<DOC>
[110 Senate Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:36142.wais]
S. Hrg. 110-69
FUTURE OF COAL
=======================================================================
HEARING
before the
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
TO
RECEIVE TESTIMONY ON THE ``FUTURE OF COAL'' REPORT RECENTLY PUBLISHED
BY THE MASSACHUSETTS INSTITUTE OF TECHNOLOGY
__________
MARCH 22, 2007
Printed for the use of the
Committee on Energy and Natural Resources
______
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COMMITTEE ON ENERGY AND NATURAL RESOURCES
JEFF BINGAMAN, New Mexico, Chairman
DANIEL K. AKAKA, Hawaii PETE V. DOMENICI, New Mexico
BYRON L. DORGAN, North Dakota LARRY E. CRAIG, Idaho
RON WYDEN, Oregon CRAIG THOMAS, Wyoming
TIM JOHNSON, South Dakota LISA MURKOWSKI, Alaska
MARY L. LANDRIEU, Louisiana RICHARD BURR, North Carolina
MARIA CANTWELL, Washington JIM DeMINT, South Carolina
KEN SALAZAR, Colorado BOB CORKER, Tennessee
ROBERT MENENDEZ, New Jersey JEFF SESSIONS, Alabama
BLANCHE L. LINCOLN, Arkansas GORDON H. SMITH, Oregon
BERNARD SANDERS, Vermont JIM BUNNING, Kentucky
JON TESTER, Montana MEL MARTINEZ, Florida
Robert M. Simon, Staff Director
Sam E. Fowler, Chief Counsel
Frank Macchiarola, Republican Staff Director
Judith K. Pensabene, Republican Chief Counsel
Michael Carr, Counsel
Frank Gladics, Republican Professional Staff Member
C O N T E N T S
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STATEMENTS
Page
Bingaman, Hon. Jeff, U.S. Senator from New Mexico................ 1
Deutch, John M., Institute Professor, Department of Chemistry,
Massachusetts Institute of Technology, Cambridge, MA........... 5
Domenici, Hon. Pete V., U.S. Senator from New Mexico............. 34
Hannegan, Bryan, Vice President, Environment, Electric Power
Research Institute, Palo Alto, CA.............................. 12
Lashof, Daniel A., Ph.D., Climate Center Science Director,
Natural Resources Defense Council, New York, NY................ 21
Moniz, Ernest J., Cecil and Ida Green Professor of Physics and
Engineering Systems, Co-director, Laboratory for Energy and the
Environment, Massachusetts Institute of Technology, Cambridge,
MA............................................................. 11
Salazar, Hon. Ken, U.S. Senator from Colorado.................... 4
Sanders, Hon. Bernard, U.S. Senator from Vermont................. 5
APPENDIX
Responses to additional questions................................ 49
FUTURE OF COAL
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THURSDAY, MARCH 22, 2007
U.S. Senate,
Committee on Energy and Natural Resources,
Washington, DC.
The committee met, pursuant to notice, at 2:33 p.m., in
room SD-364, Dirksen Senate Office Building, Hon. Jeff
Bingaman, chairman, presiding.
OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR FROM NEW
MEXICO
The Chairman. Thank you all very much for being here. Why
don't we go ahead with the hearing? I should tell everyone that
Senator Domenici is coming in a few minutes. He's involved,
with several other members of the committee, in the mark-up of
the supplemental Appropriation Bill, which they're doing in the
Appropriations Committee, and so that's a priority item that's
going to make some of them late.
But, the purpose of this hearing today is to try to clarify
people's thoughts about the future of coal. The basis for the
discussion, of course, is the recently-released report from
MIT, giving conclusions and recommendations about the future of
coal, based on an extensive review of the literature describing
the current state of coal technology.
As the title to this report makes clear, the underlying
premise of the report is that we are quickly entering a period
where greenhouse gas emissions will be a primary determining
factor in choosing our energy sources. The concept was also
reflected in the recent report of the Electric Power Research
Institute, Electricity Technology in a Carbon-Constrained
Future.
Both of these reports reflect a growing sentiment in the
public, both here and abroad, that the current path that we are
on is not sustainable. The final shape of the policy that we
are going to employ to control greenhouse gases is not clear.
I've been working with others here in the Senate to flesh out
ideas about how we can go forward. But, I do think that the
discussion has moved beyond the question of whether we should
constrain carbon, to more important questions of how we should
do so, and when.
What we lack, so far, in this area is not technological
ability or investment interest, but the political will to move
ahead and develop a framework that will allow these
technologies to flourish. As I see it, a policy framework for
coal needs to have as a minimum of two things. First, we need
to give a clear price signal to markets on the value of adding
greenhouse gases to the atmosphere, or the cost of adding those
greenhouse gases to the atmosphere. Without this, it will never
make good economic sense to spend the extra capital in emission
controls or to invest in the necessary control technology.
Second, I believe we need to accelerate the research and
development, and importantly the demonstration, of large-scale
carbon capture and storage technologies. This report explains,
in some depth, this topic of carbon capture and storage and how
central it is to the future of coal in the United States and in
our future energy policy.
Several of us here on the committee have been trying to
take the lead in the Senate to outline some practical steps
that can be taken to begin answering these questions. Earlier
this month, Senator Salazar and Bunning introduced a bipartisan
bill, S. 731, The National Carbon Dioxide Storage Capacity
Assessment Act. There are five other Senators, including myself
and Senator Tester, who are on the committee, as cosponsors.
That bill outlines a process for determining potential
geologic formations for the storage of carbon dioxide. I want
to thank both of them for their leadership and their
initiative.
Today, Senator Domenici and I are introducing a bill that
would complement that earlier bill, and this bill is called the
DOE Carbon Capture and Storage Research, Development, and
Demonstration Act. The bill will improve and expand carbon
capture and storage program that we created as part of the 2005
Energy Bill. Specifically, it will build on DOE's regional
carbon sequestration partnerships, to ensure that we have the
answers that we need for this key part of our energy future. We
have a number of cosponsors on that legislation. I'm told
Senators Tester, Bunning, Salazar, Obama, and Webb have all
cosponsored the bill.
I'd like to inform colleagues that we will hold a
legislative hearing on those two carbon sequestration bills in
the reasonably near future, both to examine their specific
provisions and to hear from experts on what other steps we
should be taking in the Senate to deal with these issues. It's
obviously an important piece of the puzzle, and I hope a good
first step toward even more legislation to set us on a
sustainable path forward in a carbon-constrained world.
So, this hearing should be a very good introduction to the
issues and a basis upon which we can begin legislative work
here in the committee. Again, I thank our very distinguished
panel of witnesses for their presence here today. Why don't we
go right ahead and start with testimony? Then when Senator
Domenici comes, he may have an opening statement at that point.
But I'll start on my left with Professor John Deutch who is
co-chair of this study, a Professor of Chemistry at MIT and a
former high-ranking official here in the Government in various
important capacities. I've had the good fortune to work with
him in many of those capacities and welcome him back to the
Congress.
With him is Ernie Moniz who is, of course, also co-chair of
the study and a professor of physics and engineering systems at
MIT, and former Deputy Secretary of Energy.
Bryan Hannegan, who's the vice president for environment at
EPRI, the Electric Power Research Institute in Palo Alto, thank
you very much for being here.
Dan Lashof, who is a frequent testifier to our committee, a
welcome one, the deputy director of the climate center for the
Natural Resources Defense Council in New York, thank you very
much for being here.
Professor Deutch, why don't you go right ahead? We will
hear from each of you, if you can summarize your comments, and
then we will have some questions.
[The prepared statements of Senators Bingaman, Salazar, and
Sanders follow:]
Prepared Statement of Hon. Jeff Bingaman, U.S. Senator From New Mexico
Thank you all for coming here to testify today and give us your
thoughts on the future of coal. The basis for our discussion today is a
recently released report by MIT giving their conclusions and
recommendations based on an extensive review of the literature
describing the current state of coal technology.
The title of the report is, ``The Future of Coal; Options for a
Carbon Constrained World.'' As this title makes clear, the underlying
premise of this report is that we are quickly entering a period where
greenhouse gas emissions will be a primary determining factor in
choosing our energy sources. This concept also was reflected in the
recent report from the Electric Power Research Institute, ``Electricity
Technology in a Carbon-Constrained Future.''
It seems to me, that both of these reports reflect a growing
sentiment among the public, both here and abroad, that the current path
we are on is unsustainable. The final shape of the policy we will
employ to control greenhouse gases is unclear. I, and others here, have
some ideas about how we might go forward, but we seem to have moved
beyond the question of ``if,'' to the more important questions of
``how'' and ``when.''
What we have lacked so far in this area is not technological
ability or investment interest but the political will to develop a
framework that will allow these technologies to flourish. And there are
clearly opportunities in coal technologies. Considering the abundant
coal resources we have here and the scale of the energy challenge we
face in the future it is imperative that we do all we can to stimulate
innovation to make coal use compatible with our carbon constrained
world.
As I see it, a policy framework for coal must, at a minimum do two
things: First, we must give a clear price signal to markets on the
value of adding greenhouse gasses to the atmosphere. Without this, it
will never make economic sense to spend the extra capital in emissions
controls or to invest in control technologies. Second, I believe we
need to accelerate the research, development, and--importantly--the
demonstration of large-scale carbon capture and storage technologies.
As this report explains in some depth, the topic of carbon capture
and storage is central to the future of coal in the United States and
our future energy policy. That is why a number of Members of this
Committee have been taking the lead here in the Senate to outline the
practical steps that we must take to answer the questions that surround
carbon capture and storage technologies and to develop a consensus on
how they should be implemented.
Earlier this month, Senators Salazar and Bunning introduced a
bipartisan bill, S. 731, the National Carbon Dioxide Storage Capacity
Assessment Act of 2007, with 5 other Senators, including myself and
Senator Tester on this committee. That bill outlines a process for
determining potential geological formations for the storage of carbon
dioxide. I want to thank them both for their leadership and initiative.
Today, Senator Domenici and I are introducing a bill to complement the
Salazar-Bunning bill. Our bill is called the DOE Carbon Capture and
Storage Research, Development, and Demonstration Act of 2007.
This bill will improve and expand the carbon capture and storage
program that we created at the Department of Energy in the Energy
Policy Act of 2005. Specifically, it will build on DOE's regional
carbon sequestration partnerships to ensure that we have the answers we
need for this key element of our energy future. I am pleased to have a
number of co-sponsors from both sides of the aisle on this bill, as
well.
I would like to inform my colleagues here that we will hold a
legislative hearing on those two carbon sequestration bills in the near
future, both to examine their specific provisions and to hear from
experts what other steps we should be taking here in the Senate to
advance the technology and utilization of carbon sequestration.
This is obviously an important piece of the puzzle and I hope a
good first step towards even more legislation to set us on a
sustainable path forward in a carbon constrained world.
Today's hearing provides a good introduction to the issues and an
informational base for that legislative work here in the committee. I'd
like to thank all of you for your efforts in bringing us this
information and I look forward to your views as we develop policy for
the future use of coal.
______
Prepared Statement of Hon. Ken Salazar, U.S. Senator From Colorado
Thank you Mr. Chairman and Ranking Member Domenici.
My home state of Colorado is endowed with many natural resources,
including vast coal resources. Coal is our most abundant domestic
energy source. It provides more than 50% of our nation's electricity
needs, and America has enough coal to last more than 200 years.
Unfortunately, CO<INF>2</INF> pollution from coal combustion is a main
cause of global warming, which threatens my state's water resources,
our economy, and our quality of life.
Fortunately, as the MIT ``Future of Coal'' Study shows, there seems
to be more than one way to reconcile coal use with protecting our
climate, through new technologies such as Integrated Gasification
Combined Cycle (IGCC) with Carbon Capture and Storage. I am proud of
the work this Committee did in the Energy Policy Act of 2005 to promote
new advanced coal technologies. We need low-carbon technologies like
coal gasification and ultra-supercritical generation, with carbon
capture and storage, to continue to power our homes and businesses
without exacerbating the problems associated with global warming.
Mr. Chairman, I believe that even in a carbon constrained economy,
our use of coal from domestic sources will continue to grow. Indeed,
the MIT Study suggests (as the Energy Information Administration has
previously reported) that even with a price on carbon (starting at $25
per ton of CO<INF>2</INF> emitted) coal use over the study period
(through 2050) would go up by between 20% and 60% if carbon capture and
storage technologies are deployed. Corresponding CO<INF>2</INF>
emissions from coal plants would be reduced by a half from today's
levels. In short, the new coal technologies that are the subject of
this report offer a way to secure the future of coal in a carbon
constrained world.
My understanding is that all the elements of IGCC are known--there
are dozens of gasification plants in operation in several industries.
Likewise, companies are already doing geologic carbon sequestration.
For example, in the oil fields we're using CO<INF>2</INF> for enhanced
oil recovery.
As the MIT report indicates, there is sufficient scientific
evidence to conclude that carbon sequestration is a viable option. To
ensure that it is technically feasible, several large-scale
demonstrations must be conducted. Simultaneously, liability issues must
be addressed and a regulatory structure developed to insure the success
of this technology.
The report also recommends, and together with Chairman Bingaman and
several of our colleagues on this Committee, I have introduced
legislation that would start us on the path to large-scale
sequestration by directing the U.S. Geological Survey to conduct a
national assessment of our sequestration capacity. Specifically, this
national assessment would evaluate the potential capacity and rate of
carbon sequestration in all possible sites throughout the United
States, and would evaluate the various risk levels involved.
Carbon sequestration also has the potential to enhance the recovery
capabilities of certain oil, gas, and coal-bed reservoirs, increasing
the efficiency with which we extract these important fossil resources.
The Department of Energy has already established seven regional
carbon sequestration partnerships. These partnerships have vital
experience and understanding about the potential for storing carbon
dioxide. Our legislation will build upon the existing work of these
partnerships, and create a national database accessible to the public
on the potential storage sites across the United States--enabling
companies to make cost-effective decisions needed to make sequestration
a viable option.
Last month in the Finance Committee Montana's Governor, Brian
Schweitzer, also endorsed the future of coal. Montana has one-third of
all the coal deposits in America--8 percent of all the coal in the
world. But the Governor recognizes the signs of global warming in the
west. ``We don't get as much snow in the high country as we used to . .
. and the runoff starts sooner in the spring. The river I've been
fishing over the last 50 years is now warmer in July by five degrees
than 50 years ago, and it is hard on our trout population.''
Governor Schweitzer knows the only way we'll be able to use our
coal reserves is if we can burn coal without emitting the
CO<INF>2</INF>. I agree and look forward, Mr. Chairman, to working with
you and our colleagues in the Congress to help American companies--in
partnership with government--take advantage of opportunities to lead
the world in developing new clean coal technologies.
The report states that one of the major challenges we face is to
develop, deploy and demonstrate commercially viable technologies for
CCS. The report recommends federal spending of $500 to $550 million per
year for 10 years on R&D and another $300 million per year over 10
years on ``first of a kind'' demonstrations of carbon capture and
storage technologies. I will work with Senator Dorgan and you, Mr.
Domenici, to make sure DOE has the necessary funding to invest in low-
or zero-emission gasification and liquefaction technologies, and in
developing the technologies necessary to sequester the carbon dioxide.
Working together, we can identify the best technologies and move down
the innovation curve faster to ensure coal is a part of this country's
clean energy future.
______
Prepared Statement of Hon. Bernard Sanders, U.S. Senator From Vermont
Chairman Bingaman, Ranking Member Domenici, we now live in a
carbon-constrained world, or one in which carbon should be constrained
in our production of energy. I thank the authors of this MIT study that
is the topic of today's hearing for educating us on this issue.
Vermonters look forward to a world where we are not addicted to
fossil fuels, including coal, because coal brings with it mountain top
removal, acid mine drainage, and air pollution, including global
warming gases. It also results in the concentration of wealth and power
in the hands of corporations that for over a century have been known
for their ruthless disregard for human dignity. We look forward to a
country and a world where energy efficiency and renewable energy are
the principal, if not the only, ways we power our society. To the
extent that this study assists in bringing that cleaner future to our
people, it is welcomed.
I am concerned that many of the coal plants that are in the process
of being permitted/constructed today are using old technology which is
not easily retro-fitted with Carbon Capture and Storage (CCS)
technology. Therefore, we may be locking ourselves into a more
expensive solution when we should be requiring Integrated Gasification
Combined Cycle (IGCC) technology, now, even without CCS, so that when
this technology is better demonstrated, we can easily install it on
coal plants equipped to accept it.
I also want to thank the other witnesses from the Electric Power
Research Institute and the Natural Resource Defense Council for their
analyses of this study and their perspectives on coal and CCS.
STATEMENT OF JOHN M. DEUTCH, INSTITUTE PROFESSOR, DEPARTMENT OF
CHEMISTRY, MASSACHUSETTS INSTITUTE OF TECHNOLOGY, CAMBRIDGE, MA
Mr. Deutch. Thank you very much, Mr. Chairman.
As I came here this afternoon, I realized that it was
almost to the day and certainly to the month, that I first
appeared in front of this committee, 30 years ago. That's how
old I am. So, I want to tell you, it's good to be back, but it
started 30 years ago, and Senator Domenici was here for that
hearing.
Let me very briefly point to six or seven main conclusions
or points about our Future of Coal in a carbon-constrained
world. These are the main conclusions that I think should be of
interest to the committee, and I know that my friend, Ernie
Moniz, will add a few points after that.
The first is that a significant carbon charge is required
to give the market signals to permit us to stabilize greenhouse
gas emissions, let's say, by mid-century. That market signal,
whether it's in the form of a carbon charge through attacks or
through a capture-rate system, has three effects.
The first effect, is it reduces demand significantly for
energy, for electricity. It shifts from carbon-rich carbon,
high-carbon sources of electricity and other fuels to low-
carbon fuels--for example, wind or nuclear power.
Very importantly, it opens the door to new technologies,
which make coal use a carbon-free emissions, so it has those
three effects. Less demand, a shift to lower carbon-intensity
fuels, and new technologies such as carbon capture and
sequestration. Our estimate is the level of charge necessary is
about $30 per ton of CO<INF>2</INF>, which would add 20 to 25
percent to the retail price of electricity for U.S. consumers.
Our second principle conclusion is that carbon capture and
sequestration is the critically-enabling technology to prepare
coal for the future. Carbon capture and sequestration permits
the use of coal to capture the CO<INF>2</INF> that is used,
that is formed in combustion, its pressurization, and
transportation to a sequestration or storage site.
Our highest priority recommendation and objective is to
recommend three to five at-scale--that means 1 million ton per
year--sequestration projects in different geologies in the
United States, managed in such a manner that they demonstrate
the practical--the practical, the practical--practical
demonstration of this technology with respect to economics,
with respect to technical performance, and very importantly, an
accompanying regulatory framework that will command public
confidence.
Each one of those projects would cost about $15 million a
year, if they are properly instrumented with the appropriate
monitoring and verification, plus the cost of CO<INF>2</INF>,
but in our minds, doing that now, immediately, provides a
practical option for coal, going forward in the future. If
carbon capture and sequestration is available, our estimate is
there will be more coal use, even with a very, very severe
carbon-control policy, because carbon capture and sequestration
will be economically viable.
Our third point is that it is too early to pick a
technology winner for coal use. As you know, Mr. Chairman,
there are two leading technologies for use in coal today. One
is pulverized coal--you would have oxygen-driven pulverized
coal plants if there was carbon capture and sequestration--or
integrated gasification-combined cycle. These are the two large
alternatives that are presently on the menu today.
In our view these technologies should be pursued, and there
are other interesting technologies as well, that should be
pursued, and it is too early for anyone--an investor--to pick a
technology winner. Depending upon coal type and upon
circumstances, depending upon how much technology advance there
will be, depending about all these matters, one project or
another may choose to use a particular gassifier or a
particular pulverized coal plant.
The next point, Mr. Chairman, is that the 2005 Energy Act
authorizes Government assistance to a wide range of coal
technology projects. We believe that Federal assistance should
only be given to coal projects with CO<INF>2</INF> capture and
sequestration. That whether it's pulverized coal plant, whether
it's an IGCC fuel plant, whether it's a synthetic fuels plant,
whether it's a retro-fit of some kind of plant, no matter how
it's done, we think it's appropriate and necessary for the
Government to provide such assistance to show the private
investment community that these technologies are practical, but
it is important that it be done with carbon capture and
sequestration. There is not the same justification for Federal
assistance to these kinds of technologies where there is not
carbon capture and sequestration.
