Government expenditures on energy R&D, energy conservation have risen steadily over the past decade, but only two countries, Japan and the United States, are responsible for the bulk of expenditures in this area. Until the mid-1990s, global conservation expenditures were more or less split equally among the transportation, industrial, and residential sectors, but during the past few years, there has been a sharp rise in industrial conservation R&D efforts.
IEA government spending on renewable research and development remained quite stable during the 1990s following a remarkable surge after 1974 that peaked in 1980 but fell steeply during the early 1980s. Nearly half of the renewable energy sources spending in 2000 was directed toward solar photovoltaic (PV) research, with R&D on biomass, wind, and geothermal sources accounting for most of the remaining amount. Small hydro R&D remains pretty much completely absent from the ER&D agendas of IEA countries. Once again, Japan and the United States lead the charge on renewables R&D, together spending nearly three-quarters of the total for IEA countries.
Energy Research and Development expenditures by governments are generally used to fund energy technology development efforts within government laboratories as well as in firms. Government organizations themselves may perform significant amounts of R&D. For example, in the United States, many U.S. Department of Energy (DOE) laboratories have research programs on a range of energy technologies. Relevant R&D is also carried out by other agencies such as the U.S. Department of Defense (DOD) and the National Aeronautical and Space Administration (NASA). For example, work done by DOD and NASA was instrumental in the development of fuel cells. The government’s role may be even more prominent in developing countries. For example, in India, government laboratories and public sector undertakings perform much of that country’s research on coal use, hydrocarbon exploration and processing, electric power generation, and atomic energy.
Governments also fund energy innovation in firms through mechanisms such as R&D contracts, co-operative research and development agreements, and grants for Research and Development or demonstration. Although less common, there are also some examples of government-funded programs on international cooperation in ER&D. A prominent example is the European Union’s program on research, technological development, and demonstration of energy technologies. The focus in the energy component of its Fifth Frame- work program (1998–2002) has been on technologies for cleaner energy as well as on economic and efficient energy, for which approximately 1 billion euros have been budgeted.
