In 1978 a monumental multi-departmental study was submitted
to President Carter concluding that “solar energy could make a significant
contribution to U.S. energy supply by the end of this century”. The study,
backed by 30 federal departments, stated that “even with today’s subsidized
energy prices, many solar technologies are already economic.” Yet no action was
taken and solar power and other renewable energies stagnated for over 30 years.
Until now? Allan Hoffman, former senior official at the U.S. Department of
Energy, who personally delivered the report to the White House back in 1978,
recalls what went wrong – and what lessons the U.S. should draw if it is to
avoid another failed renewables revolution.
On December 6, 1978 I personally delivered a multi-agency
report to the staff of the Domestic Policy Advisor to President Carter entitled
‘Domestic Policy Review of Solar Energy: A Response Memorandum to The President
of the United States’. It is popularly known as the DPR. The report had been
requested by the President in a May 3, 1978 speech in Golden, Colorado,
dedicating the newly formed Solar Energy Research Institute (SERI). SERI has
since become the National Renewable Energy Laboratory (NREL).
The DPR was the final report of the first comprehensive
review by the U.S. federal government of its policies for renewable energy. It
involved 30 federal departments and agencies, and at its peak this 6-month
study involved the efforts of 175 senior government officials detailed to the
DPR task force. As the U.S. Department of Energy’s senior representative to the
DPR, and just one month after I had joined DOE as a political appointee, I was
designated to head the effort by my new boss, the head of DOE’s Policy Office.
My hopes were dashed when President Clinton tried to put a
price on carbon by raising gasoline prices by five cents a gallon and ran into
a political firestorm. He never tried again.
The next six months were rather intense, starting with the
fact that the other 29 departments and agencies didn’t trust the 30th, DOE,
because of some recent history. Shortly before the DPR was announced the Carter
Administration had released a National Energy Policy, also a multi-agency
effort chaired by DOE. The story I was told by non-DOE staff was that DOE, at
the last minute, had pulled out a draft it had prepared on its own and
submitted it as the multi-agency report. As a result I inherited a problem of
trust and spent much of the DPR’s first month building relationships with the
non-DOE detailees to reestablish that trust. The DPR was completed in early
December 1978, and delivered to the White House shortly thereafter. The full
report, with appendices, was formally published in February 1979 and is
available in DOE’s archives.
Point well taken
The reason I am writing about it now is that my wife
recently happened to read it for the first time, and had a ‘strong’ reaction.
She asked me, quite forcefully, WTF has it taken the U.S. so long to implement
what we recommended more than 35 years ago? Point well taken! She also
recommended that I write about this failure and “name names”. As a government
retiree (as of September 30, 2012) I feel free to do that without constraint,
recognizing that others may have different views on the subject. In fact, I
will let the readers of this piece make up their own minds by reproducing the
seven-page Executive Summary in full below before offering my views. It also
serves as a piece of history that most people today are not familiar with.
Here it is.
Domestic Policy Review of Solar Energy: A Response
Memorandum to The President of the United States
(February 1979, TID-22834/Dist. Category UC-13)
EXECUTIVE SUMMARY
INTRODUCTION
In your May 3, 1978, Sun Day speech, you called for a Domestic
Policy Review (DPR) of solar energy. Stuart Eizenstat followed on May 16 with a
memorandum defining its scope to include:
A thorough review of the current Federal solar programs to
determine whether they, taken as a whole, represent an optimal program for
bringing solar technologies into widespread commercial use on an accelerated
timetable;
A sound analysis of the contribution which solar energy can
make to U.S. and international energy demand, both in the short and longer
term;
Recommendations for an overall solar strategy to pull
together Federal, State and private efforts to accelerate the use of solar
technologies.
In response to this memorandum, an interagency Solar Energy
Policy Committee under the chairmanship of the Secretary of Energy was formed
to conduct the review. Over 100 officials representing more than 30 executive
departments and agencies have participated since early June.
This review was conducted with significant public
participation. Twelve regional public forums were convened throughout the
Nation during June and July to receive public comments and recommendations on
the development of national solar energy policy. The response of the public was
impressive, and reflected the growing support for solar energy identified by
several recent opinion polls. Several thousand people attended the meetings and
over 2000 individuals and organizations submitted oral or written comments.
In addition, briefings were given to members of the Domestic
Policy Review by representatives of solar advocacy groups, small businesses,
state and local government, public interest and consumer groups, utilities, the
energy industry and solar equipment manufacturers. This public input was an
important part of the Review.
In large part, themes reflected in the public comments are
consistent with the findings of the DPR and the premises of the National Energy
Plan. These premises include an emphasis on conservation as a cornerstone of
national energy policy, awareness that energy prices should generally reflect
the true replacement cost of energy, and recognition of the need to prepare for
an orderly transition to an economy based on renewable energy resources. The
public forum comments also reflected a deep concern that the poor and the
elderly have access to affordable energy.