This leads me to my next point, that it is our engineering
judgment that the prospects for retro-fitted plants, which are
designed for one purpose--to later do carbon capture and
sequestration, or to do pre-investment for plants that you're
building today for one purpose, assuming that you can easily
retro-fit them for carbon capture later--but that window of
opportunity is very narrow, indeed. It is likely to be quite
expensive and difficult to do the retro-fit. The reason is
quite easy to explain--a plant with a carbon capture and
sequestration is a very different plant than a plant that has
been built for optimum performance without carbon capture and
sequestration. The notion that you can just bolt on a device
which will do the carbon capture for you ignores the many other
changes in the processes that have to take place to make it
work.
So, our view is the push for Government assistance today
should be where there is unknown. The unknown is in the
integration of carbon capture and sequestration to the
efficient operation of a carbon capture, fishing operation to
that conversion, coal-conversion plant.
Mr. Chairman, there's also another problem which we see and
draw to your attention, and that is the possibility of a
perverse incentive today for man, many people, to commit to a
coal-conversion plant, without CO<INF>2</INF> capture today
under the expectation that such plants will be grandfathered,
that they will not be subject to any future carbon constraints
that may be placed, they will be granted, for example, granted
emission allowances, or granted waivers from emission taxes in
the future. We believe that such grandfathering loopholes
should be closed, with enough notification to the industry, so
that you don't catch people unaware, or else you're going to
find people building many plants in anticipation of a carbon-
control regime.
My final remark has to do with the worldwide prospects for
stabilization of carbon emissions. We want to recognize that
dealing with global warming requires global adherence to
emission constraints. The real issue here is what will be
happening going forward, not in the United States or in Europe
or the developed world where we see the economies, but what
will happen in the large, emerging, rapidly growing economies,
which are projected to be the biggest users of coal, and the
biggest emitters of greenhouse gases in the future.
I will remind you that, last year, China put online the
equivalent of 80 large coal plants. None of them, of course,
with carbon capture and sequestration. Their electricity use is
projected to grow at three or four times the rate of increase
of the United States or of Europe, or OECD countries, in
general.
So some way must be found of reaching an accommodation with
these emerging economies, or else the actions that we take will
have no significant effect on greenhouse gases, on global
warming worldwide. We are making very slow progress at that
step of engaging those countries, and finding a way to come to
some sort of an agreement with them about what will be the
control of these emissions going forward.
Our study did a particular in-depth look about the
challenges facing China, if they were even to consider doing
such a CO<INF>2</INF> constraint policy, adopting them and then
implementing them. There are very good reasons why they believe
they should be given a much longer, a different set of rules
for the developing countries, but if we don't come together
about some set of incentives for these countries to adopt
carbon capture and sequestration, the actions we take will not
prove productive in controlling greenhouse gas emissions.
The central message of this study is that the demonstration
of technical, economic and institutional features for carbon
capture and sequestration at commercial scale and coal
combustion and coal-conversion plants will give policymakers
and the public the confidence that practical carbon mitigation
options exist. It will shorten the deployment time and reduce
the costs of carbon capture and sequestration to occur, should
a carbon emission and coal policy be adopted, and I think
inevitably it's going to be. Third, it will maintain
opportunities for the lowest cost, and most widely available
energy form, coal, to be used to meet the world's pressing
energy needs in an environmentally acceptable manner.
Thank you very much, Mr. Chairman. I look forward to your
questions, and the questions from the members.
[The joint prepared statement of Mr. Deutch and Mr. Moniz
follows:]
Joint Prepared Statement of John M. Deutch, Institute Professor,
Department of Chemistry, and Ernest J. Moniz, Cecil and Ida Green
Professor of Physics & Engineering Systems, Co-director, Laboratory for
Energy and the Environment, Massachusetts Institute of Technology,
Cambridge, MA
Mr. Chairman, and members of the committee, thank you for the
opportunity to appear before you today to summarize some of the key
findings and recommendations in the MIT study on the future of coal. We
carried out the study with eleven colleagues from various disciplines,
over a three-year period, with the benefit of advice from an external
group with diverse perspectives. We request that the Executive Summary
of the report be entered into the record.
The study examines the role of coal as an energy source in a world
where constraints on carbon emissions are adopted to mitigate global
warming. Our first premise is that the risks of global warming are real
and that the United States and other governments should and will take
action to restrict the emission of carbon dioxide and other greenhouse
gases.
Our second and equally important premise is that coal will continue
to play a large and indispensable role in a greenhouse gas constrained
world.
Our purpose is to identify the measures that should be taken to
assure the availability of demonstrated technologies that would
facilitate the achievement of carbon emission reduction goals while
continuing to rely on coal to meet a significant fraction of the
world's energy needs.
Carbon dioxide capture and sequestration (CCS) is the critical
technology enabler for this purpose, and the priority objective with
respect to coal should be the successful large-scale demonstration of
the technical, economic, and environmental performance of the
technologies that make up all of the major components of a large-scale
integrated CCS system--capture, transportation, and storage.
The United States and other nations may need a vast scale of carbon
dioxide sequestration. By mid-century, annual sequestration of several
gigatonnes of carbon dioxide is the scale needed for a major impact on
climate change mitigation, given the expectation that coal use will
grow substantially. This translates into sequestration of the
CO<INF>2</INF> emissions from many hundreds of utility scale plants
worldwide.
Each plant will need to capture millions of metric tonnes of
CO<INF>2</INF> each year. Over a fifty-year lifetime, one such plant
would inject about a billion barrels of compressed CO<INF>2</INF> for
sequestration. We have confidence that megatonne scale injection at
multiple well-characterized sites can start safely now, but an
extensive program is needed to establish public confidence in the
practical operation of large scale sequestration facilities over
extended periods and to demonstrate the technical and economic
characteristics of the sequestration activity.
An important additional objective of the demonstration program is
to create an explicit and rigorous regulatory process that gives the
public and political leaders confidence in effective implementation of
very large scale sequestration. A regulatory framework needs to be
defined for sequestration projects including site selection, injection
operation, and eventual transfer of custody to public authorities after
a period of successful operation.
Present government and private sector sequestration projects are
inadequate to demonstrate the practical implementation of large scale
sequestration on a timely basis.
Thus we believe that the highest priority should be given to a
program that will demonstrate CO<INF>2</INF> sequestration at megatonne
scale in several geologies, following ``bottom-up'' site
characterization. For the United States, this means about three
megatonne/year projects with appropriate modeling, monitoring and
verification (MMV), focusing on deep saline aquifers. Each
demonstration project should last about eight to ten years. We estimate
the cost for the total program to be about $500M over a decade, not
including the cost of CO<INF>2</INF> acquisition. The CO<INF>2</INF>
costs are likely to be considerable and highly variable depending on
the acquisition strategy (natural reservoirs, capture from existing
plants, supply from large scale demonstrations of new coal combustion
and conversion plants).
In addition to the value of the scientific and engineering data
that will emerge from this sequestration demonstration program, we
should not underestimate the value of demonstrating the ability to
successfully manage the program over an extended time. Such practical
implementation experience will be important for public confidence in
committing to very large sequestration over many decades.
To explore the prospect of very large scale sequestration, our
study employed the Emissions Prediction and Policy Analysis (EPPA)
model, developed at MIT, to prepare scenarios of global coal use and
CO<INF>2</INF> emissions under various assumptions about the level and
timing of CO<INF>2</INF> emissions pricing, whether through a tax, a
cap and trade system, or some other mechanism.
An important threshold is the CO<INF>2</INF> price that leads to
economic choices that result in stabilization of CO<INF>2</INF>
emissions. The economic adjustments caused by a CO<INF>2</INF> charge
are reduced energy use, a shift to lower-carbon emitting technology,
improved efficiency of new and existing coal power plants, and
importantly introduction of CCS. The EPPA model and our engineering
analysis of alternative coal technologies suggests that a carbon charge
of approximately $30/tonne-CO<INF>2</INF> is needed (most of this comes
from capture, not sequestration). However, if the CO<INF>2</INF>
emissions price remains low compared with this threshold price for an
extended period, CO<INF>2</INF> emissions are significantly higher and
CCS plays a minor role in reducing cumulative CO<INF>2</INF> emissions
in this half-century. The CCS demonstration program needs to be carried
out with urgency or the United States runs the danger of adopting a
carbon constraint policy without a practical alternative for use of
coal.
Our highest priority recommendation is that the Congress, the
Department of Energy, and other private and public sector entities work
to launch as soon as possible a sequestration demonstration program
with the characteristics identified above, including those associated
with development of the regulatory system. A sense of urgency has been
absent and this needs to change.
Our second recommendation is for the U.S. government to provide
incentives to several alternative coal combustion and conversion
technologies that employ CCS. At present, Integrated Gasification
Combined Cycle (IGCC) is the leading candidate for electricity
production with CO<INF>2</INF> capture because it is estimated to have
lower cost than pulverized coal with capture. However, neither IGCC nor
other coal technologies have been demonstrated with CCS at large scale.
It is critical that the government RD&D program not pick a
technology ``winner'' for several reasons. First, technology advances
will undoubtedly lower the cost of all coal utilization technologies
with capture--IGCC, pulverized coal, and potentially novel approaches.
Some advances, such as much lower cost oxygen separation from air,
could remove the IGCC cost advantage. Second, there are very different
coal types (high ash content, high moisture content, . . . ) and local
conditions for specific projects that affect technology choice.
Indeed, the DOE program needs considerable strengthening and
diversification in looking at a range of basic enabling technologies
that can have major impact in the years ahead, particularly in lowering
the cost of coal use in a carbon-constrained world. This work needs to
be done at laboratory or process development unit scale, not as part of
large integrated system demonstrations.
Both industry and the government would benefit from an extensive
modeling and simulation effort in order to compare alternative
technologies and integrated systems as well as to guide development. A
significant increase in the DOE coal RD&D program is called for, as
well as some restructuring.
Government assistance is needed for a portfolio of coal combustion
and conversion demonstration projects with CO<INF>2</INF> capture--
IGCC; oxyfuel retrofits; coal to synthetic natural gas, chemicals and
fuels are examples. Given the technical uncertainty and the current
absence of a carbon dioxide emissions charge, there is no economic
incentive for private firms to undertake such projects at any
appreciable scale. The DOE coal program is not on a path to address our
priority recommendations--enabling technology, sequestration
demonstrations, coal combustion and conversion demonstrations with
capture. The level of funding falls far short of what is required and
the program, perhaps as a result, is imbalanced.
The flagship project FutureGen is consistent with our priority
recommendation to initiate integrated demonstration projects at scale.
However, we are concerned that the project needs more clarity in its
objectives. Specifically, a project of this scale and complex system
integration should be viewed as a demonstration of commercial viability
at a future time when a meaningful carbon policy is in place. Its
principal call on taxpayer dollars is to provide information on such
commercial viability to multiple constituencies, including the
investment community. To provide high fidelity information, it needs to
have freedom to operate in a commercial environment.
We believe that the Congress should work with the Administration to
clarify that the project objectives are commercial demonstration, not
research, and reach an understanding on cost-sharing that is grounded
in project realities and not in arbitrary historical formulas. In
thinking about a broader set of coal technology demonstrations,
including the acquisition of the CO<INF>2</INF> needed for the
sequestration demonstration projects, we suggest that a new quasi-
government corporation should be considered.
The 2005 Energy Policy Act contains provisions that authorize
federal government assistance for coal plants containing advanced
technology projects with or without CCS. We believe this assistance
should be directed only to plants with CCS, both new plants and
retrofit applications on existing plants.
There is the possibility of a perverse incentive for early
investment in coal-fired power plants without capture, whether
pulverized coal or IGCC, in the expectation that the emissions from
these plants would potentially be ``grandfathered'' by the grant of
free CO<INF>2</INF> allowances as part of future carbon emission
regulations and that (in unregulated markets) they would also benefit
from the increase in electricity prices that will accompany a carbon
control regime. Congress should act to close this ``grandfathering''
loophole before it becomes a problem.
Success at capping CO<INF>2</INF> emissions ultimately depends upon
adherence to CO<INF>2</INF> mitigation policies by large developed and
developing economies. We see little progress to moving towards the
needed international arrangements. Although the European Union has
implemented a cap-and-trade program covering approximately half of its
CO<INF>2</INF> emissions, the United States has not yet adopted
mandatory policies at the federal level. U.S. leadership in emissions
reduction is a likely prerequisite to substantial action by emerging
economies, and recent developments in the American business sector and
in Congress are encouraging.
A more aggressive U.S. policy appears in line with developing
public attitudes. Our study has polled the American public, following a
similar poll conducted for the earlier MIT study on nuclear power.
Americans now rank global warming as the number one environmental
problem facing the country, and seventy percent of the American public
think that the U.S. government needs to do more to reduce greenhouse
gas emissions. Willingness to pay to solve this problem has grown 50%
over the past three years.
The situation faced by large, rapidly growing, emerging economies
is difficult. We studied a number of cases in China, looking at the
``real'' decision-making process for construction and operation of coal
plants in several provinces.
These case studies suggest that it will be some time until China
(or India) is willing and able to mitigate CO<INF>2</INF> emissions. We
examined, with the EPPA model, the consequences of a lagged compliance
with CO<INF>2</INF> mitigation measures by non-OECD countries. While a
long lag, say 40-50 years, precludes any realistic possibility of
meeting prudent global greenhouse gas concentrations, we found that a
more modest lag, say 10 years, is potentially manageable from the point
of view of incremental accumulated emissions. That is, the challenge of
stabilizing emissions is exacerbated but not qualitatively altered.
This suggests a step-by-step international approach to the climate
challenge, one that requires U.S. leadership both in advancing
meaningful carbon policy and in demonstrating as early as possible the
effectiveness and cost performance of technologies such as
sequestration.
Absent substantial reductions in CO<INF>2</INF> emissions relative
to ``business-as-usual'' expectations, substantial global warming will
occur. At some point, nations would then face accepting the high
economic cost and social disruption of adapting to climate change or
the more problematic prospect of geo-engineering the climate by active
measures. We do not dismiss the possibilities of adaptation and/or geo-
engineering. But we do believe that it is less risky and ultimately
less costly for the U.S. to lead the way in adopting emissions
constraints today and in developing and demonstrating the technologies
that will constrain emissions without significantly impacting economic
development.
Mr. Chairman, thank you again for inviting our testimony. We
appreciate the leadership of this committee in moving forward our
nation's approach to global warming risks, and we welcome further
discussion.
The Chairman. Thank you very much.
Professor Moniz, we're glad to have you here, thank you.
STATEMENT OF ERNEST J. MONIZ, CECIL AND IDA GREEN PROFESSOR OF
PHYSICS AND ENGINEERING SYSTEMS, CO-DIRECTOR, LABORATORY FOR
ENERGY AND THE ENVIRONMENT, MASSACHUSETTS INSTITUTE OF
TECHNOLOGY, CAMBRIDGE, MA
Mr. Moniz. Thank you, Mr. Chairman.
I cannot claim this is my 30th-year anniversary, only my
10th.
Mr. Deutch. Not bad, not bad.
Mr. Moniz. Given the obvious conclusion about John and me.
Mr. Chairman and members of the committee, thank you for
the opportunity. What I will do is, since John has given this
kind of overview of the report, just emphasize three features,
briefly.
One is there is sometimes some confusion over the words
``large-scale'' and ``sequestration.'' And I think that's
partly because, there are in some senses, three different uses
of the word. One is of the mega-ton per-year scale, associated
with a utility-sale plant, one plant. Another is the lifetime
accumulation of emissions from one utility-scale plant, which
is then on the 100-mega-ton scale, or equivalently, billion
barrels of compressed CO<INF>2</INF> sequestration. The third
is the giga-ton scale, which is where we have to get to, say,
by mid-century, for sequestration to be one of the technologies
making a large impact in mitigating climate change risks.
I think the important thing to emphasize, so there's no
confusion, is that we feel very, very confident about the
wisdom of going ahead now with those mega-ton per-year
projects. And while the program described in the Report, and by
John, practical implementation will be essential for generating
public confidence, generating the regulatory regimes needed to
reach those other very large cumulative scales for large
plants, and for the globe.
Second point would be a brief statement about the
Department of Energy RD&D program. First, we believe that the
program is under-funded, and perhaps as a consequence, rather
unbalanced. We need a much more aggressive, what I would call,
basic science and engineering effort, in terms of looking for
the breakthrough technologies, at bench-scale, and at process
development unit-scale. That could be transforming in the
future.
These are things like oxygen separation, advanced capture
technologies, to give a whole list of them--these are not
getting the attention that we will need, to really get new
ideas and new cost reduction some decades down the road.
Second is that the sequestration program that John just
described, is of course, in some sense, our highest priority
for immediate implementation, and we welcome the bill that you
just announced, that you filed today for sequestration, and of
course would be delighted to help in any way that we can to
help shape those programs, to address the key issues.
Third, is we also recommend that we need a portfolio of
coal technology-demonstration programs. Starting with IGCC--I'm
sorry, always with capture--starting with IGCC, it makes
perfect sense. But we also need to be thinking about a
demonstration program, for example, of an oxygen-firing retro-
fit of an existing plant; of a coal-to-synthetic natural gas
plant, or a coal-to-chemicals plant. We need a portfolio.
Those demonstration projects themselves may be the sources
of the possibly very expensive carbon dioxide needed for the
sequestration demonstrations. On the other hand, we should not
have the sequestration demonstrations hostage to exquisite
timing of these demonstration projects to the sequestration
projects.
We believe these large projects should have a clear focus
on demonstration of commercial viability as the point of these
demonstration programs. Large, billion dollar-integrated
programs are not the place for ``research,'' they are for
demonstrating commercial viability, and as one supports those
programs, it will be very important to provide high-fidelity
information, which means having the projects run in as
commercial a manner as possible. We can delve into that in more
detail.
Finally, my third point, very briefly, is that another
aspect of the study was to look at a continuation of our
polling of the American public, that started with our earlier
report, and there we would just note one fact that emerged, and
that is that in 3 short years between the two polls, climate
change went from the bottom of the list to the top of the list
in terms of environmental concerns of the American public, and
that was associated as well, with the public's willingness to
contemplate, frankly, paying a somewhat larger amount than they
were several years ago for addressing climate change.
Consequently, of course, we look forward to the continued
leadership of you, Mr. Chairman, and the committee as you move
forward on climate change legislation. Thank you. We also look
forward to questions.
The Chairman. Thank you very much.
Mr. Hannegan, we're glad to have you here.
STATEMENT OF BRYAN HANNEGAN, VICE PRESIDENT, ENVIRONMENT,
ELECTRIC POWER RESEARCH INSTITUTE, PALO ALTO, CA
Mr. Hannegan. Thank you, Mr. Chairman, and members of the
committee.
I'm Bryan Hannegan, vice president, environment at the
Electric Power Research Institute, a non-profit, collaborative,
R&D organization, headquartered in Palo Alto, California.
EPRI appreciates the opportunity to provide testimony to
the committee on the MIT report, and it's a great personal
honor for me to be back in this committee room, and on this
side of the witness table.
My comments today reflect our Institute's work with our
talented scientists and engineers who are working on the many
issues associated with electric power generation and use.
But today I want to focus my comments on two subjects.
First, I want to provide to you EPRI's view on the MIT report
which, at the outset, I want to say we believe is an important
foundation on which to consider future energy policy.
Second, I want to highlight some of the recent work that
we've done. You mentioned in your opening statement, Mr.
Chairman, emphasizing the importance of CO<INF>2</INF> capture
and storage, as part of an overall low-cost, low-carbon
portfolio of options that we'll need to address climate change.
As you're well aware, coal currently provides half or over
half of the electricity used in the United States, and most of
the forecasts show that this will continue to be dominant in
our energy future. By displacing otherwise-needed imports of
natural gas or fuel oil, coal plays a critical role in our
energy security, and it helps address our trade deficit with
respect to energy.
The challenge is this, though. By 2030 EIA projects that
total electricity demand in the United States will go up by 40
percent. At the same time as we think about dealing with
climate change, we're looking at a substantial reduction in our
future greenhouse gas emissions, and we want to do that in a
way that allows for continued economic growth, and the benefits
that all of the energy that we use, provides.
