The President's Comprehensive Climate Strategy and the Clean Coal Initiative

MODERATOR:   Good afternoon and welcome to the Foreign Press Center for this afternoon's briefing on U.S. climate change policies and the recently announced Clean Coal Initiative.  This afternoon we have the Chairman of the President's Council on Environmental Quality, James Connaughton, who will begin with a very brief presentation.  And then he'll be happy to take your questions.

MR. CONNAUGHTON:   Good afternoon, everybody.  I'm Jim Connaughton, the Chairman of the White House Council on Environmental Quality.  I serve as the President's senior adviser on environmental, natural resource and energy policy.  I'm here to talk about two things today.  The first is the announcement of our Clean Coal Initiative and the second is to give you just a short snapshot of where we are with respect to implementation of the President's Comprehensive Climate Change Strategy. 

But first on clean coal, we have spent the last four years substantially increasing investment in the next generation of coal technologies that not only makes them very good when it comes to pollution, but makes them extremely efficient and ultimately we are working toward making them emission free, including carbon emissions. 

Today, Treasury Secretary Paulson and Energy Secretary Bodman announced $1 billion in new tax credits that are going to go to nine projects in nine states to actually construct, at a commercial scale, the kind of plants that will make this possible.  This is the first and largest step for the commercial demonstration of the technologies that will enhance our energy security.  They'll be even cleaner than today's cleanest coal plants and then we'll see efficiency gains that reduce greenhouse gases and this will lead to the construction of facilities in which we actually capture the carbon and then find a way to store it underground.

This $1 billion initiative today will be supplemented by another $650 million in tax credits for the next highest performing projects and those will be issued next year.  That comes on top of about $70 million annually we are spending on hard tests to figure out how to store carbon dioxide under the ground.  This investment is larger than that made by any other nation in the world and, in fact, it's probably larger than the rest of the nations of the world combined.  We have had very constructive conversations with counterparts in Asia, in particular China and India.  And I just returned from the first U.S.-EU high-level dialogue on clean development and climate where the subject of coal for the first time was prominently featured along with commitments to take aggressive action on renewal fuels and on efficiency.  That was a very historic step because as is now recognized, given the work we've done on renewables, it remains the case that coal is going to be a fundamental source of energy at least for the next several decades and the need to prove the technologies that will make lower carbon coal possible is of central importance not just to America but also to the world.

We will also be continuing with a series of other clean coal research programs that I'll be happy to talk about if you'd like to know more about that.  And then in the coming year, we'll be issuing new grants and new loan guarantees again, so that the next generation of coal technologies will be available as we add facilities to meet our energy demand.

Now very briefly on the climate policy side, I wanted to let you know where we stand today in America.  In 2002 the President announced a goal of improving the greenhouse gas intensity of our economy by 18 percent by 2012.  That is a goal that would help us avoid more than 500 million tons of carbon dioxide.  To put that in perspective, that's about the same amount that the Kyoto participants would be expected to achieve if they were meeting their targets, so we set a goal that was an equal measure to the rest of the countries in Kyoto combined. 

And today, we just have the estimates recently announced for 2005, we saw greenhouse gas emission growth lower than average.  To put that in perspective, our economy was up 3.2 percent.  While we had substantial population and job growth, our greenhouse gas emissions were up only 0.6 percent.  That's against an annual average of about 1 percent, so this is a banner year in controlling the growth of greenhouse gas emissions. 

What that means on the reverse side is we are moving -- we are ahead of our track in meeting the President's goal.  And I think it's important to note, as you think about the American economy, industrial emissions were barely up.  The emissions that come from factories and from their use of energy were barely up.  Where we see the rise in America of our greenhouse gases, it's more people driving more cars greater distances to service-based jobs and large commercial office buildings.  So as we look at how we make progress on climate change, we have to focus very heavily on those individual consumer choices, its building, its equipment, its other technologies.

Now, to put this progress in perspective, we have international data that runs up to 2004.  The United States during this period saw a slight increase in our emissions -- 1.3 percent.  That was against nearly 10 percent of economic growth.  Just by way of contrast, the European Union had an increase of emissions of 2.1 percent.  So Europe's emissions went up slightly more than the United States emissions.   Japan went up 0.5 percent.  I just note this -- all the major economies of the world had slight increases and that's against much more substantial economic growth, so we're all making about the same rate of progress.