SUMMARY OF MAJOR FINDINGS
The results of the Domestic Policy Review can be summarized
in nine major findings.
1. With appropriate private and government support, solar
energy could make a significant contribution to U.S. energy supply by the end
of this century. Renewable energy sources, principally biomass and hydropower,
now contribute about 4.8 quads or six percent to the U.S. energy supply. Since
estimates of future energy supply and demand are imprecise, three generic
forecasts of possible solar use were developed. They can be distinguished most
readily by the level of effort that would be required to reach them. In the
Base Case, where present policies and programs continue, solar energy could
displace 10-12 of a total of 95-114 quads in the year 2000 if energy prices
rise to the equivalent of $25-32 per barrel of oil in 1977 dollars. A Maximum
Practical effort by Federal, state and local governments could result in solar
energy displacing 18 quads of conventional energy by the end of the century.
Thus, if one assumes the higher future oil price scenario and this Maximum
Practical effort, solar could provide about 20 percent of the nation’s energy
by the year 2000. The Technical Limit of solar penetration by the year 2000,
imposed primarily by the rates at which changes can be made to existing stocks
of buildings and equipment, and rates at which solar techniques can be
manufactured and deployed, appears to be 25-30 quads.
2. Solar energy offers numerous important advantages over
competing technologies. It provides the Nation with a renewable energy source
which can have far fewer detrimental environmental effects than conventional
sources. To the extent that increased use of solar energy can eventually reduce
U.S. dependence on expensive oil imports, it can also improve our balance of
payments, alleviate associated economic problems, and contribute to national
security. Widespread use of solar energy can also add diversity and flexibility
to the nation’s energy supply, providing insurance against the effects of
substantial energy price increases or breakdowns in other major energy systems.
If oil supplies are sharply curtailed or environmental problems associated with
fossil and nuclear fuels cannot be surmounted, solar systems could help reduce
the possibility of major economic disruption.
In addition, because solar systems can be matched to many
end-uses more effectively than centralized systems, their use can help reduce a
large amount of energy waste. Although the U.S. now consumes about 76 quads of
energy a year, less than 43 quads actually are used to provide energy directly
in useable form. The rest in consumed in conversion, transmission and end-use
losses.
3. Even with today’s subsidized energy prices, many solar
technologies are already economic and can be used in a wide range of
applications. Direct burning of wood has been economic in the private sector
for some time, accounting for 1.3 to 1.8 quads of energy use. Combustion of
solid wastes or fuels derived from solid wastes is planned for several U.S.
cities. Passive solar design can significantly reduce energy use in many
structures with little or no increase in building cost. Low head hydroelectric
generation is currently economic at favorable sites. Solar hot water systems
can compete successfully in many regions against electric resistance heating,
and will compete against systems using natural gas in the future. A number of
solar systems installed by individual users are cost-effective at today’s
market prices. In addition, other solar technologies will become economic with
further research, demonstration, and market development, and if subsidies to
competing fuels are reduced or removed.
4. Limited public awareness of and confidence in solar
technologies is a major barrier to accelerated solar energy use. Public
testimony continually emphasized the need for more and better solar
information. New programs to educate designers, builders, and potential solar
users in the residential, commercial and industrial sectors are needed. Because
consumers lack information, they often do not have confidence in solar
products. Programs to provide reliable information to consumers, to protect
them from defects in the manufacture and installation of solar equipment, and
to assure competition in the solar industry can help build consumer confidence
in the future.
5. Widespread use of solar energy is also hindered by
Federal and state policies and market imperfections that effectively subsidize
competing energy sources. These policies include Federal price controls on oil,
and gas, a wide variety of direct and indirect subsidies, and utility rate
structures that are based on average, rather than marginal costs. Also, the
market system fails to reflect the full social benefits and costs of competing
energy sources, such as the costs of air and water pollution. If solar energy
were given economic parity with conventional fuels through the removal of these
subsidies, its market position would be enhanced.
6. Financial barriers faced by users and small producers are
among the most serious obstacles to increased solar energy use. Most solar
technologies cannot compete effectively with conventional fuels at current
market prices, in part because of subsidies, price controls, and average-cost
utility rate structures for these conventional fuels. The tax credit provisions
in the National Energy Act (NEA) will improve the economics of certain solar
technologies, particularly in the residential sector.
Other barriers exist because the high initial costs of solar
systems often cannot be spread over their useful lives. Industry and consumers
have yet to develop experience in financing and marketing solar systems. Some
of the provisions of the National Energy Act will help expand credit for
residential/commercial solar systems. In addition, the new Small Business
Energy Loan Act will provide credit assistance to small solar industry firms.
Other existing Federal financial programs, which were created for other
purposes, could also help finance solar purchases if they were directed toward
this end.