I want to stress to the committee, that this is not a
trivial matter. It implies a substantial change in the way that
we produce and consume electricity, all throughout our economy.
The technologies like we'll discuss today on carbon capture and
storage from coal are just one part of a necessarily economy-
wide solution that includes greater efficiency at the end-use,
increasing renewables, more efficient use of natural gas, and
expanded role for nuclear power and similar transformations in
all of our other sectors from transport to commercial and
residential use.
It's this context in which I encourage you to consider the
MIT study that my colleagues here just recently summarized.
EPRI agrees with many of the study's main points, but we differ
on a couple.
In particular, we agree that carbon capture and storage is
going to be a critically enabling technology for coal going
forward, and as Professor Deutch noted in his comments, the key
will be the successful demonstration of CCS at the large-
scale--one million tons of CO<INF>2</INF> per year. We believe
this is important for both pre-combustion, as well as post-
combustion technologies. Both pulverized coal as we know it
today in the United States, and IGCC technologies going
forward. We also must demonstrate storage in a variety of
geologies, to take advantage of the full richness that we have
available here in the United States.
As I mentioned, we agree with MIT's view that we should
avoid choosing between coal technology options. While the
technology for pulverized coal is well-established, the method
for capturing and storing the CO<INF>2</INF> from those plants
is not, and needs significant demonstration work.
But, in contrast, while there are proven methods for
capturing and storing the CO<INF>2</INF> from IGCC, the plants
that we're thinking about building, going forward, will have
larger components, and a degree of integration that has not yet
been demonstrated affordably and reliably at a commercial
scale. In that vein, we disagree with comments in the MIT
Report, limiting the application of your DOE programs to just
IGCC; we think there's a role for pulverized coal for capture
and storage going forward.
Both of these areas are going to require work to reduce the
cost penalty and energy demands associated with current coal
technologies, and we view the existing FutureGen programs, and
the regional carbon sequestration programs at DOE, as good
examples in this regard.
But others are needed, and we also think that many of the
programs at DOE do need to significantly increase their scope,
and accelerate the schedules of the work that they're doing to
enable CCS capability as soon as possible.
In our view, however, an even greater impediment than the
technology, than the financing, the even greater impediment to
expanded CCS may be the development of public acceptance and
the regulatory and legal frameworks going forward. Absent a
consistent and predictable approach to siting and permitting
facilities that have carbon capture and storage, the capital
costs and the risks associated with these projects will simply
be too large to allow them to move forward.
There are also questions of ownership of the stored
CO<INF>2</INF>, the liability when it leaks--if it leaks--back
into the atmosphere, and questions regarding the environmental
fate of the CO<INF>2</INF> once you put it in the ground. These
issues bear further study and work at EPRI is underway, but
more work needs to be done.
Let me make another point about the MIT study--we disagree
with their view that pre-investment in capture-ready features
is categorically un-economic. In many ways, whether or not
you're retro-fitting an existing plant or you're building a new
plant with an eye toward capture and storage, that's going to
be a decision that's dictated by the availability of the
technology, how soon you think limits on CO<INF>2</INF>
emissions will come--in the event that the limits become more
likely, the prospect of pre-investment could become worthy of
consideration. But if you do it in the near future, it's a
higher-cost option of compliance with CO<INF>2</INF> limits
going forward.
Let me turn now to the recent work that we've done at EPRI
that illustrates the promise of CCS as part of the solution to
satisfying our energy needs in an environmentally responsible
manner. Mr. Chairman, you mentioned our electricity technology
in a carbon-constrained future work, and it does suggest that
with aggressive R&D, demonstration, and deployment of advanced
energy technologies, and more importantly, with aggressive
assumptions on how those technologies can be deployed, we can
slow down and halt the increase in CO<INF>2</INF> emissions
from the electric sector, and then eventually reduce them, even
as we simultaneously meet the increased demand for electricity.
However, as shown on this chart, I note that the pace at
which we can do so, using EPRI's professional judgment and
technical expertise, is substantially slower than some of the
proposals that have been discussed in this body, and some that
have been envisioned by this committee.
The chart to my right shows the net change in
CO<INF>2</INF> emissions, relative to EIA's base case in their
2007 annual energy outlook, that results from specific
technology deployment targets identified in seven areas, from
NG sufficiency at the top in blue, down to plug-in hybrid
vehicles and distributed energy resources at the bottom, in
purple.
As I mentioned, the most encouraging aspect of the study
is, that as we move toward 2030, we see CO<INF>2</INF>
emissions from the electric sector can be falling fairly
dramatically. However--and I must stress this--it will require
a long-term commitment of billions of dollars in energy
research, development, and deployment in every aspect of
electric generation, transmission and consumption. It will not
be cheap, and it will not be easy to accomplish.
As you see on the chart, the largest area there is in
orange, and that's carbon capture and storage. We believe that
those technologies offer the greatest promise, particularly
if--as we assume in our work--you apply them to every new coal
plant coming online after 2020.
As my colleagues from MIT have just pointed out, this is
not an all-assured, given the technology development that we're
engaged in, and the pace at which we expect things to come
about.
Let me make one final point about our work. We've done some
preliminary economic analysis, looking at the cost of achieving
the emissions trajectory implied by the grey area both with,
and without, capture and storage and advanced nuclear
technologies, and we estimate that the cost to the U.S. economy
without those technologies roughly triple, to a total of $2
trillion over 50 years, if you don't have capture and storage,
and if you don't have advanced nuclear. They triple relative to
the cost that would be incurred if you did have those
technologies. Instead of having carbon capture and storage, and
nuclear at the ready, you would instead meet the grey emissions
requirement, by massive fuel-switching to natural gas, and
price-induced conservation, driven by very large carbon prices,
in our economic model.
The bottom line of this work suggests that as you consider
legislation going forward, you should probably take into
account the pace at which you expect technologies to be
deployed realistically and cost-effectively in the economy. If
you have a constraint before technology, you may incur larger
costs than if you had the technology before you applied the
constraint.
In summary, we're continuing with further technical and
economic analysis on this work, and I'd be pleased, Mr.
Chairman, to update the committee as our work evolved in the
weeks and months ahead. I want to thank you and Senator
Domenici, and your colleagues on the committee for the
opportunity to speak, and I look forward to your questions.
[The prepared statement of Mr. Hannegan follows:]
Prepared Statement of Bryan Hannegan, Vice President, Environment,
Electric Power Research Institute
Thank you, Mr. Chairman, Ranking Member Domenici, and Members of
the Committee. I am Bryan Hannegan, Vice President--Environment for the
Electric Power Research Institute (EPRI), a non-profit, collaborative
R&D organization headquartered in Palo Alto, California. EPRI
appreciates the opportunity to provide testimony to the Committee on
the MIT ``Future of Coal'' report, and it is a great personal honor for
me to be back in this Committee room on this side of the witness table.
My comments today reflect the work of the talented scientists and
engineers we have working across our Institute on the many issues
associated with electric power generation and use.
I want to focus my comments today on three subjects: (1) EPRI's
views on the MIT report, which we believe provides an important
foundation on which to consider future energy policy; (2) a detailed
view from EPRI on the principal challenges facing coal-based generation
in the decades ahead; and (3) highlights of some recent analytical work
that EPRI has published emphasizing the importance of advanced coal
technologies as part of an overall low-cost, low-carbon portfolio of
options to reduce carbon dioxide emissions associated with climate
change.
BACKGROUND
Coal currently provides over half of the electricity used in the
United States, and most forecasts of future energy use in the United
States show that coal will continue to have a dominant share in our
electric power generation for the foreseeable future. Coal is a stably
priced, affordable, domestic fuel that can be used in an
environmentally responsible manner. Through development of advanced
pollution control technologies and sensible regulatory programs,
emissions of criteria air pollutants from new coal-fired power plants
have been reduced by more than 90% over the past three decades. And by
displacing otherwise needed imports of natural gas or fuel oil, coal
helps address America's energy security and reduces our trade deficit
with respect to energy.
By 2030, according to the Energy Information Administration, the
consumption of electricity in the United States is expected to increase
by approximately 40% over current levels, at the same time, to
responsibly address the risks posed by potential climate change, we
must substantially reduce the greenhouse gas emissions intensity of our
economy in a way which allows for continued economic growth and the
benefits that energy provides. This is not a trivial matter--it implies
a substantial change in the way we produce and consume electricity.
Technologies to reduce CO<INF>2</INF> emissions from coal will
necessarily be one part of an economy-wide solution that includes
greater end-use efficiency, increasing renewable energy, more efficient
use of natural gas, expanded nuclear power, and similar transformations
in the transportation, commercial, industrial and residential sectors
of our economy. In fact, our work at EPRI on climate policy has
consistently shown that non-emitting technologies for electricity
generation will likely be less expensive than technologies for limiting
emissions of direct fossil fuel end uses in other sectors.
Paradoxically, as we seek greater limits on CO<INF>2</INF> across our
economy, our work at EPRI suggests we will see greater amounts of
electrification--but only if the technologies to do so with near-zero
emissions are at hand.
THE MIT STUDY
Let me first make some general remarks about the MIT study which is
the topic of today's hearing. I should note that while none of the EPRI
staff were formally involved in the development of the report, we did
comment on earlier drafts of it provided to us by the study's authors.
In addition, our former President and CEO, Kurt Yeager, served on the
study's Advisory Committee.
We agree with many of the main points of the MIT study:
<bullet> In particular, we agree with the study's main finding that
CO<INF>2</INF> capture and sequestration (CCS) will be the
critical enabling technology that provides for continued coal
use even as we reduce our CO<INF>2</INF> emissions.
<bullet> We agree that the key to proving CCS capability is the
demonstration of CCS at large-scale (>1 million tons
CO<INF>2</INF>/year) for both pre-and post-combustion capture
with storage in a variety of geologies. The scope of the
program described in the MIT report is appropriate.
<bullet> We share the view expressed by the MIT report that absent
these successful demonstrations at the large scale, CCS will be
confined to a narrow set of uses for enhanced oil recovery, and
coal's share of future electricity production will decline
dramatically as a result.
<bullet> We concur with the MIT report that we should avoid choosing
between coal technology options--rather, we should foster a
``portfolio of technology options''.
--While there are well proven methods for capturing CO<INF>2</INF>
resulting from coal gasification, IGCC plants will have
larger components and a degree of integration that has not
been demonstrated at the commercial scale.
--In contrast, PC technology is well proven commercially in the
power industry, and here the need is for demonstration of
post combustion capture at a commercial and affordable
scale.
<bullet> We agree that there will inevitably be additional costs
associated with CCS. EPRI's latest estimates suggest that the
levelized cost of electricity (COE) from new coal plants (IGCC
or supercritical PC) designed for capture, compression,
transportation and storage of the CO<INF>2</INF> will be 50-80%
higher than the COE of a conventional supercritical PC (SCPC)
plant.
<bullet> EPRI's technical assessment work indicates that the
preferred technology and the additional cost of electricity for
CCS will depend on the coal type, location and the technology
employed.
--Without CCS, supercritical pulverized coal (SCPC) has an
advantage over IGCC. However, the additional CCS cost is
generally lower with IGCC than for SCPC.
--Some studies show an advantage for IGCC with CCS with bituminous
coal, but with lignite coal SCPC with CCS is more generally
preferred. With sub-bituminous coals, SCPC with CCS and
IGCC with CCS appear to show similar costs.
<bullet> At the same time, our initial work with post-combustion
CO<INF>2</INF> capture technologies suggests we can potentially
reduce the current 30% energy penalty associated with CCS to
something closer to 10% over the longer-term. Improvements in
IGCC plants offer the same potential for reducing cost and
energy penalty as well.
<bullet> We also concur with MIT's assessment of the need to consider
the entire integrated system for capture, transportation and
storage of CO<INF>2</INF> at scale, and note that the existing
FutureGen program is one good example of how this can be done.
FutureGen is recognized around the world as a meaningful carbon
sequestration project, and it has become a model for similar
projects in other parts of the world. Others are needed, and we
welcome the recent 10 MW pilot plant and the 200-MW plant
announcement by AEP in that regard.
<bullet> We believe that the greater impediment to expanded CCS may
be the development of public acceptance and suitable regulatory
and legal frameworks. Absent a consistent and predictable
approach to siting and permitting facilities for the transport
and storage of CO<INF>2</INF>, the capital costs and risks
associated with these projects will likely prevent them from
moving forward. The question of ownership of the stored
CO<INF>2</INF> and the liability for any release or leakage is
also not well understood. And most notably, the environmental
fate of the captured and stored CO<INF>2</INF> is also an open
scientific area worth further study.
<bullet> We see value in the approach taken by the various DOE
Regional Carbon Sequestration Partnerships and do not agree
with MIT's assessment that these existing programs are
``completely inadequate''. However, we do see the need to
significantly accelerate the schedules and increase the scope
of these programs to allow large scale tests and demonstrations
of the full range of CCS technologies.
<bullet> We view the question of whether to retrofit an existing
coal-based plant for CCS as a matter of economics and
reliability: if the technologies exist to do so at a cost low
enough to keep the plant in operation reliably, the owner may
incorporate CCS retrofits particularly as they make additional
modifications to the system to meet new stringent air pollution
controls. EPRI is initiating analytical work in this area to
better understand the potential for retrofits on existing coal-
based generation units.
<bullet> With respect to the construction of new coal-based
generation units, we disagree with the MIT report's categorical
conclusion that pre-investment in ``capture-ready'' features is
uneconomic. EPRI views this as a matter of perception on when
and how restrictions on CO<INF>2</INF> emissions may occur: as
the prospect of limits becomes more likely, such pre-investment
becomes more worthy of consideration.
<bullet> The rapid pace of expansion in global coal generation
capacity (105 GW added in China last year alone) underscores
the need to focus on enabling large-scale CCS technology as
soon as possible, regardless of discussions on domestic or
international policy frameworks to reduce CO<INF>2</INF>
emissions.
In the paragraphs that follow, we provide further detail on EPRI's
view of the critical needs for coal-based generation in a carbon-
constrained world.
INCREASING COAL PLANT EFFICIENCY
In the 1950s and '60s, the United States was the world's pioneer in
power plants using thermodynamically efficient ``supercritical'' and
``ultra-supercritical'' steam conditions. Exelon's coal-fired Eddystone
Unit 1, in service since 1960, still boasts the world's highest steam
temperatures and pressures. Because of reliability problems with some
of these early units, U.S. designers retreated from the highest
supercritical steam conditions until the 1980s and '90s when
international efforts involving EPRI and U.S., European, and Japanese
researchers concentrated on new, reliable materials for high-efficiency
pulverized coal plants. Given the prospect of potential CO<INF>2</INF>
regulations (and efforts by power producers to demonstrate voluntary
CO<INF>2</INF> reductions), the impetus for higher efficiency in future
coal-based generation units has gained economic traction worldwide. In
fact, the majority of new pulverized coal (PC) plants announced over
the last two years will employ high-efficiency supercritical steam
cycles, and several will use the ultra-supercritical steam conditions
heretofore used only overseas (aside from Eddystone).
EPRI is working with the Department of Energy, the Ohio Coal
Development Office, and major equipment suppliers on an important
initiative to qualify a whole new class of nickel-based
``superalloys,'' which will enable maximum steam temperatures to rise
from an ultra-supercritical steam temperature of 1100 F to an
``advanced'' ultra-supercritical steam temperature of 1400 F. Combined
with a modest increase in steam pressure, this provides an efficiency
gain that reduces a new plant's carbon intensity (expressed in terms of
CO<INF>2</INF> emitted per megawatt-hour (MWh)) by about 20% relative
to today's state-of-the-art plant. If capture of the remaining
CO<INF>2</INF> is desired, improved efficiency will also reduces the
required size of any necessary equipment.
However, realization of this opportunity will not be automatic--in
fact, it will require a renewed, sustained R&D commitment and
substantial investment in demonstration facilities to bring new
technologies to market. The European Union has embraced such a strategy
and is midway through its program to demonstrate a pulverized coal
plant with 1300 F steam conditions, which was realistically planned as
a 20-year activity.
Efficiency improvements will also be important for other coal power
technologies. The world's first supercritical circulating fluidized-bed
(CFB) plant is currently under construction in Poland. The greatest
increase in efficiency for integrated gasification combined cycle
(IGCC) units will come from increases in the size and efficiency of the
gas turbines and improvements in their ability to handle hydrogen rich
``syngas'' that would be produced in IGCC plants designed for
CO<INF>2</INF> capture.
CO<INF>2</INF> CAPTURE TECHNOLOGY
Carbon capture and storage (CCS) technologies can be feasibly
integrated into virtually all types of new coal-fired power plants,
including IGCC, PC, CFB, and variants such as oxy-fuel combustion. For
those constructing new plants, it is unclear which type of plant would
be economically preferred if it were built to include carbon capture.
All have relative competitive advantages under various scenarios of
available coal types, plant capacity, location, sales of by-products,
etc.
Although carbon capture appears technically feasible for all coal
power technologies, it poses substantial engineering challenges
(requiring major investments in R&D and demonstrations) and comes at
considerable cost. However, analyses by EPRI and the Coal Utilization
Research Council suggest that once these substantial investments are
made, the cost of CCS becomes manageable, and ultimately coal-based
electricity with CCS can be cost competitive with other low-carbon
generation technologies.
Post-combustion CO<INF>2</INF> separation processes (placed after
the boiler in the power plant) are currently used commercially in the
food and beverage and chemical industries, but these applications are
at a scale much smaller than that needed for power producing PC or CFB
power plants. These processes themselves are also huge energy
consumers, and without investment in their improvement, they would
reduce plant electrical output by as much as 30% (creating the need for
more new plants). CO<INF>2</INF> separation processes suitable for IGCC
plants are used commercially in the oil and gas and chemical industries
at a scale closer to that ultimately needed, but their application
necessitates development of modified IGCC plant equipment, including
additional chemical process steps and gas turbines that can bum nearly
pure hydrogen.
EPRI's most recent cost estimates suggest that for PC plants, the
addition of CO<INF>2</INF> capture using the currently most developed
technical option, amine solvents, along with drying and compression,
pipeline transportation to a nearby storage site, and underground
injection, would add about 60-80% to the net present value of life-
cycle costs of electricity (expressed as levelized cost of electricity,
or COE, and excluding storage site monitoring, liability insurance,
etc.). This translates into a potentially large hike in consumers'
electric bills.
The COE cost premium for including CO<INF>2</INF> capture in IGCC
plants, along with drying, compression, transportation, and storage, is
about 40-50%. Although this is a lower cost increase in percentage
terms than that for PC plants, IGCC plants initially cost more than PC
plants. Thus, the bottom-line cost to consumers for power from IGCC
plants with capture may be comparable to that for PC plants with
capture.
A utility's choice between these technologies will depend on
available coals and their physical-chemical properties, desired plant
size, the CO<INF>2</INF> capture process and its degree of integration
with other plant processes, plant elevation, the value of plant co-
products, and other factors. For example, IGCC with CO<INF>2</INF>
capture generally shows an economic advantage in studies based on low-
moisture bituminous coals. For coals with high moisture and low heating
value, such as sub-bituminous and lignite coals, a recent EPRI study
shows PC with CO<INF>2</INF> capture being competitive.
It should be noted that IGCC plants (like PC plants) do not capture
CO<INF>2</INF> without substantial plant modifications, energy losses,
and investments in additional process equipment. As noted above,
however, the magnitude of these impacts could likely be reduced
substantially through aggressive investments in R&D. Historical
experience with the development of environmental control technologies
for today's power plants suggests that technological advances from
``learning-by-doing'' will likely lead to significant cost reductions
in CO<INF>2</INF> capture technologies as the installed base of plants
with CO<INF>2</INF> capture grows. An International Energy Agency study
led by Carnegie Mellon University suggested that overall electricity
costs from plants with CO<INF>2</INF> capture could come down by 15%
relative to the currently predicted costs after about 200 systems were
installed. Furthermore, despite the substantial cost increases for
adding CO<INF>2</INF> capture to coal-based IGCC and PC power plants,
their resulting cost-of-electricity is still usually less than that for
natural gas-based plants at current and forecasted natural gas prices.
