<DOC>
[110th Congress House Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:37639.wais]
THE BENEFITS AND CHALLENGES OF
PRODUCING LIQUID FUEL FROM COAL:
THE ROLE FOR FEDERAL RESEARCH
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON ENERGY AND
ENVIRONMENT
COMMITTEE ON SCIENCE AND TECHNOLOGY
HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
SEPTEMBER 5, 2007
__________
Serial No. 110-51
__________
Printed for the use of the Committee on Science and Technology
Available via the World Wide Web: http://www.science.house.gov
U.S. GOVERNMENT PRINTING OFFICE
37-639 WASHINGTON : 2008
_____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512ÿ091800
Fax: (202) 512ÿ092104 Mail: Stop IDCC, Washington, DC 20402ÿ090001
______
COMMITTEE ON SCIENCE AND TECHNOLOGY
HON. BART GORDON, Tennessee, Chairman
JERRY F. COSTELLO, Illinois RALPH M. HALL, Texas
EDDIE BERNICE JOHNSON, Texas F. JAMES SENSENBRENNER JR.,
LYNN C. WOOLSEY, California Wisconsin
MARK UDALL, Colorado LAMAR S. SMITH, Texas
DAVID WU, Oregon DANA ROHRABACHER, California
BRIAN BAIRD, Washington ROSCOE G. BARTLETT, Maryland
BRAD MILLER, North Carolina VERNON J. EHLERS, Michigan
DANIEL LIPINSKI, Illinois FRANK D. LUCAS, Oklahoma
NICK LAMPSON, Texas JUDY BIGGERT, Illinois
GABRIELLE GIFFORDS, Arizona W. TODD AKIN, Missouri
JERRY MCNERNEY, California JO BONNER, Alabama
PAUL KANJORSKI, Pennsylvania TOM FEENEY, Florida
DARLENE HOOLEY, Oregon RANDY NEUGEBAUER, Texas
STEVEN R. ROTHMAN, New Jersey BOB INGLIS, South Carolina
MICHAEL M. HONDA, California DAVID G. REICHERT, Washington
JIM MATHESON, Utah MICHAEL T. MCCAUL, Texas
MIKE ROSS, Arkansas MARIO DIAZ-BALART, Florida
BEN CHANDLER, Kentucky PHIL GINGREY, Georgia
RUSS CARNAHAN, Missouri BRIAN P. BILBRAY, California
CHARLIE MELANCON, Louisiana ADRIAN SMITH, Nebraska
BARON P. HILL, Indiana PAUL C. BROUN, Georgia
HARRY E. MITCHELL, Arizona
CHARLES A. WILSON, Ohio
------
Subcommittee on Energy and Environment
HON. NICK LAMPSON, Texas, Chairman
JERRY F. COSTELLO, Illinois BOB INGLIS, South Carolina
LYNN C. WOOLSEY, California ROSCOE G. BARTLETT, Maryland
DANIEL LIPINSKI, Illinois JUDY BIGGERT, Illinois
GABRIELLE GIFFORDS, Arizona W. TODD AKIN, Missouri
JERRY MCNERNEY, California RANDY NEUGEBAUER, Texas
MARK UDALL, Colorado MICHAEL T. MCCAUL, Texas
BRIAN BAIRD, Washington MARIO DIAZ-BALART, Florida
PAUL KANJORSKI, Pennsylvania
BART GORDON, Tennessee RALPH M. HALL, Texas
JEAN FRUCI Democratic Staff Director
CHRIS KING Democratic Professional Staff Member
MICHELLE DALLAFIOR Democratic Professional Staff Member
SHIMERE WILLIAMS Democratic Professional Staff Member
ELAINE PHELEN Democratic Professional Staff Member
ADAM ROSENBERG Democratic Professional Staff Member
ELIZABETH STACK Republican Professional Staff Member
STACEY STEEP Research Assistant
C O N T E N T S
September 5, 2007
Page
Witness List..................................................... 2
Hearing Charter.................................................. 3
Opening Statements
Statement by Representative Nick Lampson, Chairman, Subcommittee
on Energy and Environment, Committee on Science and Technology,
U.S. House of Representatives.................................. 6
Written Statement............................................ 7
Statement by Representative Ralph M. Hall, Ranking Minority
Member, Committee on Science and Technology, U.S. House of
Representatives................................................ 9
Written Statement............................................ 10
Statement by Representative Bob Inglis, Ranking Minority Member,
Subcommittee on Energy and Environment, Committee on Science
and Technology, U.S. House of Representatives.................. 7
Written Statement............................................ 8
Prepared Statement by Representative Jerry F. Costello, Member,
Subcommittee on Energy and Environment, Committee on Science
and Technology, U.S. House of Representatives.................. 10
Prepared Statement by Representative Charles A. Wilson, Member,
Committee on Science and Technology, U.S. House of
Representatives................................................ 11
Prepared Statement by Representative Roscoe G. Bartlett, Member,
Subcommittee on Energy and Environment, Committee on Science
and Technology, U.S. House of Representatives.................. 11
Witnesses:
Dr. Robert L. Freerks, Director, Product Development, Rentech,
Inc.
Oral Statement............................................... 13
Written Statement............................................ 14
Mr. John N. Ward, Vice President, Marketing and Government
Affairs, Headwaters Incorporated
Oral Statement............................................... 20
Written Statement............................................ 21
Dr. James T. Bartis, Senior Policy Researcher, RAND Corporation
Oral Statement............................................... 30
Written Statement............................................ 32
Biography.................................................... 37
Dr. David G. Hawkins, Director, Climate Center, Natural Resources
Defense Council
Oral Statement............................................... 38
Written Statement............................................ 39
Biography.................................................... 56
Dr. Joseph Romm, Former Acting Assistant Secretary, Office of
Energy Efficiency and Renewable Energy, Department of Energy;
Senior Fellow, Center for American Progress
Oral Statement............................................... 56
Written Statement............................................ 58
Biography.................................................... 63
Dr. Richard D. Boardman, Senior Consulting Research and
Development Lead, Idaho National Laboratoryq
Oral Statement............................................... 64
Written Statement............................................ 65
Discussion
Water Consumption With Coal-to-Liquids Plants................ 75
CO<INF>2</INF> Emissions..................................... 75
Role of the Federal Government............................... 76
Can We Use the Hydrogen Extracted From This Process?......... 76
Coal-to-Liquids Versus Petroleum............................. 77
Coal Production.............................................. 78
Greenhouse Gas Emissions--Cost and Viability................. 79
Water Usage.................................................. 79
Limitations of Domestic Coal Resources....................... 80
CTL Waste.................................................... 80
Plug-in Hybrids.............................................. 81
Running Aircraft Engines on Coal-to-Liquids.................. 83
Carbon Sequestration......................................... 84
Reasons to Start Investing in Coal-to-Liquids................ 84
Should Carbons Be Taxed?..................................... 85
Price of CO<INF>2.........................................</INF> 85
Why Not Coal-to-Liquid to Help Address Global Warming?....... 86
Is Energy Security Important?................................ 86
Should We Increase Domestic Oil Production?.................. 87
Construction of Power Plants................................. 87
More on Domestic Oil Production.............................. 88
CTL as a Bridging Technology................................. 88
CTL Success in Other Countries............................... 89
Investing in CTL............................................. 90
CTL Emissions................................................ 91
Coal Supply.................................................. 92
More on Investing in CTL..................................... 92
More on CTL Emissions........................................ 93
CTL Commercial Application................................... 93
Carbon Capture and Sequestration............................. 94
Appendix: Answers to Post-Hearing Questions
Dr. Richard D. Boardman, Senior Consulting Research and
Development Lead, Idaho National Laboratory.................... 98
THE BENEFITS AND CHALLENGES OF PRODUCING LIQUID FUEL FROM COAL: THE
ROLE FOR FEDERAL RESEARCH
----------
WEDNESDAY, SEPTEMBER 5, 2007
House of Representatives,
Subcommittee on Energy and Environment,
Committee on Science and Technology,
Washington, DC.
The Subcommittee met, pursuant to call, at 10:05 a.m., in
Room 2318 of the Rayburn House Office Building, Hon. Nick
Lampson [Chairman of the Subcommittee] presiding.
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
hearing charter
SUBCOMMITTEE ON ENERGY AND ENVIRONMENT
COMMITTEE ON SCIENCE AND TECHNOLOGY
U.S. HOUSE OF REPRESENTATIVES
The Benefits and Challenges of
Producing Liquid Fuel From Coal:
The Role for Federal Research
wednesday, september 5, 2007
10:00 a.m.-12:00 p.m.
2318 rayburn house office building
Purpose
On Wednesday, September 5, 2007 the Subcommittee on Energy and
Environment of the Committee on Science and Technology will hold a
hearing to receive testimony on the use of coal to produce liquid fuel,
the status of coal-to-liquid (CTL) technologies and what additional
research, development and demonstration programs should be undertaken
at the Department of Energy or other agencies to better understand the
benefits and barriers to converting coal into transportation fuels.
The Subcommittee will hear testimony from six witnesses who will
speak to a range of policies that warrant consideration before moving
forward with the advancement of the production of synthetic
transportation fuels from coal. Policies for consideration include
carbon dioxide management, infrastructure improvements, water usage,
energy security, energy balance of CTL technologies (energy used and
produced), exhaust emissions, options for using coal with organically
derived feedstocks to produce liquid fuels, coal production
requirements, potential outcomes for consumers, and the appropriate
level of federal investment in CTL technologies. They also will discuss
the technical and economical challenges with meeting any desired policy
objectives as well as the benefits and drawbacks of investing federal
resources in CTL technologies.
Witnesses
Dr. Robert L. Freerks, Director of Product Development Rentech Corp.,
Denver, CO. He will speak to the state of development of CTL
technologies using the Fischer-Tropsch process. He will highlight the
benefits of the commercialization of the F-T process and discuss some
of the challenges.
Mr. John Ward, VP, Marketing and Governmental Affairs Headwaters, Inc.,
South Jordan, Utah. He will discuss the growing global demand for oil
and the need to explore alternative liquid fuel options using the
Nation's abundant coal reserves. He will review the local and global
economic benefits as well as the national security and environmental
benefits.
Dr. James Bartis, Sr., Policy Researcher, RAND Corp., Arlington, VA. He
will address economic and national security benefits of CTL technology
as well as the technical challenges for addressing the carbon dioxide
emissions resulting from the CTL process. He will also provide
suggestions for federal activities needed to address the uncertainties
surrounding CTL technology.
Mr. David G. Hawkins, Director, Climate Center at Natural Resources
Defense Council, Washington, DC. He will speak to the environmental
concerns associated with the adoption of CTL technologies--in
particular, the ``well-to-wheel'' emissions of these new fuels and the
impact on global climate change. He will also address other energy
strategies which still rely on coal, but help to reduce our nation's
carbon dioxide footprint at the same time.
Dr. Richard D. Boardman, The Secure Energy Initiative Head, Idaho
National Laboratory, Idaho Falls, ID. He will discuss water resource
management related to the production of liquid fuels from coal. He will
also address the potential for producing liquid transportation fuels
using coal with organically derived feedstocks.
Dr. Joseph Romm, Center for Energy & Climate Solutions; Center for
American Progress; former Acting Asst. Secretary at Department of
Energy during the Clinton Administration, Washington, DC. He will
address the environmental policy considerations related to advancing
CTL technology. He will focus on the role of CTL technology in a world
with greenhouse gas constraints.
Background
The coal-to-liquids (CTL) process was discovered by German
scientists and used to make fuels during World War II. Since that time,
there has been varying intensity of interest in this technology. As the
price of petroleum and natural gas stays high, there will be an
increasing interest in developing the commercial potential of producing
synthetic liquid fuels from coal.
There are a number of proposed CTL projects in the United States
and overseas, and SASOL in South Africa has a long history with CTL.
According to the 2007 Massachusetts Institute of Technology (MIT)
Report ``The Future of Coal,'' SASOL has been producing 195,000 barrels
per day of liquid fuel using Fischer-Tropsch technology for several
decades. In addition, jet fuel from a gas-to-liquids pilot plant has
already been certified for use by the United States Air Force.
There are two mainstream processes for producing liquid fuels for
transportation applications: direct and indirect. It is generally the
indirect route for liquid fuel production that is discussed in the
United States. A good explanation for the focus on the indirect process
is the fact that SASOL in South Africa has commercialized that
technology increasing the confidence in the indirect approach to
liquefaction. In addition, the MIT Report explains that converting coal
directly to liquid products requires reactions at high temperatures and
high hydrogen pressure. This liquefaction route is very costly due to
the type of equipment needed to operate at these conditions. The MIT
report also states that in general, the direct liquefaction route
``produces low-quality liquid products that are expensive to upgrade
and do not easily fit current product quality constraints.''
Indirect Liquefaction Process
As described by the MIT Report the initial step in the production
of methane, chemicals, or liquids from coal is the gasification of coal
to produce a syngas--this is the same process carried out in Integrated
Gasification Combined Cycle (IGCC) for electricity generation. The
synthesis gas, or syngas, (predominantly carbon monoxide and hydrogen)
is cleaned of impurities and a water gas shift reaction increases the
hydrogen to carbon monoxide ratio. Then, a Fischer-Tropsch reaction
converts a mixture of hydrogen and carbon monoxide to liquid fuels. The
hydrogen and carbon monoxide can be derived from coal, methane or
biomass.
Challenges With CTL
The MIT report states that ``Without CCS (carbon dioxide capture
and storage), Fischer-Tropsch synthesis of liquid fuels emits about 150
percent more CO<INF>2</INF> as compared with the use of crude oil
derived products.'' Requiring these facilities to capture and sequester
the carbon dioxide will make the synfuels more expensive. However, the
MIT report also points out that carbon capture and storage would not
require major changes to the synfuels process or significant energy
penalties because the CO<INF>2</INF> is byproduct in an almost pure
stream and easier to capture and manage.
In addition, questions have been raised about the ability to
guarantee a dependable and sustained market for coal-to-liquid fuels
which could deter private-sector investment. Specifically, industry has
expressed concern that the uncertainty of world oil prices coupled with
the technical risks associated with the operation of the initial
commercial plants and the implementation of carbon dioxide management
options will make private investment difficult to obtain.
CTL plant costs will vary based on location, capacity, construction
climate, product slate and coal type. The Fishcer-Tropsch synthesis
using coal has been criticized as inefficient and thus costly. The MIT
report concludes, ``Today, the U.S. consumes about 13 million barrels
per day of liquid transportation fuels. To replace 10 percent of this
fuels consumption with liquids from coal would require over $70 billion
in capital investment and about 250 million tons of coal per year. This
would effectively require a 25 percent increase in our current coal
production which would come with its own set of challenges.''
Benefits From CTL
Production of domestic liquid fuel would help secure energy
supplies by displacing imports of diesel or jet fuel. Refiners cannot
meet U.S. demand for these fuels so diesel or jet fuel production from
CTL facilities would offset imports.
``Unlike conventional transportation fuels, CTL fuels, made using
an indirect liquefaction process, produce tailpipe emissions that are
almost completely free of sulfur.'' (Coal International--January/
February 2007)
``Carbon dioxide emissions, over the full fuel cycle, can be
reduced by as much as 20 person, compared to conventional oil products,
through the use of carbon capture and storage.'' (Williams & Larson
2003, Princeton University, ``A comparison of direct and indirect
liquefaction technologies for making fluid fuels from coal,'' Energy
for Sustainable Development, Volume VII, No. 4, December 2003).
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
Chairman Lampson. Good morning. This meeting will come to
order. I am pleased to welcome our panel of witnesses here this
morning. As you may recall during the--during our Committee
markup at the end of June Chairman Gordon committed to holding
a hearing on the topic of liquid fuel production from coal. And
I am pleased that we are able to host such an expert panel of
witnesses today to discuss the barriers and benefits of using
our abundant coal resources to produce liquid transportation
fuels.
I understand that many supporting the coal-to-liquid
technology do so at least in part because this technology could
help to decrease oil imports. There is no question that we must
reduce our reliance on foreign oil supplies, and I have worked
to ensure the Federal Government continues to play a role, a
critical role in the development of bio-based fuels as an
alternative to petroleum for transportation fuel.
Achieving greater energy independence will take
collaborative work from a range of experts. We need to fully
explore all of our options for diversifying our fuel use. I
sincerely hope that the urgency to achieve greater fuel supply
diversity, energy independence, and fuel use efficiency will
not lead us to turn a blind eye toward the pressing issue of
global climate change. We have a need to have a comprehensive
strategy to build an energy future that is sustainable.
And I recognize there may be economic and strategic
benefits of advancing coal-to-liquid technologies from both the
regional and the global perspectives. I am also interested in
learning more about the possibility of combining coal with
biomass to produce liquid transportation fuels.
I further understand that converting coal into
transportation fuels helps reduce the emissions coming from our
tailpipes.
However, I am also aware that there are significant
environmental challenges associates with using coal to produce
liquid fuels. I believe it is essential that we continue to
examine our energy strategies with attention to the issue of
global warming and other environmental concerns such as
management of our water resources.
I am also interested in the price implications of creating
a second market for coal that will compete with coal's use in
electricity and the electivity generation and in the projected
lifespan of our coal reserves.
We can't build a coal-to-liquid industry overnight, nor
should we fully embrace coal-to-liquid technology as part of
our energy strategy until we have thoroughly examined all of
the relevant concerns and plotted our next steps sensibly and
in a manner that puts our federal resources to good use.
Again, I would like to welcome our witnesses and say that I
look forward to your testimony and your recommendations for the
Committee.
At this time I would yield to my distinguished colleague
from South Carolina, our Ranking Member, Mr. Inglis, for an
opening statement.
[The prepared statement of Chairman Lampson follows:]
Prepared Statement of Chairman Nick Lampson
I am pleased to welcome our panel of witnesses here this morning.
As you may recall, during our Committee markup at the end of June,
Chairman Gordon committed to hold a hearing on the topic of liquid fuel
production from coal.
I am pleased that we are able to host such an expert panel of
witnesses today to discuss the barriers and benefits of using our
abundant coal resources to produce liquid transportation fuels.
I understand that many supporting the coal-to-liquid technology do
so at least in part because this technology could help to decrease oil
imports. There is no question that we must reduce our reliance on
foreign oil supplies, and I have worked to ensure the Federal
Government continues to play a critical role in the development of bio-
based fuels as an alternative to petroleum for transportation fuel.
Achieving greater energy independence will take collaborative work
from a range of experts. We need to fully explore all of our options
for diversifying our fuel use. I sincerely hope that the urgency to
achieve greater fuel supply diversity, energy independence and fuel use
efficiency will not lead us to turn a blind eye toward the pressing
issue of global climate change.
I recognize there may be economic and strategic benefits of
advancing coal-to-liquid technologies from both the regional and global
perspectives. I am also interested in learning more about the
possibility of combining coal with biomass to produce liquid
transportation fuels. I further understand that converting coal into
transportation fuels helps to reduce the emissions coming from our
tailpipes.
However, I also am aware that there are significant environmental
challenges associated with using coal to produce liquid fuels. I
believe it is essential that we continue to examine our energy
strategies with attention to the issue of global warming and other
environmental concerns such as management of our water resources.
I am also interested in the price implications of creating a second
market for coal that will compete with coal's use in electricity
generation and in the projected lifespan of our coal reserves.
We cannot build a coal-to-liquid industry overnight and nor should
we fully embrace CTL technology as part of our energy strategy until we
have thoroughly examined all of the relevant concerns and plotted our
next steps sensibly and in a manner that puts our federal resources to
good use.
Again, I would like to welcome our witnesses and say I look forward
to your testimony and your recommendations for this committee.
At this time, I would like to yield to my distinguished colleague
from South Carolina, and our Ranking Member, Mr. Inglis for an opening
statement.
Mr. Inglis. Thank you, Mr. Chairman. I appreciate the
opportunity to participate in this hearing.
And this afternoon Coca-Cola and the United Resource
Recovery Corporation will be announcing their intent to build
in Spartanburg, South Carolina the largest bottle-to-bottle
recycling plant in the world. The plant will recycle 100
million pounds of plastic for reuse each year, enough plastic
to make two billion, 20-ounce Coca-Cola bottles. That is a lot
of Coke.
The plant will bring jobs to the South Carolina's fourth
district, require less energy than producing bottles from
unused materials, reduce waste, and lessen carbon dioxide
emissions by one million metric tons over the next ten years.
It wasn't long ago when the best way we knew to deal with
waste from bottles was to dig a hole and bury it. When we found
out that strategy wasn't the best use of resources, nor
environmentally sound, we innovated and started recycling.
I suppose that when we first started realizing the negative
effects of burying our plastic, someone could have and may have
suggested that we just bury the waste in a different place,
maybe at the bottom of the ocean. In retrospect, it is easy to
see that that approach, while newer looking, was equally
problematic.
So, plastics are everywhere, and we learned how to
innovate. In the same way coal is a fact of life in our current
energy situation, and we have an opportunity to innovate to
make it the most efficient, to make the most efficient use of
that resource.
And coal is a lot like those plastics. At one point we
thought burning it in kettle stoves was a good way to heat a
home. Now, the challenges of carbon emissions and greenhouse
gases cause us to rethink that strategy.
I am concerned that we may be headed down the wrong track
here in gasifying coal for transportation use. It makes a lot
of sense to use coal, for example, in Integrated Gasification
Combined Cycle technology that is stationary, and it makes it
so we can produce electricity, and then use that electricity in
things like plug-in hybrids. And we can also generate hydrogen
power out of similar use of that technology by capturing the
hydrogen.
But I have significant concerns about whether this is the
right path, to make it into a liquid and make it a portable
transportation fuel. It seems to me that there are other
portable transportation fuels. We can't put a reactor in our
trunk, and we can't clamp a windmill on the back bumper. So we
need to find some portable energy source for our cars, and
perhaps I could be convinced that coal-to-liquid is a good idea
for transportation purposes, but I come with great skepticism
about whether it would work or whether it is desirable.
So I look forward to hearing the testimony, and Mr.
Chairman, I yield back.
[The prepared statement of Mr. Inglis follows:]
Prepared Statement of Representative Bob Inglis
This afternoon, Coca-Cola and the United Resource Recovery
Corporation will be announcing their intent to build, in Spartanburg,
South Carolina, the largest bottle-to-bottle recycling plant in the
world. The plant will recycle 100 million pounds of plastic for reuse
each year--enough plastic to make two billion 20-ounce Coca-Cola
bottles. The plant will bring jobs to the district, require less energy
than producing bottles from unused materials, reduce waste, and lessen
carbon dioxide emissions by one million metric tons over the next 10
years.
It wasn't that long ago when the best way we knew how to deal with
waste was to dig a hole and bury it. When we found out that that
strategy wasn't the best use of resources, nor environmentally sound,
we innovated and started recycling.
I suppose that when we first started realizing the negative effects
of burying our plastic, someone could have, and may have, suggested
that we just bury the waste in a different place--maybe at the bottom
of the ocean. In retrospect, it's easy to see that that approach, while
newer looking, was equally problematic.
So, plastics are everywhere, and we learned how to innovate around
that reality. In the same way, coal is a fact of life in our current
energy situation, and we have an opportunity to innovate the most
efficient uses of that resource.
Coal's a lot like those plastics. At one point, we thought burning
it in kettle-stoves was a good way to heat a home. Now, the challenges
of carbon emissions and greenhouse gases cause us to re-think that
strategy.
I'm concerned that we may be headed down the wrong track here in
gasifying coal for transportation use. Instead of finding a different
way to burn coal out of a different pipe (car exhaust instead of a
factory smokestack), there's an opportunity to chart a new path. By
encouraging Integrated Gasification Combined Cycle (IGCC) technology,
we can reduce our dependence on foreign oil by utilizing our coal
resource. We can address climate concerns by capturing and sequestering
nearly all of the carbon emissions. Finally, from that coal, we can
produce clean energy--electricity and hydrogen that can fuel plug-in
and hydrogen-powered vehicles.
Before we knew any better, we could talk energy without talking
about climate. We no longer have that luxury. I hope that the coal
developments we encourage take both into account, and support the
American innovative spirit in creating a new energy economy.
Thank you, Mr. Chairman. I yield back.
Chairman Lampson. Thank you, Mr. Inglis.
If there are Members who wish to submit additional opening
statements, your statements will be added to the record at this
point.
Oh, Mr. Hall from Texas, we would recognize you for five
minutes. The Ranking Member on the Full Committee.
Mr. Hall. I am sorry, Mr. Chairman, to be late, but I did
want to give an opening statement, and I was trying to read it
one time before I gave it.
Chairman Lampson. Did you make it?
Mr. Hall. Not quite.
Chairman Lampson. All right.
Mr. Hall. I would like to thank you for having this very,
very important hearing today. You and I are both from energy
states, and we have similar ideas about it. I hope we can get
together.
I have stated a lot of times that coal is an important part
of our domestic energy mix, and it should be and certainly it
should be continued to be so through broadened use and
particularly coal-to-liquids.
One of our witnesses, Dr. Bartis, states in his testimony
that, ``OPEC revenues from oil exports are about $700 billion a
year.'' $700 billion. Now, we are handing countries like
Venezuela, Iran, Libya, Saudi Arabia hundreds of billions of
dollars a year. Why? Well, because unfortunately, there are
those in this country that feel it is better to give $700
billion to unstable foreign governments than it is to invest in
our own country, our own workforce, our own national security,
and our own national independence.
And so today we are talking about coal-to-liquids
technology, of which I have been supportive in this and
previous Congresses. Just this year alone, we have attempted
several times to include common-sense language to bills that
have passed through this committee and onto the House Floor,
language that is, in fact, supported by some of our witnesses'
testimony, but all of which was ultimately defeated.
I know that we have to worry not only about energy supply
but also about the effects of energy exploration, production,
and consumption on our own environment. And I have faith in our
scientists and inventors that they will devise ways to
increasingly reduce emissions from the energy life cycle of
fossil fuels. We have to have fossil fuels. It is ridiculous to
think we are going to do without them or we are about to do
without them.
If we can invent ways of--for humans to live in space, we
can continue to improve the capture and sequestration of carbon
dioxide and other greenhouse gases. I have said it before; we
should use all domestic resources to arrive at energy
independence. We need renewable energy and plug-in hybrids, but
we also need clean coal technology, nuclear power, and
environmentally-responsible exploration and drilling for oil
and natural gas on American soil and in American waters.
While we continue R&D into renewable fuels and alternative
vehicles, we still need fossil fuels in order to maintain the
lifestyle that we Americans deserve and that makes the United
States of America the greatest country in the world. The
alternative is sending our young overseas to take some energy
away from people when we don't have to. We have plenty right
here at home.
Thank you. I yield back my time to a good Chairman.
[The prepared statement of Mr. Hall follows:]
Prepared Statement of Representative Ralph M. Hall
Thank you Chairman Lampson. I would like to thank you for having
this very important hearing today. I have stated many times that coal
is an important part of our domestic energy mix and that it should
continue to be so through broadened use--in particular, coal-to-
liquids.
One of our witnesses, Dr. Bartis, states in his testimony that,
``OPEC revenues from oil exports are about $700 billion a year.'' $700
billion a year. We are handing countries like Venezuela, Iran, Libya,
and Saudi Arabia hundreds of billions of dollars a year. Why? Because
unfortunately, there are those in this country that feel it is better
to give $700 billion dollars to unstable foreign governments than it is
to invest in our own country, our own work force, our national security
and our energy independence.
So today we're talking about coal-to-liquids technology, of which I
have been supportive in this and previous Congresses. Just this year
alone, Republicans have attempted, several times, to include common
sense language to bills that have passed through this committee and on
the House Floor. Language that is in fact supported by some of our
witnesses's testimony, but all of which was ultimately defeated by the
Majority. I know that we have to worry not only about our energy
supply, but also the effects of energy exploration, production and
consumption on our environment. I have faith in our scientists and
inventors that they will devise ways to increasingly reduce emissions
from the energy life cycle of fossil fuels. If we can invent ways for
humans to live in space, we can continue to improve the capture and
sequestration of carbon dioxide and other greenhouse gases.
I've said it before--we need it all. We need renewable energy and
plug-in hybrids, but we also need clean coal technology, nuclear power
and environmentally responsible exploration and drilling for oil and
natural gas on American soil and in American waters. While we continue
R&D into renewable fuels and alternative vehicles, we still need fossil
fuels in order to maintain the lifestyle that we Americans deserve and
that makes the United States of America the greatest country in the
world.
Chairman Lampson. Thank you, Mr. Hall. You did a good job.
Mr. Hall. Would you like me to read it again?
Chairman Lampson. Well, the second time could get better.
Mr. Hall. I do really thank you.
Chairman Lampson. You are welcome. We thank you.
Now I can say that if there are other Members who want to
enter something into the record, you may do so, and we will, it
will be done at this point in the record.
[The prepared statement of Mr. Costello follows:]
Prepared Statement of Representative Jerry F. Costello
Good morning. Mr. Chairman, thank you for calling this important
hearing to examine the benefits and challenges of producing liquid fuel
from coal and to identify necessary research to overcome the challenges
of converting coal to liquids.
In the past several months, Congress has focused on energy reform
and ways to address our dependence on foreign oil while maintaining a
sound environment and national economy. Given the volatility of the oil
and gas markets, it makes sense to develop policies that place a
greater dependence on domestic resources, and coal-to-liquids is one
way to help achieve this goal.
In 2006, the United States ranked as the top world-wide consumer of
oil, consuming 20.6 million barrels of oil per day and importing 12.2
million barrels per day. China was next, consuming 7.3 million barrels
per day and importing 3.4 million barrels per day. While China still
trails the United States in consumption and importation levels, it is
dedicating substantial amounts of funds to coal-to-liquids and other
technology in an effort to become more energy independent.
The United States has an abundant supply of coal, and I firmly
believe coal-to-liquids, particularly in combination with carbon
capture and storage (CCS) and other technologies, is part of the
solution to achieving U.S. energy independence, continued economic
prosperity and improved environmental stewardship.
Fuels produced by coal-to-liquids are cleaner than petroleum-
derived transportation fuels. Coal-to-liquids plants using CCS can
produce fuels with life cycle greenhouse gas emission profiles that are
as good as or better than that of petroleum-derived products.
In February, I joined Chairman Gordon and twenty-five other House
Democrats in sending a letter to Speaker Pelosi and Majority Leader
Hoyer stating our strong commitment to advancing the deployment of
clean coal technologies, including CCS. In order for CCS technology to
become commercially viable, the Federal Government must show it is
committed to funding the necessary research, development, and
demonstration (RD&D) projects.
Mr. Chairman, as you know, I have been a strong advocate for
federal coal initiatives and programs. I intend to continue to work
with my colleagues on both sides of the aisle to ensure we continue to
advance clean coal technology to overcome the technical and economical
challenges for coal-based power plants.
To that end, I am glad we are having today's hearing because it is
imperative that we understand the benefits and the challenges that must
be addressed for coal-to-liquids. I look forward to hearing from the
witnesses on these issues, and specifically their recommendations on
necessary research and development projects that would further clarify
the benefits and challenges in the deployment of coal-to-liquids fuels.
[The prepared statement of Mr. Wilson follows:]
Prepared Statement of Representative Charles A. Wilson
Thank you, Mr. Chairman, for holding this important hearing. I
appreciate having the opportunity to participate this morning.
I would like to welcome today's witnesses; I look forward to
hearing their views on coal-to-liquid (CTL) fuel technology. This
hearing offers us a great opportunity to discuss the positive
implications of the development of CTL fuel technologies, and the role
Congress can play in helping this energy resource become a viable
option in the United States.
With energy prices continuing to rise, it is vital that we work to
find new technologies to aide in reducing our nation's dependence on
foreign energy sources. Coal is our nation's most abundant resource and
must play a role in building our energy future.
CTL fuel conversion is a proven technology that is currently in use
throughout the world. Coal-to-liquid technologies have been used since
World War II, and today, South Africa uses the technology to produce
approximately 40 percent of its transportation fuels.
In fact, in my district, Baard Energy, L.L.C., is in the
development phase of building a 35,000 barrel per day coal-to-liquids
facility in Wellsville, Ohio. The facility's unique design and
operation has the potential to sequester up to 85 percent of all carbon
dioxide produced, and will be capable of producing synthetic jet fuel,
diesel fuel and other valued chemical feedstocks. Additionally, the
Wellsville facility is estimated to have a major impact on the regional
economy, creating up to 200 high-paying plant jobs and 750 new mine
jobs.
While I understand that there are some obstacles to coal-to-liquid
fuels, I believe that they can be overcome with the help of the Federal
Government. That being said, I am excited to bring CTL research and
technologies to the forefront of Congress's discussion on energy
independence and security. Again, thank you all for coming today--I am
looking forward to hearing from you all today and working together in
the future.
[The prepared statement of Mr. Bartlett follows:]
Prepared Statement of Representative Roscoe G. Bartlett
There are a number of important national security and environmental
considerations involved with coal-to-liquids technologies, including
global peak oil, a topic I have discussed many times. This committee
and the Full House have previously addressed the topic of coal-to-
liquid (CTL) technologies on a number of occasions. I appreciate the
opportunity to gather a summary of important actions to date into the
record for this hearing.
In an effort to begin moving forward with research and development
into using coal-to-liquids for energy Republicans in April of this year
offered a Motion To Recommit to H.R. 363, the Sowing the Seeds Through
Science and Engineering Research Act. This language authorized the
Director of the Office of Science at the Department of Energy when
carrying out a program to award grants to scientists and engineers at
the early stage of their careers at institutions of higher education
and research organizations to prioritize grants expanding domestic
energy production and use through coal-to-liquids and advanced nuclear
reprocessing. These grants were for up to five years and at least
$80,000 per year. This language was accepted and approved on the House
Floor by a vote of 264 to 154. H.R. 363 including this language went on
to pass the House Floor that day by a vote of 397-20. Furthermore, H.R.
2272, the 21st Century Competitiveness Act of 2007, which combined
several Science and Technology competitiveness bills, including H.R.
363, passed the House Floor under suspension of the rules and by voice
vote.
At the appointment of conferees on H.R. 2272, the 21st Century
Competitiveness Act of 2007, Ranking Member Hall offered a motion to
instruct conferees asking that the managers on the part of the House at
the conference on the bill be instructed to insist on the language
prioritizing the early career grants to science and engineering
researchers for the expansion of domestic energy production and use
through coal-to-liquids technology and advanced nuclear reprocessing.
This non-binding motion passed the House Floor by a vote of 258 to 167.