Now, if you put that in terms of intensity, the chart comes out about the same.  The United States -- we improved basically the efficiency of our economy and reduced the rate of growth in our greenhouse gases by about 7.5 percent.  For the EU-25 it was about 4.5 percent improvement.  So as contrasted, the EU -- we're slightly ahead of the EU in progress.  We're not quite as far ahead as -- Japan's a little bit further ahead and Germany and the UK, as individual countries, have done a little bit better but we're all within the same band of progress.

Now, how we've gotten there has been through a whole suite of policies. I won't go into that in detail, but I also want to sort of correct some misperceptions. These policies included mandates -- three tough mandates.  One on automobile fuel economy, one requiring renewable fuels, and one requiring appliances -- new mandatory appliance standards.  I would note last year the United States used more renewable fuel than any other nation on earth.  Last year, the United States installed more renewable energy than any other nation and that trend line in America is increasing; it's not decreasing.

We're also going to have a whole series of tax incentives.  In our energy bill alone, we have more than $10 billion in tax incentives for more efficient cars, more efficient energy systems, nuclear power, and a whole series of other technologies.  This is another broader list just so you can get a feel for what's going on in America.  One I want to highlight, the American Government itself has a new series of programs.  We're going to dramatically improve the efficiency of government energy use to lead the way.  Estimates are we should reduce greenhouse gas emissions by about 40 million tons.  That's one-tenth of the Kyoto commitment, so that would be just from federal facilities alone.  And then we have a whole series of technology partnerships. 

Since 2001, we have gone well beyond the Framework Convention discussions that occur in the UN to establish more than a dozen multilateral technology partnerships, to bring into the marketplace technology such as hybrid electric cars, the next generation of coal, methane capture projects.  There's a whole series of technology partnerships.  And then on the longer term, things like hydrogen and fusion.  And then finally, I'll conclude, we have just completed our action plans, nearly a hundred of them, for the Asia-Pacific Partnership on Clean Development and Climate.  That's six countries, representing 50 percent of the world's economy, population, energy consumption, and greenhouse gas emissions.  With these six countries in these sectors, we are looking forward to dramatically opening up markets for commercialization of technologies that will lower greenhouse gases and improve energy security.  Thank you. 

MODERATOR:   If you would state your name and organization and wait for the mike.  We'll take your questions.  Yes, sir.  Front row here. 

QUESTION:   I'm Brian Beary from Europolitics.  The European Commission is planning to include international flights in its emission trading scheme.  What's your response to this?  Will the U.S. be taking legal action against them on that?

MR. CONNAUGHTON:  We are strongly opposed to the imposition of a tax.  We think it violates trade rules.  It's also not a smart way to find your way to efficiency into aviation.  There are long capital stock turnover cycles for airplanes.  You know, airplanes have 20, 25 years of life.  But if you look historically, the fuel efficiency of airplanes has been cut in half.  I mean, it's improved by 50 percent in contrast with cars, which has stayed flat.  So the aviation sector has already made dramatic progress in becoming more fuel efficient because they have to.  It costs a lot of money to fly people around. 

The CO2 emissions and fuel consumption for passenger mile traveled for airplanes today, the modern airplanes, is the same as for vehicles.  So we think a better approach in aviation is to come up with the partnerships to ensure new purchases that are efficient, but also to relieve congestion in the airways.  And there are many -- there are real restrictions between our markets and also with Asia that causes a tremendous extra consumption of fuel that's unnecessary and a smarter approach, if we want to do something rational and lower costs to the consumer is to go after congestion mitigation, not to impose taxes. 

QUESTION:   It's not a tax, it's a…

MR. CONNAUGHTON:   It's a tax.  I mean, it goes right to the customer, it goes to the bottom line of what it costs to fly.  So you know, let's just call it what it is. It's a tax. 

MODERATOR:   Yes, I have a question from New York.  Go ahead. 

QUESTION:   Yeah.  Olli Herrala from Kauppalehti, Helsinki, Finland.  I'd like to ask one question about the new kind of coal plants.  How clean are the new kinds of coal plants, compared to the old ones?  Can you give us an example?

