Fossil Fuels

Coal provides about one quarter of the nation's energy needs, but emissions from coal combustion have contributed to air pollution, including acid rain. Under a program to provide more advanced, efficient, and environmentally acceptable coal utilization technologies, the Department of Energy (DOE) funds up to 50 percent of the costs of industry-sponsored projects to demonstrate commercial-scale applications of innovative clean coal technologies. As of September 1991, about half of the 32 ongoing funded projects were progressing on schedule and within cost estimates. Equipment failures, additional equipment requirements, and problems in scheduling tests were contributing factors to projects that were behind schedule or over budget. GAO believes that DOE's selection of some projects, while meeting selection criteria, may not be the most effective use of federal funds. For example, some projects are demonstrating technologies that might have been commercialized without federal assistance. GAO also identifies projects with potentially limited applications and projects that have proven economically unviable. GAO questions whether DOE has done all that it could to ensure that its investment is adequately protected. For example, DOE continued to fund some projects that it knew were experiencing financing problems and that were eventually withdrawn from the program; DOE has since improved controls over project costs.

GAO found that: (1) 15 of the 32 ongoing funded projects have experienced delays, cost increases, and reductions in scope; (2) most ongoing projects have not progressed far enough for DOE to assess whether they will ultimately achieve their performance objectives and, as of September 1991, only three projects had completed the demonstration phase; (3) DOE invested about $21.2 million in 5 of the 13 projects that had been withdrawn from the program; (4) DOE funded some projects that may have limited potential for return on the federal investment, since those projects' technologies may have been commercialized without federal assistance; (5) it was questionable whether DOE had done all that it could to ensure that its investment was adequately protected, since it continued to fund some projects that were experiencing financing problems and were eventually withdrawn from the program; (6) DOE improved its management controls over project costs and incorporated a new policy on project funding to require justifications for additional funding; and (7) DOE began developing procedures for independently reviewing sponsors' final project reports to ensure that they include sufficient and accurate information for potential users of the technologies, and plans to complete the procedures by late 1991.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Team: Phone: