Well, the first thing I'd want to do is find out what are the biggest energy uses around and who is using that energy. People always discuss cars and sometimes larger vehicles come into the picture too, but I'd bet good money (none of Erik's billion though) that the cars and trucks that you see everyday on your way to wherever-you're-going don't amount to even 1/3 of the total energy use in America -- even if your counting just petroleum/fossil fuels.

After I knew where all the energy needs are I'd want to see how those needs could be met more efficiently, and I'd want to know where the energy is being wasted. I live in Florida, and a lot of my energy use (and waste) in terms of dollars goes to my HVAC system. No matter how hard my little Trane tries it just can't get more than a 20 minutes together for a nap. You'd think that better insulation of my home would save me a lot of energy, right? If I didn't have to pay to cool my house, I'd only pay for occasional lighting, water heating, computing and running a few other appliances.

I don't really know where all the nation's energy needs are, but I do know that the military consumes a good deal of fossil fuels. Perhaps cleaning up their act could save us some money too. Imagine a greener military, and you'll be imagining a solution to a big piece of the puzzle.

I am sure that fossil fuels are used in more things than transportation, generating electricity, creating consumer nondurables, and powering our military, but I don't know what those uses are. Furthermore I don't know which of these things use the most fossil fuels in any given month or year. So, I don't really know what would be the best area for energy research. I liked a lot of these ideas -- especially the idea of engineering thermoelectric nanomaterials to convert heat energy into electricity. Florida Power and Light would go out of business if we could generate electricity from heat.

My mistake, I meant to link to the page where I pulled the de-jargoned information from. (I'm definitely not smart enough to really understand what's going on in that paper, either). Here's the right link: Reversible Thermoelectric Nanomaterials.

On another note, I was thinking about this some more, and I decided that before I put any money into anything I would want to discuss this issue with a lot of really smart people. I would want to hear from leading scientists, inventors, and environmentalists - among others - about what is the most efficient, effective, feasible, and environmentally safe technology in the near future for energy production. If it happened to be what I originally suggested, kudos to me, but I'd much rather make the right decision than do what I thought might work.

Erik -- yeah, I know... no answer in here. Sorry. I want to think about this for another day and then I'll be back to comment with an answer. It is one billion dollars after all.

1. Development of nuclear energy (mining, production and refinement, power plant design) for 100% domestic and industrial electricity supply. As Aaron Linville pointed out, modern nuclear energy can be very clean and safe. Nuclear power plants are also space and resource efficient compared to coal.

2. Development of bio-diesel production and refinement processes from various sources for 100% of all devices requiring an engine. Buses, trains, cars, ships, etc. Most modern diesel engines do run OK on bio-diesel, but research to develop bio-diesel specific engines could be undertaken. Research could also be undertaken in the area of how and where we can obtain bio-diesel. From existing waste products, plants, renewable crops, other means not yet thought of perhaps.

I don't like the hydrogen for cars idea.

The rest of the money I would put into nuclear energy research(mainly pebble bed reactors) and converting enriched uranium reactors to use thorium.

Coupling this research would be very effective and efficient at producing electricity (and hydrogen cells through electrolysis). Nuclear power plants already produce ~20% of the electricity in the US and ~70% of power in France, so they're a very proven source of power. Adding efficient thermoelectric devices to convert the massive amounts of extra heat to electricity would reduce the need for huge light water cooling systems that are not very environmentally friendly. Pebble bed reactors using thorium would use a fuel that is much more readily available in the earth's crust, would produce waste that is far less harmful than what is produced by the reactors used today, and, by their nature, would be much safer to operate.

On top of their use in power plants, thermoelectric devices would have an enormous of immediately applicable uses if they can be produced economically. Anything that produces heat would now also produce electricity. Your car engine - any combustion engine, really - would be able to convert all the heat it produces into electricity. The heat escaping from your house in the winter, the heat of your roof during the summer, and the heat coming off of your computer processor could all be used to make electricity.

Oh, and did I mention that thermoelectric devices made from nanomaterials are reversible? That means that by putting electricity into the device you could create both heat and cold just by switching the polarity of the current. Sweet, eh?

I'd like to see the $1B split into three main efforts. The first being fusion research (and more refinement of current fission technologies). The second effort would be hydrogen fuels (in respect for cars where energy needs to be self contained to the vehicle). The third would be an effort to inform people that nuclear power is safe. The goal would be fusion power, but even fission power from advanced reactors such as Peeble Bed Reactors is safe. Doppler broadening simply prevents them from overheating like older light water reactors. Another thing is that people worry about nuclear waste getting into the environment, but the fact is burning coal (56% of supply of electricity for the US) releases radiation into the environment! Speaking of which, this is an interesting fact: the energy content of nuclear fuel released in coal combustion is greater than that of the coal consumed.

To sum it up: hydrogen as a fuel for cars and nuclear energy to make the electricity needed for electrolysis to make the hydrogen (and also to power stuff that just gets plugged into the wall).

Also, as William mentioned, there are important safety concerns with the refueling of vehicles. I'm not worried about the gas tank in a collision, but I am worried about random people at the pump ... (And no, I don't think we'll be going back to full-service stations everywhere. Yes, I know they still have them in some states, but I can't see the gas stations in CA wanting to pay someone to fill tanks.)

I DO NOT want to see self server hydrogen filling stations. Because this is one of the most dangerous steps and because most people cannot be trusted to follow a list of safety instructions on how to use a hydrogen filling system.

Understand that the real problems with biodiesel are that it is quite inefficent to produce. < 1% of all the solar energy is actually converted to used energy, where any reasonable solar cell is about 14-16% (between inefficencies in the solar cell, and large efficencies in an electric motor). The real interesting piece of the biodiesel efficency puzzle is algea. Studies have shown that some algeas produce >10000(?) gallons/acre, where other common crops