[U.S. Department of Energy, Secretary's Annual Report to Congress, January 1980]
[From the U.S. Government Publishing Office, www.gpo.gov]

U.S. Department of Energy
SECRETARY'S ANNUAL REPORT TO CONGRESS
January 1980
DOE/S-0010 (80)
/. i: 77Q
SAN DI^O PUBLIC. LIBRARY
SCIENCE INDUS IKX
DOE/S-0010 (80)
U.S. Department of Energy
SECRETARY'S ANNUAL REPORT TO CONGRESS
January 1980
3 1336 05750 2412
For sale by the Superintendent of Documents, U.S. Government Printing Office
Washington, D.C. 20402
Stock Number 061-000-00375-4
Preface
This is the second Annual Report of the U.S. Department of Energy and covers activities of all elements of the Department except the independent Federal Energy Regulatory Commission, which issues its own annual report.
This report is supplemented by four annexes listed on page xii.All years are fiscal years unless otherwise noted.
iii
Table of Contents
Chapter	page
1.	Posture Statement Introduction............................. 1-1
Current Conditions.................... 1-2
Current Energy Demand.............. 1-2
Current Energy Supply.............. 1-3
Energy Outlook........................ 1-5
Future Energy Demand............... 1-5
Future Energy Supply............... 1-6
Departmental Strategy and Programs.... 1-8 Demand Reduction...................... 1-8
Supply Expansion................... 1-10
Other Energy-related Programs...... 1-15
Other Programs.................... 1-15
Management Initiatives................ 1-16
Conclusion........................... 1-17
2.	Conservation Introduction.............................. 2-1
Buildings and Community Systems Program............................. 2-2
Development and Demonstration of
New Technology................... 2-2
Regulatory Programs................ 2-4
Transportation Programs............... 2-5
Development and Demonstration of
New Technology................... 2-5
Cooperative and Voluntary Conservation...................... 2-7
State and Local Conservation Programs. 2-7 Industrial Programs.................. 2-10
Small-Scale Technology............... 2-12
Energy Storage....................... 2-13
Outlook.............................. 2-15
3.	Solar and other Renewable Energy Introduction.............................. 3-1
Solar Programs........................ 3-1
President’s Program................... 3-3
Solar Applications.................... 3-4
Market Analysis and Assessment..... 3-4
Systems Development................ 3-5
Market Test and Application........ 3-5
Federal Photovoltaic Utilization
Program.......................... 3-6
Solar in Federal Buildings Program... 3-7
Market Development and Training.... 3-7
Solar Technologies.................... 3-8
Biomass Energy..................... 3-8
Chapter	page
Solar Thermal....................... 3-8
Photovoltaics..................... 3-11
Wind Systems...................... 3-11
Ocean Systems..................... 3-13
Hydro............................. 3-14
Solar Energy International Activities.... 3-15
Outlook............................. 3-15
Geothermal Resources................ 3-16
Hydrothermal Resources............ 3-18
Geopressured Systems.............. 3-19
Hot Dry Rock Resources............ 3-20
Outlook........................... 3-20
Magnetic Fusion Energy.............. 3-21
Introduction...................... 3-21
Accomplishments................... 3-23
Outlook........................... 3-23
4.	Fossil Energy Introduction............................. 4-1
Energy Security Reserve............... 4-2
Coal Technology...................... 4-3
Mining R&D.......................... 4-3
Synthetic Fuels.................... 4-4
Direct Combustion.................. 4-6
Advanced Environmental Control.... 4-6
Fuel Cells......................... 4-6
Heat Engines and Heat Recovery..... 4-6
Magnetohydrodynamics................ 4-7
Coal Applications.................... 4-7
Low- to Medium-Btu Gas.............. 4-7
High Btu Gas....................... 4-7
Coal Liquids....................... 4-8
Coal Supply Development............. 4-8
Petroleum............................ 4-9
Enhanced Oil Recovery............... 4-9
Tar Sands.......................... 4-9
Oil Shale........................... 4-9
Strategic Petroleum Reserve........ 4-11
Natural Gas.......................... 4-12
Uncoventional Gas Recovery......... 4-12
Refinery Capacity Availability and Requirements.............. 4-12
Oil and Natural Gas Supply Development....................... 4-12
5.	Electric Energy Introduction............................. 5-1
U.S. Electric Energy Network......... 5-2
Chapter
page
Chapter
page
Utility Planning..................... 5-2
R&D Programs......................... 5-3
6.	Nuclear Energy Introduction.............................. 6-1
Converter Reactor Systems............ 6-3
Thermal Reactor Technology.......... 6-3
Advanced Reactor Systems........... 6-3
Breeder Reactor Systems.............. 6-4
Liquid Metal Fast Breeder Reactor.... 6-4
Water-Cooled Breeder............... 6-4
Gas-Cooled Fast Breeder Reactor..... 6-4
Fuel Cycle......................... 6-4
Special Nuclear Systems.............. 6-5
Space and Terrestrial Systems....... 6-5
Advanced Systems Evaluation......... 6-5
Advanced Isotope Separation Technology 6-5
Commercial Nuclear Waste........... 6-6
Remedial Actions Programs.......... 6-6
Spent Nuclear Fuel................... 6-7
Uranium Resource Assessment.......... 6-7
7.	Environment Introduction.............................. 7-1
Technological Impacts................ 7-1
Health and Environmental Research.... 7-3
Environmental Compliance and Overview............................. 7-5
Outlook.............................. 7-7
8.	Defense Programs Introduction.............................. 8-1
Nuclear Weapons Activities............ 8-1
Research and Development............ 8-2
Weapons Testing..................... 8-2
Weapons Production.................. 8-3
Verification and Control.............. 8-3
Nuclear Materials Production.......... 8-4
Defense Waste Management.............. 8-7
Nuclear Materials Safeguards and Security......................... 8-8
Naval Reactors........................ 9-9
Inertial Fusion..................... 8-10
Classification........................ 8-10
9.	International Programs
Cooperation Among Energy Consuming Nations................ 9-2
Analysis of International Energy Markets................... 9-3
Actions to Increase Energy Supplies... 9-4
Activities with Established Producing Nations.................. 9-4
Efforts to Assist Countries in Developing New Supplies............ 9-5
International Cooperation in Energy Research and Technology.............. 9-5
Nuclear Energy Cooperation and Nonproliferation..................... 9-7
10.	General Science Programs Introduction................................10-1
R&D Planning, Advice, and Assessments 10-2
National R&D Planning and Assessments .......................10-2
Satellite Power System...............10-2
Advanced Technology Projects.........10-3
Energy Research Advisory Board.......10-3
Coordination of DOE Commercialization Activities.......10-4
International R&D Planning...........10-4
Nuclear Non-Proliferation Activities.. 10-4
Basic Energy Sciences..................10-4
Nuclear Science......................10-5
Materials Sciences...................10-6
Chemical Sciences....................10-7
Engineering, Mathematical and Geosciences........................10-7
Biological Energy Research...........10-8
Advanced Energy Projects.............10-9
High-Energy and Nuclear Physics........10-9
International Cooperation in High-
Energy and Nuclear Physics.........10-10
High-Energy Physics..................10-10
Nuclear Physics......................10-12
Life Sciences Research and Nuclear Medicine....................10-13
11.	Energy Information
Introduction........................11-1
Major Development Programs..........11-2
Financial Reporting System........11-2
Oil and Gas Information System....11-2
National Energy Information System. .11-3
Consumption Data System...........11-3
Energy Emergency Management
Information Systems.............11-3
Data Operations.....................11-3
Systems Support.....................11-3
Applied Analysis....................11-5
Information Validation..............11-5
Outreach Activities.................11-5
Chapter
page
Chapter
page
12.	Economic Regulation Introduction..............................12-1
Fuels Conversion.....................12-1
Utility Systems......................12-4
Petroleum Operations.................12-4
Compliance with Petroleum and Allocation Regulations............12-5
13.	Energy Production Power Marketing...........................13-1
Naval Petroleum and Oil Shale Reserves. 13-5 Naval Petroleum Reserve No. 1........13-5
Navel Petroleum Reserve No. 2......13-5
Naval Petroleum Reserve No. 3...13-5
Naval Oil Shale Reserves........13-7
Uranium Enrichment................13-7
Gaseous Diffusion Operations....13-7
Gaseous Centrifuge Enrichment Plant. 13-9
Leasing Programs..................13-9
14.	Support Operations
Resource Management...............14-3
Management Review.................14-3
In-House Energy Management........14-4
Field Operations..................14-4
Appendices
Appendix
A.	Foreign Direct Investments in U.S. Energy Sources and Supplies	A-l
Introduction...........................A-l
The Petrolum and Natural Gas Industries.............................A-2
Summary of Foreign Investment
Activity..........................A-3
Activities of Foreign-Controlled
Companies.........................A-4
The Coal Industry......................A-9
The Nuclear Fuel Industry.............A-10
Other Foreign Activity in Uranium.... A-10
Alternative Energy Sources.............A-10
B.	Exports of Energy Resources by Foreign Companies	B-l
Introduction...........................B-l
The Export of Crude Oil and Refined Oil........................B-l
Identification of Exporters..........B-l
Export Controls......................B-2
Crude............................... B-2
Refined Products.....................B-2
The Export of Natural Gas..............B-2
Identification of Exporters..........B-2
Appendix
Export Controls.....................B-3
Export of Coal........................B-3
Identification of Exporters.........B-3
Export of Uranium.....................B-3
Identification of Exports...........B-3
Export Controls.....................B-3
C.	Major Recipients of DOE Funding	C-l
D.	Actions Taken Regarding Dislosure of
Energy Assets by DOE Employees	D-l
Introduction..........................D-l
Section 603...........................D-l
Other Sections of the Act.............D-2
E.	Financial Assistance Programs for Alternative Fuel Demonstration Facilities	E-l
Introduction..........................E-l
Program Development...................E-l
Regulation Development................E-2
Future Plans..........................E-2
Energy Security Corporation...........E-2
F.	1978 Budget Summary	F-l
Introduction..........................F-l
vii
List of Tables
Table No.	Title	Page
1	Shares of primary consumption (1979)................................................ 1-3
2	Sources of primary energy consumption............................................... 1-3
3	Gross U.S. imports of crude petroleum............................................... 1-4
4	World price of internationally-traded oil........................................... 1-4
5	Department of Energy budget authorities for conservation programs................... 1-9
6	Budget authority for research, development, and applications.......................... 1-11
7	Budget authority for conservation—1979, 1980, and 1981.............................. 2-2
8	State energy conservation program grant awards—1979................................. 2-8
9	Energy extension service—1979 state grants............................................ 2-10
10	Budget authority for solar and other renewable energy—1979, 1980, and 1981.......... 3-1
11	Potential fuel displacement of solar technologies................................... 3-2
12	Federal photovoltaic utilization program applications cycles........................ 3-6
13	Potential geothermal energy production—1985, 2000, and 2020........................... 3-16
14	Budget authority for fossil energy—1979, 1980, and 1981............................. 4-2
15	Budget authority for coal—1979, 1980, and 1981...................................... 4-3
16	Status of applications for coal loan guarantees—1979................................ 4-8
17	Budget authority for petroleum—1979, 1980, and 1981................................. 4-9
18	Budget authority for the Strategic Petroleum Reserve—1979, 1980, and 1981........... 4-11
19	Oil in storage by end of 1979....................................................... 4-12
20	Budget authority for natural gas—1979, 1980, and 1981............................... 4-12
21	Electric energy systems research projects........................................... 5-2
22	Budget authority for electric energy systems —1979, 1980, and 1981.................. 5-2
23	Budget authority for nuclear—1979, 1980, and 1981................................... 6-3
viii
Table No.	Title	Page
24	Budget authority	for environment—1979, 1980, and 1981................................. 7-1
25	Budget authority	for defense programs—1979, 1980, and 1981............................ 8-1
26	Budget authority	for general sciences—1979, 1980, and 1981........................... 10-1
27	EIA activity level	indicators—1979, 1980, and 1981.................................... 11-2
28	Budget authority for the Energy Information Administration—1979, 1980, and 1981....... 11-2
29	EIA statistical programs and developmental activities................................. 11-4
30	EIA validation tasks and accomplishments.............................................. 11-6
31	Budget authority of the Economic Regulatory Administration—1979, 1980, and 1981....... 12-1
32	Manpower applied to Economic Regulatory Administration —1979, 1980, and 1981.......... 12-1
33	Energy production costs and revenues—1979, 1980, and 1981............................. 13-1
34	Current status of repayment, power systems of the power marketing administrations....	13-3
35	Cumulative repayable investments of the power marketing administrations............... 13-3
36 Recent PMA power rate adjustments...................................,..................... 13-5
A-l Foreign direct investment in petroleum and all U.S. industries and U.S. direct investment in foreign industries.............................................................. A-l
A-2	Additions to foreign direct investment in U.S. petroleum— 1974-1978.................... A-l
A-3	Foreign sources of direct investment in U.S. petroleum—1973-1978....................... A-3
A-4	OPEC direct investment in the U.S.—1975-1978........................................... A-3
A-5	U.S. petroleum and natural gas production by identified foreign-controlled companies.	A-4
A-6	U.S.	refinery operations of identified foreign-controlled companies—1976-1979......... A-4
A-7	U.S.	gasoline sales by foreign-owned companies........................................ A-5
B-l	U.S.	natural gas exports.............................................................. B-2
C-l	Procurement and financial assistance activities during	1979............................ C-l
C-2	Contractors awarded $10 million and over during 1979................................... C-2
F-l	Budget authority summary—1979, 1980, and 1981.......................................... F-l
F-2	Energy supply—research and technology development...................................... F-2
ix
Table No.
Title
Page
F-3	Energy supply—production,	demonstration, and distribution............................. F-2
F-4	Conservation.......................................................................... F-2
F-5	Regulation............................................................................ F-3
F-6	Energy information.................................................................... F-3
F-7	Environment..........................................................................  F-3
F-8	General science programs.............................................................. F-3
F-9	Atomic energy defense activities...................................................... F-4
F-10	Policy and management................................................................. F-4
x
List of Figures
Figure No.	Title	Page
1	Scope of markets and applications for products from biomass resources................... 3-9
2	Central-receiver solar thermal power system............................................. 3-10
3	Solar total energy application.......................................................... 3-12
4	Geothermal resource potential in the continental United States for direct heat	applications...	3-17
5	Basic magnetic field configurations for confining plasmas............................... 3-22
6	Commercial nuclear power plant orders and completions between 1953 and 2000............. 6-2
7	Environment expenditures for technology programs—1975 through 1981...................... 7-2
8	Location of nuclear materials production facilities..................................... 8-5
9	Flow of materials between nuclear materials production plants........................... 8-6
10	Budget phasing of the Economic Regulatory Administration.................................. 12-2
11	Manpower phasing of the Economic Regulatory Administration................................ 12-3
12	Electric power marketing areas of the Department of Energy and the Tennessee Valley Authority......................................................................................... 13-2
13	Buildup of cumulative repayable investment through 1978, the five Power Marketing Administrations................................................................................... 13-4
14	The production history of the Elk Hills Naval Petroleum Reserve........................... 13-6
15	Uranium enrichment capability versus nuclear power availability........................... 13-8
16	Organization of the Department of Energy.................................................. 14-2
xi
Annexes to Annual Report
1.	The Third Report to Congress: Comprehensive Program and Plan for Federal Energy Education, Extension, and Information Activities (in preparation by the Office of State and Local Programs, Office of Conservation and Solar Energy, U.S. Department of Energy).
2.	Second Annual Report to Congress on the Automotive Technology Development Program (in preparation by the Office of Transportation Programs, Office of Conservation and Solar Energy, U.S. Department of Energy).
3.	Nuclear Nonproliferation (in preparation by the Office of International Affairs, U.S. Department of Energy).
4.	Observations and Recommendations on the Future of the Energy Extension Service Program: Second Report by the National Energy Extension Service Advisory Board (in preparation by the Office of State and Local Programs, Office of Conservation and Solar Energy, U.S. Department of Energy).
xii
Chapter 1
Posture Statement
Introduction
The Department of Energy sees its mission as assuring the Nation’s orderly transition from an economy dependent upon oil to an economy relying upon diversified energy sources. This report summarizes the Department’s efforts to accomplish its mission during fiscal year 1979, its programs for fiscal year 1980, and its plans for fiscal year 1981.
This report can be evaluated only in the context of the Department’s assessment of the energy outlook for the Nation and the world. The Department anticipates that the transition in energy use will occur in roughly three phases. For the next 5 years the world will continue to rely heavily on oil, which supplied about half of the world’s energy in 1979. During the forthcoming 5-year period, the most readily available, economic source of additional energy is conservation, or the more efficient use of the energy now being consumed. In addition, the use of natural gas, coal, uranium, and renewable resources can help reduce growth in the demand for oil. Some nonOPEC nations, notably Mexico and the United Kingdom, are expected to increase their oil and gas production. In the medium term, from 1985 to 2000, the world will begin to make a significant move away from oil dependence. During this period, the world has several attractive options for reducing demand for oil and diversifying its energy supply. These include more coal and coal-derived synthetic fuels, solar technologies, oil shale, unconventional gas sup
plies and nuclear power, as well as continued improvements in the efficiency of energy use. Beyond the year 2000, the world will move further toward renewable energy sources and advanced nuclear technologies. These technologies will displace both traditional fuels and non-renewable unconventional sources of energy, but improvements in cost and technical performance must be achieved before they can be adopted widely.
This posture statement gives an overview of the Department’s policies, programs and strategies. It first describes current conditions of energy supply and demand. It then sets out our current view of the progress we will make in the coming years to limit demand and maintain supply. Finally, it outlines the Department’s strategy and programs for fiscal year 1981. Succeeding chapters of the annual report detail each of the Department’s major programs.
The Department’s assessment of the world energy outlook demonstrates that, for many decades ahead, we must pursue efforts to limit demand and to expand and diversify supply with equal diligence. No single energy source, no single restraint on demand and no single technological innovation can resolve our current energy problems. Their resolution can come only by the pursuit of many distinct and sometimes complicated programs, unified primarily by their common need for full cooperation of all branches of government and for the long term support of sectors of the American public and economy.
1-1
Current Conditions
During 1979, the energy demand situation improved while the energy supply outlook deteriorated, particularly for sources outside the United States. Oil price increases throughout 1979 by the Organization of Petroleum Exporting Countries (OPEC) limited demand not only for crude oil and petroleum products, but also for fuels whose prices tend to track the price of oil. In this period, world oil prices doubled. The landed cost of imported oil to United States refiners rose from an average of $15 per barrel at the beginning of 1979 to an average of $29 per barrel in December. This section sets out the Department’s assessment of current conditions, first with respect to demand for energy, then with respect to supplies of energy for both the United States and the industrialized countries outside the United States.
Current Energy Demand
A very substantial proportion of the world’s demand for energy is for oil. This demand occurs in sectors of the economy such as transportation where large-scale substitution of other energy sources are not now possible. There has been relatively little shift, worldwide, to other forms of energy—natural gas, coal and solar—although demand for these sources did increase in 1979 over 1978 levels.
United States Energy Demand: In 1979, total energy demand in the United States increased only slightly above 1978 levels. This was caused primarily by the combined effects of a slowdown in economic growth and significantly higher energy prices. Limits on supply caused by the Iranian revolution and other factors depressed consumption at the beginning of the peak driving season. These limits and substantially higher prices helped keep gasoline consumption over the year at about 400,000 barrels per day, roughly 5 percent, below 1978 levels. In the fourth quarter, after physical shortages had disappeared, gasoline demand was 700,000 barrels per day lower than in the same period of 1978 as a result of higher prices and conservation. Consumption of other petroleum products—home heating oil, diesel fuel, jet fuel, and residual oil—remained near 1978 levels of about 11.4 millions barrels per day. Overall, consumption of petroleum in 1979 was slightly lower than in 1978.
Natural gas consumption in 1979 remained about the same as in recent years at 19.5 trillion cubic feet (tcf). Industrial demand for gas decreased slightly in 1979 to about 7.8 tcf from 8.3 tcf in the prior year. Use of gas by electric utilities increased
slightly to 3.4 tcf from 3.1 tcf in 1978. Some of the net decrease in consumption in these sectors was absorbed by the residential and commercial sectors, which increased their use of natural gas from 7.5 tcf in 1978 to about 7.8 tcf.
Coal consumption grew in 1979 by more than 50 million tons largely due to increases in coal use by electric utilities. The 1979 consumption level—about 700 million tons—reflects the return of growth trends exhibited before the coal strike and low production levels in 1978. A faster rate of increase in coal use can only be achieved by resolving such issues as stringent environmental controls and the high cost of handling, transporting, and using coal. These barriers and the problems they represent may be overcome through technological advances in conversion of coal to synthetic gas and liquids, through the development of systems that will burn coal in a more efficient and environmentally acceptable manner, and through financial incentives to utilities to encourage substituting coal for petroleum-based fuels.
Total consumption of electricity grew by 3 percent in 1979, to a total of 2.1 trillion kilowatt hours from a total of 2 trillion kilowatt hours in 1978. About 40 percent of this electricity was used in the industrial sector, 23 percent was used in the commercial sector and 33 percent was used in the residential sector. This pattern of use reflected little change from 1978.
Demand for energy produced by solar devices and renewable energy sources (hydroelectric power and energy from plant materials) remained about the same as in 1978. More than 3 primary quads1 of low-and high-head hydroelectric power were used to generate electricity and about 2 quads of forest products were consumed as fuel by the pulp and paper industry. The use of wood for home heating also gave indications of an increase.
World Energy Demand: The availability and price of oil dominates world energy use. The world has not appreciably substituted other fuels for oil and world oil consumption increased between 1973 and 1979. The United States is less dependent on oil than the rest of the Free World, using oil for only 46 percent of its primary energy needs compared to 58 percent for the remainder of the Free World as shown in table 1.
1 One quad equals one quadrillion, or 10'5, British thermal units (Btu’s).
1-2
Table 1.	— Shares of primary consumption (1979)
Table 2.	— Sources of primary energy consumption
Energy Type	United States	Non-U.S.—Free World
(percent)	(percent)
Domestic Production
1979
(percent)
Oil........................ 46	58
Gas........................ 25	13
Coal....................... 19	17
Nuclear..................... 4	2
Renewables........	 6^	10
Total.........	100	100
Free World natural gas consumption outside the U.S. has remained stable in recent years at about 14 quads consumed. Demand for electricity increased and caused a substantial derivative demand for nuclear power, which accounted for about 3 quads of primary energy in those countries in 1979—three times the 1973 level. In 1979, the Free World outside the U.S. used about 10 quads of energy from renewable sources, slightly higher than the amount used in 1978.
Current Energy Supply
In 1979, petroleum constituted about 53 percent of the Free World’s energy supply. Throughout the Free World, however, substantial amounts of energy are supplied by coal (18 percent), gas (18 percent), renewable resources (8 percent), and nuclear power (3 percent). Diversification of supply away from oil is proceeding throughout the world, but slowly.
United States Energy Supply: The United States is not energy poor, but we have not made sufficient use of our abundant domestic resources. Table 2 shows that the United States produces approximately 78 percent of its energy needs. We produce more domestic energy per capita than Europe or Japan consume per capita. Although imports of oil represent only 21 percent of our energy consumption, our continued reliance on imports for nearly half of our current petroleum requirements remains a very substantial problem. Each of the domestic sources is discussed below. Foreign sources are discussed in the succeeding section on world supplies.
Domestic production of crude oil and natural gas liquids remained about the same as in 1978 at 10.3 million barrels a day (MMBD) compared to 10.2 MMBD in 1979. With net domestic petroleum demand at 18.5 MMBD, the level of net oil imports, excluding imports for the Strategic Petroleum Reserve,
Oil................................................. 25
Gas................................................. 24
Coal................................................ 19
Nuclear.............................................. 4
Renewables..........................................  6
Subtotal........................................ 78
Imports
Oil................................................. 21
Gas.................................................. 1
Subtotal........................................ 22
Total...............................................100
was 7.7 MMBD. Imports for the Strategic Petroleum Reserve were negligible after August 1979, but averaged 60,000 barrels a day for this year. Substantial quantities of imported oil were used to build private inventories throughout the year.
The amounts of oil imported from specific foreign sources change frequently. The breakdown of imports by country of origin for 1979 is given in table 3. Imports from Saudi Arabia, Nigeria, Libya and Venezuela increased in 1979 to offset reductions from other countries, including Iran.
In 1979, domestic production of natural gas did not increase above 1978 levels of 19.1 trillion cubic feet, although drilling activity was substantially higher than last year. Through the third quarter of 1979, the number of exploratory wells increased by 25 percent, while the number of developmental wells increased by 12 percent.
Coal production in 1979 reached a record level of 760 million tons, including about 60 million tons that were exported, an increase of 8 percent over record 1977 production levels. Over 100 million tons of excess coal production capacity still existed.
Nuclear energy continues to be an essential element of the Nation’s electric supply system. In 1978, nuclear energy generated approximately 13 percent of the domestic electricity. This figure was slightly lower in 1979 due to the shutdown of nuclear capacity in response to safety and other concerns, that were highlighted by the Three Mile Island accident. There were 71 nuclear reactors with a combined capacity of 52 million watts (gigawatts) in operation or start-up testing at the end of 1979. Construction of
1-3
Table 3. — Gross U.S. imports of crude oil and petroleum products.
(millions of barrels per day)
1979'
OPEC
Saudi Arabia.....................................1.3
Iran.............................................0.3
Nigeria..........................................1.0
Libya............................................0.7
Venezuela........................................0.7
Algeria..........................................0.6
Indonesia........................................0.4
United Arab Emirates.............................0.3
Other..........................................  0.2
Total OPEC...................................5.5
Non-OPEC
Bahamas..........................................0.1
Canada...........................................0.5
Mexico...........................................0.4
Netherlands Antilles.............................0.2
Puerto Rico......................................0.1
Trinidad/Tobago..................................0.2
Virgin Islands...................................0.4
Other..........................................  0.7
Total non-OPEC............................  ,2.7
Total imports................................8.2
1 These figures are gross imports based on data from the first eleven months of the year. Imports from Iran were suspended by the President on November 12, 1979. No imports for the Strategic Petroleum Reserve are included. Imported petroleum products are counted on a par with crude oil. The sources of the crude refined into products overseas and then imported into the United States are not known. To get net oil imports, subtract U.S. petroleum exports of about 450,000 barrels per day.
Note: Totals may not add due to rounding.
Federal and state financial or regulatory incentives, have begun to accelerate the rate at which solar power technologies are readied for the market. The primary technologies that showed increases in the market place in 1979 include active and passive space heating and solar hot water heating for residential and commercial buildings. A major effort to advance alcohol fuels, which began in 1977, yielded significant results in 1979. This program emphasizes the production of gasohol, which is a mixture of 10 percent ethanol and 90 percent unleaded gasoline. As a result of the 4 cents per gallon excise tax exemption that the President signed into law in November 1978 and the substantial increases in the price of gasoline, ethanol for fuel production capacity increased to about 80 million gallons per year at the end of 1979 from a neglible level in 1977.
Current Energy Supply Outside the United States: Oil dominated the energy supply situation outside the United States, as it did domestically. The major developments on the supply side were substantial OPEC price increases announced at the April, June and December meetings; the oil price increases announced independently by members of OPEC throughout the year; the increasing volume of oil traded on the spot market at prices significantly higher than posted OPEC prices; the announcements by some OPEC member countries of plans to hold down future production; and the Iranian revolution and subsequent production shutdown in January. The increase in world oil prices throughout the year can be seen in table 4.
another four nuclear generating stations with a combined capacity of 4 gigawatts had been completed by the end of 1979. These stations are currently awaiting licensing and are likely to begin commercial operation in 1980. After the Three Mile Island accident, the President endorsed the Nuclear Regulatory Commission’s approach which called for a short pause in licensing activities so that the Commission could focus on safety improvements. He urged the Commission to expedite this process so that it could resume licensing not later than June 1980.
Solar energy and renewable energy sources, which include biomass, hydroelectricity, geothermal power, and wind, now contribute 5 quads to national energy supply, primarily from biomass (including an estimated 2 quads of forest by-products) and hydroelectricity. Recent oil price increases, coupled with
Table 4.	— World price of internationally — traded oil
(dollars per barrel)
Beginning of:	Price
January 1979....................................13.77
February......................................  14.14
March...........................................14.59
April...........................................16.22
May.............................................16.34
June............................................17.44
July............................................20.55
August..........................................20.62
September.......................................20.77
October.........................................20.90
November.......................................24.01
December.......................................24.01
January 1980....................................27.28
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Disorder in the world oil market was reflected in the increase in sales on the spot market and a reversal in the traditional relationship between spot market prices and long-term contract prices. With the exception of a brief flurry of activity during 1973-74, the fraction of oil traded in the spot market in recent years has averaged less than 5 percent of oil traded. In the last months of 1979, however, industry sources believe that at least 15 percent of internationally traded oil was sold on the spot market. In the past, the spot market has been a place where excess oil was traded at prices near or even below contract levels. In 1979, however, spot market prices soared to over $45 per barrel, in some cases reaching levels more than 200 percent above contract prices. In turn, these high prices encouraged increases in the price of contract oil.
In 1979, the Free World’s supply of oil produced outside the United States remained near 1978 levels at about 40 million barrels per day, about 31 MMBD of which was produced by OPEC nations. Despite curtailments of Iranian production, supplies remained stable primarily because Saudi Arabia and Kuwait raised production above expected levels.
During 1979, total supplies of energy produced in the Free World outside the United States from sources other than oil also remained generally at about 1978 levels. Foreign Free World natural gas production remained stable at about 7 MMBD oil equivalent after a decline in 1974-75. Except in Australia and Canada, foreign coal production in industrialized countries has not grown for the past two decades. Increases in Australian and Canadian production has helped offset declines in Western Europe and Japan. Coal production in 1979 remained at about 109 MMBD of oil equivalent. Nuclear power production has continued its rapid growth. In 1979, Free World generation of nuclear power outside the United States increased by 10 percent and is now approximately equal to United States levels of about 3 quads or the equivalent of 1.5 MMBD of oil. Renewable energy production in 1979 consisted primarily of hydroelectric power and remained at a level equivalent to nearly 5 MMBD of oil.
Energy Outlook
The future holds some encouragement relative to the delicate balance that currently characterizes the energy demand and supply relationship with respect to the major sources of energy. In the United States, we expect continued progress in restraining the growth in energy demand, particularly with re
spect to oil. This seems likely to be coupled with continued progress in developing technologies for domestic energy production from all sources and with accelerated energy diversification. The Administration’s replacement cost pricing policy, particularly for oil and natural gas, has resulted in a substantial reduction in projected energy consumption. The Administration’s decision to allow domestic crude oil prices to rise to world levels in October 1981, in concert with deregulation of natural gas prices at the wellhead under the National Gas Policy Act, have already begun to improve the Nation’s capacity to satisfy future energy needs, while encouraging energy conservation.
Worldwide, oil production will dominate international energy supply in the near term. A reduction in OPEC production is possible in 1980. Increases in non-OPEC production, particularly from the North Sea and Mexico, could partially offset this decline. Gains in world non-oil energy production, especially from coal and nuclear sources, are expected to continue during the next five years as the world continues the transition to non-oil energy supplies.
This section summarizes the Department’s current assessment of future conditions through 1985 with respect to both demand for energy and expected supplies of energy to meet that demand. These forecasts, though inherently uncertain, represent the Department’s best estimates.
Future Energy Demand
Energy demand worldwide will continue to be influenced heavily by oil prices through 1990. Future plans by OPEC to hold production down will drive prices up and force the oil consuming nations to constrain demand for oil and switch to other fuels. By 1985, the United States will make some progress in reducing demand for oil, and greater progress thereafter as viable domestic substitutes become available. Through 1985, other industrialized nations are expected to continue improving the efficiency with which they use energy. Their consumption of oil will remain about the same as in 1979. Demand for natural gas and electricity, particularly for electricity produced by coal-fired and nuclear plants, will continue to rise, but worldwide direct coal consumption will not grow significantly until after 1985.
Future United States Energy Demand: Energy consumption will be held near current levels over the next 5 years. A resumption in economic growth will not increase end-use energy consumption as much as
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in the past because it will occur in the context of higher prices and improvements in efficiency. But consumers will be shifting to the use of energy in converted forms, such as electricity and synthetic fuels, rather than in the primary forms of oil and gas. Because of the conversion losses, primary energy consumption may grow even as end-use consumption remains constant. However, this shift in energy use will help move the Nation away from dependence on petroleum.
United States petroleum consumption in 1985 will likely be lower than current levels. Consumption of natural gas, coal, and electricity will increase. The 3 to 8 percent reduction in petroleum consumption from current levels expected by 1985—a savings of as much as 1.5 MMBD—will be due primarily to the increasing efficiency of automobiles, utility and industry boiler conversions from oil to coal, and fuel shifting and conservation in the residential and commercial sectors. As much as one-third of this reduction would result directly from the effects of the Administration’s initiatives to remove controls from oil prices. By 1985, total natural gas consumption will increase slightly from 20 to 21 trillion cubic feet. Most of the increase will be attributable to gas hookups for new and converting residential customers. Use by industry of 50 to 60 million more tons of coal will be stimulated by the coal conversion provisions of the Powerplant and Industrial Fuel Use Act of 1978.
The demand for electricity is expected to grow at about 4 percent per year between now and 1985. The major share of the primary energy inputs to generating plants will be provided by coal and nuclear energy. Coal consumption by utilities will rise from about 500 million tons in 1979 to nearly 700 million tons by 1985. Oil and gas use by utilities will decrease by 1985, but the level of savings will depend largely on measures taken to replace oil-fired utility plants. Renewable sources hold great potential for the future, but demand cannot be expected to increase significantly by 1985 because of the time required to develop cost-effective and efficient technologies.
Future Energy Demand Outside the United States: Petroleum consumption in the Free World outside the United States will increase slightly by 1985, but will retain its share of total energy demand. The overwhelming dependence on oil for transportation uses will not change significantly by the mid-1980s. By 1985, natural gas consumption will have increased by about 20 percent over current levels and will constitute an expanding share of end-use demand. This
increase in natural gas use will occur primarily in the industrial sector, which is more readily equipped to shift from dependence on petroleum than other economic sectors. Direct coal consumption by industry is expected to remain near current levels between now and 1985, but its share of total Free World energy consumption outside the U.S. will increase in subsequent years. Demand for electricity will increase by about 3 percent per year through 1985, as it captures a slightly higher share of total energy consumption. Demand for energy from renewable sources is not expected to expand significantly by 1985, although rapid growth in demand for decentralized solar space and water heating will occur in the 1990s.
Future Energy Supply
Between now and 1985, decreases in United States oil and gas production will be exceeded by increased production from coal, nuclear and renewable sources. Likewise, outside the United States, declining overall production of oil will be accompanied by increasing gas, coal and nuclear energy production. Steady progress will be made in the use of solar and renewable energy sources.
Future Energy Supply in the United States: Oil production in the United States is expected to remain near current levels of 9 to 10 million barrels per day through the year 2000. Declines in conventional production, resulting from depletion of resources on shore in the lower forty-eight states, will be offset by new production from Alaska, shale and enhanced oil recovery. But if total oil resources in the United States, particularly those off-shore, are less than previously estimated, even higher world oil prices may not offset the continued decline in conventional production.
Conventional gas supplies in the United States will continue to decline in the lower forty-eight states from 9 MMBD oil equivalent in 1979 to 8 MMBD in 1985 and to 7 MMBD in 1990. The Alaskan natural gas pipeline will compensate for some of this decline. Gas from Alaska’s North Slope can replace the equivalent of approximately 425,000 barrels of oil per day by 1985. After 1985, exploration of the large gas resources that exist in unconventional formations and production of synthetic gas will further offset production declines.
As the price of oil rises, United States coal will capture an increasing share of industrial energy and electric utility markets and, eventually, will become a feedstock for the production of synthetic fuels. Abundant domestic resources of coal ensure that
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there will be sufficient supply for all our energy requirements that coal can meet. With the deployment of technologies currently under development, synthetic liquids produced from coal will grow markedly after 1985.
Nuclear power may provide a substantial substitute for oil use in the future. Almost 10 percent of the oil used in the United States, approximately 1.5 million barrels per day in 1979, is burned in utility generating plants. Nuclear energy could displace much of this oil. Our estimates suggest that the nuclear units scheduled to enter commercial operations between now and the end of 1982 could displace about 250,000 barrels of oil per day, if their production reflects historical trends. Licensing of new nuclear power plants for operation has been suspended temporarily by the Nuclear Regulatory Commission but, as the Commission implements the recommendations of the Kemeny Commission and those of its own internal review groups, we anticipate a renewal of licensing by mid-1980.
Our estimate of the future growth in the nucleargenerated share of electricity was reduced in the aftermath of the accident at Three Mile Island. This continues the trend of reduced forecasts that began in the early 1970s. The erosion of nuclear growth forecasts has numerous causes. Along with the rapidly growing financial burden of building and operating nuclear plants, two major factors were heightened concerns about reactor safety and radioactive waste management. The President has directed increased efforts on both of these concerns. Nuclear capacity in the United States now appears likely to increase from current levels of about 50 gigawatts to 150 to 200 gigawatts by 2000. The range of future nuclear capacity depends on completion of the 100 gigawatts of capacity currently under construction or with their construction permit granted, and on the outcome of management and regulatory decisions on another 50 gigawatts awaiting construction authorization or in the planning stages.
Renewable supplies in the United States are projected to increase from 5 quads in 1979 to 6 quads in 1985 and 7 quads in 1990. One area of increase in the near-term will be alcohol fuels. On January 11, 1980, the President announced a national target for alcohol production capacity of 500 million gallons per year. In addition to use in gasohol, some of the alcohol produced will probably be burned directly, particularly in farm vehicles. Further research, experimentation and development of liquid or gaseous fuels from biomass is now being carried out. These technologies are in varying stages of development
and will not make significant contributions without further cost reductions and subsequent market development. During the 1990’s the contribution of renewables to total energy demand is expected to increase rapidly toward the goal of serving 20 percent of the Nation’s requirement in 2000.
Future Energy Supply Outside the United States: Worldwide oil production (excluding the United States and Communist countries) should increase about 1 million barrels per day above 1979 levels to equal 41 MMBD in 1980. It is expected to range between 41 and 55 MMBD in 1985 and from 41 to 60 MMBD in 1990. These estimates will depend primarily on the oil production policies of OPEC countries. A number of oil producing countries with reserves that are large relative to current production levels are increasing their production capacities slowly if at all. These cautious policies reflect a strong preference for production rates that stretch reserves over longer periods and an aversion to even a slight risk of limiting the amount of oil ultimately recoverable. Conventional oil production will decline steadily in the 1990s.
In the next few years, OPEC countries are unlikely to increase their collective oil production significantly above the current level of 31 MMBD. Although by 1985 OPEC production capacity may increase to 36 MMBD, actual output is likely to be constrained by non-technical considerations. Indeed, the Persian Gulf producers—Saudi Arabia, the United Arab Emirates, Kuwait, Iraq, and Iran—have ample reserves to support increased production.
Extensive exploration worldwide will cause a continued increase in non-OPEC oil production. Output will rise sharply in the North Sea fields. By 1982, North Sea production should be at or near its peak level of about 3.5 MMBD, 2.8 MMBD of which will be produced from the British sector and 0.7 MMBD from Norway. Unless new large fields are found, however, production from the North Sea will begin to decline in 1983 or 1984. Substantial increases in oil production are expected from Mexico, Egypt, India, and Malaysia in the next several years, but most of these gains will either support increased oil use in the producing countries themselves or offset increased consumption in other developing nations.
Eastern European nations, when the Soviet Union is included, have been net suppliers to the world market. They export about 1 MMBD, mainly to Western Europe. As a group, these nations may become net importers within 3 to 4 years if East European imports more than offset Soviet exports. Oil production in the Soviet Union is expected to
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peak in the next year or two, as the amount of discovered reserves has fallen sharply in recent years.
China should be able to produce more oil than it consumes in the 1980s. To export more than 500,000 barrels per day, however, China will need to make considerable headway in locating and developing exploitable reserves or the enforcement of strict controls on domestic oil consumption.
Free World natural gas production outside the U.S. should be equivalent to about 7 MMBD of oil in 1980. It is expected to range between 6 to 12 MMBD of oil in 1985 and 6 to 15 MMBD in 1990. Eastern European nations, including the Soviet Union, will produce an additional 7 MMBD and, in 1980, China will add about 1 MMBD to the world supply of natural gas. Following a decline in 1975, production of natural gas in the industrialized world has been stable for the past four years at about 16 MMBD oil equivalent. In the immediate future, production in these industrial countries will decline once again, but worldwide natural gas supplies should increase during the 1980s as production expands in OPEC and in other countries with promising resources such as Mexico.
Foreign Free World coal supply is now expected to increase from about 10 MMBD oil equivalent in 1979 to about 14 MMBD in 1985 and 15 MMBD in 1990. Coal consumption will reverse its decline and start to increase in Western Europe and Japan. Canada and Australia will continue to expand their production and use of coal.
Free World nuclear energy supply outside the U.S. is expected to increase from about 3 quads in 1979 to between 6 and 15 quads in 1985 and between 15 and 22 quads in 1990. During the next few years, nuclear power will prove the largest single potential source of additional energy production in the industrialized world. It will be the only additional source for some Western European countries and for Japan.
In the mid-term, energy supplies from renewable sources will remain only a small part of Free World energy supply Outside the U.S., renewable supplies are projected to increase from about 10 quads in 1979 to 13 to 19 quads in 1985 and to 14 to 22 quads in 1990. An additional amount of energy from forest and agriculture products is not currently counted in energy statistics.
Departmental Strategy and Programs
The Nation’s objective is clear: in 10 years—by 1990—we must cut our dependence on foreign oil by
50 percent, while maintaining a strong and growing economy. Current Department of Energy programs, together with Administration proposals under consideration by the Congress and the efforts of other Federal agencies, provide the Nation’s first comprehensive energy strategy. This effort includes a balanced emphasis on both reduction of demand and increase in supply. If successful, our energy strategy will maintain our national security, strengthen the domestic economy and assure an adequate energy supply.
This section first describes the Department’s fiscal year 1981 program to limit demand for energy. It next examines the programs to increase the availability of supplies from major energy sources. A third subsection explains the Department’s energy-related programs for regulation, information and international affairs. The fourth subsection describes other Departmental programs for general science, defense and administration.
Demand Reduction
The Department has four major efforts under way to constrain demand: (1) conservation programs to improve energy efficiency; (2) phased decontrol of energy prices to ensure that the market price of energy reflects its replacement cost; (3) import limitations on oil; and (4) contingency planning, including various forms of voluntary and mandatory rationing of scarce energy supplies. DOE and the Department of State are also engaged in a vigorous effort to promote international agreement on a planned reduction of demand for energy, particularly oil, in the twenty member countries of the International Energy Agency.
Conservation: The Department’s conservation programs are designed to reduce the growth of energy demand by encouraging and providing the means for more efficient use of energy. These programs encompass a wide range of efforts, including public information, financial assistance, research and development, and energy conservation standards. Because conservation depends on the actions of tens of millions of individuals, businesses and institutions, the conservation programs are tailored to the specific characteristics and needs of each energy using sector of the economy.
The Department’s fiscal year 1981 budget provides direct funding of $1,067 billion to pursue the objective of energy conservation, as shown in the following table. Additional funds are located elsewhere in the Federal budget, particularly through the
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Solar Energy and Conservation Bank, which, if established by Congress, is budged to receive $2.3 billion for construction subsidies from 1980 through 1984. These programs will be complemented by an estimated $739 million in conservation tax credits and supporting programs being implemented by other Federal agencies.
Table 5.	— Department of Energy budget authorities for conservation programs
FY 1980 FY 1981
(millions of dollars) Public Education
Energy information campaign.................. $7	$	50
Research and Development
Buildings and community systems.......	$106*	$	97
Industrial................................... 60	59
Transportation.............................. 118	113
Conservation multi-sector...................  17	29
Subtotal................................ $301	$ 298
Grant Programs
State and local............................ $457	$ 569
Energy Impact Assistance* 2.................  50	150
Total conservation...................... $815	$1,067
' This includes $4 million for implementing the Emergency Building Temperature Control program which is not authorized beyond 1980.
2 Although Energy Impact Assistance funding is requested as part of the Department’s conservation appropriation, it is passed through to the Farmers Home Administration for administration. These funds assist communities in meeting needs associated with efforts to increase energy supply.
The Energy Information Campaign is a national advertising campaign using television, radio, newspapers and magazines. The advertising campaign will emphasize the efficient use of energy in homes and for personal transportation. A test program in fiscal year 1980, requested in the $7 million budget supplemental, will provide the data needed to launch full-scale campaign in fiscal year 1981. The Department is requesting budget authority of $50 million for fiscal year 1981.
Conservation research and development activities are designed to maximize conservation efforts undertaken by all sectors of the American economy and to accelerate the development of innovative equipment and processes. Substantial energy savings are possible over the net 20 years, but this high potential is often accompanied by significant technical risk and long-lead times for implementation. The fiscal
year 1981 budget includes $298 million for conservation research and development activities in buildings and community systems, industrial and transportation sectors. Budget authority for these programs remains roughly equal to fiscal year 1980 levels because of the increased incentives that now exist for private investment in improved technologies.
The Department’s conservation grant programs provide Federal funds to the State and local governments to facilitate energy conservation. These programs are funded at $569 million in fiscal year 1981, an increase of 25 percent over the previous year. Major fiscal year 1981 grant activities include:
1.	The Energy Management Partnership Act, now before Congress, which will broaden state and local energy management capabilities and consolidate several existing grant programs and the Energy Extension Service;
2.	Energy audits and energy conservation measures for schools and hospitals throughout the Nation; and
3.	Weatherization assistance for low-income persons, particularly those who are elderly or handicapped.
In addition, the President has proposed that legislation be enacted to establish the Solar Energy and Conservation Bank and to authorize subsidized long term loans to residential conservation investments by lower income households. Legislation now pending in Congress would authorize more than $2 billion over four years for such loans. Energy investments under these subsidized loans would reduce family energy budgets by more than the amounts needed to repay the loans.
Conservation regulatory programs include the establishment of energy efficiency standards for buildings and appliances, implementation of Residential Conservation Service programs and further evaluation of the feasibility of establishing efficiency standards for industrial equipment. The Department’s proposed Building Energy Performance Standards will be completed in fiscal year 1980 and efficiency standards for certain categories of appliances will be proposed. State plans for implementing the Residential Conservation Service, which requires utilities to provide conservation services to their residential customers, will be received and reviewed. These and other regulatory efforts will help ensure that new automobiles, buildings, and appliances are designed and built to minimize energy use.
Decontrol: On April 5, 1979, President Carter directed the Department of Energy to phase out con
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trols on all domestically produced crude oil by September 30, 1979. This phased decontrol program began on June 1, 1979, with new incentives for those categories of oil where the maximum amount of new exploration and production will result. Beginning on January 1, 1980, prices are being allowed to increase gradually for upper and lower-tier oil that does not qualify for one of the special incentive categories. Increases in the prices of oil as a result of decontrol prices will cause substantial reductions in overall oil demand and stimulate domestic oil production. Coupled with the decontrol of oil prices, the President proposed the Windfall Profits Tax to recoup much of the income the producers would receive as a result of decontrol and oil price increases.
Import Limitations: On July 15, 1979, President Carter announced that United States net imports on foreign oil will never again exceed an annual average of 8.6 million barrels per day. He announced his intention to establish specific import ceilings each year, and set this overal limitation at 8.2 million barrels per day for 1979. Other nations made similar commitments to limit their imports at a December 1979 meeting of the 20-nation International Energy Agency.
In his State of the Union address for 1980, the President announced that the U.S. import ceiling for 1980 would again be set at 8.2 million barrels per day While we currently expect to achieve even lower levels of imports, the President made clear his intention to enforce this ceiling through the use of an import fee if imports threaten to exceed the 8.2 MMBD level.
Contingency Planning: Contingency planning is a key element for managing energy demand in periods of shortage. The Department has two principal planning efforts under way, pursuant to authority granted by the Emergency Energy Conservation Act of 1979. First, a national gasoline consumption target will be set. This national target will be allocated among the States through voluntary state targets for gasoline consumption developed in consultation with the States. The targets will be published in early 1980. In the event of serious petroleum supply interruptions, these voluntary targets could be made mandatory. Second, the Department is developing a gasoline rationing plan that will be sent to the Congress early in 1980. The Department is exploring simplified rationing plans based on license plates, coupons, or credit cards as alternatives to full-scale gasoline rationing.
International Actions Taken to Reduce Demand: The United States has contributed a renewed and vigorous leadership to the international effort to coordinate reductions in the demand for energy, particularly oil. In June 1979, the seven major western industrialized countries—the United States, Canada, the United Kingdom, France, West Germany, Italy and Japan—held their annual economic summit in Tokyo. Those countries agreed to take several energy-related actions. Most important were their decisions to freeze 1985 imports for each country to 1977-78 levels and to restrict their oil imports in 1980. A follow-up meeting of the energy ministers of the seven summit nations in September reinforced these commitments.
This initiative was followed by a December ministerial-level meeting of the International Energy Agency (IEA), called at the request of the United States. At that meeting the twenty member countries agreed on binding oil import ceilings for 1980 and 1985 for each member. The ceilings chosen will limit the collective demand of the members to 23.1 million barrels per day, plus bunker fuel, in 1980 and 24.6 MMBD in 1985. More importantly, the members agreed to meet quarterly to review the world oil supply situation and, if necessary, to revise downward the previously determined national ceilings. The members also established within the IEA a mechanism to review each IEA country’s performance to assure compliance with the ceilings.
Supply Expansion
The Nation must develop economically and environmentally acceptable substitutes for oil. The prime responsibility for the development of alternate energy sources lies with the private sector. The Federal Government, however, has a role to play in meeting that responsibility. The techniques available to the Federal Government in this effort include:
1	. Direct Federal expenditures for research and development and for efforts to remove barriers to the commercial use of existing technologies;
2.	Financial incentives such as tax credits, loan guarantees and grants to encourage private expenditures for energy producing capacity;
3.	Direct production of energy, such as development of the Naval Petroleum Reserves, the enrichment of uranium for use in light water reactors and the distribution and marketing of power from Federal hydroelectric dams; and
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4.	Maintenance of a substantial reserve of petroleum to protect the nation from its vulnerability to disruption in oil supplies.
The Department’s fiscal year 1981 budget provides for the use of each of these means for increasing supply.
Research, Development and Applications: The Department’s fiscal year 1981 budget provides $4,092 billion to pursue energy research and development programs to facilitate the entry of technologies into the private sector. The development of our fossil, nuclear and renewable resources in an environmentally acceptable manner is critical to changing the nation’s long-term energy supply profile. Maintaining the research base necessary to assure continued technical achievements is of equal importance.
Table 6. — Budget authority for research, development, and applications
1980	1981
(millions of dollars)
Fossil energy............................... $ 897	$1,165
Solar and other renewables........................ 771	868
Electric energy systems and storage.........	104	112
Magnetic fusion................................... 356	404
Nuclear Fission................................. 1,186	925
Environment....................................... 235	261
Supporting research............................... 252	297
General purpose facilities.................. 0	60
General reduction........................... -71	0
Total research, development and applications.............................. $3,730	$4,092
Fossil Energy: Table 6 shows that in fiscal year 1981 the resources devoted to fossil energy research and development have increased substantially over fiscal year 1980 to a level of $1,165 billion. This level of support is indicative of the expanded role that domestic fossil resources are expected to play between 1985 and 2000. Coal will play a central role in the Nation’s fossil energy programs. Administration plans to accelerate the production and utilization of coal include $673 million of funding for research and development of advanced technologies for the conversion of coal synthetic liquids, gases and solids. Construction will begin on two solvent-refined coal demonstration plants and a large-scale facility to produce synthetic high Btu gas. The two liquefaction pilot plants, known as Exxon Donor
Solvent and H-coal, will be in operation, generating valuable data to support future commercial size facilities. The remaining $374 million provided for coal research and development is focused on:
1	. Improving direct combustion technologies;
2.	Developing new technologies to increase energy conversion efficiency through means such as fuel cells and magnetohydrodynamics;
3.	Developing advanced pollution control technology to support required conversions of utility and industrial boilers to coal; and
4.	A major new initiative to demonstrate the acceptability of coal-oil mixtures in utility and industrial boilers.
The Department’s petroleum program will develop new and improved technologies for recovering oil from existing and potential oil reservoirs, as well as from unconventional sources such as oil shale or tar sands. Work will continue to define and to improve methods to exploit the Nation’s unconventional gas resources, including Eastern gas shales and Western gas sands. Total funds provided for petroleum and gas programs, including commercialization activities, are $118 million.
Solar and Other Renewables: The goal of obtaining as much as 20 percent of the Nation’s energy needs from solar energy, including hydropower, by the turn of the century is reflected in the increased level of resources allocated to these research and development activities in fiscal year 1981. In addition to $868 million in direct expenditures, solar tax credits of $355 million and tax credits for geothermal development totalling $52 million will also be available. Solar technology development activities in fiscal year 1981 include:
1.	Continued photovoltaic research and development in thin films, novel concentrators and advanced materials;
2.	Completion of the 10 megawatt central receiver power plant;
3.	Expanded development of small-scale wind energy systems and fabrication of advanced intermediate and large-scale experimental systems; and
4.	Establishment of the Solar Energy Information Data Bank to collect, analyze and disseminate data on solar technologies.
Solar applications programs complement these technology developments. They are intended to eliminate the economic and institutional barriers to early use of solar energy technologies and systems in housing, commerce, industry and agriculture.
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Geothermal activities in fiscal year 1981 are directed toward the following activities:
1.	The use of hydrothermal energy for commercial electricity generation and direct heat applications;
2.	Evaluation of the economic recoverability of methane, thermal and hydraulic energy from geopressured resources;
3.	Development of the technologies to reduce the cost of energy recovery from all geothermal resources; and
4.	Effort to extract energy economically from hot dry rock.
The program is being carried out through a combination of hardware developments demonstration plants, technical support to prospective users and loan guarantees. Budget authority totalling $197 million will be requested for geothermal activities in fiscal year 1981.
The fiscal year 1981 budget requests $19 million for further commercial development of low-head hydroelectric power resources at existing dam sites and for new initiatives involving power production from river current.
Electric Energy Systems and Storage: Better methods of transmitting and storing electric energy are critical to the development of new and improved energy technologies. The fiscal year 1981 budget includes a total of $112 million for this purpose. The $40 million requested for electric energy systems in fiscal year 1981 will be used to continue development of the means to integrate new electric energy technologies into existing electric utility systems and to provide new options for increased power transmission and storage. The $72 million requested for an energy storage systems program in fiscal year 1981 will be used to develop reliable, low cost, safe and environmentally acceptable energy storage systems and components for use in transportation systems, systems for heating and cooling buildings, industrial processes, solar power systems and utilities.
Nuclear Energy: The Department’s nuclear energy programs are aimed both at nuclear fission and at magnetic fusion. Nuclear fission programs are undertaken by the Department to develop the nuclear technology base and to provide the underpinning for the nation’s nonproliferation policy. Fiscal year 1981 funding for nuclear fission activities totals $925 million in seven programs, representing a significant decrease from previous years. Funding for the Liquid Metal Fast Breeder Reactor has been reduced in light of current projections that breeder reactors will not
be needed until after the year 2020. The level of funding for fiscal 1981 will maintain the technological base needed to keep the breeder option open and is consistent with United States nonproliferation goals. Activities will be focused on the operation of the Fast Flux Test Facility at Richland, Washington, its supporting facilities and associated test programs. Development will also continue on the water cooled breeder reactor at the Shippingport Atomic Power Station. Also, the naval reactors research and development programs, contained in the Department’s defense programs, help support the nuclear fission energy option.
In response to the accident at the Three Mile Island generating station, the President appointed the Kemeny Commission to investigate nuclear power and recommended ways to assure its safety. The report of this group revealed serious shortcomings in the system that regulates and manages nuclear power. The Department of Energy, which has no regulatory or managerial mission in the operation of commercial nuclear power plants, is working with the private sector in matters of nuclear safety. The Department is assisting industry with numerous activities including:
1	. Dissemination and interpretation of data on nuclear plant operating experience gained by the Nuclear Regulatory Commission, DOE and the industry itself;
2.	Identification of appropriate technologies that could improve the safety and reliability of nuclear plants; and
3.	Collection and dissemination of the maximum amount of relevant technical data from analysis of the Three Mile Island accident.
A major activity in fiscal year 1981 is continued and expanded research and development to increase the safety and efficiency of light water reactors. A total of $55 million is provided for this important program, compared to $41 million in fiscal year 1980.
The Department is proceeding with a broadbased technical program for the interim management and permanent disposal of radioactive wastes. The fiscal year 1981 commercial waste management budget of $299 million provides for further expansion of an investigation launched in fiscal year 1980 into the use of geological formations other than salt for isolation of nuclear waste. Investigations also continue in salt formations. The spent nuclear fuel program, funded at $20 million in fiscal year 1981, continues to provide technical and operational support for the President’s commitment to provide in
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terim storage for commercially generated spent nuclear fuel. Separate legislation was proposed in 1979 to provide borrowing authority of $300 million, necessary for the acquisition of storage capacity which will be required by 1983. The Administration continues to support that legislative proposal. This program is based on plans presented by the Interagency Review Group for Nuclear Waste Management, appointed last year by the President to create a unified Federal policy for the management of radioactive waste. Of particular concern to the review group was the role of the States in nuclear waste management and the development of effective relationship between Federal and State governments. The findings and recommendations of this group will be the subject of a Presidential policy announcement during 1980.
Funding for the Advanced Isotope Separation Technology program will be increased to $87 million. This will permit the continued development of uranium separation processes that offer potential for the production of enriched uranium at a substantially reduced cost.
Magnetic fusion is expected to be a long-term source of electric energy. Funding of $404 million is provided in fiscal 1981 to continue development of magnetic fusion technology. The program will develop the sound technical and engineering foundation necessary to design, construct and operate complex experiments and facilities. Progress, measured by improvements in plasma density, temperature and confinement time, has been encouraging. Activities in fiscal year 1981 include continued construction of the Tokamak Fusion Test Reactor and the Mirror Fusion Test Facility. Both are scheduled for completion in 1982. The Fusion Materials Irradiation Test Facility, which will provide the necessary testing capability for materials development and engineering generation, will be completed two years later. In addition, other tokamak and mirror experimental devices will be operated to continue development of a strong scientific base for the eventual design of a fusion engineering test facility.
Environment: The Department’s environmental programs associated with energy supply are designed to ensure that the evaluation of environmental impacts is incorporated in energy technology development and deployment activities. The budget request for these environmental programs for fiscal year 1981 is $261 million. Major activities will include efforts to predict the effects of increased levels of carbon dioxide in the atmosphere; determine the
long-term effects of low-level radiation exposure; and conduct research on selected energy projects, such as the solvent-refined coal and geothermal demonstration projects. The Department’s Project Environmental Planning System is designed to ensure that environmental considerations are considered at every step of the decision-making process, from the earliest design activities through completion.
Support for Energy Research: The Department’s supporting research programs provide the scientific base for energy technology development. The fiscal year 1981 budget includes $297 million for basic energy research programs that seek fundamental knowledge of the physical and biological sciences, engineering and mathematics as they affect the production of energy and its conversion into other forms. In fiscal year 1981, the Department will move forward with its investigations into the chemistry of coal, the processes of combustion, and new approaches to the use of solar energy and the isolation of nuclear waste. The Chemical and Materials Sciences Laboratory at Lawrence Berkeley Laboratory will be completed. Cooperative research in universities, industry and national laboratories will be supported in order to speed the transfer of technology.
Direct Energy Production: In addition to the research, development and application of energy technologies, the Department is also responsible for producing energy. These activities include:
1	. The production and sale of enriched uranium for use in domestic and foreign nuclear-powered electrical generating plants;
2.	The development, production, and sale of oil from the Naval Petroleum Reserves; and
3.	The distribution and sale of electric power in five power marketing areas.
These services and products are sold to the private sector at prices that are sufficient to recover the full costs of their production and distribution over a reasonable period of time. Revenues obtained from the sale of enriched uranium offset the costs incurred by the Department in providing enriching services. Revenues generated from the sale of oil from the Naval Petroleum Reserves and the marketing of power produced by four of the five power marketing administrations revert directly to the United States Treasury. In fiscal year 1981, production and distribution costs will be $1.7 billion, while anticipated revenues will total over $3.7 billion.
The Department presently enriches uranium for domestic and foreign nuclear power reactor custo
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mers and to meet government needs at three gaseous diffusion plants located in Oak Ridge, Tennessee; Portsmouth, Ohio; and Paducah, Kentucky. The fiscal year 1981 budget authority request of $88 million is based on production of 9.5 million separative work units (SWU). Sales of 10.8 million SWU are anticipated in fiscal year 1981, some of which will come from inventory. Construction of the Portsmouth Gas Centrifuge Enrichment Plant is a major project in the Department’s efforts to reduce the amount of power needed for encrichment purposes. The Plant is scheduled to provide 2.2 million SWU of capacity by the end of 1988 and is funded at $319 million in fiscal year 1981,
The three Naval Petroleum Reserves comprise the ninth largest known domestic petroleum resource. The fiscal year 1981 budget request provides for continued operation and development of the reserve and the resumption of exploratory drilling at Naval Petroleum Reserve Number 1 after a temporary halt in fiscal year 1980. The request anticipates that the federal share of production from the Naval Production Reserves will be 160,000 barrels per day.
The five Power Marketing Administrations operate high voltage transmission systems to distribute electric power produced at Federal hydroelectric generating projects. The Power Marketing Administrations are the Alaska Power Administration; Bonneville Power Administration, which serves the Pacific Northwest; and the Southeastern, Southwestern and Western Area Power Administrations. Strategic Petroleum Reserve: The largest element of DOE’s contingency planning for supply interruptions is the Strategic Petroleum Reserve. In December 1975, legislation was enacted to establish a reserve of up to 1 billion barrels of oil to reduce the nation’s vulnerability to a severe petroleum supply interruption. Preparation of storage facilities is proceeding and funds are available in the budget for resumption of oil acquisition in 1980. The revised schedule calls for expansion of the current 92 million barrel supply to 248 million barrels by 1983, with 750 million barrels in storage by 1989. The latter figure includes 24 million barrels in storage regional petroleum storage. No decision has yet been made on the final 250 million barrels of the reserve capacity.
Energy Security Corporation: In July 1979, the President asked Congress to enact legislation creating an independent Energy Security Corporation that would assist the private sector in making investments in the production of synthetic fuels (both liquids and gases) from coal, biomass, peat and oil shale and in the de
velopment of unconventional natural gas reserves. As proposed, the Corporation’s objective will be the development of domestic production capacity; it would not engage in research and development activities. The President has also asked that it be given the authority to provide support for gasohol production.
The Corporation will be an independent, government-sponsored enterprise with a Congressional charter. It will be located outside the Executive Branch, independent of any Government agency. The Corporation will be managed by a seven-person board of directors: a chairman and three other outside directors would be appointed by the President and confirmed by the Senate. In addition, the Secretaries of Energy, Treasury and one other department will sit on the board. The Administration has set a goal that synthetic fuels developed through the Energy Security Corporation will replace 1.75 million barrels of imported oil per day by 1990.
Alternative Fuel Development and Production: On November 27, 1979, Public Law 96-126 was signed appropriating $2,208 billion to the Department to stimulate alternative fuel production in anticipation of the formation of the Energy Security Corporation. The Department will implement this program during 1980 through feasibility study grants, cooperative agreements, loan guarantees, and price guarantees or purchase commitments.