Just two days later when the conference report on H.R. 2272 came to
the Floor, with the coal-to-liquids language removed, a motion to
recommit the conference report with instructions using the same
language as the motion to instruct, which passed 258-167 just two days
before, was voted down 199-227. In two days, months of House precedent
was ignored. I am not sure why, but over 50 of my colleagues switched
their vote. I am grateful that today's hearing will allow us to examine
and discuss the implications of federal support for research and
development into the potential for domestic energy to be produced from
coal-to-liquids.
In addition to the actions taken by the House, on June 20, 2007, a
new congressionally mandated report from the National Research Council
of the National Academies of Science was released. It recommends an
increase of about $144 million annually in new federal funding in a
variety of areas to ensure that coal is mined efficiently, safely, and
in an environmentally responsible manner. One of the areas the report
recommended requires additional study is estimates of the amount,
location, and quality of mineable coal. The report indicated that there
is enough coal at current rates of production to meet anticipated needs
through 2030, and probably enough for 100 years. However, the report
concluded that it is not possible to confirm the often-quoted assertion
based upon estimates from the mid-1970's that there is a sufficient
supply for the next 250 years. This range of estimates from 100 years
to 250 years is based upon current use rates. It does not take into
account the increased use rate that would result from coal-to-liquids
technologies. The report noted that actual usage rates of coal could
vary considerably depending upon any regulatory carbon constraints
imposed by federal legislation or international agreements.
I look forward to the testimony of today's witnesses about the pros
and cons of proposals concerning the production of synthetic
transportation fuels from coal and the appropriate role of Federal
Government involvement in any such efforts.
Chairman Lampson. At this time I would like to introduce
our witnesses. We have Dr. Robert Freerks, Director of the--of
Product Development with Rentech Corporation, Dr. James T.
Bartis is a Senior Policy Researcher at the RAND Corporation,
Dr. David G. Hawkins is the Director of the Climate Center at
the National Resources Defense Council. Dr. Joseph Romm is a
Senior Fellow with the Center for American Progress. Dr. Romm
is also former Acting Assistant Secretary of the Office of
Energy Efficiency and Renewable Energy during the Clinton
Administration. Dr. Richard D. Boardman heads the Security, the
Secure Energy Initiative at the Idaho National Laboratory,
Department of Energy, and I was looking for my friend from
Utah, Mr. Matheson, to introduce our last witness, Mr. Ward,
but Mr. Matheson didn't get--come in and say nice things. So,
Mr. Ward, John Ward, is the Vice-President for Marketing and
Governmental Affairs at Headwaters, Inc.
And we welcome all of you. And our witnesses should know
that spoken testimony is limited to five minutes each, after
which the Members of the Committee will have five minutes to
each ask questions.
And we will begin with Dr. Freerks.
STATEMENT OF DR. ROBERT L. FREERKS, DIRECTOR, PRODUCT
DEVELOPMENT, RENTECH, INC.
Dr. Freerks. Thank you. Good morning. I am Dr. Robert
Freerks, Director of Product Development for Rentech. I am a
synthetic organic chemist with 26 years experience in the
science of fuels and for the past eight years have been working
on producing synthetic jet fuel and diesel fuel, utilizing the
Fischer-Tropsch (F-T) process.
Rentech is one of the world's leading developers of
Fischer-Tropsch technologies with 25 years experience building
and operating five plants. Our plant designs are a
straightforward application of proven commercial components.
The process first takes any carbon source, gasifies it to
producing gas, which is fed to Fischer-Tropsch's reactor, and
the raw F-T products are processed into chemical feedstocks,
diesel, jet fuel, and NAPTHA.
The process captures CO<INF>2</INF> and other contaminants
at several stages. F-T can be a significant element of the
solution for the dual energy challenges facing America,
dependence on imported crude oil, and the need to reduce our
greenhouse gas emissions. Given the abundance of domestic
feedstocks and the proven track record of the technology, F-T
fuels can greatly help reduce oil imports and Rentech will lead
the way.
Along with our commitment to energy security, Rentech is
dedicated to reducing greenhouse gas emissions. CO<INF>2</INF>
capture is inherent in the Rentech process, although the only
obstacle to significant carbon emissions reductions is
sequestration. Rentech has teamed with Denbury Resources, a
company that is leading in the way on CO<INF>2</INF>
sequestration and enhanced oil recovery (EOR).
When used for EOR, CO<INF>2</INF> from the production of
one barrel of F-T fuel yields an additional barrel of oil for
marginal oil fuels, resulting in a two-for-one domestic energy
benefit. Rentech fuels are the cleanest liquid transportation
fuels available.
As you can see from the containers in front of you, the
fuels are clearer, they smell like wax, they contain
essentially no sulfur and aromatics, they are non-toxic,
biodegradable, and completely compatible with the fuel
distribution system in engines.
The DOD, a leader in this area, has found F-T fuels to meet
virtually all of their environmental and performance
requirements, including significant particulate matter
reductions up to 96 percent, reduce CO<INF>2</INF> emissions,
and higher performance in advanced aircraft.
Last month the Air Force certified its entire B-52 fleet to
run on a 50/50 blend of F-T jet fuel with conventional jet
fuel, and we look forward to 2011, when that certification is
extended to the entire fleet.
Today the barriers to building large scale coal and pet
coke fed F-T facilities are purely financial. Oil price
volatility continues to discourage potential F-T investors.
Congress should enact policies to help reduce risk and
encourage investment in these plants. And I refer to my written
statement for our recommendations including a regulatory and
legal framework for CO<INF>2</INF> sequestration.
Also, as our nation enters into a regulatory regime for
managing CO<INF>2</INF> emissions, it will be critical that the
system established to account for man-made CO<INF>2</INF> is
beyond reproach. This committee should take the leadership role
in forcing the development of a modern, comprehensive, and
universal model for assessing the life cycle greenhouse gas
emissions for all fuels. Such a life cycle analysis should
consider the latest production technologies and processes, the
energy inputs throughout the production of the raw material,
and through the distribution to the point of sale, including
those of imported oil and other fuels and the emissions
associated with their use.
What I have discussed so far is the current state of coal-
to-liquid (CTL) technology. What I want to discuss next is the
future.
As I described above, the first step in our process is
gasification of the feedstock to produce gas for use in our F-T
reactor. Rentech is in the early stages of developing the next
generation of our process, biomass to liquids (BTL). Unlike
CTL, which has been utilized commercially for decades,
commercialization of BTL faces near-term hurdles. Current
biomass gasification technology is not nearly as advanced as
that of coal gasification. Most manufacturers are just now
investigating the ability of their systems to accept biomass
along with coal.
Advancing new biomass gasification and co-feed technologies
could be greatly expedited with federal support. Biomass
gasification works, and it is our objective to integrate it
into our production process in progressively-increasing
percentages. But for a company such as Rentech or any of the
other U.S.-based F-T fuel developers and their investors, such
risks are not financeable at this time.
Congress can help advance the technology of BTL through the
establishment of a loan or grant program to allow commercial
operators to acquire gasifiers that can be dedicated to testing
various forms of biomass over extended periods and growing
season.
Once biomass has been proven as a viable commercial
feedstock for F-T plants and the plants are connected to carbon
sequestration opportunities such as EOR, as is our Natchez
plant, then it is entirely realistic to envision a process that
absorbs CO<INF>2</INF> from the atmosphere and stores it
underground. This would move transportation fuels and coal from
being a producer of greenhouse gasses to being a net part of
the solution. We view this as the game changer, not only for
Rentech, but for our nation.
Thank you very much for the opportunity to address the
Subcommittee today, and I look forward to answering any
questions.
[The prepared statement of Dr. Freerks follows:]
Prepared Statement of Robert L. Freerks
Honorable Members of the House of Representatives Committee on
Science and Technology, Subcommittee on Energy and Environment, thank
you for the opportunity to testify today on the benefits and challenges
of producing fuels from coal. I am Dr. Robert Freerks, Director of
Product Development for Rentech, Inc. For the past eight years I have
been working on processes for the production of synthetic jet and
diesel fuels from alternative resources utilizing the Fischer-Tropsch
(F-T) process. My educational background is in synthetic organic
chemistry and I have 26 years experience in fuels and related
technologies.
Rentech is one of the world's leading developers of Fischer-Tropsch
technologies. As such, it is the company's vision to develop technology
and projects to transform underutilized hydrocarbon resources such as
coal, petroleum coke, remote or stranded natural gas and biomass and
municipal waste into valuable clean fuels and chemicals that will help
accommodate our nation's growing energy needs. Our company has been in
the business of developing alternative and renewable energy
technologies for more than 25 years, having been initially affiliated
with the Solar Energy Research Institute which became the National
Renewable Energy Laboratory in Golden, Colorado. Rentech's focus is on
the technology for converting synthesis gas, carbon monoxide and
hydrogen, into ultra clean synthetic diesel and jet fuels via the
Fischer-Tropsch process followed by hydroprocessing.
The goal of our efforts is to demonstrate the viability of this
technology for diverse alternative feedstock materials into fungible
transportation fuels in volumes great enough to reduce importation of
crude oil and refined fuel products. Currently the United States
imports approximately 65 percent of our crude oil and fuel products.
Conversion of biomass into first generation biofuels is estimated by
EIA to provide only 11.2 billion gallons in 2012 per year or 458,000
barrels of oil equivalent per day, which would account for about 2.3
percent of today's consumption of 20 million barrels per day. The
largest plants will have a capacity of no more than about 7,000 barrels
per day. Rentech's first plant will produce 30,000 barrels each day or
460 million gallons per year, and it will be scalable to more than
80,000 barrels per day.
Rentech is well aware of the dual energy problems facing America:
The need for independence from imported crude oil; and the need to
reduce the greenhouse gas (GHG) footprint of these fuels. First I'd
like to briefly address energy security. As a company we believe that
the U.S. cannot achieve energy independence without utilization of its
many diverse natural resources, including both renewable and fossil
fuels. Given the current level of our dependence upon imported oil we
must consider all realistic options in solving this problem. But
achieving this goal will take guidance and support from the Federal
Government to protect investors from the consequences market
manipulation by the oil cartel. We must remember that the oil markets
are not free markets and it is not unreasonable to believe that if we
begin to succeed in ending our addiction to foreign oil, the nations
that produce it will try to undermine our efforts at energy
independence by cutting prices. Relying on affordable, abundant
domestic coal helps to mitigate strategic concerns, but does not
eliminate the risk of a price cut intended sustain our addiction to
imported oil.
The benefits to the U.S. in terms of energy security, balance of
payments, and the establishment of the new CTL technology base with an
associated increase in jobs will be substantial and obvious. Projects
that Rentech is developing are located in economically challenged areas
such as our proposed plant in Natchez, Mississippi, and our conversion
of a fertilizer plant in East Dubuque, Illinois. Our hope is that
Washington will make a long-term commitment to a broad suite of
alternative energy solutions; including those utilizing our abundant
coal reserves, but that encourages cooperative efforts across segments
of the alternative fuels industry.
Second, Rentech is committed to developing and deploying
technologies and processes that reduce the GHG emissions associated
with both the production and use of our fuels. We have assembled a
Carbon Leadership Team to address the overall carbon footprint of fuels
production using Rentech's F-T technology. This team which includes all
senior executives, staff scientists and engineers has committed the
company to being a leader in reduction of carbon dioxide emissions from
our projects. A CO<INF>2</INF> solution is a key decision criterion in
advancing a project. The Rentech plant design already incorporates
carbon capture as an integral part of the process, the only obstacle to
significant carbon emissions reductions is sequestration of the
captured carbon dioxide.
But our commitment to CO<INF>2</INF> management does not stop at
the fence. Rentech has already established relationships with companies
that transport and sequester CO<INF>2</INF> using existing Enhanced Oil
Recovery (EOR) technologies that have been proven for over 20 years.
EOR in conjunction with F-T fuels production will increase available
energy by approximately one barrel of crude for every barrel of F-T
fuel produced, increasing oil production from existing North American
fields and further improving our nation's energy security. Pipelines
already exist for the transportation of CO<INF>2</INF> in several areas
of the country and plans are being formulated to extend pipeline
capabilities to cover significant areas of the central and eastern U.S.
Rentech has partnered with Denbury Resources to supply CO<INF>2</INF>
to several locations for EOR sequestration. One sequestration site is
the Gulf Coast Stacked Storage project in Cranfield, Mississippi, part
of the Southeast Regional Carbon Sequestration Partnership (SECARB), a
public-private partnership dedicated to the development and deployment
of carbon sequestration solutions.
But the benefits of Rentech's fuels are not limited to
CO<INF>2</INF>. Rentech fuels will be the cleanest liquid
transportation fuels available. F-T diesel and jet fuel are pure
paraffinic hydrocarbons. This means that they inherently contain
essentially no sulfur and aromatics, two fuel components that have long
been the focus of federal and State environmental protection policies.
The fuels are clear, non-toxic, biodegradable and completely fungible
with current fuels and fuel transportation infrastructure. This means
that no changes are needed to fuel distribution pipelines or engines to
use F-T diesel and jet fuel. (A comparison of the life cycle CO<INF>2</INF>
emissions from diesel fuels produced from coal to diesel fuels produced
from several different qualities of crude oil is shown below as Figure
1.)
The Department of Defense has been a leader in advancing the
development of a U.S.-based Fischer-Tropsch fuels industry. As part of
several conjoined programs, the Department is seeking to encourage the
development of a domestic alternative fuels industry that can provide a
reliable source of fuel for their aircraft, tanks, ships and other
vehicles while reducing emissions. For the sake of simplifying
logistics, these initiatives also aim to reduce the multiple types of
fuels that our military must carry to the battlefield--approximately
nine. This new fuel also must be capable of being stored, transported
and distributed using existing infrastructure. Only fuels produced
using the Fischer-Tropsch process are able to meet all of these
requirements.
Through the Assured Fuels Initiative the Air Force has tested F-T
jet fuel in multiple applications from a diesel engine powered HMMWV
(Hummer) to a B-52 bomber. Last month, the Air Force certified its
entire B-52 fleet to fly on a 50/50 blend of F-T jet fuel and
conventional jet fuel, and is progressing on extending that
certification to all its aircraft by 2011. (See Figure 2 below for a
comparison of particulate emissions from a turbine engine using blends
of conventional and synthetic Fischer-Tropsch jet fuels. Figure 3
illustrates the DOD view of the future use of F-T jet fuel in a
multitude of applications.)
Commercial aviation is also progressing towards full acceptance of
F-T jet fuel in general aviation aircraft. The Federal Aviation
Administration is supporting the Commercial Aviation Alternative Fuels
Initiative (CAAFI) which will oversee the efforts to approve the use of
blends of F-T fuel with conventional jet fuel. This fuel is already in
use in South Africa and all planes flying out of Johannesburg
International Airport have been using a blend of F-T jet fuel and
conventional jet fuel for seven years, including Delta Air Lines that
recently initiated service from Atlanta.
F-T fuels offer numerous benefits for aviation users. The first is
an immediate reduction in particulate emissions. F-T jet fuel has been
shown in laboratory combustors and engines to reduce PM emissions by 96
percent at idle and 78 percent under cruise operation. Validation of
the reduction in other turbine engine emissions is still under way.
Concurrent to the PM reductions is an immediate reduction in CO<INF>2</INF>
emissions from F-T fuel. F-T fuels inherently reduce CO<INF>2</INF>
emissions because they have higher energy content per carbon content of
the fuel, and the fuel is less dense than conventional jet fuel
allowing aircraft to fly further on the same load of fuel.
The fuel also offers increased turbine engine life through lowered
peak combustion temperature. This reduces stress on hot components in
the turbine engine thereby increasing the life of those components.
Fuels that burn cooler may also help to reduce the heat signature of
aircraft, making them less vulnerable to infrared missile attacks.
(Figure 3 shows some of the many applications for F-T jet fuel in
military equipment ranging from tanks to fuel cells to spacecraft.)
Also critical to meeting the needs of aviation, F-T fuels are truly
``drop-in replacements'' for their petroleum-based counterparts,
requiring no new pipelines, storage facilities, or engine
modifications, barriers that have stalled other alternative aviation
fuels programs.
Another advantage to F-T fuels is the maturity of the technology.
Rentech's plant designs are a relatively straight forward application
of existing, proven commercial components that can provide reliable
production of liquid hydrocarbon fuel and chemical products. The
process first takes a carbon source such as coal, gasifies it to carbon
monoxide and hydrogen (known as synthesis gas or syngas), removes
contaminants from this syngas including carbon dioxide, and captures
energy from that process for electricity production. The purified
syngas is then fed to a Fischer-Tropsch reactor where the carbon
monoxide and hydrogen are converted to hydrocarbons. At this stage,
additional carbon dioxide is captured from the recycle stream and
prepared for sequestration. The raw F-T products are further processed
into chemical feedstocks, diesel, jet fuel and naphtha using
conventional refining and distillation technologies. (See Figure 4 for
a simplified process flow diagram.)
Today, the barriers to building large scale commercial F-T
facilities that can cut into the volume of imported oil are purely
financial. The history of the energy business, particularly the oil
industry, is marked by volatility. Investors have long memories and, as
has been said before, ``capital is cowardly.'' Many who are interested
in investing in alternative energy production are looking to Washington
to provide some level of certainty. The cost of a 30,000 to 40,000
barrel per day F-T plant is estimated in the $3 to $6 billion range,
numbers that are often associated with large traditional refineries or
power plants, not alternative energy production.
Federal policies and programs that can help to provide the needed
certainty can take several forms. The first, and most natural, would be
for the Department of Defense to enter into long-term supply contracts
with F-T fuel producers. There are several bipartisan proposals to
enable this, including extension of the Department's contracting
authority from its current five-year limit to 25 years. Next would be
the establishment of a program similar to that proposed by
Representatives Boucher and Shimkus to create a ``price collar''
program which would protect producers from a dramatic drop in oil
prices and taxpayers through a revenue sharing mechanism when prices
exceed a certain level.
Extending the extending the existing alternative fuels excise tax
credit, which covers F-T fuels and is set to expire in the fall of
2009, to 2020 would also provide a level of protection for investors
from potential OPEC price manipulation intended to undermine U.S.
alternative energy programs.
The next area that the Federal Government can assist in is
providing regulatory certainty with respect to CO<INF>2</INF>
sequestration. The DOE should encourage the exploration of options for
managing industrial CO<INF>2</INF> and the Federal Government should
assume responsibility for geologically sequestered CO<INF>2</INF>.
As our nation enters into a regulatory regime for managing CO<INF>2</INF>
emissions, it will also be critical that the system that is established
to account for manmade CO<INF>2</INF> is beyond reproach. This
committee should take a leadership role in forcing the development of a
modern, comprehensive and universal model for assessing the life cycle
greenhouse gas emissions for all fuels. Such a life cycle analysis
should consider the latest production technologies and processes, the
energy inputs throughout production of the raw material through fuel
distribution to the point of sale, including those of imported oil and
other fuels, and the emissions associated with its use. This model
should be applicable across all fuel types and not tailored to consider
only the emissions of a few.
With the exception of improving life cycle analysis science, all of
the incentives that I have listed are to advance deployment of F-T
technology rather than to advance the state of it. To repeat, our
current hurdles are financial much more than technical. But as I
described above, the first step in our process is the gasification of a
feedstock, either coal or petroleum coke, to produce synthetic natural
gas for use in our F-T reactor. While coal and pet coke are the
feedstock of choice today that does not forever have to be the case. As
a company we are agnostic on what feedstock we use, as long as it
works. Rentech is in the early stages of developing the next generation
of our process--biomass-to-liquids. Unlike CTL, which has been utilized
commercially for decades, commercialization of BTL faces near-term
hurdles. Current gasification technology manufacturers and operators
have limited or no experience with biomass gasification on a commercial
scale. Some are just now investigating their ability to feed biomass
along with coal and there is no estimate yet available for how much
biomass could be fed without upsetting the design of the gasifier.
Advancing new biomass gasification technologies could be greatly
expedited with federal support to attract investment. Biomass
gasification works and it is our objective, moving forward, to prove
technologies and processes that allow for an increasing percentage of
our feedstock to come from biomass. Congress can help advance the
technology of BTL through the establishment of loan or grant programs
expressly to allow commercial operators to acquire gasifiers that can
be dedicated to testing various forms of biomass over extended periods
and growing seasons. Coupled with carbon sequestration this holds great
potential to help move fuels production from a process that emits
CO<INF>2</INF> to one that absorbs CO<INF>2</INF>. But for a company
such as Rentech, or any of the other U.S. based F-T fuels developers
and their investors, such risks are not financeable at this time.
There is also a role for the Federal Government in assessing the
regional availability of various biomass supplies. It is currently not
known how much biomass will be available in any given location without
disrupting the ecology of that area or impacting food supply. It is
always assumed that biomass is readily available, but few studies exist
to show that supplying biomass to a major fuels production facility can
be accomplished on a sound economic basis and that this supply can be
sustained for an extended time period. Congress should study of the
availability and cost of biomass in several areas of the U.S. where CTL
plants could be located. The sustainable availability of biomass at
some level is needed if biomass is to be used to reduce the overall
carbon footprint of a CTL facility. There have been assertions that
specific levels of biomass co-feeds are possible. These will remain
academic theories until these questions are answered.
Once biomass has been proven as a viable commercial feedstock for
F-T plants and plants are connected to carbon sequestration
opportunities such as EOR, as is our Natchez plant, then it is entirely
realistic to envision a process that extracts CO<INF>2</INF> from the
atmosphere and stores it underground. This would move transportation
fuels from being a contributor to global warming to being part of the
solution. We view this as a ``game changer'' not only for Rentech but
for our nation.
Thank you very much for the opportunity to address the Subcommittee
today and I look forward to answering any questions you may have for
me.
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
Bibliography
(1) Marano, J.J.; Ciferno, J.P. Life Cycle Greenhouse Gas Emissions
Inventory For Fischer-Tropsch Fuels, U.S. Department of Energy,
National Energy Technology Laboratory, 2001.
(2) Altman, R.L. In House Transportation Committee Hearing on Energy
Independence and Climate Change, Washington, DC 2007.
(3) Corporan, E.; DeWitt, M.J.; Monroig, O.; Ostdiek, D.; Mortimer,
B.; Wagner, M. American Chemical Society, Fuels Chemistry Division
2005, 51, 338.
(4) Harrison, W.; ``The Drivers for Alternative Aviation Fuels''
Presentation, OSD: 2006.
(5) ``The Potential Use of Alternative Fuels for Aviation,'' in
International Civil Aviation Organization, Montreal, Canada, 2007.
http://web.mit.edu/aeroastro/partner/reports/caep7/caep7-ip028-
altfuels.pdf
(6) Maurice, L. ``Alternative Fuels, Aviation and the Environment''
ICAO/Transport Canada Workshop on Aviation Operational Measures for
Fuel and Emissions Reductions, Canada, 2006. http://www.icao.int/icao/
en/env/WorkshopFuelEmissions/Presentations/Maurice.pdf
(7) Reed, M.E.; Gray, D.; White, C.; Tomlinson, G.; Ackiewicz, M.;
Schmetz, E.; Winslow, J. Increasing Security and Reducing Carbon
Emissions of the U.S. Transportation Sector: A Transformational Role
for Coal with Biomass, NETL, 2007.
Chairman Lampson. Thank you, Dr. Freerks.
Mr. Ward.
STATEMENT OF MR. JOHN N. WARD, VICE PRESIDENT, MARKETING AND
GOVERNMENT AFFAIRS, HEADWATERS INCORPORATED
Mr. Ward. Thank you, Mr. Chairman. Members of the
Committee, I am John Ward, Vice President of Headwaters
Incorporated, on whose behalf I am testifying today. I am the
Immediate Past President of the American Coal Council and also
serve on the National Coal Council as appointed by the
Secretary of Energy.
Headwaters is a member of the Coal-to-Liquids Coalition,
which is a broad group of industry, labor, energy technology
developers, and consumer groups. This coalition is interested
in strengthening U.S. energy independence through the greater
utilization of domestic coal to produce clean transportation
fuels.
The prospect of making liquid transportation fuels from
America's abundant coal resources has received significant
attention in recent months, and as with any high-profile policy
debate, this means many misconceptions have arisen. It may be
best at this point to summarize what coal-to-liquids is by
pointing out what it is not.
First of all, coal-to-liquids is not a new kind of fuel.
Any liquid fuel product that can be made from crude oil can be
made from coal. Products from coal-to-liquids plants include
high quality gasoline, diesel fuel, and jet fuel that can be
used in the existing engines without modification of those
engines and can be distributed through out existing fuel
distribution systems.
Second of all, coal-to-liquids is not dirty. In fact, fuels
produced by today's coal-to-liquids processes are exceptionally
clean when compared to today's petroleum-derived fuels. Coal-
to-liquid fuels contain substantially no sulfur. They also
exhibit lower particulate and carbon monoxide emissions. These
fuels also contribute less to the formation of nitrogen oxides
than petroleum-derived fuels, and they are readily
biodegradable.
As for greenhouse gas emissions, coal-to-liquids refineries
generate carbon dioxide in highly-concentrated form, allowing
for carbon capture and storage. Coal-to-liquids refineries with
carbon dioxide capture and storage can produce fuels with life
cycle greenhouse gas emissions profiles that are as good as or
better than the petroleum fuels that they replace.
And finally, coal-to-liquids is not strictly a research and
development effort. The term ``coal-to-liquids'' refers to a
broad class of technologies for making liquid transportation
fuels from coal. Many of these technologies have been known for
decades. Many are being deployed at commercial scale in other
parts of the world. And likewise, carbon capture and storage
technologies are currently being practiced at commercial scale
for enhanced oil recovery operations in many locations around
the globe.
As the Federal Government considers measures to support
coal-to-liquids, it is important to provide two different types
of support.
First, commercialization incentives are needed to speed the
commercial deployment of coal-to-liquids facilities in the
United States with the goal of increasing our nation's energy
security.
Second, research support is needed to continue to improve
the efficiency and environmental performance of coal-to-liquids
technologies, with the goal of making this already clean
resource even cleaner.
Specific areas where continued research and development
support would be beneficial include: number one, utilization of
biomass as a strategy for reducing greenhouse gas emissions.
Number two, improving life cycle assessment tools for
determining greenhouse gas emissions profiles for coal-to-
liquids facilities when compared to other fossil fuel energy
sources.
And number three, expanding methods of carbon capture and
storage beyond the currently available opportunities in the
area of enhanced oil recovery.
The advantages to developing a coal-to-liquids capability
in the United States are numerous, and some of the dollars we
now send overseas to buy oil would be kept at home to develop
American jobs, utilizing American energy resources. We would
expand and diversify our liquid fuels production and refining
capacity using technologies that are already proven.
We would produce clean-burning fuels that can be
distributed through our existing pipelines and service stations
to fuel our existing vehicles with no modifications to their
engines. We would take a real and immediate step toward greater
energy security.
Thank you for the invitation to testify and your interest
in this important topic. I would be happy to answer any
questions.
[The prepared statement of Mr. Ward follows:]
Prepared Statement of John N. Ward
Improving America's Energy Security
Through Liquid Fuels Derived from Coal
Thank you Mr. Chairman. Honorable Members of the Committee, I am
John Ward, Vice President of Headwaters Incorporated, on whose behalf I
am testifying today. I also serve as Immediate Past President of the
American Coal Council and as a member of the National Coal Council as
appointed by the Secretary of Energy.
Headwaters Incorporated is a New York Stock Exchange company that
provides an array of energy services. We are a leading provider of pre-
combustion clean coal technologies for power generation, including coal
cleaning, upgrading and treatment. We are the Nation's largest post-
combustion coal product manager, recycling coal ash from more than 100
power plants nationwide. We have built a large construction materials
manufacturing business and incorporated coal ash in many of our
products. We are currently commercializing technologies for upgrading
heavy oil and have entered the biofuels market by constructing our
first ethanol production facility utilizing waste heat from an existing
coal fueled power plant in North Dakota. Headwaters is also active as
both a technology provider and a project developer in the field of
coal-to-liquid fuels.
Headwaters is a member of the Coal-to-Liquids Coalition--a broad
group of industry, labor, energy technology developers and consumer
groups. This coalition is interested in strengthening U.S. energy
independence through greater utilization of domestic coal to produce
clean transportation fuels.
Summary of Testimony
The prospect of making liquid transportation fuels from America's
abundant coal resources has received significant attention in recent
months. As with any high profile policy debate, this means that many
misconceptions have arisen. It may be best, at this point, to summarize
what ``Coal-to-Liquids'' is by pointing out what it is not:
<bullet> Coal-to-liquids is not a new kind of fuel. Any liquid
fuel product that can be made from crude oil can be made from
coal. Products from coal-to-liquids plants include high quality
gasoline, diesel fuel, and jet fuel that can be used in
existing engines without making any modifications to the
engines or distribution systems for the fuel.
<bullet> Coal-to-liquids is not dirty. In fact, fuels produced
by coal-to-liquids processes are exceptionally clean when
compared to today's petroleum-derived transportation fuels.
Coal-to-liquids fuels contain substantially no sulfur and also
exhibit lower particulate and carbon monoxide emissions. These
fuels also contribute less to the formation of nitrogen oxides
than petroleum derived fuels and they are readily
biodegradable. As for greenhouse gas emissions, coal-to-liquids
refineries generate carbon dioxide in highly concentrated form
allowing carbon capture and storage. Coal-to-liquids refineries
with carbon dioxide capture and storage can produce fuels with
life cycle greenhouse gas emission profiles that are as good as
or better than that of the petroleum-derived products they
replace.
<bullet> Coal-to-liquids is not strictly a research and
development effort. The term ``coal-to-liquids'' refers to a
broad class of technologies for making liquid transportation
fuels from coal. Many of these technologies have been known for
decades and many are being deployed at commercial scale around
the world. Likewise, carbon capture and storage technologies
are currently being practiced at commercial scale for enhanced
oil recovery operations.
As the Federal Government considers measures to support coal-to-
liquids, it is important to provide two different types of support:
<bullet> Commercialization incentives are needed to speed the
commercial deployment of coal-to-liquids facilities in the
United States with the goal of increasing our nation's energy
security.
<bullet> Research support is needed to continue to improve the
efficiency and environmental performance of coal-to-liquids
technologies with the goal of making this already clean
resource even cleaner.
Specific areas where continued research and development support
would be beneficial include:
<bullet> Utilization of biomass as a strategy for reducing
greenhouse gas emissions.
<bullet> Improving life cycle assessment tools for determining
greenhouse gas emissions profiles for coal-to-liquids
facilities when compared to other fossil fuel energy sources.
<bullet> Expanding methods of carbon capture and storage
beyond currently available opportunities in the area of
enhanced oil recovery.
Why Coal-to-Liquids?
It's easy to see why coal-to-liquids is attracting so much
attention these days. In the President's words, the United States is
addicted to oil. U.S. petroleum imports in 2005 exceeded $250 billion.
In the past two years, natural disasters have disrupted oil production
and refining on the U.S. gulf coast. Political instability in the
Middle East and other oil producing regions is a constant threat. Fuel
prices have rapidly escalated along with world oil prices that are
reaching levels unseen since the 1970s energy crisis.
The situation is not likely to get much better in the future.
Global oil demand was 84.3 million barrels per day in 2005. The United
States consumed 20.7 million barrels per day (24.5 percent) and
imported 13.5 million barrels per day of petroleum products. Worldwide
demand for petroleum products is expected to increase 40 percent by
2025 largely due to growing demand in China and India. World oil
production could peak before 2025. Most of the remaining conventional
world oil reserves are located in politically unstable countries.
In contrast, coal remains the most abundant fossil fuel in the
world and the United States has more coal reserves than any other
country. With coal-to-liquids technology, the United States can take
control of its energy destiny. Any product made from oil can be made
from coal. At today's oil prices, coal-to-liquids is economical and has
the power to enhance energy security, create jobs here at home, lessen
the U.S. trade deficit, and provide environmentally superior fuels that
work in today's vehicles. By building even a few coal-to-liquids
plants, the U.S. would increase and diversify its domestic production
and refining base--adding spare capacity to provide a shock absorber
for price volatility.
Coal-to-Liquids Historical Perspective
Headwaters and its predecessors have been engaged in coal-to-
liquids technologies since the late 1940s. Our alternative fuels
division is comprised of the former research and development arm of
Husky Oil and holds approximately two dozen patents and patents pending
related to coal-to-liquids technologies.
The founders of this group included scientists engaged in the
Manhattan Project during World War II. After the conclusion of the war,
these scientists were dispatched to Europe to gather information on
technologies used by Germany to make gasoline and diesel fuel from coal
during the war.
In the late 1940s, this group designed the first high temperature
Fischer-Tropsch conversion plant which operated from 1950 to 1955 in
Brownsville, Texas. It produced liquid fuels commercially at a rate of
7,000 barrels per day. Why did it shut down? The discovery of cheap oil
in Saudi Arabia.
The Arab oil embargo of 1973 reignited interest in using domestic
energy resources such as coal for producing transportation fuels. From
1975 to 2000, Headwaters researchers were prime developers of direct
coal liquefaction technology. This effort, which received more than $3
billion of federal research funding, led to the completion of an 1,800
barrels per day demonstration plant in Catlettsburg, Kentucky. Why did
deployment activities cease there? OPEC drove oil prices to lows that
left new technologies unable to enter the market and compete.
Today, our nation finds itself in another energy crisis. Oil costs
more than $70 per barrel and comes predominantly from unstable parts of
the world. There is little spare production and refining capacity and
our refineries are concentrated in areas susceptible to natural
disasters or terrorist attacks. And once again, our nation is
considering coal as a source for liquid transportation fuels. The
question is: What can we do this time to ensure that the technologies
are fully deployed?
Coal-to-Liquids Technology Overview
From a product perspective, coal-to-liquids refineries are very
similar to petroleum refineries. They make the same range of products,
including gasoline, diesel fuel, jet fuel and chemical feedstocks.
These fuels can be distributed in today's pipelines without
modification. They can be blended with petroleum derived fuels if
desired. They can be used directly in today's cars, trucks, trains and
airplanes without modifications to the engines.
From a production perspective, coal-to-liquids refineries utilize
technologies that have been commercially proven and are already being
deployed in other parts of the world. Two main types of coal-to-liquids
technologies exist. Indirect coal liquefaction first gasifies the solid
coal and then converts the gas into liquid fuels. Direct coal
liquefaction converts solid coal directly into a liquid ``syncrude''
that can then be further refined into fuel products.
