DOE Funds New Energy Technologies Without Estimating Potential Net Energy Yields

IPE-82-1: Published: Jul 26, 1982. Publicly Released: Jul 26, 1982.

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The Department of Energy (DOE) has questioned the feasibility and utility of using the net energy analysis method of determining the energy yield and efficiency produced by newly introduced technology as required by Public Laws 93-577 and 96-294. GAO examined the net energy concept to determine its methodological feasibility and cost effectiveness in DOE evaluations of programs which are eligible to receive energy funding.

DOE has not performed or used the net energy analysis method as required under the statutes. Future financial support of new energy technology is presently uncertain because it is not yet clear which, if any, federal entities will carry out future responsibilities for research, development, and demonstration activities and under which authority the support will be provided. GAO found that, if DOE used the net energy method, its policymakers would have a better basis for minimizing total energy use, conserving domestic energy resources, and reducing the amount of premium fuel that has to be imported. The net energy method would measure physical energy flows and identify the types and amounts of energy consumed in the production of energy. However, by failing to use this method, a new technology may be funded because it appears economically attractive, even though its net energy yield has not been adequately estimated and may be unfavorable. GAO found no evidence that the net energy method has been considered in the DOE proposal evaluation process or that it has been performed in a manner responsive to statutory requirements. GAO concluded that the net energy analysis method is a useful tool for policymakers, because it helps them maximize effective energy use and conserve domestic energy resources in the production of new energy products. GAO believes that the arguments which have been advanced by DOE officials against the performance or use of the method do not hold up; the impediments to compliance have been or can be overcome.

Matter for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: Congressional interest in new energy technology has subsided as a result of the substantial budget reductions implemented in the early years of the present administration.

    Matter: Congress should require DOE, or succeeding entities, to demonstrate during oversight and appropriations hearings that the potential ability of proposed energy technologies to produce net rather than gross premium fuels and energy at their commercial stage was analyzed and considered before DOE funded the development of those technologies.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: DOE disagreed with this recommendation and does not intend to take corrective action.

    Recommendation: The Secretary of DOE should issue directives necessary for ensuring that similar or comparable cost-estimating methods, based on acceptable levels of engineering effort, are used in developing proposal documents and that their results are tested for validity.

    Agency Affected: Department of Energy

  2. Status: Closed - Not Implemented

    Comments: DOE disagrees with this recommendation and does not intend to take corrective action.

    Recommendation: The Secretary of DOE should issue directives necessary for obtaining uniform data on the cost, performance parameter, energy, materials inputs, and final products and by-products of energy facilities in proposal documents, along with their associated quantitative uncertainties.

    Agency Affected: Department of Energy

  3. Status: Closed - Not Implemented

    Comments: DOE disagrees with this recommendation and does not intend to take corrective action.

    Recommendation: The Secretary of DOE should issue directives necessary for developing the additional database for the analysis of indirect energy flows.

    Agency Affected: Department of Energy

 

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