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The DoE – To Be or Not To Be, That is the Question?

February 27, 2016

DoE Retired LogoWhat started as a precursory investigation into the U.S. Department of Energy’s imbalance of appropriations between the Office of Atomic Energy Defense and the Office of Energy Efficiency and Renewable Energy, turned into a deeper examination of DoE’s effectiveness of transitioning America to a more sustainable and environmentally friendly energy economy.

Without exception, the DoE is all about Atomic Energy Defense (AED). Energy Efficiency and Renewable Energy (EERE), on the other hand, is not mission critical. To the extent that the Energy Department’s FY 2016 congressional budget request allocates 63% of its total budget to AED activities and only 9% to EERE programs, energy efficiency and renewable energy programs appear to be at an extreme disadvantage. This concern is also mirrored in the Enacted DoE budget for FY 2015 where 64% was allocated to AED activities and 7% for EERE programs.[1]

The argument is not whether AED is more important than EERE; rather it is a question of the horsepower behind EERE and the Energy Department’s performance in “ensuring America’s security and prosperity by addressing its energy, environmental and nuclear challenges through transformative science and technology solutions.”[2] Unfortunately, no government-approved standardized measures exist to quantify the success or failure of the AED activities and EERE programs.

The DoE and in particular their Office of AED has significant challenges. When it comes to just one of the many activities under the Office of AED – the cleanup of abandoned mine lands – the task is highly complex and seemingly endless. There are estimates of as many as 500,000 abandoned mines – coal, hardrock, uranium, and others mines such as iron, phosphate, sand, gravel, clay pits and quarries – in our nation.”[3]

When it comes just to uranium mines, the DoE is responsible to “provide for the disposal, long-term stabilization, and control of uranium mill tailings in a safe and environmentally sound manner and to minimize or eliminate radiation health hazards to the public. Currently, the DOE is charged with “completing surface reclamation at 24 inactive uranium mill tailings piles and the cleanup at 16 uranium recovery facilities licensed by the Nuclear Regulatory Commission.”[3] This is just the tip of the iceberg. “There are about 4,000 mines with documented production, including 15,000 mine locations with uranium occurrence in 14 western states.’[3]

According to the DoE, “The Office of Energy Efficiency and Renewable Energy (EERE) is the U.S. Government’s primary clean energy technology organization. EERE works with many of America’s best innovators and businesses to support high-impact applied research, development, demonstration, and deployment (RDD&D) activities in sustainable transportation, renewable power, and end-use energy efficiency. EERE implements a range of strategies aimed at reducing U.S. reliance on oil, saving American families and businesses money, creating jobs, and reducing pollution. EERE works to ensure that the clean energy technologies of today and tomorrow are not only invented in America, but also manufactured in America.”[1]

The Department also states, “The FY 2016 Budget Request includes robust funding levels for clean energy technologies that advance American leadership in nuclear power, fossil energy, renewables, efficiency, and grid security for the 21st century. To sustain the Nation’s primacy in scientific discovery, the Request also increases funding for basic research.”[1]

Figure 1 shows funding levels by Apportions allocated for the Department’s FY 2015 Enacted Budget and the FY 2016 Congressional Budget Request; $27.4 billion and $29.9 billion, respectively. The top section is a high-level view; segmented into five major areas of investments:

  • Atomic Defense Activities,
  • Energy Programs (not including EERE),
  • EERE Programs,
  • Power Marketing, and
  • Adjustments (Discretionary Payments, Excess Fees and Recoveries – FERC).

EERE appropriations consist of four primary areas:

  • Sustainable Transportation,
  • Renewable Energy,
  • Energy Efficiency, and
  • Corporate Support.

The last section of Figure 1 contains all other Energy programs, and expenditures.