To understand how coal-to-liquids technologies work, it is helpful
to focus on the role of hydrogen in fuels. Coal typically contains only
five percent hydrogen, while distillable liquid fuels such as petroleum
typically contain 14 percent hydrogen. The hydrogen deficit can be made
up in two different ways:
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
Direct Coal Liquefaction
Direct coal liquefaction involves mixing dry, pulverized coal with
recycled process oil and heating the mixture under pressure in the
presence of a catalyst and hydrogen. Under these conditions, the coal
transforms into a liquid. The large coal molecules (containing hundreds
or thousands of atoms) are broken down into smaller molecules
(containing dozens of atoms). Hydrogen attaches to the broken ends of
the molecules, resulting in hydrogen content similar to that of
petroleum. The process simultaneously removes sulfur, nitrogen and ash,
resulting in a synthetic crude oil (syncrude) which can be refined just
like petroleum-derived crude oil into a wide range of ultra-clean
finished products.
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
Direct coal liquefaction originated in Germany in 1913, based on
work by Friedrich Bergius. It was used extensively by the Germans in
World War II to produce high octane aviation fuel. Since that time,
tremendous advancements have been made in product yields, purity and
ease of product upgrading.
From 1976 to 2000, the U.S. Government invested approximately $3.6
billion (1999 dollars) on improving and scaling up direct coal
liquefaction. During this time, pilot and demonstration facilities
ranging from 30 to 1800 barrels per day of liquid fuel were built and
operated in the United States. The end result of this effort is the HTI
DCL process developed by Hydrocarbon Technologies Incorporated, a
subsidiary of Headwaters.
In June 2002, the largest coal company in China (Shenhua Group)
agreed to apply the HTI technology for the first phase of a three-phase
multi-billion dollar direct coal liquefaction project. The Shenhua
direct coal liquefaction facility in Inner Mongolia is currently under
construction and is scheduled to startup in 2008. The first phase, as
currently configured, has a capacity of 20,000 barrels per day.
Additional direct coal liquefaction projects are currently being
studied or planned in India, the Philippines, Mongolia and Indonesia.
The Philippines project is based on hybrid technology utilizing both
direct and indirect coal liquefaction.
Indirect Coal Liquefaction
Indirect coal liquefaction is a two-step process consisting of coal
gasification and Fischer-Tropsch (FT) synthesis. Coal is gasified with
oxygen and steam to produce a synthesis gas (syngas) containing
hydrogen and carbon monoxide. The raw syngas is cooled and cleaned of
carbon dioxide and impurities. In the F-T synthesis reactor, the
cleaned syngas comes in contact with a catalyst that transforms the
diatomic hydrogen and carbon monoxide molecules into long-chained
hydrocarbons (containing dozens of atoms). The F-T products can be
refined just like petroleum-derived crude oil into a wide range of
ultra-clean finished products.
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
Indirect coal liquefaction was developed in Germany in 1923 based
on work by Drs. Franz Fischer and Hans Tropsch. During World War II,
the technology was used by Germany to produce 17,000 barrels per day of
liquid fuels from coal.
In 1955, Sasol constructed an indirect coal liquefaction plant at
Sasolburg, South Africa. Additional indirect coal liquefaction plants
were constructed by Sasol in Secunda, South Africa. Today Sasol
produces the equivalent of 150,000 barrels per day of fuels and
petrochemicals using its technology--supplying approximately 30 percent
of South Africa's liquid transportation fuels from coal. Technologies
for indirect coal liquefaction are also being developed and deployed by
Headwaters, Shell, Syntroleum and Rentech.
Indirect coal liquefaction projects are currently being studied or
planned in China, Philippines, Germany, Netherlands, India, Indonesia,
Australia, Mongolia, Pakistan and Canada. In the United States,
indirect coal liquefaction projects are being considered in Alaska,
Arizona, Colorado, Illinois, Indiana, Kentucky, Louisiana, Mississippi,
Montana, North Dakota, Ohio, Pennsylvania, Texas, West Virginia and
Wyoming,
Comparison of Direct and Indirect Coal Liquefaction Products
One of the main differences between direct and indirect coal
liquefaction is the quality of the raw liquid products. Direct coal
liquefaction raw products contain more ring structure. Therefore direct
coal liquefaction naphtha is an excellent feedstock for production of
high-octane gasoline, while direct liquefaction distillate requires
considerable ring opening (mild hydrocracking) to generate on spec
diesel fuel. On the other hand, the straight-chain structure
hydrocarbons produced by indirect coal liquefaction technology results
in high-cetane diesel fuel, but indirect liquefaction naphtha needs
substantial refining (isomerization and alkylation) to produce on spec
gasoline.
Both processes produce low-sulfur, low-aromatic fuels after the
refining step Direct and indirect coal liquefaction can be combined
into a hybrid plant that produces both types of products that can be
blended into premium quality gasoline, jet fuel and diesel with minimum
refining.
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
Indirect coal liquefaction plants usually include combined-cycle
electric power plants because they produce a substantial amount of
steam and fuel gas that can be used to generate electricity. Direct
coal liquefaction plants produce less steam and fuel gas, so they can
be designed to purchase electricity, be self-sufficient in electricity
generation or generate excess power depending on the local market
conditions.
Direct coal liquefaction plants produce more liquid fuel per ton of
coal than indirect plants. However, indirect plants are better suited
for polygeneration of fuels, chemicals and electricity than direct
plants.
The preferred feedstock for direct coal liquefaction plants is low-
ash, sulfur-bearing, sub-bituminous or bituminous coal. Indirect plants
have greater feedstock flexibility and can be designed for almost any
type of coal ranging from lignite to anthracite.
Coal-to-Liquids Environmental Profile
Fuels produced by coal-to-liquids processes are usable in existing
engines without modifications and can be distributed through existing
pipelines and distribution systems. Nevertheless, they are
exceptionally clean when compared to today's petroleum-derived
transportation fuels.
Indirect coal liquefaction fuels derived from the Fischer-Tropsch
process, in particular, contain substantially no sulfur and also
exhibit lower particulate and carbon monoxide emissions. These fuels
also contribute less to the formation of nitrogen oxides than petroleum
derived fuels and they are readily biodegradable.
The production of coal-to-liquids fuels is also environmentally
responsible. Because coal liquefaction processes remove contaminants
from coal prior to combustion, process emissions from coal-to-liquids
plants are much lower than traditional pulverized coal power plants.
Both direct and indirect coal liquefaction plants generate carbon
dioxide in highly concentrated form allowing carbon capture and
storage. Coal-to-liquids plants with carbon dioxide capture and storage
can produce fuels with life cycle greenhouse gas emission profiles that
are as good as or better than that of petroleum-derived products.
A life cycle greenhouse gas emissions inventory for indirect coal
liquefaction diesel was prepared for the U.S. Department of Energy
National Energy Laboratory (NETL) in June 2001. This study compared the
emissions for indirect coal liquefaction (with and without carbon
capture and storage) diesel with conventional petroleum diesel
delivered to Chicago, IL. Some of the results from that study are
summarized in the following table:
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
Life cycle greenhouse gas emission inventories have not been
completed on direct and hybrid coal liquefaction technologies. However,
based on the fact that these technologies have lower plant CO<INF>2</INF>
emissions than indirect coal liquefaction and the CO<INF>2</INF> is in
concentrated form, it can be assumed that direct and hybrid
technologies will have lower life cycle GHG emissions than conventional
petroleum diesel.
Gasification technologies like those that would be used in coal-to-
liquids plants have already demonstrated the ability to capture and
store carbon dioxide on a large scale. For example, the Dakota
Gasification facility in North Dakota captures CO<INF>2</INF> from the
gasification process and transports it by pipeline to western Canadian
oil fields where it is productively used for enhanced oil recovery.
There is also growing interest in utilizing coal and biomass
(agricultural and forestry byproducts) together to further reduce net
carbon dioxide emissions. This is achieved because biomass is
considered a renewable resource and a zero net carbon dioxide emitter.
The co-processing of coal and biomass would allow a much greater scale
of liquid fuel production than an exclusive reliance on biofuels.
The co-processing of coal and biomass in commercial gasification
plants is being done in Europe in the range of 80 to 90 percent coal
and 10 to 20 percent biomass. It is speculated that up to 30 percent of
the feed mix could be in the form of biomass; however there are
economic and logistic issues to consider. Biomass is a bulky material
with low density, high water content and is expensive to transport and
pre-process for gasification. In addition, it tends to be seasonal and
widely dispersed.
Coal-to-Liquids Economics Profile
Coal-to-liquids projects are capital intensive. Direct coal
liquefaction is slightly less capital intensive than indirect coal
liquefaction ($50,000-$60,000/bpd versus $60,000-$80,000/bpd).
Escalating capital costs related to raw materials prices and equipment
availability make small coal-to-liquids projects less economic and may
force some developers to look at larger capacity projects on the order
of 30,000 to 80,000 barrels per day to take advantage of economies of
scale.
High capital costs ($2.5 billion to $6 billion per project) and
large project size (30,000 to 80,000 barrels per day) will dictate
where and how viable coal-to-liquids projects can be built. Multiple
partners will likely be required to spread the risks and costs. These
partners may include coal suppliers, technology providers, product
users, operators, or private equity providers.
Large, low-cost coal reserves (from 500 million tons to over one
billion tons) will be needed; preferably dedicated to the project.
Coal-to-liquids plants can be adapted to handle any kind of coal
through proper selection of the coal gasification technology.
The following graph indicates the impact of plant size on project
economics. Large CTL plants (30,000 to 80,000 barrels per day) can
compete with petroleum-derived products when crude oil prices exceed
$35 to $45 per barrel, not including costs related to carbon capture
and storage. In this case the debt to equity ratio was assumed to be
70:30 and did not include any government incentives on product sales.
This graph is only for discussion purposes. Economic analysis should be
based on site specific conditions for each project.
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
Coal-to-Liquids Commercialization Challenges
Estimates of the potential for coal-to-liquids vary widely. The
Southern States Energy Board that posits the possibility of coal-to-
liquids production exceeding five million barrels per day. The National
Coal Council puts forth the vision of 2.6 million barrels per day by
the year 2030. The Energy Information Administration reference case
forecast projects coal-to-liquids production at about 800,000 barrels
per day by 2030. This forecast assumes real oil prices increase 1.6
percent per annum over the forecast period. If real prices rise 3.6
percent per annum, EIA projects coal-to-liquids production to more than
double to over 1.6 million barrels per day.
Although larger scale coal-to-liquids projects appear to be
economically viable in today's oil price environment, there are still
significant hurdles to get the first projects built. There are no coal-
to-liquids plants operating in the U.S. that would serve as
commercially proven models. Until that happens, financial institutions
will be reluctant to fund multi-billion dollar projects without
significant technology and market performance guarantees. This includes
some assurance that plants will not be rendered uneconomic by oil
producing nations or cartels that may seek to artificially reduce oil
prices just long enough to prevent the formation of this competitive
new industry.
Other nations are moving forward more aggressively to deploy coal-
to-liquids technologies. In China, for instance, the government has
already committed more than $30 billion to commercialization of coal
gasification and liquefaction technologies and construction of the
first plants has begun.
In the United States, Headwaters is one of several companies that
are pursuing development of coal-to-liquids projects using private
sector financing. As an example, one of the projects we are pursuing in
the United States is the American Lignite Energy project located in
North Dakota. American Lignite Energy features ample coal reserves,
highly qualified development partners, and substantial existing
infrastructure to support the facility. The State of North Dakota has
been exceptionally supportive and has already committed $10 million of
matching funds for front end engineering and design activities. But the
project's viability is by no means certain. The task of raising upwards
of $2 billion to build one of the first American coal-to-liquids
refineries is daunting--especially for smaller companies like ours.
Headwaters certainly does not advocate abandoning America's open
and efficient financial markets for a more centralized system like
China's. But the United States should recognize that just because a
technology is no longer a research project does not mean that the free
market is ready to fully embrace it.
As long as oil prices remain high or climb higher, market forces
will lead to the development of a coal-to-liquids infrastructure in the
United States. But that development will come slowly and in measured
steps. If for energy security reasons, the United States would like to
speed development of a capability for making transportation fuels from
our most abundant domestic energy resource, then incentives for the
first coal-to-liquids project are appropriate.
Coal-to-Liquids Potential Commercialization Incentives
Incentives for commercializing coal-to-liquids technologies in the
United States should be constructed to address the market risks that
make financing of the first several plants difficult. For example, one
widely discussed approach would establish an ``oil price collar'' to
guide the government's investment. If oil prices were to drop below a
specified level, the United States would make payments to coal-to-
liquids projects participating in the program to ensure their
viability. Alternatively, if oil prices rose above a higher specified
level, the participating projects would pay back into the program.
Properly constructed, such a program could have a meaningful effect on
addressing the market risk associated with fluctuating oil prices.
The Coal-to-Liquids Coalition has also identified five specific
actions the Federal Government could take to help overcome deployment
barriers:
1. Provide funding, through non-recourse loans or grants, for
Front End Engineering and Design (FEED) activities. These
activities are necessary to define projects sufficiently to
seek project financing in the private sector. FEED for a
billion dollar project can cost upwards of $50 million.
2. Provide markets for the fuel produced by the first coal-to-
liquids plants. Federal agencies like the Department of Defense
are major consumers of liquid fuels. By agreeing to purchase
coal derived fuels at market value, but not lower than a
prescribed minimum price, the government can remove the risk of
reductions in oil prices that could stop development of this
industry.
3. Extend excise tax credit treatment for coal derived fuels.
The recent SAFETEA-LU Bill extended to coal-derived fuels the
approximately 50 cents per gallon excise tax credit that was
originally created as an incentive for ethanol production. But
the provision as now enacted will expire before any coal-to-
liquids facilities could be placed in service.
4. Appropriate funds for loan guarantees authorized in the
Energy Policy Act of 2005 and ensure that those funds are made
available to coal-to-liquids projects.
5. Ensure that industrial gasification tax credits authorized
in the Energy Policy Act of 2005 are also extended to coal-to-
liquids projects.
Combined with support from states and local communities anxious to
see development of coal resources, these actions would help private
industry bridge the deployment gap and establish a coal-to-liquids
capability more quickly for our nation.
Areas Needing Additional Research and Development
Research support is needed to continue to improve the efficiency
and environmental performance of coal-to-liquids technologies with the
goal of making this resource even cleaner.
Headwaters has for a period of over 25 years collaborated with
DOE's National Energy Technology Laboratory (NETL) on a number of
research and development activities related to the direct and indirect
conversion of coal to transportation fuels and chemicals.
Most recently, we have benefited from a number of economic and
technical reports and analyses on coal conversion processes that have
been both created and made public by NETL. Particularly pertinent to
today's discussion is a recently completed study for the Air Force,
showing how coal biomass to liquids (CBTL) processes can be
economically and environmentally competitive, not only in today's
marketplace, but also in the future when the control of greenhouse
gases becomes a national mandate.
Specific areas where continued research and development support
would be beneficial include:
<bullet> Utilization of biomass as a strategy for reducing
greenhouse gas emissions.
<bullet> Improving life cycle assessment tools for determining
greenhouse gas emissions profiles for coal-to-liquids
facilities when compared to other fossil fuel energy sources.
<bullet> Expanding methods of carbon capture and storage
beyond currently available opportunities in the area of
enhanced oil recovery.
Coal-to-Liquids Advantages
The advantages to developing a coal-to-liquids capability in the
United States are numerous. Some of the dollars we now send overseas to
buy oil would be kept at home to develop American jobs utilizing
American energy resources. We would expand and diversify our liquid
fuels production and refining capacity using technologies that are
already proven. We would produce clean-burning fuels that can be
distributed through our existing pipelines and service stations to fuel
our existing vehicles with no modifications to their engines. We would
take a real and immediate step toward greater energy security.
Thank you for the invitation to testify and for your interest in
this important topic. I would be happy to answer any questions.
Chairman Lampson. Dr. Bartis.
STATEMENT OF DR. JAMES T. BARTIS, SENIOR POLICY RESEARCHER,
RAND CORPORATION
Dr. Bartis. Thank you for inviting me to testify.
The United States oil consumers are currently paying about
a half trillion dollars per year for crude oil, and most of
that amount ends up being paid for by households, either
directly or in higher prices for products and services. The
bill averages to almost $5,000 per household per year. More
over, the large amount of wealth transferred--on a global
basis--from oil consumers to oil producers raises serious
national security concerns because some, although certainly not
all, of this revenue is being spent contrary to our foreign
policy interests.
But no less pressing is the importance of addressing the
threat of global climate change. For example, without measures
to address carbon dioxide emissions, the use of coal-derived
liquids to displace petroleum fuels for transportation will
more than double greenhouse gas emissions. And this is clearly
not acceptable.
The emphasis of our research at RAND on unconventional
fuels has concentrated on what is known as the Fischer-Tropsch
coal-to-liquids method. We find this option to be the only
unconventional fuel option that is commercially ready today and
capable of eventually displacing millions of barrels per day of
imported petroleum.
Producing large amounts of unconventional fuels, including
coal-derived liquid fuels, and moving towards greater energy
efficiency will cause world oil prices to decrease. Our
research shows that under reasonable assumptions this price
reduction effort could be very large and would likely result in
large benefits to U.S. consumers and large decreases in OPEC's
revenues.
We have also examined whether a large domestic coal-to-
liquids industry can be developed consistent with the need to
manage carbon dioxide emissions.
If we are willing to accept emission levels that are
similar to those associated with conventional petroleum, the
answer is definitely yes. One technical approach for achieving
parity with petroleum is the capture and sequestration of the
carbon dioxide generated at the plant site.
A second approach involves using a combination of coal and
biomass as we just heard. Fortunately, the second approach is
very low risk, although not quite ready for commercial
production.
Now, given the large demand on OPEC oil that we anticipate
will persist over the next 50 years, this is a very good
answer. We can at least address a major economic and national
security problem while not worsening environmental impacts, at
least on the global scale.
If, however, we demand a significant reduction in the
emission levels as compared to conventional petroleum, the
answer is a qualified yes. The only way we know of reaching
this level of carbon dioxide control when making coal-derived
fuels is to use a combination of coal and biomass as the feed
for the plant and to capture and sequester most of the carbon
dioxide generated at the plant site. The reason I give a
qualified yes is that there does remain considerable
uncertainty regarding the viability of sequestering carbon
dioxide in geological formations.
Against this background of benefits and challenges, federal
R&D has an important role to play. Foremost in priority are
multiple large-scale demonstrations of carbon sequestration.
Our analysis shows that the limiting factor in the growth of a
domestic coal-to-liquids industry will be the time required to
determine whether and how hundreds of millions of tons of
carbon dioxide can be annually sequestered.
The remainder of my recommendations follow from what we at
RAND describe as the middle path to coal-to-liquids
development, namely a path that focuses on reducing
uncertainties, fostering early, but very limited, commercial
experience; and reducing greenhouse gas emissions.
First, Congress should consider providing federal cost
sharing for a few site-specific front-end engineering designs
of commercial plants to convert coal-to-liquid fuels so that
government and private investors have better information on
production costs. At RAND we have learned that when it comes to
cost estimates it is often the case that the less you know the
more attractive the costs.
Second, Congress should consider establishing a flexible
incentive program capable of promoting the construction and
operation of a few early coal-to-liquid plants by our country's
top technology firms. The early plants could also serve as
demonstration platforms for carbon capture and sequestration
and the combined use of biomass and coal.
Third, the current energy R&D program on transportation
fuels in the Department of Energy is too narrowly focused on
hydrogen and ethanol from cellulosic materials. This program
needs to expand to provide adequate support to gasification of
biomass or a combination of coal and biomass.
The most pressing near-term research need centers on
developing a fuel handling and gasification system capable of
accepting both biomass and coal.
Finally, I recommend consideration of a number of important
high-risk, high-payoff research opportunities that are not
being addressed in the current federal program because they
require a longer timeframe for execution, and these
opportunities are covered in my written testimony.
This concludes my remarks. Thank you.
[The prepared statement of Dr. Bartis follows:]
Prepared Statement of James T. Bartis\1\
---------------------------------------------------------------------------
\1\ The opinions and conclusions expressed in this testimony are
the author's alone and should not be interpreted as representing those
of RAND or any of the sponsors of its research. This product is part of
the RAND Corporation testimony series. RAND testimonies record
testimony presented by RAND associates to federal, State, or local
legislative committees; government-appointed commissions and panels;
and private review and oversight bodies. The RAND Corporation is a
nonprofit research organization providing objective analysis and
effective solutions that address the challenges facing the public and
private sectors around the world. RAND's publications do not
necessarily reflect the opinions of its research clients and sponsors.
---------------------------------------------------------------------------
Research and Development Issues for Producing Liquid Fuels From Coal
Mr. Chairman and distinguished Members: Thank you for inviting me
to speak on technical issues associated with the potential use of our
nation's coal resources to produce liquid fuels. I am a senior policy
researcher at the RAND Corporation with more than 25 years of
experience in analyzing and assessing energy technology and policy
issues. At RAND, I am actively involved in research directed at
understanding the costs and benefits associated with alternative
approaches for promoting the use of coal and other domestically
abundant resources, such as oil shale and biomass, to lessen our
nation's dependence on imported petroleum. Various aspects of this work
are sponsored and funded by the National Energy Technology Laboratory
(NETL) of the U.S. Department of Energy, the U.S. Air Force, the
Federal Aviation Administration, and the National Commission on Energy
Policy.
Today, I will discuss the key problems and policy issues associated
with developing a domestic coal-to-liquids industry and the approaches
Congress can take to address these issues. My main conclusions are as
follows. First, successfully developing a coal-to-liquids industry in
the United States would bring significant economic and national
security benefits by reducing energy costs and wealth transfers to oil-
exporting nations. Second, the production of petroleum substitutes from
coal may cause a significant increase in carbon dioxide emissions;
however, relatively low-risk research opportunities exist that, if
successful, could lower carbon dioxide emissions to levels well below
those associated with producing and using conventional petroleum.
Third, without federal assistance, sufficient private-sector investment
in coal-to-liquids production plants is unlikely to occur because of
uncertainties about the future of world oil prices, the costs and
performance of initial commercial plants, and the viability of carbon
management options. Finally, a federal program directed at reducing
these uncertainties; obtaining early, but limited, commercial
experience; and supporting research appears to offer the greatest
strategic benefits, given both economic and national security benefits
and the uncertainties associated with economic viability and
environmental performance, most notably the control of greenhouse gas
emissions.
Some of the topics I will be discussing today are supported by
research that RAND has only recently completed; consequently, the
results have not yet undergone the thorough internal and peer reviews
that typify RAND research reports. Out of respect for this committee
and the sponsors of this research, and in compliance with RAND's core
values, I will present only findings in which RAND and I have full
confidence at this time.
Technical Readiness and Production Potential
As part of RAND's examination of coal-to-liquids fuels development,
we have reviewed the technical, economic, and environmental viability
and production potential of a range of options for producing liquid
fuels from domestic resources. If we focus on unconventional fuel
technologies that are now ready for large-scale, commercial production
and that can displace at least a million barrels per day of imported
oil, we find only two candidates: grain-derived ethanol and Fischer-
Tropsch (F-T) coal-to-liquids. Moreover, only the F-T coal-to-liquids
candidate produces a fuel that is suitable for use in heavy-duty
trucks, railroad engines, commercial aircraft, or military vehicles and
weapon systems.
If we expand our time horizon to consider technologies that might
be ready for use in initial commercial plants within the next five
years, only one or two new technologies become available: the in-situ
oil shale approaches being pursued by several firms and the F-T
approaches for converting biomass or a combination of coal and biomass
to liquid fuels. We have also looked carefully at the development
prospects for technologies that are intended to produce alcohol fuels
from sources other than food crops, generally referred to as cellulosic
materials. Our finding is that, while this is an important area for
research and development, the technology base is not yet sufficiently
developed to support an assessment that alcohol production from
cellulosic materials will be competitive with F-T biomass-to-liquid
fuels within the next 10 years, if ever.
The Strategic Benefits of Coal-to-Liquids Production
Our research is also addressing the strategic benefits of having in
place a mature coal-to-liquid fuels industry producing several million
barrels of oil per day. If coal-derived liquids were added to the world
oil market, such additional liquid fuel supplies would cause world oil
prices to be lower than they would be if these additional supplies were
not produced. This effect occurs regardless of what fuel is being
considered. It holds for coal-derived liquids and for oil shale, heavy
oils, tar sands, and biomass-derived liquids, as well as, for that
matter, additional supplies of conventional petroleum. The price-
reduction effect also occurs when oil demand is reduced through fiscal
measures, such as taxes on oil, or through the introduction of advanced
technologies that use less petroleum, such as higher efficiency
vehicles. Moreover, this reduction in world oil prices is independent
of where such additional production or energy conservation occurs, as
long as the additional production is outside of OPEC and OPEC-
cooperating nations.
In a 2005 analysis of the strategic benefits of oil shale
development, RAND estimated that three million barrels per day of
additional liquid-fuel production would yield a world oil price drop of
between three and five percent.\2\ Our ongoing research supports that
estimated range and shows that the price drop increases in proportion
to production increases. For instance, an increase of six million
barrels per day would likely yield a world oil price drop of between
six and 10 percent. This more recent research also shows that even
larger price reductions may occur in situations in which oil markets
are particularly tight or in which OPEC is unable to enforce a profit-
optimizing response among its members.
---------------------------------------------------------------------------
\2\ Oil Shale Development in the United States: Prospects and
Policy Issues, Bartis et al., Santa Monica, Calif.: RAND Corporation,
MG-414-NETL, 2005.
---------------------------------------------------------------------------
This anticipated reduction in world oil prices yields important
economic benefits. In particular, U.S. consumers would pay tens of
billions of dollars less for oil or, under some future situations,
hundreds of billions of dollars less for oil per year. On a per-
household basis, we estimate that the average annual benefit could
range from a few hundred to a few thousand dollars.
Further, this anticipated reduction in world oil prices also yields
a major national security benefit. At present, OPEC revenues from oil
exports are about $700 billion per year. Projections of future
petroleum supply and demand published by the U.S. Department of Energy
indicate that, unless measures are taken to reduce the prices of, and
demand for, OPEC petroleum, such revenues will grow considerably. These
high revenues raise serious national security concerns, because some
OPEC member nations are governed by regimes that are not supportive of
U.S. foreign policy objectives. Income from petroleum exports has been
used by unfriendly nations, such as Iran and Iraq under Saddam Hussein,
to support weapon purchases or to develop their own industrial base for
munitions manufacture. Also, the higher prices rise, the greater the
chances that oil-importing countries will pursue special relationships
with oil exporters and defer joining the United States in multilateral
diplomatic efforts.
Our research shows that developing an unconventional fuels industry
that displaces millions of barrels of petroleum per day will cause a
significant decrease in OPEC revenues from oil exports. This decrease
results from a combination of lower prices and a lower demand for OPEC
production. The size of this reduction in OPEC revenues is determined
by the volume of unconventional fuels produced and future market
conditions, but our ongoing research indicates that expectations of
annual reductions of hundreds of billions of dollars are not
unreasonable. The significant reduction in wealth transfers to OPEC and
the geopolitical consequences of reduced demand for OPEC oil represent
the major national security benefits associated with the development of
an unconventional liquid fuels production industry. Note that these
revenue reductions would affect all petroleum exporters, both friends
and foes.
These strategic benefits derive from the existence of the OPEC
cartel. The favorable benefits of reduced oil prices accrue to
consumers and the Nation as a whole; however, the private firms that
would invest in coal-to-liquids development do not capture those
benefits.
The Direct Benefits of Coal-to-Liquids Production
Beyond the strategic benefits for the Nation associated with coal-
to-liquids production are certain direct benefits. If coal-derived
liquid fuels can be produced at prices well below world oil prices,
then the private firms that invest in coal-derived liquid fuels
development could garner economic profits above and beyond what is
considered a normal return on their investments. Through taxes on these
profits and, in some cases, lease and royalty payments, we estimate
that roughly 35 percent of these economic profits could go to Federal,
State, and local governments and, thereby, broadly benefit the public.
An auxiliary benefit of coal-to-liquids development derives from
the broad regional dispersion of the U.S. coal resource base and the
fact that coal-to-liquids plants are able to produce finished motor
fuels that are ready for retail distribution. As such, developing a
coal-to-liquids industry should increase the resiliency of the overall
petroleum supply chain.
The remaining benefits of developing a coal-to-liquids production
industry are local or regional, as opposed to national. In particular,
coal-to-liquids industrial development offers significant opportunities
for economic development and would increase employment in coal-rich
states.
Greenhouse Gas Emissions
While the strategic benefits of the development of a domestic coal-
to-liquids industry are compelling, no less pressing is the importance
of addressing the threat of global climate change. Specifically,
without measures to address carbon dioxide emissions, the use of coal-
derived liquids to displace petroleum fuels for transportation will
roughly double greenhouse gas emissions.
This finding is relevant to the total fuel life cycle, i.e., well-
to-wheels or coal mine-to-wheels. This increase in greenhouse gas
emissions is primarily attributable to the large amount of carbon
dioxide emissions that come from an F-T coal-to-liquids production
plant relative to a conventional oil refinery. In fact, looking solely
at the combustion of F-T-derived fuel as opposed to its production, our
analyses show that combustion of an F-T, coal-derived fuel would
produce somewhat, although not significantly, lower greenhouse gas
emissions than would the combustion of a gasoline or diesel motor fuel
prepared by refining petroleum.
In our judgment, the high greenhouse gas emissions of F-T coal-to-
liquids plants that do not manage such emissions preclude their
widespread use as a means of displacing imported petroleum. We now turn
to some options for managing greenhouse gas emissions.
Options for Managing Greenhouse Gas Emissions
For managing greenhouse gas emissions for F-T coal-to-liquids
plants, we have examined three options: (1) carbon capture and
sequestration, (2) carbon dioxide capture and use in enhanced oil
recovery, and (3) gasification of both coal and biomass followed by F-T
synthesis of liquid fuels. We discuss each below in turn.
Carbon Capture and Sequestration: By carbon capture and sequestration,
I refer to technical approaches being developed in the United States,
primarily through funding from the U.S. Department of Energy, and
abroad that are designed to capture carbon dioxide produced in coal-
fired power plants and to sequester that carbon dioxide in various
types of geological formations, such as deep saline aquifers. This same
approach can be used to capture and sequester carbon dioxide emissions
from F-T coal-to-liquids plants and from F-T plants operating on
biomass or a combination of coal and biomass. When applied to F-T coal-
to-liquids plants, carbon capture and sequestration should cause mine-
to-wheels greenhouse gas emissions to drop to levels comparable to the
well-to-wheels emissions associated with conventional, petroleum-
derived motor fuels. Most importantly, our research indicates that any
incentive adequate to promote carbon capture at coal-fired power plants
should be even more effective in promoting carbon capture at F-T plants
producing liquid fuels.
The U.S. Department of Energy program on carbon capture and
sequestration has made considerable technical progress. However,
considering the continued and growing importance of coal for both power
and liquids production and the potential adverse impacts of greenhouse
gas emissions, we believe that current funding levels are not adequate.
While we are optimistic that carbon capture and geologic sequestration
can be successfully developed as a viable approach for carbon
management, we also recognize that successful development constitutes a
major technical challenge and that the road to success requires
multiple, large-scale demonstrations that go well beyond the current
U.S. Department of Energy plans and budget for the efforts that are now
under way.
Carbon Capture and Enhanced Oil Recovery: In coal-to-liquids plants,
about 0.8 tons of carbon dioxide are produced along with each barrel of
liquid fuel. For coal-to-liquids plants located near currently
producing oil fields, this carbon dioxide can be used to drive
additional oil recovery. We anticipate that each ton of carbon dioxide
applied to enhanced oil recovery will cause the additional production
of two to three barrels of oil, although this ratio depends highly on
reservoir properties and oil prices. Based on recent studies sponsored
by the U.S. Department of Energy, opportunities for enhanced oil
recovery provide carbon management options for at least half a million
barrels per year of coal-to-liquids production capacity. A favorable
collateral consequence of this approach to carbon management is that
half a million barrels per day of coal-to-liquids production will
promote additional domestic petroleum production of roughly one million
barrels per day.
The use of pressurized carbon dioxide for enhanced oil recovery is
a well-established practice in the petroleum industry. Technology for
capturing carbon dioxide at a coal-to-liquids plant is also well
established, although further R&D may yield cost reductions. There are
no technical risks, but questions do remain about methods to optimize
the fraction of carbon dioxide that would be permanently sequestered.
Combined Gasification of Coal and Biomass: Non-food-crop biomass
resources suitable as feedstocks for F-T biomass-to-liquid production
plants include mixed prairie grasses, switchgrass, corn stover and
other crop residues, forest residues, and crops that might be grown on
dedicated energy plantations. When such biomass resources are used to
produce liquids through the F-T method, our research shows that
greenhouse gas emissions should be well below those associated with the
use of conventional petroleum fuels. Moreover, when a combination of
coal and biomass is used, for example, a 40-60 mix, we estimate that
net carbon dioxide emissions will be comparable to or, likelier, lower
than well-to-wheels emissions of conventional, petroleum-derived motor
fuels. Finally, we have examined liquid fuel production concepts in
which carbon capture and sequestration is combined with the combined
gasification of coal and biomass. Our preliminary estimate is that a
50-50 coal-biomass mix combined with carbon capture and sequestration
should yield negative carbon dioxide emissions. Negative emissions
imply that the net result of producing and using the fuel would be the
removal of carbon dioxide from the atmosphere.
One perspective on the combined gasification of coal and biomass is
that biomass enables F-T coal-to-liquids production, in that the
combined feedstock approach provides an immediate pathway to
unconventional liquids with no net increase in greenhouse gas
emissions, and an ultimate vision, with carbon capture and
sequestration, of zero net emissions. Another perspective is that coal
enables F-T biomass-to-liquids production, in that the combined
approach reduces overall production costs by reducing fuel delivery
costs, allowing larger plants that take advantage of economies of
scale, and smoothing over the inevitable fluctuations in biomass
availability associated with annual and multi-year fluctuations in
weather patterns, especially rainfall.
Prospects for a Commercial Coal-to-Liquids Industry
The prospects for a commercial coal-to-liquids industry in the
United States remain unclear. Three major impediments block the way
forward:
1. Uncertainty about the costs and performance of coal-to-
liquids plants;
2. Uncertainty about the future course of world oil prices;
and
3. Uncertainty about whether and how greenhouse gas emissions,
especially carbon dioxide emissions, might be controlled in the
United States.
As part of our ongoing work, RAND researchers have met with firms
that are promoting coal-to-liquids development or that clearly have the
management, financial, and technical capabilities to play a leading
role in developing of a commercial industry. Our findings are that
these three uncertainties are impeding and will continue to impede
private-sector investment in a coal-to-liquids industry unless the
government provides fairly significant financial incentives, especially
incentives that mitigate the risks of a fall in world oil prices.
