Why the Department of Energy doesn't work

I had an interesting discussion with one of my coworkers recently about the possibility of a thorium nuclear reactor.  In a nutshell, the DOE made one, it was melt-down proof, it could not generate material for a bomb, and the fuel is a trace element in coal.  In short, it should have been a shoo-in for more research except for one thing; the DOE wanted to help the DOD make bombs and assist the public sector in installing more light water uranium reactors.  Hence, it was shut down.

Now I cannot determine whether a thorium reactor is feasible and economical, but it illustrates a key problem with the DOE; they are operating under the idea that the reason certain technologies are not succeeding in the marketplace is a simple function of a lack of economies of scale.  Pay for the capital, and you'll get them to a sustainable economy of scale, right?

Wrong.  Consider ethanol distillation; literally thousands of companies around the world (and untold numbers of moonshiners) are distilling ethanol, most of them with a pretty good efficiency.  Most any HVAC technician of appreciable skill can get you set up--at least if it's legal for you.

In the same way, consider the hybrid car or the windmill; after over a century of making electric motors, do we really think that we're going to achieve breakthroughs in technology that reduce the cost by the order of magnitude it would take to make this technology competitive?  Do we think that in a world with Intel, Micron, and a host of others making ever more integrated circuits, we're going to be able to make solar cells that much cheaper?

In short, most DOE funding is chasing a false premise; that the capital costs incurred by startup windmill, vehicle, solar power, and other companies are a unique function of the technology.  In reality, few new energy companies have created any breakthrough technologies.

Now if the DOE were "merely" throwing away forty billion dollars a year, that would be one thing, but let's consider what else we're doing by subsidizing these (thanks Mitt Romney) loser companies; we are reducing the possible payoff for the guy who truly does have a game-changing idea that would revolutionize how we get energy.

In short, the biggest enemy of inexpensive, clean energy is our own Department of Energy.  If you're thinking of places where the federal government might cut spending without hurting the economy, here's a quick forty billion bucks that can be cut.