IMPACT OF THREE INDUSTRIAL TECHNOLOGIES DEVELOPED BY DOE

By: R. Neal Elliott, Scott McGaraghan and Katherine Wang

August, 1997

Executive Summary

The U.S. Department of Energy (DOE) has been involved in research into industrial energy efficiency technologies for over two decades now. This report looks at three different technologies developed with the Office of Industrial Technologies' (OIT) sponsorship, including: how the technology evolved; how it was used in the marketplace; the significance to both manufacturers and end-users; and the role OIT played and continues to play. These technologies are intended to provide illustrative examples of the importance of government-sponsored industrial research and development (R&D).

More than half of the economic growth during the past quarter of a century has resulted from technology improvements. Studies have estimated returns to individual companies from R&D to be 20-30 percent, while returns to society as a whole are more than 50 percent (Eisenhauer 1996). Recently, commitment to R&D has diminished, with both federal and industrial R&D dollars declining. Many industries are closing their corporate research laboratories and focusing their efforts on more near-term activities. This is manifest in a shift from basic and applied research toward more commercialization. Since much government research is done cooperatively with industry, this decline in corporate research activities also reduces the effectiveness of government-funded research. In addition, government's R&D focus has been moving to more near-term activities as well.

A 1995 study by the Secretary of Energy Advisory Board identified more than 50 economically successful industrial technologies that DOE had played a role in developing. It is estimated that in 1995 these technologies resulted in savings of about 135 trillion British thermal units (Btu). Cumulative energy savings to date from these technologies are estimated to be approximately 0.9 quad (Moore 1997). Each technology has its own unique story and has developed in different ways. For this study, three diverse technologies with different target industries were selected for review: hyperfiltration; computer controlled ovens; and the catalytic reactor. They represent good examples of how OIT has played a facilitation role in developing industrial technologies. Two of these technologies have emerged to address important needs in industry, though not in the way initially anticipated by the research. The third addressed an important need that has more recently diminished in importance as a result of other technological innovations.

DOE has played a pivotal role in bringing all three technologies to the market. While its monetary contributions to each have been modest, its funding and support occurred at a critical point in the development of each technology. Additionally, DOE's participation conferred intangible benefits upon the projects, including visibility and access to demonstration facilities, which would likely not have otherwise been afforded to the technology developers.

None of the technologies evolved in the marketplace as was anticipated when DOE became involved more than 15 years ago. Rather than this being an indictment of the Department's lack of foresight, these examples confirm the importance and value of R&D in the face of uncertainty. In each of the cases described, events that could not have been foreseen affected the course of the technology. As a result, applied technology development efforts need to be flexible in order to respond to evolving market conditions.

These examples also demonstrate the value of working directly with the private sector on applied R&D. These companies had a clear incentive to identify market niches and see product used in manufacturing plants, as opposed to national laboratories and academia for which the research is frequently an end in itself. These stories also illustrate the importance of patience when dealing with R&D. It usually takes 10 years or more to discover whether the product of an R&D effort will have any market potential at all and additional time to assess whether it is a "winner."

27 pps., 1997, $13.00, IE971