Figure 12015 Enacted and 2016 Request (table)Source: Department of Energy FY 2016 Congressional Budget Request

Figure 1 shows:

  • FY 2015 EERE enacted investments of $1.9 billion, 7% of the total budget;
  • FY 2016 EERE requested investments of $2.7 billion, 9.1% of the total budget t, a 42% increase from FY 2015;
  • FY 2015 enacted funding levels for AED activities ran about 820% of EERE Programs;
  • FY 2016 requested funding levels for AED activities run about 600% of EERE Programs;
  • The EERE Vehicle Technologies program received the largest amount of fund in the enacted FY 2015 and the requested FY 2016 budgets, $280 million and $444 million, respectively;
  • FY 2015 enacted investments in Renewable Energy programs are $456 million or 1.7% of the total DoE budget;
  • FY 2016 requested investments in Renewable Energy programs are $645 million or 2.2% of the total DoE budget, an increase of $189 million from FY 2015 levels;
  • FY 2015 enacted investments in Energy Efficiency programs are $642 million or 2.3% of the total DoE budget; and
  • FY 2016 requested investments in Renewable Energy programs are $1.0 billion or 3.4% of the total DoE budget, an increase of $387 million from FY 2015 enacted levels.

When viewed from the standpoint of the Solyndra Scandal, the solar-panel maker that defaulted on a $535 million loan guarantee from the Energy Department,[4] appropriations for EERE programs seem rather thin.

Figure 2 illustrates the relationship between the total DoE and EERE congressional budget requests from FY 2000 through 2016. The total DoE budget for any one year is indicated by the red columns; the total EERE appropriation by the blue columns. The callout above each blue column gives the percentage of EERE appropriation to total DoE budget for that year. EERE allocations ranged from a low of 1.4% in FY 2003 to a high of 9.8% in FY 2014. EERE allocations averaged about 5.8% during the 17-year period, with a slight upward trend in the latter years, though never exceeding 10%.

Figure 2 FY 2000 - 2016 Total DoE and EERE Budgets (picture)Source: Department of Energy FY 2000 through 2016 Congressional Budget Requests

 

Figure 3 shows FY 2012 to 2016 EERE budget allocations for each of the 14 programs. In general, for any given program, there is little difference between the yearly allocations from FY 2012 to 2016, i.e., little variation in yearly investment for any one program. Major expectations are Vehicle Technologies, Advanced Manufacturing, and Weatherization and Intergovernmental Programs, all of which showed an increase in funding after 2013. Of the 14 programs, the DoE consistently invested the most in Vehicle Technologies and the least in Strategic Programs. Within Renewable Energy, the lion’s share of investments went to Solar projects. When combined, the three Corporate Support activities (Facilities and Infrastructure, Program Direction and Strategic Programs) absorbed about 12% of all EERE dollars.

Figure 3FY 2012 - 2016 DoE EERE Budget Allocations Source: Department of Energy FY 2012 through 2016 Congressional Budget Requests

 

In general, the yearly allocations for any one program or expenditure show only minor changes from 2012 to 2016. Exceptions are Vehicle Technologies, Advanced Manufacturing, and Weatherization and Intergovernmental Programs, all of which spiked after 2013. Of the 14 budget items, Vehicle Technologies receive the most dollars and Strategic Programs the lowest. Within the Renewable Energy category, Solar receives the lion’s share of investments. Energy Efficiency distributions show similarities within the later years between Advanced Manufacturing, Weatherization and Intergovernmental programs, and Building Technologies. Combined, the three Corporate Support activities (Facilities and Infrastructure, Program Direction and Strategic Programs) took about 12% of all dollars earmarked to EERE.

The FY 2016 budget request also contains an appropriation item – Fossil Energy Programs. Investment in these programs is approximately $842 million; 30% of the total EERE request. Fossil Fuel Programs include:

  • Clean Coal Technology,
  • Fossil Energy Research and Development,
  • Naval Petroleum and Oil Shale Reserves,
  • Elk Hills School Lands Fund,
  • Strategic Petroleum Reserve, and
  • Northeast Home Heating Oil Reserve.

