A rigorous new study from Resources for the Future finds that the benefits of investing in five key advanced energy technologies would exceed costs by an average of more than 6 to 1 per technology. The additional funding would generate average estimated societal benefits with a present value of more than $30 billion per technology from 2040–2060. A significant portion of these benefits would come from lower consumer electricity bills.
“Our analysis indicates that US government funding of RD&D for these technologies is a spectacularly good investment,” lead author and RFF Fellow Daniel Shawhan said.
The study, summarized in the issue brief above, analyzes five key technologies that were authorized to receive additional research, development, and demonstration (RD&D) funding under the bipartisan Energy Act of 2020: advanced nuclear, advanced geothermal, diurnal energy storage, natural gas with carbon capture and sequestration, and direct air capture. The specific funding to be allocated to RD&D for each technology will be determined during annual congressional appropriations. Today’s study may help to inform these appropriations.
Investment in clean energy technologies was a key component in the new Paris Agreement goals announced by the Biden administration last week.
“Objectively estimating the benefits of proposed RD&D spending is difficult,” said Shawhan. “This large, careful study breaks new ground in order to produce good estimates.”
To estimate the effects and benefits of the added RD&D funding, the RFF researchers elicited careful projections from more than two dozen experts about how the added support would affect the costs of the technologies. They then combined those cost projections with detailed simulation modeling. Benefits would come in the form of lower electricity bills, thousands fewer US deaths from power plant emissions, and reduced greenhouse gas emissions.
- The experts expect that ten years of funding at levels similar to those authorized by the Energy Act of 2020 would reduce the costs of the technologies by 9–30 percent in 2035, compared to the situation without the additional funding.
- The added RD&D funding would result in estimated societal benefits with a present value averaging $30 billion to $39 billion per technology.
- Average power sector benefits across the technologies are likely to exceed costs by more than 10 times with a national clean electricity standard, and about 7 times even without any new national clean energy policy.
- Estimated electricity bill savings amount to an average of approximately $56 per household per year for each technology with a national clean electricity standard, and $14 per household per year for each technology without one.
Work on this study, which builds on two 2020 RFF simulation-based studies, started before the Energy Act of 2020 was passed; therefore, the study does not reflect the exact amounts authorized under the law. However, the model legislation used in this study is a very close match to what was passed.
Read the new issue brief, “Projected Effects of Proposed Funding for Advanced Energy Technologies,” by RFF Fellow Daniel Shawhan, Senior Research Associate Kathryne Cleary, Research Analyst Christoph Funke, and Research Analyst Steven Witkin. Read the full study here.
Resources for the Future (RFF) is an independent, nonprofit research institution in Washington, DC. Its mission is to improve environmental, energy, and natural resource decisions through impartial economic research and policy engagement. RFF is committed to being the most widely trusted source of research insights and policy solutions leading to a healthy environment and a thriving economy.
Unless otherwise stated, the views expressed here are those of the individual authors and may differ from those of other RFF experts, its officers, or its directors. RFF does not take positions on specific legislative proposals.
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