7. Although the current Federal solar research, development
and demonstration (RD&D) program is substantial, government funding
priorities should be linked more closely with national energy goals. Solar
RD&D budgets, which have totaled about $1.5 billion in the Fiscal Year (FY)
1974 to FY 1979 period, have not adequately concentrated on systems that have
near-term applications and can help displace oil and gas. Electricity from
large, centralized technologies has been over-emphasized while near-term
technologies for the direct production of heat and fuels, community-scale
applications and low-cost systems have not received adequate support. Basic
research on advanced solar concepts has also been under-emphasized, limiting
the long-term contribution of solar energy to the nation’s energy supply.
8. Solar energy presents the U.S. with an important
opportunity to advance its foreign policy and international trade objectives.
The United States can demonstrate international leadership by cooperating with
other countries in the development of solar technologies, and by assisting
developing nations with solar applications. Use of decentralized solar energy
can be an important component of development planning in less developed
counties which do not have extensive power grids, and cannot afford expensive
energy supply systems. In many cases, solar may be the only energy source practically
available to improve rural living conditions. Through such efforts, the U.S.
could also help to develop new foreign markets for U.S. products and services,
thereby increasing opportunities for employment in solar and related industries
at home. And, as solar energy eventually begins to displace imported oil and
natural gas, the U.S. will enjoy greater flexibility in the conduct of its
foreign policy. Insofar as solar energy systems reduce the need for nuclear and
petroleum fuels in the long-term, they can help reduce the risk of nuclear
proliferation and international tensions arising from competition for
increasingly scarce fossil fuels.
9. Although the Federal government can provide a leadership
role, Federal actions alone cannot ensure wide-spread use. Many barriers to the
use of solar energy, and opportunities to accelerate its use, occur at state
and local levels. In order to overcome these barriers and take advantage of
these opportunities, a concentrated effort at all levels of government and by large
segments of the public will be required. Nevertheless, the Federal government
can set a pattern of leadership and create a climate conducive to private
development and use of solar energy in a competitive market. These efforts must
also recognize the wide variation among solar technologies and the resulting
need to tailor initiatives to specific solar applications.
This was 35 years ago and in hindsight it is clear that the
powerful recommendations in our study were largely ignored. We thereby missed a
great opportunity to transform our society in a way that would have enabled us
to avoid many of the traumatic geopolitical, economic and environmental
problems we faced in the ensuing years.
Why? Allow me to offer some personal reflections on this. My
views take issue with both political parties and with vested interests in
traditional energy industries. They are based on my experiences over nearly
forty years in Washington, including service as Staff Scientist for the Senate
Committee on Commerce, Science and Transportation, and many years as a senior
official at the U.S. Department of Energy. Let me start with President Carter.
I served in the Carter Administration for nineteen months as
head of the renewable energy policy division in the newly established
Department of Energy. The DPR was my primary responsibility during that time
and was received by a President who was favorably disposed towards renewable
energy technologies. In fact he installed solar hot water heating panels on the
White House roof and used the DPR as the basis of his dedication speech in
April 1979. Where I take issue with his promotion of renewable energy is in his
denial of a requested increase in the R&D budget for renewables, arguing
that we had to balance the FY1981 budget. I accepted his argument at the time
but rejected it later when the President somehow found $88 billion for a new
synfuels program, probably motivated by his then poor standings in the polls. I
was sufficiently upset by this development that I left DOE shortly thereafter.
Of course President Carter lost to Ronald Reagan in the 1980
presidential election and the following eight years were terrible for renewable
energy, and for DOE in general. President Reagan and his aides set out to
eliminate two Federal Departments – DOE1 (Energy) and DOE2 (Education), but
succeeded in neither. Nevertheless, they did remove the solar panels from the
White House roof and serious damage was done in those years to the renewable
energy budget – it was reduced by a factor of eight! Only the determined
efforts of a few dedicated DOE managers (particularly Bob San Martin, the head
of the renewable electric programs) kept the programs alive. It was also during
this period that oil prices took a dive to below $10 a barrel and public
interest in alternative energy was diminished significantly.
These studies [attacking solar power] were misleading and
required a great deal of effort to refute. I’ve always thought of them as
similar in intent to the studies sponsored by the tobacco companies.
Things improved in the four years under George Bush Sr. –
budgets edged up slightly and SERI was designated as a National Laboratory,
NREL. The 1992 election also saw Bill Clinton elected as President and Al Gore
as Vice President, and hopes were high that renewable energy R&D budgets
would increase. I was now back at DOE helping to run the renewable energy
programs, first as Associate Deputy Assistant Secretary, and then as Acting
Deputy Assistant Secretary for more than three years. While annual budgets did
increase somewhat to about $300 million, I knew that this was less than
required for a fully effective program (the budget covered solar, wind,
hydropower, geothermal, biomass, ocean energy, energy storage, and
superconductivity), which I estimated to be $450 million.
