Fossil Fuels

The Energy Department's (DOE) Clean Technology program, which has been underway since 1986, is a unique partnership between government and industry for sharing the costs of commercial-scale projects demonstrating innovative technologies for using coal in a more environmentally sound, efficient, and economical way. DOE funds up to half of a project's cost, with the project's sponsor and other nonfederal participants picking up the tab for the rest. This report reviews the lessons DOE has learned in implementing the clean coal program and the changes it has made that would be useful to other federal agencies that share in the costs of developing and demonstrating technologies. GAO also obtained information on DOE's plans for the future direction of the clean coal program. Although it is too soon to judge the commercial success of the innovative technologies developed, the program has shown that the government and the private sector can work together to develop and apply new technologies.

GAO found that: (1) the program's success will ultimately be measured by the extent to which the technologies developed under the program are commercialized in the energy marketplace; (2) the program has demonstrated that the government and private sector can work cooperatively in developing new technologies; (3) DOE experience with the clean coal program can be useful to other similar federal cost-sharing programs; (4) obtaining advanced funding increased the participants' confidence and long-term planning, using cooperative agreements increased participants' management flexibility and reduced federal oversight requirements, establishing federal cost-sharing limits helped ensure the industry's commitment to projects, and establishing a comprehensive evaluation and selection process helped ensure program integrity; (5) DOE has been able to modify the program's objectives to meet changing national needs and make program improvements and adjustments on the basis of the lessons learned; (6) although many of the program's improvements and modifications have been successful in addressing private-sector financing, repayment, and evaluation problems, DOE continues to experience project delays and cost increases resulting from environmental review requirements; and (7) although DOE is considering making design improvements on existing projects, its plans for the future direction of the clean coal program are uncertain.