The request “provides for the development of advance carbon capture and storage and natural gas technologies. The $257 million for the Strategic Petroleum Reserve, $57 million above the FY 2015 Enacted level, is allocated to increase the system’s durability and reliability and begin addressing the backlog of deferred maintenance.”[1]

“Fossil Energy Research and Development (FER&D) advances technologies related to the reliable, efficient, affordable, and environmentally sound use of fossil fuels that are an important component of the President’s “All of the Above” energy strategy to ensure our Nation’s security and economic prosperity. FER&D leads Federal research, development, and demonstration (RD&D) efforts on advanced carbon capture and storage (CCS) technologies to facilitate achievement of the President’s climate goals. FER&D also conducts research and development (R&D) associated with the prudent, safe, and sustainable development of our unconventional domestic resources.”[1] When compared to FY 2016 EERE appropriations, FER&D funding levels are 66% and 26% greater than Solar Energy Programs and Vehicle Technologies, respectively.

Science Program appropriations at $5.3 billion for FY 2016 is the single largest Energy Program expenditure outside of Weapons ($9.2 billion) and Defense Environmental Cleanup ($5.6 billion) Activities. “Science (SC) is the single largest supporter of basic research in the physical sciences in the United States and funds programs in physics, chemistry, materials science, biology, environmental science, applied mathematics, and computational science. The Office of Science portfolio has two principal thrusts: direct support of scientific research, and direct support of the design, development, construction, and operation of unique, open-access scientific user facilities. SC supports researchers at all of the DoE laboratories and approximately 300 universities and other institutions of higher learning nationwide. Approximately 31,000 researchers from universities, National Laboratories, industry, and international partners are expected to use SC user facilities in FY 2016. SC programs invest in foundational science, including basic research in clean energy, to transform our understanding of nature and support advances in fundamental science and technology innovation.”[1]

One note of caution about reading too much into the DoE FY 2016 Congressional Budget Request. Like most budgets, there are differences between submitted and approved. Figure 4 shows these changes in the FY 2015 budget – the most recent year where both requested and enacted budgets are available. While the total DoE enacted budget was 1.9% lower than the request, the highest reduction in an appropriation line item was EERE programs at 17.4%. This is also true in terms of dollars. The total budget reduction of $538 million was primarily due a $402 million drop in allocations for EERE programs. The Atomic Energy Defense request of $17.7 billion was only reduced $133 million, a mere 0.7% change.

Figure 4 FY 2015 Request vs Enacted (picture)Source: Department of Energy FY 2016 Congressional Budget Request

Using total renewable energy capacity as a measure of DoE’s effectiveness in transitioning the U.S. to a low-carbon secure energy future, America’s prowess is unquestioned. According to the Renewable Energy Policy Network (REN), by the end of 2014, the seven countries with the highest capacity of renewable energy (not including hydro power) are China, the United States, and Germany followed by Italy, Spain, Japan, and India,[4] Figure 5.

Figure 5 REN Renewable Power Capacities in World

 

REN states “By dollars spent, the leading countries for investment in 2014 were China, the United States, Japan, the United Kingdom, and Germany. However, considering investments made in new renewable power and fuels relative to annual GDP, top countries included Burundi, Kenya, Honduras, Jordan, and Uruguay. The leading countries for investment per inhabitant were the Netherlands, Japan, Uruguay, the United Kingdom and Ireland and Canada (both about even).”[5]

Another, possibly more meaningful, measure to determine DoE’s effectiveness in transitioning the U.S. to a low-carbon secure energy future is the share (percentage) of electricity production from renewable energy (hydro, wind, geothermal and solar) to total electricity production.

This measure gives an entirely different picture from capacity statistics. Enerdata[6] –  a provider of energy data, forecasts, market reports, research, news, consulting and training on the global energy industry – established the data used Figure 6 – the percentage of renewables in electric energy production by country. Figure 6 shows the 2014 share of renewables in electricity production (including hydropower) by countries. The red column indicates the U.S. share (13.7%). Norway with a 98% share is the world leader and benchmark towards 100% renewable energy.[6] The data set includes:

  • 44 Countries,
  • World,
  • OECD Countries (The Organization for Economic Co-operation and Development),
  • G7 Group of Counties (Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States),
  • BRICS Countries (emerging national economies of Brazil, Russia, India, China and South Africa),
  • CIS (The Commonwealth of Independent States formed when the former Soviet Union, now called Russia, dissolved in 1991), and
  • 10 Regions (Europe, European Union, CIS, America, North America, Latin America, Asia, Pacific, Africa, and the Middle-East). Note: America includes the sovereign states that are located landmasses of North America and South America.

