Demand Subsidies vs. Funding R&D - Characterizing the Uncertain Impacts of Policy for Pre-commercial, Low-Carbon Technologies

Thu, 30 Oct 2008 19:00:00 GMT

This is a seminar presented by DOE/EERE’s Office of Planning, Budget, and Analysis and NREL’s Strategic Energy Analysis Center, featuring Gregory Nemet, Assistant Professor, University of Wisconsin.

Demand subsidies or funding R&D – which works best? During this “bonus” seminar, Gregory Nemet of the University of Wisconsin will talk about his analysis combining an expert elicitation and a bottom-up manufacturing cost model to compare the effects of R&D and demand subsidies. In his work, he modeled the effects on the future costs of a low-carbon energy technology that is not currently commercially available, purely organic photovoltaics (PV). His research found that (1) successful R&D programs reduced costs more than did subsidies, (2) successful R&D enabled PV to achieve a cost target of 4c/kWh, and (3) the cost of PV did not reach the target when only subsidies, and not R&D, were implemented. He’ll also discuss how these results are insensitive to two levels of policy intensity, the level of a carbon price, the availability of storage technology, and uncertainty in the main parameters used in the model. However, a case can still be made for subsidies: comparisons of stochastic dominance show that subsidies provide a hedge against failure in the R&D program.

Gregory Nemet is an assistant professor at the University of Wisconsin in the Nelson Institute for Environmental Studies and in the La Follette School of Public Affairs. He is also a member of the university’s Energy Sources and Policy Cluster and a senior fellow at the Center for World Affairs and the Global Economy. His research and teaching focus on improving understanding of the environmental, social, economic, and technical dynamics of the global energy system. He also teaches courses in international environmental policy and energy systems analysis. He holds a master’s degree and doctorate in energy and resources, both from the University of California, Berkeley. His undergraduate degree from Dartmouth College is in geography and economics.

National Renewable Energy Laboratory 901 D Street SW (adjacent to the Forrestal Building) or 370 L’Enfant Promenade; Ninth Floor.

Please contact Wanda Addison, of Midwest Research Institute (MRI), at [email protected] or 202-488-2202

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