But just as these three uncertainties are impeding private-sector
investment, they should also deter an immediate national commitment to
establish rapidly a multi-million-barrel-per-day coal-to-liquids
industry. However, the traditional hands-off or ``research-only''
approach is not commensurate with continuing adverse economic, national
security, and global environmental consequences of relying on imported
petroleum. For this reason, Congress should consider a middle path to
developing a coal-to-liquids industry that focuses on reducing
uncertainties and fostering early operating experience by promoting the
construction and operation of a limited number of commercial-scale
plants. We consider this approach an ``insurance strategy,'' in that it
is an affordable approach that significantly improves the national
capability to build a domestic unconventional-fuels industry as
government and industry learn more about the future course of world oil
prices and as the policy and technical mechanisms for carbon management
become clearer.
Designing, building, and gaining early operating experience from a
few coal-to-liquids plants would reduce the cost and performance
uncertainties that currently impede private-sector investments. At
present, the knowledge base for coal-to-liquids plant construction
costs and environmental performance is very limited. Our current best
estimate is that coal-to-liquids production from large, first-of-a-kind
commercial plants is competitive when crude oil prices average in the
range of $50 to $60 per barrel. However, this estimate is based on
highly conceptual engineering design analyses that are intended only to
provide rough estimates of costs. At RAND, we have learned that, when
it comes to cost estimates, typically the less you know, the more
attractive the costs. Details are important, and they are not yet
available. For this reason, we believe that it is essential that the
Department of Energy and Congress have access to the more reliable
costing that is generally associated with the completion of a more
comprehensive design effort, generally known as a ``front-end
engineering design.''
Early operating experience would promote post-production learning,
leading to future plants with lower costs and improved performance.
Post-production cost improvement--sometimes called the learning curve--
plays a crucial role in the chemical process industry, and we
anticipate that this effect will eventually result in a major reduction
of the costs of coal-derived liquid fuels. Most important, by reducing
cost and performance uncertainties and production costs, a small number
of early plants could form the basis for a rapid expansion by the
private sector of a more economically competitive coal-to-liquids
industry, depending on future developments in world oil markets.
Options for Federal Action
The Federal Government could take several productive measures to
address the three major uncertainties we have noted--production risks,
market risks, and global warming--so that industry can move forward
with a limited commercial production program consistent with an
insurance strategy. A key step, as noted, is reducing uncertainties
about plant costs and performance by encouraging the design,
construction, and operation of a few coal-to-liquids plants. An
engineering design adequate to obtain a confident estimate of costs, to
establish environmental performance, and to support federal, State, and
local permitting requirements will cost roughly $30 million. The
Federal Government should consider cost-sharing options that would
promote the development of a few site-specific designs. The information
from such efforts would also provide Congress with a much stronger
basis for designing broader measures to promote unconventional-fuel
development.
We have analyzed alternative incentive packages for promoting early
commercial operating experience. In this analysis of incentives, we
have examined not only the extent to which the incentive motivates
private-sector investment but also the potential impact on federal
expenditures over a broad range of potential future outcomes. At this
time, we are able to report that more attractive incentive packages
generally involve a combination of the following three mechanisms: (1)
a reduction in front-end investment costs, such as what would be
offered by an investment tax credit; (2) a reduction in downside risks
by a floor price guarantee; and (3) a sharing of upside benefits such
as what would be offered by a profit-sharing agreement between the
government and producers when oil prices are high enough to justify
such sharing.
We also find that federal loan guarantees can have powerful
effects, mainly because they allow the share of debt supporting the
project to increase, since the government is assuming the risk of
project default. For this very reason, we caution against the use of
federal loan guarantees unless Congress is confident that the Federal
Government is able to put in place a technical and financial project
monitoring and control system capable of protecting the federal purse.
R&D Opportunities
A great benefit of the F-T approach to liquid fuel development is
that we know it works. F-T fuels are being produced today using both
coal and natural gas in South Africa and using natural gas in Malaysia
and Qatar. F-T fuels or blends of F-T and conventional petroleum
products are in commercial use. Their suitability for use in vehicles
and commercial aviation has been established. The R&D challenge for
coal-to-liquids development is not how to use but rather how to produce
these fuels in a manner that is consistent with our national
environmental objectives.
If the Federal Government is prepared to promote early production
experience, then expanded federal R&D efforts are needed. Most
important, consideration should be given to accelerating the
development and testing (including large-scale testing) of methods for
the long-term sequestration of carbon dioxide. This could involve using
one or more of the early coal-to-liquids production plants as a source
of carbon dioxide for the testing of sequestration options.
At present, the Federal Government is supporting research on coal
gasification and associated synthesis gas cleaning and treatment
processes. All of this federally funded research is directed at nearer-
term, lower-risk concepts for advanced power generation and the
production of hydrogen, but much of it is also directly applicable to
F-T coal-to-liquids production.
Missing from the federal R&D portfolio are near-term efforts to
establish the commercial viability of a few techniques for the combined
use of coal and biomass. Such a combination offers significant cost and
environmental payoffs. The most pressing near-term research need
centers on developing an integrated gasification system capable of
handling both biomass and coal. The problem is to devise a system that
grinds, pressurizes, and feeds a stream of biomass or a combination of
biomass and coal into the gasifier with high reliability and efficiency
and without damaging the gasifier. This is a fairly minor technical
challenge. It is an engineering problem focusing on performance and
reliability, not a science problem. To establish the design basis for
such a system requires the design, construction, and operation of one
or a few test rigs. These test rigs need to be fairly large so that
they are handling flows close to what would be the case in a commercial
plant. This is because solids are involved, and it is very difficult to
predict performance and reliability of solids-handling and processing
systems when the size or throughput of the system undergoes a large
increase. Such large-scale testing could also be conducted during the
design and construction of a full-scale plant for coal-to-liquids
production, with the understanding that, if this were successfully
demonstrated, the plant would convert to accept a mixture of coal and
biomass.
In my judgment, the current federal portfolio on gasification
systems does not give adequate support to mid- and long-term R&D
directed at high-risk, high-payoff opportunities for cost reduction and
improved efficiency and environmental performance. Especially fruitful
areas for R&D are oxygen production at reduced energy consumption,
improved gas-gas separation technology, higher-temperature gas-
purification systems, and reduced or eliminated oxygen demand during
gasification. I also suggest research directed at advanced F-T process
concepts that allow efficient liquid-fuels production at small scales,
i.e., at a few thousand barrels per day, not tens of thousands. Very
large F-T coal-to-liquids plants may be suitable for Wyoming and
Montana, but east of the Mississippi, much smaller plants may be more
appropriate.
In promoting the production of alcohol fuels from cellulosic
feedstocks, the Federal Government is making major R&D investments. In
our judgment, the appropriate approach to balance this fuels-production
portfolio is not to lower the investment in cellulosic conversion, but
rather to significantly increase the investment in F-T approaches,
including coal, biomass, and combined coal and biomass gasification.
The long- and mid-term research efforts that I have described would
significantly enhance the learning and cost-reduction potential
associated with early production experience. As a collateral benefit of
this public investment, such longer-term research efforts would also
support the training of specialized scientific and engineering talent
required for long-term progress.
In closing, I commend the Committee for addressing the important
and intertwined topics of reducing demand for crude oil and reducing
greenhouse gas emissions. The United States has before it many
opportunities--including coal and oil shale, renewable sources,
improved energy efficiency, and fiscal and regulatory actions--that can
promote greater energy security. Coal-to-liquids and, more generally,
F-T gasification processes can be important parts of the portfolio as
the Nation responds to the realities of world energy markets, the
presence of growing energy demand, and the need to protect the
environment.
Biography for James T. Bartis
James T. Bartis, Ph.D. is a senior policy researcher with more than
25 years of experience in policy analyses and technical assessments in
energy and national security. He is currently finishing up a study of
the policy issues associated with the development of a coal-to-liquids
industry in the United States. Recent energy research topics include
oil shale development prospects, Qatar's natural gas-to-diesel plants,
Japan's energy policies, planning methods for long-range energy R&D,
critical mining technologies, fuel cell development options, and
national response options during international energy emergencies.
Jim has been working with the RAND Corporation since 1997. He is
located at RAND's Arlington, Virginia office. Prior to joining RAND, he
worked as a Vice President and Division Director for Science
Applications International Corporation, and earlier as Vice President
of Eos Technologies.
From 1978 through 1982, he was a member of the U.S. Department of
Energy, serving in the in the Office of Energy Research (technical
policy analyst), the Office of Fossil Energy (Director, Office of Plans
and Technology Assessment), and Office of Policy and Evaluation
(Director, Divisions of Fossil Energy and Environment). During the Bush
and Clinton Administrations, he served on the Industry Sector Advisory
Committee (U.S. Department of Commerce and U.S. Trade Representative)
on Energy for Trade Policy Matters.
Jim is a graduate of Brown University and holds a Ph.D. granted by
MIT.
Chairman Lampson. Thank you very much.
Mr. Hawkins.
STATEMENT OF DR. DAVID G. HAWKINS, DIRECTOR, CLIMATE CENTER,
NATURAL RESOURCES DEFENSE COUNCIL
Dr. Hawkins. Thank you, Mr. Chairman, Members of the
Subcommittee. Thank you for inviting me to testify today.
As has already been noted by several Members and by the
witnesses, we are facing as a nation, indeed as a planet, two
large and growing threats; oil dependence and global warming.
It is critical that we address these together in designing
strategies for energy and environmental protection.
Now, the supporters of coal-to-liquids technology claim
that the fuel can both reduce oil dependence and can have
greenhouse gas emissions that are as good or better than the
petroleum products that they replace. Well, those are claims,
and this is the Science and Technology Committee, and good
science requires that the claims be analyzed.
The problem is that these claims have not had the scrutiny
that is required given the attention that Congress has been
paying to this matter. Certainly, the objective analysis of the
total life cycle impacts of this approach of coal-to-liquids to
addressing these twin problems compared to other alternatives
have not been presented to Congress, and they are certainly no
basis for the mandates and incentives that have been fuel-
specific that have been voted on in both bodies of Congress,
fortunately neither has been enacted fortunately in our view.
Because to do so would be making a mistake, given the lack
of analysis that has been provided about the merits of this
approach compared to others. So let us take a look at a number
of these issues in the time that I have.
First, as to greenhouse gas emissions, the most
authoritative analysis by the Argonne National Labs indicates
that without carbon capture, coal-to-liquids will produce more
than twice the well-to-wheels greenhouse gas emissions of
diesel fuel, and even with 85 percent capture of carbon from a
coal-to-liquids plant, the resulting emissions will still be
about 20 percent greater than conventional diesel fuel.
Now, let us compare this to alternative ways of using coal
to back out oil, because there are alternative ways. One of
them is with plug-in hybrid vehicles. We can have coal, turn it
into electricity. If we do that in a modern plant that is
equipped with carbon capture and storage, we can back out about
twice as many barrels of oil per ton of coal as compared to the
coal-to-liquids technology, and we can do it with one-tenth the
greenhouse gas emissions. These are facts that haven't been
presented to the Congress, and it ought to be evaluated before
we move forward with what is likely to be a sub-optimal
approach.
The problems that I want to turn to next are problems of
scale. In order to make a difference on oil security, a coal-
to-liquids industry has to be huge. In order to cut coal, oil
consumption projected for 2025 by 10 percent, that requires
something on the order of 470 million tons of additional
coalmining in this country. That is a 43 percent increase in
today's level of coalmining. Unfortunately, today's level of
coalmining is associated with a lot of environmental damage. We
need reform of our coalmining practices before we contemplate
that magnitude of an increase in coal production.
The water use is another issue, and I believe that Dr.
Boardman will address it, but water use for coal-to-liquids
technology is large indeed, perhaps as high as 12 gallons for
every gallon of fuel produced.
Then there is the impact on the coal market itself.
Congressman Bartlett's opening statement notes that the reserve
estimates for coal, while apparently large, are themselves
uncertain. And if we increase coal production in order to back
out oil through the liquid coal market, the impacts on
recoverable reserves could be profound. In my testimony I point
out that if we tried to back out just one-third of oil imports
starting in 2030, that by 2050, 40 percent of today's estimated
recoverable coal reserves would be gone, and by 2080, they
would all be gone. If we tried to do more than one-third of oil
imports, then the impacts would be that much greater.
There is also the impact of carbon capture and storage.
This technology would add a large new demand for reservoir
space, and as Dr. Bartis had noticed, has noticed, we already
will have a challenge with deploying carbon capture technology
for the electric power sector. So we need to think about that.
In conclusion, let me make a recommendation. Rather than
mandate a fuel-specific approach or adopt incentives for a
fuel-specific approach, we need a fuel-neutral approach. We
should have incentives and performance standards that reward
entrepreneurs who deliver alternatives to oil that do the best
job at backing out oil and do the best job at cutting
greenhouse gas emissions. And that is the approach that we
recommend.
Thank you.
[The prepared statement of Dr. Hawkins follows:]
Prepared Statement of David G. Hawkins
Thank you for the opportunity to testify today on the subject of
producing liquid fuels from coal. My name is David Hawkins. I am
Director of the Climate Center at the Natural Resources Defense Council
(NRDC). NRDC is a national, nonprofit organization of scientists,
lawyers and environmental specialists dedicated to protecting public
health and the environment. Founded in 1970, NRDC has more than 1.2
million members and online activists nationwide, served from offices in
New York, Washington, Los Angeles and San Francisco, Chicago and
Beijing, China.
Today's energy use patterns are responsible for two growing
problems that require action now to keep them from spiraling out of
control--oil dependence and global warming. Both are serious but most
important, both problems must be addressed together. Designing
strategies that address only oil dependence and ignore global warming
would be a huge and costly mistake.
Proposals to use coal to make liquid fuels for transportation need
to be evaluated in the context of the compelling need to reduce global
warming emissions starting now and proceeding continuously throughout
this century. Because today's coal mining and use also continues to
impose a heavy toll on America's land, water, and air, damaging human
health and the environment, it is critical to examine the implications
of a substantial liquid coal program on these values as well. The first
role for federal research should be to identify through comprehensive
studies the types of vehicles and fuels that hold the best promise of
reducing both oil dependence and global warming pollution by the
amounts required to preserve a climate that allows us and others to
achieve our environmental, economic and security objectives.
Reducing oil dependence
NRDC fully agrees that reducing oil dependence should be a national
priority and that new policies and programs are needed to avert the
mounting problems associated with today's dependence and the much
greater dependence that lies ahead if we do not act. A critical issue
is the path we pursue in reducing oil dependence: a ``green'' path that
helps us address the urgent problem of global warming and our need to
reduce the impacts of energy use on the environment and human health;
or a ``brown'' path that would increase global warming emissions as
well as other health and environmental damage. In deciding what role
coal might play as a source of transportation fuel NRDC believes we
must first assess whether it is possible to use coal to make liquid
fuels without exacerbating the problems of global warming, conventional
air pollution and impacts of coal production and transportation.
If coal were to play a significant role in displacing oil, it is
clear that the enterprise would be huge, so the health and
environmental stakes are correspondingly huge. The coal company Peabody
Energy and its industry allies are seeking government subsidies to
create a coal to synfuels industry as large as 2.6 million barrels per
day of liquid fuel from coal by 2025, about 10 percent of forecasted
oil demand in that year. According to the industry, using coal to
produce that much synfuel would require construction of 33 very large
liquid coal plants, each plant consuming 14.4 million tons of coal per
year to produce 80,000 barrels per day of liquid fuel. Each of these
plants would cost $6.4 billion to build. Total additional coal
production required for this program would be 475 million tons of coal
annually-requiring an expansion of coal mining of 43 percent above
today's level.\1\
---------------------------------------------------------------------------
\1\ The coal industry's program is set forth in a March 2006
National Coal Council report, Coal: America's Energy Future. The
industry's full ``Eight-Point Plan'' calls for a total of 1.3 billion
tons of additional coal production by 2025, proposing that coal be used
to produce synthetic pipeline gas, additional coal-fired electricity,
hydrogen, and fuel for ethanol plants. The entire program would more
than double U.S. coal mining and consumption.
---------------------------------------------------------------------------
In this testimony I will not attempt a thorough analysis of the
impacts of a program of this scale. Rather, I will highlight the issues
that should be addressed in a detailed assessment.
Global Warming Pollution
To avoid catastrophic global warming the U.S. and other nations
will need to deploy energy resources that result in much lower releases
of CO<INF>2</INF> than today's use of oil, gas and coal. To keep global
temperatures from rising to levels not seen since before the dawn of
human civilization, the best expert opinion is that global greenhouse
gas emissions need to be cut in half from today's levels by 2050. To
accommodate unavoidable increases in emissions from developing
countries this will require industrialized countries, including the
U.S., to cut emissions by about 80 percent from today's levels between
now and 2050.
Achieving emissions reductions of this scale in the U.S. will
require deep reductions in all sectors, especially in the power
generation and transportation sectors, which together account for over
two-thirds of U.S. carbon dioxide (CO<INF>2</INF>) emissions. Achieving
large reductions in transportation emissions will require action on
three fronts: improved vehicles; lower carbon fuels; and smarter
metropolitan area planning to reduce congestion and growth in vehicle
miles. This is the frame we must have in mind in evaluating the
viability of alternative fuels for the transportation sector. The fuel
industry we build must be capable of producing fuels that contain
substantially less fossil carbon than is in today's petroleum-based
gasoline and diesel fuel. To help achieve the overall reductions we
need by 2050 will require transportation fuels with 50-80 percent lower
fossil carbon emission potential than today's fuels.
To assess the global warming implications of a large liquid coal
program we need to examine the total life cycle or ``well-to-wheel''
emissions of this type of synfuel. Coal is a carbon-intensive fuel,
containing double the amount of carbon per unit of energy compared to
natural gas and about 50 percent more than petroleum. When coal is
converted to liquid fuels, two streams of CO<INF>2</INF> are produced:
one at the liquid coal production plant and the second from the
exhausts of the vehicles that burn the fuel. As I describe below, even
if the CO<INF>2</INF> from the synfuel production plant is captured,
there is no prospect that liquid fuel made with coal as the sole
feedstock can achieve the significant reductions in fossil carbon
content that we need to protect the climate.
Two authoritative recent studies conclude that even if liquid coal
synfuels plants fully employ carbon capture and storage, full life
cycle greenhouse gas emissions from using these fuels will be worse
than conventional diesel fuel. There is a straightforward reason for
this. Vehicle tailpipe CO<INF>2</INF> emissions from using liquid coal
would be nearly identical to those from using conventional diesel fuel.
Any CO<INF>2</INF> emissions released from the synfuels production
facility have to be added to the tailpipe emissions. The residual
emissions from a liquid coal plant employing CO<INF>2</INF> capture and
geologic storage (CCS) are still somewhat higher than emissions from a
petroleum refinery, hence life cycle emissions are higher.
EPA's April 2007 analysis of life cycle greenhouse gas emissions of
different fuels was released in conjunction with publishing its final
rule to implement the Renewable Fuels Standard enacted in the Energy
Policy Act of 2005. EPA's analysis finds that without carbon capture
life cycle greenhouse gas emissions from coal-to-liquid fuels would be
more than twice as high as from conventional diesel fuel (118 percent
higher). Assuming carbon capture and storage EPA finds that life cycle
greenhouse gas emissions from coal-to-liquid fuels would be 3.7 percent
higher than from conventional diesel fuel.\2\
---------------------------------------------------------------------------
\2\ http://www.epa.gov/otaq/renewablefuels/420f07035.htm
---------------------------------------------------------------------------
In May 2007 Michael Wang of Argonne National Laboratory, the
developer of the most widely used transportation fuels life cycle
emissions model, presented the results of his more detailed analysis of
liquid coal fuels to the Society of Automotive Engineers conference.
The Argonne analysis shows that liquid coal fuels could have life cycle
greenhouse gas emissions as much as 2.5 times those from conventional
diesel fuel. Even assuming a high-efficiency liquid coal conversion
process and 85 percent carbon capture and storage, Argonne finds that
life cycle greenhouse gas emissions from liquid coal fuel would still
be 19 percent higher than from conventional diesel fuel (Figure 1).\3\
---------------------------------------------------------------------------
\3\ M. Wang, M. Wu, H. Huo, ``Life cycle energy and greenhouse gas
results of Fischer-Tropsch diesel produced from natural gas, coal,, and
biomass,'' Center for Transportation Research, Argonne National
Laboratory, presented at 2007 SAE Government/Industry meeting,
Washington, DC, May 2007.
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
These analyses show that using coal to produce a significant amount
of liquid synfuel for transportation conflicts with the need to develop
a low-CO<INF>2</INF> emitting transportation sector. The unavoidable
fact is that liquid fuel made from coal contains essentially the same
amount of carbon as is in gasoline or diesel made from petroleum. Given
these results, it is not surprising that a recent Battelle study found
that a significant coal-to-liquids industry is not compatible with
stabilizing atmospheric CO<INF>2</INF> concentrations below twice the
pre-industrial value. Battelle found that if there is no constraint on
CO<INF>2</INF> emissions conventional petroleum would be increasingly
replaced with liquid coal, but that in scenarios in which CO<INF>2</INF>
concentrations are limited to 550 ppm or below, petroleum fuels are
replaced with biofuels rather than liquid coal (Figure 2).\4\
---------------------------------------------------------------------------
\4\ J. Dooley, R. Dahowski, M. Wise, and C. Davidson, ``Coal-to-
Liquids and Advanced Low-Emissions Coal-fired Electricity Generation:
Two Very Large and Potentially Competing Demands for US Geologic
CO<INF>2</INF> Storage Capacity before the Middle of the Century.''
Battelle PNWD-SA-7804. Presented to the NETL Conference, May 9, 2007.
---------------------------------------------------------------------------
Proceeding with liquid coal plants now could leave those
investments stranded or impose unnecessarily high abatement costs on
the economy if the plants continue to operate.
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
Plug-in Hybrid Electric Vehicles
While NRDC believes there are better alternatives than using coal
to replace gasoline, it is worth noting that making liquid fuels from
coal is far less efficient and dirtier even than burning coal to
generate electricity for use in plug-in hybrid vehicles (PHEVs). In
fact, a ton of coal used to generate electricity used in a PHEV will
displace about twice as much oil as using the same amount of coal to
make liquid fuels, even using optimistic assumptions about the
conversion efficiency of liquid coal plants.\5\ The difference in
CO<INF>2</INF> emissions is even more dramatic. Liquid coal produced
with CCS and used in a hybrid vehicle would still result in life cycle
greenhouse gas emissions of approximately 330 grams/mile, or ten times
as much as the 33 grams/mile that could be achieve by a PHEV operating
on electricity generated in a coal-fired power plant equipped with
CCS.\6\
---------------------------------------------------------------------------
\5\ Assumes production of 84 gallons of liquid fuel per ton of
coal, based on the National Coal Council report. Vehicle efficiency is
assumed to be 37.1 miles/gallon on liquid fuel and 3.14 miles/kWh on
electricity.
\6\ Assumes life cycle greenhouse gas emission from liquid coal of
27.3 lbs/gallon and life cycle greenhouse gas emissions from an IGCC
power plant with CCS of 106 grams/kWh, based on R. Williams et al.,
paper presented to GHGT-8 Conference, June 2006.
---------------------------------------------------------------------------
Coal and Biomass?
Some have proposed that a mixture of coal and biomass could be used
to produce liquid fuel with a reduction in greenhouse gas emissions
compared to today's fuels, assuming a high fraction of the CO<INF>2</INF>
from the production plant is captured and permanently isolated in
geologic formations. Proponents of this concept argue that using such a
mixture of feedstocks to make liquid fuel could be compatible with
cutting global warming emissions. It is important to recognize that
such a combination does not actually reduce the emissions related to
using coal; rather, the biomass component of the combination actually
has negative net emissions that are deducted from the coal-related
emissions to obtain low net emissions from the mixture. Moreover, even
if the technical and economic challenges of making fuels with such a
mixture could be met, a coal-biomass approach would still result in
large amounts of additional coal mining and water requirements. With
today's mining practices, mountaintop removal mining being the most
egregious, launching a new fuel industry that depends on massive
amounts of new mining without reform of our current practices would be
a recipe for widespread environmental damage. As I discuss below,
competition for water and even for low-cost coal supplies and geologic
CO<INF>2</INF> storage reservoirs are additional factors that must be
analyzed before we can conclude that any significant use of coal for
liquid fuels would be viable. Federal research could support such
analyses. If Congress is going to legislate on the subject of liquid
coal, the only responsible action now is to require a comprehensive
comparative assessment of the full life cycle impacts and resource
requirements of alternative approaches to reducing dependence on
petroleum.
Conventional Pollution
Liquid coal fuel itself is expected to result in reduced emissions
of conventional pollutants from vehicle exhausts. However, the same may
not be true for liquid coal production plants. Conventional air
emissions from liquid coal plants include sulfur oxides, nitrogen
oxides, particulate matter, mercury and other hazardous metals and
organics. While it appears that technologies exist to achieve high
levels of control for all or most of these pollutants, the operating
experience of liquid coal plants in South Africa demonstrates that
liquid coal plants are not inherently ``clean.'' If such plants are to
operate with minimum emissions of conventional pollutants, performance
standards will need to be written-standards that do not exist today in
the U.S. as far as we are aware.
In addition, the various federal emission cap programs now in force
would apply to few, if any, liquid coal plants.\7\
---------------------------------------------------------------------------
\7\ The sulfur and nitrogen caps in EPA's ``Clean Air Interstate
Rule'' (``CAIR'') may cover emissions from liquid coal plants built in
the eastern states covered by the rule but would not apply to plants
built in the western states. Neither the national ``acid rain'' caps
nor EPA's mercury rule would apply to liquid coal plants.
---------------------------------------------------------------------------
Thus, we cannot say today that liquid coal plants will be required
to meet stringent emission performance standards adequate to prevent
either significant localized impacts or regional emissions impacts.
Mining, Processing and Transporting Coal
The impacts of mining, processing, and transporting 1.1 billion
tons of coal today on health, landscapes, and water are large. The
industry's liquid coal vision advocates another 475 billion tons of
coal production. To understand the implications of such an enormous
expansion of coal production, it is important to have a detailed
understanding of the impacts from today's level of coal production. The
summary that follows makes it clear that we must find more effective
ways to reduce these impacts before we follow a path that would result
in even larger amounts of coal production and transportation.
Health and Safety
Coal mining is one of the U.S.'s most dangerous professions. The
yearly fatality rate in the industry is 0.23 per thousand workers,
making the industry about five times as hazardous as the average
private workplace.\8\ The industry had a low of 22 fatalities in 2005
but in 2006 there were 47 deaths.\9\ Fatalities to date in 2007 are
17.\10\ Coal miners also suffer from many non-fatal injuries and
diseases, most notably black lung disease (also known as
pneumoconiosis) caused by inhaling coal dust. Although the 1969 Coal
Mine Health and Safety Act seeks to eliminate black lung disease, the
United Mine Workers estimate that 1500 former miners die of black lung
each year.\11\
---------------------------------------------------------------------------
\8\ Congressional Research Service, U.S. Coal: A Primer on the
Major Issues, at 30 (Mar. 25, 2003).
\9\ U.S. Department of Labor, Mine Safety and Health
Administration, Coal Daily Fatality Report, http://www.msha.gov/stats/
charts/coaldaily.asp, (visited September 1, 2007)
\10\ Id.
\11\ http://www.umwa.org/blacklung/blacklung.shtml
---------------------------------------------------------------------------
Terrestrial Habitats
Coal mining--and particularly surface or strip mining--poses one of
the most significant threats to terrestrial habitats in the United
States. The Appalachian region,\12\ for example, which produces over 35
percent of our nation's coal,\13\ is one of the most biologically
diverse forested regions in the country. But during surface mining
activities, trees are clear-cut and habitat is fragmented, destroying
natural areas that were home to hundreds of unique species of plants
and animals. Even where forests are left standing, fragmentation is of
significant concern because a decrease in patch size is correlated with
a decrease in bio-diversity as the ratio of interior habitat to edge
habitat decreases. This is of particular concern to certain bird
species that require large tracts of interior forest habitat, such as
the black-and-white warbler and black-throated blue warbler.
---------------------------------------------------------------------------
\12\ Alabama, Georgia, Eastern Kentucky, Maryland, North Carolina,
Ohio, Pennsylvania, Tennessee, Virginia, and West Virginia.
\13\ Energy Information Administration. Annual Coal Report, 2004.
---------------------------------------------------------------------------
After mining is complete, these once-forested regions in the
Southeast are typically reclaimed as grasslands, although grasslands
are not a naturally occurring habitat type in this region. Grasslands
that replace the original ecosystems in areas that were surface mined
are generally categorized by less-developed soil structure\14\ and
lower species diversity\15\ compared to natural forests in the region.
Reclaimed grasslands are generally characterized by a high degree of
soil compaction that tends to limit the ability of native tree and
plant species to take root. Reclamation practices limit the overall
ecological health of sites, and it has been estimated that the natural
return of forests to reclaimed sites may take hundreds of years.\16\
According to the USEPA, the loss of vegetation and alteration of
topography associated with surface mining can lead to increased soil
erosion and may lead to an increased probability of flooding after
rainstorms.\17\
---------------------------------------------------------------------------
\14\ Sencindiver, et al. ``Soil Health of Mountaintop Removal Mines
in Southern West Virginia''. 2001.
\15\ Handel, Steven. Mountaintop Removal Mining/Valley Fill
Environmental Impact Statement Technical Study, Project Report for
Terrestrial Studies. October, 2002.
\16\ Id.
\17\ EPA. Mountaintop Mining/Valley Fills in Appalachia: Draft
Programmatic Environmental Impact Statement. 2003.
---------------------------------------------------------------------------
The destruction of forested habitat not only degrades the quality
of the natural environment, it also destroys the aesthetic values of
the Appalachian region that make it such a popular tourist destination.
An estimated one million acres of West Virginia mountains were subject
to strip mining and mountaintop removal mining between 1939 and
2005.\18\ Many of these mines have yet to be reclaimed so that where
there were once forested mountains, there now stand bare mounds of sand
and gravel.
---------------------------------------------------------------------------
\18\ Julian Martin, West Virginia Highlands Conservancy, Personal
Communication, February 2, 2006.
---------------------------------------------------------------------------
The terrestrial impacts of coal mining in the Appalachian region
are considerable, but for sheer size of the acreage affected, impacts
in the western United States dominate the picture.\19\ As of September
30, 2004, 470,000 acres were under federal coal leases or other
authorizations to mine.\20\ Unlike the East, much of the West--
including much of the region's principal coal areas--is arid and
predominantly unforested. In the West, as in the East, surface mining
activities cause severe environmental damage as huge machines strip,
rip apart and scrape aside vegetation, soils, wildlife habitat and
drastically reshape existing land forms and the affected area's ecology
to reach the subsurface coal. Strip mining results in industrialization
of once quiet open space along with displacement of wildlife, increased
soil erosion, loss of recreational opportunities, degradation of
wilderness values, and destruction of scenic beauty.\21\ Reclamation
can be problematic both because of climate and soil quality. As in the
East, reclamation of surface mined areas does not necessarily restore
pre-mining wildlife habitat and may require scarce water resources be
used for irrigation.\22\ Forty-six western national parks are located
within ten miles of an identified coal basin, and these parks could be
significantly affected by future surface mining in the region.\23\
---------------------------------------------------------------------------
\19\ Alaska, Arizona, Colorado, Montana, New Mexico, North Dakota,
Utah, Washington, and Wyoming.
\20\ Bureau of Land Management, Public Land Statistics 2004, Table
3-18.
\21\ See, e.g., U.S. Department of the Interior, Bureau of Land
Management, 1985 Federal Coal Management Program/Final Environmental
Impact Statement, pp. 210-211, 230-231, 241-242, 282 (water quality and
quantity), 241, 251, 257.
\22\ Bureau of Land Management. 3809 Surface Management
Regulations, Draft Environmental Impact Statement. 1999.
\23\ National Park Service, DOI. ``Coal Development Overview.''
2003.
---------------------------------------------------------------------------
Water Pollution
Coal production causes negative physical and chemical changes to
nearby waters. In all surface mining, the overburden (Earth layers
above the coal seams) is removed and deposited on the surface as waste
rock. The most significant physical effect on water occurs from valley
fills, the waste rock associated with mountaintop removal (MTR) mining.
Studies estimate that over 700 miles of streams were buried by valley
fills from 1985-2001, and 1,200 miles were directly impacted by
mountaintop removal and valley fills from 1992-2002.\24\ Valley fills
bury the headwaters of streams, which in the southeastern U.S. support
diverse and unique habitats, and regulate nutrients, water quality, and
flow quantity. The elimination of headwaters therefore has long-
reaching impacts many miles downstream.\25\
---------------------------------------------------------------------------
\24\ EPA. Mountaintop Mining/Valley Fills in Appalachia: Draft
Programmatic Environmental Impact Statement.
\25\ Id.
---------------------------------------------------------------------------
Coal mining can also lead to increased sedimentation, which affects
both water chemistry and stream flow, and negatively impacts aquatic
habitat. Valley fills in the eastern U.S., as well as waste rock from
strip mines in the west add sediment to streams, as does the
construction and use of roads in the mining complex. A final physical
impact of mining on water is to the hydrology of aquifers. MTR and
valley fills remove upper drainage basins, and often connect two
previously separate aquifers, altering the surrounding groundwater
recharge scheme.\26\
---------------------------------------------------------------------------
\26\ Keating, Martha. ``Cradle to Grave: The Environmental Impacts
from Coal.'' Clean Air Task Force, Boston. June, 2001.
---------------------------------------------------------------------------
Acid mine drainage (AMD) is the most significant form of chemical
pollution produced from coal mining operations. In both underground and
surface mining, sulfur-bearing minerals common in coal mining areas are
brought up to the surface in waste rock. When these minerals come in
contact with precipitation and groundwater, an acidic leachate is
formed. This leachate picks up heavy metals and carries these toxins
into streams or groundwater. Waters affected by AMD often exhibit
increased levels of sulfate, total dissolved solids, calcium, selenium,
magnesium, manganese, conductivity, acidity, sodium, nitrate, and
nitrite. This drastically changes stream and groundwater chemistry.\27\
The degraded water becomes less habitable, non potable, and unfit for
recreational purposes. The acidity and metals can also corrode
structures such as culverts and bridges.\28\ In the eastern U.S.,
estimates of the damage from AMD range from four to eleven thousand
miles of streams.\29\ In the West, estimates are between five and ten
thousand miles of streams polluted. The effects of AMD can be
diminished through addition of alkaline substances to counteract the
acid, but recent studies have found that the addition of alkaline
material can increase the mobilization of both selenium and
arsenic.\30\ AMD is costly to mitigate, requiring over $40 million
annually in Kentucky, Tennessee, Virginia, and West Virginia alone.\31\
---------------------------------------------------------------------------
\27\ EPA Office of Solid Waste: Acid Mine Drainage Prediction
Technical Document. December, 1994.