Figure6 2014 Share of Renewables by Country (picture)Source: Enerdata

 

Not including conventional hydropower as a renewable source of energy, U.S. Energy Information Administration (EIA) data shows America’s makeup of renewable energy is below 10%[7]. In contrast to Enerdata’s statistics that includes hydropower, EIA’s 2014 data shows 8% renewables (wind, solar, biomass and geothermal), Figure 7. Coal (39%) and Natural Gas (27%) dominated US electricity energy production capacity. Nuclear (19%) edged out Hydroelectric (6%) and Renewables (7%). Renewable electricity output consisted of Solar (4%), Biomass (2%) and Solar (1%). Electricity production from Geothermal was essentially nil.[7] Note, other countries generating hydropower would also show a lower share of renewable energy .

Conventional hydropower is not considered a renewable source of energy. Unconventional hydropower using currents, waves, and tidal energy to produce electricity is less disruptive and qualifies as renewable. Conventional hydropower refers to the use of dams or impoundments to store water in a reservoir. Argument against qualification of available hydropower renewable is that most hydroelectric facilities were built long before the adoption of regulations that require states to increase production of energy from renewable energy sources, such as wind, solar, biomass, and geothermal. Another argument points out that traditional hydroelectric plants interrupt the flow of rivers and can harm local ecosystems, and that building large dams and reservoirs involves displacing people and wildlife. [8]

Figure7 2014 U.S. Net Generation by Energy Source (Pie Chart)

 

From the perspective of the role of renewable energy in total electricity output, the United States with the second highest installed capacity of renewable energy in the world, falls short at 13.7% with hydro and 8%, without hydro. Of the 44 counties in the study, 26 had a higher percentage of renewables than the U.S. This included such countries as Canada, Romania, Nigeria, China, India, Russia and Mexico. The U.S. share of renewables was also below the average share for the World, OECD, G7, BRICS, Europe, European Union, CIS, America and North America.[9]

Most developed countries showed higher rates of renewables in their energy mix than U.S. Countries with developed economies that fared worse than the U.S. include the Netherland, Poland, Australia, the Czech Republic, and South Korea. Poland and the Czech Republic are way less developed then most western European countries and South Korea was accepted as a developed country as of 2015.

Figure 8 displays the share of renewable energy by country on a world map. Countries are shaded in proportion to their share of renewable energy, i.e., the darker the shading, the higher the share.

Figure 8: 2014 World Map – Countries Share of Renewables in Electricity Production (Including Hydro)2014 World Map - Countries Share of Renewables in Electricity Production (Including Hydro

 

Figure 9 presents the U.S. share of renewable energy (including hydro) from 1990 to 2014.[6] America’s contribution of renewable energy averaged 10.9% over the 25-year period. Overall, from 1990 (12.3%) to 2014 (13.7%), the U.S. increased utilization of renewable energy by 1.4%. The highest percentage of renewable energy to the electric power mix was 13.7% in 2014, the last reporting year. The lowest level was 7.8% in 2001. The last four reporting years experienced an upward trend approaching a 14% share.

Figure 9 U.S. Share of Renewable Energy Production 1990 - 2014 (picture)Source: Enerdata

 

The other major program under EERE is the Energy Efficiency. Useful statistics are available from The 2014 International Energy Efficiency Scorecard published by the American Council for an Energy-Efficient Economy, Figure 10. The Scorecard evaluates “the energy efficiency of world’s 16 largest economies The council looked at 31 metrics divided roughly in half between policies and quantifiable performance to evaluate how efficiently these economies use energy.”[7]

The “metrics are distributed across three primary sectors responsible for energy consumption in an economically developed country: Buildings (blue), Industry (green), and Transportation (yellow). Also included is a section devoted to National Efforts (orange). National Effort profiles a nation’s commitment to energy efficiency.”[7]  Taken together, these metrics give an indication of overall energy efficiency in a country compared to other countries. Note: The color in parenthesis next to each sector indicates the sector’s contribution to the overall country scores graphically illustrated in the bottom left hand corner of Figure 9.

