Thank you, Georgia (Nelson, Chair of NCC).

            As always, it’s a pleasure to meet with the representatives of one of America’s most important industries - an industry that plays such a critical part in maintaining the nation’s energy security and economic vitality.  No modern economy can function without reliable supplies of electricity, every moment of every day, more or less everywhere.  And since half of the electricity in the U.S. comes from coal, I think it is fitting that we meet on a regular basis to discuss the crucial role that coal plays in supplying America’s energy needs.

             I want to take this opportunity to update you on what our Department, and our Administration, have been doing since we last met in March of this year.  I also want to use this occasion to make a rather significant announcement.

            First, however, it seems appropriate to say a word or two about the election results, and what they mean for the future of coal.  As you know, my party took a bit of a “thumping”-- to use the President’s word -- earlier this month.   That means, of course, that in January the Democrats will control both chambers of Congress.  But I believe that there are many areas where we can work together to continue strengthening America’s energy sector.   Last year’s Energy Policy Act was passed with broad bipartisan majorities, and I anticipate that we will continue to have support on both sides of the aisle for implementing its various provisions over the coming years.

            Some of the most significant portions of EPAct include a loan guarantee program for bringing new clean-energy technologies to the market, which our Department is currently setting up… as well as $1.6 billion in new tax credits for clean coal technologies--including new IGCC plants--and advanced gasification projects.

            Which brings me to the announcement I want to make today.

            This morning, the Department of the Treasury announced that nine companies have been granted $1 billion in tax credits under this section of EPAct.  The remaining $650 million will be awarded in a second phase next year.  The firms selected in this round include: Carson Hydrogen Power, Duke Energy, Eon U.S., Mississippi Power Company, Southern Company, Tampa Electric Company, and TX Energy.

            I know that many of the recipients are represented here today, and I’d like to extend my personal congratulations to each of you.

            You may have noticed I mentioned nine recipients, but only read seven names. The IRS guarantees the privacy of tax-related decisions, and taxpayers’ identities; and two of the tax credit recipients chose not to make their information public today.

            A total of 49 applications from 29 states were received -- proposing projects worth $58 billion, and $5 billion in tax credits.  The Treasury Department is responsible for implementing this section of the Energy Policy Act; however, the Energy Department plays an important advisory role – and so our National Energy Technology Laboratory reviewed the applications to help determine if the projects met the statutory requirements, and were technically and economically feasible.

            Some of you may be aware that no IGCC facilities for sub-bituminous coal were selected.  This is because the law stipulated a 99 percent reduction in sulfur for IGCC proposals -- a very worthy goal, but very difficult to achieve for sub-bituminous coal which is already very low in sulfur.  We recognize the critical role that sub-bituminous coal plays in our ability to meet current and future energy needs, so our Department, Congress, and industry are looking at look at ways of addressing this issue.

            These tax credits are a major step forward in implementing EPAct, and will serve as a significant incentive for bringing the latest clean energy technologies to market.

            Making the most of our vast coal resources is a principal reason America’s power costs have historically been among the lowest in the industrial world.  And even though coal use increased by more than 30 percent after the passage of the Clean Air Act in 1990, the average price of electricity in the U.S. declined by 20 percent.  Moreover, technological improvements have lowered emissions of the pollutants sulfur dioxide and nitrogen oxide over the same time period by 34 and 53 percent respectively.   That’s quite an achievement--and it’s something that your industry can be justifiably proud of.

            But there is still work to be done.

            That is why President Bush made clean coal technology a priority from the very beginning of his Administration--committing billions of dollars to fund clean coal projects through every step of the process, from research and development to commercialization.    This includes:

• The research at DOE’s National Energy Technology Laboratory – research that is developing innovative pollution controls, gasification technologies, advanced combustion systems, turbines, and carbon capture and storage technologies.
• It includes the Department’s Clean Coal Power Initiative – where there are partnerships between government and industry to support the development of advanced new clean coal technologies on a demonstration scale.
• It includes $450 million that we are investing over the next 10 years in Carbon Sequestration Regional Partnerships to validate the safety and affordability of long-term carbon storage.  We’re looking at more than a dozen methods including solvents, sorbents, membranes, and metal organic frameworks.
• And it includes the tax credits I just announced -- to promote technologies proven in the laboratory, but which need additional support to become commercialized and cost-competitive.