The Energy Mobilization Board: The Administration has acted under existing authority to reduce delays in granting permits to critical energy facilities. Two actions already have been taken. Procedures for setting decision schedules for critical energy facilities were established in April 1979 under the direction of the Office of Management and Budget and the Council on Environmental Quality issued regulations reforming and streamlining the requirements of the National Environmental Policy Act in November 1979.
To meet 1990 targets for oil import reduction, however, substantial additional authority is needed to accelerate the development of domestic energy production capacity. The Energy Mobilization Board proposed by the President will have three members and will be located within the Executive Office of the President. Board members will serve at the pleasure of the President and will be confirmed by the Senate. As proposed, the Board will be authorized to designate certain non-nuclear facilities as priority energy projects critical to achieving the Nation’s import reduction goals. For each designated project, the Board will establish binding schedules for federal, state and local decision-making. Judicial review of
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decisions by the Board will take place on an expedited basis in the United States Courts of Appeals.
Other Energy-related Programs
The Department of Energy performs several other energy-related roles for the nation that affect generally both demand and supply. These include regulatory measures, energy information processing and international affairs.
Regulation: The regulatory activities assigned to the Department are the responsibility of the Federal Energy Regulatory Commission, the Economic Regulatory Administration and the Office of Hearings and Appeals. In fiscal year 1981, funding for regulatory activities total $239 million.
Energy Information Administration: The Department’s energy information collection, analysis and dissemination responsibilities are carried out by the Energy Information Administration (EIA) which will receive funding in fiscal year 1981 of $116 million. EIA gathers and publishes basic energy statistics on the reserves, production, processing, distribution, consumption and price of the various energy sources. Energy information activities are being expanded in several areas. Better information will be sought concerning the financial conditions of energy firms; oil and gas reserves, production and storage; end-use consumption; emerging sources of energy; and possible energy emergencies. These and other programs will reduce the government’s dependence on private organizations for basic energy statistics. In addition, EIA also supports the regulatory and program energy information requirements of the Department. Another mission of EIA is to produce forecasts of future trends in the supply, demand and price of energy as well as analysis of the impacts of those trends. A wide range of economic, statistical and structural models are developed and used to produce the forecasts and analyses. Finally, to improve the credibility and usefulness of energy information, a multi-year program of information validation is being constructed to enhance its quality, timeliness and organization.
International Affairs: Solutions to energy problems can no longer be confined to the initiatives undertaken by individual countries. The distinction between world and domestic energy problems has become blurred as domestic energy policy is increasingly influenced by world events. Responsibility for the conduct of the nation’s international affairs rests
primarily with the Department of State, but the Department of Energy has an important role in analyzing international energy problems and promoting cooperation with other countries to provide solutions to these problems. Five million dollars has been requested for the Department’s Office of International Affairs in fiscal year 1981.
Other Programs
There are three other functions in the Department—general science programs, defense programs and administration.
General Sciences: The purpose of the Department’s General Sciences program is to gain deeper understanding of the structure and behavior of matter by pursuing fundamental knowledge in physical and life sciences. General Sciences programs are not specific to any particular technology. Rather, investigations into areas beyond existing frontiers of knowledge are expected to yield long-term scientific and technological breakthroughs. The fiscal year 1981 request for General Science programs totals $523 million.
Defense Programs: The Department of Energy provides the requirements of the Department of Defense for nuclear weapons, nuclear materials and management of nuclear waste. The Department is also charged with the responsibility of improving the technology for verification of nuclear test treaty compliance and of the development of nuclear materials safeguards and security procedures, including classification of sensitive information. Inertial Confinement Fusion technology is part of the Defense Programs mission because of its relevance to nuclear weapons development. The Naval Reactor Development program, managed as a part of the Nuclear Fission Program, designs, develops and tests improved naval nuclear propulsion plants and reactor cores needed for naval ship propulsion. Total fiscal year 1981 funding for DOE Defense Programs is $3,443 million, up from $3,008 million in fiscal year 1980.
Departmental Administration: Activities in this category include general management and administration of the Department. Fiscal year 1981 funding requested for these activities totals $362 million, an increase of $87 million over the fiscal year 1980 level. This request includes $292 million to provide for the management support costs associated with headquarters staff functions and multiprogram field offices (this includes executive management, legal assistance and counsel, financial management, audit
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and investigative activities, external communications, engineering and construction management, administrative activities, minority economic impact, and equal employment opportunity). In addition, funds are provided for policy analyses and systems studies; efforts directed toward the Department’s communications with State, local and tribal government; in-house energy management for retrofit and fuels conversion projects; and security investigations. These costs are partially offset by miscellaneous revenues.
Management Initiatives
Recent changes, implemented in October 1979, streamlined the organization and better defined responsibilities for accomplishing Department objectives. These changes were designed to provide better services to the public and to improve cooperation with the Congress.
The principal components of the Department are divided into three groups. The first group includes offices that report directly to the Secretary and Deputy Secretary. These include Legislative Affairs, Public Affairs, Consumer Affairs, and Intergovernmental Affairs which work directly with the public; state, local and tribal governments; and other entities of the Federal Government. The Policy and Evaluation Office, the General Counsel, the Economic Regulatory Administration, the Energy Information Administration, the International Affairs Office, the Inspector General, the Office of Hearings and Appeals, and the Board of Contract Appeals also report directly to the Secretary and Deputy Secretary.
The second group includes the Department’s research, development, resource applications, and revenue-producing activities. These offices—Conservation and Solar Energy, Fossil Energy, Nuclear Energy, Resource Applications, Energy Research, Defense Programs and Environment—report to the Secretary and Deputy Secretary through the Under Secretary. The Fossil Energy and Nuclear Energy offices were created from the former Energy Technology organization which was dissolved to better align technology developments with other program activities.
The third group reports to the Secretary and the Deputy Secretary through the Chief Financial Officer. It comprises those offices with day-to-day responsibility for the management of the Department’s financial, procurement and personnel resources. These offices include the Controller, Administration, Procurement and Contract Manage
ment, and Equal Opportunity. The Office of Minority Economic Impact reports to the Secretary but coordinates its activities with the Chief Financial Officer.
Four primary objectives have now been met: First, we have improved lines of control from top management to ensure that policies and procedures are better defined and that there is a mechanism to ensure they are consistently followed. Better lines of demarcation have been established between activities so that responsibilities for the success or failure of DOE undertakings are firmly assigned and, finally, improved control systems have been put in place to monitor the Department’s performance.
Second, we have improved our service to the public and our cooperation with State, local and tribal governments. Our public information systems are critical to the accomplishment of the Department’s rihssion. Many of our program objectives, such as conservation, can be achieved only through the decisions made on a daily basis by each American. Communications with citizens groups are important in fostering public understanding of our energy problems and solutions. Our mechanisms for cooperation with State, local and tribal governments must function smoothly because they bear an increasingly important role with respect to the Nation’s energy transition from oil to other sources of supply.
Third, we have improved our capability to supply the Congress with the information it needs to formulate legislative policy and to maintain close liaison between the Administration and Congress in dealing with energy matters.
Fourth, the operational management of the Department has improved significantly. New management systems have been established for planning, programming and budgeting; project management and control; and project acquisition approval. The Department has initiated a comprehensive financial management improvement program, established new guidelines and procedures for the use of consultants and has taken steps to improve the responsiveness of its procurement system. Finally, most of the critical personnel shortages have been corrected, including the addition of manpower resources for Conservation and Solar activities and the Inspector General.
In pursuing these objectives, the Department is aware that organizational change can have a disruptive effect in the short run. For that reason, emphasis was placed on efficient lines of control while most organizational components below the Assistant Secretary level were left intact. Now that the
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organization is in place, the Department is in a better position to fulfill the mandate with which it has been charged by the President and the Congress to develop and carry out an effective energy policy that will allow the Nation to move smoothly toward a healthy economy drawing on diverse energy sources.
Conclusion
The transition we face has far-reaching implications. It represents a joining of national resources and resolution, and international collaboration on a scale never before attempted in peacetime. It represents a new stage in the continuing evolution of America. From the beginning, our country has been a nation in transition. Much of our history has been built on creative change. We have refused to be static socially, economically or technologically. As a Nation and a people, we are not strangers to the
challenges and opportunities of new circumstances. The transition from an oil-dependent economy to an energy-diversified society is, we believe, no more insurmountable a challenge than many we have faced successfully in the past. But it requires a close partnership between the public and private sectors; it requires the long-term integration of different energy approaches in the face of factors sometimes beyond our control and it requires a recognition that there are no short cuts, no technological miracles, and no quick solutions dictated in Washington that by themselves will make the transition significantly shorter or less demanding. The days of cheap, accessible energy are over. Every American must participate in bringing America forward; no one should be left behind. The national energy program outlined here enlists the cooperation of all segments of our society to free our Nation from excessive foreign dependence and to ensure that America enters the next century secure in her own resources.
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Chapter 2
Conservation
Introduction
Conservation has two main goals: to eliminate energy waste, and to increase efficiency by increasing the output from each energy unit. Progress towards reaching these goals can be made by:
1.	Reducing demand for energy services;
2.	Improving the efficiency of energy use in all sectors of society—industry, business, home, vehicles; and
3.	Encouraging the use of energy-efficient rather than energy-intensive goods and services.
Conservation offers an immediate means of reducing U.S. dependence on dwindling oil supplies while minimizing the economic and social costs of supply interruptions. Conservation represents the cheapest, and most secure form of energy supply.
Policies that encourage energy conservation include: energy pricing; financial assistance; research, development, and demonstration (RD&D) of new concepts and technologies; use of regulatory powers; and educating individual, commercial and industrial consumers on the benefits of conservation. Federal conservation strategy consists of five principal elements:
1.	Decontrol and deregulation to allow energy prices to rise to the replacement costs of resources;
2.	Information, demonstration, and commercialization to accelerate the spread of conservation techniques;
3.	Financial incentives to make conservation technologies economically more attractive;
4.	RD&D to augment private sector conservation efforts and to accelerate the development of innovative equipment and processes; and
5.	Standards and regulations to encourage consumers to increase energy efficiency more rapidly than they would in response to market forces.
The Federal Government’s approach to energy conservation includes each of these elements. Because it relies principally on the market, the government seeks to eliminate barriers to market entry of cost-effective conservation technologies and practices.
Federal conservation policy seeks to accelerate cost-effective energy-conserving investments and behavior changes while minimizing the need for energy curtailment and abrupt lifestyle shifts. The majority of conservation programs are aimed at enhancing the adoption of cost-effective conservation technologies and behavior by the private sector. The intended result is greatly enhanced national energy efficiency. The distribution of funding for 1979, 1980, and 1981 is summarized in table 7.
Conservation has great potential in both the near- and long-terms. Energy savings of up to 40 or 50 percent are possible by the year 2010. Three principal reasons can be cited for this saving potential. First, as energy prices rise, more energy-conserving practices and technologies become cost-effective. Second, as capital stock is replaced over the longterm, more energy-efficient technologies are likely to
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Table 7. — Budget authority for conservation — 1979, 1980, and 1981
1979	1980	1981
(millions of dollars)
Industrial		$ 40.0	$ 60.3	$ 58.9
Buildings and community systems.	79.3	106.1	97.6
Transportation		99.1	117.5	113.0
Multi-sector			
(small-scale technology etc.)...	10.2	16.9	29.2
State and local programs		382.1	456.8	568.6
Information		0	7.0	50.0
Energy impact assistance		20.0	50.0	150.0
Total		$630.0	$814.6	$1,076.3
be introduced. And third, research and development are likely to yield new procedures and technologies that can be introduced into the various economic sectors as the supply of capital stock expands. This greater energy efficiency and reduced petroleum consumption can be attained without adversely affecting the Nation’s present or future economic well-being.
Buildings and Community Systems Program
Most of America’s buildings were constructed when energy was cheap and plentiful. They were not designed with energy saving in mind. As a result, an estimated 40 percent (5.7 million barrels of oil equivalent per day) of the energy now used in buildings is wasted. Increasing energy efficiencies in residential, commercial, and Federal buildings is the overall mission of the Buildings and Community Systems program.
The Department is working to enhance energy efficiency in the buildings themselves, in the appliances and products used in them, in their energy supply systems, in the design of communities, and in the practices of consumers. Additionally, various programs conserve oil and gas by substituting more abundant fuels such as coal and renewable energy sources (urban wastes, solar, power and thermal waste). This effort is carried out in coordination with local governments, the building industry, public and private sectors, and other Federal agencies.
An essential part of the Buildings and Community Systems activities is to accelerate the adoption of minimum energy performance standards for new and existing structures and to develop such standards for major appliances. The repair and refitting (retrofit) of existing structures to reduce energy losses and improve their energy efficiency will help bring 90
percent of existing homes and new buildings up to minimum energy efficiency standards. Priority is being given to conserving energy in hospitals and schools, and to developing integrated community energy systems that achieve high fuel efficiency ratios. The Department expects to expand the use of non-conventional energy sources, such as urban wastes, and to provide the public with the information required to make rational purchase decisions.
Activities are directed at greatly increasing the effectiveness of energy use within a framework that is both economically and environmentally sound. This includes activities that accelerate or complement private sector efforts and foster the acceptance of energy-saving technology in the residential and commercial sectors. The program is designed to:
1.	Reduce consumption of oil and gas in new buildings by 35 percent by 1985 and 60 percent by 2000 over 1975 consumption;
2.	Reduce the consumption of oil and gas in existing buildings by 20 percent by 1985 and by 30 percent by 2000 over 1975;
3.	Decrease the consumption of oil and gas resources in buildings by approximately 250,000 barrels per day of oil equivalent by 1985 and by approximately 3,000,000 barrels per day by 2000, through the use of community systems that allow for the direct substitution of waste heat for scarce fuels; and
4.	Decrease the consumption of oil and gas an additional 130,000 barrels per day of oil equivalent by 1985 and 750,000 barrels per day by 2000 through the recovery of energy from municipal wastes.
Development and Demonstration of New Technology
Building Systems: The objective of this program is to promote energy-efficient buildings by advancing the technical understanding of energy in buildings and translating awareness of energy issues to everyday practice through education, incentives, codes, and standards. RD&D activities are intended to do work the private sector is not doing or cannot do.
The most significant achievement to date has been the development of Building Energy Performance Standards as required by Title III of the Energy Conservation and Production Act (P.L. 94-385), as amended by section 304 of the DOE Organization Act (P.L. 95-91). It provides a means for incorporating energy efficient designs and technologies into commercial and residential buildings. The lack of uniform standards in state and local building codes
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has been a major barrier to the development and implementation of energy-efficient designs, practices, and technologies. To counter this problem, data on climate, structure type, and building design were compiled, and used to estimate designed energy performance. Preliminary energy design budgets have been established and reviewed by government and private sector constituents. To date, twenty-five states have implemented model building codes.
The adoption and implementation of performance standards, currently being developed, and scheduled for adoption by the states in early 1980, will result in reduced energy demands in new residential and commercial buildings. Through the 1980’s, as an increasing percentage of the building stock becomes comprised of buildings constructed to meet these standards, energy savings will increase. By 1985, savings equivalent to 325,000 barrels per day of oil equivalent could result.
Technology and Consumer Products: This program seeks to accelerate the development and commercialization of more energy-efficient residential and commercial products through joint work with private industry, on space heating equipment, heat pumps, lighting and windows, appliances, diagnostics, and building controls.
Activities include the development and testing of heating and lighting systems, windows, appliances, and heat pumps that offer the most efficient use of available energy in all types of building equipment. Diagnostic efforts focus on the use of infrared thermography for determining heat-loss characteristics of buildings. Building controls that use microelectronics to lower energy costs with minimal impact on life style are being investigated for large commercial buildings as well as for small commercial and residential structures.
Major accomplishments in this area include a completed design and evaluation of a high efficiency refrigerator-freezer that is 33 percent more efficient than existing models. A fifty-unit consumer-oriented demonstration is now under way. A program to characterize the performance of all commercially available residential oil-fired heating equipment and refit options—approximately 200 units—has also been completed. These results will be used in marketing programs conducted by DOE and by industry. A prototype of the Stirling/Rankine heat pump for residential application was generated in the laboratory to collect data on the unit’s efficiency, reliability, serviceability, and cost of operation. The 120-ton Rankine heat pump demonstration system was fabricated and operated in the laboratory.
Testing was initiated on prototype units of the absorption cycle system and the Brayton/Rankine 7.5-ton heat pump, and field engineering demonstration is planned.
Community Systems and Urban Waste: The President’s Clearinghouse for Energy Conservation for Local Officials began operation at the end of the year. It will help to develop the broadest possible consensus about the appropriate steps the Nation and communities can take to achieve reduced consumption of nonrenewable resources.
The Community Systems program also provides assistance to local governments in planning and managing their energy futures. A representative effort in this area is the Site and Neighborhood Design projects. Work on this effort began in 1978 with the selection of five developers to prepare energy-conserving alternative plans for comparison with existing conventional site development plans. The developments selected are Greenbriar, Virginia; Burke Center, Virginia; Radisson, New York; Shenandoah, Georgia; and The Woodlands, Texas. The five case studies have already yielded valuable results. These studies have demonstrated that substantial energy savings can be achieved without increasing development costs. In most cases, the incorporation of energysaving measures could save up to $2,000 per dwelling unit over its lifespan.
In other Community Systems efforts, feasible technologies to reduce the need for petroleum are being identified, developed, and applied These technologies include those particularly suited for community application such as district heating, cogeneration, and the production of energy from urban waste. Recent accomplishments include final designs for grid-connected integrated community energy systems for the Health Educational Authority of Louisiana in New Orleans, the University of Minnesota, Clark University, and the city of Trenton, New Jersey. During the year, the 5,000 gallon per day Anflow sewage treatment pilot plant in Oak Ridge, Tennessee, completed two years of operation. This promises 75 percent energy savings in small-scale treatment facilities that produce methane-rich gas and meet secondary level effluent standards. A 50 to 100 ton-per-day facility for producing methane from mixed urban waste and sewage sludge was completed and operated for a year at baseline conditions. The plant is expected to produce 400 million cubic feet of methane per year. Twenty cities were selected to begin developmental work to lead to the demonstration of a wide variety of urban waste technologies. Construction of these demonstration
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facilities is intended to be supported by loan guarantee or price support.
Regulatory Programs
Appliance Standards: Required by P.L. 94-163, the mandatory appliance efficiency program seeks to reduce the energy consumed by major home appliances. Energy efficiency improvement targets and test procedures were completed for each of thirteen products covered by the legislation. Pursuant to provisions of the National Energy Act, the target program was deleted in favor of minimum energy efficiency standards.
The program will try to improve residential sector energy efficiency significantly by 1985. Standards will be promulgated for nine of the thirteen product categories by December 1980; the standards for the remaining four will be completed by November 1981.
Federal Energy Management Program: There are approximately 403,000 Federal buildings in use; they consume approximately 414,000 barrels per day of oil equivalent. The Federal Energy Management Program is aimed at achieving cost-effective energy reduction in all Federal operations. It emphasizes energy efficiency through retrofit of existing buildings and the use of the advanced technologies in the design of new buildings. All executive agencies are to prepare energy plans in support of the Federal 10-year buildings plan. DOE has developed guidelines to aid other agencies in making these plans.
Residential Conservation Service: The Residential Conservation Service seeks to reduce the energy consumption of single- to four-family residences by requiring the larger electric and gas utility companies to provide information to their residential customers on energy conservation and renewable resources. Authorized by the National Energy Conservation Policy Act (Public Law 95-619), the Residential Conservation Service also requires utilities involved to offer energy audits, arrangements for installation and financing of measures (insulation, efficiency operations, etc.), and repayment of loans for purchase of measures through utility billings.
DOE intends the program to be initiated and directed by a state or, in the case of a nonregulated utility not covered by a state plan, by a nonregulated-utility. DOE will provide technical assistance and guidance to the states in preparing plans. For example, it will develop model energy audit procedures that may be utilized by states (or
nonregulated utilities). This approach would allow significant interaction between individual states and DOE in developing Residential Conservation Service programs.
The program also provides for material and installation standards for safety and effectiveness measures where necessary; requirements for state-approved lists of suppliers, contractors, and lenders; procedures to protect consumers; and a 3-year warranty for all products sold as a result of the program.
Energy tax credits for homes and businesses are authorized by the Energy Tax Act, which provides tax incentives for energy-conserving equipment and devices. These credits are available through the 1985 tax year. DOE is assisting and advising the Department of the Treasury and the Internal Revenue Service in the development and implementation of the credits.
The Residential Conservation Service program and the residential tax credit are projected to reduce residential energy consumption by the equivalent of approximately 300,000 barrels of oil per day by 1985. The business tax credit is projected to reduce industrial and commercial consumption by approximately 150,000 barrels per day of oil equivalent by 1985.
Analysis and Technology Transfer: This activity addresses three areas: the transfer of technology and information; consumer motivation; and planning, analysis, and evaluation.
Technology and information transfer activities provide information on energy saving measures for a diverse audience of energy users. Some recent accomplishments include: development of eight “Saving Energy in Your Home” exhibit units, which reached 1,000,000 persons during the year; the development and dissemination of an energy management manual for college facilities; conduct of ten regional homebuilders workshops; publication and dissemination (in cooperation with The Department of Housing and Urban Development) of the “Energy Wise Home Buyer Guide”; and publication of a series of fact sheets on Buildings and Community System programs for the general public.
Project Payback, a six-city demonstration program involving more than a thousand retailers and dozens of manufacturers, will be evaluated by 1980. It is a cooperative effort using paid advertising and related retailer promotions to teach the economic benefits of purchasing energy-efficient products. In a related effort, regional workshops for retailers, manufacturers, consumer groups, and the media have been held as part of DOE’s consumer education
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efforts in support of the appliance efficiency labeling program.
The residential oil conservation marketing program began in Springfield, Massachusetts, and in Nassau and Suffolk counties, New York. The program,targeted at 225,000 oil-heated homes, involved seventy-five dealers in direct marketing. It is being expanded to additional states that are heavy users of heating oil. Through state energy offices, DOE trains oil dealers to increase the efficiency of oil-fired home heating equipment, and informs consumers about the availability and importance of the residential conservation program.
Emergency Building Temperature Restriction Program: The regulations implementing this program place temporary voluntary restrictions on temperatures for heating and cooling buildings and heating domestic water in commercial, industrial, government, and other non-residential buildings. The regulations generally require that thermostats be set no lower than 78 °F for cooling, and no higher than 65 °F for heating. The program is designed to yield immediate energy savings by curtailing the use of petroleum fuels. The regulations will remain in effect until April 16, 1980, unless rescinded earlier by the President. Estimates are that the program will save 200,000 to 400,000 barrels per day of oil equivalent by restricting heating, air conditioning, and hot water temperatures in approximately 3,000,000 non-residential buildings across the Nation.
Small Business: This program affects twelve target markets that encompass approximately 2 million businesses. It will ease the impact of energy-related problems by developing and delivering data on the reduction of energy costs and introducing management techniques designed to increase energy-use efficiency.
The energy partnership for American cities program is a federally-coordinated program bringing together state and local governments and the business community to audit and retrofit small and mediumsized buildings. Owners and managers of small- and medium-sized buildings are the target audience of the program. Assistance will be given by professional engineers who, accompanied by retrofit contractors, will conduct 1-day energy surveys and submit reports listing recommendations. The Innovation Network sponsored by the National Science Foundation is developing a community-based implementation program that will provide a greater opportunity to meet the individual needs of small business people. Six cities are involved in the program.
Transportation Programs
The objective of these programs is to reduce the total energy consumed by the transportation sector and to remove its nearly complete dependence on petroleum. This objective may be achieved by the successful development and commercialization of alternative transportation and fuel technologies and through improvements in internal combustion engine efficiency, propulsion systems and vehicles.
In 1978, 53 percent of the Nation’s petroleum consumption occurred in the transportation sector. The major emphasis of the Department is on highway use because 77.3 percent of the energy in the sector'is consumed by highway vehicles. Energy savings in highway fuel use also accumulate quickly because of rapid fleet turnover: 83 percent of highway vehicles are scrapped in 10 years and 55 percent of highway miles are driven by vehicles 4 years old or less.
Development and Demonstration of New Technology
Electric and Hybrid Vehicle Program: The EHV program fulfills the requirements of the Electric and Hybrid Vehicle Research, Development and Demonstration Act of 1976 (P.L. 94-413) as amended by P.L. 95-238. It includes research, development, and demonstration of vehicles in the public and private sectors and financial incentives to users and manufacturers of propulsion systems and vehicles. The guiding principle behind the program is that electric and hybrid vehicles should be available as an option in the Nation’s future transportation system.
In January 1979, the Electric and Hybrid Vehicle Program Office submitted the Second Annual Report to Congress for Fiscal Year 1978 (DOE Report No. CS-0068) on the implementation of P.L. 94-413. The report provides a summary of the second year’s progress, a description of problems encountered, and a recommendation of changes in existing legislation.
Negotiations for the second round of electric vehicle demonstrations in actual road operations led to the addition of 300 vehicles at eight new private sector sites (the first round placed 165 vehicles at five sites). Twelve Federal and ten state and local agencies and twelve universities are demonstrating electric vehicles. Manufactures are seeking a total of $26.4 million in loan guarantees.
The most important accomplishment in research and development was the completion of the Near-Term Electric Vehicle, designed and developed by
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General Electric and Chrysler. This vehicle is achieving significant performance improvements over current electric vehicles, which are used for van-pooling, repair and delivery services, and short-distance commuting. The new model can boast of acceleration from 0 to 30 mph in 9 seconds and a range of 80 miles. A competing model, the Garrett design, is also showing performance gains using a unique lightweight flywheel design. Four competitive designs for hybrid vehicles, powered by conventional engines and electric motors, have been completed. Improved lead/acid, nickel/zinc, and nickel/iron batteries that could be produced in the near future are being integrated into test vehicles. New electric vehicle components such as traction motors, controllers, and chargers are being developed.
The corporate average fuel economy standards require that the fleet of cars produced by American automakers achieve, as an average, a set number of miles per gallon. Legislation, supported by DOE, was enacted to include electric vehicles in those standards. This gives the major automobile manufacturers another incentive to produce electric cars.
Vehicle Propulsion Research and Development: Title III of Public Law 95-238, the Automotive Propulsion Research and Development Act of 1978, provides the basis for the current heat engine development program. The program has three major objectives: (1) to produce at least a 30 percent improvement in fuel economy over the best 1983 internal combustion engine in a vehicle of equal performance; (2) to develop an ability to meet or surpass the stringent Clean Air Act emission standards; and (3) to realize a multi-fuel capacity that will contribute to achieving a projected annual petroleum savings of approximately 113,000 barrels per day of oil equivalent for the Automotive Technology program by 1985.
The two heat engines being developed are the gas turbine and the Stirling engine. In the gas turbine program, contracts are being negotiated with three groups from the automotive industry. In the Stirling engine program, a team is developing an engine for automotive application.
During the past year, significant progress was made with both engines. A gas turbine engine containing ceramic turbine nozzle vanes and heat exchangers successfully completed, 4,700 miles of road testing in a truck application. Regular revenue service for a gas turbine powered bus began on August 30, 1979, between Washington and Philadelphia. Three more gas turbine buses were added by the end of 1979. A P-40 Stirling engine developed in Sweden has been integrated into an American car as part of a
DOE contract. The car get 21.2 miles per gallon and emitted only 0.4 grams per mile of oxides of nitrogen.
In addition to the heat engine development, research, development, and demonstrations for more fuel efficient propulsion systems and components were performed. These projects include the demonstration of 400 Ford Pintos equipped with a controlled speed accessory drive. Pilot testing was completed and regular revenue service began on a turbocompound diesel heavy duty truck engine.
The First Annual Report to Congress on the Automotive Technology Development Program (DOE Report No. CS-0069) was forwarded to Congress in October 1979.
Alternative Fuels Utilization: This program is designed to promote the use in the transportation sector of alternative fuels, such as methanol, ethanol, and synthetic fuels. Most of the fuels under evaluation are not based on petroleum. Significant accomplishments in the alternative fuels area include the Third International Symposium on Alcohol Fuels Technology attended by more than 400 researchers from fifteen countries. DOE played a crucial role in organizing this symposium. In another activity, three competing fuel management systems were demonstrated on five automobiles modified for use of straight alcohol.
Engineering and fleet reliability field tests also began on alcohol/gasoline blends. This testing will lead to commercial availability of fuels that have the proper mixture of attributes to perform well. In addition, a telephone Alternative Fuels Utilization Technical Data Bank is operating at the Bartlesville Energy Technical Center. It is answering about a hundred research inquiries per month.
Non-highway Transportation Systems: This program is concerned with development and commercialization of energy-saving technology for air, marine, pipeline, and railroad transportation. Studies of energy use have been completed and conservation opportunities identified for each of these fields. Projects stemming from these studies include preliminary designs of organic Rankine bottoming cycles for pipeline gas turbines, a fuel comparison study of highway freight vehicles and rail piggyback service (a joint program with the Federal Railroad Administration and the Federal Highway Administration), and a study of the feasibility of towing aircraft off of runways as an energy conservation measure.
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Cooperative and Voluntary Conservation
Transportation Systems Utilization: This effort, which encompasses all transportation modes and all types of vehicles, provides consumers, the business community, and public officials with the information necessary to ensure oil conserving practices in the transportation sector. The effort includes intervention in energy-related proceedings of Federal and state regulatory agencies.
The Fuel Economy Information program provides the new car purchaser with comparative automobile fuel economy information. Approximately 17 million copies of the Gas Mileage Guide are printed and distributed annually to 29,000 automobile dealers.
The Driver Energy Conservation Awareness program provides automobile fleets and the general motoring public with information on conserving fuel in their everyday driving operations. Recent accomplishments include development of an award-winning movie “Running on Empty,” which has been shown to nearly seven million television viewers, and growth of the Driver Energy Conservation Awareness Training program, which was initiated in several DOE fleets. A highlight of the Driver Awareness program was a Gas Saver’s Fair on the White House Ellipse in September 1979.
The Voluntary Truck and Bus Fuel Economy program seeks to improve the fuel-use efficiency of commercial vehicles. Two hundred twenty-five participants from industry, labor unions, the trade press, and eighteen state energy offices develop, conduct, and support fuel efficient products and programs for driver training and conservation. Seminars have been conducted in truck dealer showrooms in the South and Southwest. A newsletter, Fuel Economy News, is being published and distributed quarterly.
State and Local Conservation Programs
These programs are designed to yield widespread energy conservation in the public and the private sectors through action at all levels of government. The program’s mission is to assist the efforts of state and local governments to reduce the rate of energy demand and to incorporate energy conservation in executive decision-making and legislative actions.
Because conservation and renewable resource opportunities are frequently conditioned by unique local circumstances of climate, geography, economy,
political institutions, and physical development patterns, many elements of the overall conservation effort only work well when locally defined. Moreover, many nationwide programs (for example, the 55-mile per hour speed limit) must be both implemented and enforced by state or local action.
State Energy Conservation Program: The State Energy Conservation program enables any of fiftyseven eligible jurisdictions, including the states and certain territories, to enter into a cooperative conservation effort with the Federal Government. Federal financial assistance is granted under two authorizing laws: the Energy Policy and Conservation Act of 1975 (the “base” program) and the Energy Conservation and Production Act of 1976 (the “supplemental” program). Table 8 lists grants awarded in 1979 by region and by state.
To receive grants under this program, a state must develop a comprehensive energy conservation plan containing five program activities:
1.	Mandatory lighting efficiency standards for public buildings;
2.	Programs to promote the availability and use of carpools, vanpools, and public transportation;
3.	Mandatory standards and policies relating to energy efficiency to govern state procurement practices;
4.	Mandatory thermal efficiency standards and insulation requirements for new and renovated buildings; and
5.	Right-turn-on-red traffic regulations.
For the supplemental plan, procedures for public education, intergovernmental coordination and energy audits must be included.
Numerous other program measures appear in the base and supplemental plans because of their potential contributions to the achievement of a state’s energy conservation goal. A wide range of goals is included in state plans. Over half the states have set goals for reduction of consumption ranging between 5 percent and 8 percent; the balance is evenly divided between states under 5 percent and states over 8 percent. If achieved, these goals would save about 2,649,000 barrels per day of oil equivalent in 1980 or about 6.8 percent.
Technical assistance provided to states during 1979 included sponsoring two national conferences on energy audits and building standards; sponsoring two regional conferences on ride-sharing programs; and printing and distributing a film strip on ridesharing programs to all participating states. Material
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t
Table 8. — State energy conservation program grant awards — 1979
States	Base Program (EPCA funds)	Supplemental program (ECPA funds)	States	Base Program (EPCA funds)	Supplemental program (ECPA funds)
Region I			Region VI		
Connecticut		$ 618,400	$ 152,000	Arkansas		579,400	117,300
Maine		360,900	81,500	Louisiana		1,161,400	176,900
Massachusetts....	1,121,800	244,600	New Mexico		403,200	84,900
New Hampshire..	334,500	72,900	Oklahoma		796,500	139,900
Rhode Island		334,600	76,600	Texas		2,795,600	474,600
Vermont		278,800	61,000	Total		5,736,100	993,600
Total		3,049,000	688,600			
Region II			Region VII		
				605,500	143,500
New York		2,670,400	667,300			
			Kansas	672,700	124,200
New Jersey		1,321,500	297,200			
			Missouri		853,400	209,100
Puerto Rico		591,600	146,000			
			Nebraska		460,600	98,100
Virgin Islands.. . .	220,900	47,400			
			Total		2,592,200	574,900
Total		4,804,400	1,157,900			
Region III			Region VIII		
Delaware		311,200	64,700	Colorado		574,300	133^600
District of Col....	344,000	68,800	Montana		322,800	70,600
Maryland		800,900	187,300	North Dakota....	293,400	66,800
Pennsylvania		2,079,100	453,100	South Dakota....	302,100	68,300
Virginia		901,900	217,900	Utah		402,000	86,900
West Virginia....	512,300	107,300	Wyoming		301,200	58,100
Total		4,949,400	1,099,100	Total		2,195,800	484,300
Region IV					
			Region IX		
Alabama		820,700	170,800			
Florida		1,511,400	334,600	American Samoa.	214,000	45,600
Georgia		917,000	215,800	Arizona		598,600	122,800
Kentucky 		858,500	162,700	California		3,620,100	785,600
Mississippi		573,900	125,700	Guam		220,800	48,100
North Carolina. . .	1,078,900	232,900	Hawaii		319,300	75,200
South Carolina. . .	604,800	142,700	Nevada 		315,300	65,600
Tennessee		910,100	189,700	N. Mariana Is....	211,200	45,100
Total		7,275,300	1,574,900	Total		5,499,300	1,188,000
Region V			Region X		
Illinois		2,095,900	431,300	Alaska 		292,200	57,800
Indiana		1,237,600	227,200	Idaho 		339,200	73,300
Michigan		1,834,200	358,100	Oregon		571,500	124,800
Minnesota		9,16,400	181,200	Washington		772,000	169,000
Ohio		1,833,300	412,700	Total		1,974,900	424,900
Wisconsin		1,006,200	203,300				—L_
Total		8,923,600	1,813,800	Grand total	$46,973,000	$9,997,900
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published during the year also included reports for implementation of options on lighting standards for existing buildings and of energy-efficient procurement standards and policies, two new energy audit workbooks, and an energy auditor training curriculum.
Weatherization Assistance Program: Title IV, Part A of the Energy Conservation and Production Act (ECPA), Public Law 94-385, established the Weatherization Assistance program in recognition of the fact that low-income families are severely affected by rising fuel costs. The Weatherization Assistance Program was established to develop and implement weatherization programs for such low-income persons, particularly for the low-income elderly and handicapped.
The National Energy Conservation Policy Act of 1978 (NECPA), Public Law 95-619, enacted November 8, 1978, amends ECPA and provides for the expansion of the Weatherization Assistance program. Specifically, NECPA authorized funding of $200 million for 1979 and $200 million for 1980 to carry out weatherization projects.
To accomplish these goals, the Department makes grants to the states and, in some instances, to Native American tribal organizations. To date, grants totalling more than $285 million have been awarded to all eligible states and to twenty-four tribal organizations. With these funds, more than 184,000 low-income dwellings were weatherized by June 30, 1979.
Each grant award must be spent for weatherization materials and related costs. Administrative costs can total no more than 10 percent of each grant: 5 percent for state administration and 5 percent for local administration.
The National Energy Conservation Policy Act requires that the labor needed to install the weatherization materials be supplied whenever practicable by public service employment workers and participants in training programs funded by the Department of Labor under the Comprehensive Employment and Training Act (CETA).
In 1979, the department amended the program’s regulations to increase the flexibility of its implementation. These changes were aimed at making more labor available and increasing the expenditure allowed for each unit. In response to needs determined through on-site program monitoring, three contracts were awarded to provide management assistance to both grantees and the local subgrantees. A comprehensive program manual for state grantees is under development and is scheduled for comple
tion in 1980. To provide reliable data on the manpower resources on a local project-by-project basis, a weatherization production control system will generate reports beginning early in 1980, thus assisting both DOE and the Department of Labor in achieving the best possible match of materials and labor resources.
Institutional Buildings Grant Programs: These programs are intended to promote energy conservation and to help provide assistance to institutions hard hit by increasing fuel costs. The programs encourage energy conservation programs in schools, health care facilities, and local governments and assist schools and hospitals in acquiring and installing energy conservation equipment, including solar and other renewable resource measures.
Application and reporting forms were developed and coordinated with the Office of Management and Budget. An administrative system for evaluating state plans and processing applications was organized through the DOE regional offices. In addition, a preliminary education program was launched to familiarize state and local personnel with the program and ease its early implementation. Fifty-four jurisdictions (including the District of Columbia and the territories) have received grants to initiate energy audit activities. In 1980, the fifty-four eligible jurisdictions are expected to initiate programs through which institutions and local governments will apply for grant funds to pursue energy conservation measures.
Energy Extension Service: This program assists in building state and local capacity to mount effective conservation and renewable resource programs for EES constituents. The service focuses on education and information dissemination to small-scale energy users.
A pilot program involving ten states' began in August 1977, and a national program began in October 1978. Table 9 summarizes grants to pilot and non-pilot states during 1979. Congressional approval for nationwide expansion of the Energy Extension Service was received in July 1979.
Using the experience of the ten-state demonstration program, the Energy Extension Service will be expanded to include all states and territories. The states have been invited to submit plans in order to receive grants. The DOE regional offices will review and approve the plans and provide day-to-day management of the national program.
1 Alabama, Connecticut, Michigan, New Mexico, Pennsylvania, Tennessee, Texas, Washington, Wisconsin and Wyoming
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Table 9. — Energy extension service — 1979 state grants
Alabama	370,000'	Missouri	15,000
Alaska	15,OOO2	Montana	15,000
American Samoa	15,000	Nebraska	15,000
Arizona	15,000	Nevada	15,000
Arkansas	15,000	New Hampshire	15,000
California	15,000	New Jersey	15,000
Colorado	15,000	New Mexico	370,000
Connecticut	370,000	New York	15,000
Delaware	15,000	North Carolina	15,000
D.C.	15,000	North Dakota	15,000
Florida	15,000	Ohio	15,000
Georgia	15,000	Oklahoma	15,000
Guam	15,000	Oregon	15,000
Hawaii	15,000	Pennsylvania	370,000
Idaho	15,000	Puerto Rico	15,000
Illinois	15,000	Rhode Island	15,000
Indiana	15,000	South Carolina	15,000
Iowa	15,000	South Dakota	15,000
Kansas	03	Tennessee	370,000
Kentucky	15,000	Texas	370,000
Louisiana	15,000	Trust Territory	15,000
Maine	15,000	Utah	15,000
Mariana District	15,000	Vermont	03
Maryland	15,000	Virginia	O3
Massachusetts	15,000	Virgin Islands	15,000
Michigan	370,000	Washington	370,000
Minnesota	15,000	West Virginia	15,000
Mississippi	15,000	Wisconsin	370,000
		Wyoming	370,000
1 This represents an extension of the 18-month pilot program for an extra 6 months to meet Congressional evaluation requirements. Other pilot states are Connecticut, Michigan, New Mexico, Pennsylvania, Tennessee, Texas, Washington, Wisconsin, and Wyoming.
2 This represents an extension of the 18-month pilot program for non-pilot states. All non-pilot states received $15,000.
3 These states did not choose to apply for an extension of the non-pilot state grant.
Because the Energy Extension Service is a crosscutting program requiring technical assistance from many sources, coordination between it and other Federal agencies is essential. An intra-agency coordinating committee meets about three times a year and provides support for the program’s technical assistance to the states and a sounding board for review and critique of its documents such as the Comprehensive Program and Plan for Federal Energy Education, Extension and Information Activities (CPP) and the EES Evaluation Report. An interagency committee, with representatives from twelve agencies, reviews and critiques the program with energy outreach offices located outside of DOE.
One activity of 1979 was the completion of the third annual CPP, which was prepared for Con-
gress in January 1980. The purpose of the CPP is to survey federal energy outreach programs and to provide a plan for their improved coordination.
Technical assistance to the states has included sponsoring information-sharing conferences; providing an Energy Related Technical Assistance Guide', and establishing a Practical Materials Clearinghouse, which involves the search for and screening, and distribution of practical materials relevant to the Energy Extension Service.
Special studies are a final example of the program’s activities. During the pilot program, such studies included the status of standards on the solar and conservation technologies, and the technical assistance needs of the state, and the resources available to meet them.
Industrial Programs
More efficient use of energy by the industrial sector is closely linked to economic stability, job security, and industrial growth. The industrial sector accounted for about 36 percent of all U.S. energy consumption in 1978, including 20 percent of the national oil consumption and 50 percent of the national gas consumption. More than two-thirds of industrial consumption went into the production of process steam and direct process heat.
Much of the equipment employed by industry was designed and installed during times of inexpensive and abundant energy supplies. Engineering designs and trade-offs were often made in this equipment that minimized capital cost at the expense of energy consumption; fuel utilization is inefficient, generally averaging only 5 to 30 percent. Increasing this energy conversion efficiency is the primary goal of the Office of Industrial Programs.
DOE is working to achieve this goal in three major ways: (1) sponsoring cost-shared research, development, and demonstration, (2) formulating legislative initiatives and analyses and setting industrial energy consumption targets, and (3) implementing and deploying advanced and existing but under-utilized energy conservation technologies.
The research, development, and demonstration elements of the Industrial Energy Conservation Program constitute more than 95 percent of the program expenditures. They focus on two basic areas: (1) general technologies that have application across a wide spectrum of industrial processes (the horizontal approach), and (2) technologies that are applicable to processes of specific energy-intensive industries (the vertical approach).
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The horizontal approach includes efforts directed at recovery and utilization of waste heat, combustion efficiency improvement, alternative feedstocks, and industrial cogeneration. Vertical approaches include programs in high and low temperature and end product processes, and agricultural and food processes. Analyses to support legislative initiatives include setting energy consumption goals, recycled material use targets, and equipment standards. The progress being achieved by these targets is monitored annually through use of the Industrial Reporting Program mandated by the Energy Policy and Conservation Act. Implementation and deployment activities build industry acceptance and utilization of new technologies resulting from successful research and development activities.
The program is a little more than 3 years old, and measurable energy savings of more than 1,200 barrels per day of oil equivalent are attributable to the efforts to date. The program is one of the most cost-effective in DOE and has energy savings goals, believed to be conservatively estimated, of 708,000 barrels per day of oil equivalent by the mid-1980’s and 2,600,000 barrels per day of oil equivalent in the long term.
Waste Energy Reduction: This subprogram is directed toward improvements in energy-use efficiency and the substitution of abundant fuels for scarce ones in processes that are common to many industries. The objectives of the subprogram are to achieve annual energy savings of an estimated 500,000 barrels per day of oil equivalent by the mid-1980’s and 1,100,000 barrels per day of oil equivalent in the long term.
Significant achievements were realized in the areas of high-temperature recuperators. Forty-one high-temperature ceramic recuperators and one metallic recuperator were installed and are now operating. Another technological method, the conversion of plastic waste to fuel oil, has reached the commercialization phase.
Several significant research and development efforts were initiated in 1979. Waste lubricating oil rerefining and waste wood burning efforts were started. Two contracts were let to develop oxygen enrichment techniques for combustion air enrichment and the development of a fluidized bed waste heat boiler was begun.
Research and development efforts on air-to-fuel ratio controllers, industrial heat pumps, waste gas recovery and utilization, advanced waste heat boilers, and waste tire conversion and remanufacturing were continued. A particularly noteworthy technical achievement occurred in the successful
testing of a pressurized ceramic heat exchanger that can serve high-temperature industrial applications.
Cogeneration: Cogeneration, in which waste heat produced in the generation of electricity is put to use, has been the subject of much interest in recent years. Cogeneration of electrical power and process heat in industrial operations is a powerful conservation technique. It has been estimated that the energy saved through additional cogeneration systems could exceed 200,000 barrels per day of oil equivalent by 1985. The total potential savings are perhaps 3 million barrels per day of oil equivalent by the year 2000.
At present, the potential for industrial cogeneration is under-utilized. Where it is applied it does not, in general, achieve large energy savings. All cogeneration systems do not have the same energy conservation potential; very significant differences may exist between the conservation potential of two cogeneration systems that convert the same amount of fuel energy to useful power and heat. Systems must be the proper size for the plant’s thermal baseload and, wherever possible, should be interconnected with the utility grid.
Most current cogeneration systems use extraction steam turbine systems and some gas turbine and diesel machines. Although steam turbine systems can use any common fuel, they are inefficient in cogeneration because the steam extracted for process use competes directly with power production. On the other hand, gas turbines and diesel engines deliver power more efficiently; but as currently applied to cogeneration, they require premium fuels. It has been estimated that the use of these available technologies will yield a maximum energy saving of 1,100,000 barrels per day of oil equivalent by the year 2000. Although the potential energy saving is attractive, there is opportunity for even larger savings with more advanced systems.
Initiated in 1978, the new industrial cogeneration program will reorient the implementation of cogeneration toward systems that offer larger energy savings while minimizing oil and gas consumption. During 1979, detailed engineering efforts for the demonstration of two advanced cogeneration systems were begun. One system employs an externally-fired gas turbine capable of operation on a wide range of fuels, including industrial solid wastes; another employs a diesel engine designed to operate with a wide range of gaseous and liquid fuels, including petroleum residuals and possibly coal-derived fuels. These systems have applications in
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paper and food processing and other energy-intensive industries.
The energy savings for this subprogram are projected to be 1,600,000 barrels per day of oil equivalent by the year 2000, an additional savings of 500,000 barrels per day of oil equivalent over that offered by the use of current technologies.
Industrial Process Efficiency: This subprogram seeks to increase the energy efficiency of industrial processes and substitute abundant fuels for scarce fuels in the most energy-intensive industries, including primary metals, glass, cement, paper, chemicals, petroleum, textiles, and agriculture and food processing. The objectives of the subprogram are to achieve an estimated annual energy savings of 160,000 barrels per day of oil equivalent in the mid-1980’s and 708,000 in the long term.
Significant results were realized from this subprogram area during 1979. Commercialization of the coil coating technology continued and, as of October 1, thirteen units, each achieving annual energy savings of 850 barrels per day of oil equivalent, had been installed and were operating. Foam finishing technology reached the commercialization phase; fourteen units are each processing 250 million yards each of textile products annually and achieving savings of 260 barrels per day of oil equivalent. The improved high-efficiency slot forge furnace also reached the commercialization stage. Six units are each realizing energy savings of 28 barrels per day of oil equivalent. The pipe cross reactor, a new technology for fertilizer production which is being jointly develped with the Tennessee Valley Authority, continued in the deployment stage. The combined annual energy savings of the twelve installed units are estimated to be 1,400 barrels per day of oil equivalent.
Implementation and Commercialization: The objective of this subprogram is to stimulate implementation of new as well as existing but under-utilized energy conservation technologies and practices by the industrial sector. The activities of the subprogram are highly diverse, although all are related to the qb-jective of improved energy efficiency. Delivery systems that will involve the extensive DOE resources such as the Energy Extension Service and regional offices will eventually be utilized as part of the overall commercialization effort.
During 1979, several activities were conducted in response to the National Energy Act. A study was initiated to determine the relevance of the Second Law of Thermodynamics to energy consuming processes and to various energy conservation programs.
Recovered materials utilization targets were proposed for the rubber, metals, paper, and textile industries, and a feasibility study for performance standards on motors and pumps was initiated. Also, definitions of equipment qualifying for investment tax credits were provided to the Internal Revenue Service.
Project selection techniques and controls were significantly strengthened durifig the year. A 2-year cost-shared effort was initiated to increase the data base of the Industrial Sector Technology Use Model. This data base is used to compare market penetration and energy savings potentials for new and existing technologies.
Various activities were undertaken in 1979 directed toward industrial assistance and awareness of technologies for energy conservation. Energy Anaylsis and Diagnostic Centers were continued at three universities (Pittsburgh, Tennessee, and Georgia Tech), and 105 energy audits were completed. A survey of energy conservation technologies was conducted in sixteen countries and reports were issued. An international trade show and conference was conducted in Milan, Italy, and an international energy conference was held in Los Angeles. Specific plans for technology deployment implementation in the iron and steel, pulp and paper, and agriculture and food processing industries were initiated.
Small-Scale Technology
The Office of Small Scale Technology was established to complement the long-term, centralized approach to a national conservation program. Its mission is to promote immediate conservation efforts on the local small-scale level by supporting those technologies that promote energy efficiency and make use of renewable energy resources that are abundant in a specific area. This goal is pursued through the Appropriate Technology Small Grants program, established by Congress in the Energy Research and Development Appropriation Authorization Act of 1977 (P.L. 95-39).
Appropriate technology has come to mean a process or development that is: small in scale; simple to install, operate, and maintain; decentralized; energy efficient and environmentally sound; making use of local materials, labor, and ingenuity; not capital intensive; and exploiting renewable and alternative energy sources. These technologies are thus considered “appropriate” to local needs, resources, and labor skills. Capital return on the Federal investment for appropriate technologies is
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high in terms of reduced energy consumption patterns and production of new, non-conventional energy supplies that have until now remained untapped.
Possible projects are evaluated on the basis of overall technical merit, uniqueness, regional distribution, project diversification, and potential for replication and commercialization.
The audiences of the program include individuals, small businesses, non-profit organizations, state and local governments, and Native American tribes. Grants of up to $50,000 are awarded as incentives to demonstrate the benefits of implementing various conservation technologies. The first nationwide appropriate technology grant cycle was initiated in 1979. Grant funds were made available for small-scale biomass, wind, hydro, geothermal, thermal storage, as well as solar projects. In addition, several projects were funded for technical information dissemination through workshops, seminars, and publications.
One example of the 1979 grant projects is an effort by the government of one of the Pacific Trust Territories to design a process and test the feasibility of turning 10,000 gallons per day of tuna sludge into methane gas, feedstock, and fertilizer. Because of the island’s complete reliance on imported fuel, the project may prove economically beneficial to the community in addition to conserving its supply of nonrenewable fuels. Under another grant, a university in the Southwest is testing a process for turning tumbleweed into fuel. Otherwise an agronomic pest, the tumbleweed can be cultivated, harvested, cubed, and made into pellets to be used as a fuel. In the Northeast, an individual is treating eelgrass, an abundant reserve in the coastal area, so that it can be used as insulation. These projects cultivate resources unique to their locations in a way to conserve energy and remain compatible with the environment. A research group in New England is exploring the possibility of retaining and insulating snow accumulations from snow clearance operations during the winter. This accumulation is intended to be used as a heat sink for commercial air conditioning or refrigeration during the summer.
A pilot program, initiated in 1978 in Region IX, was evaluated in a study by the Lawrence Berkeley Laboratory. Based on an assessment of twenty projects, the study estimates the potential energy savings of the 108 projects awarded to be 2 million barrels of oil equivalent over one year.
Public response in the 1979 grant cycle was enthusiastic. More than 12,000 proposals were received
requesting approximately $343 million. Of these, the program funded 600 projects (2.3 percent), for a total of $8 million. Based on the results of the pilot study, it is estimated that the funds allocated in 1979 could result in a potential energy savings of up to 12 million barrels of oil equivalent over a period of one year.
Proposed changes for the 1980 grant cycle were published in the Federal Register for public comment. The proposed changes incorporate a new allocation formula to make additional funds available to the regions in proportion to the number of grant applications received.
Energy Storage
Energy Storage supports the critical energy saving and fuel substitution missions of all of the programs that concentrate on the end uses of energy. When used as the link between energy source and end-use, storage can correct the timing mismatch between energy supply and energy demand found in most energy delivery systems. This is particularly important in the case of intermittent energy sources such as solar, or in production and delivery systems like electricity where demand fluctuates greatly.
The goals of the Energy Storage program are to increase the substitution of coal, nuclear, and solar energy for petroleum and natural gas; to enable solar and other intermittent energy systems to provide continuous service; and to conserve energy by storing industrial and utility waste heat for later use and by improving the efficiency of electrochemical processes.
Four major energy storage technologies are under development, including electrochemical (batteries), mechanical, thermal, and chemical energy storage. These technologies will be used in solar systems, transportation, building heating and cooling, industry, and utilities.
Energy Storage and Transportation: In transportation applications the mismatch between energy supply and demand is particularly severe and the need for compact buffering systems is critical. Here, intermitent demand is matched to a power source which often cannot respond quickly enough or adequately. Storage for transportation allows any supply source, continuous or intermittent, to supply the demand. DOE is developing batteries to power electric vehicles and flywheel regenerative braking systems to store momentum energy and improve the performance of electric and hybrid vehicles. The objective is to develop a battery that will give electric vehicles
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performance comparable to today’s gasoline-powered cars. Today’s batteries give electric vehicles and a range of 30 to 45 miles and an acceleration of 0 to 30 miles per hour in about 15 seconds. Near-term batteries in the early 1980’s will provide 60 to 100 mile range and, because of improved withdrawal-rate capabilities, approximately one-third better acceleration. These are improved lead-acid, nickel/zinc and nickel/iron batteries, the first of which are now being field tested in vehicles.
Advanced batteries in the late 1980’s are expected to provide a range of 110 to 210 miles and to accelerate from 0 to 30 miles per hour in less than 7.5 seconds. These lithium/metal sulfide and sodium/ sulfur batteries are being tested in the National Battery Test Laboratory dedicated in September 1979, located at Argonne National Laboratory. In the 1990’s, metal-air batteries are expected to provide greatly improved range—up to 620 miles—and acceleration from 0 to 30 miles per hour in 6 seconds. One of these batteries, aluminum air, will not be recharged in the conventional sense. It will be quickly “refueled” by replacing the aluminum plates, which are the negative electrodes.
Accomplishments in 1979 include testing of the first full-sized 20 to 30 kilowatt hour, near-term electric vehicle batteries in vehicles. The laboratory testing capability for electric vehicle batteries has been increased to include thirty-six cell modules and eight battery test stations as well as environmental and vibration testing.
Another program for transportation is flywheel regenerative braking, in which the momentum of a braking vehicle is converted back into usable energy and stored to be used as needed. A battery-powered U.S. Postal Service jeep with a flywheel regenerative braking system is now being tested. Flywheel regenerative braking will increase the range of such electric vehicles by as much as 25 percent in typical urban driving, which involves frequent starts and stops. It will also increase battery life and improve acceleration performance.
Energy Storage for Building Heating and Cooling: Several thermal energy storage concepts are being developed for building heating and cooling. Thermal storage of off-peak electric energy to be used for heating during peak hours is now commercially available to utility customers. The chief barriers to more extensive use of this technology are the lack of off-peak pricing and the question of how much storage is economically useful for the utility. Such storage can save money for both the customer and the utility. The customer pays less for the energy used
to heat his home, and the utility can make greater use of its more efficient coal-fired and nuclear baseload plants and use fewer petroleum and gas-fired peaking plants.
More efficient concepts are now being developed. Phase-change materials for customer-owned storage have been tested for long-term stability and physical properties. In one concept, heat is stored by concentrating a sulfuric acid solution and released by returning the water to it. A chemical heat pump using a sulfuric acid-water system for building heating has been operated successfully in a laboratory. A bench scale salt-alcohol system has been operated and a larger unit has been constructed.
Industrial waste heat can be stored in aquifers for subsequent use in district heating systems. Storage increases the capacity of the system by storing the heat that would be discarded during the summer and using it during the winter to supplement that available directly from the plant. In a similar manner, winter’s cold can be used to chill water that is then returned to the aquifer until it is withdrawn during the summer for use in cooling systems.
Field tests of aquifer storage at two southern sites have indicated that energy recovery rates of up to 70 percent are possible. To day, site application and geological surveys, suitability criteria, heat exchange design, and environmental documents have been completed.
Energy Storage for Solar and Conventional Utility Applications: Energy storage benefits the electric utilities by leveling the load borne by their facilities. The storage can be located in the customer’s home, at a central site, or dispersed throughout the system at substations.
Promising energy storage technologies for central site use include three underground systems: compressed air, underground pumped hydro and superconducting magnetic energy storage.
A first generation compressed air energy storage system is now operating at Huntdorf, West Germany. During off-peak hours, excess baseload electricity is used to compress air, which is stored in underground chambers leached from a salt formation. In hours of peak demand, this compressed air is used to regenerate electricity by driving turbines. Preliminary designs have been prepared for similar plants in this country. Another “no-oil” compressed air concept uses fluidized-bed coal combustion to reheat the air.
Because of its high efficiency and quick response time, superconducting magnetic energy storage is a promising longer-range technique for large central
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site facilities. In the near-term, small units will be used to stabilize lines that transmit electricity over long distances. One such unit under construction for the Bonneville Power Authority will be installed on the Pacific Intertie, which connects southern California with hydroelectric generating facilities in the state of Washington. It is expected to increase the line’s useful capacity by about 25 percent. For the electricity represented by this extra capacity to be generated in California by petroleum-fired plants would require ten million barrels of oil per year.
Energy Storage for Industrial and Multipurpose Applications: Developments in 1979 in industrial and multipurpose applications include thermal storage components for retrofitting aluminum, paper, and food processing plants to recover reject heat and development of an efficient electrolyzer for producing hydrogen from water.
Preliminary designs to retrofit plants in five industries for storing reject heat have been completed, and demonstration sites selected. A 3-year payback is possible in the paper and food industries, and waste heat from one aluminium plant can supply 12,000 homes with heat at a lower cost than that of conventional fuels.
Hydrogen is a non-polluting fuel that has many potential uses including chemical feedstocks, transportation, and natural gas supplementation. The main factor preventing its widespread use is cost —the cost of producing it in quantity and the cost of storing it safely. Economical methods of producing hydrogen by electrolysis or thermochemical splitting of water into hydrogen and oxygen are being developed. Economical storage techniques are also being sought.
Eventually, hydrogen might be produced at low cost for sale in nearby markets using small hydroelectric power sources. The hydrogen would provide a means for energy storage, using power generated in a cost-effective manner at any time when not needed for use in a utility grid. In some cases, the hydroelectric system may be dedicated to hydrogen producting only and thereby avoid the capital costs of interconnection to the grid. Any such system requires an acceptable means of storing hydrogen.
The use of hydrogen fuel for transportation is being delayed by the lack of compact safe storage. The Department is developing methods using high-pressure gaseous storage in microspheres and chemical storage in metal hydrides.
Outlook
The Federal energy conservation strategy is an attempt to employ the right tools to overcome barriers to energy conservation. Elements of the strategy include energy pricing and rate reform policies; information, education and training; government-sponsored research, development and demonstration; financial incentives; and, where necessary, regulation. Major opportunities have been identified and programs are specifically addressed at those targets. The Department’s conservation policies and programs have effects across all sectors of the economy. Specific policies and programs are also tailored to the needs of each of the energy end-use sectors.
National energy policy seeks to support the market so that it will encourage energy consumers to conserve, thereby promoting efficiency of energy use. The major components of the national energy pricing policy are phased deregulation of natural gas prices, decontrol of oil prices (coupled with a windfall profits tax), and establishment of guidelines for utility rate design.
While significant conservation measures are national in scope, many other opportunities for influencing energy consumption occur at state and local levels. In recognition of this, DOE is promoting the development of decentralized energy expertise and has enacted the State Energy Conservation program to provide financial and technical assistance to the states. With the introduction of a national Energy Extension Service and the increased efforts with local programs such as the Municipal Hot Line, the potential of the Office of State and Local Programs to reach the public is great.
The Energy Management Partnership Act currently before Congress is designed to assist states and local governments in several ways. The Act would provide for the development and implementation of comprehensive energy management plans at the state level, including activities in areas such as energy consumption forecasts, identification of projected energy supply sources, management plans, facility siting, emergency planning, renewable resources, and assistance to local governments. The Act would consolidate the State Energy Conservation program and the Energy Extension Service, thus providing a valuable “core” program to consolidate the management of Federal, state, and local energy conservation activities.
During 1980, the State Energy Conservation program will be in transition between the current program and the anticipated new consolidated
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program as defined by the Energy Management Partnership Act. Major program activities will be related to the development of consolidated management, monitoring, and information systems to prepare for the new Act, and the evaluation and validation of currently reported energy savings. The Energy Extension Service will also participate in the management consolidation activities in anticipation of merging with the program. In addition, as a result of the successful 2-year pilot program, the Energy Extension Service will be expanded in 1980 to serve fifty-seven states and territories.
Energy savings resulting from the Institutional Buildings Grants Program will begin to be realized in the current year. During the coming 5-year period, the program will pay for more than 58,000 energy audits, award more than 45,500 technical assistance grants, and sponsor more than 14,700 energy conservation measures in institutional buildings.
Decisions made by individual consumers are vitally important to DOE’s efforts to encourage conservation. The need to encourage homeowners to install building conservation measures, for example, led to the development of the existing tax incentive of 15 percent of the cost of eligible conservation investments up to $2,000. This tax credit reduces the barrier posed by the artificially low energy prices paid by consumers and reduces the financial investment constraints.
There are low income households that are adversely affected by rising energy costs and would benefit little from tax credits. Because they cannot respond to the increases in energy prices by installing retrofit measures, the Congress enacted and the Department of Energy is implementing a grant program to weatherize homes of low-income persons— with priority given to the elderly and the handicapped.
Energy savings from research and development in the area of consumer products will accrue from development and commercialization of a broad range of technologies. The Annual Cycle Energy System currently being demonstrated appears promising as a new design concept which will be incorporated into many new homes, beginning in 1981.
Technology clearinghouses will be established at either the national laboratories or through technical and professional societies beginning in 1980. These clearinghouses will be responsible for responding to requests on community energy conservation systems. A program to transfer technology to technical audiences will ensure utilization of research advances. Buildings and Community Systems will broaden its outreach efforts in this area in 1981.
The Energy Partnership for American Cities Program to bring together state and local governments and business to reduce building energy consumption, and the Small Business New Technology Application Program designed to transfer forty new conservation technologies to business, will begin in 1980. They and other information, education, and transfer activities will be broadened in 1981.
Supplementing private sector research and development of energy-efficient industrial technologies is an important part of the industrial conservation program. Investment tax credits are also available as financial incentives to encourage capital investment in more energy-efficient industrial technology. To stimulate such investment, the National Energy Act provides an additional 10 percent tax credit for an industrial investment in specified waste heat recovery, recycling, and other energy-conserving equipment and devices.
Phased deregulation of natural gas prices enacted under the Act and the more recent oil price decontrol decision, coupled with utility rate design guidelines, will help improve price signals to industrial energy users. Accordingly, there will be a greater motivation to undertake energy-conserving practices and investments.
In the Industrial RD&D sphere, demonstration projects will be designed and constructed and testing will be performed in waste energy reduction, cogeneration, and industrial process efficiency in 1981. Pilot plant testing of a process to extract methane from waste carbon monoxide will be initiated and pilot plant testing of a fuels from cellulose project will be completed in 1981. Design reviews of two wood-fired gas turbine demonstration units are also scheduled.