\28\ EPA. Mountaintop Mining/Valley Fills in Appalachia: Draft
Programmatic Environmental Impact Statement. 2003.
\29\ EPA. Mid-Atlantic Integrated Assessment: Coal Mining. http://
www.epa.gov/maia/html/coal-mining.html
\30\ EPA. Mountaintop Mining/Valley Fills in Appalachia: Final
Programmatic Environmental Impact Statement. 2005.
\31\ Id.
---------------------------------------------------------------------------
Air Pollution
There are two main sources of air pollution during the coal
production process. The first is methane emissions from the mines.
Methane is a powerful heat-trapping gas and is the second most
important contributor to global warming after carbon dioxide. Methane
emissions from coal mines make up between 10 and 15 percent of
anthropogenic methane emissions in the U.S. According to the most
recent official inventory of U.S. global warming emissions, coal mining
results in the release of three million tons of methane per year, which
is equivalent to 68 million tons of carbon dioxide.\32\
---------------------------------------------------------------------------
\32\ DOE/EIA, 2005. Emissions of Greenhouse Gases in the United
States 2004. (December).
---------------------------------------------------------------------------
The second significant form of air pollution from coal mining is
particulate matter (PM) emissions. While methane emissions are largely
due to eastern underground mines, PM emissions are particularly serious
at western surface mines. The arid, open and frequently windy region
allows for the creation and transport of significant amounts of
particulate matter in connection with mining operations. Fugitive dust
emissions occur during nearly every phase of coal strip mining in the
west. The most significant sources of these emissions are removal of
the overburden through blasting and use of draglines, truck haulage of
the overburden and mined coal, road grading, and wind erosion of
reclaimed areas. PM emissions from diesel trucks and equipment used in
mining are also significant. PM can cause serious respiratory damage as
well as premature death.\33\ In 2002, one of Wyoming's coal producing
counties, Campbell County, exceeded its ambient air quality threshold
several times, almost earning non-attainment status.\34\ Coal dust
problems in the West are likely to get worse if the administration
finalizes its January 2006 proposal to exempt mining (and other
activities) from controls aimed at meeting the coarse PM standard.\35\
---------------------------------------------------------------------------
\33\ EPA. Particle Pollution and Your Health. 2003.
\34\ Casper [WY] Star Tribune, January 24, 2005.
\35\ National Ambient Air Quality Standards for Particulate Matter,
Proposed Rule, 71 Fed. Reg. 2620 (January 17, 2006); Revisions to
Ambient Air Monitoring Regulations, Proposed Rule, 71 Fed. Reg. 2710
(January 17, 2006).
---------------------------------------------------------------------------
Coal Mine Wastes
Coal mining leaves a legacy of wastes long after mining operations
cease. One significant waste is the sludge that is produced from
washing coal. There are currently over 700 sludge impoundments located
throughout mining regions, and this number continues to grow. These
impoundment ponds pose a potential threat to the environment and human
life. If an impoundment fails, the result can be disastrous. In 1972 an
impoundment break in West Virginia released a flood of coal sludge that
killed 125 people. In the year 2000 an impoundment break in Kentucky
involving more than 300 million gallons of slurry (30 times the size of
the Exxon Valdez spill) killed all aquatic life in a 20 mile diameter,
destroyed homes, and contaminated much of the drinking water in the
eastern part of the state.\36\
---------------------------------------------------------------------------
\36\ Frazier, Ian. ``Coal Country.'' On Earth. NRDC. Spring, 2003.
---------------------------------------------------------------------------
Another waste from coal mining is the solid waste rock left behind
from tunneling or blasting. This can result in a number of
environmental impacts previously discussed, including acid mine
drainage. A common problem with coal mine legacies is the fact that if
a mine is abandoned or a mining company goes out of business, the
former owner is under no legal obligation to cleanup and monitor the
environmental wastes, leaving the responsibility in the hands of the
state.\37\
---------------------------------------------------------------------------
\37\ Reece, Erik. ``Death of a Mountain.'' Harper's Magazine.
April, 2005.
---------------------------------------------------------------------------
Effects on Communities
Coal mining can also have serious impacts on nearby communities. In
addition to noise and dust, residents have reported that dynamite
blasts can crack the foundations of homes,\38\ and many cases of
subsidence due to the collapse of underground mines have been
documented. Subsidence can cause serious damage to houses, roads,
bridges, and any other structure in the area. Blasting can also cause
damage to wells, and changes in the topography and structure of
aquifers can cause these wells to run dry.
---------------------------------------------------------------------------
\38\ Id.
---------------------------------------------------------------------------
Transportation of Coal Transporting coal from where it is mined to
where it will be burned also produces significant quantities of air
pollution and other environmental harms. Diesel-burning trucks, trains,
and barges that transport coal release NOX, SOX, PM, VOCs (Volatile
Organic Chemicals), CO, and CO<INF>2</INF> into the Earth's atmosphere.
Trucks and trains (barge pollution data are unavailable) transporting
coal release over 600,000 tons of NOX, and over 50,000 tons of PM10
into the air annually.\39\<SUP>,</SUP>\40\ In addition to health risks,
black carbon from diesel combustion is another contributor to global
warming.\41\ Land disturbance from trucks entering and leaving the mine
complex and coal dust along the transport route also release particles
into the air.\42\ For example, in Sylvester, West Virginia, a Massey
Energy coal processing plant and the trucks associated with it spread
so much dust around the town that ``Sylvester's residents had to clean
their windows and porches and cars every day, and keep the windows
shut.'' \43\ Even after a lawsuit and a court victory, residents--who
now call themselves ``Dustbusters''--still ``wipe down their windows
and porches and cars.'' \44\
---------------------------------------------------------------------------
\39\ DOT Federal Highway Administration. Assessing the Effects of
Freight Movement on Air Quality, Final Report. April, 2005.
\40\ Energy Information Administration: Coal Transportation
Statistics.
\41\ Hill, Bruce. ``An Analysis of Diesel Air Pollution and Public
Health in America.'' Clean Air Task Force, Boston. February, 2005.
\42\ EPA. Mountaintop Mining/Valley Fills in Appalachia: Draft
Programmatic Environmental Impact Statement. 2003.
\43\ Michael Schnayerson, ``The Rape of Appalachia,'' Vanity Fair,
157 (May 2006).
\44\ Id.
---------------------------------------------------------------------------
Almost 60 percent of coal in the U.S. is transported at least in
part by train and coal transportation accounts for 44 percent of rail
freight ton-miles.\45\ Some coal trains reach more than two miles in
length, causing railroad-crossing collisions and pedestrian accidents
(there are approximately 3,000 such collisions and 900 pedestrian
accidents every year), and interruption in traffic flow (including
emergency responders such as police, ambulance services, and fire
departments). Local communities also have concerns about coal trucks,
both because of their size and the dust they can leave behind.
According to one report, in a Kentucky town, coal trucks weighing 120
tons with their loads were used, and ``the Department of Transportation
signs stating a thirty-ton carrying capacity of each bridge had
disappeared.'' \46\ Although the coal company there has now adopted a
different route for its trucks, community representatives in Appalachia
believe that coal trucks should be limited to 40 tons.\47\
---------------------------------------------------------------------------
\45\ http://nationalatlas.gov/articles/transportation/
a<INF>-</INF>freightrr.html
\46\ Erik Reece, Lost Mountain: A Year in the Vanishing Wilderness
112 (2006).
\47\ Personal communication from Hillary Hosta and Julia Bonds,
Coal River Mountain Watch (Apr. 7, 2006).
---------------------------------------------------------------------------
Coal is also sometimes transported in a coal slurry pipeline, such
as the one used at the Black Mesa Mine in Arizona. In this process the
coal is ground up and mixed with water in a roughly 50:50 ratio. The
resulting slurry is transported to a power station through a pipeline.
This requires large amounts of fresh groundwater. To transport coal
from the Black Mesa Mine in Arizona to the Mohave Generating Station in
Nevada, Peabody Coal pumped over one billion gallons of water from an
aquifer near the mine each year. This water came from the same aquifer
used for drinking water and irrigation by members of the Navajo and
Hopi Nations in the area. Water used for coal transport has led to a
major depletion of the aquifer, with more than a 100 foot drop in water
level in some wells. In the West, coal transport through a slurry
pipeline places additional stress on an already stressed water supply.
Maintenance of the pipe requires washing, which uses still more fresh
water. Not only does slurry-pipeline transport result in a loss of
freshwater, it can also lead to water pollution when the pipe fails and
coal slurry is discharged into ground or surface water.\48\ The Peabody
pipe failed 12 times between 1994 and 1999. The Black Mesa mine closed
as of January 2006. Its sole customer, the Mohave Generating Station,
was shut down because its emissions exceeded current air pollution
standards.
---------------------------------------------------------------------------
\48\ NRDC. Drawdown: Groundwater Mining on Black Mesa.
---------------------------------------------------------------------------
Water Requirements for Liquid Coal
Liquid coal production requires large quantities of water.
According to a USGS report, thermal electric generation accounted for
39 percent of the freshwater withdrawn from watersheds in the U.S. in
2000.\49\ The water use dedicated to liquid coal production will
require water use above and beyond current uses, competing with other
needs, including irrigation and public water supply. The withdrawal and
consumption of water in areas with water shortages will be a major
problem for this industry. Competing water uses, primarily for
irrigation, will be a major problem in the West where water rights are
established and water is considered a very valuable commodity. In the
East, competing water uses, primarily from thermal electric cooling,
and water shortages also are beginning to become an issue of concern.
---------------------------------------------------------------------------
\49\ USGS 2004. ``Estimated Use of Water in the United States in
2000,'' USGS Circular 126. Available at http://pubs.usgs.gov/circ/2004/
circ1268/pdf/circular1268.pdf
---------------------------------------------------------------------------
There are three major uses of water in a coal-to-liquids plant, (1)
process water, (2) boiler feed water and (3) cooling water. According
to the Department of Energy's Idaho National Lab, approximately 12-14
barrels of water are used for every barrel of liquid coal.\50\
Therefore the water requirement necessary to meeting the needs of an
80,000 BPD liquid coal plant could require sourcing about 40 million
gallons of water per day (14 billion gallons per year). The 40 million
gallons of water per day needed for an 80,000 BPD liquid coal facility
is enough water to meet the domestic needs of more than 200,000
people,\51\ or one-fifth the population of the State of Montana. There
are already serious water supply problems in Western states such as
Montana and Wyoming where most of our cheap coal supplies are located.
---------------------------------------------------------------------------
\50\ Boardman, Richard, Ph.D. ``Gasification and Water Nexus,''
Department of Energy, Idaho National Laboratory Gasification Research,
presented March 14, 2007 at the GTC, Workshop on Gasification
Technologies.
\51\ Based on EPA's estimate of 200 gallons of water per person per
day, http://www.epa.gov/watrhome/you/chap1.html
---------------------------------------------------------------------------
While alternative technologies exist that use less water in the
liquid coal production process, many of them are more costly and some
may be cost prohibitive. In addition, water must be of good quality for
use in cooling towers and blow down operations and if water must be
treated before use that will add additional costs to the plant
operations Some research is suggesting the option of using coal bed
methane water as an alternative water source and this is only possible
if this water's salinity is low or if desalinization costs were low.
According to NETL, much of the water produced from coal bed methane
operations is very saline and needs to be treated prior to surface
discharge or plant use.\52\ Therefore, cost-effective sources of water
and technologies that use water more efficiently in these processes are
limited.
---------------------------------------------------------------------------
\52\ DOE/NET-2006/1233 ``Energy Issues for Fossil Energy and Water:
Investigation of Water Issues Related to Coal Mining, Coal to Liquids,
Oil Shale and Carbon Capture and Sequestration.'' June 2006.
---------------------------------------------------------------------------
Coal Resource Requirements
While it is frequently said that America has more than 250 years of
coal to use, these claims are based current coal production of about
one billion tons per year. As the National Academy of Sciences (NAS)
has concluded, even with current consumption rates, it is ``not
possible to confirm'' the 250 year supply claim because this estimate
is based on ``methods that have not been reviewed or revised since
their inception in 1974'' and that updated methods suggest that ``only
a small fraction of previously estimated reserves are actually minable
reserves.'' \53\
---------------------------------------------------------------------------
\53\ National Research Council, ``Coal: Research and Development to
Support National Energy Policy,'' Washington, DC, 2007 at 3.
---------------------------------------------------------------------------
These observations indicate we should reconsider proposals to
legislate incentives and mandates for programs like liquid coal that
would dramatically increase our rates of coal consumption. As mentioned
above, if all of the coal industry's wish list for coal use were
implemented, coal production would more than double. Apart from the
environmental and health threats presented by this scenario, there are
potentially large adverse economic impacts from a program to increase
coal consumption on this scale.
Consider the following thought experiment. What would be the impact
on U.S. recoverable coal reserves if we were to try to displace some
significant fraction of U.S. oil imports with liquid coal? Current U.S.
coal recoverable reserve estimates, using methods criticized by the NAS
as possibly overstating actual minable coal, amount to just under 270
billion tons. Suppose the U.S. were to ramp up a liquid coal of size
large enough to replace one-third to one hundred per cent of forecasted
U.S. oil imports by 2030? U.S. EIA forecasts that net oil imports
(crude and refined products) in 2030 will be about 16 million barrels a
day.\54\ Using the National Coal Council's estimate of conversion
efficiency, to replace one-third of those imports would require
consumption of nearly 1.2 billion tons of additional coal per year in
2030 and if oil import demand increased at two percent per year, by
2050 coal consumption to displace this same fraction of imports would
grow to nearly 1.8 billion tons per year. When combined with continued
use of coal for electric power, this rate of coal consumption would
consume 40 percent of currently estimated recoverable reserves by 2050
and would deplete all of those reserves by about 2080.\55\ If liquid
coal production were scaled to a level needed to replace one-half of
forecasted oil imports, 49 percent of estimated recoverable reserves
would be consumed by 2050 and 100 percent by the year 2074 and if we
tried to replace all of our forecasted oil imports with liquid coal
then two-thirds of recoverable reserves would be consumed by 2050 and
100 percent by the year 2060.
---------------------------------------------------------------------------
\54\ U.S. Energy Information Administration, ``Annual Energy
Outlook 2007.''
\55\ For this calculation we assume a one percent per year growth
rate in coal consumption in the power sector. This is not a sustainable
scenario but is chosen to illustrate the implications of ``business as
usual'' practices.
---------------------------------------------------------------------------
The above is a thought experiment, not a prediction that we would
actually run out of coal by those dates. Economists will argue that
more reserves will become ``recoverable'' as the price rises. But as
the argument suggests, such new reserves will be more expensive than
today's coal supplies.
The point we must recognize is that using coal to make liquid fuel
will at a minimum raise coal prices substantially for all uses,
including the electric power industry, which now depends on coal to
produce over 50 percent of U.S. electricity. It is also worth noting
that the massive amounts of CO<INF>2</INF> that would have to be
injected into geologic formations to limit emissions from liquid coal
production will also drive up the cost of coal use. While it appears
the U.S. has large amounts of geologic storage capacity, as with all
resources there is a supply cost curve and with the large demand for
storage capacity created by a significant liquid coal industry those
costs will escalate faster than if demand is more moderate.
In short, there is no basis to assume that liquid coal would be an
economic bargain either, providing one more reason for us to look for a
better way.
A Responsible Action Plan
The impacts that a large liquid coal program could have on global
warming pollution, conventional air pollution and damage from expanded
coal production are substantial--so substantial that using coal to make
liquid fuel would likely create far worse problems than it attempts to
solve.
Fortunately, the U.S. can have a robust and effective program to
reduce oil dependence without embracing liquid coal technologies. A
combination of efficiency, renewable fuels and plug-in hybrid vehicles
can reduce our oil consumption more quickly, more cleanly and in larger
amounts than liquid coal even on the massive scale advocated by the
coal industry.
A combination of more efficient cars, trucks and planes, biofuels,
and ``smart growth'' transportation options outlined in report
``Securing America,'' produced by NRDC and the Institute for the
Analysis of Global Security, can cut oil dependence by more than three
million barrels a day in 10 years, and achieve cuts of more than 11
million barrels a day by 2025, far outstripping the 2.6 million barrel
a day program being promoted by the coal industry.
The Securing America program is made up of these sensible steps
that will cut oil dependence, cut global warming emissions, and reduce
other harmful impacts of today's energy production and consumption
patterns:
Accelerate oil savings in passenger vehicles by:
<bullet> establishing tax credits for manufacturers to retool
existing factories so they can build fuel-efficient vehicles
and engineer advanced technologies, and
<bullet> establishing tax credits for consumers to purchase
the next generation of fuel-efficient vehicles; and raising
federal fuel economy standards for cars and light trucks in
regular steps.
Accelerate oil savings in motor vehicles through the following:
<bullet> requiring replacement tires and motor oil to be at
least as fuel efficient as original equipment tires and motor
oil;
<bullet> requiring efficiency improvements in heavy-duty
trucks; and
<bullet> supporting smart growth and better transportation
choices.
Accelerate oil savings in industrial, aviation, and residential
building sectors through the following:
<bullet> expanding industrial efficiency programs to focus on
oil use reduction and adopting standards for petroleum heating;
<bullet> replacing chemical feedstocks with bioproducts
through research and development and government procurement of
bioproducts;
<bullet> upgrading air traffic management systems so aircraft
follow the most-efficient routes; and
<bullet> promoting residential energy savings with a focus on
oil-heat.
Encourage growth of the biofuels industry through the following:
<bullet> requiring all new cars and trucks to be capable of
operating on biofuels or other non-petroleum fuels by 2015; and
<bullet> allocating $2 billion in federal funding over the
next 10 years to help the cellulosic biofuels industry expand
production capacity to one billion gallons per year and become
self-sufficient by 2015.
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
To cut our dependence on oil we should follow a simple rule: start
with the measures that will produce the quickest, cleanest and least
expensive reductions in oil use; measures that will put us on track to
achieve the reductions in global warming emissions we need to protect
the climate. If we are thoughtful about the actions we take, our
country can pursue an energy path that enhances our security, our
economy, and our environment.
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
Biography for David G. Hawkins
David G. Hawkins began his work in ``public interest'' law upon
graduation from Columbia University Law School in 1970. He joined the
Natural Resources Defense Council's Washington, DC office in 1971 as
one of the organization's first staff members.
In 1977, Mr. Hawkins was appointed by President Carter to be
Assistant Administrator for Air, Noise, and Radiation at the
Environmental Protection Agency. During his time at EPA, he was
responsible for initiating major new programs under the 1977 Amendments
to the Clean Air Act.
With President Reagan's election in 1981, Mr. Hawkins returned to
NRDC to co-direct NRDC's Clean Air Program.
In 1990, Mr. Hawkins became Director of NRDC's Air and Energy
Program, and in 2001 he became the Director of NRDC's Climate Center.
The Climate Center focuses on advancing policies and programs to reduce
the pollution responsible for global warming. In addition to working
with Congress to design a legislative mechanism that will slow, stop
and reduce the emissions of global warming pollution, Mr. Hawkins is
recognized as an expert on advanced coal technologies and carbon
dioxide capture and storage.
Mr. Hawkins currently serves on the boards of the Center for Clean
Air Policy, Resources for the Future and the Board on Environmental and
Energy Systems of the National Academy of Sciences. He is also a member
of the U.S. Department of Energy's Climate Change Science Program
Product Development Advisory Committee. Mr. Hawkins participated in the
Intergovernmental Panel on Climate Change's Special Report on Carbon
Dioxide Capture and Storage and is participating in the IPCC's Fourth
Assessment Report on climate change.
Mr. Hawkins is married with three children and lives in Bethesda,
MD.
Chairman Lampson. Thank you, Dr. Hawkins.
Dr. Romm.
STATEMENT OF DR. JOSEPH ROMM, FORMER ACTING ASSISTANT
SECRETARY, OFFICE OF ENERGY EFFICIENCY AND RENEWABLE ENERGY,
DEPARTMENT OF ENERGY; SENIOR FELLOW, CENTER FOR AMERICAN
PROGRESS
Dr. Romm. Thank you. Thank you, Mr. Chairman and Members of
the Committee. I appreciate the opportunity to share my views
on liquid coal.
I will--just two key questions. First, should Congress
promote coal as a transportation fuel? And second, if Congress
does, will people actually drive their cars with liquid coal? I
think the answer to both questions is decidedly no.
Congress should really promote only those technologies and
strategies that provide significant and net societal benefit.
Liquid coal does not provide net societal benefit. Worse, it
will actually cause societal harm. Liquid coal would increase
greenhouse gas emissions, use up increasingly scarce water
supplies, and divert hundreds of billions of dollars from
crucial clean energy solutions.
We simply have run out of time to waste money and resources
on liquid coal because global warming is happening faster than
scientists had warned. Sea ice loss, ice sheet loss,
temperature rise, sea level rise, hurricane intensity, and
expansion of the tropics, all of them are happening faster than
scientists expected.
We all want to avoid catastrophic warming such as 80 foot
sea level rise, and that means limiting future warming to two
degrees Fahrenheit, and that requires mandatory cuts in
greenhouse gas emissions of 60 to 80 percent by 2050, as many
bills before Congress would require. And it certainly doesn't
make any sense for Congress to pursue on the one hand reducing
fossil fuel, CO<INF>2</INF> emissions dramatically on the one
hand and then on the other hand significantly promoting it with
coal-to-liquids.
It is true that carbon dioxide emissions that, as Dr.
Hawkins said, carbon dioxide emissions from coal to diesel are
about double that of conventional diesel. It is true that you
could possibly capture the carbon dioxide and store it
underground permanently, but that will make an expensive and
complicated process even more expensive and complicated so it
seems unlikely for the foreseeable future.
I would also add that there is no evidence whatsoever that
this country is at all serious about carbon capture and
storage. If we were serious about carbon capture and storage,
we would be doing decidedly different things. We would have a
price for carbon dioxide, without which there will be no carbon
capture and storage, and we would start identifying and
certifying repositories for carbon capture, for carbon storage,
which we haven't even begun doing.
I would also add as I explained in my testimony, that using
carbon dioxide for enhanced oil recovery is not sequestration.
Why? Because the carbon dioxide squeezes more oil out of the
ground. You then burn that oil, and you release the carbon
dioxide again. So you haven't accomplished anything.
I would also add, and this is important, that when you are
done with the carbon capture and storage, if you happen to do
it, you are still left with diesel fuel, which is a carbon-
intensive liquid fuel that will release its carbon into the
atmosphere once it is burned in an internal combustion engine.
We are going to need to reduce diesel consumption and all
liquid petroleum consumption 60 to 80 percent by mid century.
So we don't need to figure out ways to increase it.
The future of coal in a carbon-constrained world is not
liquefaction plus carbon capture and storage. The future of
coal is electricity generation with carbon capture and storage
since that is carbon free. A 2006, study by the University of
California found that a significant use of coal to diesel could
increase annual emissions by seven billion tons of carbon
dioxide for several decades. That is more than current U.S.
carbon emissions and would certainly be fatal to any effort to
avoid catastrophic warming.
Instead of liquid coal, Congress needs to address the
climate problem by establishing a cap on emissions that creates
a price for carbon dioxide. What would be the impact of that
cap when you ultimately put it in place? The U.S. Energy
Information Administration has actually done a number of
studies on this. In one analysis EIA modeled a carbon dioxide
permit price reaching only $14 in 2030, a relatively low price,
considerably lower than the current price for carbon dioxide in
Europe. Yet this low price reduced projected liquid coal
production by 85 percent in 2030.
A second EIA analysis showed that even a moderate price for
carbon dioxide wipes out all projected liquid coal plants. So
Congress is going to be passing laws in the next few years that
are essentially going to render all liquid coal uneconomic.
Coal-to-liquid is just a dead end from a climate
perspective and from a water perspective, too. You have heard
what Dr. Hawkins said. We are in a world that is facing mega
droughts and chronic water shortages from human-caused climate
change, and in fact, water demand is one reason chronically-
water-short China has raised the capital threshold for liquid
coal projects in an effort to scale back growth.
Time has simply run out in the race to avoid catastrophic
warming. We no longer have the luxury of grossly misallocating
capital and fuels to expensive boondoggles like coal-to-liquid.
Liquid coal will not have a future in this country, no matter
how much money Congress squanders on it. I think Congress
should not allocate significant funds to liquid coal, R&D, or
other measures to promote liquid coal. The future of coal in
the carbon-constrained world, again, is in the form of
electricity generation with carbon capture and storage.
And as Dr. Hawkins said, if coal has a future as a
transportation fuel, it is with plug-in hybrids running on zero
carbon electricity generated from coal with carbon capture and
storage.
Thank you.
[The prepared statement of Dr. Romm follows:]
Prepared Statement of Joseph Romm
Mr. Chairman, Members of the Committee, I am delighted to appear
before you today to discuss the subject of liquid fuel from coal. I am
a Senior Fellow at the Center for American Progress here in Washington,
DC where I run the blog ClimateProgress.org. I am author of the recent
book Hell and High Water: Global Warming--the Solution and the Politics
(Morrow, 2007) and have published and lectured widely on energy and
climate issues.
I served as Acting Assistant Secretary at the U.S. Department of
Energy's Office of Energy Efficiency and Renewable Energy during 1997
and Principal Deputy Assistant Secretary from 1995 though 1998. In that
capacity, I helped manage the largest program in the world for working
with businesses to develop and use clean energy technologies. I hold a
Ph.D. in physics from M.I.T.
We are all grappling with how best to avoid catastrophic global
warming. I will argue coal-to-liquids is not part of the solution--and
would in fact make the problem worse. The following figure, based on
EPA data, shows the estimated change in greenhouse gas emissions from
various alternative fuels:
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
I appreciate the opportunity to share my views on coal-to-liquids,
which are based on numerous discussions with leading energy experts;
research and analysis for my book and for the National Commission on
Energy Policy; and participation in the Defense Science Board Task
Force on Department of Defense Energy Strategy, which heard a number of
briefings on liquid coal, including from the Jason's defense advisory
group. All references in this testimony can be found in my book or on
my blog.
BACKGROUND
The question of the role of coal-to-liquids can play in the
national energy mix can be understood only with a full appreciation of
the scale of climate mitigation the Nation and the world must pursue.
Global concentrations of carbon dioxide, the primary greenhouse gas,
are rising at an accelerating rate in recent years--and they are
already higher than at any time in the past three million years. The
scientific consensus, as reflected in the work of the Intergovernmental
Panel on Climate Change (IPCC), appears to be seriously underestimating
the rate of climate change:
<bullet> ``The recent [Arctic] sea-ice retreat is larger than
in any of the (19) IPCC [climate] models''--and that was a
Norwegian expert in 2005. The retreat has accelerated in the
past two years.
<bullet> The ice sheets appear to be shrinking ``100 years
ahead of schedule.'' That was Penn State climatologist Richard
Alley in March 2006. In 2001, the IPCC thought that neither
Greenland nor Antarctica would lose significant mass by 2100.
They both already have.
<bullet> The temperature rise from 1990 to 2005--
0.33<SUP>+</SUP>C--was ``near the top end of the range'' of
IPCC climate model predictions.
<bullet> Sea-level rise from 1993 and 2006--3.3 millimeters
per year as measured by satellites--was higher than the IPCC
climate models predicted.
<bullet> Atlantic hurricane intensity appears to be increasing
faster than the models projected.
<bullet> The tropics are expanding faster than the models
project.
<bullet> Since 2000, carbon dioxide emissions have grown
faster than any IPCC model had projected.
Worse, the ocean's heat content will keep re-radiating heat into
the Earth's atmosphere even after we eliminate the heat imbalance,
meaning the planet will keep warming and the glaciers keep melting for
decades after we cut greenhouse gas emissions. Therefore, we must act
in an ``anticipatory'' fashion and reduce emissions long before climate
change is painfully obvious to everyone.
The planet has warmed about 0.8<SUP>+</SUP>C since the mid-19th
century, primarily because of human-generated greenhouse gas emissions.
If we don't sharply reverse the increase in global greenhouse gas
emissions within the next decade, we will be committing the world to an
additional 2<SUP>+</SUP> to 3<SUP>+</SUP>C warming by century's end,
temperatures not seen for millions of years, when Greenland and much of
Antarctica were ice free, and sea levels were 80 feet higher.
How fast can the sea level rise? Following the last ice age, the
world saw sustained melting that raised sea levels more than a foot a
decade. NASA's Dr. James Hansen--the country's leading climate
scientist--believes we could see such a catastrophic melting rate
within the century, as do many others I interviewed for my book. Other
potential devastating threats from unrestricted greenhouse gas
emissions include widespread drought and desertification, including in
the American southwest, and an increase in extreme weather of all
kinds, including heat waves, hurricanes, and severe rainstorms.
To avoid this fate, we must sharply reduce global carbon dioxide
emissions from fossil fuel combustion. As an example of the kind of
reductions required by climate change, both Florida Governor Charlie
Crist and California Governor Arnold Schwarzenegger have committed
their states to reduce greenhouse gas emissions to 80 percent below
1990 levels by 2050. The United States Climate Action Partnership--a
group of Fortune 500 companies and leading environmental
organizations--has embraced 60 percent to 80 percent cuts by 2050.
Former Prime Minister Tony Blair committed the United Kingdom to a 60
percent reduction by 2050. The IPCC says all industrialized nations,
including the United States, need to achieve reductions of 50 percent
to 80 percent to avoid the worst of global warming--and that requires
emissions to peak in the next decade. Many bills have been introduced
to Congress to achieve such cuts. The question is where does liquid
coal fit in U.S. efforts to achieve such cuts?
NO ROLE FOR LIQUID COAL
Coal and natural gas can be converted to diesel fuel using the
Fischer-Tropsch process. During World War II, coal gasification and
liquefaction produced more than half of the liquid fuel used by the
German military. South Africa has employed this process for decades.
The process is not more widely used today in large part because it
is incredibly expensive. It costs $5 billion or more just to build a
plant capable of producing 80,000 barrels of oil a day (the U.S.
currently consumes more than 21 million barrels a day).
Five to seven gallons of water are necessary for every gallon of
diesel fuel that's produced (and double that if you co-produce diesel
fuel and electricity from coal), according to the June 2006 report,
``Emerging Issues for Fossil Energy and Water: Investigation of Water
Issues Related to Coal Mining, Coal to Liquids, Oil Shale, and Carbon
Capture and Sequestration'' by DOE's National Energy Technology
Laboratory. Here is the key figure from the report:
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
This is not a particularly good long-term strategy in a nation and
a world facing mega-droughts and chronic water shortages from human-
caused climate change. The heavy water demand is one reason chronically
water-short China has raised the capital threshold for liquid coal
projects in an effort to scale back growth.
Worse than the water issue, the total carbon dioxide emissions from
coal-to-diesel are about double that of conventional diesel, as the
earlier figure shows. It is possible to capture the carbon dioxide from
the process and store it underground permanently. But that will make an
expensive process even more expensive, so it seems unlikely for the
foreseeable future, certainly not until carbon dioxide is regulated and
has a high price and we have a number of certified underground geologic
repositories.
More importantly, even with the capture and storage of CO<INF>2</INF>
from the Fischer-Tropsch process, the final product is diesel fuel, a
carbon-intensive liquid that will release CO<INF>2</INF> into the
atmosphere once it is burned in an internal combustion engine. A great
many people I have spoken to are confused about this point: They think
that capturing and storing the CO<INF>2</INF> while turning coal to
diesel is as good an idea as capturing the CO<INF>2</INF> from the
integrated gasification combined cycle (IGCC) process for turning coal
into electricity. No. The former process still leaves a carbon-
intensive fuel, whereas the latter process yields near zero-carbon
electricity.
The future of coal in a carbon-constrained world is electricity
generation with carbon capture and storage, not CTL plus carbon capture
and storage. Capturing and storing even one gigaton of carbon a year
requires a flow of carbon dioxide into the ground equal to the current
flow of oil out of the ground. That by itself represents an enormous
engineering challenge. We need to devote the vast majority of this
level of sequestration effort to power production, to generation of
zero-carbon electricity from coal, not to generation of an endless
stream of carbon-intensive liquid fuel like Fischer-Tropsch diesel.
Worse, some people propose taking the captured CO<INF>2</INF> and using
it for enhanced oil recovery, which, as discussed below, is the
equivalent of not capturing the carbon dioxide at all.
Coal to diesel is a bad idea for the Nation and the planet. If the
United States pursues it aggressively, catastrophic climate change will
be all but unavoidable. Turning natural gas into diesel is not as bad
an idea, at least from the perspective of direct emissions, because
natural gas is a low-carbon fuel. But it represents a tremendous misuse
of natural gas, which could otherwise be used to reduce future
greenhouse gas emissions.
A 2006 study by the University of California at Berkeley found that
meeting the future demand shortfall from conventional oil with
unconventional oil, especially coal-to-diesel, could increase annual
emissions by 2.0 billion metric tons of carbon (7.3 gigatons of carbon
dioxide) for several decades. That is more than current total U.S.
carbon emissions and would certainly be fatal to any effort to avoid
3<SUP>+</SUP>C increase in average worldwide temperature. Indeed, in a
liquid coal scenario, a tripling of carbon dioxide emissions by
century's end seems likely, which would likely leave the planet
5<SUP>+</SUP>C warmer than preindustrial levels by 2100--a temperature
not seen since before Antarctica had ice, when sea levels were 280 feet
higher than current levels. Again, avoiding 3<SUP>+</SUP>C requires a
substantial decrease in total upstream and downstream carbon emissions
from oil by mid-century.
EIA PREDICTS CARBON PRICE FATAL TO LIQUID COAL
Instead of promoting of liquid coal, Congress must address the
climate problem by establishing a cap on emissions that creates a price
for carbon dioxide. What will be the impact on liquid coal of a carbon
cap? Two recent reports by the U.S. Energy Information Administration
(EIA) provide the answer.
