Historically, for example, R&D on controlling vehicle emissions to address air quality issues
such as those addressed in the Clean Air Act have been the province of EPA, while R&D on
improving fuel economy to address energy security issues has been the province of DOE. While
fuel economy and emissions characteristics are closely related in actual vehicle operation, R&D
programs at EPA and DOE have not been well coordinated.Many other examples might be cited. During the past 20 years, finding for R&D programs
such as DOE’s Electric and Hybrid Vehicle Program has fluctuated wildly, making it impossible to
sustain a coherent effort to develop hybrid vehicles. And, although Congress outlined clear goals
for bringing alternatively fueled vehicles into the fleet in the Energy Policy Act of 1992, federal
tax policies favor some fuels at the expense of others, without regard for the fuels’ relative energy
content or desirability from an environmental point of view.
PNGV is clearly an attempt to address some of these issues, by coordinating government and
industry R&D efforts toward achieving a commonly agreed-on set of goals; principally, the
development of an 80 mpg prototype vehicle by 2004. Nevertheless, the 80 mpg target appears to
have been chosen more for the technological innovations that will be required than for any direct
relationship to national goals for reduced oil imports or reduced greenhouse gas emissions. While
a super-efficient vehicle would clearly make important contributions to these goals, little thought
has apparently been given to whether the 80 mpg target is the most cost-effective approach. For
example, the same amount of imported oil might be displaced more cheaply through a
combination of a 50 mpg target with a more aggressive alternative fuels program.
The point here is not that a high fuel economy target is wrong, but that appropriate planning
and analysis are lacking that would enable an evaluation of the entire federal R&D program in the
context of broader national goals for air quality, energy security, and reduced potential for global
climate change. This analysis becomes especially important in a tight budget environment in which
PNGV-inspired R&D programs maybe competing with other ongoing programs (e.g., alternative
fuels and heavy duty vehicle research) for the same resources.
Issue 3: Is the federal R&D relationship with industry structured to encourage maximum
innovation?
There is a continuing debate about the way federal R&D finding can best catalyze the
emergence of advanced vehicle technologies. On the one hand, there are advantages to supporting
work by the major automakers and their suppliers, because the automakers are in a position to
rapidly commercialize a successful innovation in mass-market vehicles. On the other hand, many
observers are concerned that federal efforts to develop leapfrog vehicle technologies rely too
heavily on the existing industry, which, they argue, has a considerable stake in maintaining the
status quo. In their view, more agile small and medium-sized companies are best able to
commercialize novel technologies, particularly in niche markets that may be initially too small to
attract the attention of the major automakers.
OTA’s investigations for this study suggest that many small and medium-sized U.S. companies
have developed innovative advanced vehicle technologies not currently being displayed by the