R&D isn’t t violates Energy production it’s pre-production

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3.1 Preproduction

Preproduction activities include research into new technologies, improving existing technologies, and market assessments to identify the location and quality of energy resources.

3.1.1 Research and Development

R&D subsidies to energy are common worldwide, generally through government-funded research or tax breaks. Proponents of R&D subsidies argue that because a portion of the financial returns from successful innovations cannot be captured by the innovator, the private sector will spend less than is appropriate given the aggregate returns to society. Empirical data assembled by Margolis and Kammen supported this claim, suggesting average social returns on R&D of 50% versus private returns of only 20 to 30%.

However, the general concept masks several potential concerns regarding energy R&D. First, ideas near commercialization have much lower spillover than does basic research, making subsidies harder to justify. Second, politics is often an important factor in R&D choices, especially regarding how the research plans are structured and the support for follow-on funding for existing projects.

Allocation bias is also a concern. Historical data on energy R&D (Table III) demonstrate that R&D spending has heavily favored nuclear and fossil energy across many countries. Although efficiency, renewables, and conservation have captured a higher share of public funds during recent years, the overall support remains skewed to a degree that may well have influenced the relative competitiveness of energy technologies. Extensive public support for energy R&D may also reduce the incentive for firms to invest themselves. U.S. company spending on R&D for the petroleum refining and extraction sector was roughly one-third the multi-industry average during the 1956-1998 period based on survey data from the U.S. National Science Foundation. For the electric, gas, and sanitary services sector, the value was one-twentieth, albeit during the more limited 1995-1998 period.

3.1.2 Resource Location

Governments frequently conduct surveys to identify the location and composition of energy resources. Although these have addressed wind or geothermal resources on occasion, they most often involve oil and gas. Plant siting is another area where public funds are used, primarily to assess risks from natural disasters such as earthquakes for large hydroelectric or nuclear installations. Survey information can be important to evaluate energy security risks and to support mineral leasing auctions, especially when bidders do not operate competitively. However, costs should be offset from lease sale revenues when evaluating the public return on these sales. Similarly, the costs of siting studies should be recovered from the beneficiary industries.

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