            All these programs complement one another, and are converging to help us develop, demonstrate and deploy FutureGen--the first ever zero-emissions coal-fired power plant.

            Insofar as global climate change is recognized as at least partly anthropogenic, and insofar as it effects become more noticeable, the costs associated with carbon sequestration will lead to an increase in the price of electricity.  None of us wants that, of course.  So our roadmap for future coal use includes an aggressive strategy for breaking the link between greater coal use and environmental concerns.

            Our Department is mobilizing considerable segments of the nation’s engineering, industrial, and scientific talent for nothing less than the measured elimination of pollution and greenhouse gas emissions from coal-based power generation.

            Step one of the solution is retooling and retrofitting existing plants to improve efficiency.  Because every one percentage point gain in efficiency means two to three percent less CO2 per kilowatt hour, these improvements can play an important part in reducing GHG emissions.  I know that this Council has estimated that raising the efficiency of existing plants can deliver the equivalent of more than 40,000 megawatts of new, cleaner, low-cost power.

            The second step focuses on new plants.  We are particularly excited about stimulating progress in integrated gasification and combined-cycle -- which is the next class of technology that can be made to integrate effectively with carbon sequestration.  IGCC plants would also operate with significantly better fuel efficiency.  The average fuel efficiency of plants running today is about 33% percent… while the expectations for the most advanced pulverized coal and IGCC plants are in the range of 37 to 42% efficiency.

            While all of us here in this room know what a big difference that is, it really doesn’t seem like much to the ordinary person on the street.  Since I like baseball, let me put it this way.  A player who managed to improve his hitting record from .330 to .420 -- and I don’t think anyone has averaged better than .400 in a season since Ted Williams hit .406 in 1941 -- would have accomplished something really amazing.  That’s what we want to achieve with integrated gasification combined-cycle plants.  In fact, we expect that when the technologies currently on the drawing boards are fully realized, the efficiency of IGCC plants could reach close to 60 percent -- something even Ted Williams couldn’t match.

            As I mentioned, all these efforts are converging to build the $1 billion FutureGen Project, which will integrate a range of technologies in one plant for the first time.  Potential sites were narrowed to four this year -- two in Texas, and two in Illinois.  The final site selection will be made next year… with construction set for 2009, and operations planned for 2012.  If we are successful, FutureGen will prove the feasibility of delivering near-zero emission electric power, with carbon sequestration, and a goal of prices no more than 10 percent above the present.

            The FutureGen Alliance includes American Electric Power, Consol Energy, Eon U.S., Foundation Coal, Peabody Energy, PPL Corporation, Rio Tinto Energy, and Southern Company -- I see several of you are here today -- as well as Anglo-American LLC from the U.K., BHP Billiton from Australia, and China Huaneng Group.

            While FutureGen is a U.S. concept, it is clearly an international effort.  On the government side, India and South Korea have agreed to join FutureGen as paying members of the government steering committee.  China has announced its intention to join.  And other nations are also showing interest.

            In addition, FutureGen supports the goals of the international Carbon Sequestration Leadership Forum -- whose 22 members produce almost three quarters of the world’s greenhouse gases.  It supports the work of the Asia Pacific Partnership on Clean Development and Climate, whose six members produce almost half the world’s greenhouse gases.  And it supports the efforts of the G8 Gleneagles Plan of Action on Climate Change, Clean Energy and Sustainable Development.

            As nations around the world face concerns over the environmental impact of energy production, we believe that technology is the key to finding the necessary solutions.  FutureGen is a gateway to more energy with fewer emissions.

            Coal and clean-coal technology are keystones of President Bush’s first-ever integration of our energy and environmental policies which, in the past, often worked toward conflicting goals.  A little more than six years ago as a candidate he said he would invest $2 billion in clean coal technology.  Appropriations to date total about $2.2 billion, with two more years still to go.  And the money we’ve invested is yielding results, and bringing tangible benefits to the environment, the energy sector, and the economy.

            With your continued efforts and cooperation, we are committed to maintaining this momentum - to make coal an even cleaner, more reliable, more affordable part of our nation’s energy portfolio.

            With that, I would be happy to take a few questions.

Location:
Washington DC

Media contact(s):
Craig Stevens, (202) 586-4940