Of the tools available to the Federal government (i.e., free market forces; standards and regulation; research, development and demonstration; information and education; and financial incentives), all are being exploited in the Federal transportation program. For near-term impact the heaviest reliance is on standards and regulation, information and education (DOE mileage guides, vanpooling, etc.), free market forces (cost of gasoline); and financial incentives (loan guarantees to build an electric and hybrid vehicle infrastructure). The goal of the electric and hybrid program is to develop first generation electric vehicles in 1980, and first generation hybrid vehicles in the near future. In the longer-term, the research development and demonstrations will have an increasing impact with the full commercialization of these vehicles and advanced heat engines. Dynamometer
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testing of the first experimental Stirling and gas turbine engines will begin in late 1981.
The principal criterion for judging a conservation program is the return in energy saved over the next 2 to 5 years. Data from the Small Scale Appropriate Energy Technology Grants pilot program are preliminary, but early analysis of twenty selected small-scale projects indicate that, for the dollars granted, the return on investment could be as high as 500 percent, based on the dollar value of fuels (gas and electricity) saved.
In one possible scenario, it is estimated that if 13 percent of the proposals deemed worthy of grant support are funded (increased over the 2.3 percent in 1979), and if commercialization efforts are pursued, savings as high as 14,300 barrels per day of oil equivalent may be evident in the next 5 years.
The Department has undertaken a commercialization effort to assist in the efficient and timely introduction of transportation and other conservation technologies into the marketplace. The commercialization approach is a process that follows a technology from the research, development, and demonstration stage to introduction and application. There
are currently thirteen product categories in the commercialization program. Others will be identified and commercialization plans will be developed and implemented. By accelerating introduction of technologies into the marketplace, the corresponding energy savings for the Nation will be realized sooner than would otherwise be possible.
Anticipated near-term energy savings from present Federal energy conservation programs promise improved domestic energy use efficiency that will maintain an expanding economy while decreasing the amount of oil imported. Savings are expected to be approximately 20 percent of projected energy use by the year 2000. By that time, about 35 percent of existing commercial buildings will have been retired and may have been replaced with more energy efficient structures. Approximately 60 percent of existing industrial boilers will have been retired. Virtually all remaining energy-using appliances within existing buildings will have been replaced. This gradual turnover, coupled with other Federal energy conservation efforts, will play a crucial, strategic role in the Nation’s transition to domestically abundant and renewable energy resources.
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Chapter 3
Solar and Other Renewable Energy
Introduction
The Department of Energy pursues four energy options in renewable or essentially inexhaustible resources. They are solar energy, geothermal energy, fusion, and the breeder reactor.
Solar, geothermal, and one of two fusion approaches, magnetic fusion, are covered in this chapter. The other fusion option, inertial fusion, is described in Chapter 8 on defense programs because its near-term focus is primarily on defense applications; inertial fusion’s energy promise is not expected to be realized for decades. The breeder is developed in the context of nuclear energy programs covered in Chapter 6.
As renewable and inexhaustible technologies become economically competitive, they will capture an increasing share of energy market. In fact, solar technologies such as domestic hot water heating are already cost-effective with electricity in several parts of the United States. Because they will supplant nonrenewable and often imported fuels, these technologies are important to the economic well-being of the Nation. The displacement of imported energy by a mix of renewables and inexhaustibles and increased reliance on domestic coal and uranium will help improve the U.S. and the world economies. Among other things, increased reliance on domestic resources translates into jobs at home, jobs that
result from the construction, operation and maintenance of new energy facilities and related activities.
The budget authority for the years 1979, 1980, and 1981 is compared in table 10 for the solar program, the geothermal program, and the magnetic fusion program. Each is then described in turn.
Table 10. — Budget authority for solar and other renewable energy — 1979, 1980, and 1981
1979	1980	1981
(millions of dollars)
Solar applications			 $	155.9	$ 155.4	$ 186.3
Solar technology			 358.3	447.3	465.9
Small scale-hydro			 28.6	23.7	19.0
Geothermal				156.9	149.6	196.7
Magnetic fusion			 355.1	355.6	403.6
Total			 $1054.8	$1131.6	$1271.5
Solar Programs
The precipitous rise in average world oil prices to over $25 per barrel during 1979 has underscored the importance of accelerating the development of solar energy technologies. The President said on June
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20, 1979, “We are making a commitment to as important a goal as we can set for our Nation—the provision of 20 percent of our energy needs from solar and renewable sources of energy by the year 2000.”
Solar technologies can be used in centralized and dispersed applications to produce liquid and gaseous fuels, electricity, industrial and agricultural process heat, residential and commercial space conditioning, and hot water. A presidentially-ordered Domestic Policy Review on solar energy was begun in May 1978, to develop options for an evolving national solar energy strategy. In a conservative scenario based on a world oil price of $25 per barrel (base case) in the year 2000, projections showed that solar technologies could displace as many as 9.9 quadrillion Btu’s (quads) of the energy expected to be required by the U.S. in 2000. In a “maximum practical” scenario in which the Federal government aggressively pursues solar development programs, as many as 18.5 quads of conventional energy could be displaced by 2000. These projections indicate the potential of solar energy resources in long-term national energy strategy. Table 11 estimates the potential fuel displacements of individual solar technologies for the year 2000 as compared with their estimated contributions in 1977.
Table 11.— Potential fuel displacement of solar technologies
Solar technology	1977	2000 Base case2	2000 Maximum practical case
		(in quads')	
Biomass		1.8	3.1	5.4
Hydro		2.4	3.9	4.3
high-head 		(2.4)	(3.5)	(3.5)
low-head		(small)	(0.4)	(0.8)
Residential/commercial			
heating, hot water, cooling		small	0.9	2.0
Passive design		small	0.2	1.0
Industrial and agricultural			
process heat		—	1.0	2.6
Wind 		—	0.6	1.7
Photovoltaics		—	0.1	1.0
Solar thermal electric		—	0.1	0.4
Ocean thermal energy conversion.	—	—	0.1
Total		4.2	9.9	18.5
1 1 quad per year = 10'5 Btu or approximately 500,000 barrels of oil per day.
2 Based on Domestic Policy Review of Solar Energy $25-oil scenario
Since the Domestic Policy Review was written, oil prices have risen sharply, unrest has continued in Iran, and the Three Mile Island nuclear accident has occurred. These events suggest that the estimates contained in Table 11 only indicate the relative contribution of each solar technology and that the role of conservation and renewable energy sources could be greatly enhanced in a much shorter time than contemplated by the Review.
Federal strategy for solar technologies is designed to encourage a competitive solar power industry. Implementation involves:
1.	Defining market opportunities for displacing oil and natural gas to provide an environment favorable to the adoption of solar systems;
2.	Establishing market-ready solar systems for these opportunities through research and development;
3.	Reducing of costs at least to a level where economic incentives can provide parity with conventional systems;
4.	Accelerating market development through procurement steps that establish manufacturing, distribution, and servicing capacity;
5.	Performing studies on national policy for inexhaustible energy resources and systems; and 6. Promoting rapid commercialization through technology transfer activities.
One of the promising solar sources is biomass. The DOE Biomass program develops technology to bring to the market economical and environmentally acceptable processes that can displace liquid and gaseous fuels through direct combustion of biomass material and through biomass-derived substitute fuels and chemical feedstocks. The production and use of alcohol fuels from biomass are expanding rapidly. The direct burning of wood in centralized and dispersed applications is economically competitive under certain circumstances. DOE supports near-term commercialization efforts, provides technology options for mid-term commercialization opportunities, and is developing a research and development program for expanding the contribution of biomass energy beyond the year 2000.
The Solar Thermal program develops central and distributed receiver and concentrator heat collection systems. Central receivers can have major applications in the utility and industrial heat sectors, which consume more than half of the nation’s energy. Commercial use is expected to begin in the mid-to-late 1980’s, based on the program of experiments now under way. Distributed receivers may have major industrial heat and community-scale electric applications, with commercial use expected in the
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mid-1980s. Assuming that these distributed systems would be operational in about 1990, the goals for the cost (in 1980 dollars) range from 5 to 10 cents per kilowatt hour for electricity and from $5 to $10 per million Btu for heat, depending on the application.
The Photovoltaics program is aimed at achieving the commercial readiness of photovoltaic systems for residential mid-scale applications in the mid- to late-1980s at costs competitive with conventionally fueled grid connection applications. The cost goal for commercial residential applications is 5 to 10 cents per kilowatt hour systems-cost by the early 1990’s.
The Wind Energy Program seeks to lower the costs of wind power while achieving high reliability and safety. The overall performance and cost goal for the wind system is the development of an installed system having a 2 to 3 cents per kilowatt hour generating cost with a 20 to 30 year life span. Small wind systems could be competitive at 3 to 4 cents per kilowatt hour depending on the resolution of the utility demand charge issue.
Ocean thermal energy conversion (OTEC), the most advanced of ocean energy systems concepts, is now being tested in a small 1 megawatt unit. The near-term objective of the Ocean Systems program is to demonstrate technical feasibility of these systems and estimate when the other ocean energy technologies, such as salinity gradients, waves and currents, will be advanced to a level where assessment of their practical potential can be made.
These efforts will ensure that an increasing number of solar technologies are available for commercialization as the 21st century approaches and traditional supplies of energy begin to decline. At the same time, Federal strategy also recognizes that the extensive introduction of solar energy systems depends on the growth of a service industry and the maintenance of federally supported research and development until private industry is able to assume the full burden of future research and development.
Supporting the solar program is the Solar Energy Research Institute (SERI) at Golden, Colorado. Established by the Solar Energy Research, Development, and Demonstration Act of 1974, SERI supports DOE’s national program of research, development, and demonstration, (RD&D), and commercialization of solar energy technologies. The Institute also carries out activities designed to help create a solar energy industrial base and to foster the widespread use of solar technologies.
To accomplish this mission, current plans call for SERI to perform a variety of functions. These include:
1.	Analysis and planning support for DOE;
2.	Research directed at both the near- and longterm potential of solar energy, with emphasis on high-risk research that the private sector is unwilling or unable to undertake;
3.	Programs in solar energy information dissemination, education, training and technology commercialization;
4.	A major role in the coordination of international programs in solar energy research and development;
5.	Assistance to DOE in the technical and administrative management of selected elements of the national solar energy effort; and
6.	Interaction with universities in areas related to solar energy.
The rate at which the solar market and industry will develop will be influenced by the relative economics of alternative sources of energy; the technological advances in solar systems; and Federal, state, and local government policies toward energy use. In general, this rate depends on regional and national decisions on the pricing of conventional energy sources, the support provided for solar systems development, and the perceived social effects of all forms of energy use.
Solar resources are widely distributed and diverse. The mix of solar resources varies from region to region, and, in most instances, devices that convert or utilize them are located at or near the user. Thus, a mix of local, regional, state, and Federal policies bear on the process of applying solar technologies to specific market needs. This, in turn, requires varied approaches to surmount technological and nontechnological barriers to the growth of solar energy in the Nation’s energy future.
President’s Program
In addition to substantial efforts under way in DOE, the President proposed a set of economic incentives to accelerate the pace of solar energy use in the Nation’s energy future. Specifically, he called for the creation of a new national Solar Bank funded at an initial annual level of $150 million. The bank would provide interest subsidies for owners and builders of residences and commercial structures who install solar equipment and would be funded out of the proposed Energy Security Trust Fund. Over 100,000 new and retrofitted solar units could be financed through the bank during the first year.
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The President repeated his call for financing several tax credits related to solar technology through the Energy Security Trust Fund:
1.	A 20 percent tax credit, up to a total of $2,000 per home, for new homes built using passive solar designs and applications. This provides a significant new incentive for use of cost-effective designs and materials that take maximum advantage of the direct heating power of the Sun.
2.	A new investment tax credit to encourage the use of solar technologies to provide process heat for use in industry and agriculture. This credit adds to the existing investment tax credit to provide a total of 25 percent and it would remain in effect for investments made through 1989.
3.	A new 15 percent tax credit for the purchase and installation of airtight woodburning stoves in principal residences. This credit would permit greater use of wood resources for home heating, making it possible for consumers to save on heating bills.
The President also proposed that the current exemption of gasohol—gasoline containing at least 10 percent alcohol—from the Federal gasoline excise tax (4 cents per gallon) be made permanent in order to stimulate further production of gasohol. Gasohol provides a supplement for fueling the U.S. automobile fleet and can help in reducing requirements for imported crude oil.
These programs complement the solar activities undertaken by Federal agencies in pursuit of their missions. (For example, the President stated his intention to encourage the use of solar and renewable resource systems internationally, including an Agency for International Development program to assist developing countries in harnessing the power of the Sun).
Solar Applications
The Solar Applications program is designed to speed the development and commercialization of solar energy technologies and systems in the marketplace. From 1974 through 1978, program activities were largely shaped by the Solar Heating and Cooling Demonstration Act of 1974. Emphasis was on establishing technical and economic feasibility of solar systems and a data base on performance of solar systems. In 1979, the U.S. government approved a more comprehensive role in supporting the development of a solar industry.
Solar technologies come in many forms, are varied in scale, and can be applied to a large number of end-uses. The Department’s solar applications program is designed to support a diverse set of technology options. In 1979 the solar technologies addressed by the program consisted of active heating and cooling, passive and hybrid systems, agricultural and industrial process heat, photovoltaics in Federal facilities, direct wood combustion, and small wind energy conversion systems. Development and commercialization activities for these technologies will continue. These technologies have applications that are economically competitive with conventional energy resources, or nearly so. Consequently, the range of activities undertaken is diverse in both systems development and market development.
Program strategy is aimed at reducing the risk that industry must assume in developing new solar systems and in creating a favorable market environment where these new systems can compete with and displace conventional, non-renewable energy resources. Over time, private industry can be expected to accomplish most of the development of new solar systems and markets.
Market Analysis and Assessment
DOE’s role in accelerating the use of solar energy is essentially to identify and reduce technical barriers to the commercialization of solar energy. For example, to ensure that utilities assist solar use, workshops involving the Nation’s public utilities have been conducted to analyze the effects of solar use on utility services. Using the results of these workshops, DOE has cooperated with major utilities across the Nation to make solar energy use more compatible with the power generation and distribution patterns of public utilities.
Solar energy use raises many legal issues and questions that can delay the expansion of the solar market. To assist the legal profession and policymakers, a Solar Law Reporter is being published. In addition, results of an Environmental Law Institute study on the legal issues of solar access have been published under the title Solar Access Law: Protecting Access to Sunlight for Solar Energy Systems.
DOE will continue to collect and analyze market data during 1980 and 1981 to establish cost and performance goals for solar systems development. The major components of this effort are economic modeling and analysis, manpower and employment assessments, marketing and consumer response issue identification, and a continuing effort to mitigate institutional and legal barriers. The Department will
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also begin to assess the effectiveness of the incentives enacted under the National Energy Act to stimulate the solar marketplace. Further analyses of economic incentives, including investment tax credits for industrial and passive solar areas, will be conducted in 1981 to assist in evaluating various project financing methods currently in use and under consideration.
Systems Development
Systems development seeks to reduce solar systems cost and improve performance. Activities are directed at active solar heating and cooling, passive solar energy systems, and industrial process heating systems. The program also supports improvements for key components like solar collectors, energy storage units, and controls.
Active solar heating systems development questions center on the cost, performance, reliability, and durability of present and advanced systems, and on achieving the best combinations of components for various climate regions, building types, and market sectors. Performance data are now available for a range of system types and applications. They point to a need for cost reduction; performance improvement; new, cheaper, and more durable materials for components; and more accurate and simpler design and application tools. Fourteen projects were supported in 1979, emphasizing the building and testing of a range of new solar heat pump systems, and establishing performance requirements of collectors and storage components. The heat pump for combined solar-heat pump systems is now available. Future work will focus on cheaper collectors and storage mechanisms.
Using solar energy for cooling requires sophisticated techniques, many of which are in the early stages of product development. Twenty-five active system projects were supported in 1979 to develop absorption, Rankine, and desiccant solar cooling systems. Present field test data indicate the need to develop advanced cycles with higher performance coefficients. Field tests of desiccant solar cooling systems will continue through 1981. Residential-sized units are to be employed in the desiccant development program to support potentially attractive hybrid, i.e., active-passive systems.
Current systems development activities for passive solar systems focus on components development, building design and application development, systems modeling and design tool development, field testing of a variety of passive heating components
and systems, and data collection. Field tests of several single and multi-family residential buildings will continue through 1980, with publication of results expected in 1981. Field testing of commercial buildings is scheduled to begin in 1981.
Component and systems development work and field tests are also under way for industrial process heat applications and systems for agricultural drying and heating. Development of line-focus, high-tem-perature collectors that can be mass produced will begin in 1980. Systems performance verification of field test units constructed during 1979-80 will be conducted throughout 1980 and 1981. Materials research and development and systems analysis and development support for stationary and tracking collectors is planned for 1981.
Market Test and Application
A major objective of the Department’s market tests and applications is to develop agricultural and industrial process heat systems that are thermally efficient, durable, reliable, and attractively priced. Agricultural and industrial requirements account for one-third of national energy consumption. One-fourth of this energy is used at temperatures below 350 °F. The equipment being developed will be able to deliver energy at these temperatures.
During 1979, seventy-five demonstrations on farms were authorized for solar energy heating systems to dry crops and grains. Similar demonstrations are planned for 1980 and 1981. The research and development results are being passed on to the farmer through workshops, seminars, and publications.
Industrial process steam and direct heat requirements consume approximately 25 percent of the total energy now used in the United States. Seven experiments are under way for low temperature (approximately 200 °F) process heat applications. For example, a low temperature system using parabolic tracking collectors provides 77 percent of the hot water needed to wash cans in a soup factory. Four more projects are under way to provide industrial process steam (approximately 350 °F). Seven new projects are being designed to perform at higher temperatures (approximately 400 °F) and are expected to be installed in 1981.
Most industrial sites require large energy systems to satisfy the demand for process heat. In 1980, the program calls for supporting the development of
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large solar energy systems for industries with a high potential for solar applications. Ten systems, consisting of about 50,000 square feet of collectors each (a typical residential space heating application uses between 250 and 500 square feet of collectors) were designed in the past year. Construction of four systems is scheduled for 1980. The costs of these systems will be shared by DOE and industry.
The Solar Heating and Cooling Demonstration Act (P.L. 93-409) states that it is United States policy and the purpose of the Act “to provide for the demonstration within a 3-year period of the practical use of solar heating technology, and to provide for the development and demonstration within a 5-year period of the practical use of combined heating and cooling technology.” To attain these objectives, several annual cycles of residential and commercial heating, cooling, and hot water demonstrations were initiated in 1975. These demonstration cycles provide design and installation experience to a broad spectrum of engineers, architects and installers.
Through five cycles implemented through 1979 in the Department of Housing and Urban Development’s residential demonstration program, there have been some 700 residential projects involving over 12,000 dwelling units. And, as a result of the completion of four cycles, 303 commercial demonstration projects were undertaken. The commercial demonstration projects underway are identified in Solar Heating and Cooling Demonstration Project Summaries (DOE/CS-0009).
Demonstrations were also conducted in private health care facilities, with thirteen awards made in 1978 and 1979; on DOD residential buildings; and on forty Federal government buildings. All of this provides a firm basis for the Federal Buildings Solar Demonstration Program, authorized under Title V of the National Energy Conservation Policy Act.
In 1980, the past emphasis on a large number of widely dispersed demonstrations will be replaced with a Federal role that parallels the product development steps taken by equipment manufacturers. This new approach will entail engineering field tests for technical and economic effectiveness of solar systems and market tests.
Market testing will include tests of product acceptance by the consumer and tests of one marketing infra-structure, including limited production, distribution, promotion, sales, operation and maintenance. Market test plans are being developed for active and passive heating and cooling, wind, wood and biomass, agricultural and industrial process heat, and photovoltaics.
Federal Photovoltaic Utilization Program
The Department of Energy Act of 1978-Civilian Applications (Public Law 95-238, Section 208) authorized $13 million in 1978 to acquire photovoltaic systems for Federal facilities that are cost competitive and will last the life of the facilities. That program was greatly augmented by the establishment of the Federal Photovoltaic Utilization program (FPU) under Title V, Part 4, of the National Energy Conservation Policy Act (NECPA) (Public Law 95-619), which authorized the appropriation of an additional $98 million for 1979 through 1981.
As indicated in P.L. 95-590, the key objectives of FPU program are: (1) to accelerate the growth of a commercially viable photovoltaic solar electric system; (2) to reduce fossil fuel costs to the Federal government; (3) to minimize life-cycle costs, and (4) to develop performance data on the program.
The program’s five cycles are depicted in table 12.
Table 12. — Federal photovoltaic utilization program application cycles
Year	Cycle	Major applications	Cost effective
1978	I	Small remote	Now
1979	11	Small remote	Early 1980’s on
	III	Intermediate remote	
1980	IV	Intermediate remote residential	Mid 1980’s on
1981	V	Selected intermediate grid-connected	Mid 1980’s on
To date, the FPU program has funded 3150 applications in eleven Federal departments at a cost of $19,559,190 for Cycles I, II and III. Every state is represented by applications except North Dakota. There are also applications in the West Indies, the Pacific Islands, and Western Europe. Cycle IV will begin early in 1980 and Cycle V will be implemented in 1981, dependent upon appropriation of funds.
The Advisory Committee established in Public Law 95-590 has been chartered and members named. A rule for the monitoring and assessment of systems installed under the program was published in final form on November 7, 1979.
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Solar in Federal Buildings Program
The Solar in Federal Buildings program, authorized under Title V, Part 2 of NECPA, provides technical assistance and funding for the design, acquisition, construction, and installation of market ready solar heating and cooling systems in new and existing Federal buildings. By expanding an important solar market sector, the program will help to demonstrate the Federal Government’s confidence in and continuing support of the solar industry.
As required under the enabling legislation, DOE conducted the prerequisite steps for rule-making to set forth the requirements and evaluation procedures to be used in implementing the Solar in Federal Buildings program. Also during the past year, DOE has held four regional solar design workshops attended by over 200 Federal agency personnel, and has provided ongoing technical assistance to Federal agencies interested in proposing projects to DOE. This initial ground work will aid in the prompt initiation of program activities in 1981 for the funding, design, and construction of 350-550 Federal solar projects.
Market Development and Training
Major barriers to solar use include the absence of general solar information, cost and performance standards, trained installation personnel, and consumer confidence in solar equipment.
Information: DOE’s information activities focus on market development, consumer awareness and protection, training, education, cost, performance, and information on solar technologies at or near market readiness. The National Solar Heating and Cooling Information Center located in Rockville, Maryland, was established in 1976 to provide information on solar heating of hot water, space heating and air-conditioning for buildings. To date, the Center has responded to more than one-half million telephone and written inquiries, distributed more than 15 million documents, carried out more than 120 workshops and conferences, and has placed exhibits at more than 340 sites.
Information on cost, reliability, and performance of solar energy, including data gathered from the instrumented sites and from other sources, is also made available through DOE’s Technical Information Center, the Regional Solar Energy Centers, and the Solar Energy Research Institute.
The Regional Solar Energy Centers are specifically designed to introduce solar manufacturers and potential users. The Regional Centers use product
and design development, public information activities, technical assistance, workshops, and publications. These activities will be in full use in 1980 and will continue into 1981.
In 1979, major emphasis was put on educational programs for the states, industry, trade associations, the media, and various other organizations. A Solar Index program was begun in more than 80 cities. This program provided information, reported by more than 165 television and radio stations and newspapers, informing consumers on what percentage of domestic hot water could be supplied by a typical solar system on a given day in a given location. Expansion to more than 200 cities is expected in 1980.
Training and Education: During 1979, DOE initiated a program to train industry personnel in the installation of solar systems and instructors to teach solar installation skills. DOE plans to expand the program nationwide during 1980. The Department has also sponsored the development of a solar energy curriculum for elementary and secondary schools; during 1980 and 1981 plans call for disseminating this curriculum to 10,000 schools nationwide.
DOE has also begun a program to train classes in correctional institutions in solar installation and in photovoltaic installation. DOE has begun a voluntary solar certification program for contractors during 1980. These programs are expected to be fully operational in 1981.
Standards, Codes, Testing, and Certification: To aid the growth of the solar industry, DOE has been conducting programs to accelerate the development of nationally recognized uniform standards, codes, testing, and certification programs for solar energy equipment and installations in buildings. These efforts have already succeeded in developing testing procedures and material standards for solar collectors, as well as interim performance criteria for solar heating and cooling systems.
Consumer Assurance Program: The Department of Energy recognizes that the primary responsibility for consumer protection exists at the state and local levels of government. Therefore, in 1980, DOE is undertaking an effort with the states through the Regional Solar Energy Centers to plan for state-administered, comprehensive consumer assurance programs for new renewable resource consumer products. The program will be run cooperatively with industry and consumer groups and will complement and support the state’s Residential Conservation Service.
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DOE will also analyze the need for alternative means of designing a Federally-financed solar warranty insurance or reinsurance fund. The study will examine the potential roles of the private insurance industry, state insurance regulators, and the solar industry in such a program.
Other Supporting Activities: Direct wood combustion in residential and commercial applications currently provides a substantial energy resource and has an additional near-term potential. Efforts to promote further use of wood combustion are under way through the Regional Solar Energy Centers working with states. Planned efforts in 1981 include emission control and safety improvements and studies of improved wood harvesting and distribution approaches.
Small wind energy conversion systems are being supported through the Regional Solar Energy Centers in 1980 to assure consideration of their use in utility regulatory activities. Expanded market development efforts are planned for 1981.
Solar Technologies
Biomass Energy
Photosynthesis converts the sun’s power into energy resources in plants and organic material. Just as coal and oil are the residues of ancient plants and animals powered by the sun, today’s plant and animal residues are an important reservoir of solar energy.
The principal applications for biomass include electrical generation, production of heat and power for on-site residential, industrial, or agricultural applications, and production of liquid fuels for transportation. Figure 1 depicts the scope of the sources and uses of energy from biomass.
DOE’s biomass goals are to improve production and conversion technologies for fuels and chemicals and to develop better cost data on the biomass technologies that show the greatest competitive potential in the near-term.
Program accomplishments include a large anaerobic digester at a cattle feedlot in Florida to provide methane for use in the associated meat processing plant; production of the first wood-derived oil from an experimental plant in Oregon; and development of a small-scale digester to demonstrate economical production of gas for farm use.
A screening program to examine all herbaceous plants in the United States as potential energy sources
was completed. Another activity involved studying how algae can be used as an energy source and for pollution control. A base growing program was undertaken to learn how sweet sorghum can be grown as a raw material for ethyl alcohol production in all parts of the Nation.
The Biomass program now transfers important management tasks to the Solar Energy Research Institute to develop long range research and development plans in response to DOE management requirements. Increasing emphasis is being placed on alcohol fuels development and on the potential for better wood production and use for energy products.
In 1981, potential biomass energy resources will be identified by region to match biomass energy feedstocks with regional and national needs. New efforts are also planned to foster production of higher yields and identify innovative, integrated, and efficient low-cost conversion processes. The Department will emphasize the use of biomass for chemical feedstocks that are able to replace oil-derived feedstocks.
Solar Thermal
High-temperature solar heat can be used to drive turbogenerators for electricity or for industrial processes. The early thrust of the Solar Thermal Program is to develop high-temperature concentrator systems having broad market potential. There are near-term solar thermal opportunities with existing industrial facilities and powerplants. Technically satisfactory and cost-effective systems are expected to be ready by the mid-I980’s.
The goals of the advanced development effort are to expand and accelerate market penetration by improving materials and component performance, to provide storage technology that enhances capacity factor and fuel displacement potential, and to develop higher-temperature technology for additional industrial heat applications and ultimately for the production of transportation fuels by thermochemical processes.
Three classes of systems are under development, each oriented toward important markets:
1.	Linear receiver systems, which focus sunlight on long receiver tubes or pipes, including trough collectors and hemispheric bowls.
2.	Parabolic dishes, like those used in radio, astronomy, and satellite communications, that focus on a heat receiver.
3.	Heliostat and central receiver collector systems, which utilize large mirrors to reflect sunlight onto central tower receivers. As shown in figure 2, in these systems the Sun’s
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Resource Bases I Conversion	Products	Applications	Markets
Technologies	' ________________
I	Extension of
Gasoline Supplies	|Transoortation
Biomass	I (Alcohols,	Generation of Electric	ransportation
_________ .	I Fuel Oil)	Power	Sector
Biochemical
Forestry, --------- Gaseous Fuels	Onsite Fuel	Industrial/
Agricultural	(SNG, i Input for Gas Pipelines	Agricultural
and Animal [ ------- k Hydrogen) |k	K Sector
Residues	Thermo-
chemical RT_______________________________________
] --------- ' Petrochemical J7	' Residential/
--------- Substitutes	Industrial Feedstock_Commercial Aquatic-------------- (Ketones, Higher 	 Sector
Biomass	Photo-	| Alcohols)
_________ chemical --------------------- ---------- Industrial Process Heat
Electricity Generation of Pressurized	Utility Sector
and Heat	Steam,of Electricity	_____
Residential Heat
I I I------------------------------------1
Figure 1. Scope of markets and applications for products from biomass resources
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Figure 2. Central-receiver solar thermal power system
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energy is reflected from an array of Suntracking mirrors or heliostats to a central receiver located on top of a tower, where the working fluid is heated.
Accomplishments to date include production of high-performance parabolic trough collectors by several companies; the construction of full-scale systems for irrigation pumping at Willard, New Mexico and Coolidge, Arizona; the negotiation of six industrial process heat design contracts and six utility design contracts; and the deployment of trough systems for heat at a major enhanced oil recovery operation. Hemispheric bowl testing is underway at Crosbytown, Texas, and dish concentrator concepts are being tested at three locations. An industrial total energy system is under construction for a knitwear factory at Shenandoah, Georgia. Figure 3 shows a typical total energy application.
Heliostat/central receiver R&D is directed by Sandia Labs, with major test facilities in Albuquerque and Atlanta where heliostats and receivers are being tested for a 10 Megawatt pilot plant in California and subsequent major projects.
In 1981, the Department expects to select applications for experiments in two categories. One is for utility powerplant use, the other for industrial process heat. The decision to proceed in these areas was made after studies that recommended accelerated product qualification and improved interaction between suppliers and users. Both are to participate in solar thermal experiments aimed at producing data on design, cost, performance, and operations. The availability of data should help overcome reluctance of users and catalyze development of a solar concentrator industry.
Photovoltaics
Photovoltaic devices, or solar cells, convert light directly into electricity. When light strikes materials called semiconductors, internal voltages can be created. Attached wires can draw off electricity. The resulting systems may be built in a wide range of sizes and for many uses. Although many opportunities exist for improvements, the basic technology is well understood. At the present time, the major objective is to lower costs in order to make photovoltaics competitive with present energy sources.
The goals of the Department’s program are to reduce installed system costs to a range of $6 to $13 per watt (in 1980 dollars) in the near future, and to about $2 per watt by the mid-1980’s. This is to be accomplished by improving cell efficiency, simplifying
production processes, and advancing system design. Vigorous partnership between Government and industry is expected to yield further cost reductions. This, in turn, should lead to competitive solar cell power in the mid-1980’s for residential applications in many areas of the United States. The development of advanced materials and large automated production facilities should make possible still further price reduction by 1990, perhaps to $1 per peak watt for residential applications.
The Solar Photovoltaic Energy Research, Development, and Demonstration Act of 1978, P.L. 95-590, provides for an accelerated program, including Federal procurement of photovoltaic systems, in order to make photovoltaic technologies commercially competitive. It is the intent of the Act that Federal procurements would be gradually overtaken by a growing private sector market, so that by 1988, 90 percent of new orders will come from the private sector.
Significant accomplishments include a photovoltaic-powered Indian village in Arizona; an irrigation system in Nebraska; power for a National Monument in Utah; and the beginning of construction of a large system to power a college campus complex in Blytheville, Arkansas. Remote applications now power forestry lookout towers, ocean buoys, highway signs, and mobile communications equipment. A Federal buildings program using photovoltaic systems has begun. Major awards were made in 1979 for construction of nine experimental projects utilizing advanced flat-plate and concentrating photovoltaic arrays.
Eight large companies and five small businesses are now producing photovoltaic equipment and systems for commercial use. Industry has committed more than 1,000 professionals to the photovoltaics effort.
Plans for 1981 call for strengthening the advanced research and development program by adding high-risk grants to cover innovative new concepts. Nine intermediate experiments with flat plate and concentrator arrays, two regional test centers, and a Saudi Arabian village cooperative program are scheduled to be completed. Photovoltaic installations on two junior colleges will go into operation.
Wind Systems
Use of wind energy was one of man’s early technical achievements. From the sailing ships and windmills of antiquity, wind systems developed and, until recent years, were widely used. As part of
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Figure 3. Solar total energy application
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DOE’s search for renewable energy sources, interest in wind energy has been rekindled. Through technological development, energy from the wind is once again expected to become a competitive energy source in some regions.
The objective of the DOE Wind Energy Conversion program is to speed the development and commercialization of reliable and cost-effective wind systems yielding significant quantities of energy.
Major recent achievements include the development and testing of experimental prototype wind turbines in a range of sizes, the establishment of a small machine testing program in support of industrial developers, and the investigation of new concepts in wind energy.
New advanced small wind turbines suitable for rural residences and remote applications are now being tested. The Rocky Flats small wind test program continues to enjoy industry support as a mechanism for gathering data for commercial design and marketing. Experimental, intermediate size 200-kilowatt machines are now being tested with utility companies at Clayton, New Mexico; Culebra, Puerto Rico; and Block Island, Rhode Island. A fourth machine is under construction in Hawaii. The Clayton wind turbine has achieved over 5,000 hours of automatic operating time and has provided almost Vi million kilowatt hours to the town. A 2-megawatt machine, the world’s largest, was dedicated at Boone, North Carolina. In addition, a nationwide wind atlas program was begun to provide refined wind resource data on a small local jurisdiction scale across the entire Nation. It is to be completed in 1980.
The Department is now developing second and third generation small and large wind systems. Cost reductions have been accomplished with each generation, along with performance improvements and increases in system efficiency. Operational data from the 2-megawatt machine at Boone are expected to be incorporated into design improvements on the 300 foot, 2.5-megawatt turbines now being fabricated and planned for testing in 1980-81. Data from testing at Rocky Flats are being used to lower the cost and increase the efficiency of commercial small machines, and additional small wind turbines are being field-tested in cooperation with state and local agencies to address institutional and regulatory issues.
In 1981, the Department plans to publish an expanded national wind resource atlas and to begin to design and to build two advanced intermediate-sized experimental machines and two advanced megawattsized machines. Focal points for future emphasis are
on improved performance, cost, and reliability as well as development of industry and user understanding and acceptance of wind power.
Ocean Systems
The ocean stores vast amounts of solar-derived energy. The DOE Ocean Systems Program is designed to tap this renewable energy resource for generating electricity or producing energy-intensive products. In addition to tapping the temperature difference between warm tropical ocean surface water and cold deep water to generate electricity, investigations are under way on systems to extract energy from waves, ocean currents, and from the salt levels of ocean water.
The program goal is to develop environmentally acceptable, technically sound, and economically competitive technologies for converting ocean energy into a resource that can contribute to national energy needs.
Accomplishments in the Ocean Thermal Energy Conversion (OTEC) program include a test of a cold sea water pipe 5 feet in diameter and 500 feet long; extensive tests of pipe fouling caused by ocean life in waters off Hawaii and the Caribbean; cleaning tests off the coast of Florida; development and testing of large heat exchangers by Argonne National Laboratory and industrial developers; selection and modification of a navy tanker for outfitting as OTEC-1, the first fully operational test facility for ocean-going OTEC powerplant components and subsystems; and fabrication of the first heat exchanger to be tested on that facility.
If the data from OTEC-1 indicate that large numbers of heat exchanger passages can be kept clean, then a pilot plant design will be initiated. Initial design of this plant is planned for 1981. Based on the operation of this one-fifth scale commercial unit pilot plant, sufficient knowledge of OTEC should exist so that private industry will take over further development and commercialization. The Governments of Hawaii and Puerto Rico and a private consortium have offered to share some of the costs of developing their technology.
Technologies that use ocean waves, currents, and salinity gradients to generate electricity are still in a very early stage of development. Studies are under way to determine how these energy sources may be exploited in an inexpensive and environmentally safe methods.
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Hydro
Construction of new hydro dams in the United States involves a long lead time and must overcome considerable environmental and institutional barriers. Consequently, most Department of Energy attention is focused on the near-and mid-term potential of small-scale hydroelectric power generation at existing dams.
After years of neglect, small hydro power is becoming an attractive energy source. Costs are calculated to be comparable to new coal or nuclear capacity and the use of existing dams involves no new environmental impact. However, uncertainties about the resource potential, financing, and institutional constraints pose barriers to small hydro use.
DOE seeks to establish a small-scale hydroelectric development industry in the United States based on the rehabilitation and retrofitting of existing dams.
Small-scale hydro powerplants offer several advantages. They are virtually nonpolluting; they utilize a renewable resource—flowing water; they are small and aesthetically acceptable. In addition, the effects upon stream ecology are minor compared to larger hydro facilities. Finally, the technology is well established, and the required components are available throughout private industry.
The major objectives of the program are to support developers in achieving 1,000 megawatts of power-on-line from small or low-head hydroelectric projects in the mid-1980’s, to encourage national development of a potential 12,000 megawatts of new capacity in the long-term, and to prove the economic viability of small-scale hydro with minimum Federal support.
With a number of projects in various stages of planning and construction, the program’s principal near-term achievement will be putting power on-line. These projects include construction on the demonstration project in Idaho Falls and the selection of some twenty-two additional Federal cost-shared construction sites. Also, an engineering development program is being initiated to develop cost reduction techniques. Other program accomplishments include developing and publishing regulations for the Feasibility Study Loan Program; convening five conferences dealing with Federal and state, legal, institutional, and economic impediments and incentives to development; completing a national hydro site inventory and survey of existing dams in the northwest; and completing a series of feasibility studies supported by DOE grants.
The twenty-three demonstration sites already awarded Federal funds were in various stages of production during 1979. The sites are located in Arizona, Alaska, California, Florida, Idaho, Illinois, Massachusetts, Maine, Michigan, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, South Carolina, Texas, Virginia, Vermont, Washington, and Wyoming. DOE funding for these sites totals $28 million. The owners’ share is $160 million, making the total capital cost of construction $188 million.
The Department expects that one-half of the 320 feasibility studies funded through 1981 will proceed to construction with a nominal size of 3 megawatts. An additional capacity of 520 megawatts is expected from 200 projects initiated by other Federal agencies through the President’s Rural Energy Initiative, by developers, and by utilities independent of direct DOE support.
DOE plans to provide financial assistance for evaluation of presently identified sites, and assist in development of financing through other Government agencies. The Small Hydro Development Program will use cost-shared demonstration projects to display commercial competitiveness, thereby stimulating demand.
A number of significant issues constraining the potential development of low-head hydro will be addressed by the Department of Energy. These include:
1.	Funding feasibility studies with forgivable loans to remove the high risk of necessary initial evaluation.
2.	Making an aggressive effort to eliminate barriers to commercial development by conducting environmental studies and monitoring the implementation of regulations demanded by the Public Utilities Regulatory Policies Act that pertain to utility grid interties and price of power paid to small-scale energy producers.
3.	Supporting the National Conference of State Legislatures in its program to assist states address small hydro development.
4.	Expanding the number of economic sites by continuing a program of technical development to reduce design, construction, and costs of operation and maintenance. Regional office outreach activities are designed to encourage small-scale hydro site development, provide field-based technical and institutional assistance, and channel current information on hydropower activities.
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Solar Energy International Activities
The Department of Energy undertakes international solar activities to advance United States’ solar technology development, enhance the capabilities of U.S. industry, and assist other countries in finding domestic alternatives to oil use. Cooperative activities in information exchange, research and development projects, and applications analysis lead to new ideas, reduction in research and development costs, and increased opportunities to study system performance in a wide variety of user environments.
The involvement of United States industry in overseas projects and product adaptation enhances overseas business opportunities. Through sales in the international market, U.S. industry should be able to reduce costs of domestically-sold equipment. Through information exchange, training of personnel in developing countries, and demonstration projects, renewable energy technologies can rapidly substitute for petroleum products. The world-wide exchange of information on alternative energy sources is an important step in achieving security in the world energy market.
The Department of Energy is the lead United States agency in undertaking major cooperative solar activities with international organizations such as the International Energy Agency, NATO’s Committee on the Challenges of Modern Society, and the United Nations. These organizations coordinate multinational efforts in information exchanges, conferences, surveys, research and development projects, application studies and selected system demonstrations. Current areas of cooperation include information exchanges in biomass and wind technology; research and development projects in solar heating and cooling, thermal electric power and wavepower; and conferences directed to the needs of developing countries.
One of the major cooperative projects under the International Energy Agency involves the construction and operation of two experimental 500 kilowatt solar thermal electric plants in Spain. One plant employs central receiver technology, while the other utilizes distributed receiver technology. The design phase has been completed; the construction phase is under way. Initial operation of both plants is scheduled for 1981. Ten countries are cooperating in funding this $50 million project.
DOE has also been the lead United States agency in negotiating and carrying out bilateral solar energy agreements with many countries. The United States-Saudi Arabia Joint Solar Energy project is the largest
United States commitment to this type of international cooperation. Both countries will contribute $50 million over a five-year period in a $100 million effort to advance the development and dissemination of solar energy technology. Major program areas include urban, rural and agricultural, and industrial solar applications. A major project in the urban program area is a solar village power system to be built near two Saudi Arabian villages. Expected to operate in early 1981, this 350 kilowatt system using photovoltaic technology provides an opportunity to demonstrate new technology in the environment of a developing country.
Joint energy programs with foreign nations not only have considerable technical and economic merit, but provide significant political benefits as well. In some cases the sharing of U.S. solar technology can serve as the appropriate quid pro quo for reciprocal benefits in non-energy fields. In general, these activities serve as a valuable instrument of foreign policy in the enhancement of good will and improved international relations.
Outlook
Solar technologies promise to reduce U.S. dependence on imported, exhaustible fossil fuels by increasing the use of inexhaustible, relatively pollution-free solar energy. Solar technologies are especially attractive because they can be used in either centralized or dispersed applications and because they produce electricity, heat, or liquid and gaseous fuels.
The Federal government has made a major commitment to the development and commercialization of solar technologies to help meet the President’s goal of supplying 20 percent of the Nation’s energy by renewable resources in the year 2000. Significant near-and mid-term commercial potential exists for the use of biomass energy. The conversion of biomass to alcohol fuel is a rapidly expanding technology, while the direct combustion of wood is cost competitive for some uses. Other biomass commercialization opportunities are being investigated for their long-term energy potential.
Commercial adoption of solar thermal central and distributed receiver and concentrating heat collection systems is expected in the 1980’s. Major industrial heat and community-scale electric applications of distributed receivers are possible in the next several years, while the use of central receivers in the industrial heat and utility spheres is expected to begin later in the decade.
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Second and third generation wind energy systems are being developed that reflect improvements in system performance, efficiency, and lowered costs. A number of significant events are anticipated in the next few years under the wind energy program and in the market. At least a dozen small wind turbines in the 1 to 40 kilowatt range are expected to be developed and tested. The 2.5 megawatt Mod-2 will have undergone operational tests. It is planned that the 2 megawatt Mod-1 and the four intermediate sized Mod OA’s will have considerable experience, as should some intermediate systems. More importantly, the development of wind systems will have reached the point during 1980 and 1981 where industry-wide standards and criteria can be adopted.
Ocean thermal energy conversion concepts are being tested in a 1-megawatt unit, and may eventually be tested on a scale of approximately 10 megawatts. Test data will be used to determine the potential for a 40-megawatt pilot plant that will be designed in 1981, and will be operating by 1986.
A significant portion of the President’s 20 percent solar target will be supplied by active residential and commercial solar heating and cooling systems. These active systems are in varying stages of development. Space- and water-heating systems, including both direct solar and combined solar/heat pumps, have reached the residential marketplace in limited numbers and are expected to provide noticeable energy savings in the near future.
Combined solar/absorption systems will soon be competitive in larger commercial applications. Over the longer term, the development of competitive, combined solar/cooling technology, involving improved absorption and Rankine technologies, is expected to provide systems appropriate for the majority of commercial applications and to provide a capability for integrated solar heating/cooling systems. Combined solar/desiccant systems are also expected to become available for residential applications.
A large portion of future solar energy production will also be supplied by solar agricultural and industrial process heat systems. Since solar energy systems for industrial processes are not now economically competitive with conventional heat sources, the strategies for achieving use in the industrial sector must be different from those employed for active building systems or passive/ hybrid systems. It will be necessary first to identify the types of systems and the markets that have the best prospects of early conversion to solar, and then to focus most of the development efforts on those systems.
Recent studies suggest that mass-produced linefocus tracking collectors may be the most economical system under development for process-heat applications at temperatures below 550 °F. The continued development of this technology will be to the central industrial process heat program strategy. The program will also continue to support alternative technologies and to build and maintain a technology base that can support future advances. The agricultural program can focus on solar applications in a market that is already fairly well defined. The central strategy in this field, therefore, is to improve dedicated-use systems and develop integrated alternative technology and multiple-use systems for this market.
Research in the passive and hybrid solar technology program is focused on three areas: building systems, communities, and agriculture.
In its effort to assist industry in the development of photovoltaic energy systems, the Federal Photovoltaic Utilization Program is being conducted in five cycles. Photovoltaic systems are currently economical in some small-scale remote applications. Intermediate applications, consisting of 5 to 25 kilowatt off-the-grid applications such as water pumping or village power, are expected to become cost effective in the mid-1980’s. It is anticipated that applications for residential, and selected intermediate grid-connected photovoltaic systems will be proved economical in the same period.
Geothermal Resources
The United States has large and virtually untapped sources of geothermal energy in the form of underground steam and water (hydrothermal resources), geopressured resources that contain methane and heat, and hot dry rock. The potential contribution of geothermal energy sources is shown in table 13; their distribution is shown in figure 4.
Table 13. — Potential geothermal energy production — 1985, 2000, and 2020
1985	2000	2020
	(quads per year)		
Hydrothermal resources1....	... 0.34	3.0	10.0
Geopressured resources2		... 0.021	3.2	7.4
Hot dry rock resources'		.. 0.002	0.007	1.1
Total		.. 0.4	6.2	18.5
' Includes fossil fuel equivalent of electric power and direct heat applications.
2 Includes methane and fossil fuel equivalent of electric power.
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Figure 4. — Geothermal resource potential in the United States for direct heat applications
The Federal role in geothermal energy is to stimulate commercial development of geothermal resources by private industry and public authorities. The DOE strategy for geothermal development has a number of elements. These include:
1.	Reduction of uncertainty about the location, magnitude, and character of domestic geothermal resources.
2.	Support of technology improvements to reduce geothermal capital and operating costs.
3.	Provision of financial incentives (tax credits, loan guarantees, construction cost-sharing) to attract private investments.
4.	Economic analysis to determine potential market applications.
5.	Barrier analyses for overcoming legal, environmental, institutional, and other nontechnical obstacles.
6.	Technology transfer directly involving the user community and other interest groups in program planning and execution.
Hydrothermal Resources
Hydrothermal resources are underground reservoirs of hot water and steam. When the fluids from these reservoirs are extracted through drill holes, the heat content can be used to generate electric power or it can be used directly for space heating and industrial and other applications. Geothermal temperatures above 300 °F are considered necessary for electric power production.
Use of hydrothermal energy is not new. Substantial quantities of electricity have been generated from geothermal energy for over 70 years in Italy, and for about 20 years in the United States. The Geysers steam field in California now produces 663 megawatts of electric power, enough to supply one-half of the electricity requirements of a city the size of San Francisco.
The U.S. Geological Survey estimates that about 2,300 quads of hydrothermal energy could be produced in the western United States.1 Recent studies have identified hydrothermal resources in thirtyseven states. DOE seeks to stimulate development of hydrothermal resources to displace oil and gas in utility and direct heat applications in the near-term (1980-1985), and to encourage their continued rapid growth through the mid-term (1985-2000) and beyond.
1 Assessment of Geothermal Resources of the United States -1978, U.S. Geological Survey Circular 790, 1979.
The basic technology for using high temperature (above 400 °F) hydrothermal resources is well established, and major technical breakthroughs are not required for development. The principal impediments are institutional. The much more abundant moderate temperature resources (300 °F to 400 °F) require technological advances to reduce costs before widespread development can occur. In addition, only a few companies have enough direct experience in geothermal development to assess the risks and to invest confidently in new geothermal ventures.
Most of the identified hydrothermal resources in the United States are on public lands. These must be leased to private industry before exploration and development can take place. The leasing process is long and complex, but steps are being taken to simplify it.
Many Federal agencies have responsibilities related to geothermal development. For example, the Departments of the Interior, Agriculture and Defense are custodians of much government land. Congress has designated DOE as the lead Federal agency for geothermal energy development, with responsibility for overall coordination of Federal geothermal programs.
The DOE strategy for hydrothermal resources seeks to:
1.	Increase the rate of hydrothermal resource discovery and confirmation by simplifying the leasing process and by assisting industry and the states in geothermal resource evaluations.
2.	Stimulate the private sector with financial incentives and loan guarantees.
3.	Reduce risks seen by geothermal developers by sharing costs of demonstration facilities.
4.	Reduce geothermal capital and operating costs by supporting an aggressive geothermal technology program.
5.	Make both public and industrial interest groups aware of the commercial potential of geothermal resources.
Through 1979, the Department recommended legislative steps to reduce institutional barriers and increase tax incentives, provided background geothermal information to ten states considering geothermal legislation, and approved $43 million in geothermal loan guarantees. One of these was issued to a food dehydrating facility that is now commercially competitive. The other three loan guarantees were for exploratory and development drilling as the first phase in geothermal powerplant development at three resource areas in California’s Imperial Valley.
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DOE initiated studies of markets for heat energy in fifteen western states and four eastern areas to help local and state officials assess potentials for geothermal energy growth, and estimated possible future production of electric power at fifty geothermal reservoirs in the western United States.
The Department participated in industry and government drilling programs to confirm new high-temperature hydrothermal reservoirs in the Western United States. It also identified promising low- to moderate-temperature resources in several eastern and western states. A cooperative agreement was signed with industry for a cost-shared 50-megawatt flash-steam demonstration plant to produce electric power at Valles Caldera, New Mexico. Construction of a 5-megawatt binary cycle pilot plant at Raft River, Idaho, was begun. Twenty-two field experiments are under way to demonstrate direct heat applications.
DOE plans to reduce geothermal development costs by advancing technology are being implemented. New drill bits, downhole pumps, high temperature materials and instrumentation, and hydrogen sulfide control systems are available in the market. A DOE-industry project in treatment and utilization of high-temperature, high-salinity brines at Niland, California, has been so successful that the industrial and utility partners plan to build a geothermal electric power plant on the site with no further government aid.
In 1980, the Department expects to complete two exploratory wells at Mt. Hood, Oregon, extend resource definition studies to the southern portion of the Atlantic Coastal Plain, and drill an additional deep well there to confirm the presence of hydrothermal reservoirs. Eleven expected applications will be evaluated for possible approval of up to $365 million in additional loan guarantees. Eleven additional engineering and economic studies for hydrothermal direct heat applications and the detailed design of the 50 megawatt flash-steam demonstration plant at Valles Caldera, New Mexico, will be completed. Also, the construction of the 5 megawatt Raft River pilot plant should be completed in 1980; operation should commence in 1981.
In addition, during 1981 the Department will initiate several pilot projects to demonstrate direct application of hydrothermal energy to industrial processes, continue assessment of moderate temperature hydrothermal resources through cooperative projects with states, and begin construction of the 50-megawatt flash steam demonstration plant at Valles Caldera, New Mexico. Finally, DOE also expects to
expand the Geothermal Loan Guarantee program to include loans for additional electric power generating plants and direct heat utilization facilities.
Geopressured Systems
Geopressured resources are hot saline fluids found at very high pressures in porous formations beneath the coastal areas of Louisiana and Texas. DOE has mapped locations of huge quantities of geopressured aquifers on the Gulf Coast. The brines in the aquifers are believed to contain dissolved natural gas (methane). U.S. Geological Survey estimates2 that about 60,000 trillion cubic feet of dissolved methane (equivalent to 60,000 quads of energy) are present, and that the heat content of the geopressured brines is even greater. Estimates of the fraction of this energy that might be recoverable range from zero to several percent. Since current U.S. total energy consumption is about 75 quads annually, the geopressured resource base merits further examination to determine whether it could contribute to the national energy economy.
Deep, expensive wells are required to produce geopressured brines. Because methane is a premium form of energy, it is the primary target. However, the heat and hydraulic energy may be quite valuable as byproducts. Uncertainties about the economics of recovery of the methane inhibit commercial development. Drilling, construction and operating costs can be forecast, but the rate of methane production and the longevity of reservoirs are uncertain. Should the economics prove attractive, rapid commercial development is anticipated.
DOE’s objective is to encourage commercial exploitation of geopressured resources beginning in the mid-1980’s and accelerating thereafter. The strategy is to assess accurately the magnitude of the resource base, determine the productive capacity of geopressured reservoirs (with emphasis on methane recovery), evaluate possible environmental impacts such as brine disposal and land surface subsidence, derive energy recovery costs, and recommend incentives to stimulate commercial development.
The present focus of the DOE program is to characterize geopressured reservoirs through an extensive program of well drilling and production testing. Two types of wells are involved: those designed and drilled especially for long-term production tests at high flow rates, and those drilled
2 Ibid.
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commercially for gas or oil that turn out to be unproductive and are subsequently made available for short-term testing by DOE. The latter, referred to as wells of opportunity, provide less information but are also less expensive.
The testing will give program data on the salinities of brines, concentrations of dissolved methane, the quantity of methane produced, reservoir properties, maximum sustainable flow rates, rate of reservoir drawdown, reservoir size, injection of spent brines, the compaction of reservoir formations, and the subsidence of land surfaces. As these factors are better understood, it will become possible for industry to estimate the costs of recovering geopressured energy, particularly methane.
In 1979, mapping of Gulf Coast areas containing large quantities of geopressured brine was completed. The first well designed for long-term tests was drilled and completed and sites were selected for additional wells. Short-term production tests in one well were conducted and sites for four additional tests were selected.
In 1980, DOE expects to drill three new wells for long-term production testing and conduct tests on three or four wells of opportunity. The following year, the Department anticipates drilling three more new wells, testing four more wells of opportunity, and completing the long-term production test of five wells drilled in previous years.
Hot Dry Rock Resources
Hot Dry Rock formations contain thermal energy but little or no water. The U.S. Geological Survey speculates3 that the thermal energy content of hot dry rock at a depth of about 4 miles is enormous. As yet, the technology for extracting this heat has not been perfected, and little is known about the hot dry rock resources themselves.
However, the presence just below the surface of this large energy source justifies the effort to devise ways of exploiting it. The problem is not one of access; drill holes frequently penetrate to depths of several miles. The challenge is to extract economically the heat energy from the hot dry rock. Mere circulation of water into and out of a drill hole would be ineffective because the walls of the hole and the immediately adjacent rock would cool quickly, and only a small amount of heat would be recovered.
The concept for heat extraction now being tested by DOE at the Fenton Hill site in New Mexico in-
5 Ibid.
volves two drill holes, both intercepting a zone of man-made fractures in the underground rock. Water is pumped down one hole, through the fractures where the water is heated, and up the other hole. This concept for energy recovery has been demonstrated on a small scale at the Fenton Hill site. The feasibility of this concept is linked to certain characteristics of the hot rock formation. Because little is known about such rocks, except at Fenton Hill, it is not certain whether the heat extraction methods now under development would work at other sites.
The objective of the DOE Hot Dry Rock program is to establish the potential of hot dry rock as an energy resource by the mid-1990’s. The strategy is to complete development of extraction technologies at Fenton Hill and at other sites and at the same time to determine the distribution and character of hot dry rock formations throughout the country.
Two new wells are being drilled at the Fenton Hill site in preparation for a larger loop experiment expected to produce 30-50 megawatts of thermal energy. The 1978 loop produced 4 megawatts of thermal energy. The new 50-megawatt loop at Fenton Hill will be completed in 1980 and testing will begin in 1981.
Two possible future hot dry rock sites, one in the eastern and one in the western United States, will be subjected to detailed geological and geophysical examination during 1980. One of these initial sites may be selected for an energy extraction experiment. Site development could begin in 1981.
Outlook
Having established the presence of major geothermal energy resources in the U.S., the Department will identify the locations of geothermal reservoirs, define their characteristics, develop economical technologies for extracting and utilizing the energy in an environmentally acceptable manner, and encourage their development by commercial interests. High temperature hydrothermal resources (over 400 °F) can be utilized with present technology; here the challenge is to encourage rapid industrial development. The same can be said of low to moderate temperature hydrothermal resources (up to 400 °F) for direct heat use, but advanced energy conversion systems are needed for the economical generation of electric power from moderate temperature resources. Improved technology for all geothermal applications will sharpen competition by reducing costs. The growth of the present nucleus into a major
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geothermal industry will be accomplished by involving user communities in geothermal planning and field activities, and by appropriate financial incentives.
Geopressured resources hold the promise of providing substantial quantities of methane and heat energy. A vigorous DOE drilling and testing program will reveal, by the mid 1980’s, the extent to which this promise can be realized. If the energy is technically and economically accessible, commercial development will be undertaken rapidly by the oil and gas industry.
Hot dry rock may represent a large energy supply, but effective methods of finding the resources and extracting their energy must be developed. If these methods are successful, hot dry rock will be exploited commercially in the last years of this century and will make a major energy contribution in the next.
Magnetic Fusion Energy
Introduction
Fusion is the energy of the stars—the fundamental energy process of the universe. The Sun is a gigantic fusion reactor that converts hydrogen to helium through a complex chain of fusion reactions. The Sun radiates energy in various forms, including sunlight.
Fusion occurs in the Sun because gravitational forces squeeze and heat its substances to about 15 million degrees Centigrade. The pressure and temperature working together cause atoms to break apart and allow the nuclei, driving into each other, to fuse. All the Sun’s energy is produced by gravity and the fusion process.
DOE is working to develop the capacity to produce commercial fusion energy on Earth. Successful commercialization of fusion could provide an energy source whose fuel is cheap and essentially unlimited and whose by-product would pose reduced environmental problems compared to those posed by oil, gas, coal, and fission power. This section discusses the Department’s efforts to develop magnetic confinement fusion. Inertial confinement fusion is discussed in Chapter 8 on defense programs because its commercial potential is more distant than that of magnetic fusion.
While there has been technical progress in the last few years, more work is needed before DOE can be certain that the energy can be produced in fusion reactions. Toward this end, the Department of Energy spent $355 million in 1979 and will spend ap
proximately the same amount in 1980. The President’s budget request for 1981 is $403.6 million. Table 10 describes funding for the magnetic confinement fusion program in more detail.
Producing a fusion reaction represents a first step toward commercial fusion power. In a fusion reaction, light nuclei strike each other with such speed that the nuclei combine, or fuse, to form a larger atom and in the process release energy. Fusion reactions are difficult to produce because nuclei are all positively charged and, therefore, repel each other. Only if the nuclei are made to move very fast, more than a million miles an hour, can they overcome this repulsion. A temperature of 100 million degrees Centigrade is needed to attain this speed and to produce useful fusion power.
The fusion fuel created at this temperature and speed is called “plasma”. Its temperature must be maintained if a fusion reaction is to occur. No known material vessel can hold a substance at such high temperatures. Even if there were such a container, the plasma would have to be kept away from its walls. If it touched the walls, the plasma would transfer some of its heat to them, perhaps lowering the temperature below that required for fusion to occur. One of the basic challenges of fusion has been to contain or confine plasma.
Magnetic confinement is based on the fact that plasma consists of charged particles and charged particles can be restrained by magnetic fields. There are two basic magnetic field configurations for confining plasmas. They can be classified as either closed or open systems (figure 5).
In the closed system, the magnetic lines of force are closed on themselves in the shape of a doughnut or toroid. Today, toroidal devices are often called Tokamaks.
In the open or linear system, some of the plasma can leak out the ends. To restrict these losses, the magnets are placed near the ends to squeeze the magnetic lines of force. Because its magnets cause the particles to turn back rather than to escape out the ends, these devices are often referred to as mirror devices. The Department is working on both of these concepts and on combinations of some aspects of each in order to find the best candidate for a commercial reactor.
The goal in both the open and closed systems is to make a plasma hot and dense enough and then to confine it long enough for many fusion reactions to occur at once; so many, in fact, that more energy is produced than it takes to heat and confine the plasma.
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Coil Current
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Figure 5. — Basic magnetic field configuration for containing plasmas
Closed System - Simple Torus
Coil
I
Plasma
Field Lines'
Field Lines
Open System -Simple Magnetic Mirror
Plasma
Accomplishments
Progress has been so encouraging, especially in the last 5 years, that it will probably become possible to make and control a plasma of burning fusion fuel with reasonably-sized equipment. The requirements for plasma temperature, density, and confinement duration are close to fulfillment, though all three conditions have not been reached at the same time nor in any one machine. These capabilities are being combined in the Tokamak Fusion Test Reactor now being built in Princeton and scheduled to operate in 1982. By 1984, this machine is expected to reach energy break-even, where the energy produced equals the energy used to reach fusion conditions.
During 1979, progress was made in the following areas:
1.	The efficiency of the use of magnetic fields is important in making fusion reactors small and economical. In 1979, in the ISX-B experiment at Oak Ridge National Laboratory, the efficiency was raised from about 1 percent to about 3 percent, fairly close to the 5 percent to 10 percent range required for economical reactor operation. In addition, in the same experiment, the plasma density was increased fivefold.
2.	The Tokamak Fusion Test Reactor. On the basis of additional experiments, including the one cited above, expectations for the performance of the TFTR, with modifications, have been significantly increased; energy break-even should be surpassed with operation in even more reactor-like conditions.
3.	The Tandem Mirror Experiment at Lawrence Livermore Laboratory, conceived as a proof of the principle of the new tandem mirror concept, began operating in June. Even though all the features and physics of the tandem mirror have not yet been tested, early results indicate that tandem mirrors are more stable and better behaved than conventional mirror machines.
4.	An environmental impact study for magnetic fusion energy as an energy option was begun.
5.	Fusion Materials Irradiation Test Facility. Preliminary design was completed and detailed design for fabrication was begun on this powerful tool for applying existing materials irradiation data to fusion needs and developing new materials.
6.	Engineering Test Facility Design Center. To support the advancing program, a national design center has been established to focus technical discussions on the ETF, a facility to be built once scientific feasibility is established. The center incorporates participation from the major laboratories and industries.
In addition, as a result of the growing worldwide interest in fusion, cooperative efforts with Japan were initiated, including Japanese financial participation in the U.S. program and an agreement with the USSR on a continuation of a significant level of exchange visits of scientists from both countries. Moreover, the International Atomic Energy Agency (IAEA) has begun a design study to determine the features of the next large fusion machine. This study is drawing on experts from the Soviet Union, Japan, the European Community, and the U.S. and consists of workshops in thirteen different technical areas. In addition, there are several new materials and magnet technology projects being pursued under the auspices of the IAEA.
Outlook
Even though fusion energy break-even is expected to be demonstrated within a few years, research will continue on mirror machines and other concepts so that the best concepts for actual reactor design for various purposes can be compared. At the same time, research and development in the areas of structural materials, engineering systems design, plant design, materials handling, and environmental safety will be rigorously pursued.