In its January 2007 report, ``Energy Market and Economic Impacts of
a Proposal to Reduce Greenhouse Gas Intensity with a Cap and Trade
System,'' EIA examined the impact of a draft version of Sen. Jeff
Bingaman's global warming bill. That bill has a safety valve, which
limits the price of carbon dioxide permits. In the EIA analysis, the
permit price starts around $4 a ton of carbon dioxide in 2012, rises to
$7.15 in 2020 and reaches only $14.18 in 2030. This is a relatively low
price for carbon dioxide. Indeed, this 2030 price is considerably lower
than the current price for carbon dioxide in the European Union--and
the first budget year for Kyoto isn't even until next year. In this
scenario, EIA finds:
in 2020, CTL production is 0.2 million barrels per day (74
percent) lower than in the reference case. By 2030, the change
is 0.6 million barrels per day (85 percent) lower than in the
reference case.
In short, a relatively low price for carbon dioxide wipes out the
vast majority of projected CTL.
In July 2007, EIA released ``Energy Market and Economic Impacts of
S. 280, the Climate Stewardship and Innovation Act of 2007,'' an
analysis of the global warming bill by Senators John McCain and Joe
Lieberman. S. 280 sets considerably more stringent reduction targets
than Sen. Bingaman's draft bill--ultimately reaching 60 percent below
1990 emissions levels by 2050. This bill has no safety valve. As a
result, the permit price reaches $22.20 in 2020 and hits $47.90 in
2030. The report finds:
None of the 15 coal-to-liquids plants built in the reference
case are projected to come on line in the main S. 280 cases. In
the reference case [business as usual], coal consumption at CTL
plants reaches 109 million tons in 2030.
A moderate price for carbon dioxide wipes out all projected CTL.
Since it is all but inevitable that we will have a low-to-moderate
price of carbon dioxide by 2020, and at least a moderate price by 2030,
CTL will not achieve any significant market penetration. No amount of
federal research and development investment or tax credits or loan
guarantees are likely to change that equation.
CTL FOR ENHANCED OIL RECOVERY DOES NOT HELP THE CLIMATE
The carbon dioxide from CTL could be used to squeeze more oil out
of the ground by injecting it into a well where it would be sequestered
permanently. It might be argued that the carbon dioxide could have dual
value--for enhanced oil recovery (EOR) and as a certified greenhouse
gas emission reduction--and that such a dual value would make CTL more
economical.
That, however, makes neither environmental nor economic sense. The
key ratio is carbon dioxide injected vs. carbon dioxide released from
recovered oil. BP and UCLA did such a life cycle analysis in 2001 and
concluded, ``the EOR activity is almost carbon-neutral when comparing
net storage potential and gasoline emissions from the additional oil
extracted.'' And that may be optimistic. The study notes:
The results presented reflect only gasoline consumption but do
not take into account the additional emissions that would
originate from the refining process, nor the emissions arising
from the combustion of the other products of crude oil such as
diesel, bunker or jet fuels.
In short, the carbon dioxide used to recover the oil is less than
the carbon dioxide released from that oil when you include the carbon
dioxide released from 1) burning all the refined products and 2) the
refining process itself. For that reason, no nation should give carbon
credits for carbon dioxide used for EOR.
The study, however, has a different conclusion: ``utilizing
captured and recycled CO<INF>2</INF> instead of using CO<INF>2</INF>
exclusively from natural reservoirs reduces greenhouse gas emissions to
the atmosphere from EOR'' (emphasis added). This is true because most
carbon dioxide used for EOR today comes from ``natural reservoirs.''
But the Nation and the world have barely touched the full potential
of EOR even though it can potentially double the oil output from a well
that has undergone primary and secondary recovery. Why? As a 2005
Department of Energy press release on an EOR-sequestration project
noted, ``much of the CO<INF>2</INF> used in similar U.S. EOR projects
has been taken at considerable expense from naturally occurring
reservoirs'' (emphasis added).
Cheap, widely available carbon dioxide would be a game-changer for
oil recovery. The DOE carefully studied EOR and came to an amazing
conclusion in 2006. In the U.S. alone, ``next generation
CO<INF>2</INF>-EOR technology'' and ``widespread sequestration of
industrial carbon dioxide'' could add a stunning ``160 billion barrels
of domestic oil recovery.'' The combustion of that oil would produce
more than 60 billion tonnes of CO<INF>2</INF>, equivalent to ten times
annual U.S. CO<INF>2</INF> emissions.
A CTL project where the carbon dioxide is captured and used for new
EOR is a doubly bad idea from a climate perspective. Nor does it solve
the problem of oil dependency. As President Bush has said, ``we are
addicted to oil'' and ``we need to get off oil.'' Achieving those goals
while sharply reducing greenhouse gas emissions can be accomplished
only with cars that are significantly more fuel-efficient running on
low-carbon alternative fuels, such as cellulosic ethanol or electricity
from zero-carbon sources for plug-in hybrid electric vehicles.
CONCLUSION
We are simply running out of time to avoid catastrophic warming,
and we no longer have the luxury of grossly misallocating capital and
fuels to expensive boondoggles like coal-to-liquid. Because of the
urgent need to reduce greenhouse gas emissions--because Congress is
finally considering the passage of a cap and trade system to reduce
emissions--CTL should have little future in this country.
Congress should certainly not allocate significant funds to CTL
R&D, nor should it take other measures to promote CTL. The future of
coal in a carbon constrained world is in the form of electricity
generation with carbon capture and storage. And if coal has a future as
a transportation fuel, it is with plug in hybrids running on such zero-
carbon coal electricity. For these reasons, accelerating the transition
to such zero-carbon power is where Congress should be focusing its time
and resources.
Biography for Joseph Romm
Dr. Joseph Romm is one of the world's leading experts on clean
energy technologies and greenhouse gas mitigation. He is a senior
fellow at the Center for American Progress, where he oversees the blog
ClimateProgress.org. He is author of the book Hell and High Water:
Global Warming-the Solution and the Politics (Morrow, 2007). Dr. Romm
is coauthor of the Scientific American article, ``Hybrid Vehicles Gain
Traction'' (April 2006), and author of the report, ``The Car and Fuel
of the Future: A Technology and Policy Overview,'' for the National
Commission on Energy Policy (July 2004). His previous book, The Hype
About Hydrogen: Fact and Fiction in the Race to Save the Climate, was
named one of the best science and technology books of 2004 by Library
Journal.
Dr. Romm served as Acting Assistant Secretary at the U.S.
Department of Energy's Office of Energy Efficiency and Renewable Energy
during 1997 and Principal Deputy Assistant Secretary from 1995 though
1998. In that capacity, he helped manage the largest program in the
world for working with businesses to develop and use clean energy
technologies--one billion dollars aimed at hybrid vehicles, electric
batteries, hydrogen and fuel cell technologies, all forms of renewable
energy, distributed generation, energy efficiency in buildings and
industry, and biofuels.
Romm initiated, supervised, and publicized a comprehensive
technical analysis by five national laboratories of the energy
technologies best able to reduce greenhouse gas emissions cost-
effectively, ``The Five Lab Study.'' He helped lead the development of
the Administration's climate technology strategy. He is also author of
the first book to benchmark corporate best practices for using clean
energy technologies to reduce greenhouse gas emissions: Cool Companies:
How the Best Businesses Boost Profits and Productivity by Cutting
Greenhouse Gas Emissions.
Dr. Romm is Executive Director and founder of the Center for Energy
and Climate Solutions--a one-stop shop helping businesses and states
adopt high-leverage strategies for saving energy and cutting pollution.
The Center is a division of the Virginia-based nonprofit, Global
Environment & Technology Foundation. Romm's clients have included
Toyota, IBM, Johnson & Johnson, Collins Pine, Nike, Timberland, Texaco,
and Lockheed-Martin.
Romm holds a Ph.D. in physics from M.I.T. He has written and
lectured widely on clean energy and climate issues, including articles
in Forbes, Technology Review, Issues in Science and Technology, Foreign
Affairs, The New York Times, the L.A. Times, Houston Chronicle,
Washington Post, and Science magazine. He co-authored ``Mid East Oil
Forever,'' the cover story of the April 1996 issue of the Atlantic
Monthly, which predicted higher oil prices within a decade and
discussed alternative energy strategies.
Chairman Lampson. Thank you, Dr. Romm.
Now, Dr. Boardman.
STATEMENT OF DR. RICHARD D. BOARDMAN, SENIOR CONSULTING
RESEARCH AND DEVELOPMENT LEAD, IDAHO NATIONAL LABORATORY
Dr. Boardman. I am honored to be invited to contribute to
the discussion about the benefits and challenges of converting
coal into liquid transportation fuels.
I have submitted a lengthy testimony to you, but time will
not permit me to draw your attention but only to a very few of
the most selling points in that document. My remarks are based
on my personal and professional knowledge and do not reflect
the views of the Department of Energy (DOE).
Please direct your attention, if you would, please, to the
drawing in the lengthy document on page 6 of my testimony,
which shows the life cycle of carbon obtained from biomass and
coal when it is utilized to produce synthetic fuels, electric
power, and chemical products. This figure depicts the plan that
Baard Energy is developing for a site in Ohio.
Baard Energy and the Idaho National Lab (INL) entered into
a cooperative research and development agreement to study a
coal-to-liquids plant similar to the figure you are viewing,
using the majority of coal with a smaller portion of biomass.
Now please turn your attention to the summary table on page
5. The top row shows the amount of greenhouse gas released when
transportation fuels are produced from Arabian crude. The
second row shows the greenhouse gas emissions calculated by DOE
NETL for a hypothetical coal-to-liquids plant. The third row
shows the greenhouse gas emissions calculated by INL for the
Baard energy Ohio project before any controls for greenhouse
gas emissions are implemented. The remaining rows show various
levels of greenhouse gas reduction that can be attained by
implementing carbon capture and sequestration and by co-feeding
only 30 percent biomass to the coal gasifier.
As you can see from this table, it is possible to reduce
greenhouse gas emissions by up to 46 percent below comparable
crude emissions when the coal-to-liquids plants are operated in
this manner.
I wish to leave you with three factual points with respect
to the exemplary Baard energy plant design. First, gasification
and coal and biomass plans is technically feasible and
commercially proven and available for use today. I have over 20
years of experience. My Ph.D. is in gasification and
combustion. I have performed research in this area.
Second, gasification of biomass with coal is the
technically best method for extracting the available energy
from carbon from the biomass to produce transportation fuels
and other chemical products. I repeat, it is the technically
best method for extracting the energy and carbon from that
biomass.
Third, this technology is ready for first-of-kind
facilities in the United States, just as it is currently being
applied in other nations. Except that in America engineering,
ingenuity, and the will to control greenhouse gas emissions can
provide a beacon to the global commons.
Let us turn our attention to the concerns about water that
has been brought up. On Page 12 I present a drawing showing the
demand and discharges of water for a representative coal-to-
liquids plant. A large amount of water is needed, as has been
stated, to produce hydrogen and to provide process cooling
throughout these plants. Evaporation losses in the cooling
tower can be significant. As much as 10 to 15 barrels of water
per barrel of liquid product will be required unless standard
operating practices are changed.
Gas to gas coolers and closed-loop heat recovery cycles can
be deployed to reduce the water demand to as little as three to
five barrels per barrel of liquid product. The technology
exists. It is a matter of cost, benefit to tradeoff, and a will
to implement these changes.
In my written testimony I will draw attention to the
potential of using coal-bed methane wells-produced water to
supply coal-to-liquids plants. For example, I project the
possibility of using coal-bed methane water that may be
produced in the Wyoming Powder River Basin to support the
production of four million barrels of synthetic fuels produced
over a 50-year period. The water availability may not be the
barrier to start up of the first coal-to-liquids plants or
those that are built and replicated thereafter. It may simply
be the cost benefit tradeoffs required to reduce that water
consumption. Again, American ingenuity and engineering can
help.
I think I will pass by my comments on suggestions for
research that could, that the Federal Government could support.
I think most of my information is in the written testimony, and
a lot of that has already been brought up.
In the interest of time I would like to just proceed to my
conclusions. I believe the U.S. can establish greater energy
independence using hybrid and electrically-powered cars, as
been suggested, while assuring there is an adequate supply of
diesel and jet fuels for, please understand, aircraft, shipping
vessels, trains, heavy vehicles, and machinery that currently
consumes a high percentage of the petroleum derived in fuels in
the U.S.
A balanced portfolio of clean energy is needed inclusive of
clean coal conversion to electricity, chemicals, and
transportation fuels. It is important to national security and
climate control that clean coal-to-liquids plants be
constructed to establish the experience and infrastructure
necessary to establish this industry in the U.S.
Thank you for allowing me to speak.
[The prepared statement of Dr. Boardman follows:]
Prepared Statement of Richard D. Boardman
Mr. Chairman and Members of the Subcommittee, I am honored to be
invited to contribute to the discussion about the benefits and
challenges of converting coal into liquid transportation fuels by
gasification followed by catalytic transformation of the resulting
syngas into synthetic diesel and other petroleum-like substitutes. This
method of converting coal into synthetic fuels is often referred to as
the Fischer-Tropsch process.
INTRODUCTION & BACKGROUND
By way of introduction, I am a senior consulting research and
development lead for the Idaho National Laboratory (INL) where I have
worked for the past 17 years. My project assignments have covered a
spectrum of fundamental and applied research projects in nuclear fuel
reprocessing, radioactive waste cleanup, pollutant emissions control,
clean coal technology development, and gasification-based technology
assessment, development, and process design. Over the past six years,
my research efforts have primarily focused on integrated gasification
and combined cycle power generation, and process modeling of Fischer-
Tropsch synthetic fuels plants. I am currently working with other
scientists and engineers at the INL, regional universities, and private
companies to develop gasification technology and associated process
understanding to efficiently convert hydrogen deficient materials
(i.e., coal, coke, resid, biomass, and other opportunity fuels) into
clean fuels, substitute natural gas, electrical power, and chemicals
such as ammonia. I am also the Lead for the INL Energy Security
Initiative, aimed at increasing the Laboratory's capabilities and
missions in developing CLEAN, SECURE, ECONOMICAL, and SUSTAINABLE
energy solutions including the integration of the next generation of
nuclear reactors to assist in the extraction and conversion of oil
shale, oil sands, and coal to liquids.
I have served as an adjunct professor at the University of Idaho
and Brigham Young University, providing course instruction and student
advise in combustion processes, air pollutant control, and nuclear
chemical engineering. I support Wyoming State government's interest to
better understand clean coal conversions options, as well as private
industry project development through DOE approved Work for Others and
Cooperative Research and Development Agreements with the INL. I am an
officer for the Idaho Academy of Sciences (IAS), just having completed
a customary one-year term as the IAS President. I organized the IAS
49th Annual Conference held this past April with the theme Energy for
the Future: Environmental and Ecological Considerations.
I provide this personal background to establish a perspective for
the views that follow. While all of us here today and others across the
Nation will claim an interest in protecting our environment, most will
also concur that we have come to appreciate a sustained quality of life
living at a comfortable temperature in decent dwellings with adequate
mobility to reach our work location and other destinations in a safe,
orderly, and efficient manner. We also have come to depend on an
uninterrupted and diverse supply of fresh food and basic consumer
commodities. The fact is that the basis for our present quality of life
is realized from the development of at least three indispensable
energy-related commodities: First) ammonia based fertilizers; Second)
electrical power; and Third) transportation fuels, which today is
primarily derived form petroleum-derived gasoline and diesel. Global
demographics and the quality of life are directly correlated to these
three commodities, including, but not limited to mass production and
distribution of food, operation of machinery that enables mass
production, and transit of these products to consumers. Remove any one
of these commodities, and life as it is appreciated today, both here
and in developing nations will be dramatically halted. Add all of these
commodities to stable developing nations, and the standard of living
will eventually approach that of the United States. Thus, we should all
be concerned about the potential escalation of environmental and
political consequences of increased energy demand and production around
the globe.
All of us present here today are concerned with the compelling
statistics regarding the imminent peaking of oil production (estimated
by most to occur within 5-10 years). Adding to this concern, there is a
simultaneous increasing demand for energy and transportation fuels by
China, India, and many other nations. Projected population in India and
China alone may increase from around 2.3 billion persons (estimated
population in 2003) to over 2.8 billion in 2015. The per capita oil
consumption in these two nations in 2003 was only 0.74 and 1.4 barrels
per year (bbl/yr), respectively. In comparison, the per capita
consumption in the United States was 25.6 bbl/yr, while it was 19.5,
15.2, and 5.3 bbl/yr in Canada, Japan, and Mexico, respectively. It is
possible then, and many credible sources predict, that the global
energy demand through 2050 will exceed ten times the equivalent oil
reserves of the concentrated oil triangle in the Middle East, where
roughly 60 percent of the remaining oil reserves are located. These
combined facts underscore two potentially significant terrestrial
events that are relevant to national security and global climate
detriment. Clearly, I am referring to the increasing scarcity of oil
and an escalation of greenhouse gases attributed to unmitigated release
of carbon dioxide. These two problems should not overshadow the ongoing
loss of industry in the United States, including fertilizer, glass,
steel, and chemical production to foreign nations, and the impact on
national security and economic prosperity when U.S. manufacturing and
production further decline.
With this background in mind, I turn your attention to the purpose
of my testimony today. It is my intention to address the importance of
providing immediate incentives to advance coal and biomass conversion
to liquid transportation fuels in an environmentally acceptable manner.
I will address solutions that are being proposed and developed by the
Idaho National Laboratory and industrial CRADA partners to reduce both
the projected life cycle release of greenhouse causing gases and the
potential demand on water resources. This testimony will hopefully
convey an understanding that the technology basis and environmental
solutions for coal-to-liquids plants (CLT) are equally applicable to
production of synthetic natural gas, ammonia, chemicals, hydrogen, and
electrical power from coal and biomass resources. A holistic and
balanced approach to resource utilization to achieve the optimum use of
our natural resources will therefore be suggested. This discussion will
lead to recommendations on the role of federal research in achieving
these goals.
GREENHOUSE GAS EMISSIONS PROJECTIONS
I will begin my technical remarks by sharing the results of a
recent technical study completed by the Idaho National Laboratory under
a Cooperative Research and Development Agreement with Baard Energy,
L.L.C. Baard Energy, through its project company Ohio River Clean
Fuels, L.L.C. (ORCF), is developing a coal gasification Fischer-Tropsch
synthetic fuels plant in Wellsville, Ohio. A process model for the
project has been developed by the Idaho National Laboratory to assist
Baard Energy with design and permitting activities. The model has been
used to determine operating conditions to capture and sequester
byproduct carbon dioxide and to study the benefits of blending biomass
with coal to reduce greenhouse gas (GHG) emissions. A life cycle GHG
emissions assessment based on the model results for the ORCF plant, and
apportioned to the product mix of liquefied petroleum gas, naphtha,
diesel fuel, and power, indicates that a 30 percent reduction in GHG
emissions compared to life cycle GHG emissions for transportation fuels
produced from Arabian Crude for the synthetic diesel fuel is achievable
when biomass fuel is blended with the coal feeding the process and when
concentrated CO<INF>2</INF> is separated from the syngas feed to the
Fischer-Tropsch reactors and used or sequestered. When credit is also
given for the sale of surplus electrical power generated by the plant
(compared to the GHG emissions of the average electrical U.S. power
mix), the ORCF plant will further reduce GHG emissions approaching 50
percent of the emissions from ultra-low sulfur diesels derived from
crude oil. Additionally, other plant products, specifically the
synthetic naphtha liquid produced by the Fischer-Tropsch process which
may be used to produce additional transportation fuels or chemical
feedstock such as ethylene, can also reduce GHG emissions compared to
similar petroleum-derived products.
The results of the Baard Energy study are being presented in eight
days at the 24th Annual International Pittsburgh Coal Conference being
held on the doormat of the Sasol Secunda CTL complex in Johannesburg,
South Africa. While some key findings of the INL-Baard study are
provided here today, I encourage you to review this technical paper
after it has been released with the Conference Proceedings.
The table below summarizes the life cycle emissions of greenhouse
gases for CTL transportation fuels on the basis of the mileage attained
by a standard U.S. utility sports vehicle averaging 24.4 miles per
gallon when operating on petroleum diesel.
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
The INL-Baard study takes into account all greenhouse gas emissions
associated with fuels and feedstock input production and transportation
to the CTL plant. The study includes cases where woody biomass produced
in the United States is blended with the coal in the same manner that
already has been proven technically feasible in Europe at the
Puertollano, Spain and the Buggenum, Netherlands integrated
gasification, combined cycle (IGCC) power plants. The study accounts
for all greenhouse gas emissions associated with conversion of the
fuels into syngas and subsequent cleanup and conversion of the syngas
into liquid fuels using the Fischer-Tropsch reaction process and
associated product upgrading and refining. Next, the study takes into
account the greenhouse gas emissions associated with delivery of the
fuel to consumers and finally the consumption of the fuel in a standard
transportation vehicle. This study emulates the work performed by the
DOE National Energy Technology Laboratory (NETL), and investigations by
other federal, university and private organizations to assess ``well-
to-wheel'' greenhouse gas emissions associated with various
transportation fuels. While such studies invoke specific assumptions,
it should be noted that the majority of the greenhouse gas emissions
are attributed to the CTL plant and end-state combustion as illustrated
in the figure that follows.
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
This INL-Baard life cycle greenhouse gas study corroborates the
findings of other organizations, but varies to the extent that the
design of the CTL plant differs from the other studies. It is important
to understand there can be significant variation in the CTL plant
emissions depending on unit operation choices, the options selected for
the integration of heat and material recycle, and the decision to co-
produce electricity or other chemical products. I hereby state without
reservation that greenhouse gas emissions for coal-derived
transportation fuels can be reduced by at least 20 percent relative to
petroleum fuels. The INL-Baard study shows that a 30 percent reduction
may be possible before credit is taken for the clean power produced by
the plant. When apportioned credit is taken for the green power co-
produced by the plant, the GHG emissions reduction is estimated to be
46 percent as previously indicated by Baard Energy in a press
conference just last May. It is also important to state that these
reduced levels of GHG emissions can be accomplished using existing
technologies to concentrate and remove the CO<INF>2</INF> produced by
the process, and by blending biomass with the coal feedstock.
Some important observations of the study include the following:
1. Almost 50 percent of the carbon fed to the CTL plant can be
readily captured and sequestered in an appropriate geological
sink or it may be used for enhanced oil recovery.
2. Approximately 30 percent of the carbon is incorporated in
the liquid and gaseous fuels produced by the plant.
3. Approximately 15 percent of the carbon is converted to
electrical power that is used for the auxiliary load
requirements in the plant while also producing much needed
clean electrical power.
4. Sequestration of the bulk CO<INF>2</INF> produced and
process efficiency improvements can easily reduce life cycle
GHG emissions from CTL transportation fuels to a level
comparable to fuels derived from crude oil.
5. Use of 30 percent biomass by weight achieves an apportioned
reduction percentage of approximately 20-25 percent, depending
on the choice of biomass utilized and the relative carbon
content and moisture levels in the biomass.
6. The surplus electrical power produced by a CTL plant is
neutral with respect to GHG emissions when 30 weight percent
biomass is used in combination with CO<INF>2</INF>
sequestration (please refer to the Pittsburgh International
Coal Conference paper for a detailed explanation).
In addition to these conclusions, other environmental benefits of
the combination of coal and biomass conversion to synthetic fuels using
the gasification/Fischer-Tropsch process include significantly reduced
emissions of sulfur and other acid rain and ozone pollutant precursors
and complete control of mercury and other toxic metal emissions.
Additionally, it can be shown that this manner of converting biomass to
liquid fuels, specifically woody biomass as well as most herbaceous
materials, is a much more efficient method of converting and utilizing
the chemical potential of biomass. The GHG emissions associated with
indirect conversion of biomass to liquid fuels are significantly less
than ethanol fuels derived from the popular fermentation process.
Auto manufacturers in Europe and Japan are now producing hybrid
cars that will operate on diesel fuel and will attain higher fuel
mileage than their gasoline-electric driven counterparts. Therefore,
the diesel fuels produced in the manner outlined in the INL-Baard study
will further reduce greenhouse gases emitted from a hybrid vehicle. In
other words, the greenhouse gas emissions are mainly due to the
production of the fuels, and are not a strong function of type of fuel
used in the hybrid vehicle.
FEASIBILITY OF GASIFYING BIOMASS WITH COAL
Regarding the technical feasibility of incorporating biomass with
the coal feed in a coal-to-liquids plant, coal gasification plants in
Europe have demonstrated the viability of operating commercial, high-
pressure, entrained-flow gasifiers with blends of biomass for sustained
periods of operation. While the Baard ORCF project is based on gasifier
technology that has successfully operated on with biomass and coal
blends, there are other options that can be used to incorporate biomass
gasification into a CTL plant. One alternative is to independently
inject the biomass into the gasifer while simultaneously feeding coal
through a separate nozzle. A second option would be to locate a set of
gasifiers designed specifically to gasify biomass along with the
battery of conventional entrained-flow gasifiers used for pulverized
coal. Both high-pressure fluidized-bed and fixed-bed biomass gasifiers
are commercially proven and available. This option opens the
possibility of using the high temperature of an entrained-flow coal
gasifiers to destroy tars and oils produced at lower operating
temperatures in the fluid-bed or fixed-bed biomass gasifiers.
Biomass by itself can be difficult to gasify due to its high
moisture content and other physical and chemical properties. Biomass
gasifiers inherently produce tars and oils that are troublesome to
convert into syngas in conventional biomass gasifiers. Another problem
can be the low melting point of the ash which can be difficult to
manage. Hence, significant attention continues to be directed to
developing efficient and reliable biomass gasifiers. However, when the
biomass is blended with coal and gasified in a high temperature
slagging gasifier, the issue of tar formation is eliminated. The slag
produced by the biomass is readily incorporated into the higher mass of
slag produced by the coal. These facts underscore the benefits of
gasifying biomass with coal. It is technically the best method of
converting the biomass to syngas and subsequently to synthetic fuels.
Additional arguments in favor of co-gasifying biomass with coal are
beyond the scope of this testimony, but can be provided by any expert
in gasification and thermal conversion processes.
Biomass gasification should not be considered a barrier to current
project planning that is aimed at reducing greenhouse gas emissions and
other environmental impacts. However, commercialization and testing of
proven and emerging biomass gasifiers, in connection with testing by
DOE and industry of dry feed pumps and advance syngas cleanup
technology should continue. Improvement of biomass feedstock
collection, preparation, and delivery technology and infrastructure
should also be supported. This work will expand the possible uses of a
wider variety of biomass, and will increase our current understanding
of the benefits and potential impacts of biomass gasification on
refractory life and syngas cleanup requirements, for example. In
conclusion, the feasibility of using biomass with coal can be resolved
with engineering, ingenuity, and the will to do so.
The fact that biomass itself can be converted to liquid fuels begs
an answer to the supposition that the U.S. need not develop its coal
resources to produce liquid transportation fuels. The short explanation
is that resource availability and economics do not support this
assumption. In order to match the current U.S. consumption of over 20
million barrels of oil per day, two-thirds of which is converted to
transportation fuels, a formidable amount of biomass would be required.
However, a ratio of 30 percent biomass and 70 percent coal for
synthetic fuels is much more plausible. For additional information, I
refer you to the 2005 ``Hirsch Report'' that discusses peaking of world
oil production and its impacts and mitigation alternatives.\1\
---------------------------------------------------------------------------
\1\ Robert L. Hirsch, et al., Peaking of World Oil Production:
Impacts, Mitigation & Risk Management, February 2005, available at:
http://www.netl.doe.gov/publications/others/pdf/
Oil<INF>-</INF>Peaking<INF>-</INF>NETL.pdf
---------------------------------------------------------------------------
The INL-Baard study of a notional 50,000 barrels per day synthetic
liquids plant would use approximately 8,000 to 9,000 tons per day of
woody biomass at 15 percent moisture content (harvested wood typically
contains about 30-40 percent moisture). This material will need to be
collected, dried, and ground to specifications meeting the gasifier
feed system requirements. I cite with permission an example of a U.S.
project currently under construction near Selma, Alabama that will
produce dry wood pellets containing about seven percent moisture. This
project, referred to as the Dixie Pellet project, will use biomass
gasifiers to produce hot gas and substitute natural gas to produce
pellets with minimum use of fossil-based energy. The exception will be
the electricity used in the plant which will be purchased from a local
utility provider. This plant, when operated at capacity, will produce
upwards of 1,500 tons/day of dry wood pellets that could be readily
shipped to a coal-to-liquids project. Hence, indications are that five
to six comparable plants will support the biomass required for one
50,000 barrels per day CTL plant using 30 wt. percent biomass with 70
wt. percent coal. Whether the CTL plants purchase biomass collected and
assembled by plants such as the Dixie Pellet Plant, or whether they
implement in-line feed stock preparation is a matter of plant design
choice and will depend on the region where the plant is located and the
variety of biomass available. Biomass derived from switch grass, animal
waste, and woody sources can all be gasified with an appropriate choice
of gasification technology.
Obviously, it will not be economically viable for all plants,
especially plants located in the high deserts of the upper Rocky
Mountain States, to collect or transport biomass from high growth
regions of the United States. Some have suggested that the overgrowth
of western forests would be a reasonable source of biomass for western
plants. It is likely that logistics, economics, and environmental
impacts of collecting dead or diseased timber for synthetic fuels
production will rule out using this potential source of biomass for
these synthetic fuels projects. However projects in western states (as
well as other states), may take advantage of any of the following
recommendations.
1. Begin with a plant design that maximizes the concentration,
separation, and capture of CO<INF>2</INF>. Approximately 50
percent carbon capture is readily attainable.
2. Implement energy saving technology, including, but not
limited to heat recovery cycles that can utilize the low grade
and intermediate grade steam that is produced by the Fischer-
Tropsch reactors and integrated unit operations.
3. Consider co-locating the CTL plant with other renewable
energy providers such as wind power turbines to offset the GHG
emissions resulting from the plant. In this manner, higher
ratios of product recycle would be incorporated into the plant
while using a significant portion of ``green'' power for the
plant auxiliary loads.
4. Locate the CTL plant near the mine mouth, and where
possible, in proximity of existing refinery industry to
minimize the greenhouse gas emissions associated with
transportation of the feedstock and plant products.
5. Select coal resources that are near the surface to minimize
greenhouse gases associated with coal-bed methane releases and
resource production. Western coal mines typically release
significantly less CH<INF>4</INF> and CO<INF>2</INF> greenhouse
gases than eastern coal mines.
6. Consider biomass transportation costs and logistics when
trains moving coal to energy importing states in the East and
Southeast return with biomass from high growth biomass regions.
Expanding on the second recommendation on this list, I am
personally aware of, and have technically reviewed one closed-loop heat
recovery technology that is capable of recovering and converting 95
percent of the energy contained in the copious amount of low-grade and
intermediate-grade steam produced by a Fischer-Tropsch plant into
electrical power. These developing concepts take advantage of low
boiling point fluids that can condense the steam, thus eliminating the
cooling tower loads while increasing electrical power production by as
much as 15-20 percent. This is an example of how impetus to improve the
efficiency of a CTL plant will spur creative engineering aimed at
designing more efficient and cleaner plants.
WATER RESOURCE REQUIREMENTS
Let us now turn attention to water consumption concerns associated
with synthetic fuels plants. In a recent workshop sponsored by the
Gasification Technologies Council, I presented data that indicated the
consumption of water in a coal-to-liquids plant could approach 15
barrels of water per barrel of liquids fuels product for low moisture
bituminous coal, and 12.5 barrels of water per barrel of liquid fuels
for high moisture sub-bituminous coal. The basic problem is two-fold;
first, coal does not contain the amount of hydrogen that is required
for synthetic fuels production, and second, process cooling water and
cooling tower evaporation rates in CTL plants are significant.
Approximately five times the atomic ratio of carbon to hydrogen in
coal is needed to produce synthetic natural gas (CH<INF>4</INF>) while
approximately 2.5 times this ratio is needed to produce liquid fuels.
Water (as steam) is used to make up the hydrogen requirements. This is
currently accomplished by shifting CO and water (H<INF>2</INF>O) to
hydrogen (H<INF>2</INF>) and CO<INF>2</INF>. The Fischer-Tropsch
process converts a portion of the syngas to water (in the form of
intermediate pressure stream) while producing the liquid hydrocarbon
products. The general plant water use and rejection locations and
discharges are illustrated in the figure below.
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
In summary, process makeup water, cooling tower evaporation, and
dirty process water discharges (i.e., blowdown) can be significant.
Hence, water demand is a concern, especially in arid locations.
A custom-design heat recovery system for combined-cycle power
generation and process water recovery, treatment, and recycle can
reduce the water consumption for bituminous coal-to-liquids plants from
15 to 10.5 barrels of water per barrel of liquid hydrocarbon product.
Combined use of moist biomass with coal can further reduce the process
water requirement by one-half (1/2) barrel of water per barrel of
liquid product. In this case, the plant water use is approximately
apportioned among the following sinks:
<bullet> 1.75 barrels of water per barrel of liquid fuels for
process requirements
<bullet> 6.0 barrels of water per barrel of liquid fuels for
cooling tower evaporation losses and blowdown
<bullet> 2.25 barrels of water for cooling tower evaporation
losses and blowdown associated with surplus power generation
These relative figures hopefully contribute to the understanding of
the water requirements for a CTL plant. Studies regarding water
requirements vary widely, but are generally consistent with the plant
design and reporting basis. The most important point to capture is that
cooling tower losses and waste water blowdown constitute the majority
of water required for a CTL plant (8.25 of 10 barrels for the INL case
study). In order to reduce the water duty, gas-to-gas heat exchangers
could for used for steam cooling. Alternatively, a closed-loop heat
recovery system, such as that referred to previously in my testimony,
would eliminate the cooling tower and water evaporation losses, while
also increasing electrical power generation by 15-20 percent.
Incorporation of a closed-loop heat recovery system would provide the
joint benefit of reducing water use while reducing greenhouse gas
emissions. Thus, the water requirement can be reduced to as little as
3-5 barrels of water per barrel of synthetic liquid product.
Another point to consider is the opportunity for CTL plants located
near the coal mine to use coal-bed methane (CBM) produced water, or oil
field water. For example, the Wyoming Coal Gas Commission estimates the
potential water production from nearly 24,000 wells in existence in the
Powder River Basin could yield upwards of 15 billion barrels of water
over approximately 30 years. The water quality of a large portion of
the PRB basin CBM water is adequate for direct use in a CTL plant. The
salinity or hardness of the remainder of the water can be reduced with
minimal water treatment, possibly comparable to the current cleanup
requirements for much of the surface or well-produced waters used in
power plants throughout the United States.