MR. CONNAUGHTON:  Around the world today most nations, if you're building new coal plants, are building an advanced form of conventional plants.  So let me give you the contrast.  So a modern coal plan is about 35 percent efficient in terms of the use of coal to produce electricity and it captures more than 90 percent of the air pollution, all right.  So they're very clean and they're somewhat efficient. 

The plants we are talking about that will be incentivized by this new tax credit system, these are plants that have the prospect of being 60 percent efficient.  Even if we make halfway progress there, that's the equivalent of getting two power plants for one and two power plants for the same amount of emissions.  So it's an incredible efficiency opportunity which is very important for reducing greenhouse gases.  

In terms of air pollution control, these new plants potentially capture more than 99 percent of the harmful air pollutants.  Now that's different than C02.  We're talking about sulfur dioxide, nitrogen oxide and mercury and some of the toxics that come out of coal-fired power plants.  And so they're extremely clean.  Even as we're trying to prove how to capture the carbon, we'll get significant carbon reductions from the efficiency of these plants and we'll get dramatic cuts in the air pollution from these plants. 

Because they're more efficient, it means they'll probably be used to replace some of the older plants that can then be retired and so you'll get a benefit there as well.  I would note that the $1 billion in tax credits is going to be joined with nearly $10 billion of private sector investment to build these facilities.  So this whole initiative amounts to over $10 billion of effort.  We are looking forward to our counterparts in Europe and hopefully our counterparts in Asia considering doing the same kind of thing. 

And by the way, I very much enjoyed my visit to your country.  We had a very constructive -- in fact, probably one of the most constructive discussions on these issues that I've had in my five years in this job.  So I want to commend your government for their leadership in hosting that meeting. 

MODERATOR:   Do you have a follow-up? 

QUESTION:   What do you think is the reason that --

MODERATOR:   Go ahead.

QUESTION:   -- that the greenhouses -- the amount of greenhouses gases is growing in Finland faster than everywhere else? 

MR. CONNAUGHTON:  I don't know the answer to that question.  But we could follow up on that for you.  It's fairly easy to find out.  There will be fluctuations.  I mean, maybe you had one of your -- I think you have nuclear power stations.  You may have had one that went down, you know, but I don't know.  So we could find that out for you, though. 

MODERATOR:   We have a question here. 

QUESTION:   Thanks.  Li Xin from China 's Caijin Magazine.  First, a question about the details.  You said in your fact sheet that recipients of the (inaudible) category chose not to have the awards announced.  Why do they choose to -- or do they op out?  And another question is about China.  You said the clean coal technology, do you plan to share any of that with China ?  And are there any projects on underway?  Thanks. 

MR. CONNAUGHTON:  On the first question, because these are tax credits, when the federal government awards them to the taxpayer, that is treated as confidential.  We protect the confidentiality of that information.  So the taxpayer has to waive the confidentiality.  I do not know the reasons why two of them did not.  I could give you an example of why they might not.  So I don't know the reason.  But an example is they may be working on other parts of the financing and they want to arrange that first before they publicly disclose that they have the complete package put together.  It may be that they're in the middle of other business transactions that could affect their stock price and they're making sure that they are following the rules of proper public disclosure whereas that might not have been a problem for some of the other companies.  You can rest assured that they will announce when they're ready to announce because for the communities where these plants will be installed, this will be a very huge public benefit.  And so you can expect to hear from them at the quickest and legally most appropriate time. 

In terms of sharing the technology with China, the U.S. was pleased to host the task force on clean coal in Ohio just a few weeks ago where we had 300 power plant engineers from all over the six Asia-Pacific countries, including a huge delegation from China.  And not only did we have the meetings in Ohio to discuss these next generation technologies, but we actually brought the Chinese power plant engineers to a few of the experimental facilities from which these large new commercial facilities will be based.  So we do look forward to a very vigorous exchange of experience with the Chinese Government. 

As I indicated, I was just in China a short time ago and had suggested the possibility that China as it builds several hundred new power stations, might consider dedicating a portion of those to these more advanced technologies.  But that is for your government to determine.  In the meantime, we will try to find a way to lower the cost of these technologies so they can be made more widely available. 

MODERATOR:   Further questions?  

MODERATOR:   Thank you very much.