Energy R&D:

Changes in Federal Funding Criteria and Industry Response

RCED-87-26: Published: Feb 9, 1987. Publicly Released: Feb 11, 1987.

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In response to a congressional request, GAO reviewed the Department of Energy's (DOE) research and development (R&D) policy of emphasizing long-term, high-risk, high-payoff technologies, to determine whether: (1) DOE fairly applied the policy across the board; and (2) industry has undertaken energy R&D as a result of this policy.

GAO found that: (1) DOE has generally applied its R&D policy consistently, reorienting most R&D activities toward the early stages of the innovation process; (2) the civilian nuclear reactor R&D budget has been an exception, with DOE support for these technologies insulating them from major reductions; and (3) civilian reactor programs sustained substantial reductions at the beginning of fiscal year 1984 for other considerations, such as safety issues and the need to satisfy certain military objectives, as well as the long-term, high-risk, high-payoff criteria. GAO also found that: (1) there is little indication that the private sector has compensated for cutbacks in DOE R&D; (2) market factors have generally reduced the potential profitability of technology development; (3) many of the activities DOE curtailed involved large-scale activities too risky to finance without government support; and (4) reduced DOE and industry support for energy R&D has delayed U.S. technology development.

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