Engineering analyses by EPRI, DOE, and the Coal Utilization
Research Council suggests that costs could come down faster through
CO<INF>2</INF> capture process innovations or, in the case of IGCC
plants, fundamental plant improvements--provided sufficient RD&D
investments are made. EPRI pathways for reduction in capital cost and
improvement in efficiency are embodied in two companion RD&D
Augmentation Plans developed under the collaborative CoalFleet for
Tomorrow program. Efforts toward reducing the cost of IGCC plants with
CO<INF>2</INF> capture will focus on adapting more advanced and larger
gas turbines for use with hydrogen-rich fuels, lower-cost oxygen
supplies, improved gas clean-up, advanced steam cycle conditions, and
other activities.
For PC plants, the progression to advanced ultra-supercritical
steam conditions will steadily increase plant efficiency and reduce
CO<INF>2</INF> production. Improved solvents are expected to greatly
reduce post-combustion CO<INF>2</INF> capture process. EPRI is working
to accelerate the introduction of novel, alternative CO<INF>2</INF>
separation solvents with much lower energy requirements for
regeneration. Such solvents--for example, chilled ammonium carbonate--
could reduce the loss in power output imposed by the CO<INF>2</INF>
capture process from about 30% to about 10%. A small pilot plant (5 MW-
thermal) is being designed for installation at a power plant in
Wisconsin later this year; success there would warrant a scale-up to a
larger pilot or pre-commercial plant. An EPRI timeline (compatible with
DOE's timeframe) for the possible commercial introduction of post-
combustion CO<INF>2</INF> capture follows.
The introduction of oxy-fuel combustion may allow further
reductions in CO<INF>2</INF> capture costs by allowing the flue gas to
be compressed directly, without any CO<INF>2</INF> separation process
and reducing the size of the supercritical steam generator. Boiler
suppliers and major European and Canadian power generators are actively
working on pilot-scale testing and scale-up of this technology.
EPRI stresses that no single advanced coal generating technology
(or any generating technology) has clear-cut economic advantages across
the range of U.S. applications. The best strategy for meeting future
electricity needs while addressing climate change concerns and economic
impact lies in developing multiple technologies from which power
producers (and their regulators) can choose the one best suited to
local conditions and preferences.
Assuring timely, cost-effective coal power technology with
CO<INF>2</INF> capture entails simultaneous and substantial progress in
RD&D efforts on improving capture processes and fundamental plant
systems. EPRI sees the need for government and industry to pursue these
and other pertinent RD&D efforts aggressively through significant
public policy and funding support. Early commercial viability will
likely come only through firm commitments to the necessary R&D and
demonstrations and through collaborative arrangements that share risks
and disseminate results.
TRANSPORTATION AND GEOLOGIC STORAGE
Geologic sequestration of CO<INF>2</INF> has been proven effective
by nature, as evidenced by the numerous natural underground
CO<INF>2</INF> reservoirs in Colorado, Utah, and other western states.
CO<INF>2</INF> is also found in natural gas reservoirs, where it has
resided for millions of years. Thus, evidence suggests that depleting
or depleted oil and gas reservoirs, and similar ``capped'' sandstone
formations containing saltwater that cannot be made potable, are
capable of storing CO<INF>2</INF> for millennia or longer. Geologic
sequestration as a strategy for reducing CO<INF>2</INF> emissions is
being demonstrated in numerous projects around the world.
Three relatively large projects--the Sleipner Saline Aquifer
CO<INF>2</INF> Storage (SACS) project in the North Sea off of Norway;
the Weyburn Project in Saskatchewan, Canada; and the In Salah Project
in Algeria--together sequester about 3 to 4 million metric tons of
CO<INF>2</INF> per year, which approaches the output of just one
typical 500 megawatt coal-fired power plant. With 17 collective years
of operating experience, these projects suggest that CO<INF>2</INF>
storage in deep geologic formations can be carried out safely and
reliably. Furthermore, CO<INF>2</INF> injection technology and
subsurface behavior modeling have been proven in the oil industry,
where CO<INF>2</INF> has been injected for 30 years for enhanced oil
recovery (EOR) in the Permian Basin fields of west Texas and Oklahoma.
Regulatory oversight and community acceptance of injection operations
are well established.
In the United States, DOE has an active R&D program (the ``Regional
Carbon Sequestration Partnerships'') that is mapping geologic
formations suitable for CO<INF>2</INF> storage and conducting pilot-
scale CO<INF>2</INF> injection validation tests across the country.
These tests, as well as most commercial applications for long-term
storage, will compress CO<INF>2</INF> to a liquid-like
``supercritical'' state to maximize the amount stored per unit volume
underground. As a result, virtually all CO<INF>2</INF> storage
applications will be at least a half-mile deep, helping reduce the
likelihood of any leakage to the atmosphere, which would defeat the
purpose of sequestering the CO<INF>2</INF> in the first place.
DOE's Regional Carbon Sequestration Partnerships represent broad
collaborative teaming of public agencies, private companies, and non-
profits; they would be an excellent vehicle for conducting larger
``near-deployment scale'' CO<INF>2</INF> injection tests to prove
specific U.S. geologic formations, which EPRI believes to be one of the
keys to commercializing CCS for coal-based power plants. Evaluations by
these. Regional Partnerships and others suggest that enough geologic
storage capacity exists in the United States to hold several centuries'
worth of CO<INF>2</INF> emissions from coal-based power plants and
other stationary sources. However, the distribution of suitable storage
formations across the country is not uniform: some areas have ample
storage capacity whereas others appear to have little or none.
Thus, CO<INF>2</INF> captured at some power plants would be
expected to require pipeline transportation for several hundred miles
to suitable injection locations, which may be in other states. While
this adds cost, it doesn't represent a technical hurdle because
CO<INF>2</INF> pipeline technology has been proven in oil field FOR
applications. As CCS is applied commercially, EPRI expects that early
projects would take place at coal-based power plants near sequestration
sites or an existing CO<INF>2</INF> pipeline. As the number of projects
increases, regional CO<INF>2</INF> pipeline networks connecting
multiple sources and storage sites would be needed.
There is still much work to be done before CCS can implemented on a
scale large enough to significantly reduce CO<INF>2</INF> emissions
into the atmosphere. In addition to large-scale demonstrations at U.S.
geologic formations, many legal and institutional uncertainties need to
be resolved. Uncertainty about long term monitoring requirements,
liability, and insurance is an example. State-by-State variation in
regulatory approaches is another. Some geologic formations suitable for
CO<INF>2</INF> storage underlie multiple states. For private companies
considering CCS, these various uncertainties translate into increased
risk.
THE PROMISE OF CCS
Recent EPRI work has illustrated the necessity and the urgency to
develop carbon capture and storage (CCS) technologies as part of the
solution to satisfying our energy needs in an environmentally
responsible manner. Our ``Electricity Technology in a Carbon-
Constrained Future'' study, which I am pleased to have led, suggests
that with aggressive R&D, demonstration, and deployment of advanced
electricity technologies, it is technically feasible to slow down and
stop the increase in U.S. electric sector CO<INF>2</INF> emissions, and
then eventually reduce them over the next 25 years while simultaneously
meeting the increased demand for electricity. However, even under the
most aggressive technology assumptions, the pace at which we can do so
is substantially slower than that envisioned under several of the
pending bills currently before this Committee and the Congress as a
whole.
To develop this analysis, we compiled data on the currently and
likely future cost and performance of various electricity technologies
from our Technical Assessment Group work, various public-private
technology R&D roadmaps, and expert opinions from academia, industry,
and the NGO community in the published literature. From this
information, EPRI established specific technology deployment targets in
seven areas: efficiency, renewables, nuclear generation, advanced coal
generation, carbon capture and storage (CCS), plug-in hybrid electric
vehicles (PHEV) and distributed energy resources. We then calculated
the net change in CO<INF>2</INF> emissions from the electric sector
which would result from achieving each of those technology targets
compared to the underlying assumptions in the Base Case of the 2007
Annual Energy Outlook published by the Energy Information
Administration (EIA). The results are shown in Figure 1.*
---------------------------------------------------------------------------
* Graphic has been retained in committee file.
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The most encouraging aspect of the study is that, as we move toward
2030, CO<INF>2</INF> emissions levels from the U.S. electric sector can
begin falling fairly dramatically. However, this will require the long-
term commitment of billions of dollars in energy research, development
and deployment in every aspect of electric generation, transmission and
consumption. It will not be cheap, nor will it be easy to accomplish.
While one could argue that CO<INF>2</INF> reductions from some of these
targets could be slightly higher or somewhat lower, the overall picture
is clear--we can get to a low-carbon future, but only with substantial
consistent investment, smart policy choices and a realistic timeline.
Of the seven options we analyzed, we believe that the greatest
reductions in future U.S. electric sector CO<INF>2</INF> emissions are
likely to come from applying CCS technologies to nearly all new coal-
based power plants coming on-line after 2020. In fact, the longer we
delay in developing the capability to deploy CCS technologies that can
be deployed at a commercial scale, the longer we will have to wait for
the resulting substantial reductions in CO<INF>2</INF> and
correspondingly, reductions in the risk of future climate change.
Furthermore, preliminary economic work conducted by EPRI to extend
this study shows that absent both CCS and advanced nuclear
technologies, achieving these aggressive CO<INF>2</INF> emissions
reductions would be extremely costly. We estimate that the costs to the
U.S. economy would roughly triple--to nearly $2 trillion over the next
50 years--compared to costs if CCS and advanced nuclear technologies
were commercially available. This large difference in economic cost
arises from the lack of low-cost, low-carbon technologies to reduce
future CO<INF>2</INF> emissions growth on a large scale: in a world
without CCS and nuclear, we rely instead on massive fuel switching to
natural gas (with attendant price increases and import dependence) and
on price-induced conservation driven by very large carbon prices (which
would more than likely trigger any ``safety valve'' set in
legislation). Our preliminary economic work suggests that the timeline
for any cost-effective program of CO<INF>2</INF> emissions reductions
should be dictated by our expectation of technology development and
deployments in the decades ahead.
We are continuing with further technical and economic analysis, and
we expect to release our final economic analysis later this year. I
would be pleased to update the Committee as our work evolves in the
weeks and months ahead.
The Chairman. Thank you very much.
Mr. Dan Lashof is our final witness on this panel, and
we're glad to have you here.
STATEMENT OF DANIEL A. LASHOF, PH.D., CLIMATE CENTER SCIENCE
DIRECTOR, NATURAL RESOURCES DEFENSE COUNCIL, NEW YORK, NY
Mr. Lashof. Thank you very much, Mr. Chairman. It's a
pleasure to be back before the committee.
Members of the committee, I am Daniel Lashof, I am the
science director, and deputy director of the Climate Center at
the Natural Resources Defense Council.
Mr. Chairman, I went to school at the other end of
Massachusetts Avenue from the esteemed professors from MIT, so
I dare not really question the technical judgments that they
make about the readiness of carbon capture and storage
technology. I do have some questions about the completeness of
their policy recommendations, which I'll come to in a minute.
But, indeed, I agree strongly with their first premise,
which is simply that the risks of global warming are real, and
the United States and other countries need to take action to
restrict emissions of carbon dioxide and other global warming
pollutions, that certainly is essential.
They're finding that retro-fitting existing coal plants
with carbon capture and storage, whether they be integrated
gasification plants, or more conventional pulverized coal
plants, would be very complex and expensive, and unlikely to
occur. It is also a very important finding in my view.
Third, I agree with their conclusion that mega-ton scale
injection at multiple wealth characterized sites can happen
safely now. Indeed, that conclusion is also shared by Dr. Julio
Friedman of Lawrence Livermore National Lab, who testified
before the House Energy & Commerce Committee last month, that
the technology, the understanding of the geology for doing
carbon capture is at a stage where we should really start
learning more by doing it, rather than just doing research in a
laboratory mode.
Fourth, I agree strongly with many of their policy
conclusions, including one that Profession Deutch mentioned,
which is that Federal assistance for coal projects should only
go to projects that actually incorporate carbon capture and
storage, as a central part of their design.
But I do have some issues with the policy recommendations;
in particular, I believe that they are incomplete. In my view,
the most important policy recommendation stemming from their
technical analysis is that Congress should immediately require
that any new coal-fired power plants be designed and operated
with carbon capture and storage, starting right away. Their
analysis shows that is technically feasible, and it is very
important to establish that as a policy matter.
The reason it's so important is that if you take a typical
500-megawatt coal plant, and build it without carbon capture
and storage, emissions are about 4 million tons of
CO<INF>2</INF> a year--that plant can be expected to operate
for 50 years or more. That means it's a commitment to emitting
200 million tons of CO<INF>2</INF> into the atmosphere over its
lifetime. Simply put, the 100 or so conventional coal plants
that are on the drawing board in the United States and the
thousands or more that are on the drawing boards worldwide--if
they are built without carbon capture and storage, it will make
it impossible to meet the climate protection goals that I know
you share, Mr. Chairman.
In one conclusion of the MIT Report that I think has been
widely misinterpreted, their analysis finds that the private
sector does not now have the incentive to build plants that
have carbon capture and storage technology built into them, and
that's true. But that's precisely why Congress needs to act. It
needs to create a legal requirement that future coal plants
have this technology.
Some may suggest that we don't need to have a specific
performance standard for new coal plants if we have an overall
cap-and-trade system--let the price go in there, and if people
want to build plants without carbon capture, they have to pay
for the permits, that should be enough. But the MIT study shows
why I don't think that is enough. They conclude that the price
of carbon allowances has to reach about $30 per ton of
CO<INF>2</INF>, before carbon capture and storage technology
would be the economic choice. That's a relatively high number.
Indeed the EIA analysis, which was the last time I was
before the committee, considering their analysis of your
discussion draft proposal, concluded that because of the price
caps that were built into that proposal, at least through 2030,
there would be no investment in carbon capture and storage,
driven economically by the private sector. So, even with more
stringent caps, there's no guarantee that the price of
CO<INF>2</INF> allowances would quickly reach the point where
the private sector would choose to build new plants with carbon
capture and storage built in.
So, I think there would be a large risk that we would see
dozens, if not hundreds, of additional plants built in the
United States that would then commit us over 50 years or more
to excessive levels of CO<INF>2</INF> emissions that would be
very difficult to control in the future.
Certainly, your leadership with Senator Boxer in putting
developers on notice that shouldn't expect to get any
grandfathered allowances if they go ahead and build plants
without carbon capture and storage, I think, has been very,
very important. But, I don't think that, by itself, is enough.
Because even without the expectations of grandfathered
allowances, without a carbon price of $30 a ton or higher, many
utilities may conclude that they should just go ahead and try
to build plants quickly, and get their money out before the
price of allowances goes very high.
An additional policy idea, I would suggest, to go along
with a CO<INF>2</INF> new source performance standard for new
power plants, is a low-carbon generation obligation. This would
require that an increasing fraction of all of the electricity
generated by coal, come from plants that employ carbon capture
and storage. The idea behind this, as a complement to a new
source performance standard, is to spread the cost and the risk
of building this new technology across the coal-based industry,
rather than concentrating only on the developers of new plants.
So, I think that's an idea I would urge you to consider.
Finally, to address Professor Deutch's point about the need
to deal with the many power plants that are being built in
China and at a somewhat slower pace in India, but a really,
truly dizzying pace in China, building conventional coal
plants. I think it's really essential for the international
community to step up and develop a dedicated fund that would
pay for the incremental costs of building those plants with
carbon capture and disposal as soon as possible, so as they're
building out that infrastructure, it's built in a way that's
consistent with where we need to go on global warming.
It's actually a commitment that the international community
made, in principle, back in 1992 at Rio, and it's never been
fulfilled. Now is the time to step up, we have the technology
that this report and others show that we know how to keep the
CO<INF>2</INF> out of the atmosphere, by putting it
underground, starting now. So in my view, there's no time like
the present--let's get started. Thank you.
[The prepared statement of Mr. Lashof follows:]
Prepared Statement of Daniel A. Lashof, Ph.D., Climate Center Science
Director, Natural Resources Defense Council, New York, NY
INTRODUCTION
Thank you for the opportunity to share my views regarding MIT's
``Future of Coal'' report.\1\ My name is Daniel A. Lashof, and I am the
science director of the Climate Center at the Natural Resources Defense
Council (NRDC). I was a coauthor (with David Hawkins and Robert
Williams) of a September 2006 Scientific American article titled ``What
to do about Coal.'' David Hawkins of NRDC served on the advisory
committee for the MIT study and NRDC has prepared a brief response to
the MIT report, which is attached to my testimony and available
online.\2\
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\1\ Online at http://mit.edu/coal/.
\2\ Online at www.nrdc.org/globalWarming/coal/contents.asp.
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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.
CAPTURING AND SEQUESTERING CARBON IS POSSIBLE TODAY
MIT's report on the Future of Coal correctly recognizes the
imperative for prompt action on global warming and the critical role
that use of carbon dioxide (CO<INF>2</INF>) capture and geologic
storage (CCS) must play in reconciling protection of the climate with
expected global dependence on coal. Yet the report's examination of
policies to promote immediate deployment of CCS systems is incomplete
and it fails to address the most urgent problem facing U.S.
policymakers: what CO<INF>2</INF> performance requirements should be
applied to proposed new coal power plants?
While the facts set forth in the report provide ample justification
for a recommendation to require all proposed new coal plants to capture
CO<INF>2</INF> for geologic disposal, the report is silent on this
question.
Rather than recommending performance requirements to capture and
store CO<INF>2</INF> from all new coal plants, the report proposes an
incomplete policy response that would likely fail to prevent the
construction of new high-emitting coal plants and result in much larger
taxpayer costs and higher abatement costs when climate protection
policies are adopted. The report recommends that government grants be
made to energy companies to fund use of CO<INF>2</INF> capture at a few
new coal plants, that government fund several large-scale geologic
injection projects, and that Congress not ``grandfather'' new proposed
power plants from future CO<INF>2</INF> control legislation. While each
of these recommendations is a useful complement to a direct requirement
for new coal plants to use CCS, by themselves they are inadequate.
Some industry proponents of old-technology coal plants that will
not capture CO<INF>2</INF> have claimed that the MIT study suggests
that CCS systems are not ready for use at proposed new coal plants. In
contrast, the report itself states that there is no reason for Congress
to delay adoption of a carbon emission control policy and finds that
construction of new supercritical pulverized coal plants without CCS
``will raise the cost of future CO<INF>2</INF> control.'' One reason is
that retrofits of plants built without CCS are not likely. The MIT
report finds that: ``[ . . . ], retrofitting an existing coal-fired
plant originally designed to operate without carbon capture will
require major technical modification, regardless of whether the
technology is SCPC or IGCC.'' (Executive Summary, p. xiv) Yet the
report fails to recommend (or even discuss) the most obvious direct
policy measure a requirement that new coal plants employ CCS.
IS CCS READY FOR NEW COAL PLANTS TO USE TODAY?
While the Findings and Recommendations chapter of the MIT report
states there is no reason for Congress to delay adoption of a carbon
emission control policy and finds that construction of new
supercritical pulverized coal plants without CCS ``will raise the cost
of future CO<INF>2</INF> control,'' the report's Executive Summary
discusses the choice of whether to apply CCS from the point of view of
private sector developers, concluding that it is difficult to choose
between Integrated Gasification Combined Cycle (IGCC) technology and
supercritical pulverized coal (SCPC) technology.
The critical flaw in this discussion, which I expect will be widely
quoted by conventional coal plant developers, is that it implies that
the only rational approach to new coal plant investments is to permit
private developers to choose between two different types of coal
plants, both of which release their CO<INF>2</INF> rather than
capturing it. However, the premise of significantly delayed
requirements to control CO<INF>2</INF> emissions that underlies this
discussion is inconsistent with other findings in the report that CCS
is ready for application today and that there is no reason for Congress
to delay adoption of limits on CO<INF>2</INF> emissions.
Is it technically feasible for new coal power plants to capture and
sequester their carbon? The MIT study itself supports an affirmative
answer. The study finds that commercial capture systems exist:
Of the possible approaches to separation [with pulverized
coal plants], chemical absorption with amines, such as
monoethanolamine (MEA) or hindered amines, is the commercial
process of choice. (page 24)
In applying CO<INF>2</INF> capture to IGCC [ . . . ] a weakly
CO<INF>2</INF>-binding physical solvent, such as the glymes in
Selexol, can be used to separate out the CO<INF>2</INF>.
Reducing the pressure releases the CO<INF>2</INF> and
regenerates the solvent, greatly reducing the energy
requirements for CO<INF>2</INF> capture and recovery compared
to the MEA system. (page 34)
The study also finds that ``large-scale CO<INF>2</INF> injection
projects can be operated safely'' (Executive Summary, p. xii). Dr.
