has allocated $200,000 to support alfalfa production and processing facilities. The State has also approved regulatory changes and tax exemptions worth more than $3 million per year to support the alfalfa producers role in this project. Ground was broken in 1999 and power plant construction has begun.

The EIA analysis described in Chapter 2 characterizes the biomass gasification technology incorporated in AEO2000. For this analysis, EIA accelerated 90 megawatts of mandated new biomass-fired capacity that would have entered service after 2005 to begin service earlier in order to obtain the proposed production tax credit in the CCTI. In addition, biomass generating capacity growth from 2002 through 2005 already includes 144 megawatts of new construction.

The feedstock development program overlaps with other Biomass Power Systems programs in that feedstocks are an important part of the economics of biomass utilization. NEMS 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.

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 and providing 5 percent of the Nation's electricity needs by 2020.⁽⁸⁵⁾ 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.⁽⁸⁶⁾ 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 1999, 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 2000.

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.⁽⁸⁷⁾ Cost estimates assuming investor financing raise levelized costs to as much as 3.2 cents per kilowatthour.

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 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 with a levelized cost less than 3.5 cents per kilowatthour in good steam resources. A new initiative, GeoPowering the West, seeks to focus national, regional, State, and local efforts to supply at least 10 percent of electricity needs of the West with 20,000 megawatts of geothermal power installed by 2020. 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.

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 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 energy conversion program has two principal elements. The first would initiate a cost-shared project to construct and test a Kalina-cycle 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.

Opportunities for U.S. geothermal development are limited to the Western states, where current capacity totals less than 3,000 megawatts. The AEO2000 reference case projects 3,750 megawatts by 2020 and notes that in some instances geothermal power may be competitive by 2020 with costs at or below the 3.5-cent goal anticipated by the proposal. However, because there are few very low-cost sites available, it is unlikely that geothermal could provide a very large fraction of the proposed amount below the 3.5-cent goal by 2020. Even in the AEO2000 high renewables case, in which capital costs for geothermal are 33 percent below the reference case costs in 2020, resource constraints limit total geothermal capacity to less than 6 gigawatts in 2020.⁽⁸⁸⁾

Hydropower

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

Without license renewal a large number of existing nuclear plants will reach the end of their current operating licenses by 2020. In AEO2000, about 13 percent of the existing U.S. nuclear capacity is projected to be retired by 2010 and about 41 percent by 2020. Some 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. In general, the plants that were recently retired had specific reasons for being decommissioned, and all preceded the recent deregulation trends that are currently resulting in increased consolidation of the industry through the buying and selling of plants. The impact of these retirements has been counterbalanced by the improving performance of the remaining nuclear plants. In fact, nuclear generation had a record year in 1999, exceeding 700 billion kilowatthours for the first time. In the future, it is impossible to predict when or if other plants might face the need for expensive maintenance or upgrades. However, in AEO2000, about 40 gigawatts of nuclear capacity are expected to retire by 2020, with thirteen plants retiring before their licenses would have expired and twelve units continuing to operate beyond their original licenses.

AEO2000 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 5 million metric tons lower in 2010 and 14 million metric tons lower in 2020 than projected in the reference case.

In total, all existing nuclear plants operating today are displacing between 113 and 165 million metric tons of carbon. The range depends on whether the plants are assumed to displace the average carbon emissions for all generation or the average for fossil generation. In evaluating the future impact on carbon emissions, the replacement fuel for retiring nuclear plants is of key importance. Given the technology costs and fuel prices expected over the next 20 years, they would most likely be replaced by natural gas-fired, combined-cycle plants that have relatively low carbon emissions. If all current nuclear plants were replaced by new natural gas-fired, combined-cycle plants, annual carbon emissions would be about 62 million metric tons higher.

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 the National Renewable Energy Laboratory, "Unfortunately, the widespread use of hydrogen energy is not currently feasible because of economic and technological barriers."⁽⁸⁹⁾ 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 just over $2.00 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."⁽⁹⁰⁾ 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."⁽⁹¹⁾ 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.

Summary

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 performance, costs, 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 1.9 and 5.7 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, 0.8 and 0.9 million metric tons in 2010 and 2020, respectively.

In the transportation sector, EIA 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 0.5 percent of total transportation energy in 2010 and 1.0 percent in 2020, reducing transportation carbon emissions by 3.3 million metric tons (0.5 percent) in 2010 and 7.3 million metric tons (1.0 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 with current funding levels, 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 6.7 to 7.5 miles per gallon in 2020, raising the average stock efficiency from 6.0 to 6.5 miles per gallon, but that would still be short of the stated efficiency goal of 10 miles per gallon because of slow stock turnover and late introduction dates for some technologies.