After demonstrating proof of scientific feasibility, the Department’s planned next step will be to build an Engineering Test Facility. To be started by the mid-1980’s, the ETF will serve as a test bed for engineering solutions, materials testing, and systems design.
The fundamental program logic is based upon two parallel paths—engineering testing probably using a Tokamak fusion source, and exploration of the best confinement concepts for the eventual reactor choice. On the basis of the engineering experience with the ETF and the broad supporting physics program, researchers expect to have enough knowledge to choose the design with the highest potential and proceed directly to an energy source early in the next century.
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Chapter 4
Fossil Energy
Introduction
Fossil fuels—oil, gas and coal—supply 94 percent of the Nation’s energy. The prosperity Americans have enjoyed for the last 100 years has been built on a foundation of cheap, readily available fossil fuels.
The U.S. transportation systems rely almost exclusively on liquid fossil fuels, the household and commercial sectors depend heavily on liquid and gaseous fuels, and industry uses liquids and gases to satisfy three-fourths of its energy needs.
However, in recent years, U.S. known reserves of oil have begun a steady decline, and U.S. oil production peaked in 1971 at 11 million barrels per day. Simulaneously, the price of foreign oil, which in 1979 accounted for almost 50 percent of our total petroleum supply, has spiraled upward while assurances of continued supplies from overseas have become less certain.
The largest fossil fuel resource in the U.S. is coal. Nearly 4 trillion tons of coal are estimated to exist, and the amount economically recoverable today with current technology could approach 200 to 300 billion tons—several hundred years worth of supply even at an accelerated consumption rate. For almost any plausible energy future, coal must play an increasingly important role, not only in direct combustion, but also as a feedstock for synthetic fuel processes.
One principal source of new liquid fuel production will be enhanced oil recovery from existing
fields. At present, normal oil recovery operations, on average, produce about one barrel for every three barrels of oil actually in the underground reservoir. New technology and regulatory incentives introduced in 1979 could together help free a portion of the estimated 334 billion barrels of oil that are not economically recoverable by conventional techniques.
Although it poses environmental constraints, oil shale could also contribute significantly beginning in the next decade. The rich western shales are estimated to contain the equivalent of up to 1.8 trillion barrels of oil, about 40 percent of which may be recoverable.
The unconventional gases—geopressured methane, Devonian shale, coal bed methane, and gas from tight sands—present a domestic resource base at least fifteen times greater than conventional natural gas. These supplies could make a significant but unknown contribution to the gas supply beginning in the mid-1980s.
The reorganization of the Department of Energy in 1979 prepared the Department to focus concern on fossil fuels as major substitutes for imported oil. A new Assistant Secretary for Fossil Energy was designated for the Department’s development of these fuels. The budget for Fossil Energy programs, including the Strategic Petroleum Reserve, is shown in table 14.
To increase production and to encourage greater reliance on coal, five major objectives have been established for the use of coal:
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Table 14. — Budget authority for fossil energy — 1979, 1980, and 1981
1979	1980	1981
	(millions of dollars)		
Coal		.. $ 628.2	$795.4	$1,053.1
Petroleum		103.7	69.1	70.6
Gas		35.0	40.5	36.3
Strategic petroleum reserve....	..	3,007.7	0.2	2,404.0
Total		.. $3,774.6	$905.2	$3,564.0
1.	To expand domestic coal markets by implementing regulations that prohibit oil and gas use in utility and large industry boilers, under the Powerplant and Industrial Fuel Act of 1978;
2.	To encourage development of better emission control technologies so that existing and new utility and industrial facilities can burn coal directly and still comply with environmental standards;
3.	To demonstrate the capability to produce synthetic liquids and gas from coal by the mid-1980s so that commercial capacity could be established as rapidly as possible;
4.	To develop technologies that will allow more efficient and environmentally acceptable use of coal in the 1990s and beyond; and
5.	To improve the economic competitiveness of coal by correcting oil and gas price distortions; improving mining productivity and reducing unnecessary regulatory constraints to production and transportation.
To guarantee adequate supplies of liquid fossil fuels, DOE will:
1.	Encourage maximum exploration and production of domestic oil resources by greater price incentives for conventional oil production;
2.	Remove barriers to accelerated production from the Alaskan North Slope, outer continental shelf, and elsewhere;
3.	Encourage enhanced oil recovery through new regulatory and pricing incentives and continued research and develoment;
4.	Provide incentives for commercial production of oil shale, heavy crude oils, tar sands, gasohol, and enhanced gas recovery;
5.	Demonstrate the capability for producing synthetic liquids and gases that have potential to substitute for oil; and
6.	Maintain a strategic reserve to protect against supply interruptions in the future.
The strategy for natural gas is built on the accomplishments of the Natural Gas Policy Act, which abolished a dual market system and set a course toward decontrol of gas prices by 1985. The strategy recognizes that gas supplies are ample to meet existing demand in the near-term and provide for at least some new buyers as well. Amounts however, available to meet United States needs in the longterm are uncertain. Therefore, the strategy for natural gas will seek the maximum benefit from the temporary gas surplus by encouraging dual-burning utility and industrial facilities to shift from oil to natural gas, if coal is not feasible. This will reduce imports of oil. Further, the Department will encourage maximum exploration and production of domestic natural gas and ensure new markets for these additional supplies in residential, commercial and industrial markets. It will also develop supplemental sources of gas supply that are competitively priced, do not displace lower-cost domestic supplies, and are not unreasonably vulnerable to disruptions.
Energy Security Reserve
To stimulate the production of alternative fuels, the Congress appropriated $19 billion to an Energy Security Reserve. The exact disposition of most of this reserve is still to be decided. However, $1.5 billion of these funds were designated to begin the contract process for purchases or purchase commitments of alternative fuels. DOE will begin the process of committing these funds during 1980 and by the end of 1986 should have a substantial amount of fuel derived from various sources, such as coal, shale, tar sands, lignite, peat, biomass or unconventional gas under purchase agreement.
Another $708 million of the reserve has been appropriated by Congress for incentives to accelerate the construction of commercial scale facilities. There are three incentives:
1	. Project feasibility studies: $100 million has been appropriated for project feasibility studies. To determine the technical and economic feasibility of proposed alternative fuels projects. A significant part of these studies will be focused on resolving the uncertainties associated with fossil fuel alternatives to oil at commercial production levels. Cost uncertainties will be a primary target of the studies.
2	.Cooperative agreements: $100 million has been appropriated to support commercial
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scale development of alternative fuels facilities. Cooperative agreements involve those responsible for the production of these fuels in the long term at the earliest possible time.
3	.Loan guarantee reserve: $500 million is provided as a reserve to cover any defaults from loan guarantees issued to finance the construction of alternative fuels production facilities.
By making these comprehensive financial commitments to the establishment of a synfuels industry, the government has reduced the risks that slow the growth of a new industry.
Coal Technology
DOE’s program to develop more advanced generations of synthetic fuels technologies also passed several important milestones in 1979. The most detailed designs to date of full-size synthetic liquid and synthetic solid plants in the U.S. were completed. Construction of two large coal-to-liquid pilot plants moved into final stages. And for the first time, researchers successfully converted eastern caking coals to synthetic gas underground, a technique that could be applied to many coal seams that cannot be mined with today’s technology.
DOE’s research and development (R&D) program in direct coal burning also expanded in 1979. The Department announced an accelerated program to demonstrate that mixtures of coal and oil can be burned in boilers now using only oil. A new experimental boiler, a fluidized bed, started operations at Georgetown University in Washington, D.C., and DOE began a program to build industry’s confidence in the reliability of this advanced coal burning technique.
The budget authority for coal is summarized in table 15.
Table 15. — Budget authority for coal — 1979, 1980, and 1981
Budget authority 1979	1980	1981
(millions of dollars)
Coal technology....................... $625.9	$791.1	$1,046.9
Coal applications........................ 2.3	4.3	6.2
Total coal......................... $628.2	$795.4	$1,053.1
Mining R&D
Underlying most of the coal-related technologies is the need to extract coal from the ground—and to do it safely and with the least environmental damage. DOE’s mining program is carried out in three areas:
Underground Mining: To reduce the time and cost of bringing new coal mines into production, DOE is developing a new mechanized boring machine that can sink shafts up to thirty times more rapidly than conventional equipment. The new machine also improves the miners’ working conditions. During the year, initial trials of a prototype shaft boring machine continued at U.S. Steel’s Oak Grove Mine in Alabama. Over 300 feet of shaft were excavated and lined. Trials are expected to continue through 1980 to a depth of 1,150 feet.
In 1981, activities will focus principally on obtaining the information needed to predict and control the leakage of gases and fluids into the mine, and will investigate ground subsidence. Disposal of mine waste and control of mine effluents will also constitute major 1981 activities.
Because drilling equipment for roof bolts must be positioned upright, holes can be drilled by conventional methods only as deep as the tunnel or coal seam is high. DOE is working with several firms to develop a greater-than-seam-height drill. In one system being developed, a flexible roof drill permits installation of roof bolts regardless of seam height. The first tests were conducted in 1977, and in 1979 over 6,000 holes 8 feet deep were drilled in a mine near Palisade, Colorado to test an improved design.
DOE also demonstrated several advances in coal transport from the mine face in 1979. Perhaps the most notable achievement in haulage systems was the initial surface testing of a system called the autotrack bridge conveyor train. Guided by an electrical cable laid loosely on a simulated mine floor, a 100-foot long version of this conveyor system was required to negotiate ninety turns in a series of test runs at Oak Hill, West Virginia. The test demonstrated the system’s capability of carrying coal at the rate of 12 tons per minute compared to conventional shuttle cars that carry only about 2 tons per minute. DOE plans to move testing underground in 1981.
Surface Mining: About 60 percent of the Nation’s coal comes from surface mines, a substantial growth from 10 years ago when surface coal provided only a third of the U.S. total.
In the hilly terrain of Appalachia, a common method of surface mining is “haulback contour min
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ing.” The soil overlying a coal seam, called overburden, is removed from the outcrop of coal and around the contour of the mountain. In conventional systems, the drilled and blasted overburden is removed by front-end loaders and bulldozers, hauled away, and deposited in the pit where the coal has been removed. In 1979, field demonstrations began of a low-wall conveyor system that would replace the large off-road hauling trucks at lower costs, reduce pit congestion, increase miner safety and enhance land reclamation. The system consists of a series of 50- and 80-feet long portable conveyor units that can handle up to 2,400 tons per hour of overburden. The system is now being demonstrated at a surface mine near Hazard, Kentucky.
Coal Preparation: After the coal is mined, advanced coal cleaning and upgrading can be done at the mine, resulting in reduced shipping costs, lower sulfur emissions, and, in some cases, improved boiler reliability.
Physical cleaning of coal is the least expensive and most environmentally acceptable way of separating impurities from coal leaving the mine. DOE has a major effort underway to separate pyrite (an iron-containing mineral) from coal using a technique called high-gradient magnetic separation. Research into this promising method will continue through 1980 and into 1981. Chemical cleaning techniques, which modify both the chemical and physical properties of coal by a chemical reaction, also hold promise for meeting more stringent air quality standards as well as providing a customized coal for a range of coal conversion technologies. One such technique, called oxydesulfurization, could be a candidate for commercial use in 7 to 8 years, particularly if positive results are obtained in 1980 when DOE plans to evaluate three major variations of the technique.
A new method was developed during the year for determining the chemical configuration of organic sulfur in coal. Under a contract to the University of Houston, researchers devised instruments to improve both the reliability and precision of current methods of determining how organic sulfur is bonded to the carbon atoms of coal. Once the analytical techniques are standardized and automated, researchers will have a more exact method of evaluating the chemistry involved in removing organic sulfur from coal.
Synthetic Fuels
Several processes to convert coal into synthetic fuels entered the final stages of development during
1979. Many of these processes are outgrowths of techniques pioneered in Germany in the 1930s and 40s. However, unlike their German predecessors, the processes can accept a much wider variety of coals at improved efficiencies and costs. Based on the information and experience gained in laboratory testing in the 1960s and pilot testing in the 1970s, several of these processes are being readied for demonstration at near-commercial scale in the 1980s. Later in the decade, commercial-scale operations could begin.
Coal Liquefaction: Three promising processes have moved into large scale development — the Solvent-Refined-Coal (SRC), Donor Solvent, and H-Coal processes. Each represents a generic category called direct liquefaction, meaning that coal is converted directly into liquids. In July 1979, two DOE contractors completed the most detailed engineering, environmental, and economic analyses to date for a full-scale SRC module, one of up to five that would make up a future commercial plant. Following completion of the 1-year design efforts by a joint venture of The Southern Co. and a subsidiary of Gulf Oil, DOE authorized both firms to begin detailed design leading to construction and operation. The Southern Co., working with Wheelabrator-Frye and Air Products & Chemicals, chose a site in Kentucky for a plant that will produce clean-burning solid and liquid fuels from high-sulfur coal. Gulf’s plant, to be located in West Virginia, will manufacture a liquid product. Each facility will be designed to convert 6,000 tons of coal a day into the equivalent of 20,000 barrels of oil.
The commercial promise of the SRC-solid process was enhanced significantly in 1979 by successful testing of a Kerr-McGee technique for separating coal ash from the synthetic product. Two other ash separation techniques also showed promise in their initial tests. This led researchers to conclude that the critical step for separating solid and liquids, which is common to many coal liquefaction techniques, will not impede future commercial development.
By the end of the year, the construction of two other coal-to-liquid facilities was over 90 percent complete. At Baytown, Texas, workers neared completion of the Exxon Donor Solvent facility, a 250-ton-per-day pilot plant expected to begin operating in the summer of 1980. And at Catlettsburg, Kentucky, the Ashland Oil H-Coal pilot plant moved into the latter stages of construction. Capable of processing 200 to 600 tons of coal per day, the H-Coal plant will be the largest synthetic fuel facility in the U.S. construction when completed in 1980 and full plant operations begin. With the data obtained
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from the demonstration of the SRC full-scale module plus information from the pilot plants, scale up of the H-Coal and the Exxon Donor Solvent plants to commercial size could occur without the necessity of an expensive demonstration plant.
During the year, enhanced efforts began in another synthetic fuel category called indirect liquefaction. In this process, coal is converted to a gaseous mixture of carbon monoxide and hydrogen. The gases are then chemically recombined over a catalyst to form an assortment of liquids, including methanol, or even high octane gasoline. Although several indirect liquefaction techniques are ready for commercial use—one version of the process has operated for 20 years in South Africa—further improvements are possible to lower costs and to improve performance. Toward this end, DOE increased emphasis on improving the indirect liquefaction process, particularly in converting the coal gas to useful liquids and in tailoring the process to U.S. coals and markets.
Coal Gasification: Increased interest in indirect liquefaction during 1979 added a new perspective to DOE’s coal-to-gas program. Since the production of synthetic gas is the first step of the indirect process, DOE’s on-going efforts to improve coal gasification techniques should play a significant role in the liquid and the gaseous markets.
During 1979, pilot plant testing confirmed the technical promise of two advanced techniques for producing pipeline quality, or high-Btu, gas from eastern caking coals. These coals, in contrast to many others, tend to swell and stick together when heated and have proven troublesome for conventional gasifiers. But researchers working on DOE-sponsored projects with two private firms showed that advances in coal gasifiers can overcome the caking of these coals. Both firms are currently designing demonstration plants to test these advanced techniques at large scale, with DOE slated to select one in the spring of 1980 for cost-shared construction and operation. Construction is expected to begin in 1981.
One coal gasification demonstration project designed to produce a low-Btu gas for a taconite plant in Minnesota encountered technical problems in 1979 particularly in handling small particles of coal called “fines.” This situation, coupled with projections of increased product and capital costs and new environmental restrictions, forced DOE not to proceed with the proposed 500-ton-per-day plant.
Three of DOE’s initial six gasifiers-in-industry projects continued into 1979. The program was
begun in 1976 to show that off-the-shelf gasifiers could be used in small industry applications. A project to equip a conventional small-scale gasifier at a York, Pennsylvania brick kiln, was completed in June 1979, and showed that anthracite coal could be converted to a low-grade fuel gas at costs ranging from $2.40-$2.60 per million Btu’s. A second gasifier project, at the University of Minnesota, is expected to begin producing gas for heating campus facilities in 1980. The third, in Pike County, Kentucky, has been modified to include a gas cleanup capability and is still being designed.
Several new generations of gasification concepts moved into more advanced stages of development during 1979. Contracts were awarded to improve two advanced gasifier concepts being developed by private firms, one for high-Btu gas and one for medium-Btu gas, both using techniques borrowed from rocket technology. A major catalytic gasification process successfully completed a 165-hour run in a 1-ton-per-day development unit using Illinois caking coal.
Underground Coal Gasification: Eastern caking coal was turned into synthetic gas underground for the first time in 1979 at a site near Pricetown, West Virginia. Applying underground gasification techniques to eastern coals had been considered difficult due to the coal’s tendency to swell and shut off passages in the seam needed to sustain the flow of air for gasification. However, a team from DOE’s Morgantown, West Virginia Energy Technology Center successfully converted several hundred tons of coal to gas in the fall. The achievement increased the possibility that a large unmineable coal resource in the populous Appalachia region might become available.
In the West, where underground coal gasification has been tested for several years, scientists from DOE’s Lawrence Livermore Laboratory began their third major field experiment at Hoe Creek #3 near Gillette, Wyoming. During the 57-day test, almost 4,000 tons of coal were converted into about 200 million cubic feet of gas. To increase the heating value of the synthetic gas, the researchers injected a mixture of steam and oxygen (rather than air) into the burning coal.
Peat Conversion: DOE broadened its synthetic fuel program in 1979 to include peat, a geologically “young” coal containing almost 50 percent water. Preparations were begun for possible modifying of the Hygas facility in Chicago to prepare for converting peat to gas at pilot scale in 1981. Furthermore, detailed studies of the chemistry of peat from Maine,
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North Carolina, and Minnesota showed that the material is highly reactive and produces up to 25 percent liquids during gasification. Ten states have joined DOE in its expanded peat program.
Direct Combustion
The dominant use of coal throughout the remainder of this century is likely to remain direct combustion.
DOE took a major step toward increasing the environmental acceptability of coal burning by starting up the largest industrial fluidized-bed coal combustor in the U.S., at Georgetown University in Washington, D.C. The fluidized-bed process burns coal in a bed of limestone with the mixture suspended on an upward-blowing stream of air. Sulfur released from the burning coal is captured by the limestone before it can leave the boiler and pollute the air. Preliminary operation showed that the 100,000 pound (steam) per hour unit can meet the requirements for sulfur dioxide, nitrous oxides, and particulate emissions—the pollutants regulated by the Clean Air Act—without the need for additional cleanup equipment.
Detailed designs were continued on two fluidized bed systems to be built at Shamokin and Wilkes-barre, Pennsylvania. Both would burn anthracite wastes, large amounts of which have accumulated in several areas of the state. Start-up is scheduled for mid-1981. A third such project may be built pending selection of a suitable site.
Confidence in the commercial future of the pressurized fluidized-bed system was gained during the year. Unlike the Georgetown unit, which functions at atmospheric pressure, pressurized fluidized-bed combustors operate at pressures of six to sixteen times normal atmospheric pressure. This gives the hot combustion gases sufficient energy to spin a gas turbine to generate electricity before their heat is used in a conventional steam-turbine system—a concept called combined cycle. A 1,000-hour test run of a combustion gas clean-up system to protect turbine blades showed that more of the combustion contaminants could be removed than previously thought. Construction of a 13-megawatt pressurized fluidized bed-combined cycle pilot plant at Wood-Ridge, New Jersey will begin in 1980 and is expected to be completed in 1981. A pressurized coal combustor facility jointly funded by the U.S., the United Kingdom and The Federal Republic of Germany will be completed in 1980.
Also in 1979, the first long-term burn test of coal-oil mixtures began at a Massachusetts power plant. In September, DOE announced a three-year
program to augment the New England test with data from a variety of other utility and industrial boiler designs.
Advanced Environmental Control
The Advanced Environmental Control Technology program got under way in 1979 to develop and demonstrate new techniques for removing pollutants from the direct burning of coal. The Environmental Protection Agency (EPA) has sponsored significant research and development in these areas, and it became imperative for DOE and EPA to coordinate their efforts closely. In May, the two agencies signed an agreement establishing the mechanisms for DOE to transfer funds to EPA for joint projects. In 1980 and 1981 work will concentrate on improving the performance and reliability of conventional lime/limestone scrubbers; on developing new generations of scrubbers that solve the wet sludge disposal problems of conventional devices; and on limiting emissions of nitrous oxides, sulfur oxides and particulates, and heavy metals from advanced coal systems.
Fuel Cells
During 1979, work progressed on a new second generation concept called the molten carbonate fuel cell. This advanced system uses hydrogen and carbon monoxide, which can be made by gasifying coal, in an electrochemical reaction with oxygen to generate electricity. By linking the molten carbonate fuel cell to a coal gasifier, the efficiency of producing electricity could approach 50 percent, a substantial improvement over the 30 to 35 percent efficiencies of today’s coal-burning power plants. To develop candidate designs and manufacturing techniques for these types of fuel cells, DOE signed contracts during the year with United Technologies Corporation and the General Electric Company. These contracts are part of an effort to move the molten carbonate fuel cell from the research stage to primary exploratory development, a transition that is expected to be completed in 1981.
The first modules that will make up a fuel cell utility demonstration powerplant in New York City began arriving at the Manhattan Island site in late 1979. Designed to produce 4.5 megawatts of electricity using a first generation phosphoric acid concept, the demonstration plant is scheduled to begin tests in early 1981.
Heat Engines and Heat Recovery
Two demonstration units that use the waste heat of a municipal power plant to generate additional electricity went into operation in 1979. The units use
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the hot exhaust from diesel generators to vaporize a fluid that has a low-boiling point. The vapors then spin a turbine-driven generator to produce about 10 percent additional electricity. Through 1980, DOE hopes to have six units operating to demonstrate variations of the waste heat recovery concept.
The High Temperature Turbine Technology program will move into its fifth year in 1981 with successful tests that could lead to high efficiency integrated gasifier combined-cycle power plants in the early 1990s. The advanced turbine blade cooling techniques were tested last year, both designed to make possible the development of 2,600 degree F. gas turbines for use in combustion with low-Btu coal gasification. One of the concepts—an air cooled version—accumulated 300 hours of test time. Continued testing in 1980 will provide additional experimental data necessary for proceeding to the next phase of the program, which is to test a turbine under actual field conditions.
Magnetohydrodynamics
Magnetohydrodynamics (MHD) systems generate electricity directly from the hot gases of coal combustion. The technique is potentially more efficient than many other energy producing processes. Coupled to a conventional steam electrical generator, an MHD system could achieve an efficiency of up to one and a half times that of today’s coal burning power plants. Environmentally, MHD offers the advantage of removing sulfur as an inherent part of the process, thereby reducing the need for extensive clean-up equipment.
The 50-megawatt (thermal) Component Development and Integration Facility—one of the major facilities in DOE’s MHD program—is nearing completion outside Butte, Montana. Both the initial combustor and generator channel were delivered to the site in 1979.
Construction activities are expected to be completed in 1980 and full scale testing is expected to begin in 1981. The facility will provide engineering data from which to scale up MHD power systems.
Coal Applications
Low-to-Medium-Btu Gas
The objective for low- to medium-Btu gas is to develop a timely program for the use of these gases from coal gasification as alternatives to natural gas and fuel oil. The program will use the information gained from operations of several commercial low-
and medium-Btu coal gasification plants by 1985 to stimulate near-term commercial capability in key industries. Commercial development will depend primarily on the long-term economics of this technology.
The strategy for low- to medium-Btu gas will involve three primary thrusts to overcome or reduce the barriers to commercialization. First, a commercial experience base must be established. Second, information and data related to the market economics, to regulatory and institutional constraints, and to environmental, health and safety factors must be collected and assessed. DOE staff must then make recommendations to bring about policy and legislative changes. The third activity is to further public and user awareness of medium-Btu gas as an alternative fuel to oil and natural gas.
High-Btu Gas
In 1979, DOE and a private gasification company signed a cooperative agreement for $3 million which will permit support that could result in the first commercial production of high-Btu gas in the world. The objective of the high-Btu gas commercialization program is to have two or three high-Btu gas plants in operation by the mid-1980’s. The program is structured to pursue a two-pronged approach to commercialization. The initial effort centers around supporting Great Plains Gasification Associates in their efforts to construct and operate the nation’s first commercial high-Btu gas plant. A Cooperative Agreement for $3 million has been signed to allow project sponsors to proceed with project engineering and preconstruction activities until a final acceptable ruling is obtained on the sponsor’s tariff request. A total of $25 million is to be provided as part of the Cooperative Agreement and this will be repayable upon successful financing of the project. A favorable Federal Energy Regulatory Commission (FERC) tariff could result in the first commercial production of synthetic pipeline gas from coal anywhere in the world by 1983.
The second parallel effort is to use a Federal loan guarantee as well as to support an appropriate tariff before FERC. This second approach would remove one of the principal barriers to commercial high-Btu gas production, which calls for the ratepayer to assume the cost of a plant failure. The loan guarantee program is based on the Alternative Fuels Demonstration Program established in the Department of Energy Act of 1978 (P.L. 95-238). (see Appendix E)
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The long range target is an industry capable of supplying up to 500,000 barrels a day of oil equivalent by 1990 in support of the President’s synthetic fuels goal.
Coal Liquids
This program has a number of objectives, all leading to the establishment of a competitor synfuels industry. One is to encourage industrial participants to make evaluations of various coal-liquids processes and their problems. The second is for industry to evaluate Federal financial and non-financial incentives to accelerate private sector investments in synthetic fuels facilities. The third is to determine appropriate types of incentives to achieve the President’s energy goals.
In 1979, DOE concluded a preliminary economic analysis of the Fischer-Tropsch conversion facilities to producing gasoline and diesel fuels from coal in the U.S. It also supported an independent marketing study for two solvent retined coal projects, SRC-I and SRC-II, and carried out evaluations of commercialization incentives for the Energy Security Task Force for Synthetic Fuels.
The indirect coal liquefaction plan is intended to contribute to the Nation’s supply of liquid fuels for transportation. It will support private industry’s initial commercial development activities—preliminary design, economic and financial analysis, site screening, and the like. DOE will also continue its study efforts so that the Department can make informed decisions on the need for, and character of, financial and non-financial incentives that may be required to advance coal liquids technologies.
Coal Supply Development
To increase the demand for coal, DOE monitors and expedites the licensing and siting of powerplants, provides financial incentives for voluntary and mandatory conversions, and acts as an energy advocate during environmental reviews. The Department surveys projected coal mine openings, coal production, and contract intentions, and also guarantees loans for underground eastern coal mines.
Coal Loan Guarantees: DOE provides help to small-and medium-sized producers to expand, develop, or reopen underground low-sulfur coal mines and to build coal preparation plants is provided by DOE. Established by the Energy Policy and Conservation Act of 1975 and expanded by the Powerplant and Industrial Fuel Use Act of 1976, the program is in
tended to stimulate production of underground low-sulfur coal (no more than 0.6 pounds of elemental sulfur per million Btu’s), promotes the reduction of sulfur content of coal produced from any coal mine, and encourages competition within the coal industry.
DOE has the authority to issue up to $750 million in loan guarantees for projects complying with all environmental and safety regulations. Each project must also be financially sound, as defined by the statute and the program regulations. The maximum loan guarantee is 80 percent of the lender’s loan; the limit for any one borrower is $30 million. The program has approved its first conditional commitment for a loan guarantee of $1.1 million. This was the result of a 1979 campaign to implement and introduce the program to the coal industry and to commercial banks. During the year, the program adopted regulations, prepared an application package, published a brochure, and made presentations to coal producers, bankers, and dealers in government-guaranteed securities. The result of those activities are indicated in table 16.
Table 16. — Status of applications for coal loan guarantees — 1979
Status	Number	Millions of dollars
Accepted applications under review.	4	$ 40.0
Partial applications		3	41.5
Applications in preparation		22	227.0
Program totals		29	$308.5
Coal Production Technology: This program identifies potential constraints to adequate and competitively-priced coal supplies, and implements strategies to overcome such constraints. A number of activities were undertaken during the year.
A study, begun to determine how equipment manufacturers and coal operators decide to put new technology into commercial use in coal mines, will be completed by 1981. Another study involving coal miner training was initiated in cooperation with the Department of Interior’s Bureau of Mines.
Three other studies should be completed by 1981 for the investigation, exploratory core drilling, and analysis of anthracite reserves in the Narragansett Basin of Massachusetts and Rhode Island.
Licensing and Siting: The licensing and siting program focuses on ensuring the improved planning, public participation, compatibility, and integration
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of Federal licensing and siting programs with state and local procedures. The program also involves assessing the regulatory impacts on current and planned low-Btu coal gasification commercialization plants in an effort to minimize conflicts. An interagency Federal permit tracking system for coal mines is being established and work is progressing to identify energy projects that might avoid permit obstacles.
Petroleum
Research and development continued in 1979 on techniques to tap previously unrecoverable domestic petroleum supplies. Primary attention was given to increasing heavy and light oil production from existing fields both on and offshore and in developing the in situ (underground) method of extracting oil from oil shale. Plans were also formed for an increased effort beginning in 1980 to develop the Nation’s tar sand deposits. The budget estimates for petroleum technology and applications programs are given in table 17.
Table 17.	— Budget authority for petroleum — 1979, 1980, and 1981
leave polluting combustion gases trapped in the underground formation.
Another way of boosting the recovery of heavy oil is “fireflooding” or igniting a portion of the oil to generate heat. This technique was successful in a Louisiana project carried out for DOE. Expected to produce some 700,000 barrels of heavy oil over a 6-year period, the test recovered more than half that amount in the first year. In the light oils category, a test was begun in North Dakota where carbon dioxide was injected into a reservoir to boost recovery. Also initiated was the first sizeable offshore chemical food test designed to evaluate the potential for enhanced oil recovery in the Gulf of Mexico.
DOE will emphasize four areas through 1981: (1) determining technical requirements for enhanced oil recovery technologies, especially increased production of heavy oils; (2) developing extraction technologies for Utah tar sands; (3) assessing the adequacy of incentives for and available supplies of in-jectants and (4) developing model state legislation.
Using current enhanced oil recovery (EOR) techniques, DOE also seeks increased and sustained production from low-yield oil and gas fields, reservoirs, and stripper wells through its resource applications program.
1979	1980	1981
(millions of dollars)
Petroleum technology		$100.7	$ 61.4	$ 63.8
Petroleum applications		...		3.0	7.7	6.8
Total		$103.7	$ 69.1	$ 70.6
Enhanced Oil Recovery
President Carter’s removal of price controls on heavy oils in 1979 added to the significance of a DOE-sponsored program to develop methods of injecting steam deeper into oil producing reservoirs. In some fields the oil is so thick it cannot be poured from a jar at room temperature. Engineers apply heat, typically in the form of steam, to thin the oil. But steam produced on the surface cools too rapidly to be effective deeper than about 2,500 feet. In 1979, a private firm under contract to DOE’s Sandia Laboratories developed and began testing a high-pressure system that burns diesel fuel mixed with air at the bottom of the well (rather than on the surface). By generating steam at the base of the well, production equipment can not only tap deeper reservoirs but
Tar Sands
Perhaps as many as 30 billion barrels of oil are contained in the Nation’s tar sand deposits, which are located primarily in Utah. What portion of this resource that is recoverable is still highly uncertain and will most likely depend heavily on the success of in situ (underground) recovery techniques. DOE has begun a project near Vernal, Utah to inject steam into the underground tar sands to loosen organic oillike material. This will be completed in 1981 and the results will be compared with earlier experiment involving underground combustion to determine the future direction of the program. An expanded resource assessment and reservoir characterization in cooperation with other Federal and state agencies will begin in 1980 and continue into 1981.
Oil Shale
Two oil shale R&D thrusts were pursued during 1979, one built around a program to ensure that up
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dated designs are developed for commercial scale modules to process shale on the surface, and the second involving emphasis on the in situ process for extracting oil from shale.
In the surface processing area, DOE invited prospective contractors to submit proposals for the design of a commercial-scale surface oil shale module. Because most surface processing techniques are ready for commercial application, this program is intended to complement the Administration’s proposal for tax credits and other incentives which are designed to stimulate commercial introduction. If these incentives do not prove acceptable, the Department could use the designs to move toward actual cost-shared construction of the first commercial demonstration module. Award of the initial design contracts is scheduled for 1980.
The primary focus of DOE’s oil shale program is the in situ process. By heating the shale underground rather than bringing it to the surface, waste disposal problems and costs are substantially reduced.
Progress during the year included completion of the second large-scale in situ retort, or heating chamber, in a cost-shared program with a private firm. Located at a test site near Rifle, Colorado, the retort is the largest constructed to date and contains a zone of broken shale as high as a 30-story building. Approximately 47,000 barrels of shale oil were produced during this test. Data gave researchers confidence that major improvements in production efficiency can be achieved in a now-planned two-retort demonstration scheduled to begin in 1980 and to last for 3 years.
Late in 1979, the first oil began to flow from a second in situ project conducted for DOE in Colorado. The project, which will be continued through 1980 and into 1981, achieves the desired retorting temperatures by injecting superheated steam into the shale seam. Shale oil was also produced from an in situ experiment in Utah, which will be expanded in 1980 in tests that approximate commercial-scale retorts. A fourth oil shale experiment was concluded in 1979 when the shale formation was found not to have suitable characteristics for production.
In June, a draft plan was completed outlining the directions to be taken by DOE’s oil shale research in the 1980s. The plan describes a proposed effort to bring designs of the modified in situ process—where some of the shale is mined and the rest heated underground—to commercial readiness over the next 2 years. The plan was distributed for public comment.
In Michigan, a project continued in 1979 to produce synthetic fuels from deposits of Antrim shale. Four underground fracturing tests are involved with the first combustion tests of a factured site already completed and a second series of tests planned for completion in 1980. Evaluation of these tests and site restoration are planned for 1981. A low-grade gas, suitable as an industrial fuel, is the typical product.
The Department of Energy seeks to stimulate industry to produce oil from domestic shale resources. The objective is the production of 40,000 barrels of shale oil per day by 1990. To accomplish this objective, the program will insure that three basic elements for commercial operation exist for oil shale:
1.	The resource is available to private industry for development.
2.	Suitable extraction technologies exist or are developed.
3.	Markets exist for the products of oil shale operations.
For several decades there has been commercial interest in the vast United States oil shale resources. However, the limited quality and quantity of resource availability to private industry, high costs of available extraction technologies, and problems of upgrading and transporting shale oil to existing markets has precluded commercial development.
While today there are no commercial size (50,000 barrels per day) oil shale facilities in operation, activities ranging from preliminary design to construction of commercial scale mines are taking place at eight sites. Several companies, working either independently or in joint ventures, contemplate commercial scale operations.
To prepare for anticipated socioeconomic needs in affected communities, the Department provided funds to Colorado and Utah to deal with shale oil impacts. Funds were also provided to help state and local governments accelerate license and permit decisions and to develop expertise in managing development on private lands.
Work addressing barriers to commercial shale oil production took place during 1979 and will continue in 1980. Economic analyses and evaluations will seek to expand the industry and determine the need for continuing Federal incentives. The Department will continue evaluating alternative incentive mechanisms to accelerate adoption of oil shale technologies. To assure orderly development, the program will provide for state and Federal plans to manage production and to address site selection, environmental requirements, water availability, socio
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economic impacts, and other considerations. The program will extend to local governments.
Strategic Petroleum Reserve
To diminish the United States’ vulnerability to a severe petroleum supply interruption, the Energy Policy and Conservation Act authorized the creation of a Strategic Petroleum Reserve of up to 1 billion barrels. A Strategic Petroleum Reserve Plan, detailing proposals to design, build, and fill the reserve went to Congress in February 1977 and became effective in April. Implementation plans were prepared for the first 750 million barrels of crude oil for storage. Decisions have not yet been made regarding the extent of Government and industry involvement in allocating the final 250 million barrel increment. Table 18 notes funds available for the acquisition and storage of oil.
Table 18.	— Budget authority for the Strategic Petroleum Reserve — 1979, 1980, and 1981
Prior
Years 1979	1980'	1981
(millions of dollars)
Facilities & support......... $880.7	$663.3	$0.2	$2,404.0
Petroleum acquisition &
transportation............ 3,143.5	2,344.4 0	0
Total...................$3,944.2	$3,007.7	$0.2	$2,404.0
1 SPR activities for 1980 are being	funded from 1979 unobli-
gated balances.
The program is being developed in four distinct segments. Phase I consists of 248 million barrels of storage capacity in five salt dome sites, one in Texas and four in Louisiana. The reserve has storage fill rate capacity of up to 500 thousand barrels per day.
Phase II of the program consists of expansion of the Bryan Mount site by 120 million barrels, the West Hackberry site by 160 million barrels, and the Bayou Choctaw site by 10 million barrels. This 290-million barrel expansion will be accomplished by creating new storage caverns utilizing the technique of solution mining, construction of Phase II is underway and will continue until completed in 1986. Phase II facilities have been funded through 1981.
Phase III of the Program entails the creation of 190 million barrels of new storage space. Several government options are now under study for devel
opment of phase III. And a final decision will be made as part of the 1982 budget process.
The remaining 23 million barrels to reach the 750-million barrel target is called the Regional Petroleum Reserve. As proposed by the President, the Regional Reserve consists of 20 million barrels of residual, (or a suitable product substitute) for the East coast, at least half of which will be located in the northeast, and 3 million barrels of storage in Hawaii of commercial grade jet fuel. Because the RPR is relatively expensive, its development is contingent upon the passage of an adequate windfall profits tax on oil companies’ revenues as proposed by the President.
During 1979, construction was underway at five storage sites and one marine terminal during 1979, to implement Phase I. These sites and their capacities are:
1.	The West Hackberry Salt Dome, Cameron Parish, Louisiana; 51 million barrels.
2.	The Bryan Mound Salt Dome, Brazoria County, Texas; 60 million barrels.
3.	The Bayou Choctaw Salt Dome, New Iberia Parish, Louisiana; 36 million barrels.
4.	The Weeks Island Salt Dome, Calcasieu Parish, Louisiana; 75 million barrels.
5.	The Sulphur Mines Salt Dome, Calcasieu Parish, Louisiana; 22 million barrels.
6.	St. James Parish, Louisiana, the site of the marine terminal.
These storage facilities, plus some 4 million barrels in interconnecting pipelines and surface tanks, will provide the initial 248 million barrels of storage.
Through an interagency agreement, the Defense Fuel Supply Center contracts for Strategic Petroleum Reserve oil based on DOE specifications. The last crude oil purchase was awarded in November 1978 and the last shipment of crude from 1978 supply contracts was received in August 1979. Due to the Iranian supply interruption and its subsequent impact on the world crude market and on the availability of supplies for domestic consumption, DOE did not purchase additional foreign crude oil during 1979. At the Tokyo Economic Summit in June 1979, the oilconsuming nations agreed not to buy oil for strategic stockpiles if such action would place undue pressure on prices in the world market. The participating countries also agreed to consult one another about decisions to resume fill of strategic stockpiles. Several domestic alternatives and strategies are being
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considered for resuming crude oil purchases for the filling of the Strategic Petroleum Reserve. They include timing, methods, size, and sources of such purchases.
Oil acquisition for SPR could resume again in 1980 depending upon international market conditions.
Three of the five storage sites received oil in 1978 and 1979. As of the end of 1979, the amount of oil in storage and under United States title control was 91.7 million barrels, distributed as shown in table 19.
Table 19.	— Oil in storage by end of 1979
Amount in Storage (millions of barrels)
West Hackberry................................ 30.1
Bryan Mound................................... 31.2
Bayou Choctaw................................ 28.3
Tanks/Pipelines............................... 2.1
Total...................................... 91.7
The Strategic Petroleum Reserve sites have been designed and constructed to supply crude oil to interstate and local pipelines, and for shipment by tankers. The SPR is capable of distributing 1 million barrels per day through permanent drawdown systems installed at the three operating sites. The drawdown capability will increase to over 3 million barrels per day upon completion of Phase II of the program (538 million barrels). DOE has completed a plan for distribution of oil, which was approved by Congress in November 1979 as Amendment No. 3 to the Strategic Petroleum Reserve plan. The distribution plan describes how the SPR may be used to mitigate the effects of a severe supply interruption; the methods to be used to select the recipients of the SPR oil from the Reserve; the options for selling the crude oil; and the pricing of oil from the Reserve during a drawdown of the reserve.
Natural Gas
Within DOE, the fossil energy program focused its efforts on the eastern shales, tight sands, and coal seams, while the geothermal program carried lead responsibility for developing geopressured recovery technology and its methane byproduct. As part of this program, DOE and the US Geological Survey are cooperating in a 5-year effort (involving forty-
five contractors) to increase natural gas production from the Eastern Devonian Shales. Field tests were conducted in the East to develop methods of fracturing the underground formations to free previously unrecoverable gas.
In the West, a highly instrumented multi-well testing program was begun to characterize methods of producing gas from tight sand formations and to determine the most suitable diagnostic tools for use in commercial exploration and production. Eight field tests were begun in 1979 to measure the productivity of natural gas from coalbeds, and twenty-four core samples from selected coal seams were taken to measure the gas content. DOE’s efforts in these areas are aimed to increase production above the 0.9 trillion cubic feet of unconventional gas currently being produced each year fron unconventional gas resources. Funding for natural gas program is displayed in table 20.
Table 20. — Budget authority for natural gas — 1979, 1980, and 1981
	1979	1980	1981
	(millions of dollars)		
Enhanced gas recovery		$33.8	$35.6	$30.8
Unconventional gas recovery		0.5	4.6	4.6
Supply initiatives		0.7	0.3	0.9
Total		$35.0	$40.5	$36.3
Unconventional Gas Recovery
In 1979, DOE and the American Public Gas Association began a project to demonstrate the feasibility of using coalbed methane gas as a replacement for oil in local community applications. In the early 1980’s, DOE will establish and manage a drilling program for unconventional gas for '•municipal gas systems and rural energy needs. The increased domestic production and use of coalbed methane will support the presidential initiatives for rural America. Other new efforts will include site resource assessments in as many as thirty coal states, and the development of training programs that would enable state employees to participate in a nationwide effort.
In 1979, DOE emphasized monitoring in-place capacity, resource availability and requirements. Pricing incentives and industry financing were given increasing attention to lower the constraints that
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limit oil and gas production. During the years ahead plans to deliver Alaskan oil and gas to West Coast and Mid-West areas will be developed as will incentives for increasing conventional domestic oil and gas production.
Refinery Capacity Availability and Requirements.
This program seeks to overcome constraints that have limited refinery construction and siting in the last decade, and to manage technology transfer, demonstration, and commercialization projects for refining West Coast heavy oils. The refinery group will continue to monitor domestic refinery capacity, availability, and requirements and will recommend to
state and local governments models or standards for refinery siting permits.
Oil and Natural Gas Supply Development
This effort is designed to stimulate increases in domestic oil and natural gas production, especially in the lower forty-eight states and adjacent offshore territories, by expanding domestic refining capacity, increasing domestic exploration, and utilizing coalbed methane and other unconventional gas resources. The programs envision the addition of 1 million barrels a day to domestic crude oil production and 1 trillion cubic feet per year to domestic natural gas production by 1990.
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Chapter 5
Electric Energy
Introduction
The share of U.S. energy used to produce electricity has risen steadily in the past and is expected to continue rising in the future. The National Energy Plan II, for example, projects increases in electricity use ranging from about 3 to about 4.6 percent per year to the end of the century. The Department of Energy established the Electric Energy Systems program to ensure that the Nation’s electric energy system is capable of meeting future demands reliably with the lowest practical energy losses in accordance with National Energy Policy. The Electric Energy Systems plan takes the systems approach to the domestic electric energy network and ties together energy source and energy end-use technologies.
A research, development, and demonstration effort has been structured to:
1.	Improve the efficiency of the electrical energy system—i.e., increase capacity utilization, reliability, and decrease capital requirements;
2.	Permit shifting electricity generation away from oil and gas to more abundant nonrenewable resources in the short- and mid-term and to renewable and inexhaustible resources in the long-term;
3.	Enhance the efficiency of energy generation, transmission, distribution, and storage;
4.	Protect the environment.
The primary focus of the program is on the development of future electric energy systems that utilize centralized (fossil, nuclear, hydro) and decentralized
(fuel cells, batteries, photovoltaics, wind) sources. Ancillary concerns are to provide delivery options that improve means of transferring energy to meet load and system demands and also to speed up the integration of advanced technologies into a reliable network.
The major thrust of the program is divided into power delivery and power supply integration activities. Power delivery involves development of high voltage alternating current (HVAC) systems, high voltage direct current (HVDC) systems, underground cables, and studies of electric field effects. Power supply integration encompasses systems control and development, load management, and integration of new technologies. Specific project examples from each area are listed in table 21. Budget authority (table 22) approximates $40 million annually, and is allocated equally to the two activities.
Power delivery focuses on research and development in electric energy transmission.The principal equipment areas (cables, compact stations, overhead transmission electric field effects, and improved system efficiency) have evolved over several years of analysis. The objective for each area is to develop systems that increase power transfer capability while lessening the environmental impact. About 20 percent of the total budget is spent on laboratory and prototype development. In all phases of R&D, DOE encourages industry involvement, including costsharing.
The strategy for power supply integration is to ensure that all new sources (including storage) are in-
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Table 21. — Electric energy systems research projects
Power delivery
1	. High voltage alternating current system develop-opment
1200 kV circuit breaker
1200 kV lightning arrester Voltage and current sensors Gas insulated transformer Advanced superconducting
generator
Higher efficiency materials, equipments, and systems
2	. High voltage direct current system development
Improved efficiency a.c./ d.c. conversion
Circuit breaker
Submarine cables for OTEC plants
3	. Underground cables development
a.c. superconducting cable
Semi-flexible 1200 kV gas insulated cable
± 600 kV d.c. cable
4	. Electric field effects
Biological studies on small animals
Primate behavorial and biological studies
In-situ measurement
Power supply integration
1. Systems control and development R&D
Emergency state control
Large-scale systems controls
System effectiveness
Effect of d.c. overlay on existing a.c. network
2 . Load management R&D
Two way communication/ control system
Tests for system impact of heating/cooling storage
Plan for system-wide load management/distribution automation schemes with dispersed storage and generation
2 . Dispersed storage and generation integration
Model/simulation of dispersed storage and generation in existing and future electric network
Develop power conditioner for dispersed sources
Battery energy storage test on prototype advanced batteries for power system application
Storage battery electric energy demonstration to determine system credits for battery storage on electric systems
Demonstrate 4.8 MW fuel cell as a dispersed generation source
Table 22. — Budget authority for electric energy systems — 1979, 1980, and 1981
1979	1980	1981
(millions of dollars)
Power delivery		$25	$20	$21
Power supply integration		16	17	19
				■ ■■ ■ —
Total		$41	$37	$40
tegrated into the grid system. This is accomplished by developing system methodologies, conducting field tests and technology demonstrations, developing data for power system planning, and transferring information on new source technologies to public and private utilities to encourage the early penetration of these technologies into the electric system.
The diversity and complexity of the issues involved have divided the strategy into two levels of effort: macro or generic, involving the impact of new technologies on the power system, and micro or specific technology-oriented, concerning the actual interfaces on the electric system. Within each, it is necessary to address both near- and long-range problems, all of which encompass considerations ranging from power conditioning equipment to functional models of industry.
U.S. Electric Energy Network
The United States electric network is vast and complex. Most experts forecast a rapidly-increasing dependence on electrical energy. This, in turn, will require a higher level of performance from the domestic network. Adding to network complexities will be the introduction of solar and other new sources of electrical energy that are quite different from conventional ones.
The electric energy system is a vital link between the sources and uses of power. It is so reliable that it is often taken for granted. Both the component elements and operational approach of today’s system were designed around large, central-station powerplants in an era when growth in scale was the common solution to growth in demand. With the advent of the energy crisis, the nature of the electric energy problem intensified. As this occurred, doubts were raised as to the ability of the Nation to make a smooth transition to an electric energy system using renewable resources and dispersed energy technologies.
Utility Planning
Since World War II, the United States electric power system has been characterized by increasing regulatory and environmental constraints, and, more recently, by alarming increases in fuel costs. Thus, utility planning has had to deal with a number of adjustments. Among them are or have been:
1.	More stringent environmental requirements;
2.	Higher financing costs;
3.	Decreasing load factors;
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4.	An increasing demand for power, with an expanding weather-sensitive component (e.g., air-conditioning) to that demand. (Historically, yearly average peak power demand has grown 7.0 percent per year, with a much slower growth rate (< 4.0 percent) anticipated in the future);
5.	A growing influence of nontechnical issues in all phases of the regulatory process, leading to construction delays of 8 to 12 years for both generation plants and transmission lines;
6.	Uncertainty in all aspects of utility operations in a stricter regulatory environment;
7.	Decreasing public tolerance of a variety of utility-related events (such as rate increases and power outages);
8.	Larger generator units (for economies of scale), with generating sites placed farther and farther from the load centers they serve;
9.	Tighter connections between utilities, a trend that accelerated after the 1965 Northeast blackout;
10.	An increasing number of energy storage systems (e.g., pumped hydro storage) to help meet peak loads; and
11.	Recognition and general acceptance of the conservation ethic, as demonstrated by reduced electric energy demands by industry.
The effect of these developments on the electric power industry is cumulative and considerable. Moreover, the impact of other developments (such as cogeneration, dispersed solar power, and load management) is expected to grow in the future, making the control and function of the domestic energy system much more difficult.
Past engineering and design practices cannot adequately solve the problems of the implementation of new electric energy technologies. New alternatives and approaches will be required if the electric utility industry is to support the National Energy Act and its related goals—reliability, increased pooling, and conservation.
The electric energy systems program must also be responsive to legislation and Federal requirements designed to move the electric utility industry away from oil to coal, coal-based fuels, or other energy sources. The President has established the objective of displacing half of utility steam-based oil consumption by 1990. A major program established involves coal conversion under the authority of the Powerplant and Industrial Fuel Use Act of 1978 (FUA). New utility oil backout legislation will be submitted in 1980. Under FUA, selected utility powerplants are
prohibited from burning oil or natural gas and must convert to coal.
As a result of forced conversion activities, DOE estimates FUA savings by 1990 of as much as 400,000 barrels of oil per day. To accomplish this, 35 to 40 million tons of coal per year must be burned. An intervention program, developed by the Economic Regulatory Administration, is designed to ensure a consistent national energy policy by intervening where necessary in the regulatory and ratemaking processes to provide equitable consumer rates through improved efficiency and conservation. The results of the programs have led to a profile of fuel usage and conversion and distribution technologies that must be integrated into the system.
R&D Programs
A broadly-based R&D program in electric energy system has been established with two long-range goals: providing for the effective integration of new technologies (such as fuel cells, energy storage, and solar) into the Nation’s electric energy system and creating options for increased power transfer capability over existing and future transmission rights-of-way. The principal R&D goals are to:
1.	Ensure that all elements of potential sources for future electric energy systems (e.g., oil, coal, nuclear, and solar), as well as storage and improved conversion methods (e.g., fuel cells and cogeneration) are integrated to achieve a more energy-efficient system;
2.	Ascertain that the system safely continues to deliver electrical energy from each of the sources;
3.	Develop the system design and control techniques required to maintain reliability as size and complexity increase;
4.	Accelerate the commercialization of emerging technologies with near-term energy benefits;
5.	Ensure that national energy planning takes into account the needs of the electric energy network.
The 1979 achievements are described below.
1.	Improvements in high-voltage transmission are of paramount importance for the future. With the initiation of a contract to develop a gas-insulated power transformer, all key apparatus were under development or have reached the stage of finished prototype equipment tests for a 1200 kilovolt gas-insulated substation. These represent links for bringing bulk power into urban areas and from off
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shore ocean thermal conversion installations. Some elements are already being tested at the Waltz Mill test facility of the Electric Power Research Institute, and others at Bonneville Power Administration facilities. Results have already begun to appear in commercial products at lower voltages.
2.	An alternating current (a.c.) superconducting cable test site at Brookhaven National Laboratory was completed. In 1980, the first long section (100 meters) of superconducting cable will begin its test sequence. Superconductivity is expected to play a major role in future electrical systems because it minimizes electrical resistance and thus significantly affects the design of many types of equipment.
3.	Construction began on a 4.8 megawatt fuel cell power plant.1 Fuel cells produce electricity directly by electrochemical action, at high efficiency (typically 40 percent alone and 80 percent or more in a co-generation mode). They are also environmentally safe. Site construction (including all equipment delivery) is scheduled to be completed in early 1980 with the acceptance test initiative set for October of that year. This will be the first new type of electrical energy generation plant since the advent of nuclear power and also the Nation’s first new dispersed energy source. The site, a cooperative effort with industry and Electric Power Research Institute, is part of the Consolidated Edison company system in Lower Manhattan.
4.	The least efficient part of a high voltage direct current (d.c.) system has been the a.c./d.c. converter. A non-destructive analyzer device was developed during the year to determine the quality of a “growth” crystal (vital to the converter). The result is an increase in final efficiency. The system is already in commercial use.
5.	Even though most electrical equipment is highly efficient, various improvements are possible to further reduce losses. One technique involves the principle of superconductivity, the potential of which has already been cited. This principle can be applied to many types of equipment and attempts are underway to do so. An advanced superconducting generator completed its laboratory phase this year and is now moving into moderate-sized prototype
1 This activity is managed by EES and funded by Fossil Energy.
development. In addition, new techniques for generating at higher voltages are being developed.
6.	Software was completed during the year to provide utilities with an advanced automatic generator control algorithm. This is expected to be implemented on an existing system during 1980.
7.	Almost all transmission line developments are now being delayed due to various institutional and environmental issues. A prime example is the effect of high voltage electrical fields on plants, animals, and humans. The first phase is complete, with carefully developed test protocols, test cages, and genetic tests on fruit flies. Work began during the year on the effects of these high voltage fields on small animals and will proceed in 1980 to large primates.
8.	The full impact of new technologies on the electrical system is unknown. Models are being developed to provide analytical tools for this purpose; these models must be tested. The near-term use of heat-and-cool storage (especially heat) could facilitate the use of solar energy in the residential or commercial market place. Heat-and-cool storage load management tests began in selected regions during 1979 to determine the system effects of various storage scenarios. The tests will run for two years.
9.	Construction of a battery energy storage facility began during the year and is now nearing completion. This will become the test site for all advanced batteries for load leveling use on utility systems.2 It is owned by Public Service Electric and Gas of New Jersey (PSEG) and will test DOE and Electric Power Research Institute-funded advanced batteries. The first advanced battery (zinc chlorine) is being purchased and will undergo testing in 1981.
Future activities will focus on these issues.
1.	Ensuring that all elements of future electric energy systems are integrated to achieve an overall energy-efficient system.
2.	Developing means of transferring large blocks of electrical energy inter-regionally to back up dispersed sources and to meet normal and emergency needs of the future network. Meeting this goal involves overhead and under
2 This activity is managed by EES and funded by the Storage Division of the Office of Conservation and Solar Energy.
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ground high voltage a.c. and d.c. systems. For example, high voltage d.c. networks, either as overlays to existing a.c. systems or in new arrangements to link load centers, offer considerable promise for more economic transmission of bulk power, enhanced systems stability, reduced environmental effects and increased power delivery reliability. The focus of this area will be on the terminal conversion equipment and on a better understanding of the benefits and limitations of d.c. transmission.
3.	Developing system design and control techniques that will permit reliability to be maintained as the system increases in size and complexity. Control systems are being sought to enhance the performance in all modes of operation, from normal through emergency to restorative states. The ultimate goal is the
development of a computerized control system that automatically adapts itself to alternate modes of operation. Such a system will almost certainly have to be designed with the help of new concepts.
4.	Aiding the commercialization of emerging technologies with significant near-term energy benefits. The electric energy system’s ongoing Load Management program, for example, is designed to effect the transition to commercialization by providing decision makers with information from field trials and advanced demonstrations.
5.	Meeting the need for future electric energy systems as required by national energy policy. Work accomplished to date by the electric energy system will provide a strong methodological and technological foundation for future plans to reach national energy policy goals.
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Chapter 6
Nuclear Energy
Introduction
Today, nuclear power in the United States supplies some 13 percent of the Nation’s electricity. This electricity is produced by seventy-two reactors. DOE expects nuclear power’s share of electricity generation to increase to over 30 percent by the year 2000 with the addition of reactors under construction and projected.
Advanced nuclear technology in the form of the fission breeder reactor offers an approach to meeting the Nation’s long-term energy objective to make available renewable and essentially inexhaustible sources of energy to sustain a healthy economy. It has the capability to produce more fissile (“burnable”) fuel than it consumes; the breeder would not only sustain itself but would generate fuel for additional breeders and possibly for light water reactors. Parallel to these efforts, DOE conducts the National Uranium Resource Evaluation program to reduce uncertainties in the extent, availability, and economics of domestic and foreign nuclear fuel resources.
Table 23 shows the funding levels for the Fission Energy program (including waste management), and the National Uranium Resource Evaluation for the 1979 to 1981 period. In addition, the Naval Reactor program supports the Department’s nuclear fission energy activities. The technology developed by the Naval Reactor program has formed the basis for the civilian application of light water reactors and continues to contribute to the nuclear fission develop
ment effort. Because of the close tie-in between its technology and that developed for other nuclear energy programs, the Naval Reactors development program is placed organizationally under the cognizance of the Assistant Secretary for Nuclear Energy. For budget purposes, however, Naval Reactors is funded within the Atomic Defense activities mission area.
National energy policy as enunciated in the National Energy Plan II, published in May, 1979, stresses the key role of the present generation of fission systems—the light water reactor operating in a once-through fuel-cycle mode. By implementing this policy, DOE places particular emphasis on improving light water reactor safety and uranium utilization efficiency. In the long term, the fission breeder concept offers an essentially inexhaustible electrical energy source. For the time being, however, demonstration and commercial deployment of the breeder as well as reprocessing and recycling of spent fuel will remain deferred. This deferral is based on a lowered sense of urgency for extending natural uranium ore supplies in light of a fall-off in light water reactor orders in the past few years (figure 6) and on increased concern for the risk of nuclear weapons proliferation through misapplication of civilian nuclear fuel cycles. At the same time, however, breeder reactor development will continue, to permit deployment when needed.
The Fission Energy program is designed to accomplish four principal objectives. One is to enhance the potential for increased near-term commercial
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400
1960	1970	1980	1990	2000
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Figure 6. — Commercial nuclear power plant orders and completions between 1953 and 2000
Year 2000	_
Projection Range
^Completed
Projected Based on Existing Orders
Actual
Ordered
350
300
o> >
co
£ 250
□
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(/>
c6
200
CO 0
O
Z
o 150 b.
0
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100
50
0
Table 23. — Budget authority for nuclear — 1979, 1980, and 1981
Fission energy	1979	1980	1981
	(millions of dollars)		
Converter reactor systems			
Thermal reactor technology ....	$ 23.9	$ 57.0'	$ 48.5
High-temperature gas-cooled			
reactor2		42.0	—	—
Advanced reactor systems		4.1	7.5'	5.0
Light water reactor safety			
facility3		10.3	—	—
Program direction		0.9	1.4	1.5
Breeder reactor systems			
Liquid metal fast breeder			
reactor 		562.7	614.9	299.8
Water-cooled breeder		63.0	60.0	61.0
Gas-cooled fast breeder reactor .	26.0	26.0	0.0
Fuel cycle		71.5	49.5	12.0
Program direction		9.9	11.4	11.2
Special nuclear systems			
Space and terrestrial systems ...	43.1	36.4	40.0
Advanced systems evaluation ..	10.3	2.0	3.0
Program direction		1.0	1.2	0.9
Advanced isotope separation		54.7	55.7	86.9
Commercial nuclear waste		212.2	220.1	298.9
Spent nuclear fuel		11.4	18.5	20.5
Uranium resource assessment ....	73.3	64.7	35.8
Subtotal		$1,220.3	$1,226.3	$ 925.0
Unobligated balance			-40.0	
Total		$1,220.3	$1,186.3	$ 925.0
1 Includes pending supplemental request.
2 High-temperature gas reactor included in thermal reactor technology in 1980 ($25.0M). No funds in 1981.
3 Description of this element appears in the Environment chapter.
deployment of light water reactors by improving them (particularly in uranium utilization and safety) and by developing other means of extending the uranium resources (such as advanced isotope separation techniques). Another is to assess advanced fission options for their nonproliferation, economic, technical, and institutional merits during the period that commitments are deferred to breeder and other concepts requiring reprocessing and recycling of spent fuel. The third is to maintain the breeder as a viable option. The fourth objective is to resolve the issue of nuclear waste management to re-establish the light water reactor as a viable supply option.
Converter Reactor Systems
Thermal Reactor Technology
Light Water Reactors:	The light water reactor
program seeks to improve the efficiency of uranium fuel, reduce occupational exposure to radiation, improve plant productivity, and improve reactor safety. The first three objectives can be accomplished through the development, demonstration, and widespread commercial application of improved technologies. The electric utility industry and its equipment and service suppliers are directly involved in the program and share costs. Significant near-term benefits (before 1985) are expected to include conserved uranium, less dependance on imported oil, and reduced radiation exposure for operating personnel.
Improvement of reactor safety is accomplished by development and encouraging the implementation of reactor systems and concepts that offer significant safety improvements. Work includes vendor and utility involvement and is fully coordinated with the Nuclear Regulatory Commission and the Electric Power Research Institute. In 1980 and 1981, the program will respond to the recommendations of the Kemeny Commission Report and will stress accident prevention, system and component reliability, and the man-machine interface.
High-Temperature Gas-Cooled Reactor: During 1979, the focus of this program was the high-temperature gas-cooled reator using a steam cycle for the production of electricity. This is the concept that the General Atomic Company unsuccessfully attempted to commercialize in the early and mid 1970’s. DOE sponsored both design and technology development and provided the major fiscal support for the high-temperature gas reactor steam-cycle concept. In 1979, DOE decided that there was not sufficient private sector interest to warrant further development of this concept. Therefore, the program was redirected in 1980 to focus on the Advanced High Temperature Reactor capable of direct cycle electricity production (via a gas turbine) and process heat production. This program is part of an international cooperative agreement with the Federal Republic of Germany. In 1981, with a shift in emphasis towards near-term solutions to the problems of the nuclear industry, the Administration proposes termination of this program.
Advanced Reactor Systems
This program has two goals. The first is to reduce current U.S.-supplied inventories of high-
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enrichment uranium at dispersed research and test reactor facilities. Significant reductions should occur in less than 7 years. The second goal is to develop alternative and innovative design and operating techniques for fuel cycle facilities that would increase the proliferation resistance of vulnerable operations and key process equipment.
Breeder Reactor Systems
Liquid Metal Fast Breeder Reactor
The presidential policy statement of April 1977 directed that commercial reprocessing of spent fuel from light water reactors and commercial demonstration of the breeder reactor be deferred. Consistent with this policy, the Administration proposed that the Clinch River Breeder Reactor Plant project be terminated except for completion of selected systems design, equipment fabrication, and equipment testing. The administration is also proposing that the Liquid Metal Fast Breeder Reactor program be consolidated around the operation of the Fast Flux Test Facility at Hanford, Washington. This program consolidation is based on the assumption that a commercial liquid metal fast breeder reactor will not needed before the year 2020.
The most important facility in the current breeder strategy is the Fast Flux Test Facility, which will soon begin operation. The Facility is essential for conducting breeder reactor fuels and materials testing and for obtaining plant performance, operating and maintenance experience directly applicable to any future fast breeder reactors in the post-2020 time frame. Major construction and sodium fill were completed in the latter part of 1978. Pre-operational checkout is nearing completion; fuel load was begun in late 1979; reactor criticality will occur in early 1980.