Julio Friedman of Lawrence Livermore National Laboratory agrees.
Testifying before the House Energy and Commerce Committee on March 6,
2007, Dr. Friedman concluded that:
Opportunities for rapid deployment of [geological carbon
sequestration] GCS exist in the U.S. There is enough technical
knowledge to select a safe and effective storage site, plan a
large-scale injection, monitor CO<INF>2</INF>, and remediate
and mitigate any problems that might arise (e.g., well-bore
leakage). This knowledge derives from over 100 years of
groundwater resource work, oil and gas exploration and
production, studies of geological analogs, natural gas storage
site selection and operation, and hazardous waste disposal. A
careful operator could begin work today at a commercial scale
and confidently select and operate a site for 30 to 50 years.
(pages 6-7)
The MIT study notes that existing projects do not employ the
rigorous monitoring that is needed for a fully implemented CCS program
and that permitting regulations need to be written. However, if begun
now, these requirements can be developed in a few years, shorter than
the period required to plan, finance, and build new coal plants now in
preliminary development stages. Such requirements will need to be
adopted to carry out the large demonstration injection projects
recommended by the report in any case. As the report states, ``What is
needed is to demonstrate an integrated system of capture,
transportation, and storage of CO<INF>2</INF>, at scale. This is a
practical goal but requires concerted action to carry out'' (Executive
Summary, p. xi) Rather than carry out a set of demonstrations
unconnected to newly built coal plants, the obvious alternative is to
integrate the construction of new coal plants with the initial large-
scale injection projects.
CONCLUSION
The MIT study does not examine in any detail the key issue
surrounding new coal plant construction: would it be better to vent
CO<INF>2</INF> from new coal plants in the next decade or two rather
than capture it. The report notes that if significant new coal capacity
without CCS is built the costs of CO<INF>2</INF> control programs would
increase for all. Another outcome, not discussed in the report, is that
such new coal investments will be cited by their owners as reasons to
delay the pace of programs to limit CO<INF>2</INF> emissions. That
result would foreclose options to stabilize CO<INF>2</INF>
concentrations at adequately protective levels.
While the authors of the MIT report decline to say so directly, the
information presented in the report supports a straightforward policy
recommendation: Congress should require planned new coal plants in the
United States to employ CCS without further delay.
______
Natural Resources Defense Council's Response to MIT's
`Future of Coal' Report
By David Hawkins and George Peridas, Natural Resources Defense Council
ABOUT NRDC
The Natural Resources Defense Council is an international nonprofit
environmental organization with more than 1.2 million members and
online activists. Since 1970, our lawyers, scientists, and other
environmental specialists have worked to protect the world's natural
resources, public health, and the environment. NRDC has offices in New
York City, Washington, D.C., Los Angeles, San Francisco, and Beijing.
Visit us at www.nrdc.org. NRDC President: Frances Beinecke; NRDC
Director of Communications: Phil Gutis; NRDC Publications Director:
Alexandra Kennaugh; NRDC Editor: Lisa Goffredi.
SUMMARY
MIT's report on the Future of Coal correctly recognizes the
imperative for prompt action on global warming and the critical role
that use of carbon dioxide (CO<INF>2</INF>) capture and geologic
storage (CCS) must play in reconciling protection of the climate with
expected global dependence on coal. Yet the report's examination of
policies to promote immediate deployment of CCS systems is incomplete
and it fails to address the most urgent problem facing U.S.
policymakers: what CO<INF>2</INF> performance requirements should be
applied to proposed new coal power plants?
While the facts set forth in the report provide ample justification
for a recommendation to require all proposed new coal plants to capture
CO<INF>2</INF> for geologic disposal, the report is silent on this
question.
Rather than recommending performance requirements to capture and
store CO<INF>2</INF> from all new coal plants, the report proposes an
incomplete policy response that would likely fail to prevent the
construction of new high-emitting coal plants and result in much larger
taxpayer costs and higher abatement costs when climate protection
policies are adopted. The report recommends that government grants be
made to energy companies to fund use of CO<INF>2</INF> capture at a few
new coal plants, that government fund several large-scale geologic
injection projects, and that Congress not ``grandfather'' new proposed
power plants from future CO<INF>2</INF> control legislation. While each
of these recommendations is a useful complement to a direct requirement
for new coal plants to use CCS, by themselves they are inadequate.
Based on leaks of early drafts of the report's executive summary,
industry proponents of old-technology coal plants that will not capture
CO<INF>2</INF> are already claiming the MIT study suggests that CCS
systems are not ready for use at proposed new coal plants. MIT's Howard
Herzog, one of the MIT study participants, in a November 2006
presentation, provides a more accurate summary of the facts:
Is CCS feasible? Yes, all major components of a carbon
capture and sequestration system are commercially available
today. Why is CCS use limited today? It is almost always
cheaper to emit to the atmosphere than sequester. Therefore,
opportunities are limited to niche areas until carbon policies
are put in place.
The report states there is no reason for Congress to delay adoption
of a carbon emission control policy and finds that construction of new
supercritical pulverized coal plants without CCS ``will raise the cost
of future CO<INF>2</INF> control.'' Yet the report fails to recommend
(or even discuss) the most obvious direct policy measure--a requirement
that new coal plants employ CCS.
Is CCS Ready for New Coal Plants to Use Today?
While the Findings and Recommendations chapter of the MIT report
states there is no reason for Congress to delay adoption of a carbon
emission control policy and finds that construction of new
supercritical pulverized coal plants without CCS ``will raise the cost
of future CO<INF>2</INF> control,'' the report's Executive Summary
inconsistently suggests that the choice of whether to apply CCS should
be left to private sector developers:
From the standpoint of a power plant developer, the choice of
a coal-fired technology for a new power plant today involves a
delicate balancing of considerations. On the one hand, factors
such as the potential tightening of air quality standards for
SO<INF>2</INF>, NO<INF>X</INF>, and mercury, a future carbon
charge, or the possible introduction of federal or state
financial assistance for IGCC would seem to favor the choice of
IGCC. On the other hand, factors such as near-term opportunity
for higher efficiency, capability to use lower cost coals, the
ability to cycle the power plant more readily in response to
grid conditions, and confidence in reaching capacity factor/
efficiency performance goals would seem to favor the choice of
super critical pulverized coal (SCPC). Other than recommending
that new coal units should be built with the highest efficiency
that is economically justifiable, we do not believe that a
clear preference for either technology can be justified.
(Executive Summary, p. xiv)
The critical flaw in this excerpt, which we expect will be widely
quoted by conventional coal plant developers, is that it implies that
the only rational approach to new coal plant investments is to permit
private developers to choose between two different types of coal
plants, both of which release their CO<INF>2</INF> rather than
capturing it. However, the premise of significantly delayed
requirements to control CO<INF>2</INF> emissions that underlies this
discussion is inconsistent with other findings in the report that CCS
is ready for application today and that there is no reason for Congress
to delay adoption of limits on CO<INF>2</INF> emissions.
Is it technically feasible for new coal power plants to capture and
sequester their carbon? The MIT study itself supports an affirmative
answer. The study finds that commercial capture systems exist:
Of the possible approaches to separation [with pulverized
coal plants], chemical absorption with amines, such as
monoethanolamine (MEA) or hindered amines, is the commercial
process of choice. (page 24)
In applying CO<INF>2</INF> capture to IGCC [ . . . ] a weakly
CO<INF>2</INF>-binding physical solvent, such as the glymes in
Selexol, can be used to separate out the CO<INF>2</INF>.
Reducing the pressure releases the CO<INF>2</INF> and
regenerates the solvent, greatly reducing the energy
requirements for CO<INF>2</INF> capture and recovery compared
to the MEA system.'' (page 34)
The study also finds that ``large-scale CO<INF>2</INF> injection
projects can be operated safely'' (Executive Summary, p. xii). The
study notes that existing projects do not employ the rigorous
monitoring that is needed for a fully implemented CCS program and that
permitting regulations need to be written. However, if begun now, these
requirements can be developed in a few years, shorter than the period
required to plan, finance, and build new coal plants now in preliminary
development stages. Such requirements will need to be adopted to carry
out the large demonstration injection projects recommended by the
report in any case. As the report states, ``What is needed is to
demonstrate an integrated system of capture, transportation, and
storage of CO<INF>2</INF>, at scale. This is a practical goal but
requires concerted action to carry out'' (Executive Summary, p. xi)
Rather than carry out a set of demonstrations unconnected to newly
built coal plants, the obvious alternative is to integrate the
construction of new coal plants with the initial large-scale injection
projects.
capturing and sequestering carbon is possible today
Capture of Carbon From Power Plants
The 2005 Intergovernmental Panel on Climate Change (IPCC) special
report on Carbon Dioxide Capture and Storage groups processes to
capture or separate CO<INF>2</INF> from power plant gas streams into
three categories: post-combustion, pre-combustion and oxyfuel
combustion. Today pre-combustion capture is the most economic option
but other approaches show promise as well.
Pre-combustion capture is applicable to processes that gasify coal.
Coal gasification is widely used in industrial processes, such as
ammonia and fertilizer production around the world. Hundreds of such
industrial gasifiers are in operation today. Integrated Gasification
Combined Cycle (IGCC), used for electric power production, is a
relatively recent development--about two decades old and is still not
widely deployed.
Commercially demonstrated systems for pre-combustion capture from
the coal gasification process are used in industrial plants to separate
CO<INF>2</INF> from natural gas and to make chemicals such as ammonia.
Due to lack of CO<INF>2</INF> control policies, most such systems
simply release the separated CO<INF>2</INF> to the air. An example
where the CO<INF>2</INF> from coal gasification is actually captured
rather than vented is the Dakota Gasification Company plant in Beulah,
North Dakota, which captures and pipelines more than one million tons
of CO<INF>2</INF> per year from its lignite gasification plant to an
oil field in Saskatchewan. ExxonMobil's Shute Creek natural gas
processing plant in Wyoming, which strips CO<INF>2</INF> from sour gas
and pipelines several million tons per year to oil fields in Colorado
and Wyoming, is another large industrial example.
Today's pre-combustion capture approach is not applicable to the
installed base of conventional pulverized coal in the United States and
elsewhere. However, it is ready today for use with IGCC power plants.
The oil giant BP has already announced an IGCC project with pre-
combustion CO<INF>2</INF> capture at its refinery in Carson,
California. The MIT executive summary statement that ``[t]here is no
operational experience with carbon capture from coal plants and
certainly not with an integrated sequestration operation.'' (Executive
Summary, p. xiii), is not correct as the Dakota Gasification plant
shows.
The principal obstacle for broad application of pre-combustion
capture to new power plants is not technical, it is economic: under
today's laws it is cheaper to release CO<INF>2</INF> to the air rather
than capturing it. The MIT report states that ``at present Integrated
Gasification Combined Cycle (IGCC) is the leading candidate for
electricity production with CO<INF>2</INF> capture because it is
estimated to have lower cost than pulverized coal with capture''
(Executive Summary, p. xiii). This is backed up in the main body of the
study, which quotes the respective costs of electricity from a
supercritical pulverized coal plant with capture and an IGCC with
capture as 7.69 cents/kWh and 6.52 cents/kWh (p. 30).
Commercial post-combustion CO<INF>2</INF> capture systems have been
applied to very small portions of flue gases from a few coal-fired
power plants in the United States that sell the captured CO<INF>2</INF>
to the food and beverage industry. However, industry analysts and the
MIT report state that today's systems, based on publicly available
information, involve much higher costs and energy penalties than the
principal demonstrated alternative, pre-combustion capture. New and
potentially less expensive post-combustion concepts have been evaluated
in laboratory tests and some, such as ammonia-based capture systems,
are scheduled for small pilot-scale tests in the next few years. Under
normal industrial development scenarios, if successful such pilot tests
would be followed by larger demonstration tests and then by commercial-
scale tests. These and other approaches should continue to be explored.
Oxyfuel combustion is also in the early stages of development.
Pilot studies for oxyfuel processes have been announced. As with post-
combustion processes, absent an accelerated effort to leapfrog the
normal commercialization process, it could be significant number of
years before such systems begin to be deployed broadly in commercial
application.
Capturing emissions from new power plants is perfectly feasible. Is
it possible then to sequester the CO<INF>2</INF> in geologic
formations? We examine that question below.
Sequestration of Carbon in Geologic Formations Is Possible
We have a significant experience base for injecting large amounts
of CO<INF>2</INF> into geologic formations. For several decades oil
field operators have received high pressure CO<INF>2</INF> for
injection into fields to enhance oil recovery, delivered by pipelines
spanning as much as several hundred miles. Today in the United States a
total of more than 35 million tons of CO<INF>2</INF> are injected
annually in more than 70 projects. In addition to this enhanced oil
recovery experience, there are several other large injection projects
in operation or announced. The longest running of these, the Sleipner
project, began in 1996. But the largest of these projects injects on
the order of 1 million tons per year of CO<INF>2</INF>, while a single
large coal power plant can produce about 5 million tons per year. And
of course, our experience with human-made injection projects does not
extend for the 1,000-year or more period that we would need to keep
CO<INF>2</INF> in place underground for it to be effective in helping
to avoid dangerous global warming. Accordingly, the public and
interested members of the environmental, industry, and policy
communities rightly ask whether we can carry out a large-scale
injection program safely and assure that the injected CO<INF>2</INF>
will stay where we put it.
Do we have a basis today for concluding that injected
CO<INF>2</INF> will stay in place for the long periods required to
prevent its contributing to global warming? The IPCC report concluded
that we do, stating that ``[o]bservations from engineered and natural
analogues as well as models suggest that the fraction retained in
appropriately selected and managed geologic reservoirs is very likely
to exceed 99 percent over 100 years and is likely to exceed 99 percent
over 1,000 years.''
The MIT study itself states that:
[although substantial work remains to characterize and
quantify these mechanisms, they are understood well enough
today to trust estimates of the percentage of CO<INF>2</INF>
stored over some period of time--the result of decades of
studies in analogous hydrocarbon systems, natural gas storage
operations, and CO<INF>2</INF>-EOR. [ . . . ] Additional work
will reduce the uncertainties associated with long-term
efficacy and numerical estimates of storage volume capacity,
but no knowledge gaps today appear to cast doubt on the
fundamental likelihood of the feasibility of CCS. [ . . . ] Our
overall judgment is that the prospect for geologic
CO<INF>2</INF> sequestration is excellent. We base this
judgment on 30 years of injection experience and the ability of
the earth's crust to trap CO<INF>2</INF>. (p. 44)
Although the report notes the existence of open issues about large-
scale deployment, meaning a sequestration program on the order of
billions of tons per year, Chapter 4 of the report makes clear that
these issues are not obstacles to commencing numerous multimillion
tonne per year injection projects today. Rather, the issues mentioned
are ones that should be addressed to allow a large-scale program to be
implemented in an economically optimized fashion.
The report makes recommendations that include a comprehensive
nationwide survey by the United States Geological Survey to map out
storage capacity, the development of a regulatory framework for CCS,
the adoption of long-term liability regimes for storage sites, and the
acceleration of large-scale sequestration projects of at least 1
million tonnes of CO<INF>2</INF> annually. All of these recommendations
can be implemented before the commissioning of new coal power plants
now in the development stage.
The Cost of CCS
CCS costs more than conventional power generation. Significantly
more capital and equipment is required and the energy penalty that
accompanies plants that capture and sequester their carbon is not
trivial. However, deployment of CCS will have a minimal effect on the
power sector, end-consumers, and the economy as a whole.
With today's off-the-shelf systems, estimates are that the
production cost of electricity at a coal plant with CCS could be as
much as 40 percent higher than at a conventional plant that emits its
CO<INF>2</INF>. But the impact on average electricity prices of
introducing CCS now will be very much smaller due to several factors.
First, power production costs represent about 60 percent of the
price that end-consumers pay for electricity--the rest comes from
transmission and distribution costs. Second, coal-based power, which
would initially be the source that would utilize CCS, represents just
over half of U.S. power consumption. Third, and most important, even if
we start now, CCS would be applied to only a small fraction of U.S.
coal capacity for some time. Thus, with a properly designed trading
approach, the incremental costs on the units equipped with CCS could be
spread over the entire coal-based power sector or possibly across all
fossil capacity depending on the choices made by Congress. Based on CCS
costs available in 2005 we estimate that a low-carbon generation
obligation large enough to cover all forecasted new U.S. coal capacity
through 2020 could be implemented for about a 2 percent increase in
average U.S. retail electricity rates.
The MIT study notes that absent a value for carbon there is no
economic reason from the firm's perspective to employ CCS outside niche
markets like enhanced oil recovery. However, the study does not
demonstrate, or even argue, that a prompt deployment program would
result in economically infeasible impacts on electricity prices. The
added costs of CCS therefore do not constitute an argument that prompt
deployment for new capacity now in the planning pipeline would be
economically infeasible.
Regulations Needed for CCS
A regulatory framework is absolutely necessary to assure that CCS
does not pose any significant risk to human health or the environment,
to assure it is performed to high standards, and to enable the
widespread adoption of the technology.
The MIT study clearly calls for such a framework to be developed,
and should be commended for doing so:
An explicit and rigorous regulatory process that has public
and political support is prerequisite for implementation of
carbon sequestration on a large scale. This regulatory process
must resolve issues associated with the definition of property
rights, liability, site licensing and monitoring, ownership,
compensation arrangements and other institutional and legal
considerations. Regulatory protocols need to be defined for
sequestration projects including site selection, injection
operation, and eventual transfer of custody to public
authorities after a period of successful operation.[ . . . ]
These issues should be addressed with far more urgency than is
evidenced today (Executive Summary, p. xii).
With concerted effort by an agency with jurisdiction and
capability, which we believe is the U.S. EPA, a regulatory framework
for CCS can be in place in a few years. For new plants that are closer
to construction, there will likely be a need for interim requirements
and those should be set forth without further delay.
POLICIES TO PROMOTE CCS
The MIT study recommends government grants to support installation
of CO<INF>2</INF> capture at several new coal plants (p. 100).
Although this policy recommendation may make sense as a complement
to a requirement for new coal plants to use CCS, by itself it is
inadequate and likely to lead to wasted taxpayer expenditures.
Research and development funding as well as direct government
subsidies can be useful in assisting a technology's widespread
adoption, but cannot substitute for the incentive that a genuine
commercial market for CO<INF>2</INF> capture and storage systems will
provide to the private sector. Government assistance needs to go hand
in hand with policies that will make the adoption of low-carbon
generation technologies mandatory. The amounts of capital that the
private sector can spend to optimize CCS methods will almost certainly
always dwarf what government will provide with taxpayer dollars. To
mobilize those private sector dollars, Congress needs a stimulus more
compelling than the offer of modest handouts for research.
We have a model that works: intelligently designed policies to
limit emissions cause firms to invest money to find better and less
expensive ways to prevent or capture emissions.
Where a technology is already competitive with other emission
control techniques, for example, sulfur dioxide scrubbers, a cap and
trade program like that enacted by Congress in 1990, can result in more
rapid deployment, improvements in performance, and reductions in costs.
However, a CO<INF>2</INF> cap and trade program by itself may not
result in deployment of CCS systems as rapidly as we need. Many new
coal plant design decisions are being made literally today. Depending
on the pace of required reductions under an emissions cap, a firm may
decide to build a conventional coal plant and purchase credits from the
cap and trade market rather than applying CCS systems to the plant.
Although this may appear to be economically rational in the short term,
it is likely to lead to higher costs of CO<INF>2</INF> control in the
mid and longer term if substantial amounts of new conventional coal
construction leads to ballooning demand for CO<INF>2</INF> credits.
Moreover, delaying the start of CCS until a cap and trade system
price is high enough to produce these investments delays the broad
demonstration of the technology that the United States and other
countries need if, as seems likely, we continue substantial use of
coal. The more affordable CCS becomes, the more widespread its use will
be throughout the world, including in rapidly growing economies like
China and India. But the learning and cost reductions for CCS that are
desirable will come only from the experience gained by building and
operating the initial commercial plants. The longer we wait to ramp up
this experience, the longer we will wait to see CCS deployed here and
in countries like China.