If two-thirds of the estimated CBM produced water in Wyoming were
used for CTL plants in conjunction with advance steam cooling
technology, then there would be sufficient water to produce four
million barrels of synthetic fuels per year over a 50-year period.\2\
This is equivalent approximately 25-30 percent of the transportation
fuels currently consumed in the United States.
---------------------------------------------------------------------------
\2\ (1,000,000,000 bbl-water)/(5 bbl water per bbl-fuel produced)/
(50 years) = 4,000,000 bbls fuel/yr for 50 years.
---------------------------------------------------------------------------
NEXUS OF CTL WITH NUCLEAR ENERGY
It is also worth noting is the possible nexus of coal and
unconventional fuels production with nuclear energy. With the
electricity produced from a nuclear reactor it is possible to produce
oxygen for a coal/biomass gasifier while concurrently producing
hydrogen for the Fischer-Tropsch reactor. Future class nuclear reactors
will also have the capability of boosting the pressure of the low-grade
and intermediate grade steam to levels amenable for electric power
generation by a steam-driven electrical power turbine-generator set.
Consider also the possibility of co-electrolyzing CO<INF>2</INF> with
water inside a fuel-cell operated with power and heat produced by a
nuclear reactor. In this application, the CO<INF>2</INF> and water
would be converted to CO, H<INF>2</INF>, and O<INF>2</INF>--all
essential inputs to coal and biomass gasification and Fischer-Tropsch
synthetic fuels production. Thus, the amount of carbon incorporated in
the fuel could theoretically exceed 95 percent. Other studies funded by
AREVA using Powder River Basin coal as the feed and an advanced
generation nuclear power plant showed that greater than 96 percent of
the carbon in coal could be converted to liquid fuels.
BENEFITS OF A HOLISTIC APPROACH
The preceding discussion supports the argument for a holistic
approach to energy and transportation fuel development that is
protective of the environment, while giving adequate attention to
sustainable and secure energy for the Nation's future. The urgency for
clean energy need not come at the expense of national security. As the
Nation moves forward using biomass and other renewable energy
resources, and eventually with nuclear power and heat, it will be
possible to again produce ammonia for fertilizer, chemical feedstock
for consumer products, industrial gas for gas and steel production
plants, and clean hydrogen for electrical power production (as known as
FutureGen), hydrogen for sour crude and unconventional fossil fuel
upgrading, and last, but not least, secure transportation fuels for the
next century and beyond. This can be done while reducing greenhouse gas
emissions. Failure to take on this leadership will only transfer this
responsibility to future generations and foreign nations that will
continue to produce the products demanded without probable control of
greenhouse gas emissions. Failure to assume this leadership will also
result in economic decline and increased national security risk. On the
other hand, willingness of project developers and environmental
protection organizations to accept coal conversion with biomass
blending and carbon management will enable the U.S. to provide
solutions to our global commons, while assuring secure, clean,
efficient, and sustainable domestic energy for the future.
Other system approaches could consider the use of high pressure
CO<INF>2</INF> slurries to transport western coal and CO<INF>2</INF> to
CTL plants and carbon sequestration sites in the East, with a return
line bringing water from the East to the arid West as practical. The
reality is that the U.S. is not short on viable solutions to build a
clean, and secure CTL industry. Such ideas abound within the Nation's
research academic institutions and national laboratories. The key for
currently developing projects is to implement proven technology with a
goal of reducing greenhouse gases and minimizing water use. This
recommendation is consistent with other technical experts who have
previously testified before congressional committees. It is consistent
with DOE and Department of Defense objectives to establish a secure
domestic supply of transportation fuels while simultaneously mitigating
global climate impact concerns.
I personally support efforts to convince the U.S. to conserve
energy, while moving to a new fleet of hybrid cars and electrically-
driven commuter cars. I support accelerated development of wind and
solar energy, as well ``smart'' deployment of nuclear electrical power
generation. I support a movement to develop biomass as a national
resource, and the associated deployment of a system to improve yield,
collection, preparation, and transportation of this resource to points
of efficient conversion into energy and transportation fuels. However,
I also believe the pending peaking of oil production, as well as
diminishing domestic reserves of natural gas, in parallel with global
energy demand projections and the acute need to address climate change
point to the urgency for the United States to begin unprecedented
efforts to begin building plants for transportation fuels from the
Nation's abundant supply of coal with biomass. It is both in the
interest of national security as well as global environmental
protection. The example established by the United States can serve as a
model for other countries to follow. This task cannot be left purely to
the market place, since it is not presently the lowest cost method to
produce electricity, natural gas, ammonia, chemicals, and
transportation fuels. It is for these reasons that ``big oil'' is not
currently investing in the development and construction of CTL plants
in the United States. Therefore, federal incentives to move to a
synthetic fuels industry are necessary for timely market entry--in a
manner that is protective of the environment. Establishing necessary
greenhouse gas reduction targets will impact the economics and risk of
the first U.S. plants; hence, assistance in the form of loan guarantees
and tax advantages will help establish this vital industry ahead of
significant economic incentives.
ROLE OF FEDERAL RESEARCH
In my opinion, the role for federal research is to press forward
with its existing programs to promote commercial development of clean
and efficient coal-to-liquids plants. Efforts that support the
characterization of sites for CO<INF>2</INF> sequestration should be
accelerated in order to provide technically acceptable options for the
first CTL plants. In addition, efforts to advance biomass gasification,
particularly with coal blends, will help expand the current set of
commercially available options. Ongoing efforts to improve and expand
biomass feedstock collection and preparation options, as well as high-
pressure injection technology, are encouraged. Additionally, federal
research aimed at demonstrating emerging heat recovery options is
advised. Concepts that recovery the heat from low grade stream to help
reduce water consumption while improving overall plant efficiency (thus
further reducing greenhouse gas emissions) should continue to be
validated through appropriate technology demonstrations supported by
federal research funding.
Process modeling of integrated CTL plants should also continue.
These studies may include investigation of the technical feasibility of
emerging heat recovery options. Process modeling can be complemented
with academic research aimed at developing a deeper understanding of
the fundamentals of Fischer-Tropsch reactor hydrodynamics and reaction
processes. The benefit will be improved reactor designs for future
plants and computational tools to help optimize operating conditions in
first-of-kind CTL plants in the U.S.
A study that addresses the feasibility of collecting, treating, and
using coal-bed methane produced water would have significant
ramifications on the impact of establishing CTL plants in some western
states. This potential benefit may also apply in eastern and southern
states. The study may also consider the use of this limited water
resource for biomass growth and reclamation of coal mine terrain.
Development of a national basis for estimating greenhouse gas life
cycle emissions, inclusive of potential credits for co-generation of
electrical power and other consumer products derived from a CTL plant
is advisable. An acceptable arbiter of carbon emissions and credits for
all possible energy platforms and co-generation plants will require
careful and factual consideration of system interactions with the
environment. The comparative INL-Baard life cycle emissions studies are
considered accurate, but leave open the possibility of calculating
other greenhouse gas emissions benefits associated with the non-
transportation products from a CTL plant. This merely points to the
interdependence of energy with other consumer products and not strictly
the transportation sector. Similar consistent calculation methods
should be developed for other energy conversion platforms.
Federal research covering infrastructure needs, including the
capability of manufacturing and transporting gasifier and Fischer-
Tropsch reactor vessels to CTL projects locations is advised. One of
the most significant cost and schedule impediments to establishing the
CTL industry in the U.S. is the lack of heavy vessel manufacturing
capability throughout the world. In order to establish greater
independence from foreign controls, the U.S. may need to re-establish
this capability. A social-economic study on the buildup requirements
and logistics of this critical infrastructure component is recommended.
A holistic approach to deployment of CTL plants with biomass and
water resources, and nuclear assisted energy should be pursued as an
out-reaching goal. Although this should not impede the first generation
of CTL plants, such an outlook will help ensure optimal use of our
nation's resources and environmental protection for future generations.
As the Nation expands this industry beyond the first generation of CTL
plants, it will become increasingly important to consider overall
system performance.
CLOSING REMARKS
I recommend a balanced federal focus on renewable energy and
development of the Nation's coal. Mass deployment of ``smart'' hybrid
and electrically powered cars should be pursued in conjunction with the
development of synthetic fuels from coal. These two objectives are
complementary and mutually compatible. In this manner, the U.S. can
establish greater energy independence, while assuring there is a proper
fuel choice for aircraft, shipping vessels, trains, heavy vehicles, and
machinery that currently consume a high percentage of the petroleum-
derived fuels in the U.S.--namely diesel and jet fuels. The aims of
environmental protection advocacy groups and the coal industry should
not be viewed as being exclusive. A balanced portfolio of clean energy
is needed, inclusive of coal utilization and conversion to electricity,
chemicals, and transportation fuels. I believe it is possible to
reverse greenhouse gas emissions when considering methods to reduce the
greenhouse gas emitted from coal-derived fuels and chemicals.
Incentives to encourage clean CTL projects are therefore both important
and necessary.
Federal and State governments can help build the supporting
infrastructure necessary to propagate the synthetic fuels industry
ahead of any imminent global energy crises. Absent from my testimony
today, but of significance, is substantive argument to establish
domestic capability to supply the steel, manufacture the vessels, and
erect these plants before they become vitally necessary in a relative
short time frame. The Federal Government can focus attention on
rebuilding these capabilities by working with industry and equipment
fabrication shops in various regions where coal-to-liquids plants will
be constructed. There is a need to continue to build liquid product and
CO<INF>2</INF> pipelines, while providing practical and acceptable
solutions for carbon management.
In conclusion, moving forward with a set of clean CTL plants today,
and the research roles identified earlier, responsible infrastructure
can be established to help ensure our nation's energy and political
security. Workforces can be trained and engaged and economic prosperity
sustained by industrial construction and plant operations on home soil.
The U.S. can provide technical leadership to other nations poised to
utilize coal to meet their increasing energy demands.
Discussion
Chairman Lampson. Thank you very much. Now we will move
into the question period, and each Member will have five
minutes. I yield the first five minutes to myself as Chairman.
Water Consumption With Coal-to-Liquids Plants
Dr. Boardman, let me start with you. In your written
testimony you state that a coal-to-liquids plant could produce
or could approach 15 barrels of water per barrel of liquid fuel
product from low moisture bituminous coal and twelve and one-
half barrels of water per barrel of liquid fuels for high
moisture sub-bituminous coal. How does that water requirement
compare to conventional petroleum-derived motor fuel production
now?
Dr. Boardman. I am not sure that I can give you an exact
answer, but, again, these plants require hydrogen. Carbon is
deficient to that hydrogen, and so you need water, at least a
barrel of water to make up the hydrogen needed to formulate the
synthetic fuels. The majority of the water, Mr. Chairman, is
actually consumed in the cooling towers that are used to cool
the intermediate and low-pressure steam. And so in that part of
the plant by that evaporative process of those cooling towers
you lose copious amounts of this water.
Chairman Lampson. Some strategies to change that?
Dr. Boardman. Yes. That is where the need to upgrade the
plants to these gas-to-gas heat exchangers then which would
eliminate the duty on those cooling towers. Also, as we
progress forward to look at these closed-cycle heat recovery
loops that many are working on in the United States, that will
also help.
Chairman Lampson. And is there a role for federal research
to help insure that those strategies become effective?
Dr. Boardman. Yes. In that particular area I think a
demonstration of some of these closed-loop heat recovery cycles
is recommended.
CO<INF>2</INF> Emissions
Chairman Lampson. Okay. For both you and Dr. Bartis, you
discussed the possibility of reducing CO<INF>2</INF> emissions
when biomass is blended with the coal during the liquid fuel
process, and then, and when concentrated CO<INF>2</INF> is
separated from the syngas feed and sequestered, what are the
technical challenges with combining coal and biomass in order
to achieve a significant CO<INF>2</INF> reduction target?
Do you want to start or Dr. Bartis, you start, and then we
will go to Dr. Boardman.
Mr. Bartis. The gasification takes place at 15 atmospheres
of pressure or so. So the challenge is getting biomass into
that gasifier and going through that pressure change. And then
once it is in the gasifier, you want to make sure that it
doesn't interfere with the internal workings of a gasifier that
has been designed for something else. So I think it is a pretty
straightforward process that we have here. I mean, this is not
science. It is technology and testing, but I think we need a
few test rigs built, designed and built, and we need to make
sure that this system works.
We are handling solids, and whenever you handle solids, you
have tremendous uncertainties. It is very hard to scale up, so
the only way to make this technology truly commercial is to
test it at some scale.
Now, there is some experience in the Netherlands on using
biomass for gasification, but it turns out these are very small
amounts, and they are very special forms of biomass. They are
not biomass types that typically would be found in the United
States.
So I think there is a real opportunity here to do something
on a very short timescale.
Role of the Federal Government
Chairman Lampson. Okay. So, again, is there a role for the
Federal Government to plug in?
Mr. Bartis. I think there are lots of uncertainties with
regard to the future of coal-to-liquids in the United States,
and I just don't see the private sector coming up with a lot of
its own funds to move this technology forward. So I think there
is a role for the Government.
Chairman Lampson. Do you want to make a quick comment, Dr.
Boardman?
Dr. Boardman. Well, I concur, for feed injection high
pressure is certainly an issue that can be further developed
and improved, springing from the experience in Europe, but I
might also mention that when we talk about biomass and coal
gasification, sometimes we think that has to be done in the
same gasifier. It is entirely feasible to do them in two
separate gasifiers. These coal-to-liquid plants will require a
battery of gasifiers. So it is possible to use already existing
and proven biomass gasification technology, both in Europe and
developing in the U.S., to gasify the biomass and the coal in
two separate reactors, combining that syngas.
But, again, I think those dry feed systems is probably the
area where research focus could mainly be put.
Can We Use the Hydrogen Extracted From This Process?
Chairman Lampson. If I continue with my questions the way I
am going, I am going to run out of time. So let me digress from
what I intended to do and just ask a question that came up
yesterday in some discussions with staff on this. And the
process which I am trying to understand and I do not, I am told
that a significant amount of hydrogen is separated from this,
and if that is the case early in the process, why don't we just
take the hydrogen and instead of taking it all the way through
this entire process to make a different kind of fuel, why don't
we use it when we are trying to build this infrastructure
necessary to start to distribute? Can someone comment on that
for me?
Dr. Boardman. May I take a shot at that?
Chairman Lampson. Please. Yes.
Dr. Boardman. Well, certainly, you know, we have looked at
a hydrogen economy, and hydrogen of itself is very difficult to
transport about. It is, you know, a very light molecule.
Chairman Lampson. Well, would it be better for us to put
our money into the research to help solve that problem than the
research to take this through all these different stages to get
to where we are going?
Dr. Boardman. I think the hydrogen economy is well in the
future. I think that the coal-to-liquids plants are a bridge to
that future, and I think the liquid transportation fuels, as
well as synthetic natural gas, are very convenient carriers of
that hydrogen.
Chairman Lampson. Thank you very much.
Mr. Inglis.
Coal-to-Liquids Versus Petroleum
Mr. Inglis. I said to the Chairman, bingo. It seems to me
that is quite the question is why invest in something that
really is sort of like, well, I think when we are comparing
coal-to-liquids to petroleum, we are really comparing Pintos
and Vegas. Anybody remember a Pinto and a Vega? Some of the
staff back here is too young to remember. Well, a Vega, my
family had three of them. They had aluminum blocks or
something. They fell apart after awhile. They were maybe--the
Vega may have been better than the Pinto or the Pinto better
than the Vega, but really, when you are comparing coal-to-
liquid and run it in a car, compared to petroleum, are we
really talking about that kind of comparison rather than a
really elegant solution that the Chairman was just talking to?
You figure a way to get that hydrogen into that car. The
only emission is water out of the back of the car. Right? You
don't have this, Dr. Bartis mentioned we can deal with the
national security issue, and I think that is correct. It seems
to me if we used our own coal, we are clearing dealing with the
national security. We are not getting all the way, which is
also fixing the environmental challenge.
So the thing that I found interesting about testimony from
Dr.--let us see, Dr. Romm said and it will be interesting to
hear Mr. Ward's response to this, that a carbon trading system
would wipe out coal-to-liquids, destroy the economics of it. Is
that correct?
Mr. Ward. Not in our view because, again, the thing you
have to, I think you had it right with the Pinto and the Vega.
You know, we are not talking about coal-to-liquids being
something that competes with hydrogen that is some number of
decades in the future. We are talking about reducing our
dependence on imported oil with a similar thing. So I would
look at it from the perspective of the Pinto, I have to build
and protect the system for protecting my imported oil
resources, while the Vega is something that I can do here at
home while we are working on whatever vehicle we want for the
future.
As far as your direct question on the carbon trading goes,
the products are commodities. We are not talking about a new
kind of fuel. These products will compete against the oil-
derived products in an open market, and our analysis shows that
as long as oil prices remain above a certain level, $50 a ton
or whatever, the impact of that carbon will, the carbon tax or
whatever carbon regulation scheme will come into place, will
wash out in that process. So we--I don't see it as a definite
at all.
Mr. Inglis. And Dr. Freerks had a comment about reducing
the risk of price fluctuations. What would you recommend by way
of strategies to reduce that price fluctuation?
Dr. Freerks. My concern is that if crude oil drops
precipitously, it will wipe out the economic benefits of
building CTL plants, and I think the economic value for CTL
plants is in the 45 to $50 per barrel range. So we can make
those plants pay back their loans and give the investors a good
return at a reasonable price for crude. But we need price
stability and a collar on the lower end of that price in order
to get the investors to be willing to put money into those
plants.
Mr. Inglis. Are you telling me a floor on prices, a floor
on crude oil prices?
Dr. Freerks. Yes.
Mr. Inglis. Is that what you are talking about?
Dr. Freerks. Just a guarantee that the prices will not drop
below a certain level, which will just insure the economic
viability of these plants' future, and we are not then
dependent upon foreign sources of crude to fuel our economy and
protect our----
Coal Production
Mr. Inglis. Dr. Hawkins, you had some different numbers in
an MIT study that was mentioned in the charter for this
hearing. You said that, MIT apparently says that switching or
to replace 10 percent of the fuel consumption they say, I think
it was your number, too, 10 percent. They say that it takes, it
would take 250 million tons of coal per year. You said, I
think, 470 million tons. They say it would require a 25 percent
increase in our current coal production. You said a 43 percent.
You are disagreeing with the MIT study I guess?
Mr. Hawkins. My numbers are taken from the National Coal
Council report, and they are aimed at a target of 10 percent
reduction in the year 2025, forecasted oil consumption, which
is larger than today's oil consumption. So you have two
numbers; one, the larger amount of oil consumption in 2025,
which is about the earliest that you would expect this industry
to get spun up to a size where it could conceivably make that
kind of a dent and using the technology efficiency numbers that
the National Coal Council used. I don't know what efficiency
numbers MIT used.
Mr. Inglis. Thank you. Thanks, Mr. Chairman.
Chairman Lampson. Mr. McNerney, you are recognized for five
minutes.
Mr. McNerney. Thank you, Mr. Chairman. Thanks panel members
for coming this morning. This is a set of very interesting
testimony, and there is a lot of disagreement I see between the
panel members.
Dr. Bartis and Mr. Hawkins both mentioned what I think is
the very fundamental quandary that we are facing; how do we
reduce our dependence on imported oil while reducing the
production of greenhouse gases, and our national security
depends on this, our economy depends on this, the environment.
It is a very difficult, complicated question. So I appreciate
the time and effort that you are putting into it.
It is important to be open-minded about CTL, but I have
grave concerns, especially for surface mode of transportation.
Air transportation may be a little bit more interesting, but
for surface mode I think we have grave problems.
Greenhouse Gas Emissions--Cost and Viability
My question, the first question is Dr. Freerks, there are
two issues I would like you to address; the greenhouse gas
emissions, the cost and viability. In my mind I don't see any
basis for what it is going to cost to sequester greenhouse
gases, and also, the technical viability of that process. Is it
safe? We don't know too much about that yet, so building an
industry, assuming that that is going to be a good process, it
is very, very risky.
The other question is something that has been brought up,
water usage. How do you see that playing out in the long run?
Water is going to be even more valuable than oil. It already is
in some situations. So both in terms of usage and in terms of
pollution, when the coal is mined.
Dr. Freerks. Let us first start with carbon capture and
sequestration. The coal-to-liquids process inherently captures
CO<INF>2</INF> in several places in the plant. We gasify coal,
and we capture the CO<INF>2</INF> from that gasification
process. We run the synthesis gas, carbon monoxide and
hydrogen, through a Fischer-Tropsch reactor, which in our case
produces more CO<INF>2</INF> while shifting the carbon monoxide
to hydrogen. And we capture CO<INF>2</INF> from that part, too.
So we can capture CO<INF>2</INF> quite readily in our plants
with no additional cost because the equipment is there for
other reasons.
Now, the sequestration part of that is a separate question,
and we have addressed that in our Natchez plant by teaming up
with Denbury Pipeline, who is moving CO<INF>2</INF> from
natural sources right now to oil fields for enhanced oil
recovery. And the amount of CO<INF>2</INF> that we produce is
equivalent to roughly one barrel of crude oil produced for
every barrel of F-T produced. And although people may argue
that that does not net decrease the greenhouse gas emissions
because you are just trading CO<INF>2</INF> put into the ground
for fuel brought up, it does increase our energy security, and
we are going to burn that fuel anyways whether we burn it from
imported crude or we make the crude here. It just changes where
we are going to pay for that crude. So it is probably better to
use our own domestic resources than it is to produce external
resources and bring them in.
Water Usage
The other question you had was on what? The water use?
Mr. McNerney. Water usage.
Dr. Freerks. Okay. In the Natchez plant we have Mississippi
River water for cooling, so water use is not an issue in that
plant. We have looked at designs for plants that are capable of
being put in dry climates like Wyoming, and they actually will
not use any more water than they produce. When you produce a
barrel of crude oil with the Fischer-Tropsch process, you
produce a barrel of water, and that water can be condensed and
recycled through the process, and you have no net usage of
water. And that is an engineering design.
Mr. McNerney. So you are saying that you use a barrel of
water in the process and then you produce a barrel of water at
the end of the process? Is that what you are saying?
Dr. Freerks. You can design the plant such that you are net
neutral on water. It is an engineering issue. It is a cost
issue, but it can be done.
Mr. McNerney. That seems farfetched to me.
Limitations of Domestic Coal Resources
Mr. Ward, you have referred to abundant coal resources, and
if we move forward with coal-to-liquid displacement of
petroleum for surface transportation, what limitations do you
see on the domestic coal resource? This was an issue that was
brought up by one of the other panelists. What limitations are
there?
Mr. Ward. There have been two studies completed in the last
year, one by the Southern States Energy Board and one by the
National Coal Council, but both took a hard look at the
availability of coal, and both determined that our coal
resources in the United States are more than adequate to
accomplish this kind of a scale up and use the coal resources
for transportation uses in addition to electricity generation.
CTL Waste
Mr. McNerney. We will have to study those reports. And you
also talked about CTL being a clean resource, and while the end
product is clean, clearly, it looks clean anyway. I didn't open
it up and smell it, but I didn't want to get it on my suit. But
how much waste is produced in producing a barrel of liquid, and
how toxic is the waste? And what do you do with it, not even
considering the carbon dioxide?
Mr. Ward. Well, I am going to defer to one of the
scientists with us, but the waste products from a coal-to-
liquids plant are very similar to what you would see in an oil
refinery.
Dr. Boardman. If you would like me to answer that.
Mr. Ward. You have got a gasification slag product, which
is a solid product, which is also very similar to the coal
combustion products you have from a coal-fueled power plant,
the residual solids. They are non-hazard. They are classified
non-hazardous waste in this country.
Dr. Boardman. Having been involved in the intimate details
of such a design and seeing one on the Baard Energy Project, I
can comment to that. It is the ash product coming from the coal
and the biomass that might be used. There will be some air
emissions discharges. Those will be relatively clean because
this process takes out all of the toxic metals in that coal,
the mercury, arsenic, and other things, as well as a lot of the
unburned hydrocarbon. So you basically are generating some
power in that plant, but it is a combined cycle power, very
clean on that discharge point. It does have some CO<INF>2</INF>
in it that is opportune to remove in the future, but apart from
that the water discharge also needs to be cleaned up but
conventional technology exists to do that.
So on that basis it is, again, comparable to a pulverized
coal-fired power plant that has to clean up its water
discharges.
Chairman Lampson. Dr. Bartlett, five minutes.
Plug-in Hybrids
Mr. Bartlett. Thank you very much.
There is an article recently that said that our usual 250
years projection of coal use might more appropriately be just
100 years. That is probably because at current use rates, they
are just projecting from our current use, and we are really
increasing our use of coal a bit over two percent a year. If,
by the way, you increase the use of something just five percent
a year, that doubles in 14 years, it is four times bigger in 28
years, it is eight times bigger in 42 years, and it is 16 times
bigger in 56 years.
So if, in fact, we have 100 years of coal at our present
rate of increase in the use of coal, if we increase its use
just five percent, I think that would be a low figure if we are
going to make any meaningful impact, then it is, we are going
to run out of coal pretty darn quickly, aren't we?
You mentioned the evaporation of water and how much water
it took, that is really double sin, isn't it? You are using
precious water, and it takes a lot of energy to do that. You
are wasting a lot of heat doing that. When the President said
we were hooked on oil, he was exactly right. We are so hooked
on oil that we become irrational when we are talking about
alterative energy uses.
You know, we were talking about hydrogen. Why don't we just
use the hydrogen? Well, you always use more energy producing
hydrogen than you get out of it. Why wouldn't you just go back
to the original energy source and use that? If you are talking
about using coal, why don't you just burn the coal? There is no
better way to get energy out of almost any product than simply
to burn it. And if you are doing that where you can use the
excess heat instead of stupidly evaporating precious water,
then you have a double increase in the efficiency.
Am I wrong? Doesn't it make any--by the way, and if you
want to get a lot of duration from your plug-in hybrid, instead
of stopping to refuel your car, simply stop to switch
batteries. And you can now drive an infinite distance with a
plug-in hybrid, can you not?
If I am not wrong in all of this, does it make any sense to
talk about coal-to-liquids? Why don't we just burn the coal and
produce electricity and use plug-in hybrids?
Mr. Hawkins. Well, I would agree 100 percent with that. I
mean, I think, you know, electric motors are very efficient, so
if you can generate electricity, you can use it very
efficiently, and I think plug-in hybrids are the vehicle of the
future. I think there is no question that if you take the coal
and burn it in a gasification plant and capture the carbon and
store it, you would actually have carbon-free electricity. So
you would be running your car on carbon-free electricity. If
you do CTL, if you do liquid coal with carbon capture and
storage, you are still running your car on diesel fuel. You
have not solved the global warming problem at all, but you have
spent a bundle of money to get you nowhere.
So I couldn't agree with you more.
Dr. Boardman. Except that when you burn that coal in those
power plants, you need the same water to cool that steam that
you make. The process----
Mr. Bartlett. I would use that for district heat. All over
the world they place their power production plants where there
are people so that they can use the excess heat for what is
called district heating. In the summertime you can simply use
an ammonia cycle, refrigeration and cool your homes with this
excess heat. What we do is really dumb, and we need to stop
doing it, do we not?
Dr. Boardman. Yes, and that same steam, though, could be
taken off that coal-to-liquids plant and used the same way. It
is the exact same steam, it is the exact same quality of heat.
Dr. Hawkins. If I could just add a word about the elephant
in the room and that is energy efficiency, this is the long
pole in the tent if you are worried about oil dependence and
global warming. We can back out more oil with smarter cars,
smarter transportation systems. We can back out more global
warming emissions with that, and we can give Americans
increased choice, vehicles--people don't buy vehicles because
they burn lots of gasoline. They buy them for the services they
provide, and if we have intelligent policies that are designed
to deliver vehicles that people want to drive, we don't need
price supports for minimum prices of oil. Those vehicles are
going to provide value to American consumers whatever the price
of oil is.
Mr. Ward. I would just agree. I would agree entirely that
plug-in hybrid vehicles are a place we need to go. The energy
efficiency is a place we need to go. Coal-to-liquids is a
bridge technology. It is not the ultimate technology. The
problem with plug-in hybrid vehicles is we have got to make
millions of them and convince people to buy them and use them.
There are no plug-in hybrid airplanes, there are no plug-in
hybrid locomotives, there are no plug-in hybrid big yellow
machines that build things and long-haul trucks and those kind
of things. We will continue to use liquid fuels for those types
of things.
And one other clarification on the brief discussion on
price supports for deployment of coal-to-liquids facilities, I
don't think anyone in the industry is looking for that as a
permanent solution. When we talk about commercialization
incentives, we have a commercialization gap where we need to
convince Wall Street that the first few of these plants can be
built. So when you are looking at some sort of a mechanism to
insure against price volatility in oil markets, you are only
looking at that for the limited purpose of the first few coal-
to-liquids plants so that you can get this industry kick
started. And after that, let the industry compete against oil
resources and others to fill that continuing demand we are
going to have for liquid fuels while we wait for efficiency and
plug-in hybrids to take hold.
Mr. Bartlett. What you are saying about trucks and trains
and airplanes is, particularly for airplanes is exactly true.
They have got to have a liquid fuel. But a large part of the
liquid fuels we use are in automobiles, and we can do something
about that, can we not?
Thank you, Mr. Chairman.
Chairman Lampson. Thank you, Dr. Bartlett.
And now, Mr. Costello, five minutes.
Mr. Costello. Mr. Chairman, thank you, and thank you for
calling this hearing today.
Running Aircraft Engines on Coal-to-Liquids
Mr. Ward, I appreciate you making the comment that there
are airplanes and locomotives and other road-building equipment
and other vehicles that have to run on liquid fuel. Both you
and Dr. Freerks made the point that the Department of Defense
has been a leader in moving to clean coal technology and also
to coal-to-liquids. And there has been some discussion, I
think, and some skeptics in the past saying, do you have to
modify aircraft engines in order to run them on coal-to-
liquids.
And Mr. Ward, I think I heard you say earlier that one is
that CTL is not a new kind of fuel, and two, is that you do not
have to modify existing engines to run them on CTL. Is that
correct?
Mr. Ward. That is correct. You are making gasoline, diesel
fuel, jet fuel. Those fuels can be used directly, they can be
blended with petroleum-derived fuels, they can be distributed
in existing pipelines and service stations. You know, this is--
and that is no small issue. When you look at new types of fuels
coming into play for the United States, you are also going to
not only build the vehicles that run on those fuels, you are
going to have to build the delivery systems for getting those
fuels to market. Ask anyone who tries to drive E-85 in lots of
states in this country, you know, where they can find those
things.
One of the advantages to CTL as a bridge technology is we
can put it into the existing pipelines, the existing vehicles,
and reduce our dependence on imported oil right now.
Mr. Costello. So for those who have questioned do you have
to modify, does DOD have to modify the engines, they do not?
Jet Blue and some of the other airlines are looking at CTL. Dr.
Freerks, it looks like you want to make a comment here.
Dr. Freerks. I have been involved with the development of
the F-T fuel with the Department of Defense for about eight
years, and the only concern that they really have is that they
have not seen this fuel in their engines before, so they are
testing to make sure that it does work. And so far all the
tests show that there is no modification needed, other than
that you can get more efficiency out of the fuel if you design
the engine to actually run on that fuel. We can run it on the
existing engines, but we can actually do better, and even NASA
is looking at designing spacecraft to run on the F-T fuels
because it provides a cleaner way to get into space than many
of the other alternative fuels that they have been using.
So there are many advantages to this fuel. It is not only
just a replacement for conventional fuels. It is an enabling
fuel for both the turban engine and the diesel combustion
engine where we can design the engines to be both more
efficient and lower polluting because the fuel itself burns so
much cleaner than conventional fuels which contain aromatics
and sulfur.
Mr. Costello. And it is my understanding that the
Department of Defense, the Air Force in particular, has just
certified a CTL blend to be used for the B-52?
Dr. Freerks. Correct.
Mr. Costello. And that just took place just a few weeks
ago. Is that correct?
Dr. Freerks. Correct.
Carbon Sequestration
Mr. Costello. Mr. Hawkins, my understanding from your
testimony is that you indicate that carbon sequestration makes
sense for coal electricity generation but not for CTL. I wonder
what you believe are the appropriate federal initiatives for
developing the sequestration used for electricity production.
Mr. Hawkins. Thank you, Mr. Costello. Actually, we believe
that carbon sequestration or carbon capture and storage makes
sense for any use of coal. What we question is using coal to
make liquid fuels. We think that a better way to back out oil,
if you are going to use coal, is to make electricity with that
coal and then use it to make plug-in hybrid vehicles. We think
that can deliver more barrels of oil per ton of coal with many
fewer greenhouse gas emissions.
So instead of, you raised the aircraft issues, we need to
look at this as an overall resource, and efficiency driven
through plug-in hybrids can free up barrels of oil that then
can be available for other uses such as aircraft.
So instead of spending lots of money to produce a new fuel
for the Air Force, why not look at the U.S. Postal Service,
have that fleet converted to plug-in hybrid vehicles, why
doesn't FedEx look at converting its ground fleet to plug-in
hybrid vehicles, and free up all or a part of the needs for the
aircraft that need it.
Mr. Costello. Dr. Boardman, do you have a response to Mr.
Hawkins' statement?
Reasons to Start Investing in Coal-to-Liquids
Dr. Boardman. Thank you. I do. I will maybe add a new
perspective here. When you look at the oil reserves to the
production rates, you can look at British petroleum statistics
published two years ago that indicated all of North America, if
we continue at the rate of production, we will deplete those
reserves within ten years. And so that means that we have got
to look towards, when we are looking at all of the
transportation vehicles and the heavy vehicles, our demand for
that oil, if that oil depletes and national security risks go
up correspondingly, we need to have an ability to generate that
fuel in terms of national security.
And I think it is important for us to begin to establish
that infrastructure now to be able to do coal-to-liquids
because it does take time to do that. It takes time to build
that, it takes heavy equipment and vessels. We don't have that
capability nor that experience.
So the first few plants could establish that capability so
when those declining reserves do eventually meet up to us, we
are prepared to have an alternative for that liquid fuel.
Mr. Costello. I thank you, and I thank you, Mr. Chairman.
Chairman Lampson. Thank you, Mr. Costello.
Mr. Hall, five minutes.
Mr. Hall. Mr. Chairman, thank you.
Should Carbons Be Taxed?
I have listened here and read some of your testimony. I go
back to the reason we are here and what we are doing here and
the major duty of a member of Congress, probably one of the
major duties is to prevent a war. And right now today the major
war I see by some of you on the panel there is a war against
energy. You are knocking fossil fuels. You are knocking coal.