Water Cooled Breeder
The objective of the Water Cooled Breeder program is to improve significantly the utilization of nuclear fuel resources for generating electrical energy with water-cooled nuclear reactors by proving that breeding can be achieved in a light water reactor using a thorium/uranium-233 fuel system. A reactor core using this fuel system is now operating in the Shippingport Atomic Power Station at Shippingport, Pennsylvania. The core is expected to operate for another 2 to 3 years before being sent to the Expended Core Facility for a detailed determination of reactor performance, including breeding. The ex
pended core is expected to contain about 1 percent more fissionable material than the initial loading.
Operation, testing, maintenance, and evaluation continued during 1979 at the Shippingport plant. The core performance is being evaluated and reviewed. Operating the plant is expected to provide valuable information not only on the useful life of the core but also on the long-term performance of all aspects of light water reactors. During 1979, plans and preparations for core shutdown and end-of-life testing continued, including design and procurement of various fuel removal, disassembly, and end-of-life examination equipment. Work was also carried out to develop and disseminate additional technical information to assist industry in evaluating water-cooled breeder concepts and the extent to which it wishes to adopt or apply them. Design and testing of fuel element concepts, neutron-conserving control methods, and conceptual designs for pre-breeders and breeders continued during 1979. Irradiation tests were conducted and will be analyzed to evaluate the feasibility of fuel concepts.
Gas-Cooled Fast Breeder Reactor
Coordinated efforts to develop the reactor have been carried out by private industry and the U.S. Government and through an international agreement among the United States, the Federal Republic of Germany, and Switzerland. In 1979, the U.S. and Germany agreed to pursue a common reactor design.
The gas-cooled fast reactor has been pursued as a back-up alternative to the liquid metal fast breeder reactor, should the liquid metal breeder encounter insurmountable technical problems. The former is at a much earlier stage of development than the latter; none has ever been built. After 15 years of successful experience with liquid sodium-cooled reactors, DOE foresees no such insurmountable problem that would require going to an entirely different coolant. Accordingly, without a perceived need or market for a system with an alternative coolant, the Administration proposes that work on the gas-cooled fast reactor be terminated in 1981.
Fuel Cycle
This program involves fuel reprocessing technology R&D related to breeder systems. The overall objective is to realize the potential contribution of nuclear energy to the country’s total energy needs while avoiding nuclear weapons proliferation, wasteful use of national resources, and environmental damage.
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Special Nuclear Systems
Space and Terrestrial Systems
Nuclear devices are developed for Federal agencies for space-oriented scientific experiments, telemetry, navigation, communication, and surveillance. In addition, isotope applications are investigated using skills developed in the handling of plutonium-238, including the demonstration of beneficial uses of radioisotopes in various terrestrial applications.
During 1979, the Department continued the reduction and analysis of data from the NASA Viking, Pioneer 10 and Pioneer 11, and Voyager 1 and Voyager 2 spacecraft. Design modifications were initiated on the multi-hundred-watt generators for the NASA Galileo mission; and the design of a new, higher-powered, nuclear generator system was initiated for the NASA International Solar Polar mission scheduled for February 1983. Also during the year, the Savannah River Plutonium Fuel Fabrication Facility started the production and encapsulation of heat source plutonium dioxide for the Galileo mission.
A pilot irradiator at the Sandia Laboratories site in Albuquerque, New Mexico, was utilized to irradiate tonnage quantities of dried sewage sludge for large-scale agricultural experiments and to guide the design and operation of demonstration-size units. The technology for disinfection of sewage sludge using cesium-137 is available for application by municipalities and private industry.
Advanced Systems Evaluation
Two major system evaluation programs have been established to examine the issue of nuclear proliferation. One, domestic in scope, is known as the Nonproliferation Alternative Systems Assessment Program. This program has completed an evaluation of alternative nuclear systems. It includes analysis of proliferation resistance, resource availability and requirements, commercial potential, economics, international deployment, safety, and environmental impacts. A draft of the final report was distributed for public comment at the end of 1979.
The International Nuclear Fuel Cycle Evaluation program, initiated by the United States about 2 years ago and joined by fifty-seven countries and six international organizations, was set up to minimize nuclear weapons proliferation without jeopardizing energy supplies. A final report, scheduled for release in early 1980, should provide a means for evaluating
alternative proliferation-resistant nuclear energy systems and institutional arrangements that could be deployed world-wide.
Another object of the advanced systems evaluation program is to assess and develop technologies that can expand nuclear energy applications for national needs. In 1979, initial assessment of the Twin Cities cogeneration district heating project was completed and a plan initiated to demonstrate cogeneration with hot water district heating in St. Paul; a combined DOE, Electric Power Research Institute, and Environmental Protection Agency demonstration design for an advanced wet/dry cooling tower was completed; a water use information system became operational; and a feasibility study of cogeneration process heat supply to a major Gulf states industrial complex was completed.
Also associated with the advanced systems evaluation program is the economic evaluation of conventional and advanced nuclear systems and competing energy technologies. Its purpose is to provide a data base for planning U.S. civilian nuclear power programs. An economic data base comparing recent cost indices and regulatory requirements for six nuclear and four coal systems was completed during the year.
Advanced Isotope Separation Technology
The objective of this program is to conserve uranium resources by developing a technology that will permit more economical enrichment of uranium for use as fuel in power reactors. The effort involves the development of three processes—two laser techniques and a plasma technique—to demonstrate the technological principles and components required to establish the design of an engineering demonstration facility. Fabrication of pre-prototype systems started during the year for all three technologies and the schedule now indicates that they will begin operation in early 1981. While these systems are being constructed, small testbeds will continue to serve as the primary means of process investigation. Recent progress has been significant; a large scale magnet system for laboratory experiments was successfully operated for the plasma process. The Lawrence Livermore Laboratory successfully completed a laser system to be used with the pre-prototype testbed. In a related effort, a cooperative assessment of the uranium chemical exchange process was initiated with the Republic of France.
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Commercial Nuclear Waste
Commercial Waste Management
The objective of the commercial waste management activities is to provide facilities for terminal isolation and to research, develop, and implement the technology necessary to provide for the long-term management and disposal of radioactive wastes.
The most developed and the most likely technical method to achieve the long-term isolation of high level waste from the biosphere is through appropriate treatment of the wastes (solidification and/or packaging) followed by their emplacement in mined repositories within deep geologic formations. The sites for these repositories would be selected carefully to assure that they provided stable, natural barriers to any migration of radionuclides toward the biosphere. This terminal isolation will assure public health and safety while the radioactivity of the waste decays to nonhazardous levels.
Several potential sites for the first commercial waste repository are already being investigated under current Administration plans. The site for the first full-scale repository will be chosen after several candidate sites have been identified. The repositories developed under this program will also provide capability for disposal of defense wastes. Considerable progress in identifying some of these sites was made during 1979 as a result of exploratory geologic field studies in Louisiana, Mississippi, Texas, Utah, Nevada, and Washington. These efforts focused on promising salt formations under non-DOE land, basalt formations at DOE’s Hanford Site in Washington, and tuff, granite and shale formations at DOE’s Nevada Test Site. New data gathered on broad geologic systems allowed increasingly smaller areas within them to be identified for further detailed study. By late 1981, licensable sites will begin to be identified. To increase further siting options, additional promising geohydrologic systems are being studied nationwide in broad granite-like and shale-like formations.
A broad scientific base is under development for the requisite waste form treatment and for the siting, design, engineering, and analysis of geologic repositories. Significant accomplishments were made during the year in planning, design and analysis, spent fuel packaging, and field experimentation (in-situ testing). DOE and the U.S. Geological Survey jointly developed a first draft Earth Sciences Technical Plan, which helps resolve earth science uncertainties prior to licensing. The preparation of a National En
vironmental Policy Act Implementation Plan and a comprehensive Waste Management Plan was initiated during the year. Technical program plans were updated and approved.
Designs for two conceptual repository facilities in salt formations were completed in 1979. An architect-engineer was selected for the conceptual design of a repository in basalt, and computer models were developed and tested to support future safety evaluations of repository design and operations. Substantial progress in spent fuel packaging was made at the Engineering Maintenance and Disassembly Facility in Nevada. Underground facilities were nearly completed for in situ testing (using either spent fuel or heaters to simulate spent fuel) in granite, basalt and salt.
Internationally, cooperation on waste isolation increased during the year. In Sweden, in situ tests at a granite mine got underway. Cooperative programs were discussed with the Federal Republic of Germany on salt repositories and with Canada on repositories in granite.
This program also supports the development of packaging technologies for spent fuel and other commercial wastes. In addition, it has also been examining waste forms, such as glass and synthetic minerals, for immobilization of commercial wastes.
Remedial Actions Program
The Department is examining the radiological conditions at 140 sites and facilities used for nuclear operations under the Manhattan Engineer District and Atomic Energy Commission and no longer under Federal control. The principal contamination at these sites results from residues from processing and handling of uranium and thorium ores. It appears that approximately thirty sites will require remedial work to make them suitable for unrestricted use under current radiological criteria. Remedial work is being performed by the State of Colorado to limit radiation exposure resulting from the widespread use of uranium mill tailings for construction purposes in the Grand Junction, Colorado, area. DOE provides 75 percent of the funding and the state provides the remainder. About 800 structures (including homes, schools and commercial buildings) have been identified for remedial work, of which about one half has been completed. The remaining are scheduled for completion by 1983. Under the Uranium Mill Tailings Radiation Control Act of 1978, DOE and state governments commenced actions to control radiation exposure from twenty-two inactive uranium mill tail
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ings sites located at Canonsburg, Pennsylvania, and at eight western states. In all cases, these tailings piles were not stabilized and there were no parties willing to accept responsibility for their control.
Spent Nuclear Fuel
In February 1979, the Department submitted legislation to Congress that would give DOE the authority to accept and store commercial spent fuel and to establish and collect a charge to recover the cost of this service. This authority is being requested to permit DOE to accept limited amounts of domestic nuclear power reactor spent fuel and a limited amount of foreign reactor spent fuel in support of the U.S. Government’s nonproliferation policy.
Also in February, DOE issued a report on the estimated amounts of away-from-reactor spent fuel storage that would be needed beyond what might be provided by the utilities. During the year, DOE continued to update these projected requirements based on changes in utility plans. Facilities that might be utilized to meet these requirements were identified and evaluated. Work on the final versions of three generic environmental impact statements on spent fuel storage is expected to be completed in early 1980.
DOE provided technical support to international spent fuel studies such as the International Nuclear Fuel Cycle Evaluation. Work continued on feasibility studies of reracking spent fuel storage basins in countries with different technical and economic capabilities, as did cooperative efforts related to spent fuel storage technology.
Uranium Resource Assessment
The National Uranium Resource Evaluation program was established to reduce uncertainties as to the extent, availability and economics of both domestic and foreign nuclear fuel resources. Work on the program continued during 1979 to identify new areas that appear favorable to further geological exploration and to apply improved technology to
uranium resource assessment, exploration, and production.
Participants in NURE include the U.S. Geological Survey, various state geologic surveys, industry, and universities. DOE’s Grand Junction Office coordinates and monitors field activities, which encompass a nationwide aerial radiometric and hydrogeochemical survey, surface geologic studies, and drilling for subsurface geologic information in critical areas. The program also includes a thorium resource project, as well as participation in the International Uranium Resource Evaluation Project established to evaluate the potential for discovery of additional uranium resources worldwide.
For the purpose of evaluation, the United States has been divided into 620 National Topographic Map Series 1 ° x 2° quadrangles. By September 30, 1979, aerial radiometric surveys coverig 144 quadrangles and hydrogeochemical surveys covering seventy quadrangles were available. Resource assessment was completed for eighteen quadrangles. Current plans call for completing 116 priority quadrangle evaluations by October 1980, 250 by 1983, 400 by 1985 and 620 covering the entire conterminous U.S. and Alaska by 1987. All of these activities will contribute to the publication by the end of the year of an assessment of 116 priority quadrangles containing all of the presently-known reserves and many of the currently estimated potential resources of the United States. By the end of 1981, the airborne reconnaissance program is scheduled to be completed and thirty additional quadrangles assessed.
DOE’s uranium resource assessment also provides annual estimates of total U.S. domestic uranium ore reserves and resources, as well as studies of production capabilities and other supply and demand factors affecting uranium resources and their availability. An annual survey collects data on uranium prices and procurements. In addition, the program surveys the domestic uranium market semiannually. One such survey assesses all phases of uranium marketing—domestic sales and prices, imports, inventories, unfilled demand, and uncommitted supply.
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Chapter 7
Environmental Programs
Introduction
The Administration and the Congress have emphasized the need to protect the environment while accelerating the development of energy technologies. Through the Assistant Secretary for Environment, DOE formulates environmental policies and programs so that the Nation can effectively search out options to solve its energy problems with minimum environmental impact. The DOE organization act (P.L. 95-91) requires the Department to assure the “incorporation of national environmental protection goals in the formulation and implementation of energy programs and to advance the goals of restoring, protecting, and enhancing environmental quality, and assuring public health and safety.” Enr vironmental, health, and safety factors are accorded the same importance as technical and economic considerations and are closely integrated into departmental decision-making from the earliest phases of development through program completion.
This chapter discusses the environmental research assessment and overview by the Assistant Secretary for Environment. The other environmental research and control programs conducted by other DOE program offices are not included. Such programs, however, are coordinated through the intraDepartmental Committee and internal planning documents such as the Environmental Development Plans and Environmental Readiness Documents discussed in this chapter. In addition, DOE participates in interagency working groups which assure coord
ination among all major environmental research and regulatory agencies.
To achieve the goals of the National Energy Plan and to fulfill the requirements of P.L. 95-91, DOE’s Office of Environment conducts three analytical programs: technological impacts, health and environmental research, and environmental compliance and overview. Table 24 illustrates budget trends from 1979 through 1981 and Figure 7 the trend of environmental effort with respect to the DOE technology programs from 1975 to the present (with a projection into 1981).
Table 24 — Budget authority for environment — 1979, 1980, and 1981
1979	1980	1981
(millions of dollars)
Environmental compliance, overview, and technology impacts	 Health and environmental research 	 Total		$ 50.6 207.7	$ 56.4 221.2	$ 62.8 246.8
	$258.3	$227.6	$309.6
Technology Impacts			
The Technology Impacts area analyzes the effect of environmental policies and regulations on energy development and use. The purpose is to anticipate, identify, and assign priority to environmental, health, and safety concerns relevant to major energy
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100
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DOLLARS IN MILLIONS
i	i	i	i	i	i	।
1975	1976	1977	1978	1979	1980	1981
PLANNED
FISCAL YEARS Z^z NUCLEAR	NON-NUCLEAR	MULTI-TECH.
ACTUAL COSTS ARE NOTED FOR 1975-1978
Figure 7. — Environment expenditures for technology programs — 1975 through 1981
and conservation technologies progressing through development and acquisition.
During 1979, DOE and its national laboratories conducted regional assessments of potential environmental impacts of energy plans, and developed a Mitigation Strategies Guidebook to help DOE and regional officials to understand techniques that have been employed to mitigate the impacts of energy development. Urban and community impact studies were also initiated to analyze the variable impacts of energy and environmental issues on urban, suburban and metropolitan areas. In 1980, the second generation of Regional Issue Identification and Assessment Reports associated with energy supply and demand forecasts (provided by the Energy Information Administration and the National Energy Plan) will be produced for each Federal region. Additionally, comprehensive analyses of urban and community impacts of major Departmental initiatives will be prepared, as required, including an analysis of recent synthetic fuels development proposals.
Other primary products of the Technology Impacts program involve coordinating the preparation of Environmental Readiness Documents, Project Environmental Plans, and Environmental Development Plans. Environmental Readiness Documents are analyses used to develop the Office of Environment’s position on the environmental status of technologies at major decision points in the acquisition process. Baseline documents for fourteen developing technologies were completed and analyzed by the DOE Commercialization Task Force. Project Environmental Plans are more detailed and are prepared jointly by the Office of Environment and the various technology offices to identify research needed to resolve environmental problems. More than sixty of these plans were produced during the year. Environmental Development Plans provide a means for scheduling environmental research to correlate with work in the various technology research and development programs; during 1979, Environmental Development Plans were prepared or updated for thirty major energy programs.
The program also prepares technology assessments that examine potential environmental, health, and safety impacts of generic energy technologies and provide data on relevant processes being explored to produce energy by these technologies. These assessments contain base data used to prepare plans and documents discussed above. During 1979, the National Coal Utilization Assessment and the Imperial Valley Geothermal Integrated Assessment were completed.
DOE prepared an environmental analysis of the National Energy Plan during the year and published the second Annual Environmental Analysis Report as well as the National Environmental Impact Projection II. Analyses were made of energy supply and demand projections forecast by the Energy Information Administration in its annual report.
During 1979, DOE conducted an analysis of the environmental impacts of synthetic liquid fuels; further analysis will be undertaken in 1980 with special emphasis on the question of siting of facilities in the eastern as opposed to the western United States. In response to increasing emphasis on coal technology research, development and demonstration, DOE plans to publish a fact book in 1980 on environmental issues with respect to coal
In 1981, the Technology Impacts program expects to expand its current activities to analyze new regulatory and legislative initiatives in air, water, land use, and waste areas. Analyses will include EPA’s ambient air quality standards, coastal zone management issues, and expansions of regulations under the Toxic Substances Control Act, Clean Water Act, Solid Waste Disposal Act, and Resource Conservation and Recovery Act. Plans call for further technology assessments on transportation, industrial energy usage, and unconventional gas recovery, as well as on specific solar, fossil, and nuclear developments. Further assessments will be initiated on post-2000 energy scenarios in which renewable sources, decentralization, and electrification are to be emphasized. Improved estimates will be made of national and regional economic impacts of pollution abatement.
Health and Environmental Research
The Health and Environmental Research program conducts research to determine the health and environmental effects of energy-related pollutants. Four-fifths of the annual budget of the Office of the Assistant Secretary (Environmental Program) is devoted to this effort. Investigations are being made of the physical and chemical interactions of pollutants in the environment and in biological systems, attempting to identify and characterize those pollutants to which humans may be exposed and to understand the processes leading to possible deleterious results. Advanced instruments measure levels of radiation, chemicals, and particles emitted into the environment.
Extensive data were developed in 1979 on the physical and chemical nature of effluents from
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several technology processes and the potential health hazards associated with them. Fluidized bed combustion, solvent refined coal, high- and low-Btu gasification, above-ground and in situ oil shale retorting, and diesel automotive fuels were among the sources studied.
During 1980, studies will focus on improving instrumentation and measurement techniques to expand knowledge on the effect of pollutants after their release into the environment. Improved methods of characterizing radioactive emissions from nuclear facilities will be developed so that accurate dose and risk assessments can be made.
The transport of pollutants is also studied for possible disruptions to ecosystems. Major ecological research was undertaken during 1979 on coal-derived synthetic fuel technologies. Its aim is to address the issues of degradation of air, surface water, and ground water quality. Research under way will help assure that coal synthetic fuel projects are undertaken within the constraints of applicable environmental laws and policies and that they anticipate future regulations.
In coordination with other Federal agencies, DOE has supported interdisciplinary oceanographic studies. Their aim: to provide a fundamental understanding of the physical, chemical, and biological impacts affecting marine environments. Research results obtained over the last decade were reviewed in a workshop held during 1979.
The study of pathways of radionuclides through the environment to man and other organisms represents a major research thrust. It involves determining the movement of short- and long-lived radionuclides through soils and ground water, redistribution in the ocean, and uptake by plants and animals.
Biological studies are conducted in the Health and Environmental Research program on animals, organ tissues, cells, and subcellular material to understand toxic action and to predict the effects on human health. This activity provides important data for occupational and public health risk analysis associated with advanced nuclear and non-nuclear emerging alternative energy sources. Also, radiation-and light-emitting instrumentation continues to be developed for the diagnosis and treatment of human disease.
During 1980, studies will continue on the toxic effects of emissions from new energy-technology pilot plants. Other research will assess the potential health impacts of several coal liquefaction and gasification processes. Techniques for exposing biological
systems will be improved and standardized to promote more efficient toxicologic screening. The capability of estimating human risk from experimental data will also be upgraded. Studies on comparative health effects assessments of competitive liquefaction and gasification processes will continue into 1981 and will progress toward demonstration and commercialization. Increased emphasis will be placed on identifying the most harmful classes of chemical agents and the process stages where they occur, so that hazards can be reduced or eliminated during early stages of process development.
Human health studies are undertaken to identify and characterize health effects from chemical, physical, and biological factors associated with specific energy technologies and conservation measures. For example, respiratory diseases and biomedical risks of both coal mining and atmospheric pollutants derived from burning fossil fuels were studied during the year. More epidemiological data will be gathered during the coming years on populations exposed to radioactivity, hydrocarbons, and trace metals in oil shale.
Epidemiological studies of low-level radiation exposure to humans will be expanded during 1980 and 1981. The health and mortality status of employees exposed to low-level occupational radiation over long periods of time will be carefully studied at DOE and DOE-contractor sites and at naval shipyards. Specific studies related to indoor pollution will be enhanced in 1981 to identify the potential health effect of decreased air exchange in residential dwellings due to conservation measures.
The concentration of carbon dioxide in the global atmosphere is increasing because of the combustion of fossil fuels. At some point in the future, elevated carbon dioxide levels in the atmosphere may cause changes in the world’s climate. This, in turn, could cause potentially serious dislocations to the terrestrial biosphere, the oceans, and the ice-covered regions of the Earth.
Research conducted during 1979 included studies of the role of the oceans, atmosphere, and biosphere in distributing and absorbing atmospheric carbon dioxide. Resulting information on the global carbon cycle is used to estimate future atmospheric concentrations and to determine how the climate would change with higher carbon dioxide levels. Activities included a major oceanographic study of the North Atlantic’s role in the carbon cycle, an examination of quantities and rates of transfer of carbon in the biosphere, and the development of a hierarchy of simple and complex computer models to
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estimate the atmospheric response to increased carbon dioxide. This research is conducted in cooperation with the National Science Foundation, the National Oceanographic and Atmospheric Administration, the Environmental Protection Agency, and other organizations. These activities will broaden in scope in 1980, when the first research on climate change impacts on the biosphere is scheduled to begin.
The effects of weather and climate fluctuations on the Nation’s utilization of its energy resources are also being studied to determine which types of energy use are most sensitive to climate fluctuations. For example, investigations of fuel use in cities have resulted in computer models that relate fuel quantities to temperature, wind, and cloudiness. These models are being used to estimate energy savings that could accrue from various urban conservation strategies.
Environmental Compliance and Overview
This program is designed to ensure that all DOE activities comply with environment, health, and safety policies and applicable laws, regulations, and standards. The requirements of the National Environmental Policy Act (NEPA) are fully integrated into the DOE planning and decision-making processes at the earliest possible time. To this end, the environmental compliance and overview program works closely with DOE offices to ensure early consideration of environmental factors and to provide early identification of the need for environmental assessments and environmental impact statements.
During 1979, the program carried out some 200 determinations regarding the need for an Environmental Impact Statement and an Environmental Assessment, and reviewed and approved some 110 NEPA documents. Draft DOE guidelines to implement the Council on Environmental Quality National Environmental Policy Act regulations were published in the Federal Register. Guidelines to implement international requirements have also been published.
The program maintains an environmental engineering capability that provides an overview and assessment capability on the adequacy of environmental control aspects of national energy policies and DOE’s energy research program. The approach taken is to focus on understanding the efficacy of candidate environmental controls in relation to
energy systems needs. Data resources for evaluations include existing literature, data generated from ongoing Federal and industrial research programs, and, where appropriate, laboratory and field data acquisition programs.
Reports were issued during 1979 on the practicability of candidate environmental controls for industrial boilers to contribute to the DOE position on industrial New Source Performance Standards being formulated by the Environmental Protection Agency (EPA), on the practicability for carbon dioxide control for fossil fuel emissions, and on an interim report on the state-of-the-art of coal conversion waste-water treatment. A generic research plan for a comprehensive liquefied gaseous fuels research program was also prepared and a final report was issued on the environmental control status and needs for mobile diesel engines.
In 1980, coal activities will continue to focus on industrial boiler environmental control issues, synthetic fuel wastewater, and solid waste management practices. Data from initial 1979 small-scale (6 cubic meters) liquified natural gas spill tests will be evaluated and larger scale spills (40 cubic meters) will be conducted to determine vapor dispersion behavior. Reports on a tanker fire hazard analysis, peak shaving plant safety analysis, and marine terminal safety analysis are expected to be completed. Oil shale field data acquisition and evaluation will continue, with emphasis on raw and spent shale leachate control needs and wastewater management.
In 1981, the emphasis will be on acquiring information to assess the adequacy of processes that convert coal from a solid to a premium liquid or gas. Liquified natural gas vapor dispersion and vapor cloud burn tests (forty cubic meters) are expected to be completed and evaluated in support of the comprehensive liquefied gaseous fuels program. Tests will be conducted and evaluated on the basis of the 1980 liquified petroleum gas assessment study and oil shale field studies will be expanded to gather new and confirmatory data on actual siting situations and environmental control operations.
Radiological Surveys and evaluation and certification of remedial actions are other important activities within the environmental compliance and overview program. At the present time, the DOE remedial action program includes: (1) privately-owned contaminated facilities formerly utilized for nuclear operations under contracts with the Manhattan Engineer District and Atomic Energy Commission; (2) surplus radioactively contaminated DOE-owned facilities maintained under surveillance
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by DOE’s Nuclear Energy Program until they are decontaminated and released for unrestricted use; and (3) inactive uranium mill tailings sites where uranium ores were processed for use by the Federal government.
The DOE nuclear energy program is responsible for the preparation of facility schedules, engineering evaluations, NEP A documents, remedial action plans, and the execution of remedial action operations. Additionally, the Assistant Secretary (Environment) undertakes independent performance, evaluation, and documentation of radiological surveys. This permits the Department to determine the nature and extent of contamination and to notify the nuclear energy program of the need for and the potential magnitude of remedial action. It also allows for an independent evaluation of and concurrence in plans prepared by the nuclear program for remedial action operations and certification surveys. Surveys, evaluation, and certification help to eliminate potential health hazards at these facilities.
In 1979, the priority ranking for mill tailings sites was completed, radiological survey reports for fifteen Manhattan Engineer District/Atomic Energy Commission sites were developed, and a national surplus facilities R&D plan was produced. Two surplus facilities were decontaminated, and certification surveys were initiated. Also, a report was sent to the Congress on radioactively contaminated public or acquired lands as required by P.L. 95-604, The Uranium Mill Tailings Radiation Control Act of 1978. Planned 1980 nuclear activities include supplying the first annual mill tailings report to Congress, as required by P.L. 95-604, providing the nuclear energy program with radiological surveys for four mill tailings sites and three formerly utilized Manhattan Engineer District and Atomic Energy Commission sites, and completing certification of four remedial actions anticipated to be conducted by the nuclear energy program.
In 1981, remedial action overview activities will continue, with special emphasis on the implementation of radar monitoring networks at uranium mill tailings sites to determine conditions before and throughout the conduct of remedial action operations.
The compliance and overview system also serves to ensure that all DOE-controlled activities minimize risks to the safety and health of the public and of employees and that adequate protection is given to property and the environment. The Office of Environment provides advice on the development and conduct of environment, health, and safety activities
of all DOE components through regular audits and the application of uniform standards. Special operations are also conducted in the areas affected by nuclear weapons tests in the Pacific.
Several activities begun during 1979 will be continued during 1980, including safety analysis and review. This activity will point up residual risks associated with DOE’s operations. A performance measurement system will be maintained to identify needed environmental, health, and safety improvements. A standards information system, established in 1979, will be enlarged to include engineering standards.
1981 plans call for increased emphasis on DOE’s emergency-response capability in light of the Three Mile Island incident, continued environmental, health, and safety policy development and issuance of regulations, and expanded independent technical reviews of DOE’s programs’ safety analyses.
The environmental and compliance program is also responsible for assuring the safe operation of research and test reactors used to conduct DOE and other government programs. Seven on-site safety and environmental reviews were accomplished during 1979 and safety reports were issued. Safety analysis reports and related documents were reviewed to determine the adequacy of the facility design to protect public health and safety. This activity will continue in 1980 and 1981.
The environmental and compliance program also performs safety analyses, in conformity with DOE Order 5481.1, on non-reactor nuclear facility operations for the energy research program. Assistance is provided to the energy research program in the preparation of the Safety Analysis and Review Systems Implementation Plan; the preparation of the Implementation Plan for the Assistant Secretary (Environment) will be accomplished in 1980.
In 1979 and early 1980, three agreements were reached between DOE and Nuclear Regulatory Commission (NRC) dealing with budget, funding, nuclear materials management and safeguards system, and NRC evaluation of DOE contractor performance. Three additional agreements are to be updated and implemented during 1980. The placement and conduct of NRC programs are reviewed to ensure that they do not adversely affect DOE programs and resources but still provide NRC with necessary DOE laboratory resources. In 1979, the Loss-of-Fluid-Test Facility was completed and responsibility for its operation was transferred to the Nuclear Regulatory Commission. The Department, however, retains responsibility for the safe and environmentally acceptable conduct of this facility operation.
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Outlook
The Office of Environment plays an integral part in the Nation’s energy policy because some fuels and many technologies threaten to degrade the environment. The environmental regulatory process may impede energy programs if trade-offs between energy and environment are not confronted and resolved. Coal, nuclear, oil shale, and synfuels create more serious environmental problems than conventional oil and gas. Yet these energy sources will become increasingly economic and desirable as world oil prices increase. Therefore, achieving a balance between efficient energy production while protecting the environment is likely to become increasingly difficult over time.
The Assistant Secretary for Environment will continue to pursue resolution of environmental, health and safety concerns associated with conventional and emerging technologies, while at the same time maintaining active coordination with the energy programs to ensure that environmental issues do not impede production and technology commercialization. During 1980 and 1981 the Office of Environment will continue many of the programs initiated in 1979, as well as those projects that are produced annually. Many new projects are also planned for each program area as well, which have been previously described in the text.
EV’s technology impacts program will continue to analyze environmental policies, laws, and regulations on the Federal and regional levels as they effect energy development and its use. Regional and Federal assessments on the impacts of energy programs on all aspects of the environment will be made with an increased effort towards greater coordination between objectives and activities at both levels.
In the area of health and environmental research, emphasis will continue to be placed on the health effects of pollutants and toxic chemicals resulting from various energy processes. Studies to address both the dangers of radiation and the potential benefits from using nuclear technology to study human illnesses will increase. Activities in the carbon dioxide effects research area will broaden in scope in the next two years, at which time the first research on climate change impacts on the biosphere will begin.
The environmental compliance and overview program will continue to ensure that the DOE activities are in compliance with all standards, regulations, policies and laws addressing environmental, health and safety aspects of energy development and use. The program will continue to identify the need for Environmental Assessments and Environmental Impact Statements and will assist DOE in complying with NEPA requirements. Efforts will continue in determining the adequacy of environmental control issues of national energy policy, and assistance will be provided to technology programs in developing and instituting required controls for new energy programs. The program will also continue to assist the DOE nuclear energy program in conducting radiological surveys and evaluation and certification of remedial actions for contaminated sites.
Energy and environmental concerns can be made compatible by reaching a sensible balance of interests. The Office of Environment, through its three programs, will continue to work towards achieving a viable balance between environmental health and safety concerns and the need to rapidly develop and commercialize required energy sources for the Nation.
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Chapter 8
Defense Programs
Introduction
The Department of Energy manages a variety of atomic energy defense programs, all of which support the Department of Defense. These comprise one-third of the Department’s total budget: $2.7 billion in 1979, $3.0 billion in 1980, and $3.4 billion in 1981 (table 25). These activities include:
1.	Design, testing, and production of nuclear weapons required by the DOD and authorized by the President;
2.	Production of special nuclear material for weapons and management of nuclear wastes;
3.	Safeguards, security, and classification related to facilities, materials, and information;
Table 25. — Budget authority for defense programs — 1979, 1980, and 1981
Activity	(millions of dollars)		
	1979	1980	1981
Weapons		1,471.4	1,653.8	1,971.9
Verification and control		29.8	37.9	41.4
Nuclear materials production ..	445.1	512.6	522.5
Defense waste management ....	257.0	283.4	349.6
Nuclear materials security			
and safeguards		46.1	46.8	50.4
Naval reactors		297.9	278.4	305.4
Inertial fusion			144.1	194.9	202.0
Unobligated balances			-23.4		
Total		. . $2,668.0	$3,007.8	$3,443.2
4.	Improvement of U.S. ability to verify nuclear test treaties;
5.	Prevention of proliferation of nuclear weapons;
6.	Control of exports contrary to national security; and
7.	Research and development of inertial confinement fusion technology.
The Assistant Secretary for Defense Programs manages these activities, with the exception of Defense Waste Management and Naval Reactors under the Assistant Secretary for Nuclear Energy.
Nuclear Weapons Activities
The statutory bases for the Department of Energy’s nuclear weapons responsibilities are the Atomic Energy Act of 1954, as amended, and the Department of Energy Organization Act of 1977, which transferred them to the Department of Energy. The mission of the DOE nuclear weapons activities is to conduct experiments and perform research and development in the military application of atomic energy and to provide nuclear weapons and components in support of the United States national defense policy and security objectives. The Department of Defense and the Department of Energy jointly establish the composition of the nuclear weapons stockpile and the underground nuclear test program which are approved annually by the President. DOE’s responsibilities include:
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1.	Research, development, engineering, testing, production, retirement and disposal of nuclear weapons;
2.	Transportation of nuclear weapons to and from DOD receiving points;
3.	Evaluation of stockpiled weapons and related hardware for safety, reliability and performance; and
4.	Maintenance of response capability to nuclear accidents or incidents.
Research and Development
Research and development for DOE is conducted principally through three nuclear weapons design and engineering laboratories: Los Alamos and Sandia, which are located in New Mexico, and Lawrence Livermore in California. These laboratories are responsible for nuclear weapon concepts, feasibility studies, detailed design, development of components and materials, testing, and certification of nuclear designs for production and stockpiling. The laboratories also monitor the production of nuclear weapons and conduct the stockpile quality assurance and reliability testing program.
The nuclear weapons laboratories continued to investigate new weapon technologies and to study the feasibility of new nuclear concepts. They placed major emphasis on nuclear weapons safety in abnormal environments and emphasized the means to provide maximum security against unfriendly forces. They continued to search for ways to increase the military application of nuclear weapons and at the same time to minimize the use of special nuclear materials. Advances of this nature in nuclear weapons technology have contributed to savings in weapon system costs.
DOE continues to study with the Department of Defense the feasibility of equipping weapons systems such as Missile X and the Advanced Strategic Air Launched Missile with nuclear capability. The Department also continued advanced development work on the Trident II and the Maneuvering Reentry Vehicle warheads.
Weapons personnel are also pursuing exploratory research and engineering on new concepts and conducting basic research for science or applications that could alter nuclear weapons technology.
As in prior years, spinoffs of technology occurred from the weapons program to both national security and energy-related activities. The following examples illustrate the diversity of activities that relate to weapons program research and development. In each, weapons program support contrib
uted during the course of development, especially in the initial phase.
1	. The Department of Defense benefitted from the understanding and application of high explosives phenomena. New, high performance, rocket propellants will include new safety features. A high-energy and relatively safe explosive known as LX-14 has been adopted for use in the manufacture of shaped charges.
2.	High-temperature, hybrid, thick film electronics technology is being adapted to geothermal logging instrumentation. Quartz gauges able to measure pressures up to several thousand pounds per square inch at temperatures up to 300 °C have been made available for geothermal applications, oil and gas exploration, and steam injection wells for enhanced oil recovery.
3	. Based upon research on hydrogen embrittlement, a plan has evolved to enhance understanding of the pressure limits, fracture criteria, and safety factors associated with transporting hydrogen in natural gas pipelines.
4.	Investigations of gas dynamics problems for the development and application of diagnostics to automotive engine combustion processes resulted in a plan. By improving knowledge of combustion in internal combustion engines, the researchers are nearing goals of increased efficiency and decreased pollution.
5.	Aspects of extensive DOE site security and weapon protection methods are being transferred to countries with developing nuclear power programs under the auspices of the International Atomic Energy Agency.
Weapons Testing
Weapons testing is an integral part of nuclear weapons research and development, which is conducted in accordance with the terms of the Limited Test Ban Treaty of 1963, and, since March 31, 1976, the proposed Threshold Test Ban Treaty. The weapons research, development, and testing program also supports the President’s Comprehensive Test Ban initiative. All tests are conducted underground at the Nevada Test Site.
In response to a requirement from the Senate Armed Services Committee (Report No. 95-961), DOE prepared two classified reports, one on the reliability of nuclear weapons in the U.S. stockpile, the other on the impact of adding insensitive high explosives into the U.S. stockpile.
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At the Nevada Test Site, Presidentially-approved nuclear tests were conducted in accordance with the terms of applicable treaties. In the interest of public and environmental safety, scientific and technical experts review all proposed nuclear tests to assure compliance with safety and containment standards. The nuclear weapons testing program also accords with requirements of the National Environmental Policy Act.
The Department of Defense and DOE conducted a nuclear weapons accident exercise, NUWAX 79, during April 1979 at DOE’s Nevada Test Site. It was the first joint exercise conducted to realistically simulate a major accident involving nuclear weapons. A 34-man DOE Accident Response Group worked with a 450-man Department of Defense team in an environment of a radioactive contaminant that simulated plutonium and damaged aircraft and training weapons parts. The departments are studying recommended improvements to procedures, equipment, and organizations based on the exercise results.
Weapons Production
Several government-owned, contractor-operated plants* with a range of manufacturing capabilities produce parts of nuclear weapons. These plants produce parts from uranium, plutonium, and key materials at high levels of precision, quality, reliability, and process control.
As an important addition to the Nation’s strategic nuclear arsenal, DOE began to produce a new warhead for the Air Force’s Minuteman III missile system. DOE also introduced a new model of the B61 bomb and completed another version of it. The Department continued to produce warheads for the Navy’s Trident submarine-launched ballistic missile system. In addition, the Department began a major retrofit to prolong the life of the Poseidon missile system.
New and ongoing programs contributed to increased production of strategic and tactical nuclear weapons. Development continued on a new Air Force full-fuzing option bomb and new 8-inch and 155-mm Artillery Fired Atomic Projectiles for the Army, as well as the warheads for the Sea Launched Cruise Missile and the Standard Missile-2 for the
1 Rocky Flats, Golden, Colorado; Bendix, Kansas City; Pinellas, Clearwater, Florida; Pantex, Amarillo, Texas; Mound Facility, Miamisburg, Ohio; Y-12 Plant, Oak Ridge, Tennessee; and Savannah River Weapon Facility, Aiken, South Carolina.
Navy. Production engineering was initiated for the warhead for the Air Forces’ new Air Launched Cruise Missile now nearing production. Finally, development engineering was authorized for new warheads for the Army Pershing missile system.
The DOE completed an appraisal of its seven government-owned, contractor-operated nuclear weapon production facilities during 1979. The appraisal identified the financial resources required to arrest deterioration due to aging and to improve facilities. The project begins in 1980 and will continue for several years. Late in the year, the Department began a study of the long-range use of its production plant at Rocky Flats, Colorado. The study will take two years to complete. Construction continued on the Rocky Flats new plutonium and waste treatment facility scheduled for completion in 1980.
In 1980 and 1981, the Department will continue to fulfill its weapons production responsibilities as outlined in the Presidential Stockpile Memorandum. The rapid increase in funding for this period reflects a substantial increase in the production of weapons systems for the Nation’s stockpile. The project to improve the weapons complex will continue in its second year funded at a substantially increased level. Finally, employment at the primary weapons laboratories will continue at the 1979 level of 7,400 to permit an aggressive advanced weapons system development program.
Verification and Control
DOE efforts focused on U.S. policies that affect major aspects of international security affairs. These include improving U.S. capability to verify nuclear test treaties, preventing the proliferation of nuclear weapon technology and materials, and controlling exports that would potentially be inimical to national security.
Efforts to advance nuclear capability verification took high priority during 1979. Verification technology activities are conducted primarily at the DOE weapons laboratories. These activities seek to strengthen U.S. capability to detect, locate, and identify nuclear explosions in a variety of conditions and environments. The Department aims to develop improved methods and equipment for monitoring underground nuclear explosions by seismic and non-seismic means and also to devise methods of monitoring atmospheric and space explosions.
Major 1979 accomplishments in DOE’s verification technology program included delivery of an Integrated Operational Nuclear Detection System test
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model for the Department of Defense’s Global Positioning Satellite System, the start of serial production on the detection system, and the successful field testing of a prototype National Seismic Station at McMinnville, Tennessee. The latter is a compact, self-contained unit which would be installed in regional networks in foreign countries’ territories of treaty parties to augment long-range teleseismic monitoring capabilities.
The DOE contributed technical advice and assistance to an interagency effort to monitor worldwide nuclear activities and discourage the spread of sensitive nuclear technology. The DOE also studied national nuclear programs, several of which contributed to actions by the U.S. to reduce proliferation risks. The DOE refined methods for tracking worldwide stocks and flows of special nuclear materials during 1979.
The DOE representatives continued to participate in negotiations to frame an International Convention on Physical Security of Nuclear Materials and Facilities. Now nearing completion, the convention would set protection standards for materials and equipment in international transit. During the year, DOE also negotiated, in cooperation with other agencies, a five-year extension of the U.S.-U.K. Mutual Defense Agreement on nuclear cooperation.
Among DOE’s objectives for 1980 is field testing of an advanced prototype National Seismic Station north of Fairbanks, Alaska. The station will be subjected to extremes of climatic and communications conditions that it might encounter in the Soviet Union.
In addition, DOE expects to progress in 1980 and 1981 on advanced techniques for detecting underground nuclear explosions by non-seismic means and to develop and produce advanced sensors for space-borne deployment, thus strengthening U.S. capability to detect atmospheric nuclear explosions.
Nuclear Materials Production
The major objectives of the nuclear materials production program are three-fold:
1.	To provide nuclear materials for national defense requirements, DOE reactor research and development programs, and the needs of other government agencies and of industry;
2.	To receive, store, and process fuels from production reactors and from foreign and domestic research reactors to permit the recovery of enriched uranium and plutonium; and
3	. To develop improved methods for nuclear materials production, including advanced technology used in support of operations.
The program is conducted at Savannah River, South Carolina; Richland, Washington; Oak Ridge, Tennessee; in Fernaid, Ohio, and Ashtabula, Ohio. Figure 8 shows the location of these facilities, and figure 9 presents the relationship between them and the flow of materials.
The Savannah River reactors produce plutonium, tritium, and other isotopes for use by the DOE, other government agencies and industries. F-Canyon and H-Canyon process irradiated fuel and target elements to recover the uranium, neptunium, and plutonium. Tritium is extracted from production reactor targets, and the Multi-Purpose Processing Facility processes isotopic materials including americium-241 for industrial use—oil well logging, smoke detectors, and other applications. The heavy water plant provides material for DOE programs, for other government agencies, and for domestic and foreign firms.
During 1979, Savannah River continued to produce weapon-grade plutonium to meet national defense requirements. The Savannah River plant complied with all requirements of the Clean Air Act; it made modifications to thirteen boilers to meet stack particulate emissions standards.
The N-reactor at Richland produces fuel-grade plutonium and by-product steam for the Washington Public Power Supply System. Maintenance and repairs continued on the PUREX chemical processing plant in order to maintain its standby condition. Deactivation of the Z-Plant continued during 1979, including cleanup of the Plutonium Reclamation Facility and recovery of the resulting scrap.
Richland’s N-reactor produced fuel-grade plutonium and delivered sufficient by-product steam to supply 3.9 billion kilowatt hours of electricity to the DOE-Bonneville Power Authority power grid. Richland completed testing of the neutron-absorbing capability of the new N-reactor, boron-carbide ball, safety system added during the summer.
The Oak Ridge Y-12 Plant processes enriched uranium from the Idaho and Savannah River plants and returns recovered uranium metal to Savannah River for use in fabricating enriched uranium fuels. The facilities at Fernaid and Ashtabula fabricate fuel billets for the Richland N-reactor and depleted uranium cores for the Savannah River reactors.
The Idaho Chemical Processing program was established to conserve domestic uranium resources by recovering enriched uranium from spent U.S.
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Richland
Figure 8. — Location of nuclear materials production facilities
Legend
• Major Nuclear Materials Production Sites A Minor Nuclear Materials Production Activities ★ Headquarters (Washington, DC)
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Figure 9. — Flow of materials between nuclear materials production plants
• Weapons grade Pu • Tritium • Other - Cf-252 - Pu-238 - U-233 - Pu-242 - Am-241
RADIOACTIVE WASTES — Processing — Storage
Weapons grade Pu Fuel grade Pu
IFPF Idaho HEU Recovery from Spent R&D and Naval Fuels
OAK RIDGE Y-12 PLANT LITHIUM and HEU Processing for Reactor Feed
Spent Domestic and
Foreign R&D Reactor Fuels
FERNALD AND ASHTABULA
Ohio
SEU and DU Metal, Oxide and Fluoride Processing; Metal Extrusion and Machining for Reactor
Feed
Operating In Standby
PUREX PROCESSING PLANT
RICHLAND Washington
Government fuel. This fuel is then used as feed material for the Savannah River materials production reactors. Storage and processing of naval nuclear propulsion and other government spent fuel are also provided.
During 1979, considerable progress was made in reducing high risk operations and personnel radiation exposure levels at the Idaho Chemical Processing facility; improvement on an in-place contactmaintenance operation to a combined remote equipment removal and remote maintenance operation was made.
The DOE completed a study on upgrading production facilities at Savannah River, Richland, Oak Ridge, and Idaho and submitted it to the Congress. The study evaluated the need for upgrading production and site facilities to eliminate a backlog of deficiencies that have accumulated over the past quarter century of operation. The study identified a series of activities to improve operational efficiency and reliability in accordance with forecast program requirements.
As part of its annual planning process, DOE evaluated supply and demand for various grades of plutonium, tritium, uranium-233, americium-241, enriched uranium, and heavy water.
During 1980 and 1981, the Nation’s nuclear materials production complex will continue to operate at capacity. The three production reactors at Savannah River will operate at full productivity and the N-Reactor at Richland will produce plutonium and by product steam. During 1980, DOE will undertake a study with the DOD to determine better methods of long-range planning for nuclear materials production requirements.
Defense Waste Management
The Defense Waste Management program was established to ensure the safe handling, processing, storage and disposal of defense-generated radioactive wastes. Since 1944, radioactive wastes have been generated as a by-product of national defense nuclear programs. The principal source of waste has been the reprocessing of reactor fuels to recover plutonium, uranium, and other products because in processing over 99 percent of the fission products remain in high-level liquid waste. Other radioactive waste results from the production of plutonium components for weapons, laboratory experiments, and reactor operation. High-level wastes are stored in isolated sites at Savannah River, South Carolina; Richland, Washington; and the Idaho National Engi
neering Laboratory. Other categories of waste are generated at these and several other DOE sites.
During the past year, a Presidentially-appointed Interagency Review Group (IRG) on Nuclear Waste Management made recommendations on long-term management of nuclear wastes. The Group published a report of its findings and conclusions in March 1979 and distributed it to Congress, state and local officials, industry, and the general public. The Review Group prepared a decision memorandum with its recommendations which went to the President.
The Administration is proceeding along the general lines recommended by IRG in its implementation of the 1980 waste management program. The 1981 waste management program also reflects recent Presidential direction based on the recommendations of the IRG.
Interim Waste Operations: The principal concern of DOE interim waste operations is the safe storage of high-level waste. The DOE seeks to reduce the volume of liquid waste and store it in double-shelled tanks at Savannah River and Richland (after evaporation) and in underground bins at Idaho (after calcination). In 1979, waste volume decreased at each site. Ten double-shell waste tanks were completed at Savannah River and Richland and twenty-three are scheduled to be completed in 1980. By the end of 1987, DOE plans to complete construction on the tank replacement program and on improvements on operational practices. Low-level solid wastes are disposed of by shallow land burial.
Long-Term Waste Management Technology: DOE is developing several methods of immobilizing defense wastes to prepare them for disposal. Ongoing development for low-level waste includes generation of acceptable comprehensive operating criteria (1980), field tests of improved disposal technology, and development of stabilization techniques for sites no longer needed (assuring that disposal areas remain safe over the long term with minimal reliance on continuing maintenance and surveillance). Alternative disposal techniques for low-level wastes are being developed and their potential assessed.
DOE is developing an incineration technique as the major treatment process for transuranic-contaminated materials which contain plutonium and other elements heavier than uranium. The proposed Idaho Transuranic Waste Treatment Facility (TWTF), would begin operation in the late 1980’s to prepare currently-stored waste for geologic disposal. The Department also is developing techniques and re
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quirements for recovery and treatment of previously buried transuranic wastes.
The Department is developing improved techniques for capture and treatment technology for storage and disposal of long-lived radioactive effluents from off-gas streams. The technology to meet current requirements will be available in 1980.
Waste Isolation Pilot Plant: Work during 1979 focussed on geologic characteristics of the proposed site and preliminary design and safety analysis studies. The Department issued a draft Environmental Impact Statement and held public hearings. As part of action taken on the recommendations of the IRG, the Administration has recently decided that the Waste Isolation Pilot Plant (WIPP) project for geologic disposal of nuclear waste (in a southwestern New Mexico bedded salt formation) should be terminated. The New Mexico site will be compared with several fully qualified alternative sites for the first nuclear waste repository, which will be licensed by NRC. As planned by the Administration, this initial repository will accept both defense and commercial wastes.
Transportation: The objective of this program is to assure that future transportation needs for defense wastes (e.g., to a disposal site) are met in a safe, cost-effective, and publicly acceptable manner. The Albuquerque Operations Office was designated the lead office and Sandia Laboratories the lead contractor for DOE transportation programs and have responsibility for both defense and commercial nuclear waste transportation. A Transportation Technology Center was established at Sandia to pursue specific transportation systems and their supporting technology. In addition, work began during 1979 to gather information and to remove institutional barriers to safe transportation.
As a part of an integrated approach to transportation, DOE pursues design concepts for specific systems through contracts with private industry and with the assistance of DOE’s national laboratories. Systems to meet the shipment needs for contacthandled and remote-handled transuranic waste, processed waste, and solidified waste canisters have high priority. Work also continues to ensure consistent design and licensing criteria and to develop testing and analytical techniques.
In institutional issues, analysis continues on the quantitative risks to the public from transportation together with evaluation of the public’s perception of system safety. Systems to meet the information request of policymakers, industry, and the public are
being developed. Some activities, for example, a system for the analysis of hazardous materials incident reports, are now in operation. In addition, the industrial capability is being assessed for cask construction to assure that spent fuel transportation systems are built and licensed for support of the spent fuel storage programs.
Decontamination and Decommissioning: Responsibility for the safe management and disposition of some 500 surplus radioactively-contaminated DOE-owned facilities falls under this program. The facilities include reactors, fuel reprocessing plants, buildings, tanks and ground disposal facilities located at nineteen sites throughout the United States and Puerto Rico. In addition, the program provides for development and transfer of decommissioning technology from DOE programs to the private sector.
Major program areas include surveillance and maintenance to assure that facilities remain in a safe condition until they are decommissioned; establishment of priorities and an orderly approach to disposition activities; and selected disposition actions to reduce the need for surveillance and permit alternative productive use of property. In addition, the program provides for the development and transfer to industry of methods to improve the efficiency and reduce the cost of facility disposition.
Nuclear Materials Safeguards and Security
The Security and Safeguards program is an integral part of DOE’s national security responsibilities. Under the Atomic Energy Act of 1954 as amended, subsequent legislation, and Executive Orders, DOE has responsibilities for the protection of nuclear weapons in its custody, special nuclear materials, classified materials and information, and DOE property. The major objective of this program is to develop and support safeguards and security systems to protect against, and to respond to threats of espionage, theft or sabotage. This objective is met through:
1	. Implementation of a security clearance program to insure the integrity of personnel occupied in sensitive-classified areas and in the handling of special nuclear materials;
2.	Development and implementation of state-of-the-art safeguards and security for application in DOE operations;
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3.	Technology transfer to the private sector;
4.	Assurance that DOE’s emergency response plans and capabilities are adequate to deal with contingencies; and
5.	Enhancement of U.S. non-proliferation efforts by providing technical support to international safeguards programs.
Integrated safeguards and security systems are designed for various types of facilities and are implemented at DOE facilities. Integrated systems combine access controls, physical protection measures, contingency plans, emergency response capabilities, and nuclear materials control, surveillance, accountability, and inventory verification measures. The technical information developed within the DOE program is available to the nuclear industry for use in preventing nuclear terrorism and in supporting nuclear weapon non-proliferation objectives.
During the past year, DOE consolidated into a single organization all major safeguards and security incident management functions. These include the management of the nuclear materials information systems, the Department’s operational capability to assess the credibility of nuclear threats, the development of safeguards and security contingency plans and search and diagnostic equipment for nuclear emergency search teams, and operational readiness procedures to permit DOE decision-makers to deal effectively with safeguards and security incidents.
DOE developed, tested and demonstrated an automated safeguards system for a plutonium storage vault and developed and evaluated an advanced automated entry control system for personnel identification as well as for contraband and special nuclear materials detection. The Department also tested an automated plant process monitoring system to detect unauthorized transfers of special nuclear materials.
Significant progress was made during the year in the implementation of safeguards and security capabilities. A program for improving safeguards capabilities was undertaken and new systems were installed at several important DOE facilities for protection against a range of potential threats. Types of improvement included the strengthening of fences, gates, guard posts and vaults; installing perimeter lighting to facilitate continuous surveillance; introducing doorway monitors to detect contraband; and adding new measurement equipment to permit timely and accurate evaluations of special nuclear materials. Guard force training and capabilities were enhanced at selected facilities, and security surveys were conducted at all major DOE facilities.
Technical assistance was given to the International Atomic Energy Agency and safeguards were developed and reviewed for the International Fuel Cycle Evaluation. The second international physical protection training course as mandated by the Nuclear Non-Proliferation Act of 1978 was conducted during 1979, and specific and generic safeguards were developed for various types of fuel cycle facilities.
Naval Reactors
The Naval Nuclear Propulsion program is a joint DOE and Department of the Navy effort for the design and development of nuclear propulsion plants and reactor core designs with high reliability, maximum simplicity, and long life for installation in naval submarines and surface warships. Operational data from existing naval nuclear ships and land prototypes are analyzed continuously and the results are factored into current development efforts. The ultimate objective is to develop cores that will last the lifetime of a ship.
The technology developed in this program is directly applicable to, and an inherent part of, DOE’s nuclear fission energy program. The Naval Reactor development program is the source of much of the technology upon which the civilian nuclear energy industry is based. In recognition of this, the program is placed organizationally under the cognizance of the Assistant Secretary for Nuclear Energy.
Under the submarine propulsion reactors program, initial criticality testing was performed in the S8G prototype reactor plant to confirm the performance of the reactor for Trident Class submarines. Systems checkout in the lead ship, Ohio (SSBN 726), has continued, as did the design and development of the advanced submarine nuclear propulsion plant. The reactor and plant will provide higher performance than any submarine propulsion plant now in use or under development. Also, developmental efforts continued on the high shaft horsepower reactor plant used in the Los Angeles Class submarines. Engineering physics, materials, and chemistry evaluations were carried on in support of the effort to extend the life of reactor plants and components.
In the surface ship propulsion reactors program, development and construction of Nimitz class aircraft carrier propulsion plants continued and the development of associated refueling equipment and procedures progressed during the year. The operation, development, and testing of the longer life ad
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vanced reactor core for application in the guided missile cruisers proceeded. Design of the Advanced Fleet Core, which will utilize new concepts in fuel elements to improve performance also progressed. The construction and test support for the Virginia class guided-missile dual reactor cruisers continued during 1979.
Under the supporting research and development program, work continued in determining nuclear, physical, mechanical and chemical properties of expended cores. Core design tests were carried out, and critical physics tests were conducted. This information is applied to the design and development of advanced concepts in support of the goal to develop cores that will last the lifetime of the ship.
Inertial Confinement Fusion
Inertial confinement fusion is an approach to controlled thermonuclear fusion as an energy source that also has application in near-term nuclear weapons technology. For both applications, it is necessary to demonstrate the feasibility of releasing more energy from small hydrogen targets than is required to heat them. This is accomplished by laser or particle beams that cause the thermonuclear reaction.
Applied research in inertial fusion is carried out mainly at the DOE Los Alamos, Lawrence Livermore, and Sandia weapons laboratories. Supporting research is conducted in other DOE and U.S. Government laboratories as well as in industry and universities. Experiments on large laser and particle beam facilities now in operation or under construction at the weapons laboratories are expected to provide enough understanding of the physics of inertial fusion. These tests will help to project the requirements for high energy gain from target and net energy gain from reactor-class facilities.
Available laser and particle beam machines are small relative to the energy sources that feasibility demonstration demand. However, they provide an understanding of energy absorption and transport in targets. Record yields of thermonuclear neutrons, over 10 billion in a single pulse, have been attained in experiments on the Shiva laser facility at Lawrence Livermore Laboratory. Shiva and the Helios facility at Los Alamos irradiate targets that give encouraging indications of significant fuel compression. This is a necessary step toward attaining high energy gain from targets and net energy gain from complete energy systems.
Progress is being made toward identifying laser and particle beam methods that are appropriate for
fusion energy production by inertial confinement. A series of accelerators for electrons or light ions has been developed at Sandia. Sources for heavy ion beams have been developed at a number of DOE laboratories. Both light and heavy ions are expected to deposit their energy efficiently in targets, but considerable uncertainties remain concerning the adaptability of the accelerator technologies to the requirements of inertial fusion for precise focusing at a distance from the targets. Very short wavelength lasers may be required to drive targets efficiently to ignition conditions, and electrical efficiency of up to 10 percent may be required to offset losses overall in the reactor system. The search for suitable lasers has been narrowed to a few candidates for which initial scaling experiments are to be undertaken in 1980 and 1981.
The ijext major facility to come into operation in the inertial fusion program will be the Particle Beam Fusion Facility (PBFA-I) at Sandia, Albuquerque. It is scheduled to begin operation in the fourth quarter of 1980. A prototype experiment for PBFA-II, a more-than-two-fold expansion of that accelerator planned for the early 1980’s, is to be operated at Sandia during 1980. Construction will continue on the 100 kilojoule Antares carbon dioxide laser facility at Los Alamos, scheduled for completion in 1984, and the 100 kilojoule Nova laser facility at Lawrence Livermore, scheduled for completion in 1983. Target experiments will be carried out mainly on Shiva and Helios to reach fuel compression well beyond a hundred times the liquid density of hydrogen. The plan is to progress to scaling experiments with both short wavelength lasers and ion beam sources.
Classification
The DOE is responsible for implementing policy for the classification of Restricted Data, Formerly Restricted Data and National Security Information within DOE’s jurisdiction, in accordance with the requirements of the Atomic Energy Act of 1954, as amended, and applicable Executive Orders. The DOE must also assure the continuous review of Restricted Data and other classified information to determine what may be declassified and disseminated in the interest of scientific progress and the general public welfare, without damage to the national security. It is DOE’s continuing goal to maintain a realistic and viable classification and declassification system consistent with these responsibilities.
In the past year, the DOE has been engaged in a major court case involving injunctions sought under
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the Atomic Energy Act, and activities related to this litigation are still under way. In addition, the DOE’s classification and declassification procedures have undergone extensive reevaluation and a major effort has been undertaken to review past declassification actions taken. Classification activities also focused on implementation of Executive Order on “National Security Information” 12065 including issuance of a completely revised DOE manual on responsibilities, standards and procedures for conduct of the classification program. New and revised classification guidance was also issued in such areas as the gas centrifuge program, laser isotope separation methods,
nonproliferation, sabotage and nuclear weapons technology.
In the coming year, particular emphasis will be placed on the following activities: (1) an evaluation of the effectiveness of the Atomic Energy Act as it concerns the DOE’s classification and declassification program; (2) continued implementation of E.O. 12065, involving the development of new national security classification guides and procedures; (3) review and revision of guides which define overall DOE classification policy; and (4) further technical proliferation bilateral agreements to protect sensitive nuclear technology.
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Chapter 9
International Programs
Developments in the 1970s, particularly in the oil market, placed energy in the forefront of problems facing governments. As the decade progressed, however, it became clear that the nature of the shortterm oil problem was no longer exclusively one of sufficient resources but one dominated by overriding political concerns. By 1979, three trends had become evident.
For the first time in peacetime, oil supply arrangements proved inadequate in assuring a continued and stable supply of oil imports, forcing consuming governments, which have significant foreign policy interests to protect and advance, to treat oil problems as national security issues. It is expected that the energy problem of the 1980s will become even more visibly intertwined with international political and strategic questions, with access to energy supplies in general, and oil in particular, becoming dominant geopolitical concerns.
Second, the previous distinction between world and domestic energy problems has become blurred as U.S. policy is increasingly influenced by factors and events originally seen as external to domestic concerns. The new, harsh reality is that until U.S. oil import dependence is reduced sharply, the ability of the United States to act flexibly and effectively in the international arena will be constrained by energy policies and developments that are determined abroad.
Third, the recent period of relatively stable oil production and prices has disappeared. Consuming countries, which were granted a relatively ample opportunity to put their energy house in order from
1974 to 1978, will no longer have this degree of latitude. As a result, the interval within which we can act to regain control of our energy situation has been severely curtailed.
In the face of these developments, governments have begun to adopt policies necessary to reduce their economic and political vulnerability arising from continued dependence on insecure supplies of oil. In the 1980s, particularly the early part of the decade, the U.S. will need to strengthen, accelerate, and complete this process if it expects to avoid permanent economic damage and the parallel and increasingly ominous threats to national security.
The international aspects of United States energy policy include a number of international energy initiatives that have been recently completed, are in progress, or will soon be undertaken to advance this strategy. These include:
1.	Participation in the annual Economic Summit meeting of the heads of state or government of the seven major industrialized nations;
2.	Cooperation with principal allies in the twentymember International Energy Agency (IEA);
3.	Bilateral cooperation with selected countries outside the Persian Gulf in order to assist in developing indigenous conventional and non-conventional hydrocarbon resources, and as a means to increase the security of the United States’ energy supply;
4.	Intensification of the International Energy Development Program under which we are cooperating with several developing countries
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to assess their energy resources and articulate options for future energy strategies;
5.	Support for the energy programs of such international financial institutions as the International Bank for Reconstruction and Development;
6.	Bilateral and multilateral collaboration with more than twenty countries in energy research and development in such fields as solar, geothermal, fusion, nuclear, conservation, and coal; and
7.	Continued cooperation in a variety of forums to assure the safe development of nuclear power. These significant initiatives can help convince the Nation’s industrialized partners and others that the U.S. is serious in curbing oil demand, and also help the U.S. to ensure that they make similar and supportive efforts.
Cooperation Among Energy Consuming Nations
The United States directed a major portion of its international efforts in 1979 to strengthening cooperation among Summit and IEA partners. Begun in 1975 at French initiative, the annual Summit meetings of the heads of the seven major industrialized countries plus the President of the Commission of the European Communities are devoted primarily to informal but detailed discussions and decisions on the full range of international economic issues. The Department of Energy played a prominent role in the preparations for the Tokyo Economic Summit in June 1979. Among the major energy decisions made at the Summit were the following:
1.	To freeze, on an individual country basis, oil imports in 1985 at 1977-78 levels;
2.	To restrict 1980 oil imports;
3.	To establish a register of international crude oil transactions;
4.	To increase coal production, utilization, and trade;
5.	To create an international energy technology group to explore possible collaboration in promoting acceleration of new and promising energy technologies; and
6.	To cooperate in enhancing public safety as an essential element to ensure the continuing expansion of nuclear power.
In September 1979 at a follow-up meeting in Paris, Energy Ministers reviewed progress in fulfilling Tokyo commitments, implemented a monthly
register of crude oil transactions, accepted terms of reference for establishment of the International Energy Technology Group, appointed a Coal Industry Advisory Board to promote coal utilization, and reconfirmed oil import targets. Ongoing activity in these areas will be handled by the International Energy Agency.