Accordingly, we believe the best policy package is a hybrid program
that combines the breadth and flexibility of a cap and trade program
with well-designed performance measures focused on key technologies
like CCS. One such performance measure is a CO<INF>2</INF> emissions
standard that applies to new power investments. California enacted such
a measure in SB1368 in 2006. It requires new investments for sale of
power in California to meet a performance standard that is achievable
by coal with a moderate amount of CO<INF>2</INF> capture.
Another approach is a low-carbon generation obligation for coal-
based power. Similar in concept to a renewable performance standard,
the low-carbon generation obligation requires an initially small
fraction of sales from coal-based power to meet a CO<INF>2</INF>
performance standard that is achievable with CCS. The required fraction
of sales would increase gradually over time and the obligation would be
tradable. Thus, a coal-based generating firm could meet the requirement
by building a plant with CCS, by purchasing power generated by another
source that meets the standard, or by purchasing credits from those who
build such plants. This approach has the advantage of speeding the
deployment of CCS while avoiding the ``first mover penalty.'' Instead
of causing the first builder of a commercial coal plant with CCS to
bear all of the incremental costs, the tradable low-carbon generation
obligation would spread those costs over the entire coal-based
generation system. The builder of the first unit would achieve far more
hours of low-carbon generation than required and would sell the credits
to other firms that needed credits to comply. These credit sales would
finance the incremental costs of these early units. This approach
provides the coal-based power industry with the experience with a
technology that it knows is needed to reconcile coal use and climate
protection and does it without sticker shock.
MISINTERPRETATIONS OF THE MIT REPORT
Some have misread the MIT to suggest that additional research and
development is required before we could apply CCS to coal plants now
being designed. For example, a recent press report cited a leaked draft
of the report's executive summary as follows: ``[the study] concludes
in a draft version that it is not clear which technology--the so-called
integrated gasification combined cycle or pulverized coal--will allow
for the easiest carbon capture, because so much engineering work
remains to be done''. This reference confuses two different issues: is
CCS demonstrated today versus which approach to CCS may ultimately
prove to be most effective and economical. As discussed above, the MIT
report makes clear that demonstrated CCS methods exist today although
private firms will not employ them absent a subsidy or a CO<INF>2</INF>
emissions performance requirement.
The report urges that no single approach like IGCC should be
anointed as the ultimate best system for use of coal with CCS. Adoption
of policies that set a CO<INF>2</INF> performance standard now for new
plants will not anoint IGCC as the technological winner since
alternative approaches can be employed when they are ready. If the
alternatives prove superior to IGCC and pre-combustion capture, the
market will reward them accordingly. Setting the policy now will create
the market that will stimulate competition among competing approaches.
Some industry developers who are seeking approval to build
conventional CO<INF>2</INF> emitting coal plants already have misstated
the report's conclusions as justifying their attempts to build new
plants without CCS. For example, Sithe Global Power LLC, the developer
of the proposed Desert Rock power plant, in a January 2007 brochure,
cites the then unreleased report to imply that the report raises
questions about ``the viability of sequestration technologies''.
Even if carbon capture technologies become available and
affordable, many unanswered questions remain about the
viability and impacts of sequestering carbon dioxide. While
some technologies in the oil and gas industries use carbon
sequestration today for additional development, no long-term
storage data is currently available. An upcoming study from
energy experts at the Massachusetts Institute of Technology
(MIT) to be released in February 2007 is likely to cast further
doubt on the viability of sequestration technologies. While
Sithe Global and other developers believe the future is
promising, carbon sequestration issues still remain a largely
unknown factor because of these concerns.
In fact, the MIT report states the authors' ``confidence that
large-scale CO<INF>2</INF> injection projects can be operated safely,''
even though current modeling, monitoring, and verification methods do
not resolve all relevant technical issues. (Executive Summary, p. xii).
Chapter 4 of the report, which discusses geologic storage in detail,
states that
<bullet> geologic trapping mechanisms ``are understood well enough
today to trust estimates'' made by the IPCC that more than 99
percent of injected CO<INF>2</INF> will likely be retained for
at least 1,000 years; and
<bullet> ``no knowledge gaps today appear to cast doubt on the
fundamental likelihood of the feasibility of CCS.'' (p. 44)
CONCLUSION: TIME IS OF THE ESSENCE
The study does not examine in any detail the key issue surrounding
new coal plant construction: would it be better to vent CO<INF>2</INF>
from new coal plants in the next decade or two rather than capture it.
The report notes that if significant new coal capacity without CCS is
built the costs of CO<INF>2</INF> control programs would increase for
all. Another outcome, not discussed in the report, is that such new
coal investments will be cited by their owners as reasons to delay the
pace of programs to limit CO<INF>2</INF> emissions. That result would
foreclose options to stabilize CO<INF>2</INF> concentrations at
adequately protective levels.
The report does state that there is no reason for Congress to delay
action to limit CO<INF>2</INF> emissions during the CCS demonstration
program recommended by the study authors. There are ample reasons to
avoid any such delay. If CO<INF>2</INF> performance standards for U.S.
coal plants were to be delayed until after the completion of the three
to five recommended large-scale sequestration demonstrations, and other
countries followed suit, it is likely that broad CCS would not happen
until another 20 years of coal capacity had been constructed--an amount
of new capacity about as large as current global coal capacity. If that
amount of sunk investment in non-capture coal capacity is made, either
CO<INF>2</INF> control programs will be much more costly, as the study
notes, or worse, politicians will simply fail to put in place effective
programs to protect against a climate catastrophe.
The die is being cast for that catastrophe today, not decades from
now. Decisions being made today in corporate board rooms, government
ministries, and congressional hearing rooms are determining how the
next coal-fired power plants will be designed and operated. Power plant
investments are enormous in scale, more than $1 billion per plant, and
plants built today will operate for 60 years or more. The International
Energy Agency (IEA) forecasts that more than $5 trillion will be spent
globally on new power plants in the next 25 years. Under IEA's
forecasts, more than 1,800GW of new coal plants will be built between
now and 2030--capacity equivalent to 3000 large coal plants, or an
average of ten new coal plants every month for the next quarter
century. This new capacity amounts to 1.5 times the total of all the
coal plants operating in the world today.
The astounding fact is that under IEA's forecast, 7 out of every 10
coal plants that will be operating in 2030 don't exist today. That fact
presents a huge opportunity--many of these coal plants will not need to
be built if we invest more in efficiency; additional numbers of these
coal plants can be replaced with clean, renewable alternative power
sources; and for the remainder, we can build them to capture their
CO<INF>2</INF>, instead of building them the way our grandfathers built
them.
If all 3,000 of the next wave of coal plants are built with no
CO<INF>2</INF> controls, their lifetime emissions will impose an
enormous pollution lien on our children and grandchildren. Over a
projected 60-year life these plants would likely emit 750 billion tons
of CO<INF>2</INF>, a total, from just 25 years of investment decisions,
that is 30 percent greater than the total CO<INF>2</INF> emissions from
all previous human use of coal.
The MIT report concludes that retrofits of plants built without CCS
are not likely: ``[ . . . ], retrofitting an existing coal-fired plant
originally designed to operate without carbon capture will require
major technical modification, regardless of whether the technology is
SCPC or IGCC.'' (Executive Summary, p. xiv)
The IPCC stated in February 2007 that the warming of the plant's
climate system is ``unequivocal'', and that it is attributable to
anthropogenic greenhouse gas emissions with more than 90 percent
probability. Meanwhile, in its April 2007 release, the Panel reportedly
will warn of starvation, water shortages, disease, floods, extinctions,
and increased death rates, claiming that ``[c]hanges in climate are now
affecting physical and biological systems on every continent.'' We must
begin decreasing our greenhouse gas emissions now. The modest costs of
deploying CCS today are completely overshadowed by the costs and risks
of not doing so.
While the authors of the MIT report decline to say so directly, the
information presented in the report supports a straightforward policy
recommendation: Congress should require planned new coal plants in the
United States to employ CCS without further delay.
The Chairman. Thank you very much. Thank you all.
We'll do 5-minute rounds here, and let me start and ask a
few questions.
Let me ask Professor Deutch and Professor Moniz: on the
issue of whether or not there's going to be the capacity to
actually capture and sequester--the capturing, I guess, is not
the tough part, it's the sequestering that's more difficult, as
I understand it. We have, as you said, Professor Deutch, 80 new
coal plants constructed in China last year. We've got lots of
coal plants ourselves, there are lots of coal plants around the
world. Is it realistic to think that once this technology is
perfected and commercialized on a large scale, that we then
have the capacity, and geologic formations, to really sequester
all of this carbon? It just strikes me that you've got a lot of
carbon going into the atmosphere now, and I'm just wondering if
all of that's going to be going into geologic formations in the
future, and do we have enough of them?
Mr. Deutch. Mr. Chairman, the first point is, that we
believe there is a vast capacity in deep saline aquifers in the
United States for the foreseeable storage of this
CO<INF>2</INF> material. One of the recommendations of our
study is, however, to do a bottom-up review, in this country,
and elsewhere in the world, to really tie down what these
capacities are. Our expectation is that the same will be found
for China. India, on the other hand, has less-capable geology.
But, we do think in the United States that storage capacity
exists, and through some accidental piece of good fortune,
which I don't usually encounter, the places where we have coal
plants, the places where these deep saline aquifers exist, are
more or less close by. So, it's not vast distances.
The second point I would like to make is that I don't think
it is only the process of injection and monitoring the storage
cites in this report. We need practical experience with the
capture part, where we really haven't done any work on capture
from a coal plant. We need experience with the pressurization
and transportation, and we need the coal-integrated system put
together, in a regulatory framework. That practical experience
is important.
What about the pace? Yes, it's a huge scale, as Ernie
emphasized; yes, it will take time to make those investments;
but I want to remind you that since the Congress put in new
source performance standards on criteria pollutants, the coal
industry and the utilities have shown a tremendous capacity to
meet those more stringent environmental requirements. I am
convinced that given time, and given the support, that the coal
industry will gradually be able to introduce this into the
operation of the United States.
The Chairman. Let me just to try to better understand what
people are recommending going forward here.
As I understand, in the MIT Report that you've described,
the recommendation there is that we should immediately, or as
soon as we can, change the law or provide that Federal
assistance will only go to projects that incorporate this
capture and sequestration technology, coal projects.
Mr. Deutch. That's correct, Mr. Chairman, but let me
emphasize, that we think it should be an array of projects.
The Chairman. Right.
Mr. Deutch. It should not just be IGCC----
The Chairman. Right, it----
Mr. Deutch. It should be all sorts of projects.
The Chairman. Yes, use all possible technologies, but use
capture and sequestration.
Mr. Deutch. Each one of them would have to have capture and
sequestration----
The Chairman. Right.
Mr. Deutch [continuing]. Integrated in their design and
operation.
The Chairman. That's your recommendation for what we do
right now.
Now, I understand that we've got a different set of ideas,
Dr. Hannegan. You said that EPRI's view was that beginning in
2020, you would anticipate we would have in place a requirement
that carbon capture and sequestration be used if additional
coal plants are to be constructed, as I understood it. Is that
right?
Mr. Hannegan. Actually, Mr. Chairman, it was one assumption
that we made under the scenario here to the right. It was not--
EPRI is a 501(c)(3) non-profit, it doesn't make policy
recommendations per se--it was just one element of assuming, as
would be assumed in the case of the MIT study, that if we
invest substantially in the carbon capture and storage
technologies, and we work on deploying them and developing them
at a commercial scale, our technical work shows that the
earliest that they could be within the range of economic
assistance to be commercializable on their own, is in the 2020
timeframe. Once you start from moving at the current pilot
scale that we're seeing today, through to some of the new
announcements by AEP and others of a 200-megawatt project, just
within the last week, to by the time you get to a commercial
scale where you've tested and run that, and you develop the
supporting regulatory structures, the earliest that we see it
could be widespread, in terms of its availability, is by 2020.
Let me say one other thing, and that is: we disagree with
MIT's view that you should only limit support to those projects
that have carbon capture and storage built in. Those certainly
should be preferred, because CO<INF>2</INF> capture and storage
is a necessary option, as we've demonstrated going forward, but
there are issues associated with so-called Ultra Super Critical
Pulverized Coal Plants, which are pushing temperatures and
pressures that we've never done in the real world. Also with
respect to IGCC at scale--I mentioned in my testimony--there's
a level of sophistication and integration that hasn't been
demonstrated above the two pilot programs at DOE.
The Chairman. My time has run out, maybe I'll come back and
ask some additional questions in the second round.
Senator Domenici, did you want to go ahead with a
statement, or questions, or did you want me to skip over and
call someone else? What's your preference?
Senator Domenici. I'm going to do what's most accommodating
to you all.
The Chairman. I think we're happy to hear your statement
and questions at this point, if you're ready.
Senator Domenici. I won't have any questions, but I do have
a statement.
STATEMENT OF HON. PETE V. DOMENICI, U.S. SENATOR FROM NEW
MEXICO
Senator Domenici. First of all, I don't know what it is,
Senator Bingaman, I don't get to see these two guys--Deutch and
Moniz very often. One would think that they are actually hiding
out in some foreign country and just show up every now and then
and peek at us, because they look so different. I mean, they're
getting grey, bald-headed----
[Laughter.]
Senator Domenici. I mean, the whole thing, huh?
Mr. Moniz. Shall we go?
Senator Domenici. Do you guys work together or at different
places?
Mr. Deutch. Senator, I remember how you looked 30 years
ago, too.
[Laughter.]
Senator Domenici. Well, Senator Bingaman tells me I still
look pretty good.
[Laughter.]
Senator Domenici. Anyway, I have been waiting for an
occasion to express myself the way I'm going to here in just a
little bit, and I thought it might be good to do it today,
where you guys could come down hard on me, and when you go
outside afterwards, you can say, ``That's really bad, what he
said,'' but----
First, I want to thank Senator Bingaman for scheduling this
hearing on this very important topic. Make no mistake about it:
we must recognize that the use of American coal in electricity
generation is essential to our Nation's energy independence and
security. At present, half of our electricity is generated from
coal, and the EIA estimates that by 2030, 57 percent of our
electricity will be derived from coal. Nobody can be sitting
around that's worried about the products that come from burning
coal, and be cavalier about that reality.
With these numbers in mind, it is clear that for us to make
progress, we must make significant advancements in clean coal
technology. I believe it would be unwise for the United States
to move forward without also working to get China and India as
full partners in the capture and sequestration of carbon
dioxide. That includes getting their financial support for
these efforts.
When the technology is proven at the scale needed to
capture and sequester carbon dioxide, it will be critical for
them to fully participate in the implementation of that
technology. To do otherwise could negatively impact the U.S.
economy and our global competitiveness. I don't think one can
see that any other way.
The United States has led the effort, but unless China, and
the other coal-using countries participate in this work with
both human capital and financial resources, it is unlikely that
we will be able to address global climate change in a
reasonable, fair and effective manner.
China controls the world's third-largest coal reserves, and
is expected to account for more than half of the global growth
in coal over the next 25 years. I want to read that again.
China controls the world's third-largest coal reserves, and is
expected to account for more than half the global growth in
coal supply and demand over the next 25 years.
In approximately 2 years, China will pass us as the world's
leader in carbon dioxide emissions. By 2025, China will emit
twice as much carbon dioxide as the United States. Remember, it
is not American Climate Change we are facing, it is Global
Climate Change, and it requires global cooperation and
participation for a global solution.
I expect that Professors Deutch and Moniz will tell us that
it makes a significant difference in reducing the world's
carbon emissions, but other major coal-using and -producing
countries have to participate in finding solutions. I find The
Future of Coal Report interesting, and I'm ready to support
major research, development, and development projects in this
area. It is clear that we need to gain a better understanding
of how to best enhance the efficiency of our future, and our
future coal-fired power plants, to reduce carbon dioxide
emissions.
We also need to better understand how to best capture and
sequester carbon, and to deal with the technological,
economical, and potential infrastructure and liability
challenges that we face in large-scale carbon sequestration.
All of these are issues that the MIT Report can help us
better understand. Having the answer to these questions will be
important so we don't put our country at economic risk or at
competitive disadvantage.
I believe the Report does a good job of pointing out many
of the issues that need to be addressed to help Congress
thoughtfully address coal and its future. I thank the Chairman
for holding the hearing. I look forward to working with him and
others as we move forward in a very, very formidable task ahead
of us.
Thank you very much.
The Chairman. Professor Deutch, did you want to respond?
Mr. Deutch. Thank you very much, Mr. Chairman, I'll be very
brief.
Senator, in my opening remarks I made it very clear, and
the report is quite clear, that you're quite right, this is a
global problem, and if there's not a way of finding the large,
emerging economies, like India and China, have them constrain
their CO<INF>2</INF> emissions, climate change doesn't get
better. It is a judgment question on which I have my own view--
very, very great reservations about: should the United States
or Europe or the developed world, in general, go forward--when
should it go forward?--unless you have it locked up tight when
the emerging economies will go forward. We have some
information about what would happen if there was a lag-time.
You must find a way to lock up the emerging economies on this
question as well, or else you're only going to be paying money,
and not improving the climate.
The Chairman. Senator Bunning, why don't you go ahead?
Senator Bunning. Thank you very much, Mr. Chairman. Thank
you all for being here. Since you have two of the largest coal-
producing States in the United States here represented in
Senator Thomas and myself--Kentucky and Wyoming--we have a deep
and abiding interest in what's going on with coal. We
appreciate your report.
Your report emphasizes demonstration of new technologies.
One of the technologies I believe that is most promising is
coal-to-liquid fuels. I have introduced legislation to provide
Government incentives in the form of tax credits and planning
loans for the first few coal-to-liquid facilities. I believe
these plants, aside from easing our dependence on foreign oil,
will help push gas, coal gasification technology into the
mainstream, much like that which has been done in South Africa.
Would you support this kind of a demonstration program?
Mr. Deutch. Senator, our Report and our comments here are
quite clear that synthetic fuels--gases or liquids--would
certainly be candidates for us in these early demonstration
projects, but with carbon capture----
Senator Bunning. Carbon sequestration--oh, yes.
Mr. Deutch. I might say in this regard that there's an
advantage----
Senator Bunning. We have that in the bill.
Mr. Deutch. But, it's an advantage with synthetic liquids,
because you're making oxygen in the--you have to make the
oxygen to do the synthetic fuel, so you don't have that extra
cost that you have in electricity generation.
Senator Bunning. I'm also one of the co-sponsors of the
bill for the other program where we find out how we can store
and place the carbon that we sequester.
Mr. Deutch. Yes, Senator.
Senator Bunning. I have a question for, is it Don or Dan?
Mr. Lashof. Dan.
Senator Bunning. I know the NRDC has opposed coal-to-liquid
technology, but I see your organization supports coal
gasification for electricity. Is that correct, or incorrect?
Mr. Lashof. Well, Senator, we believe that carbon capture
and storage is a critical technology, if coal is going to be a
viable energy technology in the electric sector, and we support
Government funding for carbon capture and disposal associated
with electricity generation.
The problem we have with coal-to-liquids is that, when
we're looking at the need to reduce the CO<INF>2</INF>
emissions that cause global warming by, on the order of 80
percent over the next 50 years, we need to be moving from
transportation fuels that rely on petroleum to fuels that have
fundamentally lower greenhouse gas emissions over the fuel
cycle, from well to wheels.
The problem with coal-to-liquids is, even with carbon
capture and storage, you still end up, at best, with a fuel
that has about the same emissions, or a little bit higher
emissions, than from conventional gasoline. The reason for that
is that the tailpipe emissions are basically the same, you're
producing a hydrocarbon fuel that is essentially equivalent to
diesel.
Senator Bunning. The Air Force would disagree with you.
Mr. Lashof. No, I don't think so. I know the Air Force is
very interested in using Fischer-Tropes liquids derived from
coal in their jets, and the emissions from the jets would be
about the same as--their CO<INF>2</INF> emissions would be
essentially identical----
Senator Bunning. They have testified before me, or have
come to visit with me, and that is not their position.
Mr. Lashof. Well, and----
Senator Bunning. Because the fuel burns cooler, it's better
for the engines, and with a mixture of some type of petroleum,
it doesn't emit near the emissions that a regular jet would
emit if it used petroleum-based fuel.
Mr. Lashof. Well, I'd be happy to review their testimony
and----
Senator Bunning. That's all right.
Mr. Lashof [continuing]. Further to the record, but the, my
understanding----
Senator Bunning. You ought to visit with them.