Political firestorm
Not expecting much action in a first Clinton term (there
were lots of other ‘fish to fry’) I looked forward to Clinton’s second term. Of
course my hopes were dashed when the President tried to put a price on carbon
by raising gasoline prices by five cents a gallon and ran into a political
firestorm. He never tried again. Vice President Gore was also responsible for a
serious setback when he insisted that all programs aimed at reducing global
warming be so labeled in the FY1996 budget request, which many of us argued
against strongly.
We were unsuccessful, the Republicans won both the House and
Senate in that off-year election, and the Gingrich Revolution that followed
used the Gore budget identifications as a guide to reducing the renewable
energy budget by 25%. This had serious consequences for NREL, which received 60
% of its operating funds from that budget, and NREL was forced to lay off 200
of its 800 staff. It was a devastating time for renewables, about which I still
carry strong feelings. One of those feelings is that we had a President and
Vice President who understood energy issues and the need to move toward a
renewable energy future. In my opinion they should have taken more steps to put
us on that path, and they didn’t. I’m still angry.
The Clinton/Gore years were followed by the Bush/Cheney
years where the energy focus was on fossil fuels and nuclear power. It was a
discouraging period for renewables and we lost valuable time while the rest of
the world began to make significant progress in their development and
deployment of renewables. We clearly lost out on the economic activity and jobs
that were going to other countries as the new, clean energy industries were
being developed. It was only with the coming of the Obama administration that
this situation began to change, but our progress has been seriously slowed down
by a dysfunctional Congress these past few years, the worst I have seen in all
my years in Washington, DC.
Let me also say a word about the role of traditional energy
companies in the oil, natural gas, and coal industries. Clearly their role in
supplying energy would be affected by the penetration of renewable
technologies, and they have reacted as one might expect. In the mid 1990s, as
renewables began to emerge, the coal industry sponsored several studies that
attacked the ability of renewables to provide a significant fraction of
national energy needs. These studies were not accurate, even misleading, and
required a great deal of effort to refute. I’ve always thought of them as
similar in intent to the studies sponsored by the tobacco companies to raise
doubts about the health effects of smoking and slow down regulatory activities.
Modern analogs are the studies sponsored by fossil fuel companies to disprove
global warming and climate change and slow down efforts to reduce dependence on
carbon-based fuels.
A plague
This is not to say that fossil fuels don’t have an important
role to play in our future energy supply. Renewable technologies are not ready
yet to provide the large amounts of energy required to power our economy and
fulfil our international responsibilities, and probably won’t be for several
more decades. Nevertheless, recent studies document that renewables can provide
the major share of our electrical energy requirements in 2050 if we have the
will to do so and make the necessary investments (see ‘Renewable Electricity Futures Study’,
NREL, June 2012). It is also true that our transportation fleets are highly
dependent on petroleum-based fuels, and will be for many years until they are
electrified and alternate liquid fuels are developed. Also, natural gas has
always been recognized as a needed transition fuel to a renewable future. With
the U.S. and other countries entering a new natural gas era with the emergence
of large amounts of shale gas via fracking , and the ability of natural gas to
substitute for coal in power generation and thus reduce carbon emissions, it
will be an important part of our energy supply for decades to come.
Unfortunately, this glut of shale gas may lead to reduced investments in
renewables if national energy policies don’t take this into account.
Recent studies document that renewables can provide the
major share of our electrical energy requirements in 2050 if we have the will
to do so.
To sum up my views on why more hasn’t happened in the U.S.
since February 1979 when the DPR was released to the public and provided an
excellent framework for moving toward a renewable energy future: a plague on
all houses. Too many Republicans and some Democrats have been too protective of
traditional energy companies, Democrats have often failed to provide needed
leadership when opportunities presented themselves, and fossil fuel companies,
particularly coal companies, are generally doing what they can to protect their
vested interests. However, it is also fair to recognize that several oil
companies did invest resources in the early days of photovoltaics to help get
things started, as Peter Varadi well documents in his newly published book
about the history of PV ‘Sun Above the Horizon’ (Pan
Stanford Publishers). Nevertheless, they mostly retreated from these
investments when they realized that short term profits were not available, and
that a long term perspective would be required.
Today, in my opinion President Obama ‘gets it’ about the
promise and importance of a renewable energy future. I believe he is doing what
he can to put the U.S. on that path but is facing serious opposition from a too
often recalcitrant U.S. Congress. In my view Congress has an obligation to look
down the road, anticipate national needs, and take positive steps to address
those needs before they become crises. This is an obligation I believe recent
Congresses have often not met. We can do a lot better and must if the U.S. is
to derive its fair share of benefits from an emerging and inevitable clean
energy industry that other countries are working hard to develop and know is
the future.
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