The 1980 Summit meeting will be held in Venice in the spring. As with Tokyo, the Venice Summit is expected to address international energy issues and developments, particularly given the possible severe impact on the world economy of a continuation of oil market instability and increasing prices.
The International Energy Agency, of which twenty major industrialized countries are members, continued in 1979 to be the major U.S. forum for cooperation among energy-consuming nations. Cooperation within this body covers the gamut of energy issues. The major agreements in 1979 resulted in commitments to reduce oil import demand for 1979 and 1980 by the participating countries.
The IEA Ministerial meeting in December 1979 was convened at U.S. initiative and marked the culmination of a year-long U.S. effort to accelerate the reduction in demand for imported oil. At a previous Governing Board meeting in March, the IEA countries had agreed to a U.S. proposal to reduce demand for world oil by 2 million barrels a day in 1979 through restraint in oil demand and accelerated production in response to the Iranian oil production cutback. The United States was successful in meeting its commitment by the adoption of strong demand restraint measures. At the December Ministerial, this effort was extended, resulting in the following decisions:
1.	Agreement by each member country on binding national oil import ceilings which would limit the collective level of demand to 23.1 million barrels per day (MMB/D) (plus bunkers) in 1980 and 24.6 MMB/D in 1985, compared to 24 MMB/D in 1978. This agreement represents a reinforcement of the Summit commitment and an extension of this commitment to the non-Summit members of the IEA;
2.	Establishment of a mechanism for revising these ceilings downward to reduce marginal price pressure in the market;
3.	Agreement that the same degree of binding national commitment would accompany any downward revision of ceilings;
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4.	Establishment of a mechanism within the IEA whereby, on a quarterly basis, country performance will be reviewed along with oil supply developments in order to ensure compliance with the ceilings and adjustments of demand levels to match available supplies;
5.	Agreement on a framework for developing plans to allocate reductions in oil demand;
6.	Agreement on a study leading to consideration by the Governing Board of means to reduce the emergency entitlement for countries which fail to live up to their oil import ceiling commitment; and
7.	Agreement to increase the ability of member countries to influence stock levels, to improve understanding of and ability to influence changing oil market structures; and to consider measures for introducing more order into spot market activities.
The IEA member countries will meet again at the Ministerial level in the first quarter of 1980 and quarterly thereafter to review the oil market and determine the amount of any downward adjustment in the ceilings.
As part of its ongoing programs in 1979, the IEA also expanded its R&D cooperation, strengthened the procedures for reviewing each country’s energy performance, implemented Summit decisions providing for increased transparency in the international oil market and collaboration in the International Energy Technology Group and, in response to Iranian developments, increased its data acquisition efforts in support of its emergency allocation system. DOE involvement in these programs was substantial.
DOE also played a major role in the program reviews that were published by the Standing Group on Long Term Cooperation in June 1979 and resulted in adoption of improved energy programs in member countries; negotiated the adoption of principles and policies for increasing steam coal utilization, production, and trade; and joined other members in the formation of the Coal Industry Advisory Board. DOE coordinated U.S. efforts in support of the IEA-sponsored International Energy Conservation Month (October 1979) to develop a greater awareness of conservation efforts in member countries.
Under the Standing Group on the Oil Market, the Department developed a register of international oil transactions and consulted with oil companies and traders on the changing structure of the oil industry.
DOE prepared the recommendations for an IEA working party that initiated a coordinated effort to
help developing countries bring into use technologies related to renewable energy (the McPhail Group). The Department also participated in the Ad Hoc Group on International Relations which addresses relations between developed and developing countries.
Finally, in the thirteen-nation Antarctic Treaty forum, DOE was a principal participant in developing a framework for possible future oil production from the Antarctic.
Analysis of International Energy Markets
DOE is currently preparing detailed analyses of worldwide oil resource and production levels to provide policymakers with the best available estimates of technical production capacity in the major oil producing countries. DOE also examines other considerations, such as absorptive capacity, that affect production rates for particular nations. While some OPEC and non-OPEC oil producers have populations large enough to enable their governments to absorb much, if not all, of the petrodollars received from oil sales, about two-thirds of OPEC oil exports are derived from countries with small populations and limited capacity to absorb foreign exchange. Most of the latter countries are located in the Middle East. These countries may have the technical capability to produce more oil in the future, but the serious limits on their spending power are likely to reduce oil output below the technically possible maximum level.
DOE analyzes activity within the world oil market, its overall structure, and the multiplicity of factors that affect it. For example, technical and economic issues alone do not determine the level of world oil production. Since social and political considerations have an increasingly important effect on oil production levels in OPEC and non-OPEC developing countries, DOE evaluates these impacts in coordination with other Federal agencies. In a similar fashion, DOE monitors economic growth rates, fuel substitutions, and oil demand in a number of developing countries and the IEA member countries to establish a continuing picture of world oil demand. DOE also continues its examination of the structure of the world oil market, which is evolving rapidly with the increasing role of national oil companies in the OPEC nations and a corresponding decline in the role of the international oil companies.
During 1979, the Department developed several important analytical tools to support its international
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energy market studies. The Gately model derives the implications of OPEC pricing behavior on world oil price trends; and a simulation model of a typical oil resources and policy options to project world oil price trends; and a simulation model of a typical OPEC economy predicts the effects of various price and production policy choices on that country’s economic development.
As part of a program to assess world crude oil resources and production potential, DOE initiated the Foreign Energy Supply Assessment Program. The study is regarded as a landmark and is the U.S. Government’s first systematic effort to determine the quantities of conventional petroleum remaining and recoverable within each country of the world and the probable rate at which such resources could be produced. The first country study under the Assessment Program, which analyzed Nigeria, was completed in 1979. Current plans call for publication of country studies on Venezuela, Saudi Arabia, and Kuwait.
Actions to Increase Energy Supplies
In response to the growing uncertainties in the Persian Gulf, there is a clear need both to increase the world availability of energy supplies and to improve the security to the United States of those supplies. To meet this need, the United States is bolstering its ties with established producing nations outside the Persian Gulf area, encouraging diversification of supply through the development of new producing areas, and pursuing efforts to broaden and strengthen the energy supply development programs of international financial institutions.
Activities with Established
Producing Nations
Efforts in this area are focused on encouraging the development of natural gas, coal, and petroleum resources, both conventional and unconventional.
Natural Gas: A number of natural gas import projects were approved to permit natural gas to be substituted for oil products in both the residential and industrial sectors. These include a liquefied natural gas import project that will bring natural gas into the California market and a number of Canadian natural gas import projects. The U.S. is continuing to negotiate with Canada on the future availability of natural gas imports. Particular emphasis has been placed on the construction of the Alaskan Natural Gas Transportation System.
In another major decision, the United States and Mexico reached agreement on a framework for the sale of Mexican natural gas to the United States. Regulatory approval was granted on December 29, 1979, and gas began flowing in mid-January 1980. The U.S. is continuing to work closely with Mexico on a wide range of oil and natural gas import questions.
Finally, within the International Energy Agency, the United States is actively participating in the World Gas Study, which will identify the potential for increased accelerated usage of natural gas within the OECD area. Increased international trade in natural gas could have a significant influence on the ability of countries to reduce their oil imports.
Coal: Both the May IEA Governing Board Ministerial and the Tokyo communiques contain pledges to accelerate coal utilization. A Coal Exports Study, which examines the constraints to expanding steam coal exports, is nearing completion. This study will provide the basis for initiatives to eliminate or mitigate these constraints. A World Coal Study, which will be completed in May 1980, will provide a complementary analysis of existing and probable constraints inhibiting accelerated coal utilization worldwide.
Petroleum: The United States has begun to move in the direction of stimulating the production of heavy oils, of which there are abundant reserves in several nations, notably the United States, Canada, and Venezuela. A Memorandum of Understanding has been concluded on the development of heavy oil and tar sands with Canada and the first of six projects is under way. The U.S. expects to conclude a similar agreement with the Government of Venezuela on cooperation in the production, transportation, and refining of heavier Venezuelan crude oils.
Other energy issues between the U.S. and Canada include the pricing and level of oil exports, crude oil and product exchange, and the construction of a West-to-East pipeline to facilitate the distribution of Alaskan crude oil to the Middle West. DOE also monitors developments in the Mexican and Venezuelan oil industries and the implications of these developments for the U.S. market for product imports.
Electric Energy: A U.S. and Canadian Electricity Exchanges Study was completed in May 1979, and DOE will focus on implementing its recommendations and coordinating with the Economic Regulatory Administration to facilitate the development of procedures for regulating electricity trade. As a result of
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the February 1979 meeting between Presidents Carter and Lopez Portillo, a joint study was initiated on the possibility of increased electricity trade along the common U.S.-Mexican border.
Efforts to Assist Countries in
Developing New Supplies
As a further means to increase the worldwide availability of oil and to diversify sources of supply, the United States has placed increased emphasis on stimulating oil production in non-OPEC nations. As one example, DOE has completed a study of the potential for promoting energy exploration and development in the developing world and will actively continue to pursue policies and programs to encourage development of these resources.
The International Energy Development Program: This program, which was initiated in 1977, is another mechanism by which the United States is attempting to increase the worldwide availability of energy supplies. With policy guidance from the Department of State, DOE conducts energy assessments with the governments of developing countries. Assessments have been completed with Egypt and Peru and are now in progress with Argentina, Portugal, and the Republic of Korea. Each assessment is a comprehensive examination of a country’s energy needs, uses, and resources that is performed by specialists from the U.S. who work closely with counterparts from the participating government. The assessment process enables the participating government to articulate and pursue energy development strategies that reduce dependence on imported petroleum, increase reliance on indigenous energy resources, and avoid premature or excessive commitments to nuclear power.
The product of the comprehensive energy assessment is a joint report that is approved by both governments. This report describes the assessment process and presents the results of the analysis. It is not an energy plan, but rather a technical analysis that provides a sound analytical foundation on which the participating government could subsequently prepare a national energy plan.
Cooperation with International Financial Institutions: The World Bank Group expects to initiate thirty new oil and natural gas projects during the next 3 years with a financial commitment of $1.2 billion. In addition, five loans for coal production are expected to be considered. During 1979, funding for the petroleum exploration program of the Bank totaled
$112.4 million for projects in Egypt, Pakistan, Thailand and Turkey. The United States was an early supporter of expanding the Bank’s program into the field of petroleum development.
International Cooperation In Energy Research and Technology
United States international energy research and development (R&D) efforts are directed toward collaborative programs that: (1) accelerate development and commercial application of energy technologies that have a significant ability to replace imported oil; (2) enhance the prospects for introduction of alternative energy sources; (3) reduce R&D costs to the United States; and (4) maintain the U.S. technology leadership position. Increasing emphasis is placed on large-scale joint projects that have a significant energy production or conservation potential, including synthetic fuels production.
International energy R&D cooperation is conducted both bilaterally and multilaterally. In addition to jointly funded R&D and demonstration projects, the exchange of information or technical experts and coordination of national programs help to assure a common understanding of major technical problems and the means to their solution.
At the end of 1979, DOE was a party to or was responsible for implementing thirty-five bilateral research, development, and demonstration agreements with seventeen countries and the European Community. Of these, twelve were initiated in 1979. Twenty-one agreements were being negotiated or developed at year-end.
Of particular interest and importance among U.S. bilateral cooperative agreements are those concluded in the past year with Japan and the Federal Republic of Germany. As an outcome of an initiative in 1978 by former Prime Minister Fukuda, a broad cooperative agreement with Japan was negotiated, with early emphasis on fossil and fusion energy. Japan is planning to contribute 25 percent of the total cost of the billion-dollar DOE solvent refined coal fuels project (SRC-II) and has made a commitment for a $60 million participation in the upgrading of the U.S. Doublet III, a magnetic containment fusion device that will be the largest Tokamak in the world. The German government also has made a commitment to contribute one-fourth of the total cost of the SRC-II project.
These arrangements are important because of their scope and magnitude and also because, in the
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case of SRC-II, they indicate that cooperation is feasible on near-term technologies involving both governmental and industrial participation. In a related development, the Department is preparing to participate in the construction and operation of pilot plants in Germany for the conversion of methanol to gasoline. Discussions are under way with Japan for DOE participation in a project that involves an alternative coal liquefaction process in Japan.
Following President Carter’s signature of a broad agreement for cooperation in science and technology with the People’s Republic of China, the Department of Energy signed an agreement for cooperation in high energy physics under which DOE will collaborate in the planning, design, and construction of a major synchrotron facility in China on a fully reimbursed basis. The U.S. and China also will cooperate in water resources development under an accord signed by the Vice President. DOE serves as the national coordinator for this activity, which is expected to lead to cooperation on planning and construction of large hydropower facilities in China.
Other new bilateral agreements include one with The Netherlands in closed-cycle magnetohydrodynamics; a comprehensive nuclear R&D agreement with Japan in the field of fast breeder reactors, together with an agreement in fast reactor safety; an agreement with France to study the French chemical exchange uranium enrichment process; and an agreement with the United Kingdom to investigate the behavior of higher actinides in fast reactors. Progress has been made under the $100 million U.S./Saudi Arabia joint R&D program on solar technology. Contracts will be awarded early in 1980 to a number of U.S. firms for construction of a 350-kilowatt photovoltaic solar system to power a village in Saudi Arabia and five solar cooling demonstration projects.
Since the formation of the IEA in 1974, multilateral projects under its sponsorship have increasingly become the focus for international energy R&D cooperation. As the most active participant in the lEA’s program, DOE is party to thirty-three Implementing Agreements in solar, fossil fuels, coal, fusion, geothermal, hydrogen and conservation technology. Five of these were signed during 1979, and four others were being negotiated or developed at the end of the year.
Cooperation through the IEA increasingly emphasizes the joint development of significant new energy production and conservation techniques and means to substitute for scarce oil supplies. New activities cover a range of technology areas, including: the development of high temperature materials for
use in conventional internal combustion engines and turbines for automotive use; R&D on enhanced oil recovery techniques; geothermal equipment development, testing, and demonstration (including arrangements to test a U.S.-developed system in Italy, New Zealand and Mexico); use of coal and oil mixtures to fire utility boilers; and cooperative development of hot dry rock geothermal technology (Germany will provide up to one-fourth of the funding of the U.S. project, located in New Mexico).
Substantial progress was also made during the year in existing IEA projects, including entry into the construction phase of the small solar power project under which nine countries will commit $40 million to construct two 500-kilowatt electric solar power systems of different designs near Almeria, Spain and development of three new projects aimed at energy conservation in residential and commerical buildings.
Another notable multilateral development that occurred under the auspices of the International Atomic Energy Agency (IAEA) was the international cooperative design study of a next-generation Tokamak-type fusion machine. Western European countries, Japan, the U.S., and the Soviet Union worked together to define the scope of the next fusion machine, which may follow the large fusion devices now being built in the U.S., the U.K., and Japan. This effort resulted in strong international consensus about the status of magnetic fusion technology and the remaining issues that need to be addressed. A final report containing recommendations for follow-up activity will go to the IAEA Governing Board in early 1980.
DOE also provides technical advice and assistance to the International Development Cooperation Agency, the Agency for International Development, and other U.S. Government agencies in the conduct of their energy development assistance programs. These efforts promote the transfer of new energy technologies (especially those using renewable resources) to developing countries, thus expanding their energy resource base.
In addition, the Department has the lead role in an interagency International Solar Commercialization Working Group, which is working to accelerate the commercialization of solar energy by fostering the widespread use of solar resources in the U.S. and overseas.
During 1979, DOE hosted approximately 350 visits by foreign nationals to DOE headquarters and about 1600 visits to field and contractor organizations. DOE also arranged about 500
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assignments of foreign scientists to various laboratories and research facilities for periods of up to a year and coordinated the participation of about 350 Americans in 142 IAEA technical meetings.
Nuclear Energy Cooperation and Nonproliferation
U.S. cooperation in nuclear energy is focused primarily on making the benefits of nuclear energy available to other countries while reducing the risks of the proliferation of nuclear weapons. As part of American efforts to assure the continued safe use of nuclear energy, the United States participates actively in various multinational activities such as the International Nuclear Fuel Cycle Evaluation project and in the programs of the OECD Nuclear Energy Agency and the International Atomic Energy Agency.
As required by the Nuclear Non-Proliferation Act of 1978, which establishes new conditions for cooperation in the peaceful uses of nuclear energy, DOE is engaged in the renegotiation of existing agreements for cooperation in the peaceful uses of nuclear energy and the negotiation of new agreements. Agreements are currently in force with twenty-two nations, the European Atomic Energy Community (EURATOM), and the International Atomic Energy Agency (IAEA). Under the lead of the Department of State, DOE has participated in the development of a draft model agreement and its presentation to twenty-four nations. Talks have been held with fourteen nations, EURATOM, and the government on Taiwan. In June 1979, Australia and the United States signed the first amended agreement, which is now before Congress. The U.S. and the IAEA have also signed an amendment to an existing agreement which has been approved by the President and forwarded to Congress. The United
States and Morocco signed a new agreement, and an amended agreement with Norway was initialed.
DOE took part in a continuing study under the auspices of the IAEA on possible future arrangements for the international storage and custody of plutonium. Efforts undertaken in 1979 also include support for an IAEA study of international spent fuel storage cooperation and the preparation of an environmental impact statement on the storage of foreign spent power reactor fuel in the United States.
DOE also contributed to the development of lower enriched fuels for research reactors and has sought the acceptance of this concept by foreign reactor operators. DOE negotiated an agreement with France to undertake a study of the proliferation resistance of the French process for the chemical exchange enrichment of uranium.
In cooperation with other concerned agencies, DOE has participated in the development and implementation of programs to strengthen international safeguards of the International Atomic Energy Agency. DOE joined with the Department of State and the Arms Control and Disarmament Agency in supporting Senate ratification of the U.S.-IAEA agreement on the application of safeguards in the United States. This treaty, if ratified, would apply safeguards to civil nuclear facilities within this country and thus fulfill a voluntary commitment made by the U.S. during development of the Treaty on the Non-Proliferation of Nuclear Weapons (the NPT).
Under the Nuclear Non-Proliferation Act, DOE has responsibilities in export license determinations and conclusions of arrangements for cooperation. In 1979, the Department processed 295 subsequent arrangements under Section 131 of the Atomic Energy Act, involving transfer of nuclear equipment or material to foreign nations or between the original recipient and another country. Additionally, new procedures for the application of the National Environmental Policy Act outside the United States under Executive Order 12114 were developed and implemented.
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Chapter 10
General Science Programs
Introduction
The resolution of the Nation’s energy problems will require the development of new and the improvement of existing technologies. In many cases, these advances will require knowledge gained in part from research in the basic sciences to provide the foundation for energy technology development. The fundamental knowledge in science and engineering that comes from basic research contributes to advances in the production, use, and conservation of energy. It also enhances environmental protection.
The Department’s Office of Energy Research supports programs in the basic energy sciences, high energy physics, and nuclear physics. Knowledge gained from these activities cuts across the Department’s organizational lines. The Office also has broad responsibilities for research and development (R&D) planning and independent technical advice to the Secretary on a range of subjects related to energy technology development. Funding for these activities is shown in table 26.
Basic energy science activities include research in nuclear science, materials science, chemical science, engineering, mathematics and geoscience, biological science and advanced energy projects. Advanced energy projects investigate high-risk, high-payoff scientific concepts that might not otherwise receive support in the Department. Funding for research in the basic sciences rose from $187.5 million in 1978 to $204.7 million in 1979. In 1979 these funds supported work by some 2,000 scientists
Table 26. — Budget authority for general sciences — 1979, 1980, and 198T
1979	1980	1981
	(millions of dollars)		
Basic energy sciences			
Nuclear sciences		$ 29.5	$ 32.0	$ 34.8
Materials sciences		94.1	97.0	99.9
Chemical sciences		54.7	65.0	74.5
Engineering, mathematical, and			
geosciences		16.5	21.4	30.7
Advanced energy projects		4.0	5.2	8.3
Biological energy research		4.0	6.3	9.2
Program direction		1.9	2.3	2.4
Subtotal		204.7	229.2	259.8
Technical assessment project			
Assessment projects		2.2	2.5	3.2
Satellite power system		4.6	5.5	5.5
Advanced technology projects....	3.5	5.0	12.0
Program direction		0.4	0.5	0.5
Subtotal		10.7	13.5	21.2
High energy physics		297.2	325.1	358.8
Nuclear physics		92.6	104.6	115.5
Life sciences research and			
nuclear medicine2		41.1	42.2	48.5
Total		$646.3	$714.6	$803.8
' Includes operating, capital equipment and construction
1 Undertaken by the Office of Environment.
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and engineers at 165 institutions in forty-two states and the District of Columbia. The Basic Energy Sciences budget is $229.2 million for 1980. The President’s budget request for 1981 is $259.8 million.
ER’s High Energy and Nuclear Physics programs differ from other DOE basic research activities in that they do not directly support the development of energy resources. Rather, research into high energy physics and nuclear physics seeks a deeper understanding of fundamental aspects of matter and energy. High energy physics seeks to understand the basic laws of the universe that govern fundamental properties of matter, energy, and their transformations. Nuclear Physics is directed at developing a more complete knowledge of the structure and properties of atomic nuclei and the scientific laws governing their interactions.
Together, the High Energy and Nuclear Physics programs had a combined 1979 budget of $389.8 million, of which $297.2 million was for high energy physics and $92.6 million for nuclear physics, accounting for 90 percent of the Federal support for basic research on elementary particles and nuclear structure. The 1980 budget for high energy physics is $325.1 million and for nuclear physics is $104.6 million. The President’s request for 1981 is $358.8 million and $115.5 million respectively. The principal features of these programs are: (1) to maintain groups of faculty and students conducting research at universities and DOE laboratories throughout the U.S.; (2) to fund the design, construction and operation of the accelerators and other research facilities essential for advancing knowledge in high-energy and nuclear physics; (3) to assure the availability of the national facilities to all qualified users; and (4) to marshal expert advice at each step of the planning and implementation of the program.
R&D Planning, Advice and Assessments
The objective of R&D planning is to determine the best combination of R&D options to meet the Nation’s energy requirements. This planning is carried out cooperatively by the Office of Energy Research and the Office of Policy and Evaluation. In keeping with its legislative mandate, the Office of Energy Research also independently advises the Secretary on R&D programs and management.
National R&D Planning and Assessments
Analyses of the potential contribution of new energy technologies play a major role in helping DOE
develop its research, and development and demonstration plans. A series of program strategies and other analytic studies was completed during the year to examine the energy, economic, environmental and social benefits of alternative technologies. The Office of Energy Research was assigned responsibility for a technology base review and for the development of R&D strategies for fusion, fission, geothermal, biomass and solar energy. The office also participated in drafting the fossil program strategy. This initial strategy work established the direction and priorities for DOE’s 1981 budget request.
The technology base review was one of several independent, objective analyses and assessments carried out by the Office of Energy Research in 1979. The technology base includes basic and applied research and exploratory development programs. The study sought to determine the strengths and overall balance, as well as duplications and gaps of technology base programs. Technical assessments were also conducted in the following areas:
1.	Fossil energy. The Fossil Energy Research Working Group made recommendations on long-range research needs in coal gasification. The group has recently conducted a similar study on coal liquefaction which will continue in 1980.
2.	Technology engineering/economic evaluation. This activity has focused on developing a method to evaluate quantitatively engineering uncertainties and cost sensitivities of specific energy technologies. Initially, this methodology has been applied to the evaluation of Ocean Thermal Energy Conversion.
3.	Robotics. Programs were begun that will continue in 1980 to examine the status of and need for research on robotics of energy technology, including examination of opportunities in nuclear reactor servicing and synthetic fuel plant operation and maintenance.
The Office of Energy Research will assess the Department’s battery program in 1980 to identify major technical problems, review accomplishments, and identify R&D needs.
The assessment activity was funded at $2.2 million in 1979 with $2.5 million in 1980. The President’s 1981 budget requests $3.2 million.
Satellite Power System
The valuation of the Satellite Power System (SPS) continued in 1979. The system is an option being considered as a post-year-2000 energy source. The concept calls for the capture of solar energy by
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satellites located in geostationary orbit, which is a point in space about 22,000 miles above the Earth, which maintains a fixed position relative to Earth. This energy then would be converted to electrical energy by means of solar cells and finally to radio frequency energy and sent to Earth in a focused beam. The beam would be aimed at a ground receiving antenna where it would be reconverted to electricity for distribution in a utility grid. Currently, the Satellite Power System is in the concept development and evaluation phase. Several areas need improvement, including the costs of solar cells and space transportation, solar cell efficiency, and understanding of acceptable limits of radiation exposure resulting from micro wave power transmissions.
In 1977, DOE and NASA embarked on a DOE-managed comprehensive evaluation and assessment of the SPS concept. Funded at $15.6 million, this 3-year study is aimed at investigating the technical feasibility, environmental and social acceptability, economic viability, and merits of SPS compared with other energy options. The study wil be completed in 1980; the results will provide a basis for making informed decisions about the future SPS work.
Advanced Technology Projects
The Advanced Technology Projects activity provides DOE with the capability to identify promising new technology projects in all energy fields that have the potential for national impact, and to move rapidly to take advantage of these systems and components. Projects involve interdisciplinary and multiprogram technologies not addressed elsewhere within the Department.
Funding for advanced technology projects during 1979 totalled $3.5 million. Funding for 1980 is $5.0 million. The President’s 1981 budget request is $12.0 million for these programs.
During 1979, DOE completed the basic research on a project aimed at the development of ordered alloys, in which orientation of the metal atoms is in long chains rather than randomly. The alloys possess extraordinarily high temperature strength characteristics essential for future combustor and fusion reactor requirements. The project is being transferred to the fusion program for applied development.
A new photocatalyst, which uses solar energy to promote chemical reactions, has been demonstrated with an efficiency in excess of 40 percent for conversion of solar energy to hydrogen by water splitting. Previous efficiencies were less than 2 percent. This
hydrogen could be used as a synthetic fuel, or can be used to make methane. A new effort is being planned to demonstrate applications.
Several new projects have been started since last year, including: multi-year projects to develop a residential solar energy system that can supply up to 90 percent of the single family residence’s total energy needs; and modeling studies of a new technology for coal gasification chemistry with a follow-on effort to conduct tests with a product demonstration unit. A field exercise in radio frequency heating of tar sands also is being planned in a continuation of the research effort begun by the Advanced Energy Projects activity discussed later in this chapter.
Energy Research Advisory Board
The Energy Research Advisory Board provides a means of obtaining advice from the energy industry, energy users, state and local governments and public interest groups. Through the Director of Energy Research, the Board advises the Secretary on overall research and development conducted by DOE and provides long-range guidance. The Board carried out the following activities in 1979:
1.	Strategic Petroleum Reserve. In 1978, the Under Secretary requested that the Energy Research Advisory Board review the Strategic Petroleum Reserve program and recommend ways to improve its performance. The recommendations were provided to the Secretary on March 4, 1979 by the study group.
2.	Weapons Laboratories. In December 1978, the Secretary requested that the Board review the relationship between the two nuclear weapons laboratories (Lawrence Livermore Laboratory and Los Alamos Scientific Laboratory) and their parent organization, the University of California. The final report was submitted to the Secretary on May 14, 1979.
3.	Gas Research Institute. On May 4, 1979, the Federal Energy Regulatory Commission requested that the Board analyze the Gas Research Institute 1979 R&D Program and Five-Year Plan to help the Commission in its rate setting process. The study group forwarded its conclusions to the Board in July 1979. The Board will perform the same service for the commission next year.
4.	Construction/Development Projects Late in 1978, the Under Secretary asked the Board to set up a study group to consider ways to improve the management of construction and
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development projects. The report is being completed in 1980.
During the coming year, the Board expects to establish two standing committees to provide advice on solar photovoltaic and geothermal energy. Other topics which may be addressed in 1980 include sulphur dioxide emissions, biomass R&D and energy efficiency, and the adequacy of basic and applied research in the Department.
Coordination of DOE Commercialization Activities
The Department provides assistance in the commercialization process. During 1979, the Office of Energy Research provided staff support to the DOE Commercialization Committee whose objectives are to: (1) identify commercialization candidates; (2) assess their potential; and (3) develop and implement plans to increase the production of domestic fuels while encouraging the use of fuel-saving methods.
During 1979, the committee proposed three candidates for a DOE commercialization emphasis: annual cycle energy systems, distributed thermal storage and coal/oil mixtures. The Committee is presently assessing these candidates. In addition, the Office participated in a number of projects in support of DOE commercialization activities, including a series of meetings in Florida with state public utility commissions which resulted in a critical demonstration of coal-and-oil mixtures in an oil utility boiler in Florida. DOE has also agreed to work with other Federal agencies to carry out projects in small scale hydro, unconventional gas and alcohol fuels in rural areas.
International R&D Planning
The Office of Energy Research plays a major role in three of DOE’s many international activities: the International Energy Agency Strategy Committee, new cooperative efforts with Japan, and nuclear nonproliferation. During 1979, energy systems teams at Brookhaven National Laboratory in the U.S. and at Kernforschungsanlage, Juelich, Germany, completed analyses of sixteen energy scenarios for sixteen countries. The scenarios feature the impacts of new supply and conservation technologies under an energy policy emphasis on system costs and security of supply. The committee also investigated plans to accelerate alternative technology and studied the relationship between oil prices and environmental limitations.
In a bilateral cooperative effort, the Office of Energy Research is coordinating for the Department a project on U.S. - Japan cooperation in science and technology. In September 1979, the Deputy Director of Energy Research attended a conference in Japan as a followup to President Carter’s U.S.-Japanese research initiative on non-energy R&D. The U.S. proposals included six DOE projects—two basic research and four environmental projects. The conference participants agreed to continue discussions in Washington, D.C. in spring 1980.
Nuclear Non-proliferation Activities
The Office of Energy Research participates in the development of U.S. policy on major issues related to non-proliferation. Significant activities during 1979 included: international discussions on spent fuel management, including the Pacific Basin Spent Fuel Storage Study, and the recently launched International Atomic Energy Agency study on international spent fuel management; review of sensitive export cases and requests for retransfers of U.S.-origin materials; and study of international arrangements for sensitive nuclear fuel cycle facilities.
The U.S. asked other nations to undertake a reexamination of the benefits and risks of early commitment to nuclear fuel cycle strategies involving sensitive facilities and materials and to exercise restraint in sensitive nuclear exports. In an effort to promote the fullest possible international dialogue and understanding on these critical issues, the U.S. initated the International Nuclear Fuel Cycle Evaluation.
This evaluation was first proposed by the President in his nuclear power policy statement on April 7, 1977. Six months later, the United States served as host for an organizing conference attended by forty nations and three international organizations. The organizing conference decided to engage in a technical and analytical study rather than in negotiation, that participants would not be bound by the results, and that the study would take about two years. International participation includes fifty-three nations and four international organizations. A final report is expected early in 1980.
Basic Energy Sciences
Within their respective disciplines, the scientists in the Basic Energy Sciences program pursue long-range research opportunities for dealing with the Nation’s energy problems. Basic research yields new and
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useful information. It also provides immediately applicable ways of understanding the possibilities and limitations of Nature.
A key step in basic research is the choice of scientific areas to pursue. The basic energy science research is developed to be relevant to the needs of the DOE energy technologies, while maintaining sufficient flexibility to take advantage of the latest scientific and engineering developments.
The role of basic energy sciences in meeting research requirements of those outside the Government interested in solving energy-related problems is also important. Basic research constitutes a long-term investment in national economic and technological resources. Although industry does support about 15 percent of the national effort in basic research, few private organizations can justify the high costs and economic risks associated with long-term research ventures. Therefore, the Federal government has assumed major responsibility for supporting basic research in the national interest.
The Basic Energy Sciences program is divided into six categories: Nuclear Science; Materials Science; Chemical Science; Engineering, Mathematical and Geosciences; Biological Energy Research; and Advanced Energy Projects. The total 1979 budget for these programs was $204.7 million with $229.2 million budgeted for 1980. The 1981 budget request is $259.8 million. During the year, research activities were carried out at 165 institutions in forty-two states and the District of Columbia; over 2,000 scientists and engineers were supported, primarily at universities and DOE laboratories.
The scientific fields which comprise the basic energy science research efforts require large, expensive, centralized facilities. The total cost of facility operations during the year (exclusive of associated research activities) was $22 million, about 10 percent of the research budget. At the Brookhaven National Laboratory, construction of the Synchrotron Light Source, which was initiated in 1978 and continued into 1979, is expected to begin initial operation at the end of 1980. This unique facility will provide high fluxes of x-rays and ultraviolet light for advanced research in materials, chemical, and biological sciences during the next decade. At the Sandia/Livermore Laboratory, construction of a Combustion Research Facility is to be completed in 1981. The facility will be available for use by industry, universities, national laboratory and government scientists. Plans provide for expanded research on internal combustion engines and combustion furnaces.
In 1981 the Basic Energy Sciences division will focus on research related to the chemistry of coal combustion, catalysis, novel approaches to the use of solar energy and nuclear waste isolation. In addition, a strong basic research program, needed to meet long-term energy needs, will be supported; and programs in engineering, geosciences, advanced energy projects, and biological energy research will be expanded to meet the increasing demand for basic and exploratory research in these areas.
Nuclear Science
The Nuclear Science activity involves three major areas: basic research on low energy physics and heavy elements, national responsibility for nuclear data, and production and distribution of stable isotopes and special research materials.
Nuclear data measurements are carried out in support of both the fission and fusion energy programs. Neutron data, charged particle data, and nuclear structure and decay data are measured, compiled, evaluated, stored and disseminated. These evaluated data are used widely for a variety of purposes ranging from nuclear medicine application to fusion reactor engineering design.
Continuing research on the chemical and physical properties of heavy radioactive elements (i.e., the “actinides”: for example, americium, curium, and californium) under the nuclear science program includes studies of their behavior in aqueous and nonaqueous solutions important to nuclear waste processing technology.
A sizeable world market exists for separated stable isotopes (e.g., calcium-46 and -48, iron-57, nickel-62) and rare heavy isotopes (e.g., pluton-ium-244, americium-241, californium-252) for use in applications ranging from nuclear medicine to oil-well logging to research. Through support of major facilities at the Oak Ridge National Laboratory, the nuclear science program funds the production, separation, and purification of a wide variety of such materials, which are sold and loaned both domestically and internationally.
Among the nuclear research achievements during the year was the verification of an important nuclear mass equation. This was made possible by using the Recoil Atom Mass Analyzer system at the Lawrence Berkeley Laboratory’s 88-inch cyclotron. The mass equation is important in predicting nuclear properties that cannot be measured directly. The equation predicts the existence of short-lived fission
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fragments, their decay chains and decay properties, and calculates nuclear decay heat.
Scientists from the Argonne National Laboratory and the University of Illinois, using the new electron accelerator at the University, have obtained new data in the “giant resonance” energy region. The data substantiate a mode of response by nuclei in this energy region to external excitiations, and are a contribution to the understanding of nuclear structure theory.
To help protect health and safety in the nuclear industry, improved chemical agents for plutonium, called “biological sequestering agents” have been produced by the Lawrence Berkeley Laboratory. While chemical agents for removing plutonium from living systems have existed for years, these agents are highly toxic and remove other trace metals vital to biological systems. This new agent offers promise of solving these problems.
Nuclear sciences data activities continue to be important domestically and internationally. The collection, compilation, and dissemination of current, critically evaluated data provide the basis for many research, engineering and regulatory activities and decisions. To continue to serve this need, a Radioactivity Handbook will be prepared using current data provided by several of DOE’s national laboratories, the U.S. Bureau of Standards, several universities and international collaborators. In a related activity, measurements made with the Oak Ridge Electron Linear Accelerator continue to provide nuclear data in response to requirements established by the fusion energy program.
Materials Science
This program seeks to understand the properties of materials and phenomena that affect all energy systems. The program places emphasis on areas where problems exist or are anticipated and on areas important to all energy systems. It is well known that materials problems often set the pace for development of new systems, the performance of present systems, and the evolution of advanced concepts.
At the DOE laboratories, technology and information transfer take place between basic and applied programs. The materials sciences program also supports research at universities and, to a lesser extent, at industrial laboratories, taking advantage of the unique expertise of researchers at each of the different types of institutions.
Among the many technical accomplishments of the materials sciences program in 1979 is a new process developed at DOE’s Ames Laboratory for
preparing multifilamentary superconducting wire at significantly reduced cost. Superconducting wire is used in magnets for magnetohydrodynamics, fusion energy research and high energy physics and has potential for power transmission and generation equipment. The next phase is to develop the process for commercial production.
Among the most severe problems in coal conversion systems are corrosion and erosion. Prevention of excessive corrosion depends on the formation of a protective oxide scale on the material (usually chromium oxide or aluminum oxide). For this to be effective, the oxide must form rapidly, and adhere well to the material. A recent investigation of erosion resistance of oxide scales on AISI 310 stainless steel has shown that it depends on the atmosphere in which the scale was formed. Under certain conditions the oxide flaked off completely, exposing a clean metal surface. These results suggest two goals for the development of resistant alloys: improvement in the oxide-metal interfacial strength to alleviate the flaking problem, and strengthening of scales to reduce erosion rates.
Ion-implanted and laser-annealed silicon solar cells material was developed that is significantly more efficient over a wider solar spectrum than normally-annealed material. The ion-implantation laserannealing technique is now being advanced because of its compatibility with high-speed and low cost processing possibilities. It not only offers a superior technique for solar cell processing but also has potential for improved superconductors and other new materials.
Scientists have synthesized crystalline orthophosphates (monazite) containing up to 10 percent uranium and other components of nuclear waste. Tests of this synthetic material’s ability to retain the waste elements (i.e., prevent leaching) indicate that it offers an alternative in the search for stable material for storage of high level actinide elements.
Progress on the development of silicon nitride, a ceramic material of potential use in high-temperature automobile and truck turbine engines, has been enhanced by the application of new microscopic techniques to the study of the process used to fabricate ceramic material parts. The process, sintering, produces finished, fabricated parts through solidifing powdery starting materials at temperatures below their melting points; the process is promoted through use of a variety of sintering agents. These additions, however, can alter the final fabricated part unless carefully controlled. The new microscopic techniques permit studying the location and quan-
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tides of these agents. This will enable the development of sintering methods to produce higher quality, higher-temperature silicon nitride parts.
Chemical Science
The goal of DOE’s chemistry and atomic physics research is to provide fundamental understanding of the chemical phenomena involved in the generation, conversion, storage and utilization of energy. Understanding these phenomena is critical to providing the new energy options the country must have and to improving design and operation. Research areas being pursued include catalysis, combustion, solar photochemistry, reaction kinetics and coal chemistry.
Chemists at Argonne National Laboratory and the University of Illinois, together, achieved the most noteworthy results. Taking a different direction from the earlier development of the “synthetic leaf,” they successfully simulated the way solar energy is used in living plants and certain bacteria, by producing for the first time a man-made version of the photoreaction center. The center is the biological molecular structure which performs the primary light-driven chemistry of photosynthesis. The ability to produce the photoreaction center under controlled laboratory conditions will enhance understanding of the photosynthetic process.
In a development that may ease waste disposal problems associated with coal burning, investigators at the Oak Ridge National Laboratory have developed several promising methods to obtain valuable material from coal fly-ash while converting the coal into a useful by-product or lessening the problems involved in its disposal. Some methods use not only flyash but also sulfur dioxide scrubber sludge, a serious environmental nuisance. At least one such process has attracted the attention of aluminum producers because aluminum recovery from fly-ash may be less energy intensive than by current methods. Another advantage is that fly-ash is a domestic source of feed material, while conventional feedstock (bauxite) must be imported.
A discovery at the Lawrence Berkeley Laboratory may enhance the production of synthetic fuel from coal-derived gases. Chemists there may have discovered a key to the classic, but still not well understood, Fischer-Tropsch method of producing gasoline from carbon monoxide and hydrogen. The normal product from carbon monoxide and hydrogen is methane. The laboratory chemists found that adding small amounts of ethylene and propylene to the synthesis gas brought measurable yields of
gasoline-range hydrocarbons. Application of this knowledge should lead to better process efficiencies and more desirable fuel mixtures.
Researchers at the Oak Ridge National Laboratory have adapted the electron spin resonance technique, used for studying the properties and reactions of transient species in solution at room temperature, to the examination at high temperatures and pressures of short-lived species of interest in coal conversion processes and combustion. This enhanced technique already has provided insights into chemical changes unnoticed before in coal-related substances.
Engineering, Mathematical, and Geosciences
The engineering, mathematical and geosciences activities involve research related to energy production and conservation in the disciplines of mechanical, structural and electrical engineering, mathematics, statistics, computer sciences, geology, geochemistry and geophysics. Basic research in engineering began in 1979 to explore new ideas and, initially, to advance the general understanding of energy transfer processes, advanced industrial technology, and process dynamics and control.
The applied mathematical sciences activity is the focal point for advancing the state-of-the-art in mathematical, statistical, and computer science. Concepts, methodologies and tools with broad applicability in DOE energy technology and energy policy missions are being developed. Advanced analytical and numerical methods allow more accurate predictions of the feasibility, safety, reliability and efficiency of energy systems. Advanced computer systems concepts benefit both energy technology and energy policy programs by contributing to more effective use of DOE computing resources. Applied mathematical sciences also contribute to the development, analysis and use of large-scale computational models to simulate fluid flow for reactor safety, enhanced oil recovery, automobile engines, and atmospheric pollution. This includes not only a continuing search for new mathematical methods but also initial work related to future generations of supercomputers.
Energy deep within the earth in the form of hot water, hot dry rocks and molten rock constitutes a potential major energy reserve. A fundamental understanding of geology and geophysics will aid in predicting the availability of these resources. Typically, studies in geoscience are being conducted on the behavior of rock under stress, the properties of hot
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geothermal brines and of thermal stress fracture. Seismic research is underway to locate and to assess the magnitude of lava bodies and to better understand earth movements that may affect choices of sites for energy-producing or nuclear waste installations. The studies include techniques for extracting energy from lava bodies under the earth’s surface. Geochemistry work is included to develop scientific bases for predicting effects like migration of energy-related wastes in the earth’s crust.
During the past year, the Lawrence Berkeley Laboratory developed mathematical expressions to describe the thermodynamic parameters of complex high temperature brines. These are important in predicting behavior of brine solutions in wet geothermal systems. In another development related to geothermal energy, the Sandia Laboratories devised thermodynamic models which describe the chemistry of gases associated with molten lavas, a step toward understanding the origin and nature of gases emitted from volcanic sources.
Based on work under the mathematics program, mathematicians at New York University’s Courant Institute of Mathematical Science have developed and implemented techniques to describe, in three dimensions, the properties of species present in a magnetohydrodynamic system at equilibrium. The equilibrium computational model is capable of computing both high and low pressure non-axisymmetric plasma equilibria. This accomplishment occurred when such capabilities were needed to answer critical questions about the mechanism for, and properties of, plasmas confined by magnetic fields in fusion energy systems.
Mathematicians and computer scientists are continually striving to improve the performance and efficiency, increase the capability and sophistication, and reduce the cost of computers. Recently, a joint DOE and National Science Foundation program provided a better understanding of the process of creating quality numerical software using automated programming aids. The resulting collection of software for solving systems of linear equations, called LINPACK, was distributed to over 150 requestor sites during the first three months of availability and is proving to be a popular, useful tool for computer users, numerical analysts, and educators.
Biological Energy Research
The biological energy research program was initiated in 1979 to generate fundamental information on the use of biological systems for the conversion
and conservation of energy. The program emphasizes botanical and microbiological research.
Botanical research is directed at providing basic information for enhancing the availability of biomass products for future supplies of fuel and chemicals. In 1979, activities included research on the regulation of plant growth and development for enhanced biomass production; the production of hydrogen in simple plants; the control of photo-synthetically-fixed carbon dioxide into hydrocarbons in green plants; the ways in which plants adapt and grow in adverse environments; and how genetic systems work in plants.
The microbiological investigations are directed towards understanding how microbial systems degrade a principal constituent of biomass, cellulose, into ethyl alcohol. In addition, studies are conducted on how microorganisms can synthesize hydrocarbons from simpler molecules.
In 1980 and beyond, work will be initated on how the anaerobic (without oxygen) microbes function biochemically, genetically and physiologically. These organisms are the most important ones in anaerobic digestion processes for production of methane. The exploration of green plant biochemistry and genetics with respect to oil and hydrocarbon production possibilities is also expected. Also, investigations will start on plant roots and their interactions with soil microorganisms to improve understanding of plant nutrition in order to optimize productivity of biomass.
One of the distinguishing elements of biological systems is that molecules fit together in highly specific ways, whether in the antigen-antibody reaction in the human body or in the symbiotic nitrogenfixation relationship between the legume plant and the soil microorganisms. Proteins are the molecules involved in many of these recognition processes; however, the polysaccharides (chains of multiple sugars) also have such capability. Recently, in studies on plant-host relations conducted at the University of Colorado, a new analytical procedure was developed for obtaining critical chemical characterization data on polysaccharides. This development can provide essential information about features of polysaccharides which confer specificity. In turn, this knowledge should lead to an understanding about infective processes in plants, the compatibility of organisms in nitrogen-fixation relations and other biological processes important for energy production.
A bacterium discovered by researchers at the University of Georgia has the capability of producing
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ethyl alcohol from sugars at elevated temperatures (65-70 °C) under anaerobic conditions. When this organism grows with a compatible cellulose degrading organism, the system can convert this major component of biomass to ethyl alcohol. This offers the potential of using a continuous stream rather than a batch process for fermentation of cellulosic residues to alcohol. The batch process suffers from alcohol build-up which “poisons” the system. Organisms that can function at high temperatures and have high alcohol tolerance could become the workhorses for cellulose-to-alcohol conversions.
When plants undergo environmental stress, such as drought, various reactions occur. Recent progress at Michigan State University has placed our understanding of these events on a firmer footing by defining some of the specific metabolic steps. These studies begin to offer opportunities for devising a rationale for identifying and breeding stress-resistant plants. With more complete knowledge, it begins to be feasible to develop selection techniques to recognize plants, agricultural or biomass, that possess the characteristics for growing under stressful conditions.
Advanced Energy Projects
The Advanced Energy Projects area pursues high-risk, high-payoff scientific systems that might not otherwise receive support in the Department. The program explores the scientific feasibility of novel concepts which could lead to new energy technologies. Where appropriate, the economics of the concept is also determined.
These project studies are typically at too early a stage of scientific verification to qualify for funding by DOE. The period of support ranges from one to three years, after which it is expected that the concept will either be at a stage where the Advanced Technology Projects activity, discussed earlier in this chapter, can pick up the project and work toward technological viability, or the project is ready to be transferred to one of the DOE program offices for further development. If neither of these alternatives is appropriate, the project will be dropped. Funding for advanced energy projects during 1979 totalled $4.0 million. Funding for 1980 is $5.2 million. The President’s 1981 budget request is $8.3 million for these programs.
Significant progress was achieved during 1979 in the development of an in situ method of extracting oil from tar sands using radio frequency heating. Large volumes of deposit are heated by a specially-
designed radio frequency electromagnet; there is almost no damage to the environment. The progress obtained through construction and testing of a laboratory-scale facility confirmed predictions of very high efficiency and gave strong indications of economic viability. A projected net energy recovery of five to eight barrels of oil recovered is predicted for each barrel of oil burned. If successfully implemented, this process could make available approximately eight billion of the twenty-six billion barrels of oil in the Utah tar sand deposits and possibly an equal amount in other types of viscous oil deposits throughout the United States. After an exploratory 15-month effort sponsored by AEP, the project has been transferred to ATP which will support field testing.
Another major accomplishment was an experimental verification of a new method for producing x-rays, known as channeling. This radiation, produced by charged particles passing through a very carefully aligned crystal, has some interesting, and potentially useful, characteristics. It propagates in extremely narrow beams; all the emitted x-rays have nearly the same energy; and the beam energy can be varied continuously. Potential applications include: non-destructive materials testing, materials research, x-ray lithography for microcircuit fabrication, x-ray instrument calibration, and medical x-ray diagnostics.
Future projects are planned to test new concepts in liquefaction of natural gas, to modify fuel-air mixtures in internal combustion engines using plasmalike ignition characteristics and to apply a newly developed solar photocatalyst for production of hydrogen.
High Energy and Nuclear Physics
DOE is the executive agent for the national program in high-energy and nuclear physics. The Department’s program constitutes nearly 90 percent of the Federal effort in these research areas. This research seeks deeper understanding of the behavior of energy and matter at the nuclear and sub-nuclear levels. Experiments are centered around large particle accelerators, which produce the energetic projectiles required to examine the atomic nuclei and elementary particles studied in the program. The program was funded at $389.9 million in 1979, with $297.2 million for high energy physics and $92.6 million for nuclear physics. The President’s 1981 budget requests $474.3 million for the program; $358.8 million for high energy physics and $115.5 million for nuclear physics.
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High energy physics deals with elementary particles—their creation, their transformations, and the forces and other relationships among them. The research is designed to uncover the fundamental physical laws which reveal themselves at very high energies.
Nuclear physics concentrates on the interactions, structure, and other fundamental characteristics of atomic nuclei, which can be characterized as clusters of elementary particles. Many of the nuclear studies are carried out by studying the interactions of nuclear probes and nuclei. The nuclear physics program includes the areas known as heavy ion physics and medium energy physics. Nuclear research at lower energies retains strong ties with current applications of nuclear energy and is conducted as part of the Basic Energy Sciences program.
In the past several years, promising direct applications to energy production have been identified and early studies and design work are underway within HENP. One of these involves acceleration of heavy ions for implosion of fusion targets, which is being carried out jointly with the Office of Inertial Fusion.
Last year, nearly all of the research was carried out under contracts with universities and at laboratories operated under contract by universities or university consortia—the exceptions are work conducted under the contract with Union Carbide for operation of Oak Ridge National Laboratory and a few small contracts with industrial firms.
International Cooperation in High Energy and Nuclear Physics
Basic physics research in high energy and nuclear physics is carried out in several countries. Outside of the U.S. the major research efforts are in Western Europe, the Soviet Union, Japan, and the People’s Republic of China. International cooperation is carried out through frequent exchanges of visitors, international sponsorship and attendance at conferences, and collaborative research using facilities both in the United States and in other countries.
In January 1979, following the signing of the Agreement between the Government of the United States of America and the Government of the People’s Republic of China on Cooperation in Science and Technology, an Implementing Accord between the Department of Energy and the United States of America and the State Scientific and Technological Commission of the People’s Republic of China on Cooperation in the Field of High Energy Physics was signed. A patent annex to this High Energy Physics
accord and a US-PRC Cooperation Program in High Energy Physics for June 1979-June 1980 were negotiated in June 1979. The high energy physics agreement was the first agreement between the U.S. and China in a specific research area. During the first years of the cooperative program, the U.S. will provide assistance to China in design and development of the 50 giga-electron-volt proton synchrotron being built near Beijing, on a full cost recovery basis. A similar agreement in nuclear physics research is being discussed.
In May 1979, an agreement was signed between the U.S. government and the Japanese government on cooperation in research and development in energy and related fields. Intensive discussions have been held during 1979 directed toward a formal cooperative program under this accord in high energy physics research. An Implementing Agreement for High Energy Physics Research Cooperation was signed November 11, 1979. A work program for 1980 has been negotiated.
High Energy Physics
High energy physics is an exploratory field of basic research whose goal is to understand the fundamental nature of matter and energy. The program includes experimental studies and theoretical analyses seeking to provide new insights into the ultimate constituents and structure of matter, the nature of the four known fundamental forces of nature, and the relationships among these forces.
The primary method for systematically achieving these objectives is the study of the interaction of very high energy particle beams with other particles of matter. High energy beams are generated by particle accelerators. Advanced technology is a critical ingredient for providing the requisite accelerators, colliding beam systems, sophisticated particle detectors and data analysis capabilities. High energy physics facilities and detectors work at the limits of the state-of-the-art technology, and advances in experimental capability very often require new technology.
To maintain world leadership in this field, the DOE program presently includes three large accelerator centers at Brookhaven National Laboratory, Fermilab, and Stanford Linear Accelerator Center. Each of these laboratories focuses research in different areas: electron-positron colliding beams at SLAC; proton-proton colliding beams at Brookhaven; proton fixed target collisons and protonantiproton colliding beams at Fermilab. The three
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national centers are utilized for experimental work by groups throughout the country. The theoretical work is equally wide-spread, occurring at many of the same locations. The supporting technological R&D program is focused at the three centers plus Argonne National Laboratory and the Lawrence Berkeley Laboratory. Sixty-six universities and eight DOE laboratories and other institutions participate in DOE’s high energy physics program.
Two major accomplishments related to tne structure and constituents of matter occurred recently. The discovery of the tau particle, a “heavy brother” of the electron, was achieved at the Stanford Linear Accelerator. The tau is over 3,500 times heavier than the electron, and its lifetime is extremely short. Future experiments at the Positron-Electron Project, now under construction, are required to search for additional members of this family of particles and their relationships to the fundamental forces of nature.
The discovery of the upsilon particle at Fermilab is the first indication of a completely new type of quark. The nucleus is made up of neutrons and protons which are, in turn, believed to be made up of quarks. The discovery was confirmed very rapidly and a world-wide search has been initiated for new forms of matter carrying this property.
Work under the high energy physics program resulted in several achievements related to the fundamental forces of nature.
1.	An experiment at the Standford Linear Accelerator has confirmed that the electromagnetic force is related to the weak nuclear force, which is responsible for radioactive decay. The experiment measured the difference in interaction rates between electrons spinning in opposite directions when they hit a target. Researchers were able to measure a 0.01 % difference. This minute difference was the first detailed confirmation of theoretical predictions.
2.	A fundamental measurement of high energy neutrino scattering from electrons was performed at Fermilab. This difficult measurement of a very rare process provided important information which is consistent with predictions of the unified theory of weak and electromagnetic forces.
3.	Spin studies can yield information on the structure of the nucleon and the forces that hold its constituent parts together. Experiments at the Zero Gradient Synchrotron at the Argonne National Laboratory have revealed
that certain scattering processes are strongly dependent upon the direction of the proton spin. Recent experiments have shown that this effect continues to grow at the highest energies available at the Laboratory.
4.	The construction of a new theory of the strong interaction force called quantum chromodynamics has greatly improved theoretical understanding in the last few years. Calculations using this theory have shown that many particle interactions can be understood if the proton and neutron are composed of smaller particles called quarks. This new and very promising mathematical theory has predicted several key features of high energy processes which have been confirmed experimentally.
In addition to these achievements there was continued progress on new experimental facilities required for high energy physics research. Progress on construction and preparation for experiments will allow initiation of the Positron-Electron Project experimental research program early in 1980.
The Time Projection Chamber under fabrication for use of the Positron-Electron Project is a new method for particle detection. This detector has exceptional capabilities for charged particle recognition, momentum analysis, mass identification, and neutral particle track reconstruction. This will enable experiments for the first time to study the detailed dynamics of the quark-quark and quark-gluon systems. A prototype chamber has undergone a series of successful tests. Several different applications of this new device are already under consideration in allied fields of physics.
Experimental research is expected to focus on the search for additional quark constituents, new heavier leptons and the carriers of the weak force as required by the Weinberg-Salam theory, which has provided a unified description of the weak and electromagnetic interactions. The work of Professors Weinberg and Salam and related work by Professor Glashow was honored by the Nobel Prize in Physics for 1979. Professors Glashow and Weinberg did their work under DOE contracts. Theoretical research is expected to focus on further development of the theory of quantum chromodynamics which attempts to bring the strong interaction force into a unified theory also including the weak and electromagnetic force.
High energy physics research in 1980 and 1981 is expected to focus on discovery and identification of additional quark constituents, new heavier leptons and information still required by the Weinberg-Salam theory. Theoretical research in high energy
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physics is expected to focus on further development of the theory of quantum chromodynamics to bring the strong interaction force into a unified theory including the weak and electromagnetic force.
Nuclear Physics
DOE’s Nuclear Physics program is the major Federal program concerned with studies of the fundamental interactions, properties, and structure of nuclei. Within this program, studies are grouped under medium energy nuclear physics, heavy-ion nuclear physics, and nuclear theory.
Medium energy nuclear physics refers to experimental investigations at electron and proton accelerator facilities capable of producing pions, which are extremely useful in nuclear interaction studies. The Anderson Meson Physics Facility at Los Alamos and the Bates Electron Linear Accelerator (Bates Linac) operated by the Massachusetts Institute of Technology are, respectively, the leading medium energy proton and electron facilities in the world. The Los Alamos facility can accelerate protons to an energy of 800 million electron volts (MeV) and through nuclear reactions can make secondary beams of nuclear probes, in addition to pi mesons, muons, neutrons, and neutrinos. These uniquely intense secondary beams are used to study nuclear properties and the fundamental forces of nature. They are also used for research into human cancer therapy, materials research, and weapons applications. The Bates Linac accelerates electron beams to reveal the fine detail of nuclear structure. This is possible because the scattering interaction of an electron with nuclei is governed by the well-understood electromagnetic force. Thus, its effects on nuclear systems can be analyzed with great precision.
The acceleration of complex nuclei (consisting of up to a hundred or more neutrons and protons) is now feasible; the devices to do this are called heavyion accelerators. Powerful heavy-ion accelerators are in operation at the Lawrence Berkeley Laboratory and at several other DOE laboratories as well as universities. Because of the ability of heavy-ion projectiles to transfer large amounts of energy, mass, and spin to target nuclei, heavy-ion nuclear physics offers new opportunities in studying nuclei under extremes of density, pressure, and temperature. Also, heavy-ion beams are used to create new nuclear species.
Theoretical investigations of the interactions, properties, and structure of nuclei are also carried out. Nuclear theory research interprets experimental re
sults in terms of fundamental forces and also guides the planning of new experiments. Fifty-two universities and nine DOE laboratories and other institutions participate in DOE’s nuclear physics program.
To provide advice on a continuing basis to DOE and National Science Foundation program officials, a Nuclear Science Advisory Committee was chartered in 1978. Members are chosen to ensure broad representation of the nuclear scientific community. Among the members are experimenters and theorists who are located at universities and national laboratories.
Accomplishments of the nuclear physics program include:
1.	New knowledge of the magnetic structure of nuclei. The dominant thrust of nuclear structure physics during the last 20 years has been determination of static properties of nuclei. There is, however, convincing evidence that the internal state of nuclei is not static. Nucleons (neutrons and protons) move at high velocity within the nuclear volume, and nucleons continuously exchange subnuclear particles called mesons among themselves. Electron-scattering is especially sensitive to the magnetic fields created by the motion of nucleons in nuclei and by the exchange of mesons. Experiments at Bates are providing a new look into the dynamical behavior of nuclei.
2.	Pions selectively probing fundamental components of nuclei. In the energy range over which the Los Alamos facility can deliver its most intense pi meson beams, negatively charged pi mesons interact with neutrons nine times more strongly than with protons. Conversely, positively charged pi mesons interact with protons nine times more strongly than with neutrons. Thus, pion-nucleus scattering experiments permit us, experimentally, to distinguish between the static and dynamic properties of nuclei associated with the distribution of neutrons in the nuclear volume and the static and dynamic properties of nuclei associated with the distribution of its protons. Thus, the fundamental building blocks—neutrons and protons—can be separately examined in direct experiments.
3.	Nuclei tested to limits of destruction. The collision of complex nuclei at beam energies available at Lawrence Berkeley Laboratory’s Super HILAC/Bevatron, accelerator complex compresses nuclear matter to densities and
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temperatures not found on earth or created in other types of nuclear reactions. These experiments stress nuclei to new limits. Also, nuclear matter at high density and temperature is believed to exist in astrophysical objects such as neutron stars and black holes. An understanding of nuclear matter under extreme conditions is important to understanding the very large objects of astrophysics as well as the microscopic particles of nuclear physics.
4.	Determination of the role of nuclear processes in the life cycle of stars. Nuclear theorists this year made an important contribution toward understanding the astronomical objects called supernova (the spectacularly violent explosion of a star). All atoms heavier than iron are thought to be formed in these exploding stars. A major discovery was made by a group of nuclear theorists at the State University of New York at Stony Brook who pointed out the important consequence of electrons being captured by heavy nuclei during the violent collapse of a star after its hydrogen and helium fuel supply had run out. The new calculations showed that collapsing stellar material could bounce off a hard core of stellar material, driving off the outer layers of the atmosphere of the star. The very dense central core which is left behind then becomes a pulsar, or pulsating star.
5.	Successful test of new accelerator concept. A successful R&D program on a superconducting linear accelerator has been carried out at the Argonne National Laboratory. The prototype accelerator has already been used to accelerate beams of fluorine, oxygen, and sulfur atoms for nuclear research use. The superconducting accelerator resonators are rugged, have achieved high accelerating field gradients (4 million volts per meter), and have excellent timing characteristics (beam pulses are 25 to 50 trillionths of a second).
Emphasis in research is being given to exploration of the internal dynamics of nuclei and investigation of the response of nuclear matter to extreme conditions. Dynamical studies include examination of the violent and unceasing motion of protons and neutrons bound in nuclei, the role of pi mesons and heavier mesons as fundamental carriers of the nuclear force, and the mechanisms by which complex nuclei exchange energy and mass in the course of col
lisions. Research also investigates the role of quarks and excited states of neutrons and protons in the structure of nuclei, behavior of nuclear matter under extremes of compression and temperature, and contribution of the motion and presence of pi mesons bound in nuclei to the electric and magnetic properties of nuclei. The advancement of nuclear research into these high priority areas is paced by the capabilities of accelerator facilities. High quality, high intensity, and precisely controlled beams of electrons, photons, heavy ions, pi mesons and other particles are essential. In close coordination with National Science Foundation and the Nuclear Science Advisory Committee, DOE is developing a long range plan for basic nuclear research in the United States. The objective of this plan is to provide experimental and theoretical facilities required to answer the major scientific questions in nuclear physics.
The major emphasis in the Nuclear Physics program will continue to be in the areas of medium energy and heavy ion nuclear research. New probes, in the form of higher-intensity and higher-resolution beams of particles are now available to study new facets of nuclear structures, in 1981, the Nuclear Physics area will focus on further exploration of the internal dynamics of nuclei, investigation of the response of nuclear matter to extreme conditions, and investigation of how the new particles discovered in high energy physics influence the behavior of nuclei.
Life Sciences Research and Nuclear Medicine
Within the Health and Environmental Research program a general life science research effort is carried out on the risk to human health of energy-related pollutants. Data support applied efforts that are directly related to technologies such as the development of methods for detecting biological damage. The major objectives of this effort are to:1
1.	Determine the structure and activity of selected important macromolecules and cell membranes;
2.	Understand the characteristics of growth and development of cells from various tissues, especially the mechanisms for regulating cell metabolism;
1 Conducted by the Office of Environment
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3.	Determine the molecular basis of genetic structure, chromosome replication, the repair of genetic damage, and the relationship of mutagenesis to carcinogenesis is;
4.	Develop advanced biological instrumentation systems for research on the biological principles related to pollutant effects;
5.	Study the normal organization and function of ecosystems for comparison to stressed ecosystems and interpretation of physical and chemical efforts produced by energy-related activities; and.
6.	Study basic physical and chemical physics processes that govern biological and environmental response to pollutant insult.