Mr. Lashof. Yes, well, we've talked to them, and I know
that they also say that we should have carbon capture and
storage with that technology.
Senator Bunning. Yes, they have.
Mr. Lashof. I think that's very helpful.
With respect, Senator, I think that the bill, as it was
introduced, allows for support for the carbon capture and
disposal portion, but does not require that that be
incorporated----
Senator Bunning. Well, we've changed it to require it.
Mr. Lashof. I think that's definitely a step in the right
direction. I certainly appreciate that.
Senator Bunning. Well, we appreciate all of you being here.
My time is expired, Mr. Chairman, go right ahead.
The Chairman. Thank you very much.
Senator Salazar.
Senator Salazar. Thank you very much, Chairman Bingaman,
for holding this very important hearing. I would just make a
comment that I, too, come from a State that is a coal-producing
State--Colorado--and I know that on our Western slope, we
produce some of the high-quality coal that is very important to
our economy. We share that same interest with Wyoming and
Kentucky and other States that are coal-producing States.
I also think that inevitably what's going to happen is we
will continue to grow in how much coal we ultimately use,
simply because of the fact that it is so available, and I think
your report shows that.
I would ask you to comment, and I know you did this on your
report--in terms of the possibilities that we have with respect
to both IGCC, as well as with respect to carbon sequestration.
This committee has been very supportive of moving forward with
demonstration projects, IGCC--I know there are a number of
projects out there that are already up and running, and a
number that are being planned.
I also would like you to comment on how it is that we can
move the ball further forward, in terms of carbon
sequestration. There's legislation which Senator Bunning, and
I, and others on this committee are moving forward with to try
to get a good assessment of the geologic formations of the
country, so that we can determine where the best places are for
us to be able to do carbon sequestration.
So, I'd like, really, a comment from the panel on two
issues--one, how far along are we on IGCC, and is there
anything that we can do here in the Congress to try to speed up
that effort for the United States, and two, what more can we do
in terms of the carbon sequestration programs that we've talked
about?
Mr. Moniz. Senator Salazar, first of all, I'd like to
respond as a person who spends time on the banks of the
Conejos, in your part of the country.
Senator Salazar. I will say, if I was to ask anybody here
where that river is, you and I probably are the only ones who
know where that river is.
Mr. Moniz. Twenty-five miles west of Antonito.
Senator Salazar. It's a beautiful river.
Mr. Moniz. The first question on IGCC: first, I do want to
repeat something that my colleague, John Deutch said earlier,
and that is that we feel it's very important to explore
alternative technologies, but with what we know today, and with
some more experience, IGCC right now does look to be the lowest
cost technology with capture, so the idea of moving forward
with a major integrated demonstration of IGCC and carbon
capture is one we endorse.
We would add, in terms of what the Congress can do--we
would note that the current plans with FutureGen are moving
along too slowly, and I believe the Congress should provide
clarity that the object of that, and other, large-scale,
integrated demonstrations, is to demonstrate commercial
viability and one should guide the project execution along
those lines. There are various issues, in terms of reliance, on
historical formulas, for cost-sharing, that I think deserve re-
examination, but that would certainly help that go forward,
while one also, hopefully, plans for a broader portfolio of
integrated demonstration projects with capture, with other
technologies.
For example, the issues of retro-fitting pulverized coal
plants with oxygen firing could be a very interesting and
important demonstration, given our large installed base.
Senator Salazar. Let me ask you, just in terms of moving
forward to the point where we have commercial viability with
respect to these demonstration projects: I know that there are
a number of demonstration projects out there, including one
that is being planned for Colorado, that I very much support.
From your point of view, are those demonstration projects
headed in the direction that we will be able to examine the
commercial viability of IGCC?
Mr. Moniz. Well, I think first of all, of course, there is
no operating large-scale coal plant with carbon capture and
sequestration. We believe that this is a technical challenge,
to demonstrate that integrated system of IGCC with capture. We
believe there should be public funding to support it. The
question will be in the practical implementation: is the
project going to be executed in the way that provides, if you
like, high-fidelity information, let's say, to the investment
community?
Senator Salazar. Which is the best of the IGCC
demonstration projects currently underway?
Mr. Moniz. Well, I would not cast judgment on that----
Senator Salazar. Give me two or three that you would
recommend that some of us might go----
Mr. Moniz. If we talk about FutureGen as the obvious
candidate right now, with Federal support, we would say that we
need to have fewer chefs in the kitchen--streamline it, and
focus it on commercial viability. There's some very good people
involved in that project--I mean, Mike Mudd, who is heading
that, is a terrific person. I believe we have to, for example,
make sure we're not falling into a trap of lots of Federal
procurement rules, et cetera, that can compromise the value of
the commercial information.
We can discuss that in more detail. If I may just answer
briefly, the sequestration part--I'd just say that I think in
our report, I believe we provide the elements of an aggressive,
appropriate road map to really resolve the key issues of
sequestration, including site characterization, monitoring,
verification, modeling, support for a regulatory regime, and
demonstration of practical implementation, on about a 10-year
time period with, what I would consider to be relatively modest
funds. That, I think, is something that, on this panel, we have
all agreed with. It calls for a relatively small number of
focused projects, at well-characterized sites.
Senator Salazar. Thank you, Professor.
My time is up.
Mr. Hannegan. Mr. Chairman, if I may offer a slightly
different view to the Senator's question regarding IGCC, we at
EPRI, the Electric Power Research Institute, published a study
just within the last year for the city of San Antonio that
looked at the comparison in cost between an IGCC using Powder
River Basin coal, against a supercritical pulverized coal
plant, and we actually found that the costs for each are
comparable within the margin of uncertainty.
So, one of the messages out of that study, which I'd be
happy to add to the record, if that's desirable, is that we
ought not to get caught up just necessarily on IGCC when it
comes to carbon capture and storage. That in some cases,
particularly for lignite coals, pulverized coal technologies
are actually more affordable and just as effective in terms of
creating a CO<INF>2</INF> stream that can be scrubbed out and
stored. The choice of a technology between IGCC, oxy-fuel, and
pulverized coal is really a horse race. In that IGCC technology
itself is not quite mature, but capturing the CO<INF>2</INF>
is. Pulverized coal technology is mature, but capturing the
CO<INF>2</INF> is not. So there are different aspects of those
problems that should both be advanced as part of a
comprehensive research program.
Senator Salazar. All right. Thank you.
The Chairman. Senator Corker.
Senator Corker. Mr. Chairman, thank you for this testimony,
and thank all of you for being here. You know, our State, the
State of Tennessee has had companies who have shown tremendous
leadership in clean coal technologies, and we're obviously very
supportive of that, and hope it'll continue.
As I listen to the complexities that are going to be with
us in the future--capture and sequestration, and just the
unknowns that we have in that regard--and then we talk about
the projected percentage of electricity that's going to be
generated through coal, which is already a huge factor here in
our country now--as you look at these additional requirements
and complications, if you will, to make sure that it's
environmentally friendly, how does it compare with this
additional expense--sequestration and capture--to nuclear
power?
Mr. Deutch. Senator, if we had a carbon charge, or an
additional price for the capture and sequestration as we
estimate it, it would make nuclear power--if it works as well
as it's supposed to--cheaper, and our expectation would be in
the presence of a carbon charge, nuclear power would become
more economical than coal with carbon capture as a base load
generation source.
Nevertheless, the amount of nuclear power that will be used
here and elsewhere in the world is not limitless, and will be
both, for many reasons, will be only part of the mix, and so
coal will still have a role to play.
Senator Corker. What are some of the reasons that it won't
be more expensive? The use of nuclear, after all this is done,
and if, in fact there's some policy put in place to limit
carbon--why is nuclear not going to be more pervasive?
Mr. Deutch. In 2003, we did a similar study at MIT in the
future of nuclear power, and we looked very, very carefully at
the rate at which nuclear power might penetrate between now and
mid-century, that's for the next 50 years, we didn't try and go
beyond that.
There are a variety of reasons--including the length of
time it takes to construct these plants, the kind of skills
that are available for doing it, which would, in our judgment,
limit the amount of nuclear power, you might say, to the most
favorable circumstances to about a factor of three between now
and mid-century. That's a great expansion, that would be an
expansion from roughly 100 big-scale plants in the United
States, to 300, and we think that that's about as much as you
can expect from nuclear power. We'd be delighted if it was
more, but right now, we're still just talking about adding that
first nuclear power plant.
I might mention in the case of China, which is very
aggressively pushing nuclear power, they're expecting, I think,
about 20 plants over the next 10 years; meanwhile they're
putting in 80 coal plants a year. So, I think we would like to
move forward on nuclear, but we shouldn't overestimate the
speed at which it's going to happen. We still need to have
progress on waste management, sir. We still have to assure that
everybody has the highest safety standards. We have to assure
that the non-proliferation considerations are kept in
worldwide.
So, we're all for nuclear power in my world, but I think we
have to be realistic about how fast it can come in.
Mr. Hannegan. Senator, I actually have a couple of charts
over here that go directly to your question of competitiveness
between the two fuels.
We actually did a study about a year ago looking at the
different generation options that face a utility CEO when they
start thinking about siting their next plant. In fact, the
premise of your question--if I could get the other one, the
2010 one, just put that up--the chart that's being shown now,
along the bottom axis, the cost of carbon moves from zero
dollars, where it is today, to $10, $20, $30 on over to $50,
and you can see how--for each of the colored curves on the
chart, the costs of factoring in carbon constraints into those
technologies, change the levelized cost of electricity and
simply divide by 10 there to get a sense of cents per kilowatt
hour.
We show that once you get even a modest carbon charge on
the coal technologies--pulverized coal in red, and IGCC in sort
of the purple--that nuclear line, which is the flat line at
about 5.5 cents per kilowatt hour, really begins to be the most
economic.
That raises a point that I wanted to make, with respect to
my colleagues' comment that carbon capture and storage is here
and you can do it today. You certainly can, and if you do it at
$30 per ton, which is the figure in the MIT study, you see
quickly that the red and the purple line curves are even above
natural gas combined cycle at $6 per million cubic feet.
They're certainly beginning to become comparable with wind
power at today's technologies. So there's no guarantee that if
we were to start pricing carbon at that level, people would
necessarily continue to build coal. They might actually fuel
switch to other things, and I think you have to take that into
account.
The second chart that I have here, actually reflects what
we think these costs will look like in 10 or 15 years' time. If
you invest in an aggress of about $2 billion per year in
addition to over what you see today, research program that
develops and deploys these new technologies, and in contrast to
the previous chart, you see how all of those pixie sticks--if
you will--collapse onto the relatively the same low-cost, low-
carbon portfolio and that's even including the cost of capture.
This just goes to our main point, that if you allow time
for the RD&D to go forward, as the MIT report describes, and
you don't force the implementation of CO<INF>2</INF> capture
and storage immediately, you'll actually get more emissions
reductions later on, at a lower cost, and that will be better
for the economy.
Mr. Moniz. May I just add one point, Senator Corker? That
is that I agree with what Bryan has said, but should also be
cautious that, for example, these projections of, let's say,
nuclear power costs, do have assumptions built in about, for
example, a reduction of capital costs that has not been
demonstrated, as well as issues about how it's financed. So,
really our view is, I think, well as John said, our view is
that we're going to have multiple technologies deployed, they
will be site-specific, regulatory-specific, choices that will
affect cost. These are going to be--what we see today--they're
all going to be in the mix, if we can solve the key problems.
The Chairman. Senator Thomas.
Senator Thomas. Thank you, Mr. Chairman.
Thank you, gentlemen. I certainly appreciate your work on
this.
Mr. Deutch and Mr. Moniz. Your report calls for three to
five large demonstration power plants, and this and that. The
Energy Bill we passed in section 413 calls for ones in the
West. Do you share our opinion, on the advantage of mine-mouth
generation, and how do you think these technologies would work
in the West?
Mr. Deutch. We're certain that these technologies, again
choosing from the menu of available technologies, would work in
the West. There's a lot to be said for mine-mouth facilities.
Once again, we're not trying to specify technologies, we're
not trying to specify locations, we're saying that the key
thing is, to make coal usable, if there are carbon constraints,
and the key step to take is to do the sequestration piece. The
kind of technology you'd use on Western coals or at the mine-
mouth, we don't know how that's going to turn out.
Senator Thomas. No.
Mr. Deutch. It should go forward as the markets set.
Senator Thomas. Yes, well, the market's currently setting
the price of shipping coal to the East more than the value of
the coal. So, that gets a little difficult.
You emphasized the importance of not picking technological
winners and losers. But, you recommend no Federal assistance be
provided unless it has carbon sequestration involved. There are
some technologies that are closer to commercial availability
rather than that. Isn't your study exactly warning the
Government against moving forward with these other
technologies, as well?
Mr. Deutch. No, Senator, I think that the point is that we
don't believe that the taxpayer dollars should be used to
subsidize technologies which are commercial, or very close to
commercial. We believe that the technologies without carbon-
captured sequestration, such as IGCC without carbon capture, or
even supercritical pulverized coal are sufficiently close to
commercialization, that private industry and private investors
will go forward with those projects without Government
assistance, assuming that the regulatory uncertainty of the
carbon charge is not present.
But there's no amount of money that you can spend of the
taxpayer to get rid of that regulatory uncertainty in their
mind. Where we do see Government assistance justified is when
there is technology uncertainty; you have to show and
demonstrate its technical performance, its economic cost, and
environmental acceptability. Then we think the assistance----
Senator Thomas. I think there's a real question, and I've
talked about this at the White House and this and that. I don't
think anyone quarrels with the notion that down the road we're
going to see some alternative sources and all these kinds of
things. But that's a ways down the road. We're going to have
10, 15 years of demand for energy.
So, it seems to me we have to sort of balance between
encouraging and giving incentives to the production of power
that we'll have in this shorter term, as we wait for the longer
term. We get so wrapped up in research that we won't be able to
turn on the lights, if we aren't careful. Do you agree with
that, Dr. Hannegan?
Mr. Hannegan. Well, there's a certain role for both,
Senator. We see a very valuable role for the Federal Government
to be involved in things that are very much at the pilot scale,
at the ``can we do it'' scale. Then, the role of the public-
private partnerships, like FutureGen, to say, ``OK, we've done
it in the laboratory, now can we do it at the real-world at
some scale, which is not quite commercial, but it's larger than
the bench top?''
Then, the question is, at what point does that partnership
segue way into private-only funding and commercialization of
the technology? I think EPRI's view is slightly different than
that of the MIT report, in that we don't see IGCC and
supercritical pulverized coal technologies, yet, at commercial
scale as reliable and affordable as, you know, I think you
would like them to be for folks on Wall Street not to put a
risk premium on the investments, for State regulators to see
them as the low-cost alternatives when companies come to make
proposals, as they have. They've been turned away in favor of a
tried-and-true technology.
So, I think there's still some barrier there between where
we see those coal technologies today, and where you would want
them to be to call them fully commercializable. I mean, there's
a role for research, but there's also a role for incentives. I
think the Energy Bill got that right.
Mr. Moniz. Senator.
Senator Thomas. I hope so, because there's a demand that's
going to be there.
Yes, sir.
Mr. Moniz. I'm sorry, I just wanted to add a comment. One
is to clarify something which, to make it absolutely clear in
terms of the MIT report, makes it very clear that our statement
about the issue of subsidies, of assistance only for plants
with capture. I just want to emphasize: that applies to
commercial projects or large-scale integration demonstrations.
It certainly does not apply to research and development, which
needs to go across a very broad set of technologies.
Then the issue is one of, frankly, prioritization of what
is not an issue of taxpayers' dollars, and we certainly do not
believe that there are technical grounds for arguing for
additional public subsidy of plants without capture. I remind
you, the taxpayers have paid for development of these
technologies, Tampa Bay, IGCC, etc. So, it's really a question
of--and certainly costing too much is not a valid argument for
public assistance. So, I think we need to be just very hard-
nosed in our prioritization of where these public dollars go.
Senator Thomas. Yes, I understand it's really saying we
have to balance between research in the future and meeting the
needs of the next 5 years, 10 years from now.
Thank you, Mr. Chairman.
The Chairman. Senator Domenici.
Senator Domenici. I just want to depart from what would be
the most directed kinds of questions, to discussion with any of
you about the technology of sequestration.
First, am I right in assuming that large-scale
sequestration, including in the definition that this includes
putting the CO<INF>2</INF> away, permanently? Am I right in
assuming that that is a very difficult technology to achieve,
and that it may be awhile before we can get our hands around
that and get it applied? John Deutch?
Mr. Deutch. Senator, my answer to that would be, no, it is
not a difficult technology. It is, however, extremely demanding
because of the scale of it to implement it successfully and
responsibly and have it work. This is not magnetic fusion. This
is making sure that you have the process in place to capture,
transport, and do it right. So, you need examples of that.
Mr. Moniz. May I add a comment, Senator?
That is that I do think it's important, personally, that we
not think in terms of the word permanent. I mean, permanent is
good, but we should also keep in mind that, you know, one might
have percent, per-century ``leakages.'' Well, that buys us an
enormous amount of time, in terms of the CO<INF>2</INF> budget.
In the 23rd century, we are likely to have a very different set
of options, maybe even fusion, in terms of carbon-free
technology. So, I think it's very important that we not fall
into the trap of thinking that it must be ``proved'' to be
permanent forever.
Mr. Lashof. If I could----
Senator Domenici. Yes.
Mr. Lashof [continuing]. A couple things. All right,
Senator Domenici. You know, I think it's worth noting a couple
things in terms of the way the technology is.
First of all, and we haven't mentioned, the U.S. oil
industry is putting 30 million tons of CO<INF>2</INF> a year
underground right now for enhanced water recovery. They have a
very good track record of safety in doing that over the last 20
or 30 years. Now, they haven't done that with the idea of
keeping the carbon underground permanently, or for a century
time scale, but the incremental monitoring and verification
requirements that are needed to ensure that that CO<INF>2</INF>
is staying underground are not that challenging.
There's also three large-scale CO<INF>2</INF>
sequestration--geologic sequestration projects going around the
world, one Weyburn, Saskatchewan, one in Sleipner, as the
Norway project, and one in Algeria. So, there is, at scale,
some already significant experience. So, in my view, you know--
the oil industry spent 100 years perfecting the technology to
understand those reservoirs and get oil out of the ground. And
what we're really asking them to do is turn their seismic
technology upside down and figure out how to put some
CO<INF>2</INF> back underground.
It's a technically challenging thing to do, but it's not
something that is beyond what we can do, starting right away.
So, I think the way to move forward on this is to get
experience, to actually do this at scale, at commercial plants.
BP for one, is proposing to do this in California with a fully
integrated system, with a power plant that would generate 500
megawatts. It's using petroleum coke, rather than coal, but the
technology is essentially the same.
Mr. Moniz. Senator, I'll be brief. I wish it were as easy
as my colleague from NRDC indicates. We have a handful of
projects that are currently sequestering a million tons per
year, or so, of CO<INF>2</INF>. One 500-megawatt coal-fire
power plant, releases on the order of three to four times that
amount. That's one plant. Over the next 25 years, EIA's
forecast expects to add, I've roughed out some numbers here,
300-gigawatts, so about 600 new coal-fired power plants under
their base forecast. If I take that 4 million tons per year and
I multiply it by 600 plants, I get 2.4 billion tons of carbon
that has to go in, compared to the 30 million that the oil and
gas industry is using today. It's a vastly different order of
magnitude and it's that scale of the challenge which I think is
really daunting in terms of bringing this technology to market.
Senator Domenici. That's how you see it, too?
Mr. Deutch. No, it's not the way I see it. First of all, I
think that the comparison with the EOR, with Enhanced Oil
Recovery, is a poor one for a variety of reasons. The
regulatory requirements for doing EOR injection are done under
the water; it's completely different.
The fact of the matter is, if you look at some of these--
and it's a subject I know a little bit about--these fields have
been crunched up a lot. So while you learn something from these
projects, the fact is you should get no comfort from EOR in
terms of the large scale that we have to anticipate. You get no
comfort because the capacity's not there. Worldwide, you could
do all the EOR, you aren't going to do anything, you're going
to have to use saline aquifers.
