Portfolio evaluation of advanced coal technology : research, development, and demonstration

Abstract

This paper evaluates the advanced coal technology research, development and demonstration programs at the U.S. Department of Energy since the 1970s. The evaluation is conducted from a portfolio point of view and derives implications for future program design and implementation. The evaluation framework consists of four categories of criteria that assess the portfolio from strategy, diversity, partnership, and project merit points of view. The analysis of the successes and the failures of the past programs in technical, financial and managerial respects shows that these programs are reasonably successful in (1) remarkably advancing coal technologies to enable the U.S. to use coal as its major energy resource in the electricity sector when facing more stringent environmental regulation or possibly even in a greenhouse gas constrained world; (2)accumulating effective program management experience, especially involving industry in technology development from the beginning of the process to facilitate future deployment. Among these successes, a number of important features incorporated in the CCTDP are especially worth noting. These features are: (1) The program goal was well defined, which was accelerating commercialization of ACTs;

(cont.) (2) All projects have been fully funded up front, which saved worries about project funding prospect and enabled performers to concentrate on project implementation; (3) The well-defined program goal and funding commitment from federal government has encouraged industrial participation. As a result, industry has shared more than 50% of the programs cost with new money; (4) The DOE share of project cost growth was capped at 25%, which has incentivized industry to be more cautious about project risk; (5) Industry was authorized to design, build, operate and own facilities, which made full use of industry expertise and resources; and (6)In general, the program created a degree of competition for a range of technologies, which has helped hedge the program risk. Notwithstanding the achievements, some problems exist in these programs, of which the major ones are: (1) imbalanced RD&D structure caused by gaps in high efficiency combustion, application of modeling and simulation in ACT R&D, under-investment in basic research and applied R&D, insufficient university and national laboratory participation in R&D programs, and weak international collaboration, especially that with China;

(cont.) (2) deficiency in program management such as some political influence on project selection and operation, inefficient termination of unpromising projects, and design of inefficient programs such as the CCPI and over risky demonstration programs such as FutureGen. FutureGen, in a number of important respects such as goal defining, funding mechanism and technology option, presents a contrast to the CCTDP, the organization features of which have produced a number of successes. This elevates risk of failure of the program. Going forward, the DOE should (1) strive for more balanced program structure by enhancing R&D program and further diversifying technology options, with special attention on high efficiency combustion R&D and application of modeling and simulation; (2) draw in the successful experience of the CCTDP for efficient program design and management, especially in reconsidering program organization of FutureGen; (3) improve the processes of demonstration project selection and termination of unpromising projects in terms of minimizing political pressure on them; and (4) enhance university and national laboratory participation in R&D programs and Sino-U.S. collaboration on ACTs through joint RD&D on IGCC, USC, and pollution control devices. The collaboration may seek breakthrough with Chinese coal industry as a start.