In 1979, studies on biophysics have resulted in better understanding of the different structural forms of DNA, the stereo chemistry of the immune globulins, the amino acid sequence of a peptide from the muscle protein myosin and the binding of positively charged ions to neutral and charged membranes. In addition, progress has been made in understanding the cellular effects of several chemical pollutants: arsenite inhibits cell growth and causes chromosome aberrations, beryllium interferes with the induction of an enzyme by a steroid hormone and bisulfate reduces the synthesis of the building blocks of nucleic acids, the mononucleotides.
New techniques have been developed which permit better estimates of damage to pulmonary macrophages by chemicals. Also a method has been developed for mapping the distribution of electrons in biologically-important molecules in order to facilitate interpretation of their biological role.
During 1980, effort will be increased to better characterize chromatin in its various forms as to structural organization and susceptibility to chemical mutagens, and to study the role of histones in the control of gene structure and function. Model tissues and cellular systems will be further developed to provide better tools for studying differences in tissue susceptibility to chemical carcinogens. New immunological approaches will be undertaken to clarify the role of DNA repair in matagenesis and carcinogenesis.
Other studies will focus on efforts such as the role of sulfur-sulfur bonds in stabilizing the structure of biologically-active molecules, explication of the initial attachment of certain polycyclic aromatic hydrocarbons to DNA molecules as a step in the carcinogenesis process and excited oxygen molecules
and their importance in causing deleterious peroxidation of lipids with the resultant potential for carcinogencity.
A major new thrust in 1981 will center at the National Synchrotron Light Source now under construction at the Brookhaven National Laboratory. Development and fabrication of a Synchrotron Light Scattering Biomolecular Structure Facility is planned to utilize the very high brightness and flexible time structure of the synchrotron source for the analysis of living material important for biological, medical, and environmental investigations. Synchrotron light offers substantial gains in structural investigations over presently available techniques and will allow dynamic studies that have not been possible. For example, monochromatic x-rays from the synchrotron of different energy will be used to determine the atomic and molecular structure of biomolecules as a function of time.
The major objective of the program’s nuclear medicine applications research is to support R&D of new applications of radiation and radioisotopes for the diagnosis and treatment of human disease and the transfer of nuclear technology to clinical medicine. Nuclear medicine examinations are important in the diagnosis of abnormalities and diseases of the heart, lung, liver, spleen, kidneys, central nervous system, skeleton, and other organs and tissues within the human body. For example, nuclear medicine visualization of the skeletal system provides the earliest and most sensitive indication of the existence of bone abnormalities. This technique is of major clinical importance in the early diagnosis of bone cancer and in the planning and evaluation of therapy for patients.
Noteworthy accomplishments in 1979 include the production of the positron emitters, carbon-11, nitrogen-15, and fluorine-18 for labeling amino acids, fatty acids, sugars, and other biochemical compounds for investigating possible early detection of cancer, heart disease, brain disorders, and other metabolic abnormalities using newly developed ring tomograph instruments. Compounds labeled with stable isotopes such as carbon-13, nitrogen-15, oxygen-17 and oxygen-18 were synthesized and provided to research investigators through the National Stable Isotopes Resource (a joint National Institute of Health-DOE program). Routine synthesis of fluorine-18 labeled deoxyglucose will allow fuel exploration in 1980 of the clinical use of glucose metabolism in brain disorders. In addition, R&D and clinical feasibility testing of new positron-labeled radiopharmaceuticals for use in tomographic studies
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will be expanded to include new nuclides for the diagnosis and treatment of human disease. In 1981, the major emphasis will be accorded to advancing nuclear medicine capabilities to visualize organ func
tion and disease progression using computer-automated tomographic scanners. This is a potentially powerful tool for increasing knowledge of human physiology.
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Chapter 11
Energy Information
Introduction
The Energy Information Administration (EIA) was established as the Department’s primary energy information component. EIA meets two requirements. First, it serves the needs of five different sets of customers: legislators, regulators, program managers and analysts, executive and industrial decision-makers, and the general public. These five groups come to EIA for independent statistical information and analyses. The EIA determines the source and method of collection or analysis, conducts the effort, and makes the results available to the Department, other Federal agencies, the Congress, and the public. Second, EIA responds to the DOE need for energy information services. In particular, regulatory offices require energy systems analysis and design, forms clearance, data collection and processing, and energy applied analysis to operate their programs. EIA consolidates departmental energy information activities to prevent unnecessary overlap and duplication and to improve the quality and consistency of the statistics produced.
EIA meets national energy information needs through four major activities:
1. Collecting and processing key energy statistics;
2. Preparing energy forecasts and analyses;
3. Ensuring accuracy and validity and advising on appropriate use of energy information; and
4. Ensuring that the Congress, the Executive Branch, state governments and the public
receive timely, accurate information on energy matters.
Basic historical energy statistics are also maintained and analyses are conducted of energy trends. Furthermore, detailed assessments are made of the accuracy and validity of EIA information programs. The results of these efforts are published and widely distributed. To meet diverse information needs, major new programs are being developed to provide data on as industry financial structure and performance, petroleum and natural gas reserves, and energy consumption.
The methods used to conduct energy information programs, and the programs themselves, are subjected to independent review to ensure the highest attainable quality. The Professional Audit Review Team, created by the Energy Conservation and Production Act, conducts an ongoing audit of EIA activities.1 EIA programs, issues, and products are presented to the American Statistical Association Ad Hoc Committee on Energy Statistics and leading experts in various fields review major information programs and projects.
EIA plans for future years are based on legislative and program requirements. Past experience, however, indicates that the plans must be flexible to
' The Review Team is composed of representatives of the General Accounting Office, the Bureau of the Census, the Counsel of Economic Advisors, the Bureau of Labor Statistics, the Securities and Exchange Commission, and the Federal Trade Commission.
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meet changing legislative requirements. Passage of the National Energy Act in 1978 and the Emergency Energy Conservation Act in 1979 are two examples of programs with major impact on the EIA. In each case, budget estimates and plans to incorporate extensive data gathering and analysis requirements had to be revised. For the next two years, EIA will improve its collection and analysis programs, implement major developmental programs, and extend validation activities to incorporate all major energy subjects and over half of the individual programs. Principal activities undertaken by EIA are summarized in table 27.
Table 27. — EIA activity level indicators —
1979, 1980, and 19811
Activity	1979 (Actual)	1980 (Projected)	1981 (Projected)
Data collection programs..	60	64	68
Applied analysis reports...	112	120	126
Energy data reports		600	710	790
Validation studies		22	26	30
Inquiry reponses		38,000	45,000	46,000
Models		55	55	55
Energy data forms1 2			
New forms initiated		91	—	—
Modified		53	—	—
Cancelled or allowed to			
expire		49	—	—
Extended or reinstated..	12	—	—
Active on September			
30, 1979		210	—	—
Table 28. — Budget authority for the Energy Information Administration — 1979, 1980, and 1981
1979	1980	1981
(in millions)
Energy applied analysis...............
Collection, production and dissemination1........................
Information validation................
$ 9.2	$12.6	$13.6
24.3	36.9	37.4
6.3	13.3	15.2
Data information services2 to DOE....	25.8	45.6	50.0
Total............................. $65.6	$108.4 $116.2
1 Provides resources used to develop major EIA statistical programs and support outreach activities. Also, provides data interpretation for energy statistical programs.
2 Includes services for computer support, data system design and development, data standards and forms clearance, and collecting and processing data for DOE (including EIA) energy information programs.
ing their 1977 corporate financial activities was gathered during 1979. Reports for 1978 and 1979 were initiated, and plans were made to increase the number and diversity of respondents. The first annual report (presenting its 1977 findings) is scheduled for publication in early 1980.2
The first annual report for the Financial Reporting System, scheduled for publication in early 1980, will summarize the 1977 activities of twenty-seven major petroleum companies. In 1980, the system will be expanded to cover seventy-five additional coal and uranium companies. Another 200 smaller oil firms will be surveyed in 1981. Annual reports based on the results of these surveys will be published each year.
' The activity level indicators represent various functions performed within the agency to produce energy information.
2 Projections for 1980 and 1981 cannot be made by EIA because authority for initiating or cancelling forms resides throughout DOE and not exclusively within EIA.
The EIA base budget for 1979, 1980 and 1981 is summarized in table 28.
Major Development Programs
During the past year, the EIA initiated five major, long-term programs.
Financial Reporting System
The Financial Reporting System, when complete, will provide a profile of the financial structure and operations of energy companies. Information from twenty-seven major energy companies concern-
Oil and Gas Information System
This program is designed to provide verifiable annual information on crude oil and natural gas reserves and production. During the year, information from approximately 3,000 oil and gas well operators, selected according to size and location, was compiled to produce an estimate of U.S.
2 Unless otherwise noted, reports and directories cited in this chapter are available in the National Energy Information Center, 1726 M St., N.W., Rm 800, Washington, D.C. 20461 (202/634-5694).
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domestic oil and gas reserves and production for 1977. Preliminary results for 1977 were published in the fall, and a final 1977 report is scheduled for release in early 1980. Contacts with the U.S. Geological Survey and selected states were established to gain better understanding of the United States’ total energy resources.
National Energy Information System
The National Energy Information System is being developed to provide a focal point for much of the energy information collected or maintained within DOE. Plans were developed during 1979 for a comprehensive energy information directory, and efforts got underway to organize and consolidate EIA data. The information directory will provide standard definitions for terms and measuring units and will index the varied types of and sources for energy information within DOE and elsewhere.
Consumption Data System
The Consumption Data System will provide the first comprehensive statistical information on energy consumption in the residential, commercial, and industrial sectors. Consumption information is needed to manage many energy programs and is critical in evaluating the impact of conservation measures. Characteristics that influence consumption, such as the installation of insulation, choice of equipment, and selection of energy sources for heating and cooling, weigh in the development of energy policies. During 1979, the National Interim Energy Consumption Survey was taken and initial reports were published. EIA gathered information on residential energy use and expenditures from approximately 4,000 households. This represents the implementation of the first phase of the program.
EIA plans to expand its Consumption Data System by incorporating data on regional residential consumption as well as the results of studies of the commercial sector. Additionally, a commercial and nonresidential buildings survey is to provide the first nationwide, statistically valid set of information on energy use in buildings (taken from a sample of approximately 6,000 buildings). A national transportation survey is also to be carried out on a monthly basis. It will develop estimates of vehicle-miles traveled, fuel consumption, and automobile efficiency.
Energy Emergency Management Information System
The Energy Emergency Management Information System combines energy information, analytical tools, and a telecommunications network to allow improved communication of information among Federal and state decision-makers prior to, or during, an energy emergency. A pilot system, under development during the year, will provide services to eleven states,3 two regional commissions, and DOE headquarters and regional offices.
Participating states will have direct access through computer to key information systems, communicating directly to DOE headquarters problems that may arise. The results of the efforts will be made available to all DOE regions and to states that indicate interest. Table 29 summarizes plans for EIA’s principal statistical programs.
Data Operations
EIA collects and publishes the basic energy statistics produced by DOE. During 1979, seventy weekly, monthly, quarterly and annual reports, totaling more than 600 issues, were released. A number of special periodic reports such as the Winter Energy Data Bulletin, Weekly Petroleum Status Report, and single-time data reports respond to emerging energy information requirements, while on-going needs are met by such publications as MonthlyEnergy Review and the Quarterly Report to Congress: Energy Information.
During 1979, EIA assessed steps required to process, evaluate and publish energy statistical series. The program shortened processing cycles for several periodic reports. In addition, the traditional methods used to develop preliminary estimates were evaluated, and improved procedures were adopted to reduce the potential error between preliminary and final statistics. Several new short-term, rapidresponse surveys reduced the time required between reporting and publication dates for key statistics needed during the 1979 summer fuel shortage.
Systems Support
Among the services required throughout the Department of Energy are systems design and
5 California, Colorado, Maine, Michigan, Minnesota, Missouri, New Jersey, New York, Ohio, Pennsylvania, Tennessee.
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Table 29. — EIA statistical programs and developmental activities
Program	Activity	Timing
Financial Reporting System (FRS)	Produce annual report based on 1977 data	Jan. 1980
	Produce expanded annual report based on 1974-1976, 1978, 1979 data	Sept. 1980
	Expand FRS coverage through linkages to complementary data systems and additional reports	July 1980
	Expand system to include small oil companies	March 1981
	Produce annual report based on 1980 data	Sept. 1981
Oil and Gas Information System (OGIS)	Produce annual report based on 1977 data	Feb. 1980
	Begin integration on geologic and engineering data into system	June 1980
	Produce annual report based on 1978 data	Aug. 1980
	Produce annual report based on 1979 data	Jan. 1981
	Add natural gas liquids and productive data to system	Feb. 1981
Consumption Data System (CDS)	Initiate energy feedstocks survey	Jan. 1980
	Complete national level residential survey	Feb. 1980
	Develop monthly State level consumption indicators to support the Emergency Energy Conservation Act	June 1980
	Complete national commercial buildings survey	Aug. 1980
	Test data collection procedures for the industrial sector	July 1981
	Conduct pilot industrial survey	Sept. 1981
National Energy Information System	Initiate comprehensive data classification scheme	Oct. 1979
(NEIS)	Develop authoritative lists and description of EIA data	May 1980
	Expand data directory to track data transformations	March 1981
	Expand conceptual framework to include interrelationships among energy, economic behavior, finance, technology	July 1981
Energy Emergency Management	Begin operating pilot EEMIS system	Dec. 1979
Information System (EEMIS)	Expand information base accessible through EEMIS	July 1980
	Increase number of users on EEMIS system	Nov. 1980
	Refine data files and communications network	Apr. 1981
analysis, statistical and forms design, forms clearance, energy data standards, and computer support. All seek to improve the quality and speed of generation of energy data with minimal reporting burden.
Forms clearance authority for all DOE public use forms was consolidated within the EIA during 1979. Through the use of element-by-element justification, application of statistical sampling techniques, and identification of alternate existing energy information sources, data quality was improved while the paperwork burden on respondents was reduced by 16 percent for forms already in existence. New collec
tion requirements for the Financial Reporting System, the Oil and Gas Information System, the Consumption Data System, and National Energy Act implementation have, however, offset this reduction, resulting in a net increase of almost 50 percent.
The EIA provides systems design and development to support implementation of major new programs assigned to other DOE offices. Following passage of the Natural Gas Policy Act, for example, two major collection programs were initiated to develop basic data for regulatory decisions on natural gas curtailment priorities. The first program
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was created to aid DOE in determining the costs of fuels that would be used as alternatives to natural gas. The second supports the determination and publication by the Federal Energy Regulatory Commission of incremental costs that can be passed on to industrial users of natural gas.
Another example of systems design and development to meet EIA statistical needs is a new project to collect information concerning secondary stocks of petroleum products. The impact of these stocks (which are held in commercial and industrial locations) on total petroleum product supply will be estimated at both wholesale and retail levels. Information was published on the first phase, based on a survey conducted for DOE by the Bureau of the Census. At the same time, modifications were made to ongoing data programs.4
Applied Analysis
Policy and program decision-makers rely on economic analyses of the current energy situation and forecasts of future energy trends. EIA’s analysis capability permits energy-related forecasts and projections to be prepared on a regular basis as well as on special request. Thus, EIA analyses stimulate decisions in energy programs, policy, and regulations. In keeping with the mandate of maintaining objectivity in analyses prepared for others, requestors must submit detailed statements of their assumptions. The results of EIA analyses conducted during the year were published in 112 analytical reports.
Two major accomplishments during the year allowed improved estimation in applied analysis forecasts. First, the Short-Term Integrated Forecasting System was developed to replace the use of separate models in producing short-term (not to exceed 3 years) forecasts. Secondly, EIA developed a longterm forecasting capability in its Long-Term Energy Analysis Program. Prior to this, outside sources were relied upon for long-term (beyond 1995) forecasts.
Information Validation
The Energy Information Validation program progressed toward its goal of ensuring that energy
4 The monthly reports, Retail Sales and Inventories of Fuel Oil (SBR-79, DOE/EIA-0195) and Wholesale Fuel Oil Distributors Stocks and Sales (SBR-W-79, DOE/EIA-0197) are for sale at 25 cents each by Subscriber Services (Publications), Bureau of the Census, Washington, D.C. 20233.
data used by the Federal government are meaningful and accurate. During the year, EIA produced a comprehensive 5-year information validation program plan describing in detail the steps necessary to validate the EIA information systems and evaluate the energy models. The plan provides the schedule for these validations and specifies the resources required. Priority energy information validation tasks and accomplishments are described in Table 30.
Outreach Activities
DOE statistical energy information is disseminated primarily through published reports and responses to requests for energy information. In addition, printing, distribution, and marketing of energy information publications are provided, as are information services to the ten DOE regional energy information centers.
Federal, state, and local agencies, the academic community, industrial and commercial organizations, the news media, and the general public are among those groups that direct energy-related questions to DOE. Response capabilities range from preparation of specific statistical energy data to distribution of EIA energy information reports and the development of technical analyses. Over 700 data and analysis reports were released during the year and approximately 38,000 energy information requests were handled. An Energy Information Referral Directory was compiled and is to be published in January 1980. It facilitates timely responses to energy information inquiries.
The Federal Energy Data Index (FEDEX) is another EIA service. Developed in cooperation with the DOE Technical Information Center, FEDEX is a computerized energy information data base that indexes and describes in depth tables of energy data appearing in EIA publications.
EIA prepares special publications to meet specific outreach energy information needs. One is the Synopsis of Energy Facts and Projections,5 a pocket-size booklet incorporating the energy statistics most frequently requested by Congress, industry, the news media, and the general public.
Energy information distribution activities in 1979 included registration and advertising of EIA publications, systems, data bases and related models, and software. Systems and procedures were also im-
5 Synopsis of Energy Facts and Projections, DOE/E1A-0173 (SYN).
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Table 30. — EIA validation tasks and accomplishments
Task	Description	A ccomplishments
Preliminary review of proposed new or revised data collection forms or systems	Determine whether specific requested data elements, their levels of resolution, and precision of measurement are justified. Examine how adequately requirements have been translated into the specific survey design.	Reviewed 201 proposed forms and made substantive comments and recommendations for change on 168.
Review of requirements	Determine the detailed information needed to address particular energy subject areas. Ensure that required information elements can be measured with a reasonable level of accuracy and compare requirements to existing data collection systems related to the subject area being studied.	Completed six reviews of requirements including a review of the Federal Energy Regulatory Commission natural gas forms. This review led to a decision by the Federal Energy Regulatory Commission to cancel fifteen forms.
Validation of existing data collection systems	Using the results of requirements reviews, evaluate the meaningfulness and estimate the accuracy of data collected by individual systems. Recommend improvements in the system’s design and specify quality statements or caveats to accompany published information.	Completed six validation studies of existing data systems. Recommendations have led to improvements in the data systems and their publications.
Field validation of specific data	Verify the accuracy of specific pieces of information by going to the respondent firm and checking firm records against raw data and verifying procedures used to develop estimates. Calculate values independently whenever possible.	Compiled independent reserve estimates for 40 percent of U.S. crude oil reserves and 30 percent of natural gas reserves.
Validation of models and analyses	Evaluate the requirements for the model or analysis, examine the model’s structure and the assumptions underlying the model, and assess the overall ability of the resultant analysis.	Developed model evaluation methodology and conducted preliminary studies of two major EIA models.
Special studies of apparent anomalies in energy statistics or other issues	Conduct studies in response to specific requests for information or problems in energy data series.	Produced seven significant reports on subjects ranging from the State Energy Conservation program to the effects of driving patterns on gasoline consumption. As a result of one such study, the methods used to estimate final import figures based on preliminary results were significantly improved.
plemented to ensure timely printing and distribution of EIA products. Marketing procedures included a continuing program of publication assessment established to measure existing market profiles and to identify potential or new user groups. Flyers, bibliographies, directories of energy publications (typified by the EIA Publications Directory and the
EIA Publications Directory Supplement),6 articles, announcements, and other descriptive literature helped dispense energy information during the year.
6 EIA Publications Directory, DOE/EIA-0149/1, GPO-061-000-00277-4; EIA Publications Directory Supplement, DOE/EIA-0149/2, GPG-061-000-00348-7.
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Chapter 12
Economic Regulation
Introduction
The Department of Energy is responsible for regulatory activities, including prohibition of the use of oil and gas by new powerplants and major industrial installations and encouragement of the conversion of existing facilities to coal and other alternate fuels. Regulatory authority also provides for control of oil, gas and electricity imports and exports and equitable pricing and allocation of crude oil and petroleum products. Where possible, DOE seeks to guide rather than to regulate the behavior of the petroleum industry to serve best the Nation’s interests.
The budget authority for the years 1979, 1980 and 1981 is summaried in table 31 and its manpower is tabulated in table 32. Projected variations in both budget and manpower requirements through 1984 are shown graphically in figures 10 and 11.
Fuels Conversion
The 1978 Powerplant and Industrial Fuel Use Act (FUA) prohibits new powerplants and major fuel burning installations from using petroleum or natural gas unless ERA grants an exemption. ERA is also responsible for requiring conversion of existing oil and natural gas burning powerplants and industrial installations to coal, renewables, or other alternate fuels. These efforts could help to reduce U.S. dependence on foreign oil in the mid 1980’s.
To implement the new Powerplant and Industrial Fuel Use Act, DOE issued interim rules
Table 31 — Budget authority of the Economic Regulatory Administration — 1979, 1980, and 1981
Program	1979	1980	1981
(millions of dollars)
Coal utilization		$10.8	$ 27.5	$ 30.6
Fuels regulation		7.9	10.7	11.4
Utility programs and regulatory intervention		19.3	29.0	33.1
Compliance				47.1	72.3	67.4
Emergency preparedness		5.9	46.7	4.9
Regulation development		3.0	2.9	2.7
Program administration		2.6	3.1	3.5
Total	$96.6	$192.2	$153.6
Table 32. Manpower applied to Economic Regulatory Administration programs — 1979, 1980, and 1981
Program	1979	1980'	198P
Coal utilization		100	167	168
Fuels regulation		227	243	243
Utility programs and regulatory			
intervention		106	115	115
Compliance		1,413	1,365	1,238
Emergency preparedness		31	39	34
Regulation development		65	65	65
Program administration		62	51	51
Total	2,004	2,045	1,914
1 Base end-of-year positions—emergency preparedness, utility systems and coal utilization have supplemental requests pending before OMB.
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FY 1979
SUO!II!IAI $
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79	80	81	82	83	84
Fiscal Year
*Petroleum Operations
Figure 10. — Budget phasing of the Economic Regulatory Administration
SUOIJ.ISOJ
Figure 11. — Manpower phasing of the Economic Regulatory Administration
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governing existing, transitional, and new facilities and establishing administrative procedures.
When the Fuel Use Act became effective on May 8, DOE began work on prohibition orders. For existing oil-burning plants, DOE issued a rule permitting companies to petition for temporaty public interest exemption to enable electric power plants to use natural gas to displace oil as long as such exemptions would not displace coal-fired capacity. A complementary plan was implemented to ease the purchase and delivery of surplus natural gas to end-users through interstate pipelines. DOE also issued rules under the Public Utility Regulatory Policies Act curtailing the use of natural gas for outdoor lighting. In another action, DOE set up an electricity monitoring station in Valley Forge, Pennsylvania, to assure contemporaneous information on electricity transfers among electric utilities and regions and with neighboring countries to ensure maximum displacement of oil through interregional transfers.
Utility Systems
DOE utility programs promote rate reform, encourage conservation in the production and use of electricity, and seek to assure an adequate, reliable, and economic bulk power supply.
In 1979, DOE issued final rules for the award of Federal grants to state regulatory agencies and publicly-owned electric utilities for rate design initiatives and awarded $17.2 million in grants for that purpose. DOE also issued rules requiring the states to report annually on their utility regulation activities. The reports provide a basis for systematic DOE and congressional assessment of state utility regulation. DOE also issued the first set of guidelines for state regulatory agencies on various rate reform and regulatory standards included in PURPA.
Grants to be made in 1980 will help state consumer offices assess the impact of utility rate changes on consumers and to assist consumers in presenting their positions before state utility regulatory commissions. Also, twelve DOE-funded state consumer offices will participate in commission or other proceedings. The Department encourages innovative, local rate-making initiatives through pilot projects.
During 1980, DOE will direct a number of technical inquiries toward improving the reliability and efficiency of the bulk power supply system. This will include a study of power system reliability. Technical feasibility, costs, and benefits of specific power pooling arrangements will be analyzed; such arrangements encourage interconnections and coordination of utility systems’ planning and operations, enhance
emergency response capability and reduce dependence on imported fuels. The Department will also perform a detailed analysis of possible electric power system emergencies in an effort to develop more specific response strategies.
The Public Utility Regulatory Policies Act requires state regulatory authorities and non-regulated utilities to hold evidentiary hearings and to determine within 3 years whether to adopt six standards of rate design set forth in the Act. DOE financial assistance will assist state commissions and nonregulated utilities in meeting the requirements of the Act. During 1980, the Department expects to provide financial assistance for as many as fifty-one state commissions to aid implementation of these responsibilities. DOE will also provide technical assistance to commissions, including training with respect to voluntary rulemaking guidelines for twenty-five commissions and fifteen public power systems.
Petroleum Operations
As necessary, DOE will continue to operate programs for crude oil and petroleum products under the Emergency Petroleum Allocation Act until the Act expires on September 30, 1981. During the year, DOE began to phase out the remaining crude oil controls. The Department intends to simplify its enforcement of crude reseller price regulations, making them more efficient and reducing the reporting burden on the oil industry. Changes to the crude buy/sell and oil imports programs should make them more cohesive and responsive. The Department plans to continue to provide incentivies to increase domestic crude oil production and will evaluate and process propane applications to ensure equitable distribution to residential, agricultural and other users.
DOE provides a quick-reaction strike force capability to meet supply disruptions or shortages of coal, crude oil, refined petroleum products and residual fuel for a region, state, or other designated area.
The regulatory activities on crude oil and petroleum products, including aviation fuels, middle distillate, gasoline, residual oil, and natural gas liquids are discussed in the following sections.
Crude Oil: In carrying out the President’s crude oil initiatives, DOE adopted regulations to:
1.	Exempt newly discovered domestic crude oil from price controls;
2.	Provide production incentives for old oil from marginal (older, declining) wells and shift old oil gradually from the lower-tier price control category to the upper-tier category; and
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3.	Provide a portion of the initial costs of new or expanded tertiary recovery projects (unconventional techniques) by release of additional present production from price controls.
DOE increased the monitoring of crude oil imports and crude oil stocks into this country. The buy/sell program for crude oil was expanded for smaller, crude-deficient refiners. The Department implemented the temporary suspension of oil import fees and helped plan for new oil-import restrictions.
Aviation Fuels: Aviation gasoline and kerosene-base jet fuel were deregulated during the year. Supplies were tight, but adequate to satisfy the shifting needs of the airlines. With the decontrol of aviation fuels, the relationships between suppliers and purchasers of kerosene-jet fuel and aviation gasoline were no longer controlled by DOE. Some refiners have been unwilling to take on new customers. Such problems are being experienced by new air carriers, including international carriers with recent permission to serve additional cities with foreign connections. The Department worked with petroleum suppliers and aviation consumers to secure supplies for new airlines and those with new routes.
Middle Distillate: Middle distillates—home heating oil, diesel fuel and kerosene—have been decontrolled since 1976. As supplies tightened during 1979, DOE set service priorities, at first in guidelines and later by rules. Diesel priorities were temporarily adopted for agricultural production, for the transport of perishable agricultural commodities, for oil and gas production, and for surface mass passenger transportation. The priority for mass transit was later made permanent; other priorities were removed when they had served their purpose. DOE reestablished the state set-aside rule for all middle distillates and made it permanent at 4 percent of the prime supply entering any state. This rule enabled local governments to redistribute the products to areas or consumers suffering shortages.
Motor Gasoline: DOE amended the gasoline pricing regulations to allow refiners to pass through the higher per-gallon costs of making gasoline and to recognize increased retailer costs. Moreover, DOE proposed greater incentives for production of unleaded gasoline and gasohol. During the summer, DOE radically simplified the structure of retail price regulations, releasing them from May 15, 1973 price levels.
In the spring, DOE revised the allocation regulations to update the monthly base period to the 12 months
beginning November 1977 in place of the adjusted 1972 base period. In addition, as gasoline shortages hit all parts of the country, the Office of Petroleum Operations reviewed 32,000 cases for allocation determination, completing action on almost 30,000 by the end of the year. Governors were authorized to prescribe odd/even license plate gasoline purchase days, minimum purchase requirements, and hours of service. DOE expanded the state set-aside program from 3 to 5 percent of the gasoline pool and expanded the program to include supplies for retail dealers as well as users.
Residual Oil: DOE maintained the decontrolled status of residual fuel oil. Prices rose sharply as crude oil increased. The entitlements program was amended to provide additional benefits to the eastern portion of the United and Michigan for purchases of imported residual fuel oil.
Natural Gas Liquids: Natural gas liquids remained under price and allocation controls. Prices rose sharply. Butane and natural gasoline were deregulated as of January 1, 1980.
Compliance with Petroleum Price and Allocation Regulations
During the year, DOE compliance programs resulted in eighteen criminal convictions, referrals of thirty-eight willful violation cases to the Justice Department, and identification of $4.3 billion in civil overcharges.
The Office of Special Counsel, created after DOE was established, audits the Nation’s thirty-five largest refiners to determine their compliance with DOE’s pricing and allocation regulations. Focus has been on overcharges dating to the Arab oil embargo of 1973-74. The Special Counsel staff members serve on teams of attorneys, auditors and systems analysts stationed at major company refineries. The thirty-five companies audited by DOE operate approximately 90 percent of the Nation’s oil refining capacity and a notable portion of crude oil production and product marketing activities.
In 1979, the Special Counsel identified $3.6 billion in civil overcharges. Intensified audits of the major refiners progressed as planned during 1979, moving on schedule towards a 1980 completion of the field audits of the fifteen largest refiners. The remaining twenty are scheduled to be accomplished later in the year. The Special Counsel issued, in 1979, the largest allegation of pricing violations ever filed
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by DOE, charging seven major refiners with multiple pricing violations totalling $1.7 billion. The Department also reached the first comprehensive agreement ever between DOE and a major refiner (Kerr McGee, for $54 million), settling all disputed issues. Comprehensive settlement negotiations are now under way with several refiners. DOE took over $1.5 billion in claims to United States District Court, more than six times the amount taken directly in 1978. Other claims are scheduled to go through administrative proceedings before the Office of Hearings and Appeals. If appeals in cases are filed, they then go before the Federal Energy Regulatory Commission.
In addition, the Special Counsel began audits of other industry practices. In light of gasoline and heating oil price rises during 1979, staff audited the fifteen largest refiners to check their current gasoline pricing and allocation practices and the accuracy of data furnished to DOE. These are calendar year audits, to be completed in fiscal year 1980. A contractor conducted an inventory management assessment of five of these refiners.
Thousands of smaller firms are also engaged in some aspect of the oil business. The Office of Enforcement audits these firms to assure their compliance with pricing regulations. In 1979, the Office issued enforcement documents identifying over $700 million in civil overcharges in audits of all segments of the petroleum industry, except the largest refiners. During the year, that office obtained its largest single settlement, amounting to $23 million, and issued its
largest Notice of Probable Violation, amounting to $206 million.
DOE increased its investigations of gasoline price ceiling violations and established a hot line to receive consumer complaints on heating oil and gasoline prices and supply. During 1979, the Department received some new complaints on the hotline and conducted over new audits based on hotline reports.
DOE also offered to the states authority to enforce Federal regulations for the retail pricing of gasoline. Connecticut, New Jersey, Kentucky, and Rhode Island accepted this delegation. More than 2,400 audits in these states, uncovered 350 retail station violations.
1980 funds will allow for intensified audits of the remaining twenty majors. Their field audits are scheduled for completion in 1980. By the end of that year, audits of transactions through at least December 1976 of the thirty-five major refiners should be completed. In addition, DOE expects to initiate crude oil audits of transactions occurring beyond 1976 at a number of selected companies and issue enforcement orders to remedy detected pricing violations.
To the extent that resources allow, DOE will identify and taken enforcement actions with respect to significant civil violations among re-sellers of crude oil. DOE also plans to resolve previously opened civil cases, and to carry out new responsibilities including the investigation of new complaints alleging violations of the law.
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Chapter 13
Energy Production
The Department of Energy is responsible for three major programs to produce and distribute energy. These programs involve:
Table 33.	— Energy production costs and revenues — 1979, 1980, and 1981
1979	1980'	1981
1.	Providing of uranium enrichment services to domestic and foreign customers;
2.	Producing oil from the Naval Petroleum Reserves, which comprise the ninth largest known domestic petroleum resource; and
3.	Marketing and distributing electric power through the five Power Marketing Administrations, which sell 50 percent of U.S. hydropower production.
These enterprises provide services and products to the private sector, the government charges the recipients the price necessary to recover its costs or, in the case of the oil produced in the Naval Petroleum Reserve, the fair market price. The revenues generated by these programs are returned to the U.S. Treasury or, in the case of uranium enrichment, are used to offset costs of production. As can be seen from table 33, the expected annual cost to operate these government-owned enterprises in 1979, 1980, and 1981 is less than the revenues generated. In 1981, production and distribution costs are projected to total $1.7 billion, while revenues will amount to $3.8 billion. Thus, $2.1 billion will be available to repay capital investment and for other Federal government programs.
Millions of dollars
Production and distribution
costs
Uranium enrichment............
Power marketing...............
Naval petroleum reserve.......
Total......................
Revenues
Uranium enrichment............
Power marketing...............
Naval petroleum reserve.......
Total......................
$1,195.5 $1,307.5 $1,376.6
146.0	164.4	175.1
122.9	72.6	145.4
$1,464.4 $1,544.5 $1,697.1
$1,217.1 $1,057.0 $1,289.0
348.9	382.5	390.0
718.0	1,621,1	2,091.6
$2,284.0 $3,060.6 $3,770.6
1 Includes $308 million in supplemental requests for uranium enrichment.
Power Marketing
Authority to market federally-generated power was transferred from the Department of the Interior to DOE on October 1, 1977, under the provisions of the Department of Energy Organization Act of August 4, 1977. Five Power Marketing Administrations sell power: Alaska, Bonneville, Southwestern, Southeastern, and Western Area. The areas encompassed by these agencies are shown in figure 12.
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Bonneville Power Administration
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Figure 12. — Electric power marketing areas of the Department of Energy and the Tennessee Valley Authority
Southeastern - Power Administration
Puerto Rico
r \ Southwestern
Power
Administration
Alaska Power
Administration
The Power Marketing Administrations sell electricity generated by the Corps of Engineers and by the Department of the Interior’s Water and Power Resources Service. Statutory preference generally required for the sale of power is given to public bodies and cooperatives. Power is priced at the lowest rate consistent with recovery of the cost of production and sound business practice. Electric rates are uniform throughout each system.
Revenues from selling power and from transmission services from the five Power Marketing Administrations offset annual operations and maintenance costs, repay the capital investment in power features of the projects, and pay interest on the unrepaid capital invested in power. Power sales from reclamation projects also help irrigators meet capital repayments on the irrigation features of the projects found to be beyond their ability to repay.
The general status of Power Marketing Administration revenues, and repayments is summarized in tables 34 and 35, and figure 13. Except for the Bonneville Power Administration, Congress makes annual appropriations to operate the Power Marketing Administrations. Revenues are deposited in the U.S. Treasury.
In 1974, Congress enacted the Federal Columbia River Transmission System Act, which authorized the Bonneville Power Administration to place its revenues in a revolving fund and to expend them for any purpose necessary to carry out the duties pre-
Table 34.	— Current status of repayment, power systems of the five power marketing administrations
Cumulatively through 1978:	Millions of dollars
Revenues........................................$8,388
Expenses paid
Operation and maintenance.....................2,637
Purchased power and other .....................1,086
Interest...................................  .2,789
Total.......................................6,512
Remainder applied to amortization................1,876
Cumulative repayable investment
Power.........................................9,921
Irrigation assistance......................   1,393
Total......................................11,314
Less cumulative amortization..................   1,876
Unamortized investment.....................$9,438
Table 35. — Cumulative repayable investments of the Power Marketing Administrations
	Cumulative repayable investment through 1978	Repaid
	Millions of dollars	
BPA (1938-1978)		$ 6,156	$ 732
WAP A (1937-1978) ...	3,408	898
SEPA (1950-1978) ....	'975	202
SWPA (1944-1978)....	665	33
APA (1955-1978)		110		11
Total		$11,314	$1,876
Total capacity: 28,913 megawatts
Marketing area: 34 states
scribed by law, including building, operating, and maintaining the transmission system, selling electric power, and buying power during emergencies. The Act also authorized the Administrator to borrow up to $1.25 billion from the U.S. Treasury by issuing revenue bonds. The revolving fund frees Congress, the Administration, and Bonneville from the necessity of supplementary budget requests for power in low water years. By limiting Bonneville’s loan authority and retaining the Executive’s apportionment authority, tight financial control is required.
For 1979, the five Power Marketing Administrations had sales of about 125 billion kilowatt-hours of energy with revenues from sales of about $738 million.
Thirteen rate adjustments, some of which are itemized in table 36, were approved on an interim basis during 1979 and sent to the Federal Energy Regulatory Commission for final approval. Uniform procedures for power and transmission rate adjustments were proposed, and public hearings completed. A Power Rate Council was organized to study alternative systems for repayment.
Legislation was prepared to authorize self-finan-cing for the Alaska, Southeastern, Southwestern, and Western Area Power Administrations; and to implement the President’s hydroelectric initiative;
During 1980, the DOE will process and recommend major rate adjustments; publish new rate adjustment procedures; recommend revised repayment procedures; and contribute to the analysis of new procedures for evaluating hydroelectric resources adopted by the Water Resources Council. DOE also will develop testimony and provide technical support for pending pieces of legislation, including the selffinancing bill and proposals to authorize the power marketing administrations to purchase electricity from renewable resources.
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100
oo a>
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1N3IAI1S3ANI 8£6L dO INdOddd
Build-up of cumulative repayable investment through 1978, the five Power Marketing Administrations
1935	1940	1945	1950	1955	1960	1965	1970	1975
APA BPA SEPA SWPA WAPA
90
90
70
60
50
40
30
20
10
Table 36. — Recent PMA power rate adjustments
Effective date
PMA	Impacted area project
Incremental amount
Incremental percent
April 1, 1979 ............
June 1,1979 ..............
June 1,1979 ..............
July 1, 1979 .............
October 1, 1979 ..........
October 1, 1979 ..........
December 20, 1979 ........
March 1, 1980 ............
March 1, 1980 ............
SWPA SEPA. SWPA SEPA. SEPA. WAPA BPA .. WAPA WAPA
System-wide...........
Partial...............
Partial...............
Cumberland............
Georgia-Alabama.......
Central Valley........
System-wide...........
Colorado River Storage
Partial...............
$ 16,500,000 ......90,000
.....358,300 ... 2,538,000 ... 3,600,000 ... 6,000,000 . 308,000,000 .. 10,800,000 ...2,100,000
......................33
...................... 7
......................35
......................16
......................13
......................13
......................88
......................24
......................22
Naval Petroleum and Oil Shale
Reserves
The three petroleum and three oil shale reserves were established from 1912 to 1924 to provide a standby reserve of oil for national defense. Pursuant to Public Law 94-258 (April 5, 1976), Congress directed that oil be produced from the petroleum reserves at their maximum efficient rate of production for 6 years and that production be extended for 3-year periods if the President and the Congress so direct. The peak at Naval Petroleum Reserve No. 1 is expected to be between 200,000 and 220,000 barrels of oil per day; at Reserve No. 3, it is expected to average about 6,000 barrels a day. The Naval Petroleum Reserve is building the necessary production facilities to achieve maximum production.
The immediate objective of the Naval Oil Shale Reserves is to perform the necessary environmental and engineering work to support a development decision.
Naval Petroleum Reserve No. 1
In 1912, President Taft established Naval Petroleum Reserve No. 1, on 46,095 acres in the Elk Hills in Kern County, California, about 35 miles west of Bakersfield. In 1944, the Federal government contracted with Standard Oil Company of California to explore, develop, and operate the lands within the reserve on a joint basis.
For a brief period toward the end of World War II, production from the reserve reached 65,000 barrels of oil per day. Production was then reduced to 15,000 barrels a day, and subsequently to a level sufficient for testing and field maintenance (2,500-3,000 barrels a day). Full-scale production began on July 3, 1976, and now exceeds 157,000 barrels a day. The six active drilling rigs complete about seven wells per
month. A profile of oil production history at the Elk Hills Reserve is displayed in figure 14.
Current plans provide for 875 development wells and forty-one exploratory wells to be completed by the end of 1985. The program is on schedule, having completed 628 development wells and twenty-two exploratory wells. In 1979, eighty-two development wells and three exploratory wells were drilled. Production for 1979 was 52,639,748 barrels of oil. Revenues derived from the sale of oil and liquid production totalled $677,192,979.
Major construction is expected to be completed at NPR-1 during 1980, including two 100 million-cubic feet per day gas processing plants, a rail spur and liquid products loading facility, and oil and gas production facilities.
Naval Petroleum Reserve No. 2
President Taft created Naval Petroleum Reserve No. 2 at Buena Vista Hills in Kern County, California, adjacent to Elk Hills. The U.S. Government owns more than one-third of the total acreage within the Reserve, which is interspersed with privately-owned lands. Current production is predominantly stripper production, from which the Government receives a royalty share. Revenues received from royalty oil for 1979 totaled $2,325,365.
Naval Petroleum Reserve No. 3
Naval Petroleum Reserve No. 3 is at Teapot Dome, in Natrona County, Wyoming, 35 miles north of Casper. It consists of 9,481 acres owned by the government. A program to develop the Reserve to peak production nears completion. The current program calls for 416 development wells and sixteen exploration wells to be drilled by the end of 1981. In 1979, sixty-four development and six exploratory
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Figure 14. — The production history of the Elk Hills Naval Petroleum Reserve
Oil—Thousands of Barrels/ Day
120
100
80
60
40
20 0
1
120 100 80 60 40 20 0
920	1930	1940	1950	1960	1970	1980
wells were drilled. Production averaged 4,226 barrels a day during 1979 for a total of 1,542,748 barrels. Total revenues from the sale of oil were $32,796,213.
Naval Oil Shale Reserves
The Naval Oil Shale Reserves were established by Presidents Wilson and Coolidge in 1916 and 1924, respectively. Reserve No. 1, which encompasses 40,760 acres in Garfield County, Colorado, has approximately 18 billion barrels of shale oil in place; more than 2 billion barrels are estimated to be economically recoverable with current methods. Reserve No. 2, which encompasses 90,440 acres in eastern Utah near Vernal, and southeast of Salt Lake City, contains 4 billion barrels of shale oil in place; there is no current estimate of how much is economically recoverable. Reserve No. 3, which adjoins Reserve No. 1, encompasses 14,130 acres in Colorado and contains little oil shale. Its establishment was considered necessary in that it afforded working space and areas for spent shale disposal.
DOE is implementing a pre-development plan for Reserves 1 and 3.Emphasis is on performing the necessary environmental and engineering work to support evaluation of development options. A draft assessment of the environmental, socio-economic, and cost impacts of NOSR-1 development options should be completed in 1980.
Uranium Enrichment
The Uranium Enrichment Program serves domestic and foreign utility customers as well as U.S. Government requirements. The program’s objectives are to assure fulfillment of contracts for enrichment services as economically as possible; to expand DOE’s enrichment capacity to meet increases in demand by improving existing plants; and to build necessary additional plant capacity while protecting the environment and guarding public health and safety.
Uranium enrichment is now carried out using the gaseous diffusion process to separate the uranium isotopes. DOE has begun construction on a plant using the gas centrifuge principle, a far more energyefficient technique. The base production capacity of the current gaseous diffusion plants is being expanded through two large construction projects — the Cascade Improvement program and the Cascade Upgrade program. Current plans are to power these plants at a sustaining level of 7,000 megawatts beginning in 1985, resulting in a production level of about
25.6 million separative work units per year. This production level can support 240 gigawatts of nuclear power at a tails assay of 0.25 percent U-235.
Upon completion of the Gas Centrifuge Enrichment Plant, total DOE uranium enrichment production will approximate 34 million separative work units per year, which is capable of supporting about 325 gigawatts of nuclear power at a tails assay of 0.25 percent U-235. The relationship between the sustaining capacities of the enrichment plants and the nuclear power plants under contract with DOE for enrichment services is shown in figure 15.
Gaseous Diffusion Operations
During World War II and the following years, the U.S. Government built gaseous diffusion plants at Oak Ridge, Tennessee; Paducah, Kentucky; and Portsmouth, Ohio, to enrich uranium for national defense. Today, electric utilities are the main market for the products of these plants. The plants provide all of the enrichment services for the United States as well as for a significant part of the foreign nuclear power-generating industry. They also produce a small amount of enriched uranium for government needs.
During 1979, the three gaseous diffusion plants produced 14 million separative work units, about 64 percent of installed capacity. This production level required 3,900 megawatt-years of electric power, a decrease of 1,000 megawatt-years from the previous year. DOE negotiated power reductions for 1979 through 1981 with its power suppliers to adjust DOE’s projected production to match supply with anticipated demands. The DOE enrichment-complex plan for 1980 and 1981 reflects this reduced-power operational mode. In 1980, DOE plans to purchase 3,011 megawatt-years separative work units, based on the purchase of 2,600 megawatt-years of electricity from DOE suppliers. The 1981 planned power purchases are below actual contract levels, and DOE will pursue negotiation with its suppliers to reduce or eliminate contract demand charges for power not used.
The Cascade Improvement and Upgrade programs at the three plants, which began in the early 1970’s, continued during 1979. The Cascade Improvement program is 85 percent complete and the Cascade Uprating program, 80 percent. Prolonged strikes at the Portsmouth Gaseous Diffusion Plant and by one of the major material suppliers for the expansion programs caused some delay in the schedules. Both projects are scheduled to be completed at
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350
cc LU £ o D_
CC < LU
O D Z
LL O
LU
0
25.6	27.8	30.0	32.2	34.3
ENRICHMENT CAPACITY IN MILLIONS OF SWU PER YEAR
E co 75 > CO k. 0) $ o Q.
i_ CO CD O 5 C
V) 3 W k— 0)
JD CO Q. CO O
c CD E £ O
c ®
E 3
C co k_ ZD
U>
0) k.
3 O) iZ
13-8
IMPROVED GDP'S (AT 7060 MWE) IMPROVED GDP'S WITH FIRST 2.2 MSWU INCREMENT IMPROVED GDP'S WITH FULL
8.8 MSWU GCEP
300
250
200
150
100
50
the Portsmouth site by late 1982 or early 1983. The completion date for these programs at the Oak Ridge and Paducah sites is still expected by the end of 1981.
The Cascade Improvement program incorporates the most recent advances in gaseous diffusion technology into the existing plants. The improvement in process efficiency will increase the capacity of the three-plant complex by one-third without requiring an increase in power consumption. The Cascade Upgrade program improves the electrical and heatremoval systems to permit efficient operations at higher power levels, thus increasing capacity by about 20 percent and power-using capability from 6,065 to 7,380 megawatts. Once completed, the total capability of the gaseous diffusion plants will increase from about 17 to over 27 million SWUs per year.
Gas Centrifuge Enrichment Plant
Design and construction of a gas centrifuge enrichment plant began on DOE property near Piketon, Ohio, adjacent to the Portsmouth Gaseous Diffusion Plant. In full production, the plant will add about 8.8 million separative work units per year to U.S. uranium enrichment capacity. The centrifuge process is highly energy-efficient. It is estimated that the annual electrical power consumption of the plant will be 135 megawatts, about 5 percent of the power required to produce the same amount of separative work through gaseous diffusion.
Construction activities at the Portsmouth site increased during the year. The Portsmouth Area Office Administration Building was completed in February and major site preparation began in March 1979. DOE awarded contracts and started work on various facilities. The most significant contract award was for the centrifuge machine procurement. Letter contracts for the Phase I Centrifuge Machine Manufacturing program were signed in September 1979. Phase I will cost about $245 million and will provide the initial centrifuges for the project.
During 1980, the first Phase I centrifuges will be fabricated by the three selected manufacturers. Installation of Phase I machines into the centrifuge Plant Demonstration Facility, a full-scale cascade representation of plant, will begin in 1981. Construction of the first process building began in late 1979. In 1980, rough grading of the site will be completed, construction of the building will continue, and construction of process support facilities will be initiated, as required by the overall schedule.
Initial production of 2.2 million separative work units from the plant is scheduled to begin in the late 1980s, with additional production capacity to be added in 1.1 million separative work units increments as demand indicates.
Leasing Programs
The DOE Organization Act transferred certain responsibilities for leasing and developing federally-owned energy resources from the Department of the Interior to DOE. Recognizing the relationships between national energy planning and Federal energy leasing policy, DOE and the Department of Interior signed a Memorandum of Understanding in September 1978 which directs DOE to establish energy production goals for all energy leasing resources and for the Department of Interior to provide DOE with the necessary energy resource information to set the goals. DOE updates and revises production goals every 2 years. New regulations are designed to:
1	. Develop and implement alternative bidding systems;
2.	Establish diligence requirements for operations on Federal leases;
3.	Foster competition for all Federal leases;
4.	Acquire and dispose of Federal royalty oil interests to be taken in kind; and
5.	Set production rates.
DOE has the responsibility for establishing production rates for Federal leases and timetables to improve Federal energy resource recovery and ensure fair market return to the public.
In 1979, DOE submitted coal and outer continental shelf oil and gas production goals to the Department of Interior; prepared and published in the Federal Register proposed regulations for outer continental shelf oil and gas bidding systems and royalty oil; conducted public hearing for rulemaking; and approved fourteen coal leases covering 10,998 acres and 107 million tons of coal.
Plans for the future include:
1	. Approving coal lease terms and conditions that will result in production of about U/2 billion tons of coal from western lease sales;
2.	Analyzing current oil and gas leasing policy to determine its effect on developing 375 million acres, considered prospectively valuable for oil and gas resources’
3.	Assessing the rates of production of oil and gas on the 100 million acres now under lease;
13-9
4.	Evaluating permits required for oil and gas leasing and development in order to streamline the leasing and permitting process;
5.	Reviewing outer continental shefl oil and gas lease terms and conditions leading to approval of lease tract sales;
6.	Analyzing outer contiental shelf diligence requirements to determine if there is need for more stringent regulations;
7.	Assessing competition in bidding on outer continental shelf tracts;
8.	Developing and promulgating regulations for outer continental shelf oil and gas bidding systems and coal diligence; and
9.	Developing geothermal production goals and interim oil shale and coal synthetic fuels production goals.
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Chapter 14
Support Operations
On October 1, 1979, the Department of Energy completed its second full year of operation. During the first 2 years, the Department absorbed its predecessor organizations, shaped them into a new structure, and developed new management systems to accomplish diverse functions. The Department integrated programs, personnel, and systems under the Secretary of Energy.
Recent changes, implemented in October 1979, were made to enhance lines of control, to define responsibility for accomplishing Department objectives, to provide better services to the public, and to improve cooperation with the Congress. The principal components of the Department were divided into three groups. One group reports directly to the Secretary and Deputy Secretary. This includes the Inspector General, the General Counsel, International Affairs, the Economic Regulatory Administration, the Energy Information Administration, and the Office of Hearings and Appeals. Legislative and public affairs activities were made an integral part of the Office of the Secretary.
The second group reports to the Secretary and Deputy Secretary through the Under Secretary, and includes the Department’s major outlay programs. The group has been further refined to conduct programs with product focus. This meant dismantling the Office of Assistant Secretary for Energy Technology and assigning its functions to Assistant Secretaries for Fossil Energy, Nuclear Energy, and Conservation and Solar Energy, as well as to the Director of Energy Research. This realignment
should enhance coordination and development of technologies.
The third group reports to the Secretary and the Deputy Secretary through the Chief Financial Officer and consists of those offices with day-to-day responsibility for management of the Department’s resources: financial, personnel, and facilities. This alignment was adopted to provide for better management of programs, better control of project costs and performance, better fiscal analysis, and improved service to the program Assistant Secretaries.
The current relationships are displayed in figure 16.
During 1979, the Department provided analysis and support to develop a coordinated and comprehensive national energy policy. The second National Energy Plan (NEP-II) was transmitted to the Congress in May, 1979. NEP-II represents two particularly significant advances in energy planning. First, it presents new perspectives on energy futures. For the first time, a major Federal energy planning document recognizes the broad range of uncertainties that cloud the Nation’s energy future, with which responsible energy planning must deal. NEP-II also gathers in a systematic framework current and proposed policies, bringing together legislative, tax, regulatory, and technology policies and incentives.
There were three major large-scale Administration initiatives on energy policy in 1979: (1) the phase-out of controls on domestic crude oil prices; (2) a tax on the windfall profits due to decontrol; and (3) and mechanisms to use the proceeds from the
14-1
Department of Energy tb	r
Secretary	”””™
Special	Executive	Assistant to	Assistant to
Federal	Deputy Secretary	Assistant	Assistant	,he. Secr6'a'v , the Secretary
Energy	____ _____ _____ ______ (Legislative Affairs) (Public Affairs)
Regulatory Commission	...
Under Secretary
Chief Financial
Inspector	__	Officer
General
General	Asst. Secretary	Asst. Secretary	Director
Counsel	""	Conservation &	“■ ■“	Resource	Office of	— Administration
----------------Solar Energy	Applications	Minority Economic Impact ^PoBcvX13^ __	Asst. SecretarY	Asst. Secretary	Director	Director
Evaluation	Fossil Energy	""	Environment	of Equa*	" ™ Procurement
______tvaiuation__	___________________ ____________ __________ _________Opportunity__	& Contracts Mgt.
Asst. Secretary	Asst. Secretary	Asst. Secretary
nteAr"at,onal	Nuclear Energy "" — Defense Programs	Controller
Affairs
Economic	Director
Regulatory _	Office of
Administration	Energy Research
Energy
Information
Administration
Office of
Hearings Er Appeals
Figure 16. — Organization of the Department of Energy
Board of
Contract Appeals
tax to finance new energy production and conservation improvements and to assist those low-income Americans who can least afford higher energy prices.
On July 15, the President announced a major new program to reduce the Nation’s imports by one-half by the end of the next decade. The Department provided support in the development and refinement of proposals concerning the oil import reduction program, establishment of an Energy Security Corporation and an Energy Mobilization Board, and the design of new legislation authorizing mandatory conservation measures.
An Administration-wide Domestic Policy Review (DPR) of methods for advancing the introduction and widespread use of solar energy was conducted during 1979. This review involved close public participation. Other subjects studied during the year were the strategy for alcohol fuels, the Administration’s natural gas policy, and analyses leading to the DOE position on EPA’s New Source Performance Standards. Toward the end of the year, cooperation increased with the Congress in its deliberations on gasoline rationing, low-income assistance, tax credit, conservation proposals, and proposals related to reduction of oil use by electric utilities through substitution of other energy forms. Considerable analysis was also devoted to means of reducing U.S. impact on the world oil market.
Resource Management
A variety of management improvement initiatives were developed in 1979 and will be pursued in 1980 and 1981. The first project planning and review efforts were initiated during the year. Project plans will provide the planning base for 80 percent of DOE project resources. Reviews will be conducted at decision points to ensure that a project is ready to proceed before funds are committed for additional work. The financial management system consolidated at the assistant secretarial level provides greater visibility of funds for managers and reduces the chance of statutory violations. Increased automation of the budget process permits flexibility for analysis; at the same time it facilitates the zero base budget process through greater ease in use of data and assessment of alternatives.
Further improvements are anticipated as a result of new or expanded training programs for managers. Senior Executive Service employees now have new opportunities to share experiences and focus on common problems. The project management training program has been extended to include courses
beyond basic orientation and overview of the project management functions.
The Department’s training activities extend to personnel outside the DOE work force. Programs are being developed with the Department of Labor to train economically disadvantaged persons in DOE-owned, contractor-operated facilities to qualify them for entry level positions in energy-related technician and craft occupations. These programs, funded through the Comprehensive Employment and Training Act of 1978, have been successful in job placement.
The Department inherited a host of procurement activities, each with unique procedures and regulations. Consequently, during the year it was necessary to establish new DOE-wide procurement, grants, and property management regulations. An integrated procurement management information system also began operation in 1979. It provides procurement and financial assistance information for internal use and in response to Congressional requests.
The Department will continue to improve the efficiency of procurement and financial assistance activities. Expanded use of automated procurement tools, such as the solicitation preparation system, will be explored. DOE’s procurement, property, and financial assistance regulatory systems will serve DOE and Federal procurement and assistance responsibilities. A major effort will be required to implement the Federal Acquisition Regulation being developed by the Office of Federal Procurement Policy. Socioeconomic programs will evolve as legislative mandates (such as subcontracting plans required by PL-95-507) and are fully implemented. Training for procurement personnel and non-pro-curement managers in DOE will increase in the future.
Actions are underway to improve the planning and timeliness of procurement services. To increase effectiveness and decrease costs, the Department will enter a variety of agreements for use of contract administration resources of other agencies on a reimbursable basis. Certain contracting functions have been assigned to the Defense Contract Administration Service of the Defense Logistic Agency, which has the expert personnel to monitor contract progress.
Management Review
Two offices within DOE’s headquarters are responsible for reviewing management decisions and recommending or dispensing corrective measures.
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One is the Office of the Inspector General and the other is the Office of Hearings and Appeals.
The Office of the Inspector General is concerned with internal activities of the Department and its contractors. In 1979, the office was responsible for review of the Strategic Petroleum Reserve program, controls over government-owned property in the hands of DOE contractors, enforcement review of the oil pricing regulations, auditing the weatherization grants program, the Dam Safety Inspection of the Federal Energy Regulatory Commission, and the H-Coal Pilot Plant project. The Office is also responsible for investigations relating to fraud and other illegal conduct within the Department. During 1979, investigations were conducted for possible procurement and contracting irregularities and alleged conflicts of interest.
The Office of Hearings and Appeals is responsible for analyzing and deciding applications for exception from any DOE regulatory program. It grants exception relief to alleviate special hardship or inequity. Of particular significance during 1979 was the large number of submissions related to the pricing and allocation of gasoline. In order to be responsive, a number of class exception hearings were authorized; 2500 firms were affected by the resulting relief approved. The office also reviews Remedial Orders to assure that charges brought by the Department’s enforcement officials are legally correct and supported by the weight of the evidence.
In-House Energy Management
The Department should set the national example in energy management and conservation. The Inhouse Energy Management program funded energy saving retrofit projects for 1979 and 1980 at Department facilities that will result in an annual reduction of energy consumption by 4.4 percent. Also funded were projects for the conversion of three central heating plants to coal which are now burning 309,000 equivalent barrels of fuel oil annually. Retrofit projects requested for 1981 should, when completed, further reduce energy consumption by 5.1 percent annually.
Field Operations
DOE’s network of research and development capabilities includes operations offices, national laboratories, and energy technology centers. It represents a work force of approximately 12,000 government employees and 100,000 contractor employees.
DOE involvement in research and development (R&D) programs has grown at a rapid rate—from over ninety programs in 1973 to some 225 in 1979.
Overall coordination of DOE’s programs rests with headquarters; however, the Department has adopted a policy of decentralization where project management activities for energy Rd&D projects are placed at an office located near the work.
Substantial progress was made during 1979 toward greater decentralization of project execution responsibilities. Most of DOE’s seventy-five major systems acquisitions and projects are now assigned to field organizations for management. Efforts were also made toward building increased management and support capabilities in the field organizations. Approximately seventy-five personnel or positions were transferred from headquarters organizations to the field and another one hundred positions were authorized for this purpose.
Many of the projects are in the early planning and design phases. As they move into the manufacturing and construction phases, strong efforts will remain necessary to build required field resources and capabilities to handle the rapid increase in responsibilities.
Several management tools have been developed to coordinate DOE’s field organization, including institutional planning, lead mission assignments, and laboratory appraisals. The Department initiated a 5-year institutional plan to provide for long-range planning at the major laboratories. In general, work is placed at a given laboratory if it requires the unique skills and facilities of that laboratory, if it is part of a core research capability being maintained there, or if expertise is not available from university or from industry sectors. As part of institutional planning, lead missions are assigned to DOE operations offices or laboratories in specific technical areas.
Laboratory performance appraisals provide another management tool for assessing work done by the field organizations. A prototype management appraisal of Argonne National Laboratory was conducted during 1979 as part of the review of the operating contract for the laboratory. This appraisal analyzed the laboratory in terms of its performance and its management relationship with DOE. Similar reviews of other laboratories are planned for 1980.
During the 1981 budget development process, the Department placed new emphasis on solving the problem of deteriorating laboratory facilities. Facility requirements, (e.g., site utilities, lab and office space and roadways,) were considered a Department
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problem and will receive greater management attention in the future. Needed improvements have been difficult to fund although most of the Department’s facilities are now 30 or more years old.
Much DOE research work is performed by college and university scientists, particularly longer-range energy research that leads to technical options for future energy programs. During 1979, DOE obligated $277 million in support of over 1,800 individual grants and contracts. In addition, approximately $60 million was provided on a subcontract basis from DOE industrial contractors and national laboratories for university projects.
Two special university programs are worthy of note. As part of a Department-wide effort to increase the involvement of minority scientists in the national
energy effort, eleven research awards were made in 1979 to traditionally minority institutions for specific energy research projects. Each of these projects involved both faculty and students. Also, approximately 1,100 university faculty members and students were supported in various research and education related activities at the DOE national laboratories and contractor facilities as part of DOE’s Laboratory Cooperative program.
During 1979, continued emphasis was placed on the development of procedures to strengthen the collaborative relationships among the DOE national laboratories, private industry, and universities. Such collaboration expedites the distribution of new scientific and technical discoveries to the public sector.
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Appendix A
Foreign Direct Investment in U.S. Energy Sources and Supplies for 1978 and 1979
Introduction
Section 657, Subpart 8 of the Department of Energy Organization Act (Public Law 95-91) requires the Secretary to report on the U.S. activities of foreign companies or persons that own or control U.S. energy sources and supplies. Specifically, Section 657 states that the Secretary shall report to the President for transmittal to Congress:
to the extent practicable, a summary of activities in the United States by companies or persons which are foreign owned or controlled and which own or control United States energy sources and supplies, including the magnitude of annual foreign direct investment in the energy sector in the United States . . .
In response to this statutory mandate, this report summarizes 1978 and preliminary 1979 foreign activity in the domestic energy sector. In so doing, it concentrates on foreign direct investments in domestic energy sources and supplies as distinguished from foreign portfolio investment. Foreign direct investment, as used in this report, means, “ . . . the direct, indirect, or a combination of direct and indirect ownership of 10 percent or more of the voting
stock of an incorporated U.S. business enterprise or the equivalent interest in an unincorporated U.S. business enterprise.” This is the definition used by the Department of Commerce’s Bureau of Economic Analysis (BEA). The term “foreign direct investment” (FDI) is employed herein interchangeably with “foreign-owned” and “foreign-controlled.”
Most companies identified in the report are U.S. affiliates or subsidiaries of foreign companies. Although a number of these companies are 100-percent owned by foreign interests, in many instances U.S. investors have significant, often majority, interests.
The major sources used in preparing this study were:
1.	1978 annual reports, statistical supplements to annual reports, and form 10-K’s of those energy companies identified as being controlled by foreign interests.
2.	Survey of Current Business report entitled Aspects of International Investment, published by the BEA.
3.	Biweekly reports entitled Foreign Direct Investment Activity in the United States, prepared by the U.S. Department of Commerce, Bureau of International Economic Policy and Research.