The second thing is, one of the best tables in our report
is a report that looks at these three projects--Weyburn,
Sleipner, and In Salah in Algeria--and it says, ``Here's the
instrumentation that is present in those three sites. And, here
is the instrumentation we think would be needed to have a
proper sequestration project.'' They're vastly different,
vastly different. So to get this, the instrumentation to do the
monitoring, just not seismic, it is a lot of other instruments
that you want, and the modeling and simulation to make sure you
know what's going on, it is a demanding job. Since we don't--we
want to make sure we get public confidence that this is working
right, we're going to do it right, and you can not work off of
these things. You've got to do these projects carefully.
Mr. Moniz. That monitoring, that John described, must be
used in these projects to inform the regulatory development.
Mr. Hannegan. Senator, one last point, as hard as this
sounds to go from three projects at 1 million tons each to 2.4
or so billion by 2030, we absolutely have to do this if we're
going to address CO<INF>2</INF> emissions from the electric
power sector in a significant way. It's the largest contributor
in the work that we've done at EPRI, and I don't think anybody
out there disagrees that it's got to play a significant role.
The sooner we're able to prove up these technologies, the
sooner we're able to realize the benefits with respect to
climate change.
Senator Domenici. Thank you very much.
The Chairman. Senator Corker had one final question, and
then we will dismiss the panel and conclude the hearing, but go
right ahead.
Senator Corker. Many of your assumptions--all of your
assumptions, I think--have talked about a carbon charge. You
don't have to worry about winners and losers. We do, but what
is the most efficient way to, if a carbon charge is
implemented, to implement one, the most efficient way to not
have unintended consequences. Many of the cap-and-trade
policies that we look at, you know, they can have a lot of
unintended consequences. What is the most efficient way, in
your estimation, to have a carbon charge that has the desired
outcome?
Mr. Hannegan. Senator, let me be clear about the work that
we've done. We don't make any assumptions in EPRI's analysis
about how the cost comes about. But there is going to,
inevitably, be an extra cost associated with capturing and
storing the CO<INF>2</INF> from a coal-fired power plant
compared to just venting it into the atmosphere. There will
always be a cost, that will be unavoidable. Through technology
we can reduce that cost from about 50 to 80 percent extra
today, down to a much more manageable level and that's what we
think we can do with R&D.
While we didn't envision the kinds of policies that would
get you there, you can choose from a range of things from tax
incentives and loan guarantees and the other, sort of,
assistance that we've seen in the past, to things like a cap-
and-trade program. We at EPRI have done some work looking at--
if you went a certain direction, how would you design it
economically in an optimal sense--but I think that's probably a
topic that deserves a full hearing in and of itself.
Mr. Deutch. Senator, my goofy economist colleagues tell me
that the clear answer to this question is a cap and trade
system. Assuming that you tell me how you're going to allocate
the allowances initially. Having been in that world, I know how
hard that is. There are winners and losers in that and there
are plenty of people I've spoken to who have strong views about
their rights to have allowances and the other guys' rights not
to have allowances. So, that's the first thing.
But, I want to say that we should remember that this is a
global problem and what will work for us is going to be a lot
harder to do in India or China where they don't have an
internal market structure to make this go through. So, we have
to keep in mind exactly the point you make, what works for us
isn't necessarily going to work for the rest of the world,
especially the emerging world, which Senator Domenici quite
points out has to be a player. So, this is a complicated
process.
I, personally, believe for a lot of reasons, that we would
be much better advised to have a tax, rather than a cap-and-
trade system. It might evolve over time into a cap-and-trade
system, but I think your life would be easier if we had a tax,
and in our world.
Mr. Moniz. I would just add a comment that, first of all,
we should stress that the MIT report specifically avoids
talking about how a carbon policy would be implemented, so----
Senator Corker. It keeps you more popular.
Mr. Moniz. However, I will put myself in your colleagues'
camp of certainly feeling that a tax system, a carbon tax
system is more straightforward, more easily implementable. I
would just add one other point. That is, there's a lot of
merit, although it does not resolve, certainly, all of your
distributional problems. Nevertheless, a revenue neutral tax--
--
Mr. Deutch. Yes.
Mr. Moniz [continuing]. Would be the thing to consider. My
personal--this is purely personal--favorites would be that that
revenue neutrality would come from some combination of payroll
taxes and corporate taxes.
Mr. Lashof. Senator, if I can----
The Chairman. Let's take one more view and then we'll----
Mr. Lashof. Senator Bingaman's had days-long workshops on
this topic, so we won't go into great detail. But, I just want
to state, for the record, that my view is that a cap-and-trade
system is the most efficient way to do it, because it puts the
emphasis on where it needs to be, which is the quantity of
global warming pollution going into the atmosphere, which we
need to drive down over time in order to prevent dangerous
global warming.
Certainly, there are issues about the impacts of that, and
who would win and who would lose, and I think those do have to
be carefully considered and addressed through the way in which
the emission allowances are allocated and, probably the most
efficient way to do that is to auction the allowances and use
the revenue from that to potentially reduce other taxes, or to
help put some of this new technology that's needed to meet the
cap, effectively, into the field.
Again, there's, you know, we could spend a long time
talking about how to design that, but I think the basic concept
is, if you want to solve global warming, you need to reduce the
amount of global warming pollution, so, putting a cap on how
much goes into the atmosphere and allowing trading of
allowances is an efficient way to do that.
Mr. Hannegan. Mr. Chairman, if I may make one quick point?
If you do the R&D to get to a point where you've got those
technologies, like we show on the chart over there, you'll
notice those curves are relatively flat. In other words,
they're insensitive to the carbon price that you're charging.
Because they're non-emitting, and so, one of the things I'd
argue is that, ultimately if you're investing in the R&D, how
you choose amongst those technologies--be it coal, wind,
nuclear, what have you--will now become more of a function of
what makes sense for you at your site and for your utilities;
you're making investments in the electric sector. And, some of
the design issues that have come up may, perhaps, be less
important with a robust technology program.
The Chairman. Well, thank you all very much. This is very
useful testimony and we thank you for the report and the, both
reports, the EPRI report as well.
We will conclude the hearing with that. Thank you.
[Whereupon, at 4:06 p.m., the hearing was adjourned.]
APPENDIX
Responses to Additional Questions
----------
Responses of Daniel A. Lashof to Questions From Senator Bingaman
Question 1. You believe that carbon capture technology is available
today to such an extent that Congress should require it on any new
power plant. This raises two issues:
Who should bear the risk associated with including these
technologies that have not yet been demonstrated at the scale of a
commercial power plant?
Answer. All elements of CO<INF>2</INF> capture, compression,
transportation and storage have been demonstrated individually, and in
some cases in combination. Even though capture of CO<INF>2</INF> at a
power plant at the scale required has not yet taken place, the
technology is for all intents and purposes the same as that deployed at
synthetic fuels plants where it is currently commercially deployed.
Consequently, we believe that the owner(s) or operator(s) of the
capture, transportation and storage facilities should be respectively
responsible for assuring that the facility operates in compliance with
regulations during their lifetime. After site closure and
decommissioning, separate provisions may be appropriate, bearing in
mind that the transient nature of corporations may not allow them to
hold responsibility in perpetuity.
Question 2. Who should pay the additional capital costs or energy
costs of capture and sequestration if there is not yet a market price
for greenhouse gasses?
Answer. The additional costs should be spread over the coal-fired
power-generation sector. This could be accomplished through a Low
Carbon Generation Portfolio Standard, whereby a small and increasing
portion of coal-fired generation would be required to meet an emissions
level equivalent to an advanced CO<INF>2</INF> capture plant. A credit
trading program would allow generators to meet the standard in the most
cost-effective way.
Question 3. The study authors indicate that a regulatory framework
is needed to oversee site selection for CO<INF>2</INF> injection,
injection operations, and for long term monitoring and management. At
what level, state, federal, or a combination, do you see this framework
being introduced?
Answer. USEPA should regulate CCS. The agency has authority under
the Safe Drinking Water Act, and has already issued guidances for small
scale injection projects. However, a much more comprehensive framework
is needed. We believe that the existing Underground injection Control
Program model is a good one: USEPA sets federal requirements and
minimum standards, allowing states to tailor or implement these by
requesting primacy with administrative and financial support from
USEPA. A common federal framework is essential to steer the
regulations. Moreover, some states will have neither the ability nor
the desire to regulate CCS. However, some issues such as pore space
ownership and liability are bound to differ from state to state. State
frameworks are therefore also necessary, as long as they adhere to the
minimum federal standards.
Response of Daniel A. Lashof to Question From Senator Sanders
Question 4. If the Congress adopts your suggestion that no new coal
plants be built unless they incorporate Carbon Capture and Storage,
what practical effect would that have on coal plants now in the
permitting queue?
Answer. The plants in the permitting phase would need to
incorporate capture technologies into their design. For proposed
gasification plants this would be a significant but reasonable
modification. For proposed conventional pulverized coal plants this may
require a complete redesign. Utilities and regulators would need to
evaluate the added costs of the new design and determine whether energy
efficiency and/or renewable energy investments would be more cost
effective than continuing with plans to build coal-fired generation.
Response of Daniel A. Lashof to Question From Senator Salazar
Question 5. The U.S. Climate Change Technology Program Strategic
Plan shows that capturing CO<INF>2</INF> emissions from fossil fuel
plants and disposing of it in deep geologic formations is a critical
technology for preventing global warming. For this to become a
commercially and legally viable option for mitigating greenhouse gas
emissions, a robust and transparent regulatory framework for
CO<INF>2</INF> injection deep underground will need to be put in place
in the immediate future. Is EPA currently devoting the resources
necessary to develop this framework in a timely manner? And what is the
timeframe in which this should be developed?
Answer. USEPA has only dealt with small-scale injections so far. A
more robust regulatory framework is needed for commercial scale
projects. The agency is not moving at a pace that we consider
satisfactory, nor devoting the necessary resources. Large, commercial-
scale CCS projects are imminent. The development of regulations is
likely to span several years. If we start now, we have a chance of
having workable regulations by the time the first CCS plants are
commissioned. We are already late in commencing the regulatory process.
Congress should direct EPA to devote the resources necessary to
complete the regulations in a timely fashion.
Responses of Daniel A. Lashof to Questions From Senator Domenici
Question 6. A recent NRDC press release on the Future of Coal in a
Carbon Constrained World Report said:
The report's examination of policies to promote immediate
deployment of CCS systems is incomplete and it fails to address
the most urgent problem facing U.S. policymakers: what
CO<INF>2</INF> performance requirements should be applied to
proposed new power plants.
Mr. Lashof, am I correct to say that traditionally the Natural
Resources Defense Council has been an ardent supporter of the
environmental laws of this country?
Answer. Absolutely--For more than three decades, NRDC has fought
successfully to defend wilderness and wildlife and to protect clean
air, clean water and a healthy environment.
Question 7. Am I also correct to say that the Natural Resources
Defense Council would expect the government to complete a full National
Environmental Policy Act assessment before it undertakes a proposal to
transport and inject the amounts of CO<INF>2</INF> recommended for
injection in the MIT report?
Answer. Yes, we would expect an environmental impact assessment to
be carried out before the injections of large volumes of CO<INF>2</INF>
in the subsurface.
Question 8. Given your organization's historic stance that ground
disturbing activities be fully analyzed, how is it that the NRDC can
conclude that Congress should direct all new coal fired power plants
include CCS in the face of MIT's statement that: ``The central message
of our study is that demonstrations of technical, economic, and
institutional features of carbon capture and sequestration at
commercial scale coal combustion and conversion plants, will give
policymakers and the public confidence that a practical carbon
mitigation control option exists''?
Answer. NRDC has been following CCS technology for many years now.
Consensus exists among experts that, although we need to amass
additional knowledge and clarify certain areas, no major technical
barriers exist in deploying this technology in a way that safeguards
human health and the environment. The barriers are economic and
regulatory and policy related. Indeed, the MIT states in the same
report:
Although substantial work remains to characterize and
quantify these [trapping] mechanisms, they are understood well
enough today to trust estimates of the percentage of
CO<INF>2</INF> stored over some period of time--the result of
decades of studies in analogous hydrocarbon systems, natural
gas storage operations, and CO<INF>2</INF>-EOR. Specifically,
it is very likely that the fraction of stored CO<INF>2</INF>
will be greater than 99% over 100 years, and likely that the
fraction of stored CO<INF>2</INF> will exceed 99% for 1000
years. Moreover, some mechanisms appear to be self-reinforcing.
Additional work will reduce the uncertainties associated with
long-term efficacy and numerical estimates of storage volume
capacity, but no knowledge gaps today appear to cast doubt on
the fundamental likelihood of the feasibility of CCS.
The key words in your question and the MIT statement that you quote
are ``give policymakers and the public confidence''. The experts have
already made up their mind on the matter: they see no showstoppers in
the way of large-scale deployment. They are simply recommending a
handful of demonstrations with federal involvement to illustrate this
to the wider public. We second the suggestion and stress the urgency
with which these should be carried out.
If performed under adequate regulatory oversight and according to
best practices (which emphasizes USEPA's role in preparing a regulatory
framework), we are confident that the risks associated with CCS are
dwarfed by the risks associated with venting to the atmosphere 100% of
the CO<INF>2</INF>, produced by coal plants for the foreseeable future.
Question 9a. If a utility came to Congress today and said they are
willing to include CCS, untested as it is, to a proposal for a new
Integrated Gasification Combined Cycle (IGCC) or Supercritical
Pulverized Coal (SCPC) plant would the Natural Resource Defense Counsel
support full sufficiency from all federal environmental laws to get the
carbon capture and sequestration technology implemented?
Answer. No.
Question 9b. If the answer is no:
Given your unwillingness to provide sufficiency to speed the
process of CCS and NRDC's longstanding demands that the National
Environmental Policy Act be strictly adhered to, why should Congress
legislate a Carbon Sequestration standard without really knowing what
the environmental impacts of such a standard might be?
Answer. The NEPA process is site-specific. We do not believe that
the safety or efficacy of CCS in general will be proved or disproved
following NEPA review. We believe that a great deal is known about the
potential environmental impacts of a CCS standard if it is implemented
and overseen properly. While we have high confidence that CCS can be
conducted in an environmentally sound manner, it is still essential to
adhere to existing laws and to examine projects on a case-by-case basis
to understand local impacts. The NEPA process is also essential in
reassuring local and other stakeholders about the merits and safety of
a project. Earning public acceptance is crucial in siting CCS projects,
and attempting to avoid the NEPA process would likely lead to hostile
reactions that would actually slow the process of implementing CCS.
Responses of Daniel A. Lashof to Questions From Senator Bunning
Question 10. I know the NRDC has opposed coal-to-liquid technology.
But I have also seen your organization support coal gasification for
electricity. I understand that your position is coal-to-liquid
technology will increase CO<INF>2</INF> emissions ``well-to-wheels'' or
``mine-to-wheels'' as is more appropriate and you recommend moving to
hydrogen and ethanol transportation fuels. But I believe America can
not transition to a zero-carbon economy overnight. And as corn prices
have shown us, we can not fuel the entire country on corn ethanol.
Coal-to-liquid technology will be a bridge for the next decades until
we have a new, cleaner technology. For example, a coal-to-liquid plant,
using off-the-shelf carbon capture and sequestration technology and a
10 percent cellulosic biomass blend in the coal feedstock, would reduce
carbon emissions compared to gasoline by 30 percent. This is a huge
reduction. Not to mention that it will provide coal-based electricity
with carbon capture technology already built in and a gasification
system ready to promote cellulosic fuels. Given all these advantages,
what will it take for you to support coal-to-liquid fuel?
Answer. Liquefying coal to turn it into transportation fuels is an
inefficient and extremely carbon intensive process. Without carbon
sequestration it would result in well-to-wheel emissions that are
double those of petroleum-derived fuels. Even with carbon
sequestration, the most authoritative studies show that emissions would
still be higher than from conventional diesel fuel or gasoline. The
process is also very costly, and a liquid coal industry cannot develop
without federal support. We consider this an unwise use of taxpayers'
money, particularly because it is incompatible with the need to curb
greenhouse gas emissions. Analyses show that the development of a
liquid coal industry would make carbon mitigation under a cap & trade
regime much more expensive, and also start using underground
CO<INF>2</INF> storage capacity at rapid rates. We also have no
evidence that developers are intending to use biomass feedstocks or
carbon capture AND sequestration from the outset in these plants. There
are cheaper, cleaner and easier ways to break our oil addiction than
liquefying coal. If coal is to be used to replace gasoline, generating
electricity for use in plug-in hybrid vehicles (PHEVs) can be far more
efficient and cleaner than making liquid fuels. In fact, a ton of coal
used to generate electricity used in a PHEV will displace more than
twice as much oil as using the same coal to make liquid fuels, even
using optimistic assumptions about the conversion efficiency of liquid
coal plants.\1\ 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 lifecycle 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.\2\
---------------------------------------------------------------------------
\1\ 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.
\2\ Assumes lifecycle greenhouse gas emission from liquid coal of
27.3 lbs/gallon and lifecycle 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.
---------------------------------------------------------------------------
NRDC does not support coal gasification as an end in itself. Rather
we believe that coal gasification can facilitate CCS, which is an
essential technology for reducing CO<INF>2</INF> emissions from
powerplants.
Question 11. The Air Force testing program has shown that because
of the properties of fischer-tropsch fuel, such as lower burn
temperature and weight, jets that use that fuel will emit less
CO<INF>2</INF> compared to existing jet fuels. This is on top of their
confirmation of a significant reduction of other pollutants such as
sulfur and particulate matter. Are you aware of these beneficial
characteristics of CTL fuel compared to existing fossil fuels?
Answer. We are aware of these characteristics, but they do not take
into account the CO<INF>2</INF> emissions associated with these fuels
over their entire life cycle. These are still far worse than petroleum
based fuels.
Question 12. The MIT study indicates that with new technologies, we
could reduce the CO<INF>2</INF> emissions of our current coal power
fleet by 20%. Yet the study recommends that no government funds for
used for Research for existing coal power plants. Given the long life-
cycle of a plant and the report's conclusion that coal will continue to
be used well into the future, do you think it makes sense to
incentivize technology retrofits that reduce CO<INF>2</INF> emissions?
Answer. The most pressing need is to ensure that no NEW plants get
built without capturing their CO<INF>2</INF> emissions from the outset.
As the MIT report points out, retrofitting requires major overhaul and
large expenses. By building conventional plants we risk locking
ourselves into several decades' worth of new emissions, and into added
costs of CO<INF>2</INF> control. In the case of very old and
inefficient plants, a new plant might be economically preferable to a
retrofit. In the case of a more recent build, this might not be the
case. We do believe research to reduce the costs of all types of carbon
capture should be funded, but under no circumstances should it be used
as an excuse for postponing action and not utilizing technologies that
are available to us now.
Question 13. The report also highlights that China and India will
be building hundreds of new coal-fired generation units in the coming
decade using old technology. Regardless of whether of not these
countries agree to limit CO<INF>2</INF> emissions, they will have a
huge need for retrofit emissions technology. The report, however,
recommends no government support for developing this technology. Why do
you oppose the government supporting emission reducing technology for
use here in America and abroad?
Answer. Although we do not speak for MIT, it is not our
understanding that the report recommends that no funds be spent on
retrofit technology research--on the contrary, the report states that:
The U.S. 2005 Energy Act contains provisions that authorize
federal government assistance for IGCC or pulverized coal
plants containing advanced technology projects with or without
CCS. We believe that this assistance should be directed only to
plants with CCS, both new plants and retrofit applications on
existing plants.
We agree with this statement, and stress the need to fund research
that leads to real and measurable emission reductions. In the case of
CCS, sequestering CO<INF>2</INF> is a necessary requirement. Federal
money needs to be used wisely, and as a trigger for much larger private
sector investment.
Question 14. The MIT Study indicates that China alone will account
for more than half of the global growth in coal supply and demand in
the next 25 years. Why do you think China would be willing to
participate in a carbon capture and sequestration scheme like the one
the report proposes within the next ten years?
Answer. As we understand it, the report proposes ``negotiating a
global agreement featuring delayed adherence to a carbon charge for
developing economies'', not a carbon capture and sequestration scheme.
In other words, developed countries should lead by legislating
comprehensive carbon policies and specific emission limits. We believe
that developed countries will need to transfer their technological
know-how to developing countries in a concerted way if emissions are to
be curbed in time. China understands that global warming is a serious
threat to its food supply and water supply, among other concerns. With
effective leadership by the United States and active engagement with
China we believe that China and other developing countries will
participate appropriately in international efforts to prevent dangerous
global warming.