I guess to Dr. Hawkins and Dr. Romm, I would have to say
that I just disagree with you. You are both pushing the fear of
global warming, yet you don't have any answer for the cost of
it. I just would like to ask Dr. Hawkins if you and the NRDC
and Dr. Romm, if you and the Center for Energy and Climate
Solutions, and I think this follows the question Dr.--
Congressman McNerney was asking about, I guess I would ask Dr.
Romm, do you really believe that you ought to tax carbons? Is
that your, isn't that your testimony?
Dr. Romm. No. Well, I would prefer a cap and trade system.
Price of CO<INF>2
</INF>Mr. Hall. Well, yeah. You would prefer to explain it
away. Let me read it to you. I think you said, ``Instead of
promoting liquid coal, Congress must address the climate
problem by establishing a cap on emissions that creates a price
for carbon dioxide.'' What do you mean by that? If that is not
a tax.
Dr. Romm. Well, taxes go to the Government, and in a cap
and trade system the revenue is, typically goes, you know, is
circulated in the economy to find the lowest price for avoiding
carbon dioxide emissions. So----
Mr. Hall. Yeah, but there is a bump in the road there and
either way you go it runs the price of gasoline up. Now, please
pick that up and explain it. Be practical with me, not
theoretical.
Dr. Romm. Sure. Let us be clear. There is no question that
if you put a cap on emissions, carbon dioxide will have a
price. But you have all these panelists here who are telling
you that they are going to capture carbon dioxide from the
coal-to-liquids process and bury it. Well, they won't spend a
penny doing that unless there is a price for carbon dioxide
that gives them a reward for that.
Now, I think what Dr. Hawkins and I would say is that if
you combine energy efficiency with a switch to cleaner fuels,
you have the possibility that the fuels may cost more but
because you are using them more efficiently, your energy bill
won't go up. And when I was at the Department of Energy we did
a study with five national laboratories which showed that you
could substantially reduce the greenhouse gas emissions of the
United States of America without increasing the Nation's Energy
Bill. And that is what our goal is, but there is no question
that the price of carbon-intensive fuels has to go up. If the
price of carbon-intensive fuels doesn't go up, why would
anybody use less of them?
So, yes, we are in, you know, I am certainly in the camp
that global warming and, you know, this is a Science and
Technology Committee, and the scientists of the world have
spoken earlier this year in the Inter-Governmental Panel on
climate change----
Mr. Hall. Why do you express all your fears about global
warming, though, and you never set forth a way to pay for it?
Now, you, yourself, know that China is not going to do anything
but increase the intensity of the damage to the air, and yet
take all of our jobs over there, and they are not going to pay
15 cents to help our companies, our energy companies set forth
energy to use at a decent figure. Neither is Russia, neither is
Mexico, neither is India. I can go on down the road.
Why Not Coal-to-Liquid to Help Address Global Warming?
Why would you set forth the great fear of global warming
right now and not be pushing for technology like coal-to-
liquid, like we have suggested here and use the abundance of
coal that we have in this country to offset the fear of
terrorists that threaten us? And it is a national security
issue.
Dr. Romm. Well, I am a big fan of reducing oil consumption.
I wrote an article entitled, ``Mid East Oil Forever.'' I think
it is just important to understand that there is no point in
addressing the energy security problem in a way that makes it
harder to solve the global warming problem. I don't think there
is any question that the scientific consensus on global warming
is clear. We have to reduce emissions, and I think there are a
lot of bills before Congress that would do just that. Coal-to-
liquids does not address the global warming problem.
Mr. Hall. In any way?
Dr. Romm. In any way whatsoever, no, because you are left
with diesel fuel. Even if you cap----
Mr. Hall. Global warming. Oh, no. I agree with you on that.
Dr. Romm. Okay. Then we are in agreement.
Mr. Hall. No. We are in great disagreement.
Is Energy Security Important?
Let me ask you and, let me ask Dr. Hawkins how he and NRDC
feels and you, Dr. Romm, how the Center for Energy and Climate
Solutions feel. Let me ask you a simple question. It doesn't
mean to be an insulting question, because I know your answer is
going to be yes. Do you believe energy security is important?
Your answer is yes, isn't it? For both of you.
Mr. Hawkins. Yes, of course.
Mr. Hall. So if using carbon capture and storage technology
can give CTL a better life, a better life cycle, greenhouse gas
profile than imported petroleum and a much better performance
in the area of criteria pollutants, why wouldn't the NRDC
support this, and why wouldn't the Center for Energy and
Climate Solutions support that?
Mr. Hawkins. The question, Mr. Hall, is not whether we
support backing out oil with domestic resources. We do. What we
are trying to urge this committee to look at is what is the
best way to do this. We have raised a number of questions about
why we think coal-to-liquids is not the best way to back out
oil, it is not the best way to use coal to back out oil. These
are questions that if you don't look hard at them, you are
going to make mistakes, and those mistakes are going to
interfere with the objective of getting energy security, and
they are going to hit American taxpayers with bigger bills than
they need to pay.
Those are the questions we are asking you to take a hard
look at.
Should We Increase Domestic Oil Production?
Mr. Hall. Okay. If you are opposed to CTL, are you
supporting more domestic production of oil then in order to
help our national security and decrease our dependence on
foreign oil?
Mr. Hawkins. Well----
Mr. Hall. It is all fossil fuels, isn't it?
Mr. Hawkins.--we have supported enhanced oil recovery
because we do think that it is better to get additional barrels
of oil out of already producing fields than it is to go into
either unsecure areas of the world or go into pristine areas
so----
Mr. Hall. Not drilling on Anwar and in the Gulf and
offshore Florida?
Mr. Hawkins. We think there are----
Mr. Hall. Do you recommend that?
Mr. Hawkins.--a few places----
Mr. Hall. Yes or no? Do you recommend that, sir?
Mr. Hawkins. We do not recommend drilling in the Arctic
National Wildlife Refuge (ANWR). We oppose that. We do support
drilling in the Gulf of Mexico where existing production is
doing just fine, thank you, and we support a wide range, which
is outlined in my testimony, of producing resources both U.S.
biofuels resources, as well as, as I will repeat it again,
efficiency can deliver more barrels of oil equivalent than any
other tool in the toolbox.
And I would just state American consumers don't value
barrels of oil. They value mobility, and if you can deliver
that mobility with smarter cars that use fewer barrels of oil,
then we are better off from an energy security standpoint, and
we are better off from the standpoint of our wallets.
Construction of Power Plants
Mr. Hall. Last question. You advocate the use of plug-in
hybrids. Do you therefore support the construction of a new
coal-fired electric generation plant? I support nuclear powered
electric generation plants. Do you support those? They add much
needed generation to the grid.
Mr. Hawkins. We think that new power plants should be
designed to be the cleanest possible power plants. We are not
picking technologies for new electric power plants. We just did
a research report with the Electric Power Research Institute.
We will need additional electric power capacity. We think we
can do a lot more on renewable, wind and solar electric
sources, and we are really pleased that the State of Texas is
doing such a great job on wind-powered electricity. It is
growing faster than any other source of electricity in Texas,
and your state is a real leader in that area.
More on Domestic Oil Production
Mr. Hall. Yeah. We are going about two percent of the
energy. That is a big deal. Actually, ANWR, when you oppose
ANWR, I guess it is because it is too pristine, and you want to
save it and not damage little ANWR. It is just 19 million acres
up there, and the bill calls for drilling on 2,000 acres, and
it is equivalent--I will be practical with you and not
scientific.
It is equivalent to saying if you take a football field,
and you lay a dollar bill down in the end zone, you ruin the
whole field. That is outrageous, and you know it.
I yield back my time.
Chairman Lampson. Mr. Wilson, five minutes.
CTL as a Bridging Technology
Mr. Wilson. Thank you, Mr. Chairman. Gentlemen, thank you
for being here today.
I have a special interest in this because as Dr. Boardman
talked, the proposed Baard Energy Project would be in my
district, where we also, Mr. Hawkins, we made lots of
electricity along that Ohio River corridor in Ohio from
Youngstown down to Cincinnati.
What we are trying to do is to find alternate ways to be
able to make ourselves less dependent on foreign oil, and I
believe in, not only because of the fact that we have the
proper things to bring it together in our district, we also
have the need in our country. And to know that this fuel can be
burned as clean or cleaner than what we are burning and we are
not paying for it to a foreign source, I think is very
important.
One of the things that Mr. Ward talked about that I thought
was extremely important for everyone to understand and
conceptualize about this is that the CTL is actually a bridge
to technology, and I wanted to ask you, Mr. Ward, if you would
continue on that, expand on it, because I think it would answer
some of the questions where folks were saying that we only have
coal for 100 years. Well, 100 years is a long time.
But if you would, if you would talk on that as to what
really is the effect of CTL.
Mr. Ward. Well, and, again, I think it is important to
remember that we are trying to deal with two issues at the same
time here; one being an energy security issue and the other one
being a climate change issue. And they are both crucially
important, and I think some of the tension in this debate comes
when we try to put one over the top of the other.
What we are talking about with coal-to-liquids is using a
domestic resource that we have to replace a resource that
exacts a tremendous cost on our nation and our economy to
protect the access to it in other parts of the world, largely
from places where people don't necessarily like us. And so it
is to take nothing away from the need to do more for energy
efficiency, to do more for new types of vehicles. You know, the
hydrogen economy, if we can ever get to that would be a
wonderful place to be, but the reality is our production and
refining base today is at its maximum level. Our refining
facilities are located in places that are vulnerable to
terrorist attacks and to natural disasters like hurricanes. We
need to do more to use the resources we have and expand and
diversify our resource base for producing the fuels for the
vehicles we drive today.
Mr. Wilson. And I think it is going to take, and please,
anyone of the panel, if you will, please disagree with me if
you do, but I think it is going to take the implementation of
all these things, not just coal-to-liquid, not just wind, not
just solar panels, but all of them, and the sooner we realize
that and begin moving in that direction, I think the better off
we are going to be.
CTL Success in Other Countries
One of the points that I would want to ask to the panel is
if coal-to-liquid is not the right way to go, why are so many
other countries doing it and some becoming very successful with
it? Does anyone have any comment on that?
Mr. Ward. Well, let me just take a quick one and point out,
for instance, China is a country that attracts a lot of our
interest. China faces many of the same dynamics that we do.
They are dependent on foreign sources of oil. In fact, they are
dependent on the same foreign sources of oil that we are, and
they are making some critical decisions right now as to what
they need to do. They can invest billions of dollars to build
pipeline capacity to bring more foreign oil from the coasts to
their interior where the cities are growing, or they can invest
those billions of dollars in developing the coal resources that
they have in the interior for making liquid fuels from their
own resources. They are, in fact, investing the billions to do
more with the resources they have.
I think that is, you know, the Philippines, India, a number
of the growing Asian countries are making similar types of
decisions, and it is easier for them to do it because the
Government has a more direct role in building those first
plants. The problem we face here in the United States is that
we go to Wall Street and ask for the money, and until we get
the first few plants built, there is a tremendous resistance
from the private capital markets. Everybody wants to be the
first person to build the fifth plant.
Mr. Wilson. Have we not, Mr. Chairman, have we not always
in America, though, the thing that has made us above and better
than most others is the fact that we do provide the technology,
and we are able to move forward with the challenges we have
because we are willing to take the risks and to do what is
responsible.
Mr. Ward. Well, we are providing the technology that the
Chinese are using----
Mr. Wilson. Exactly.
Mr. Ward.--to develop their CTL resources. So----
Mr. Wilson. Yes. Mr. Hawkins.
Mr. Hawkins. If I could comment. Again, the debate here is
not about providing incentives for technologies to get the job
done. The question is why pick a fuel and why pick a process
when you are providing those incentives? Why not focus on the
objective? If the objective is to back out oil, then give
incentives that are open to all comers for processes that back
out oil. If the objective, as we believe it needs to be, is to
cut global warming emissions, then provide incentives for
technologies that do a better job of that. Focus on the
objectives. Don't try to pick the technology or fuel winner.
Investing in CTL
Dr. Romm. If I could add two points. One is China appears
to be scaling back their effort on CTL, and I posted on my
blog, climateprogress.org, a couple of articles that go to that
very point. So I think it is important to understand that CTL
is not taking over the planet.
I think the other important thing to understand is we have
$70 a barrel oil. We do not have any CTL plants in this
country. Now, people tell you, we could spend money to solve
the water problem, make the plants more expensive. We could
spend money to capture the carbon. No one is building these
plants because they cost $5 billion for 80,000 barrels a day.
They are phenomenally expensive plants. They are not profitable
at current prices of oil. They are going to be infinitely less
profitable if you try to deal with their water and their
CO<INF>2</INF>.
So it doesn't make a lot of sense for the Government to
push CTL down the throats of consumers. They are just, they
don't make a lot of sense economically or environmentally.
Mr. Wilson. If I could comment on that, Mr. Chairman, I
think there are two things in play there. Number one, why are
we looking for coal-to-liquid? It is simply because we have an
abundance of coal.
And secondly, I believe it is very important to realize
that this technology is something that is going to, if we are
paying $70 a barrel now, who is to say we are not paying 170 a
year from now? And so what this does if we get these plants up
and going, it gives us some balance in which we need badly
right now. Mr. Ward.
Mr. Bartis. Can I comment? I am a little concerned because
what I hear is a lot of second guessing of the marketplace here
and what works and what doesn't work. The fact is is that we
have a technology. It is one of the few choices that we have
that is ready now. It is coal-to-liquids with Fischer-Tropsch.
The problem with that technology is that we have got a concern
with global warming, and we have not proven that we can
sequester the carbon dioxide emissions. That is a fact.
That fact says that we should not be putting together any
incentive that promotes a large coal-to-liquids industry. It
doesn't mean that we shouldn't invest small amounts of money to
get some early experience, and there is a big difference
between the Government trying to pick winners, rather than
looking at coal-to-liquids first, as insurance, a small
insurance policy.
The other thing I wanted to say is that I think it is very
important to endorse what David Hawkins has said, that we focus
on objectives and not on technologies. There is too much
willingness among all parties it seems to me to try to pick
this particular technology or that technology. The true
objectives are, you know, import less oil, use less oil, and
put out fewer emissions of CO<INF>2</INF>.
And addressing one doesn't mean you are going to fix the
other one. For example, we know that if we pass legislation
that puts a premium on carbon emissions adequate to sequester
emissions for electricity production, which is about $30 I
believe, a ton of CO<INF>2</INF> according to the MIT study,
that legislation is only going to raise the price of gasoline
35 cents a gallon.
This increase in the price of gasoline is just not enough
to cause anyone to use less petroleum. So we need to think of
disincentives or incentives, I prefer disincentives because
they encourage efficiency in conservation, but we need to think
of broad-based incentives and disincentives for using less
petroleum and for reducing carbon dioxide emissions. That is
the real key here.
Mr. Wilson. And I, if I may, Mr. Chairman, I think that is
wonderful in an ideal world, but we are in a real world, and it
is a situation where we are going to have to do something with
our energy dependence, and we need to be moving on it now.
CTL Emissions
Thank you, Mr. Chairman.
Chairman Lampson. Mr. Hill, five minutes.
Mr. Hill. Thank you, Mr. Chairman. Gentleman, I am not a
member of this committee, but I am very interested in this
whole issue, because I am from Indiana, which produces a lot of
coal.
One of the things that I have learned in my years in
Congress it is very hard to determine what the facts are in
this city, and I have been listening to you for an hour now,
and I still don't know what the facts are. So maybe we can
clear up some of these things.
Mr. Ward, you said that coal-to-liquids is cleaner than the
way we produce gasoline today from oil.
Mr. Ward. Yes, sir. The fuels that result from a CTL
process are cleaner than the fuels that come from a
traditional----
Mr. Hill. Okay.
Mr. Ward.--petroleum refinery.
Mr. Hill. Dr. Bartis, you said coal-to-liquids will produce
20 percent greater carbon emissions than oil.
Dr. Bartis. They will produce much more than 20 percent.
Mr. Hill. According to the Argonne National Labs. Who is
right here? Are you right, or is Mr. Ward right?
Dr. Bartis. Well, no. There are two different issues.
Mr. Hill. Okay.
Dr. Bartis. We are talking about two different things. One
is the performance of the fuel after it is produced. The other
issue is what of the greenhouse gas emissions in producing the
fuel. If you look at a total fuel cycle basis, our
calculations, and we have been very careful with this at RAND,
our calculations show about 2.2 times as much as conventional
petroleum. That is with nothing, not doing any carbon
management at all. Just putting all the emissions into the
atmosphere.
Mr. Hill. So, Mr. Ward, how do you respond to that?
Mr. Ward. Two ways. Number one, we need to separate the
pollutants in fuel--sulfur, NOX, particulates, the things that
make people sick--from the greenhouse gas, which is a climate
change issue. On the pollutants issue there is no question that
the CTL fuels are much cleaner than the petroleum fuels that
they are replacing.
On the greenhouse gas climate change issue, if you capture
and sequester the carbon during the manufacturing process, you
can make those CTL fuels on a life cycle basis be no worse than
the petroleum that they are replacing.
Mr. Hill. Okay. So someone said that the technology as it
relates to carbon sequestration is not here yet.
Mr. Ward. I would disagree with that, sir. The largest coal
gasification plant in the country is in North Dakota, Dakota
Gasification. It is 30 miles down the road from a coal-to-
liquids plant we are looking at building. They capture and
sequester their carbon for enhanced oil recovery. All of the
coal-to-liquids developers I work with in the United States are
planning to capture their CO<INF>2</INF> and sell it for the
purposes of enhanced oil recovery.
You know, as we look at needing to move to carbon capture
and storage for the electricity generation sector, I think we
would be missing an opportunity. Here is the CTL industry that
is willing to embrace and deploy carbon capture and storage
technologies on a large scale right now, these are the
demonstration projects where we are going to learn the things
we need to know so that we can go back and retrofit carbon
capture and storage onto our existing base of electricity
generation that produces 50 percent of the power in this
country.
Coal Supply
Mr. Hill. Okay. So let me switch then to what Congressman
Bartlett has said. Are we going to run out of coal soon if we
increase production by five percent?
Mr. Ward. I do not believe we are. There is some noise on
some newspaper article that appeared recently that was looking
at known pieces. One of the things about coal that is similar
to what it is about oil is you need to look at what these
surveys are based on. Are the surveys based on the exploration
that has identified the fields that are fully characterized, or
are they based on what we know is out there and haven't gone
looking for yet because there is no reason to. The studies I
referred to earlier by the National Coal Council and the
Southern States Energy Board have both identified more than
ample coal reserves here in the country to support both
electricity generation and transportation fuels.
More on Investing in CTL
Mr. Hill. Well, then why isn't this happening, Mr. Ward? I
mean----
Mr. Ward. Well----
Mr. Hill.--if it is a no-brainer, why is it not happening?
Mr. Ward.--it will happen, and my position is that you will
see a coal-to-liquids industry in this country. The question is
how fast. The $70 oil price issue came up a minute ago. If my
coal-to-liquids plant was running today in a $70 a barrel oil
environment, I would be making good money with that facility.
The question is when I go to Wall Street and say, please loan
me $3 billion to build this plant, look at how good it is at
$70 oil, they say, well, what is the oil price going to be in
five years when you are paying back the loan after you build
this?
Mr. Hill. So what should we do?
Mr. Ward. What we should do on the commercialization side
is put in place a limited number of deployment incentives to
take some of that oil volatility price risk, and there is two
or three different proposals floating around on the Hill now
that could do that. But for the first two or three plants or
four or five, pick a number, plants, alleviate that oil price
volatility factor so you can get those plants running. Then
when you go to build the fourth and fifth plant, the people on
Wall Street have something to look at, you have got a facility
working.
You know, we will get a coal-to-liquids industry, you know,
oil keeps going up, it gets to $100, $120 a barrel, people are
going to start building these things anyway. You can let it go
that way, but that does nothing to address the energy security
issue of reducing your dependence on foreign oil before we face
another crisis.
Mr. Hill. My red light is on. I have got like 100 more
questions, Mr. Chairman, but I will let it go at that. Thank
you.
Chairman Lampson. Mr. Matheson, you are recognized.
More on CTL Emissions
Mr. Matheson. Well, thank you, Mr. Chairman. Mr. Ward, I
wanted to ask you a question first. What do you feel is an
appropriate level of environment performance for CTL facilities
that should be met in order to achieve some kind of federal
financial support?
Mr. Ward. I believe that the reason for pursuing coal-to-
liquids is as a bridge strategy to help us with energy security
issues while we develop the fuels and the strategies of the
future. Therefore, I believe if a coal-to-liquids facility can
produce a fuel that is cleaner than the petroleum fuel that it
replaces from a pollutant standard, and is better than the
petroleum fuel it replaces from a life cycle greenhouse gas
standard, that should qualify for deployment-type incentives to
get these plants built.
After that, these plants are going to be subject to the
same regulations or regulatory regimes, whether it is a carbon
tax or cap and trade system or whatever this Congress
ultimately enacts to meet our greater goals of dealing with
climate change----
Mr. Matheson. Uh-huh.
Mr. Ward.--these plants will also be subject to future
reductions to meet that system. And we will do those things
through some of the technologies that have been discussed today
like biomass firing and other technologies that are out there.
But to qualify for deployment incentives, if what we are
trying to do is improve our, if what we are trying to do is
improve our energy security, what is wrong with the standard
that says as long as you are not going backwards, you qualify.
CTL Commercial Application
Mr. Matheson. Let me also ask you a question, we have heard
a lot in the context of coal-to-liquids about using biomass in
connection with the coal for making liquid transportation
fuels. Where is this technology in terms of its opportunity for
commercial application now?
Mr. Ward. And that is really an important question for this
committee where you are looking at where research dollars
should be spent. Coal-to-liquids with carbon capture and
storage for enhanced oil recovery is something we can do today.
There is commercially-available technologies, there are
commercially-financeable technologies if we can deal with oil
price risks.
The biomass coal gasification, biomass co-firing, that is
earlier in the scale. That is back where we need to do
demonstration projects. There is probably some more basic
research that needs to be done. Those are areas where we should
be spending research dollars, not deployment dollars in order
to develop that technology so that it will be useful in making
future environmental improvements down the road.
Mr. Matheson. And what are the environmental benefits of
that technology combining the two?
Mr. Ward. Well, when you combine the two, when you do
carbon capture and storage and utilize biomass strategies, you
can now go from a fuel that is as good as or a little better
than the petroleum you are replacing to having a liquid fuel
that is significantly better than the petroleum fuel that you
are replacing.
Mr. Matheson. And just maybe just to clarify what you said,
because the Science Committee has jurisdiction over research
funding. You are suggesting that for this committee that is an
appropriate thing to take a look at?
Mr. Ward. Exactly. And my testimony outlined three areas
that I think are most appropriate for research dollars in this
area, biomass being one of them, doing more complete work on
setting standards for life cycle assessments for comparing
these technologies to other fossil fuels is a second one, and
then continuing to broaden the options and knowledge of carbon
sequestration activities outside of enhanced oil recovery is
the third.
Mr. Matheson. Okay. I appreciate that. And I am sorry I was
not here at the start of the hearing, and I wanted to welcome
Mr. Ward, who is from Utah. I would have introduced you if I
was here at the start of the hearing, but I didn't make it in
time.
Mr. Ward. That is okay. You would have said something
disreputable.
Carbon Capture and Sequestration
Mr. Matheson. One, just one last question I will throw out
to any witness on the Committee in terms of the carbon capture
and storage issue. It seems to me that these are, you know, CTL
and CCS are both sort of in play right now. Can anyone talk
about--give the Science Committee direction on the difference
between the different available forms of carbon capture and
sequestration and the types of research that this committee
ought to encourage to help enhance policy support for different
types of carbon capture sequestration?
That is for anybody who wants to answer that.
Dr. Bartis. Carbon capture and sequestration is one of the
great challenges of the next few decades in my view, and there
are a variety of approaches to take, but the most important
approach in terms of how much can be captured is geologic
sequestration. Enhanced oil recovery is significant, and it is
good for the first few CTL plants. It is important that they
probably do something like that, but if we want to go beyond
that, we are going to have to do something much more
significant. But right now the federal budget on carbon capture
and sequestration is about $80 million a year, and that is just
way too low for the challenge that is ahead.
And the critical steps here are to have very large scale
demonstrations, and what is important if you have a large scale
demonstration is that you don't just focus on the engineering.
There is a tremendous amount of basic science, geological
sciences, geochemistry, geophysics, that has to accompany any
of these large scale demonstrations. Otherwise we really won't
understand what we are doing.
And we have good scientists who are working on this, and
this is a real big challenge, not just for coal-to-liquids, for
everything.
Mr. Matheson. For everything. Yeah.
Dr. Romm. If I could just add, the Science Committee has
to, I would, if it wants to support carbon capture and storage,
should develop an accepted scientific process for identifying
and certifying geologic repositories. I mean, I would point out
we have spent how long trying to certify one repository for
nuclear waste. We are talking about dozens of repositories for
carbon dioxide, and we don't have any institutionalized process
for how you identify and certify that some repository is going
to be safe and permanent.
Mr. Matheson. Dr. Freerks.
Dr. Freerks. I do believe that the geo sequestration
partnership is doing exactly that. They are looking at sites
throughout the U.S. I believe there are seven sites that have
been chosen. They are going to sequester millions of tons of
CO<INF>2</INF> and prove the capture nature of that geo
sequestration and verify all the issues that go along with
that, including any leakage and migration.
And there are multiple places where this has already been
demonstrated. In Norway there are two major sites that have
already been using saline aquifers, and there is Devonian shale
in other areas that can store massive amounts of CO<INF>2</INF>
by the terms in which we are making CO<INF>2</INF> right now.
We can store CO<INF>2</INF> for several hundred years, if not,
I think 600 years has been proposed by Dr. Scott Clara of the
NETL in their study of geo sequestration.
So there is a lot of data supporting the sequestration of
CO<INF>2</INF> for the long-term and making it a viable
technology for all of the ways that we produce energy through
combustion and CO<INF>2</INF>, and then now it really comes
down to how do we capture that CO<INF>2</INF> and put it into
the ground. Well, coal-to-liquids offers the best opportunity
for doing that because we have to capture the CO<INF>2</INF> as
part of the process. So there is no inherent additional costs
for scrubbing the CO<INF>2</INF> out of our concentrated
streams.
Where there would be from coal-fired power plants or from
oil refineries or even from fermentation into ethanol.
Mr. Matheson. Well, Mr. Chairman, I see my time has
expired, but I do want to thank the panel, and I would suggest
as a Science Committee issue, in terms of figuring out what we
can do to encourage understanding of carbon capture
sequestration, if any of the witnesses want to provide
additional testimony that gives direction for us or any ideas,
I think that is an issue that this committee ought to take a
look at.
And with that I yield back.
Chairman Lampson. Thank you very much. We have passed the
Udall legislation that has to do with carbon sequestration, and
obviously there is more yet that we have to do.
I have been looking for a way to get Mr. Hall indebted to
me. I think I may have just found it. I am going to yield time
to Mr. Hall for a question.
Mr. Hall. Mr. Chairman, I will ask a question of you. Are
you going to give us some time to send letters----
Chairman Lampson. You bet.
Mr. Hall.--and inquiries to these gentlemen?
Chairman Lampson. You bet we are.
Mr. Hall. As you may remember, I offered an amendment to
the biofuels bill establishing an R&D program, looking into a
practice. It was unfortunately voted down during markup, but if
you will remember, I had a little better luck on offering a
motion to instruct conferees, asking the managers on the part
of the House that the conference on H.R. 2272 to be instructed,
if you remember that. Insist on language prioritizing the early
career grants to science and engineering researchers for the
expansion of domestic energy production and use through coal-
to-liquids. And this passed by a vote of 258 to 167, and most
of you guys over there voted for it.
I am going to write to each of these men and ask them if
they favor providing grants to our young scientists and
engineers to focus on R&D and these questions and whether or
not that is an appropriate or inappropriate expenditure by the
Federal Government and recommendation by this group.
And I thank you for your answers, and I thank you, Mr.
Chairman. I do owe you.
Chairman Lampson. Thank you, Mr. Hall. I think this has
been a very informative hearing, and we have, maybe it has
raised more questions for some of us than we had when we first
came in, and obviously we do want the record to remain open for
additional statements from Members and for answers to any
follow-up questions that the Committee may ask of the
witnesses. I know that I have got some that I will, indeed, be
forwarding out to you.
So as we bring this hearing to a close I want to thank the
witnesses for testifying before the Committee today. You are
excused, and this committee is now adjourned.
[Whereupon, at 12:00 p.m., the Subcommittee was adjourned.]
Appendix:
----------
Answers to Post-Hearing Questions
Responses by Richard D. Boardman, Senior Consulting Research and
Development Lead, Idaho National Laboratory
Questions submitted by Representative Jerry McNerney
Q1. Expanded use of coal-to-liquids technology could increase the high
burden on available water supplies, particularly in the West. You
discussed possible technical solutions that would dramatically reduce
the amount of water used in the F-T process.
Q1a. Please explain the status of these techniques, how difficult they
would be to implement on a large scale, and how costly their
implementation might be.
A1a. In my testimony, I stated that the amount of water required for a
coal-to-liquids plant could be as high as 8-10 barrels per barrel of
diesel fuel produced for an INL case study. This would be the case when
no effort is made to treat and recycle the water that is discharged at
several locations throughout the plant. The figure below gives a
conceptual view of the water input and effluent streams for a notional
coal-to-liquid plant. The gasifier is feed coal and steam, at a ratio
of about one pound of steam per pound of dried coal (at 10 percent
moisture). This translates to roughly 2.5 barrels of water per barrel
of F-T product. More water (about one barrel per barrel of liquid
product) is injected into the hot syngas to quench the hot syngas in
order to remove particulate and soluble pollutants. Additional water is
required to produce hydrogen in the CO shift reactor. The typical
amount required for the shift reaction is approximately 0.5 barrel of
water per barrel of product. Next, a large amount of cooling water must
be used to cool the gasifier vessel and the F-T reactors and product
upgrade refinery, which ultimately results in low-pressure steam which
when vented to the atmosphere can be as much as an additional 4-6
barrels of cooling water per barrel of product. In sum, the water input
is about 8 to 10 barrels (or 2.5 + 1 + 0.5 + 4-6 barrels of water).
In order to reduce the water consumption, the moisture that is
recovered from the coal drying process can be used to make up the steam
that is co-injected with the coal. This amounts to a net gain of one-
quarter (1/4) to one (1) barrels of water per barrel of product that
can be offset for an eastern coal or western lignite, respectively.
Next, water from the air separation unit (ASU) can be obtained, in the
amount of about 0.25 barrels of water per barrel of product, depending
on the relative humidity which obviously would be less for plant in the
Western Mountain States. Quench system water and RectisolTM blowdown
can be treated and used in the plant, netting approximately one (1)
barrel more of water per barrel of product. The F-T process also
produces about one (1) barrel of water per barrel of F-T product. This
by-product water can be treated to remove water-soluble light organics
for use throughout the plant. Finally, the cooling tower condensate can
be treated and recycled, thus reducing cooling water make up by 67
percent. This would reduce water use by an additional 2.5-4 barrels of
water per barrel of F-T fuels product. All of the above process steps
should be considered standard practice, and together amount to about
10-15 percent increase in total capital cost and 10 percent in
operating costs of the plant. Collectively, these practices would lower
the water demand to around 3-5 barrels of water per barrel of product.
Finally, I referred to implementing commercially available, but
expensive air-cooler heat exchangers to replace the steam cooling
tower. An expensive closed-loop organic refrigerant cycle could also be
deployed to cool the low-grade, unusable steam. This option would
however be expensive, but could be offset by revenue from surplus power
that can be produced by expanding the refrigerant. Both of these
options would increase the capital costs by approximately five percent,
but would reduce the water demand to 1.5-3 barrels of water per barrel
of product.
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
Q1b. What are the realistic prospects for substantially reducing the
amount of water used in coal-to-liquid production?
A1b. As can be seen by my analysis, proper consideration for using the
water discharges from coal drying, the quench system, F-T by-product
water, and cooling tower operations can significantly cut the water
demand, at a cost of around 10-15 percent of the total capital cost of
the plant, and an operating cost increase of only 10 percent. For an
additional capital cost increase of around five percent, the
theoretical water consumption can be reduced to as little as one (1) to
two (2) barrels of water per barrel of product. Currently, some
projects are claiming they have reduced the water demand to as low as
one-half (1/2) barrels of water per barrel of product for a plant using
high moisture lignite or sub-bituminous coal, and by implementing all
practical water reclamation technology.
Based on my study of refinery plants and coal-fired power plants
that already use air-cooler heat exchangers in arid climates, my
opinion remains consistent with my testimony; that is, the practical
limit of water demand--accounting for 1) potable water use, 2) yard
water uses such as dust control, 3) normal steam cleaning of equipment,
4) steam leaks, 5) water discharges limits to existing streams or deep-
well injection, 6) practical limits to air-cooler heat exchangers, and
6) cost-risk constraints associated with closed-loop refrigeration--is
around three (3) barrels of water to barrel of product.
Q1c. Is it possible to reduce the amount of water required to a low
enough level, relative to the price of gasoline, that it is
economically viable to produce coal-based fuels on a larger scale?
A1c. Only a subjective opinion can be given to this question, based on
semi-technical bias. When the cost of petroleum crude remains above
$75-80 per barrel, then my economical assessment indicates that F-T
fuels will be competitive with corresponding gasoline costs of around
$2.75 per gallon, and diesel fuel cost upwards of $3.10 per gallon, as
at the end of the summer season, 2007. This assessment includes both
capital and operating costs required to treat and recycle recovered and
produced water in the plant to achieve a water consumption rate of 3-5
barrels per barrel of fuel product.
With respect to water demands in the Western U.S., in my testimony,
I recommended that water currently being co-produced with conventional
crude oil or coal-bed methane production be used to support co-located
coal-to-liquids projects. There is sufficient water to supply several
large plants for the life span of these plants. It may be necessary to
impound, or store this water at some additional cost; however, these
costs are not substantial, and would not raise the operating cost more
than approximately five percent. With this nominal increase, F-T diesel
fuel would still be competitive with current market prices.
Although the West is water-constrained, the amount of water
required for a large complex of coal-to-liquid plants producing upwards
of 300,000 barrels of F-T fuels per day, at 3:1 barrels of water per
barrel of F-T fuels, would require less than one percent of the upper
Colorado River, Columbia River, upper Platt River, and upper Missouri
River stream flows.