Pursuant to a congressional request, GAO reviewed the Department of Energy's (DOE) Fossil Energy Research and Development (R&D) program and Clean Coal Technology Demonstration program, focusing on the: (1) R&D goals and technologies being developed by the Fossil Energy R&D and Clean Coal Technology Demonstration programs; (2) level of funding committed to R&D activities within these programs in fiscal years (FY) 1996 through 1998; and (3) companies receiving R&D awards (during these fiscal years) in which the government contributed more than $1 million.

GAO noted that: (1) DOE's overall R&D goal for its Fossil Energy R&D and Clean Coal Technology Demonstration programs is to improve the efficiency and environmental performance of current methods for producing and using coal, natural gas, and petroleum; (2) for coal, this improvement translates into R&D efforts by both programs to develop and demonstrate technologies that efficiently removes potential environmental pollutants from coal prior to its use; (3) improvement also means the development of technologies that either generate electricity from coal more efficiently than current technologies or that can generate electricity from liquids and gases derived from coal; (4) for natural gas and petroleum, DOE is focusing its efforts on improving drilling, storage, transportation, and combustion technologies and processes associated with locating, extracting, and using the resources; (5) DOE obligated or plans to obligate about $1.3 billion for R&D activities sponsored by the two programs during FY 1996 through FY 1998; (6) the Fossil Energy R&D program provides $856 million, $743 million of which has been or will be spent on activities in the applied research and development phases of R&D; the remainder will be spent for basic research; (7) the Clean Coal Technology Demonstration program accounts for about $417 million of the $1.3 billion in obligations; (8) because the program concentrates its efforts on technologies that have completed laboratory and field testing, the program obligated funds exclusively on technologies in the demonstration phase of R&D; (9) in addition, DOE obligated or plans to obligate about $307 million for the management of the programs and other non-R&D activities; (10) for the 3 fiscal years examined, DOE's fossil energy programs made or continued 162 R&D contracts and other types of assistance in which the government committed to spend more than $1 million; (11) these procurement awards involved 112 companies and other nonfederal participants; (12) the largest of these awards generally went to companies participating in the Clean Coal Technology Demonstration program; and (13) many of these awards were for projects that spanned several years and were partly funded by the companies.