A-l
1979 FDI data are included to the extent available at time of writing (December 1979).
DOE is currently taking steps to improve its monitoring of foreign activity in U.S. energy sources and supplies. Following the completion of DOE’s last FDI report, which was incorporated as Appendix A in the Department’s 1978 Annual Report to Congress, a survey was conducted of existing Federal collection activities regarding foreign direct investment to identify additional sources that could be used in preparing future reports. The survey identified several new sources, to some of which DOE is the process of obtaining access.
The Petroleum and Natural Gas Industries
At year-end 1978, foreign direct investment in U.S. petroleum was $7.8 billion, compared to $6.5 billion at year end 1977. This 20 percent increase was the largest since 1974. Despite this, FDI in U.S. petroleum compared to FDI in all U.S. industries changed little—19.1 percent in 1978, compared to 18.8 percent in 1977 and 19.2 percent in 1976. This is shown in the third column of table A-l.
The 1978 addition to the petroleum sector, which was mainly accounted for by existing U.S. affiliates, more than doubled—$1.3 billion in 1978 compared to $652 million in 1977. It consisted of equity and intercompany inflows of $308 million, compared to $52 million in 1977, and reinvested earnings of incorporated affiliates of $1 billion., compared to $601 million in 1977 (see table A-2).
Table A-2. — Additions to foreign direct investment in U.S. petroleum — 1974-1978'
Equity and			Reinvested	
		intercompany	earnings of	
	Total	account	incorporated	Valuation
Year	addition	capital inflows	affiliates	adjustments
(millions of dollars)
1974...	.. 822	431	431	-40
1975...	.. 599	79	520	0
1976...	..-301	410	538	-1240
1977.. .	.. 652	52	601	0
1978. . .	.. 1312	308	1,004	0
1 Source: U.S. Department of Commerce, Bureau of Economic Analysis, Survey of Current Business, “Foreign Direct Investment in the United States in 1978,” August 1979.
Reinvested earnings of petroleum affiliates were $1 billion, up 67 percent in 1978, and accounted for almost all the addition. Reinvested earnings equal foreign parents’ shares in the earnings of incorporated affiliates, less gross dividends.
The Department of Commerce attributes the sharp increase in equity and intercompany inflows and reinvested earnings to the increase in U.S. interest rates. As borrowing costs rose, U.S. affiliates relied more on funds from their foreign parents (equity and intercompany account inflows) and on reinvested earnings, and less on funds borrowed in U.S. financial markets.
Table A-3 reveals the leading sources of FDI in U.S. petroleum to be subsidiaries of companies incorporated in Western European countries and
Table A-l. — Foreign direct investment in petroleum and all U.S. industries and U.S. direct investment in foreign industries
		U.S. direct			Total	
			Percent	investment	U.S. direct	Percent
	FDI in U.S.	Total FDI	petroleum	in foreign	investment	petroleum
Year	petroleum1	in U.S.1	of total	petroleum	abroad*	of total
(billions of dollars) '
1973 			 4.7	20.5	22.9	24.9	101.3	24.5
1974			 5.62	25.1	22.3	21.4	110.1	19.4
1975 			 6.2	27.6	22.4	25.9	124.0	20.8
1976			 5.9	30.7	19.2	28.7	136.8	20.9
1977 			 6.5	34.5	18.8	31.4	149.8	20.9
1978 			 7.8	40.8	19.1	33.3	168.0	19.8
Source: U.S. Department of Commerce, Bureau of Economic Analysis, Survey of Current Business, “U.S. Direct Investment Abroad in 1978,” August 1979 and “Foreign Direct Investment in the United States in 1978” August 1979.
Petroleum industry—includes all phases of petroleum exploration, production, refining, transport, and marketing.
The FDI position is the value of foreign parents’ net equity in, and outstanding loans to, U.S. affiliates at yearend.
The value of U.S. parents’ net equity in and loans to foreign affiliates.
A-2
Table A-3. — Foreign sources of direct investment in U.S. petroleum — 1973-1978
		Percent		Percent		Percent		Percent		Percent		Percent
		of		of		of		of		of		of
	1973	total	1974	total	1975	total	1976	total	1977	total	1978	total
						(billions of dollars)						
All countries		4,792	100	5,614	100	6,213	100	5,901	100	6,573	100	7,885	100
Canada		426	8.8	547	9.7	596	9.5	679	11.5	710	10.8	782	9.9
Europe		4,079	85.1	4,714	83.9	5,478	88.1	4,985	84.4	5,523	84.0	6,630	84.0
European Economic												
Community		4,086	85.2	4,673	83.2	5,398	86.6	4,904	83.1	5,428	82.5	6,515	82.6
Netherlands		1	—	I	—	1	—	>	—	1	—	5,073	64.3
United Kingdom....	1,212	25.2	1,502	26.7	>	—	601	10.1	486	7.3	484	6.1
Japan 		55	1.1	44	0.78	1	—	38	0.64	48	0.73	1	—
Australia		-1	—	2	—	2	—	J	0.06	।	—	1	—
New Zealand Africa												
Latin America		231	4.8	291	5.1	101	1.6	173	2.9	276	4.1	367	4.6
OPEC		17	0.35	35	0.62	-2	—	2	0.03	4	0.06	4	0.05
' Suppressed to avoid disclosure of data of individual companies.												
2 Less than $500,000.												
Canada. European investors, primarily from the European Community countries, accounted for 84 percent of total foreign investment in U.S. petroleum in 1978—virtually unchanged since 1976. Canadian investors ranked second, accounting for 9.9 percent, compared to 10.8 and 11.5 percent for 1977 and 1978, respectively. OPEC countries’ direct investment in U.S. petroleum was insignificant, representing 0.05 percent of the total compared to 0.06 and 0.03 percent of the previous two years. OPEC investment was primarily in U.S. real estate and manufacturing, as noted in table A-4.
As table A-l demonstrates, U.S. direct investment in the petroleum industry of other countries continued to be several times greater than foreign direct investment in U.S. petroleum. Since 1973, reported U.S. investments in foreign petroleum have been approximately five times greater than foreign investment in U.S. petroleum.
Summary of Foreign Investment Activity
Oil and Gas Production: The five companies representing the major foreign interests in the United States produced 1.0 million barrels a day of crude oil and natural gas liquids and 743,410 million cubic feet
of natural gas in 1978, representing 10.3 and 3.7 percent respectively of total U.S. production. While the percentage share of natural gas produced by these companies is unchanged since 1976, these companies’ share of U.S. crude and natural gas liquids (NGL) production rose from 6.0 percent in 1976 to 7.2 percent in 1977 and 10.3 percent in 1978. This increase is attributed to the marked increase in Sohio’s North
Table A-4. — OPEC direct investment in the U.S. — 1975-1978
Year	1975	1976	1977	1978
		(millions of dollars)		
Petroleum		-2	2	4	4
Manufacturing		1	29	24	56
Trade 		-5	-9	-8	8
Finance		N.A.	N.A.	49	45
Insurance 		4	4	4	3
Real Estate		N.A.	N.A.	182	199
Other		>	164	1	10
Total	169	190	256	325
1 Suppressed to avoid disclosure of individual companies				
N.A.—Not available.				
A-3
Slope production. In 1977, Sohio produced 167,308 barrels per day or 1.7 percent of the U.S. total, whereas in 1978, with production at 528,402 barrels a day, Sohio accounted for 5.1 percent of total U.S. production. As shown in table A-5, 1978 production by the four other foreign-owned companies remained relatively unchanged.
Refining and Gasoline Marketing: As of January 1, 1979, 301 refineries were operating in the United States with a crude oil throughput capacity at 17.4 million barrels a day. The seventeen refineries owned by the five major foreign companies accounted for 10.4 percent of U.S. throughput capacity, substantially the same as that for 1977. Shell, which owns eight of the seventeen foreign-owned refineries, has crude oil throughput capacity of 1.1 million barrels a day, or 62 percent of the foreign-
controlled throughput capacity. Total Petroleum’s 1978 acquisition of a second refinery doubled its throughput capacity (see table A-6).
The five major foreign-owned companies sold gasoline through 25,872 branded service stations in 1978 compared to 26,902 in 1977. In 1978, this figure represented 15.5 percent of total U.S. branded service stations. These companies accounted for 11.7 percent of total U.S. gasoline sales in 1978 compared to 10.1 percent in 1977 (see table A-7).
Activities of Foreign-Controlled Companies
Shell Oil Company: Shell Oil Company (Shell), a fully integrated petroleum company, is a major subsidiary of the Royal Dutch/Shell Group. Shell is 69
Table A-5. — U.S. petroleum and natural gas production by identified foreign-controlled companies
Net crude oil and natural gas liquids	Net natural gas
Company	1976	1977	1978	1976	1977	1978
Shell Oil Company		.... 527,000	(barrels per day) 505,000	497,000	681,090	(millions of cubic feet) 682,550	679,995
Standard Oil of Ohio		....	25,479	167,308	528,402	28,969	31,370	30,366
American Petrofina		19,775	19,367	19,660	17,334	16,483	17,916
Husky Oil Company		14,084	14,580	14,728	7,121	7,644	6,628
Total Petroleum (North America) Ltd		3,309	4,460	4,324	7,379'	9,318'	8,505'
Total of above		.... 589,647	710,715	1,064,114	741,893	747,365	743,410
Total for U.S		....9,735,000	9,863,000	10,268,000	19,952,000	20,025,000	19,636,000
Percent foreign of Total		6.0	7.2	10.3	3.7	3.7	3.7
Natural Gas Sales
Table A-6. — U.S. refinery operations of identified foreign controlled companies — 1976-1978
Company	1976	Operating refineries 1977	1978	Total crude oil throughput capacity		
				1976	1977	1978
Shell Oil		8	8	8	1,148,000	(barrels per day) 1,137,000	1,136,000
Standard Oil of Ohio		3	3	3	449,000	452,000	452,000
American Petrofina		3	1	1	161,000	110,000	90,000
Husky Oil Company		3	3	3	57,400	59,400	60,000
Total Petroleum (North America) Ltd		1	1	2	41,000	40,000	82,500
Total of above		18	16	17	1,856,400	1,798,400	1,820,500
Total for U.S		273	290	301	16,398,372	17,047,724	17,440,885
Percent foreign of total		6.5	5.5	5.6	11.3	10.5	10.4
A-4
Table A-7. — U.S. gasoline sales by foreign-owned companies
Company	1978	Total brandea service stations 1977	1976	1978	Gasoline sales' 1977	1976
Shell Oil Company		....	16,985 (10.2)4	18,418 (10.2)	19,656 (11.2)	3	(millions of gallons) 3	3
BP-Sohio		4,109 (2.6)	4,522 (2.5)	4,906 (2.8)	3	3	3
American Petrofina		3,499 (2.1)	3,597 (2.0)	5,758 (2.8)	3	3	3
Husky Oil Company		547 (0.3)	NA	573 (0.3)	3	3	3
Total Petroleum (North America) Ltd		732 (0.4)	365 (0.2)	NA	3	3	3
Foreign total		....	25,872 (15.5)	26,902 (14.9)	30,293 (17.3)	7,601 (11.7)	6,749 (10.1)	6,992 (H.l)
U.S. total2		.... 167,249	181,063	175,228	65,229	63,863	63,031
1 Gasoline sales refers to wholesale sales from refineries.
2 U.S. total includes branded and non-branded marketers and refiners—marketers as defined by the U.S. Department of Energy.
5 Disagregated company numbers are considered proprietary by the U.S. Department of Energy.
4 Numbers in parentheses are percentages of the U.S. total.
Sources: National Petroleum News Fact Book, Issue mid-June, 1979, 1978, 1977; Petroleum Market Shares, July 1979, U.S. Department of Energy, Energy Information Administration
percent owned by Royal Dutch/Shell. Compared with other integrated enterprises in the petroleum industry, Shell ranks sixth in domestic crude oil and NGL production, fourth in domestic refinery crude runs, and fifth in domestic refined product sales.
Shell’s oil and gas exploration and production activities continued at a high level in 1978. Capital and exploratory expenditures were up 24 percent since 1977. Shell continued extensive development of offshore acreage in 1978 by participating in drilling 131 wells, of which ninety-three were producers. During 1978, Shell acquired an interest in twenty-one tracts covering 107,000 acres at several Federal offshore lease sales. These tracts were acquired for total bonus payments of $238 million. Shell’s net share in the bonuses was $204 million and the company’s interest averaged 77 percent in the leases. Shell’s expenditure represented 12 percent of total industry offshore lease sale expenditures and is double the company’s historical ratio in the Outer Continental Shelf which, since 1967, averaged approximately 6 percent. In participation with eight other companies, Shell
drilled three exploratory wells in the Baltimore Canyon off the New Jersey Coast. These wells were abandoned when they showed no hydrocarbon accumulation. Shell and its partners spent more than $200 million in leasing and drilling in the Baltimore Canyon; Shell’s share was approximately $90 million.
Onshore, Shell maintained its extensive exploratory program and participated in the drilling of 146 gross exploratory wells. Of these, fifty-two wells resulted in discoveries—twenty-five oil wells and twenty-seven gas wells. The main areas of onshore oil exploration were the Michigan basin and the Williston basin of eastern Montana and western North Dakota.
Shell joined with Primary Fuels, Inc., a subsidiary of Houston Industries Inc., in onshore oil and gas exploration and production activities in most of the continental United States. The term of the partnership is 3 to 5 years, with Primary Fuels retaining the option of terminating the agreement at the beginning of each calendar year.
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Production began in five new fields in the Gulf of Mexico, adding by year-end 1978 3,000 barrels of oil and 140,000,000 cubic feet of natural gas per day to net production. Although Shell’s domestic crude oil and NGL production continued to decline in 1978, the rate of decline was stemmed. Production declined in 1978 only 1.5 percent from the 1977 level, whereas 1977 production declined 4.1 percent over that recorded for 1976.
On December 10, 1979, the shareholders of Bel-ridge Oil Company approved the $3.6 billion merger of their company into the Shell Oil Company. The Belridge purchase, regarded as the highest priced corporate acquisition in U.S. history, occurred despite the challenges of Mobil and Texaco, both longtime Belridge shareholders with 35 percent of the company’s stock between them. Los Angeles-based Belridge, whose proven oil reserves are estimated at 376 million barrels (most of which is heavy oil) was founded in 1911 by five families.
Shell’s 1978 oil and NGL production represented 4.8 percent of the U.S. total compared to 5.1 percent in 1977. Although Shell’s 1978 natural gas production fell 0.37 percent from the 1977 level, Shell retained its 3.4 percent share of the U.S. natural gas market. Likewise, Shell’s crude oil throughput capacity represented 6.5 percent of the U.S. total in both 1978 and 1977. Shell marketed 1.3 million barrels a day of oil products in the United States, compared with 1.2 million barrels a day in 1977 and 1.1 million barrels a day in 1976.
Standard Oil Company of Ohio: Standard Oil Company of Ohio (Sohio) represents the major interest of the British Petroleum Company, Ltd. (BP) in the United States. BP’s interest in Sohio reached 53.1 percent on December 31, 1978, following a rise in Sohio’s share of Alaskan North Slope oil production to 600,000 barrels per day after royalties. According to BP’s 1970 takeover agreement with Sohio, this 53.1 percent is the maximum share BP can acquire.
In January 1978, Sohio reorganized its Sohio Petroleum Company subsidiary, renaming it Sohio Natural Resources Company (SNRC). SNRC later acquired from a subsidiary of BP a highly skilled exploration and production organization that had been responsible for North Slope activities. This subsidiary, which now has responsibility for all natural resources including oil and gas exploration, development, and production activities, has embarked on an expanded exploration program.
In October 1978, Sohio acquired two tracts in the Gulf of Mexico; an additional tract was obtained
in the same area in December 1978. Sohio also concluded an agreement with a major company holding offshore leases near San Pedro, California, whereby Sohio will earn an interest in such leases as a result of exploratory drilling. Permits have been requested to allow operations to commence in 1979. Several small gas discoveries were also completed in 1978, principally in the U.S. southwest. On the North Slope of Alaska, Sohio continued its exploration activities in areas where hydrocarbons have been found but no commercial value has been ascribed to these finds.
Through its ownership of oil and gas leases on the Alaskan North Slope and the development of Prudhoe Bay oil reserves, Sohio holds more proven crude reserves in the United States than any other company and it is one of the leading producers of domestic crude. Sohio’s U.S. crude and NGL production in 1978 more than tripled over the 1977 level. Production in 1978 represented 5.1 percent of total U.S. crude production compared to 1.6 percent in 1977 and 0.26 percent in 1976. Although its natural gas production declined in 1978 by about 3.2 percent compared to 1977, Sohio retained its 0.04 percent share of the U.S. natural gas market.
During 1978, Sohio lifted its full share of Prudhoe Bay oil. The trans-Alaska pipeline, which began operation in the summer of 1977, averaged 1.1 million barrels a day of crude oil throughput in 1978. Approximately one-third of the 800,000 barrels per day of North Slope crude oil delivered via tanker to the United States west coast was owned by Sohio. Since Sohio lacks west coast refinery facilities, its crude was either sold to other domestic refineries or exchanged for crude for resale or use in Sohio’s midwest refineries. The balance of North Slope production for Sohio’s account was transported via tanker through the Panama Canal to Gulf Coast and Caribbean destinations.
On March 13, 1979, Sohio announced abandonment of the PACTEX project involving the construction of a pipeline to move North Slope crude, in excess of that required on the west coast, to markets east of the Rocky Mountains. Continuing delays in the permitting process and the prospect for future delays from litigation, rendering the plan uneconomic, led to termination of the project.
Husky Oil Company: The Husky Oil Company is the U.S. subsidiary of Husky Oil Ltd. of Canada.
In June 1978, Petro-Canada, the Canadian Government-owned oil and gas company, notified Husky Oil of Canada of its intention to offer to purchase any or all Husky shares. Occidental Petroleum
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also indicated its interest in purchasing Husky shares. Later, both Petro-Canada and Occidental withdrew their proposed offers.
At the time these offers were made, Alberta Gas Trunk Line Company, Ltd., a natural gas transmission company, informed Husky that since the first of 1978 they and another company jointly acquired over 3 percent of Husky’s common shares on the open market. During the latter part of June 1978, Alberta Gas increased its holdings to approximately 35 percent of the outstanding shares of Husky Oil.
Although actively involved in the development of heavy crude oil in the Lloydminster area of western Canada, Husky launched an aggressive exploration program in the United States during 1978 resulting in numerous oil and natural gas discoveries, primarily in the West. In addition, Husky completed seven of eight production wells located offshore Louisiana. Natural gas production from this area, expected to flow at rates in excess of 50 thousand cubic feet per day, will be the first from Husky’s offshore acreage acquired on a royalty basis as an alternative to the traditional cash bonus system.
In 1978, Husky produced 0.14 percent of total U.S. crude oil and natural gas liquids and 0.03 percent of U.S. natural gas production. Husky’s percentage share of U.S. crude and natural gas production has remained constant since 1976. Since 1976, Husky’s crude oil throughput capacity comprised 0.3 percent of the U.S. total.
In the marketing area, refined product sales in 1978 were the highest in the company’s history. Total refined product sales increased to 71,000 barrels a day, up from 68,600 barrels a day in 1977. While Husky’s oil sales increased as a whole, percentage increases were substantially higher in the United States than in Canada.
Total Petroleum (North America) Ltd.: Compagnie Francaise des Petroles (CFP) owns directly or indirectly through its wholly owned subsidiary Total Petroleum North America Ltd. or TOPNA, approximately 50.4 percent of TOPNA’s voting shares. The Government of France is CFP’s largest shareholder owning 35 percent of its shares and controlling 40 percent of its voting rights.
While TOPNA’s U.S. production declined in 1978, its refining and marketing activities increased. TOPNA’s U.S. crude oil production declined 3.1 percent in 1978 from 1977, and natural gas sales declined 8.7 percent. Its percentage share of total U.S. crude and natural gas production remained unchanged since 1977, i.e., 0.04 percent. TOPNA’s
U.S. oil reserves at year-end 1978 were 7.24 million barrels, compared to 8.61 million barrels at year-end 1977. Natural gas reserves were 62.07 billion cubic feet at the end of 1978, compared to 59.86 billion cubic feet at year-end 1977. The company’s crude oil throughput capacity at the end of 1978 represented 0.47 percent of the U.S. total, compared to 0.23 percent in 1977.
Although TOPNA negotiated an agreement to acquire APCO Oil Corporation’s Arkansas City, Kansas refinery in August 1977, the actual transfer of assets was not completed until April 1978. Acquisition of the APCO refinery, including associated pipelines and terminals, more than doubled TOPNA’s 1978 U.S. refining capacity and expanded the company’s marketing area to include fourteen midwestern states. The APCO refinery has a rated crude oil and condensate throughput capacity of 47,200 barrels a day. Following TOPNA’s acquisition, this refinery processed 11,325,745 barrels of crude for the first 9 month’s of 1978. Prior to the acquisition, TOPNA operated only one refinery, in Alma, Michigan, which has a crude oil and condensate throughput capacity of 42,000 barrels a day. In 1978, a $13,000,000 3-year program to upgrade the Alma refinery was completed. The primary objective of this upgrading was to increase the yield of higher-margin gasolines at the expense of lower-margin industrial products.
In 1978, TOPNA shifted the direction of its exploration efforts. Increasing exploration and development costs forced TOPNA to shift emphasis to higher potential areas expected to yield rapid returns on investment. As a result, TOPNA has reduced its exploration activities in Michigan, the site of TOPNA’s major exploration activity since 1971, and plans to concentrate activity in the southwest and Rocky Mountain areas.
W. R. Grace Co.: On November 16, 1978, the Friedrich Flick Group of Dusseldorf, West Germany, purchased 7.3 million shares of Grace’s common stock by means of a public tender offer at $35 per share. This purchase increased the ownership position of the Flick group from 12 percent to approximately 28 percent of the outstanding common stock of Grace.
Since its formation in 1973, the Natural Resources Division of W. R. Grace has built its petroleum operations to a size that ranks it among the top twenty independent oil and natural gas producers in the United States. In 1978, Grace’s total domestic oil and gas production was 9.1 million barrels per day of
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oil equivalent, an 8 percent increase over that of 1977. About 32 percent of Grace’s total oil production comes from the use of secondary and enhanced recovery techniques.
In an attempt to strengthen its exploration program, Grace combined its three oil and gas operations in July 1978—Teal Petroleum in Houston, Texas; Cleary in Oklahoma City; and Polumbus in Denver—into a single unit, Grace Petroleum. In a further effort to enhance its development of oil and gas reserves in the United States, Grace sold its 23 percent interest in Voyager Petroleums Ltd. of Canada in January 1979. The proceeds from this sale will be used to expand Grace’s domestic natural resource operations.
American Petrofina: Brussels-based Petrofina, S.A., owns about 72 percent of American Petrofina’s stock.
Although American Petrofina’s 1978 U.S. crude oil and condensate production gained 1.5 percent in 1977, its percentage share of total U.S. crude and condensate production (0.19 percent) was unchanged. The company’s 1978 natural gas production rose 8.7 percent over the 1977 level representing 0.09 percent of total U.S. natural gas production, compared to 0.08 percent the previous year. The company’s crude oil throughput capacity at year-end 1978 represented 0.5 percent of the U.S. total, compared to 0.6 percent in 1977.
Commonwealth Oil Refining Company: This company has approved the signing of a definitive agreement on the proposal by Arabian Seaoil Corporation S.A. to acquire control of the company. Arabian Seaoil Corporation represents a group of Arab investors headed by Roger Tamraz. However, Arabian Seaoil must first reach agreement on a settlement with Tesoro Petroleum Corporation. Tesoro is a Texas-based oil and gas company that is the largest single stockholder (about 37 percent) of Commonwealth. Although Tamraz has held discussions with Tesoro executives, the action is still pending. As of January 1, 1979, Commonwealth’s crude oil throughput capacity at its Penuelas, Puerto Rico refinery was 128,175 barrels per day.
The proposal calls for the merger of Commonwealth into a wholly-owned subsidiary of Arabian Seaoil. In addition to acquiring all of Commonwealth’s assets, the subsidiary would assume a large amount of Commonwealth’s debt; it would also substitute on a share-for-share basis its regular common and preferred shares for Commonwealth’s outstand
ing common and preferred shares. At the time of the merger, Arabian Seaoil would invest $50 million in cash in the new enterprise in exchange for $50 million principal amount of convertible notes.
Creslenn Oil: A small Texas-based oil exploration and production company, Creslenn was acquired by Deminex-Deutsche Erdolversorgungs GmbH for an undisclosed amount. It is expected that Creslenn will be operated as a Deminex subsidiary. Creslenn’s current oil production is estimated to be 1200 barrels a day; gas output is about 902 million cubic feet. Creslenn also has a 15 percent interest in the Beatrice oil field under development in the British sector of the North Sea. Primarily engaged in oil and gas exploration activity outside West Germany, Deminex is a joint venture of several German oil firms, including the West German government-controlled VEBA AG of Dusseldorf.
Texasgulf Inc.: This company has restructured its operations by creating three new operating divisions. Two of the three new incorporated companies are located in the United States: Texasgulf Oil andGas Co., Houston, and Texasgulf Chemicals Co. of Stamford, Connecticut. The third firm, Texasgulf Metals Co., is headquartered in Toronto, Canada. Texasgulf Inc. is 31 percent owned by Canada Development Corporation.
The Thomson Organization Ltd. and Monteith Mineral Inc.: These companies formed a new oil and gas partnership to acquire oil and gas producing properties and engage in exploration throughout the United States. The venture company, Thomson-Monteith, is based in Texas. The Thomson Organization, reported to be the second largest British-based oil producer in the North Sea after British Petroleum, is 80 percent owned by Lord Kenneth Thomson’s family. In July 1978, the Thomson Organization was reorganized into the International Thomson Organization Ltd. and its headquarters relocated in Canada.
Basic Resources International S.A.: Luxembourgbased, this company purchased Shenandoah Guatemala Inc., a wholly-owned subsidiary of Shenandoah Oil Corp. Shenandoah Guatemala, a Texas-based corporation, has a 37.5 percent interest in production from oil fields on the Guatemala-Mexico border.
Bow Valley Industries Ltd.: Based in Calgary, Canada, this natural resources company has acquired through the wholly-owned subsidiaries of Bow Valley Exploration (U.S.) Inc. all of the outstanding shares of common stock (4,065,010 shares) of Flying Dia
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mond Oil Corporation, Denver, Colorado. The transaction totalled approximately $122 million. In 1977, Gulf and Western Industries Inc. sold its 40 percent interest in Flying Diamond to Bow Valley. The Seaman brothers own about 18 percent of Bow Valley Industries Ltd.
Two U.S. companies—Great Lakes Dredge and Dock Co. of Illinois and Crowley Maritime Corp, of Alaska—have joined in a venture with IHC Holland of the Netherlands and Dredging Int’l. of Belgium to engage in offshore oil construction projects in the Beaufort Sea off Alaska.
Premo Petroleum Inc.: This Texas subsidiary of the British firm Premier Consolidated Oil Fields Ltd., has acquired a 50 percent interest in 356,000 acres of oil exploration concessions in the Rocky Mountain states. The cost of the transaction is estimated at $2.2 million.
Panjea Corp, and San Jacinto Exploration Ltd.: These two Canadian oil exploration firms have acquired oil leases for 150,000 acres in southeastern Arizona. The two companies plan to drill fifteen exploratory wells in 1979.
The Coal Industry
Standard Oil Company of Ohio: The Standard Oil Company of Ohio’s principal non-petroleum mineral activities are coal production and sales. The Old Ben Coal Company division of Sohio’s Natural Resources company is an important supplier of bituminous coal obtained from surface and underground mines in Indiana and Illinois. Overall coal production in 1978 was approximately 7.8 million tons, a decline of 1.9 million tons from last year’s total. This low production level was attributed to a United Mine Workers strike during the first quarter of 1978. Productivity continued below expectations even after operations resumed. Approximately 90 percent of 1978 production was used for the steam market, the balance for metallurgical uses.
In 1979, Sohio acquired the rights to an estimated 200 million recoverable tons of underground coal in southern Illinois for $54 million. This purchase boosts Sohio’s total crude reserves by 25 percent or about a billion tons.
Shell Oil Company: Seaway Coal Company, a wholly-owned Shell Oil Company subsidiary, operates surface mines which produce about 4 million tons of
thermal coal annually. Most of this coal is sold under contract to power stations in the Ohio River Valley and to the Tennessee Valley Authority. Pending approval of Federal and state permits, Seaway plans to construct a mine for sub-bituminous coal near Gillette, Wyoming. With initial production scheduled to begin in 1981, this mine is expected to produce 4 million tons annually. Supply contracts for some of this coal have already been signed.
Scallop Coal Corporation: Previously Asiatic Petroleum Corporation, this company is also active in U.S. coal operations. A wholly-owned subsidiary of Scallop Holding Inc. which, in turn, is a wholly-owned Royal Dutch/Shell Group company, Scallop has responsibility for acquiring supplies of both thermal and metallurgical coal to meet the Group’s international requirements. Scallop recently gained access to some 500,000 tons per year of high quality coal which will be available for export. In 1978, Scallop and Reitz Coal, a Pennsylvania coal mining company, formed a joint venture company. The new firm, known as Reitz Coal Associates, will market coal.
Aquitaine Company of Canada, Ltd.: The Aquitaine Company of Canada Ltd., through its wholly-owned subsidiary, Aquitaine Pennsylvania Inc., is also engaged in U.S. coal production. Unlike Shell and Sohio, Aquitaine’s coal production increased in 1978 despite the miners’ strike. Production during that year increased 4 percent or 68,000 tons, to 1,674,000 tons. The increase was brought about by the use of two larger electric shovels which were in operation for most of the year, in addition to the opening of a new underground mine in the third quarter of 1979. Through the purchase of additional mines, Aquitaine’s coal reserves increased by 12 million tons to 68 million tons in 1978.
W. R. Grace Co.: In partnership with the Clevelandbased Hanna Mining Company, W. R. Grace planned to exploit two important coal operations in Colorado. The first, Colowyo, is expected to be Colorado’s largest mine. Production at the Colowyo mine reached 1 million tons in 1978; by 1979, production reached 114 million tons. When fully mature, in 1984, production is expected to reach an annual rate of 4.3 million tons. With total recoverable reserves of 264 million tons, Colowyo has a life expectancy of at least fifty years. The second venture, the Hayden Gulch mine, shipped its first coal in late 1978 and will reach a mature mining rate of 750,000 tons annually
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in late 1980. It has reserves of 8 million tons. This joint venture is equally owned by Hanna and Grace. Since the Friedrich Flick Group owns 12 percent of Grace, it has a 6 percent interest in these projects.
Total Petroleum: Total Petroleum Ltd. of Calgary, Canada, acquired for $2.9 million a 60 percent interest in Ridgecrest Energy Corporation of West Virginia. Ridgecrest is a small producer of metallurgical coal. Total Petroleum is part of the Paris-based TOPNA Group owned by the Compagnie Francaise des Petroles.
Other Foreign Activity in the Coal Sector
Bong-Myung Corp: A South Korean coal mining company, it is participating in a joint venture with a U.S. company to develop coal reserves in Virginia.
Placer Development Ltd.: A Canadian Company, it purchased two small coal mines in Kentucky. The transaction amounted to $118.0 million.
Belco Petroleum Corp.: This company subleased part of its West Virginia coal reserves and sold related fixed assets to Coalarbed of Beckley, West Virginia. Coalarbed is a U.S. subsidiary of ARBED, S.A., the Luxembourg-based steelmaker. Belco received $3.4 million at the closing, and will receive the remainder with interest over the next four years. The sale of assets amounted to about $1 million of the total.
The Nuclear Industry
Shell Oil Company: In 1978, Shell joined with Gulf Energy and Environmental Systems (GEES), a division of Gulf Oil Corporation, to form the General Atomic Company. The company’s main activity in the United States is the development, in conjunction with the electric utility industry and the U.S. Government, of the high-temperature gas-cooled reactor (HTGR) and its associated uranium-thorium fuel. During 1978, work continued on the start-up of the 330-megawatt HTGR power plant built by General Atomic for the Public Service Company of Colorado. General Atomic is also involved in the design and development of advanced versions of the HTGR and for gas-cooled fast-breeder reactors. Shell also began initial test drilling in Colorado where it holds a 15 percent interest in 145,000 net acres. Further uranium exploration is proceeding in Wyoming and Texas.
Standard Oil Company of Ohio: Standard Oil is the operator and 50 percent owner of a uranium mine and mill in New Mexico. Although fourth quarter 1978 mining activities were curtailed, Sohio’s share of uranium production was 276,000 pounds compared to 203,000 pounds in 1977.
Other Foreign Activity in Uranium
Freeport Mineral Company Inc.: 10.5 percent owned by Denison Mines Ltd. of Canada, this company completed construction of a 700,000 pound per year uranium oxide plant in Louisana. Denison Mines is controlled by the Roman Corporation, Ltd., which in turn is controlled by Stephen B. Roman of Unionville, Ontario.
Intercontinental Energy Corp.: Colorado-based, this company signed an agreement with Sedimex of West Germany to conduct a 4-year uranium exploration program along the Texas Gulf Coast. Sedimex will contribute 100 percent of the program’s costs, budgeted at $7.5 million, in return for a 55 percent interest as operator of the venture. The companies plan to develop jointly any properties containing commercially recoverable uranium reserves.
Imperial Metals and Power Ltd.: This Canadian mining company is negotiating to buy uranium properties in Washington, Arizona, and New Mexico.
Urangesellschaft U.S.A. Inc.: The Denver-based subsidiary of Urangesellschaft GmbH & Co. KG of West Germany, this company has been prospecting for uranium in Vermont and signing leases with Vermont landowners. The parent company wholesales chemical products in Europe.
Alternative Energy Sources
Shell Oil Company: Shell increased its investment in Solar Energy Systems (SES), a solar energy company in Delaware, so that Shell currently has a majority interest in the company. SES continued research on cadmium sulfide photovoltaic devices which convert sunlight directly into electricity. Technical problems delayed a marketing program on specialized industrial applications.
Standard Oil Company of Ohio: Sohio maintained its interest in the Paraho Oil Shale Development project in Colorado. Principal activity during 1978 involved a U.S. Navy contract according to which Sohio refined approximately 70,000 barrels of new shale oil at its Toledo refinery facilities.
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Appendix B
Exports of Energy Resources by Foreign Companies
Introduction
Appendix B addresses “exports of energy resources from the United States by foreign-owned or controlled business entities or persons and such other related matters as the Secretary may deem appropriate”. In conjunction with Appendix A, which covers foreign direct investment in United States energy sources and supplies in 1978, this meets the reporting requirement of Section 657, Subpart (8), of the DOE Organization Act.
The direct export of U.S. energy resources by foreign-owned companies is insignificant. U.S. laws and regulations impose licensing requirements which rigorously control the export of crude oil, refined products, natural gas, and uranium by all firms.
There are no foreign-owned or controlled companies currently engaged in the export of natural gas and uranium. Several companies identified with foreign interests are involved in the limited export of refined oil products. Under existing export reporting requirements, it is currently impossible to determine to what extent brokers involved in the export of U.S. coal represent foreign entities.
The Export of Crude Oil and Refined Oil Products
Identification of Exporters
Total exports of energy-related products to foreign entities (areas outside the U.S. and its territories) by foreign-owned companies operating in the United States are minimal, amounting to less than 30,000 barrels per day or between one and two-tenths of one percent of daily U.S. consumption of petroleum. Exports of energy-related refined products by foreign-owned companies operating in the U.S. are even less significant, comprising only a small fraction of U.S. exports of refined petroleum products.1
1 The names of such companies cannot be included in this report as the information is regarded as propriety data under the terms by which the information was collected by the Office of Export Administration, Department of Commerce.
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Export Controls
All exports of crude oil and energy-related refined petroleum products are controlled by the U.S. Department of Commerce. Authority for such control is derived from four sources: (1) The Export Administration Act of 1979; (2) Section 103 of the Energy Policy and Conservation Act; (3) Section 201(11) of the Naval Petroleum Reserves Production Act of 1976; and (4) Section 28 of the Mineral Leasing Act of 1920, as amended. The export from the United States of crude oil is prohibited without a validated export license from the Office of Export Administration of the U.S. Department of Commerce. Commerce Department regulations currently provide that, with the exception of foreign policy or national security considerations, licenses will be issued only if it is established that such export is consistent with the national interest and the purposes of the Energy Policy and Conservation Act and meets other rigorous tests.
Exports of energy-related refined petroleum products are also prohibited without a license. Quotas have been established for the controlled refined products and licenses are generally issued only to the extent of the exporter’s historic share of the overall quota for a particular product. Crude oil and refined products exports are dominated by U.S. companies, and in turn these exports are a small proportion of U.S. production.
Crude Oil
No U.S. crude oil is exported on a net basis. However, approximately 150,000 barrels per day, less than one percent of U.S. consumption, are currently exchanged for equal quantities of Canadian crude as part of the Candian/Domestic Crude Oil Exchange Program. This supports the viability of several U.S. northerntier state refiners. Since these exchanges minimize acquisition costs on both sides of the border through improved efficiency of transportation they are mutually beneficial.
Refined Products
Non-energy products such as greases, lubes, and petroleum coke make up the great majority of U.S. exports of refined petroleum products. U.S. exports of energy-related refined petroleum products in 1979 were minimal, amounting to about 30,000 barrels per day or less than two-tenths of one percent of U.S. daily consumption. Exports of carbon black feedstock oils, naptha, and residual fuel oil represented
the greatest portion of this total. Exports of refined petroleum products by foreign-owned companies operating in the U.S. were even less significant, making up only a small fraction of the 30,000 barrels per day of energy-related products which are exported.
The Export of Natural Gas
Identification of Exporters
To the best of DOE’s knowledge, the companies exporting gas are U.S.-owned. With the exception of Phillips Petroleum and Marathon Oil Company, the companies that are exporting gas are gas transmission and/or distribution companies with limited energy resource production capacity.
As shown in table B-l, the U.S. exported approximately 53 billion cubic feet of natural gas in 1978. Approximately 90 percent of the exports consisted of deliveries of liquefied natural gas (LNG) from the Phillips Petroleum and Marathon Oil Company’s Kenai, Alaska LNG Plant to Japan. The remaining exports consisted of overland pipeline deliveries to Canadian (66 million cubic feet) and Mexican (4.03 billion cubic feet) border communities that are remote from their indigenous gas transmission systems. Moreover, the quantities exported were small in comparison to actual U.S. gas imports from Canada (881 billion cubic feet in 1978) and prospective supplies from Mexico.
During the first 9 months of 1979, the U.S. exported 40 billion cubic feet of gas. LNG shipments from Alaska to Japan are expected to account for 90 percent of the exports. For the year, exports are likely to match 1978 shipments of 53 billion cubic feet.
Table B-l. — U.S. natural gas exports
To	1978	1979
(billion cubic feet)
Canada............................ 0.066	N.A.
Mexico............................ 4.032	N.A.
Japan............................ 48.433	N.A.
52.531	40'
N.A.—not available
Source: Energy Information Administration
1 The 1979 figure is for actual exports for the first 9 months of the year. Approximately 90 percent of the exports are LNG deliveries from Kenai, Alaska to Japan.
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Natural gas exports amount to well under one percent of total 1978 U.S. gas consumption of 19.6 trillion cubic feet. Further, the overland pipeline exports to Canada and Mexico involve border sales which maximize the economics of the logistical arrangements, while the LNG sales to Japan result in part from the fact that there are no LNG receiving terminals on the U.S. westcoast.
Export Controls
The Department of Energy Organization Act vests in the Secretary, or his delegate, the legal authority to regulate imports and exports of gas. Section 402(f) of the Act specifically reserves to the Secretary all authority (including Section 3 of the Natural Gas Act (NGA), to regulate imports and exports of gas. Section 402(a)(c)(f) vests in the Federal Energy Regulatory Commission (FERC) most of the remainder of the authority formerly exercised by the Federal Power Commission.
In response to Government and industry concerns about the potential legal and policy problems arising from the possible overlap of jurisdiction between the Secretary and the FERC, the Secretary issued Delegation Orders 0204-25 and 0204-26 (October 18, 1978). In these orders, the Secretary delegated different aspects of his import and export authority to the Administrator for the Energy Regulatory Administration and to the FERC.
The delegation to the Administrator of ERA (0204-25) allows him to determine whether a proposed export of natural gas is not inconsistent with the public interest standards of Section 3 of the NGA. This determination would be based upon a number of considerations which may include: (1) the proposed price charged at the point of exportation; (2) consistency with DOE regulations or statements of policy specifically applicable to imports or exports of natural gas; (3) the national need for the gas proposed to be exported; and (4) such other matters within the scope of Section 3 of the NGA as the Administrator finds appropriate.
The delegation to the FERC (0204-26) grants it the authority to exercise all functions under Section 3 of the NGA which have not been delegated to the Administrator and which have not been previously exercised by him in addition to the functions under Sections 4, 5, and 7 of the NGA. Reserved to the FERC under the DOE Act is the authority to approve or disapprove applications for the siting, construction, and operation of particular natural gas export facilities while the Administrator has the authority to promul
gate regulations or develop statements or policy governing such cases with respect to national energy policy considerations. FERC is also responsible for the continuing supervision of export projects through the ongoing review of energy company export tariffs.
Export of Coal
Identification of Exporters
The identification of coal exports by producing company or mine is currently not available to the DOE since transactions are generally controlled by independent coal brokers. Most export coal is for metallurgical requirements and is a blend of coals from a number of suppliers with individual constituents varying by shipment. Currently available statistical reporting information does not permit identification of the coal brokers or coal exporters of record by national origin. However, it appears that companies exporting coal are U.S.-owned coal/ energy corporations. DOE has no authority to regulate or control coal exports.
Export of Uranium
Identification of Exporters
Eight U.S.-owned companies exported uranium in 1979. The names of the exporters cannot be identified in this report because such information is regarded as proprietary under the terms by which export data are collected by DOE Assistant Secretary for Resource Applications.
Export Controls
The export of uranium from domestic sources is controlled under the Atomic Energy Act of 1954, as amended, and under the Nuclear Non-Proliferation Act of 1978. The licensing of uranium exporters is controlled by the Nuclear Energy Regulatory Commission. In essence, exporters are granted licenses only if they maintain a U.S. business address and office, and can certify a legitimate energy need for the uranium.
There is no specific distinction between foreign and domestic corporations for purposes of issuing export licenses; however, the destination of exports is clearly stated. The principal recipients of U.S. uranium in 1979 were Japan, West Germany, Taiwan, Belgium and Sweden.
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Appendix C
Major Recipients of DOE Funding
Tables C-l and C-2 summarize DOE contract funding and financial assistance activities during 1979.
Table C-l. — Procurement and financial assistance activities in 1979'
Total number of prime awards to the private sector including awards to state and local government where contract value was greater than $10,000 and for which there were 1979
obligations............................................ 4,408
Total dollars awarded to the private sector, including awards to state and local governments ................................................ $8.4	billion
Total dollars awarded to small business, including awards by GOCO contractors..............	$1.0 billion
Total dollars awarded to disadvantaged business, including awards by GOCO contractors............	$ 116 million
Total number of accepted unsolicited proposals from all sources............................................... 603
Total dollar amount for accepted unsolicited proposals............................................. $178	million
Total number of prime awards to universities where contract value was greater than
$10,000 and for which there were 1978 obligations ..................................................... 1,382
Total dollars awarded to universities................. $1.75	billion
Total number of financial assistance awards....	995
Total dollar amount for financial assistance actions ............................................... $89	million
Total number of prime contracts administered..	13,328
Total number of contractors doing business with DOE ( had 1979 obligations).................................. 2,160
Total number of universities doing business with DOE (had 1979 obligations)..................................... 236
' Preliminary dollar amount subject to continuous updating.
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Table C-2. — Contractors awarded $10 million and over during 1979
Total year
Contractor	obligations
Total year
Contractor	obligations
University of California....................... $899,787,678
Union Carbide Corporation...................... 697,491,255
Sandia Laboratories............................ 502,407,000
Westinghouse Electric............................. 530,546,022
University Research Association, Inc........... 341,600,000
Tennessee Valley Authority........................ 337,053,490
Dupont, E.I......................................  324,821,000
Bendix Corporation................................ 283,453,950
AUA; University of Chicago........................ 275,332,716
Ohio Valley Electric Co........................ 247,764,210
EG&G, Inc......................................... 211,574,416
Babcock and Wilcox Co............................. 193,033,392
Princeton University........................... 191,773,006
General Electric Co...............................191,595,954
Resource Sciences................................. 142,779,622
United Nuclear Industries Inc..................... 139,138,540
Parsons—Gilbane................................... 111,779,161
Monsanto.............................. ........ 109,723,646
Reynolds Electric & Engineering................... 109,436,794
Battelle Memorial Institute....................... 106,013,912
Goodyear.......................................... 97,952,282
Electric Energy, Inc.............................. 84,998,924
Midwest Research Institute..................... 84,511,209
Rust Engineering Corporation...................... 77,938,807
Garrett Corp...................................... 62,996,731
Standard University............................... 62,708,547
Massachusetts Institute of Technology............. 58,423,698
Mason & Hangar—Silas Mason........................ 52,588,670
Exxon Research and Engineering Company.........	38,494,559
General Atomic Company............................ 36,948,441
Iowa State University—Ames..................... 31,815,194
Catalytic, Inc....................................  35,600,000
Fluor Engineering................................. 32,500,218
Morton—Norwich Products, Inc..................... 27,659,342
Holmes and Narver, Inc........................... 27,095,494
Jones Boecon..................................... 24,180,582
Allied Chemical Corporation...................... 22,825,538
National Lead.................................... 22,803,131
Sundstrand Corporation.......................... 21,961,000
Ashland Oil Company............................. 21,953,879
McDonnell Douglas............................... 21,161,259
United Technologies............................. 20,079,480
Bechtel Corporation.............................. 18,796,065
Institute of Gas Technology..................... 18,490,233
Gruy Federal Inc................................. 17,817,879
Pittsburgh and Midway Coal...................... 17,390,000
TRW, Inc.............'..........................  16,885,236
M-K National...................................... 16,133,982
Dravo Utility Constructions, Inc................. 14,910,221
Gulf Oil Company.................................. 14,732,290
Eagle—Pitcher.................................... 14,704,603
Global Marine Development......................... 14,225,396
Computer Sciences Company........................ 13,724,537
General Dynamics................................. 13,477,805
University of Michigan........................... 13,431,041
Curtiss Wright Corporation........................ 13,390,630
Florida Power Company............................ 13,320,237
Kaiser........................................... 13,123,091
Fenix and Scisson, Inc........................... 12,779,795
Southern Company Services........................ 12,762,417
University of Wisconsin........................... 12,300,430
Bituminous Coal Research......................... 12,254,983
Dow Chemical Corporation.......................... 11,650,120
AVCO Everett Research Laboratories.............. 11,045,661
IBM..............................................    10,846,336
University of Rochester............•••••,....... 10,561,034
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Appendix D
Actions Taken Regarding Disclosure of Energy Assets by DOE Employees
Introduction
Section 603(a) of the Department of Energy Organization Act (the Act) requires the disclosure by Department employees of energy assets within 30 days after commencing service with the Department and annually thereafter. Section 603(b)(2) provides that a report “with respect to such disclosures and the actions taken in regard thereto during the preceding calendar year” be included in the annual report made pursuant to section 657 of the Act.
This report therefore covers calendar year 1979. Further, this report covers not only disclosures and other actions taken pursuant to section 603, but also certain activities pursuant to other sections of Title VI of the Act.
Section 603
In implementing section 603 of the Act during calendar year 1979, the Department made a general request to employees for submission of reports to fulfill the annual filing requirement. In addition to the submittals made in response to this request, reports have been submitted by new employees of the
Department upon their entry on duty, and by departing employees upon termination of service.
Section 603 requires all employees of the Department to file, except those holding positions at or below Grade GS-12 of the General Schedule which have been determined to be of a nonregulatory and nonpolicymaking nature. In accordance with section 603(c) of the Act, the Department published a notice in the Federal Register identifying specific positions and classes of positions that meet these criteria and are therefore exempted from the disclosure requirements of section 603(a) 44 F.R. 24710-24764, April 26, 1979.
Following the first request by the Department in October 1977 for submission of reports, several individual employees, and union locals representing Department employees, challenged the Department’s program to implement the financial disclosure provisions of the Act and Executive Order 11222. AFGE Local 421 v. Schlesinger (443 F. Supp. 431; D.D.C. 1978). The challenge focused on Part B of Form DOE-459, which requires submission of financial interest information similar to that required of all Federal employees pursuant to respective agency regulations issued in accordance with the Executive Order and implementing Civil Service Commission
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(now Office of Personnel Management) regulations. (That portion (Part A) of the Form implementing only section 603 of the Act was not challenged and was found by the court to be “amply supported by section 603(b)” of the Act.)
With regard to the challenged portion of the Form, the court held that section 1(a) of Part B was an unconstitutionally broad invasion of employees’ First Amendment rights, and that portion of the Form was ordered to be stricken. Further, with regard to the remainder of Part B of the Form, the court rejected the Department’s argument that regulations of predecessor agencies remained in effect pursuant to section 705 of the Act, and ordered the Department to make no further use of Part B until it proceeded in accordance with Civil Service Commission regulations at 5 C.F.R. Part 735, and secured Commission approval and published notice in the Federal Register.
Regulations required to be issued pursuant to section 603(b)(1) of the Act were in preparation at the time of the litigation discussed above. After consultation between the Department and the Civil Service Commission they were published for public comment and review on October 19, 1978 and final regulations taking into account comments received from the public and from within the Department were published on April 26, 1979 (10 C.F.R. Part 1010; 44 F.R. 24969 ff.) Under these regulations, Section I of Part B (DOE Form GC-459) has been altered to exempt from the required financial interest data any information relating to a professional society or a charitable, religious, social, fraternal, recreational, public service, civic, or political organization, or any similar organization not conducted as a business enterprise.
Other Sections of the Act
In accordance with section 601(c)(1) of the Act, the Department prepared and published a list of persons determined to be energy concerns as defined in section 601(b) of the Act. The list was made available to employees by memorandum of March 2, 1978, and includes approximately 22,900 entities. The names on the list include persons, businesses, companies, corporations and other entities engaged in energy-related activities as described in section 601(b) of the Act. Nearly all entities were selected through use of Standard Industrial Classification (SIC) numbers, as published in the Standard Industrial Classification Manual, 1972, prepared by the Statistical Policy
Division, Executive Office of the President, Office of Management and Budget.
Employees were cautioned that the list should not be considered all-inclusive. The energy concern list is undergoing continuous review, with re-publica-tion anticipated in calendar year 1980. The Assistant General Counsel for Standards of Conduct continues to assist DOE employees with questions as to the energy concern status of particular firms.
Section 602(a) of the Act prohibits supervisory employees from knowingly receiving any compensation from, or holding any official relation with, any energy concern, or holding stocks or bonds of any energy concern, or having any pecuniary interest therein. As a result of the review of financial interest reports submitted by supervisory employees, several employees were directed to divest themselves of energy concern holdings.
Section 602(c) of the Act provides that where exceptional hardship would result, or where the interest is a pension, insurance or other similarly vested interest, the divestiture requirements of section 602(a) may be waived by the Secretary for such period as he may prescribe. Pursuant to this authority the Secretary has granted several such waivers.
Section 604 of the Act requires supervisory employees of the Department to file a report identifying energy concerns from which they have received compensation in excess of $2500 in any of the previous five (5) calendar years. New employees filling positions classified as supervisory employee positions, as well as current employees being promoted into such positions, are requested to submit the Form DOE-460.
Section 605 of the Act establishes restrictions on post-employment activities of former supervisory employees. The Department regularly provides advice to departing employees regarding these restrictions (and the post-employment restrictions contained in the Ethics in Government Act of 1978) and the requirement in subsection (b)(1) that former supervisory employees file reports of employment with energy concerns on May 15 of the first and second years following termination of Department employment. Several reports have been received covering calendar year 1978 under this provision. The next reporting date is May 15, 1980, covering calendar year 1979.
Section 605 of the Act also provides for the waiver of restrictions placed on former supervisory employees who have outstanding scientific and technological qualifications to engage in otherwise forbidden activities on matters in a scientific or tech
D-2
nological field, where the national interest would be served. During calendar year 1979 several waivers were granted pursuant to this authority.
Section 606 of the Act limits participation by supervisory employees in matters involving former employers that are energy concerns. Waiver of these limitations is allowed where the application of the limitation would work an exceptional hardship on the employee or would be contrary to the national interest. No waivers were granted in calendar year 1979 pursuant to this authority.
Section 607 of the Act provides that reports submitted pursuant to Title VI shall be available to the public. The Department’s policy is to release copies of reports to individuals upon request. During calen
dar year 1979 several requests were received from the media and a private citizens’ group for copies of reports submitted by DOE employees. Publicly available portions of the Forms DOE-459 and DOE-460 were released in response to these requests.
Section 608 of the Act establishes civil and criminal penalties for violation of the reporting and other requirements of Title VI. No actions have been taken by the Department pursuant to this authority.
The Assistant General Counsel for Standards of Conduct is developing in conjunction with the Office of Personnel a system to include financial interest reporting information in the separation process for departing employees in order to facilitate the submittal and review of required reports.
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Appendix E
Financial Assistance Programs for Alternative Fuel Demonstration Facilities
Introduction
The Department of Energy Act of 1978—Civilian Applications (Public Law 95-238, Section 207) amends the Federal Non-Nuclear Energy Research and Development Act of 1974 (Public Law 93-577) to authorize the Department of Energy (DOE) to financially support alternative fuel demonstration facilities. These amendments (Section 19 of the 1974 Act) require DOE to report to the Congress annually on the opportunities and alternatives for implementing an alternative fuel financial assistance program and to report on DOE’s specific program plans and recommendations.
Appendix E outlines DOE’s existing financial assistance authority and describes current program development.
Specifically, the section 19 amendments authorize DOE to:
1.	Provide loan guarantees for financing the construction and startup costs of demonstration facilities converting domestic coal, oil shale, biomass, and other domestic resources into alternative fuels.
2	. Enter into cooperative agreements to share the estimated design, construction, operating, and
maintenance costs of modular facilities converting oil shale into alternative fuels.
3.	Provide community impact assistance in the form of grants, loan guarantees, and direct loans to support planning and community development efforts in areas impacted by demonstration facilities.
4.	Provide loan guarantees for financing the construction and startup costs of demonstration facilities generating desirable forms of energy, including synthetic fuels, from municipal or industrial wastes, sewage sludge or other municipal organic wastes
5.	Provide interest differential assistance on taxable obligations, guaranteed by DOE, which are issued by governments that would otherwise issue tax exempt obligations for financing municipal or industrial waste demonstration facilities.
Program Development
Congress appropriated $2,208 billion in 1980 to permit DOE to implement this financial assistance program. An amount not to exceed $500 million is to be available for a reserve to cover defaults from loan
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guarantees issued. The indebtedness guaranteed under this appropriation shall not exceed $1.5 billion.
Since the passage of section 19 in September 1978, DOE has prepared for an alternative fuel financial assistance program by drafting regulations and developing evaluation criteria, specifications for comprehensive programs, and internal management and policy guidelines for possible implementation of loan guarantee programs. DOE’s specific activities include:
1.	The Office of Resource Applications is developing regulations to implement section 19.a-x. DOE published these guidelines for public comment on June 28, 1979. These regulations include community impact assistance provisions, notification and approval procedures for state, local, and Federal officials and agencies, and detailed criteria for loan guarantee agreements.
2.	The Office of Resource Applications has engaged in additional planning efforts to assure that it will be able to proceed with the implementation of a loan guarantee program. These include establishing the administrative framework for a high-Btu coal gasification loan guarantee program, analyzing the critical points in the process of issuing a loan guarantee, and exploring a variety of solicitation options.
3.	The Office of Conservation and Solar Applications is developing regulations to implement section 19.y, as required by law. DOE published these guidelines for public comment on July 18, 1979.
4.	Resource Applications has issued a program interest notice in order to obtain information to assess the feasibility of using low- or medium-Btu gas from coal in a variety of industrial applications of commercial gasification systems. Response to this notice has been useful to DOE as plans are made for a domestic alternative fuels loan guarantee program.
5.	The Office of Financial Policy in the Controller’s office has developed a set of internal financial management procedures and policy guidelines for DOE’s loan guarantee programs. These procedures and policies are in place and will provide the control and analytical framework for an alternative fuel loan guarantee program.
Regulation Development
DOE will proceed to publish final guidelines for the municipal and industrial waste loan guarantee program and publish final guidelines for the generic alternative fuel demonstration loan guarantee program. These actions are expected to be completed by April 1980.
Future Plans
The $1.5 billion loan guarantee authority in the 1980 appropriation will enable DOE to begin laying the foundation for an alternative fuels purchase program and thereby provide an accelerated takeoff of the Administration’s proposed Energy Security Corporation, after it is enacted by Congress.
Energy Security Corporation
DOE also will be providing start-up and technical support for the proposed Energy Security Corporation. The Corporation will be a government-sponsored, congressionally-chartered enterprise, whose sole function will be to provide the Federal assistance necessary to encourage the deployment of large-scale synthetic fuel plants. It is proposed that the Corporation be able to enter in price, purchase and loan guarantees, as well as make direct loans. DOE will play a continuing and important role in providing technical and other support to this vital national undertaking.
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Appendix F
1979, 1980, and 1981
Budget Summaries
Introduction
The DOE missions discussed in this report are energy, science and defense. The energy mission consists of a range of functions: supply research and development; supply production, demonstration and distribution; conservation; information and environment. In addition, there are the overall policy and management functions of the Department. The budget authority granted for these functions in 1979 and 1980 and the President’s request for 1981 are summarized in the tables that follow. All data provided are in millions of dollars.
Table F-l. — Budget authority summary — 1979, 1980, and 1981.
	Budget authority		
	1979	1980	1981
Energy supply: research and technology development..	$3,244.8	(millions of dollars) $3,474.1	$ 3,718.3
Energy supply: production, demonstration and distribution		370.3	592.2	520.5
Conservation		630.8	814.6	1,067.3
Regulation		153.4	270.9	238.8
Energy information		65.6	108.4	116.2
Environment		217.2	235.3	261.1
General sciences		431.0	471.9	522.9
Atomic energy defense activities		I 2,668.0	3,007.8	3,443.2
Policy and management		233.2	274.8	361.8
Adjustments		-154.5	-82.9	—
Suppiementals included		—	-517.2	—
Subtotal	$7,859.8	$8,649.9	$10,250.1
Strategic Petroleum Reserve		3,007.8	0.2	2,404.0
Spent Fuel Storage Fund'		—	300.0	—
Energy Security Reserve		—	2,208.0	—
Total Budget Authority		$10,867.6	$11,158.1	$12,654.1
Activities financed from windfall profits tax2		—	$	69.6	$	180.1
1 Borrowing authority requested in legislation separate from DOE budget request.
2 To be submitted in parallel with DOE Budget.
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Table F-2. — Energy Supply — research and technology development
	Budget authority		
	1979	1980	1981
		(millions of dollars)	
Coal		$ 625.9	$ 791.1	$1,046.9
Petroleum				100.9	61.4	63.8
Gas		33.8	35.6	30.8
Geothermal		156.7	149.4	153.4
Magnetic fusion		355.1	355.6	403.6
Solar applications		127.0	136.8	176.3
Solar technology		358.3	447.3	465.9
Hydropower		28.6	23.7	19.0
Nuclear		1,147.0	1,161.7	889.2
Electric energy storage & systems		99.1	103.7	111.7
Basic research		223.4	251.8	357.7’
Unobligated balance		-11.0	-44.0	
Total energy supply (R&D)	$3,244.8	$3,474.1	$3,718.3
1 Includes $60.3 for General Purpose Facilities
Table F-3. — Energy supply — production, demonstration, and distribution
	Budget authority		
	1979	1980	1981
Coal		$ 2.3	(millions of dollars)	
		$ 4.3	$ 6.2
Naval petroleum reserves		122.9	72.6	145.4
Solar		28.9	18.5	10.0
Uranium enrichment activities		-21.6	250.5	87.6
Uranium resource assessment		73.3	64.7	35.8
Oil and gas		4.0	12.6	12.2
Multi-resource		13.2	2.0	1.6
Geothermal resource development fund		.2	.2	43.3
Federal leasing		1.1	2.2	3.3
Power marketing administration		146.0	164.6	175.1
Total energy supply—-RD&D	$370.3	$592.2	$520.5
Table F-4. — Conservation
	Budget authority		
	1979	1980	1981
Buildings and community systems		$ 79.3	(millions of dollars) $106.1	$ 97.6
State and local		382.1	456.8	568.6
Industrial		40.0	60.3	58.9
Transportation		99.2	117.5	113.0
Energy impact assistance		20.0	50.0	150.0
Multi-sector		10.2	16.9	29.2
Information		0	7.0	50.0
Total conservation	$630.8	$814.6	$1,067.3
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Table F-5. — Regulation
	Budget authority		
	1979	1980	1981
■ Ji--'	.1		(millions of dollars)	
Coal utilization			 $	10.8	$ 27.5	$ 30.6
Petroleum			 30.2	46.3	41.6
Gas			 25.8	38.9	41.1
Hydro					 10.2	12.5	12.8
Multi-resource			 76.3	145.7	112.7
Total regulation	$153.4	$270.9	$238.8
Table F-6. — Energy information
t <	■*'	Budget authority		
	1979	1980	1981
Information analysis		$ 9.2	(millions of dollars) $ 12.6	$ 13.6
Collection and dissemination		24.3	36.9	37.4
Information validation		6.3	13.3	15.2
Data information services		25.8	45.6	50.0
Total energy information	$65.6	$108.4	$116.2
Table F-7. — Environment
	Budget authority		
	1979	1980	1981
		(millions of dollars)	
Environmental research and development			
Overview and assessment		$ 50.6	$ 56.3	$ 62.8
Biomedical and environmental research		158.5	168.9	187.2
Program direction	;		8.1	10.1	11.1
Total environmental research and development	$217.2	$235.3	$261.1
Table F-8. — General Sciences
	Budget authority		
	1979	1980	1981
		(millions of dollars)	
Life sciences research and nuclear medicine		$ 41.1	$ 42.2	$ 48.6
High energy physics		297.2	325.1	358.8
Nuclear physics		92.7	104.6	115.5
Total General Sciences	$431.0	$471.9	$522.9
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Table F-9. — Atomic energy defense activities
	Budget authority		
	1979	1980	1981
		(millions of dollars)	
Inertial confinement fusion		$ 144.1	$ 194.9	$ 202.0
Naval reactor development		297.9	278.4	305.3
Weapons activities		1,471.4	1,653.8	1,971.9
Verification and control technology		29.8	37.9	41.4
Material production		445.1	512.6	522.5
Nuclear materials security and safeguards		46.1	46.8	50.4
Defense waste management		257.0	283.4	349.7
Unobligated balances		23.4	0	—
Total atomic energy defense activities	$2,668.0	$3,007.8	$3,443.2
Table F-10. — Policy and management
	Budget authority		
	1979	1980	1981
		(millions of dollars)	
Policy analysis and systems studies		$ 12.6	$ 16.5	$ 19.6
Management and support		219.3	263.5	292.4
Institutional and intergovernment relations		30.1	30.6	37.3
In-house energy management		15.1	36.7	56.9
Security investigations		14.7	16.4	17.0
EEO contractor compliance		4.3	0	0
International affairs		6.1	3.5	5.1
Other supporting activities		3.0	3.0	9.0
General purpose facilities		10.6	0	0
Cost of work for others		22.6	25.0	43.8
Miscellaneous revenues		-115.2	-121.7	-131.3
Changes in inventories and working capital		10.0	16.3	12.0
Unobligated balance			-15.0	
Total policy and management	$233.2	$274.8	$361.8
#U-S. GOVERNMENT PRINTING OFFICE : 1980 0-309-473
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