The analysis finds “the U.S., long considered an innovative and competitive world leader has allowed 12 of the 16 counties studied to surge ahead. Germany has the highest overall score. The top-scoring countries in each sector are:

  • China in buildings,
  • Germany in industry,
  • Italy in transportation, and
  • France, Italy, and the European Union in national efforts.

The report suggests the U.S. can improve by:

  • National Effort – The U.S. Congress should pass a national energy saving target,
  • Buildings – The U.S. Federal government should strengthen national model building codes,
  • Industry – The federal government should support education and training in the manufacturing and industrial sectors, and
  • Transportation – The U.S. Congress should prioritize energy efficiency in transportation spending. Source: American Council for an Energy-Efficient Economy

Figure 102014 International Energy Efficiency Scorecard -ACEE Source: American Council for an Energy-Efficient Economy

 

The U.S. “made some progress toward greater energy efficiency in recent years, particularly in areas such as building codes, appliance standards, voluntary partnerships between government and industry, and, recently, fuel economy standards for passenger vehicles and heavy-duty trucks.

In closing, DoE’s performance in transitioning America to an energy efficient and renewable energy economy is rather disappointing when compared to other developed and developing economies of the world. The million-dollar question is Why. The easy answer is America is a capitalistic society and renewable energy costs more than traditional energy and the high upfront costs to become energy efficient. A more plausible answer is fourfold – insufficient funds, politics at play, mismanagement, and lack of accountability.

Fixing the problem is simple but politically impossible. Take the DoE completely out of EERE business, appropriations and all. Transition the cost of the programs to bottom line incentives from the IRS, such as Section 1603 Treasury Cash Grant Program. Allow income tax deductions for the cost of becoming more energy efficient for new and existing residential, commercial and industrial facilities. If incentives become a point of contention, then take stop incentivizing the fossil fuel industry. With these measures in place, possibly capitalism can fix the problem.

References:
[1] Department of Energy FY 2016 Congressional Budget Request; http://energy.gov/sites/prod/files/2015/02/f19/FY2016BudgetInBrief.pdf
[2] U.S. Department of Energy, Mission; http://energy.gov/mission
[3] U.S. Bureau of Land Management, Abandoned Mine Lands; http://www.abandonedmines.gov/wbd_um.html
[4] The Washington Post, Solyndra Scandal; https://www.washingtonpost.com/politics/specialreports/solyndra-scandal
[5] REN21. Renewables 2015 – Global Status Report; http://www.ren21.net/status-of-renewables/global-status-report
[6] Enerdata, Global Energy Statistical Yearbook 2015, Share of renewables in electricity production (including hydropower); https://yearbook.enerdata.net/#renewable-in-electricity-production-share-by-region.html
[7] U.S. Energy Information Administration, Electric Power Annual; http://www.eia.gov/electricity/monthly/pdf/epm.pdf
[8] Midwest Energy News, Renewable or not? How states count hydropower; http://www.midwestenergynews.com/2012/01/13/renewable-or-not-how-states-count-hydropowe/
[9] American Council for an Energy-Efficient Economy, The 2014 International Energy Efficiency Scorecard; http://aceee.org/sites/default/files/publications/researchreports/e1402.pdf

The opinions expressed in this article are solely those of the author Dr. Barry Stevens, an accomplished business developer and entrepreneur in technology-driven enterprises. He is the founder of TBD America Inc., a global technology business development group. In this role, he is responsible for leading the development of emerging and mature technology driven enterprises in the shale gas, natural gas, renewable energy and sustainability industries. To learn more about TBD America, please visit: http://tbdamericainc.com/

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