Show an average American the U.S. Environmental Protection Agency’s (EPA) Energy Star logo and 75 percent will say what it stands for. It is not by accident.

Thanks to hefty support from the federal budget, the Energy Star program has to date helped Americans save enough electricity to avoid the need for an estimated 50 new power plants. Even more, the Department of Energy estimates that every federal dollar spent on the Energy Star program resulted in an average savings of at least $75 in consumer energy bills; the reduction of nearly 3.7 tons of carbon dioxide emissions; an investment of $15 in private sector capital; and the contribution of over $60 to the economy.

Yet despite the Energy Star program’s impressive returns, federal spending on the development of new energy-saving technologies continues to fall. Since 1978, public spending on energy research and development (R&D) has declined by nearly 60 percent, according to media reports.

But now that concern is growing over rising energy prices and the effects of climate change, the private sector appears interested in picking up the slack. While venture capital investment in energy is on the rise, overall private investments in energy R&D is about half of what it was in 1990. Yet several large companies are stepping up energy R&D efforts and exploring the profit potential of energy-saving technologies.

Dupont, for example, recently announced plans to spend $800 million on R&D for "green technology." As a result, the company hopes to increase annual revenue from products that improve energy efficiency by $2 billion, and it expects to double annual revenue from renewable resources to at least $8 billion.

GE invested $700 million in clean technologies in both 2004 and 2005, and the blue chip company plans to increase its annual spending on cleantech R&D to $1.5 billion by 2010. In May 2005, GE launched Ecomagination, a corporate initiative to expand its portfolio of cleaner energy products and reduce its own greenhouse gas emissions. Jack Fish, vice president of global manufacturing, GE Consumer & Industrial, leads the company's 148-facility Ecomagination retrofit. Revenues from Ecomagination climbed to more than $10 billion in 2005, up from $6.2 billion in 2004. In addition, GE is working to reduce its greenhouse gas emissions 1 percent by 2012 and improve energy-efficiency 30 percent by the end of 2012.

Panasonic recently formed the Panasonic Home and Environment Co., dedicated to helping improve the health and energy efficiency of homes in the United States. Among its first line of products are Whisper ventilation fans, which are 75 to 400 percent more energy efficient than minimum Energy Star requirements. The fans also improve indoor air quality through whole-house ventilation.

Dan Kammen, founding director of the Renewable and Appropriate Energy Laboratory and co-director of the Berkeley Institute of the Environment, has written extensively about the importance of investing in R&D for both energy efficiency and renewable energy.

“First, the federal government must make it clear that this is a good area to invest in,” Kammen says. “The best way to do that is to put its money where its mouth is and to make some federal investments, ideally in partnership with the private sector, so federal spending can set the tone.

"Second, the rules under which the private sector should lead in this area need to be made clear. Tax incentives for clean energy R&D are very effective, and should be increased, as are production tax credits ... which should be made long-lasting.”

Some members of Congress are working to reduce the uncertainty that comes with energy production tax credits [see "PTC remains tough to pin down," nwcurrent, May 2005].

According to Sen. Pete Domenici (R-N.M.), chair of the Senate Energy and Natural Resources Committee, the federal and private sector together reinvest less than 1 percent of total energy sales back into energy R&D. To help reverse the trend, Domenici, along with Jeff Bingaman (D-N.M.) and Lamar Alexander (R-Tenn.) introduced the Protecting America’s Competitive Edge through Finance (PACE-Finance) Act in early 2006. The proposed legislation would “modernize and make permanent the R&D tax credit.”

In addition, the Energy Policy Act of 2005 calls for $24.2 billion in funding over the next three years for energy research. Under the Energy Policy Act, the U.S. Department of Energy can hold competitions that award prizes to innovators.

Public-private partnerships for energy R&D have also become increasingly important.

According to "Energy Technology Perspectives — Scenarios and Strategies to 2050," a report released by Energy Information Centre, the private and public sector each play different but crucial roles in developing new energy technologies. The authors report the private sector is best suited for providing ongoing R&D for technologies which are already commercially viable, while public funding is best applied to “promising technologies that are not yet commercial.”