An investment that paid off 100-fold would make anyone glad. U.S. taxpayers can feel better than that about an even higher return on their investment in measurement standards for fossil fuels, which saved $113 for every dollar spent, while enhancing environmental quality, according to a study released today by the Commerce Department's National Institute of Standards and Technology.
NIST measurement standards for sulfur in fossil fuels have produced a net value to society of more than $409 million since 1984, according to a new economic impact study by the Center for Economic Research of the Research Triangle Institute, a non-rofit science and technology organization.
In addition, NIST sulfur measurement standards have produced more than $78 million in environmental benefits. The study, Economic Impact of Standard Reference Materials for Sulfur in Fossil Fuels, calculated the social (or internal) rate of return for this program to be 1,056 percent. The report also credits NIST for developing the highly accurate sulfur measurement method that made the standards possible.
Fossil fuel producers and users use NIST sulfur measurement standards to verify the accuracy of their measurements of sulfur in coal and petroleum products. NIST distributes about 1,300 different Standard Reference Materials, or SRMs, to assure the accuracy of millions of measurements made daily in medical clinics, manufacturing plants and industrial labs throughout the United States.
The economic impact study calculated benefits from NIST sulfur in fossil fuel SRMs to the coal and fuel extraction, processing and transportation industries, utilities and other industries that burn fossil fuels. The study calculated economic benefits since 1984, including estimated benefits to 2003. Improved production efficiency created benefits worth $401 million. Changes in transaction costs were worth $7.5 million. Improved product quality was valued at $2.7 million. Another benefit to industry is savings of about $1 million on commercial measurement reference materials. NIST spent $3.6 million to develop the SRMs for sulfur in fossil fuels resulting in a net benefit of $409 million.
In addition, the economic impact study found $78.4 million in benefits to the environment. Burning of fossil fuels with high sulfur content is a major contributor to air pollution, including acid rain. Due to improved accuracy in sulfur measurements, the study figures that approximately 5 percent less (4,250 fewer tons) sulfur dioxide will be emitted into the environment each year from gasoline and diesel fuel by 2003. The value of the reduction in sulfur dioxide emissions is based on an Environmental Protection Agency estimate of $4,400 in environmental damage per ton of sulfur dioxide. The environmental benefit was calculated separately from the total economic benefits because it does not directly affect the sulfur measurement supply chain which was the focus of the study.
The bulk of the economic benefits, $401 million, come from improved efficiency in fuel blending, desulfurization and equipment operations in the petroleum and coal industries. The savings come from fuel producers being able to assess more accurately the exact level of sulfur in their products. This efficiency improvement allows them to make products whose sulfur levels more closely match the regulatory limits for sulfur in fuels. If they did not have NIST SRMs, their sulfur measurements would have a wider margin of error. They would have to reduce sulfur levels further to leave a larger buffer below the regulatory limit so a buyer would not reject their products for containing too much sulfur. Larger buffers mean greater effort and higher costs to the fuel producers.
The economic impact study credits NIST chemists for developing an improved method for measuring sulfur that made high-accuracy standards possible. NIST developed the isotope dilution thermal ionization mass spectrometry (IDMS) method for sulfur measurement in 1984. It was recognized as one of the top technical achievements that year with an IR100 award from R&D; Magazine.
The economic impact study is available as an Adobe Acrobat file on the World Wide Web at www.nist.gov/director/prog-ofc/report00-1.pdf. To request a hard copy of the report, send e-mail to denise.herbert [at] nist.gov.
As a non-regulatory agency of the U.S. Department of Commerce's Technology Administration, NIST strengthens the U.S. economy and improves the quality of life by working with industry to develop and apply technology, measurements and standards through four partnerships: the Measurement and Standards Laboratories, the Advanced Technology Program, the Manufacturing Extension Partnership and the Baldrige National Quality Program.