[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
DEPARTMENT OF ENERGY OVERSIGHT: STATUS OF CLEAN COAL PROGRAMS
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
FEBRUARY 11, 2014
__________
Serial No. 113-118
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
U.S. GOVERNMENT PRINTING OFFICE
88-659 WASHINGTON : 2014
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC
area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, Washington, DC
20402-0001
COMMITTEE ON ENERGY AND COMMERCE
FRED UPTON, Michigan
Chairman
RALPH M. HALL, Texas HENRY A. WAXMAN, California
JOE BARTON, Texas Ranking Member
Chairman Emeritus JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky Chairman Emeritus
JOHN SHIMKUS, Illinois FRANK PALLONE, Jr., New Jersey
JOSEPH R. PITTS, Pennsylvania BOBBY L. RUSH, Illinois
GREG WALDEN, Oregon ANNA G. ESHOO, California
LEE TERRY, Nebraska ELIOT L. ENGEL, New York
MIKE ROGERS, Michigan GENE GREEN, Texas
TIM MURPHY, Pennsylvania DIANA DeGETTE, Colorado
MICHAEL C. BURGESS, Texas LOIS CAPPS, California
MARSHA BLACKBURN, Tennessee MICHAEL F. DOYLE, Pennsylvania
Vice Chairman JANICE D. SCHAKOWSKY, Illinois
PHIL GINGREY, Georgia JIM MATHESON, Utah
STEVE SCALISE, Louisiana G.K. BUTTERFIELD, North Carolina
ROBERT E. LATTA, Ohio JOHN BARROW, Georgia
CATHY McMORRIS RODGERS, Washington DORIS O. MATSUI, California
GREGG HARPER, Mississippi DONNA M. CHRISTENSEN, Virgin
LEONARD LANCE, New Jersey Islands
BILL CASSIDY, Louisiana KATHY CASTOR, Florida
BRETT GUTHRIE, Kentucky JOHN P. SARBANES, Maryland
PETE OLSON, Texas JERRY McNERNEY, California
DAVID B. McKINLEY, West Virginia BRUCE L. BRALEY, Iowa
CORY GARDNER, Colorado PETER WELCH, Vermont
MIKE POMPEO, Kansas BEN RAY LUJAN, New Mexico
ADAM KINZINGER, Illinois PAUL TONKO, New York
H. MORGAN GRIFFITH, Virginia JOHN A. YARMUTH, Kentucky
GUS M. BILIRAKIS, Florida
BILL JOHNSON, Missouri
BILLY LONG, Missouri
RENEE L. ELLMERS, North Carolina
Subcommittee on Oversight and Investigations
TIM MURPHY, Pennsylvania
Chairman
MICHAEL C. BURGESS, Texas DIANA DeGETTE, Colorado
Vice Chairman Ranking Member
MARSHA BLACKBURN, Tennessee BRUCE L. BRALEY, Iowa
PHIL GINGREY, Georgia BEN RAY LUJAN, New Mexico
STEVE SCALISE, Louisiana JANICE D. SCHAKOWSKY, Illinois
GREGG HARPER, Mississippi G.K. BUTTERFIELD, North Carolina
PETE OLSON, Texas KATHY CASTOR, Florida
CORY GARDNER, Colorado PETER WELCH, Vermont
H. MORGAN GRIFFITH, Virginia PAUL TONKO, New York
BILL JOHNSON, Ohio JOHN A. YARMUTH, Kentucky
BILLY LONG, Missouri GENE GREEN, Texas
RENEE L. ELLMERS, North Carolina HENRY A. WAXMAN, California (ex
JOE BARTON, Texas officio)
FRED UPTON, Michigan (ex officio)
C O N T E N T S
----------
Page
Hon. Tim Murphy, a Representative in Congress from the
Commonwealth of Pennsylvania, opening statement................ 1
Prepared statement........................................... 3
Hon. Janice D. Schakowsky, a Representative in Congress from the
State of Illinois, opening statement........................... 4
Hon. Michael C. Burgess, a Representative in Congress from the
State of Texas, opening statement.............................. 6
Hon. Henry A. Waxman, a Representative in Congress from the State
of California, opening statement............................... 7
Hon. Fred Upton, a Representative in Congress from the state of
Michigan, prepared statement................................... 54
Hon. G.K. Butterfield, a Representative in Congress from the
State of North Carolina, prepared statement.................... 55
Witnesses
Julio Friedmann, Deputy Assistant Secretary for Clean Coal
Department of Energy, Accompanied by Scott Klara, Acting
Director for the National Energy Technology Laboratory,
Department of Energy........................................... 9
Prepared statement........................................... 12
Answers to submitted questions............................... 61
Submitted material
Majority memorandum.............................................. 56
DEPARTMENT OF ENERGY OVERSIGHT: STATUS OF CLEAN COAL PROGRAMS
----------
TUESDAY, FEBRUARY 11, 2014
House of Representatives,
Subcommittee on Oversight and Investigations,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 10:04 a.m., in
room 2123 of the Rayburn House Office Building, Hon. Tim Murphy
(chairman of the subcommittee) presiding.
Members present: Representatives Murphy, Burgess, Gingrey,
Scalise, Harper, Olson, Gardner, Griffith, Johnson, Long,
Ellmers, Barton, Schakowsky, Butterfield, Castor, Tonko, and
Waxman (ex officio).
Staff present: Charlotte Baker, Press Secretary; Karen
Christian, Chief Counsel, Oversight; Carrie-Lee Early,
Detailee, Oversight; Brad Grantz, Policy Coordinator, Oversight
and Investigations; Brittany Havens, Legislative Clerk; Mary
Neumayr, Senior Energy Counsel; Sam Spector, Counsel,
Oversight; Peter Spencer, Professional Staff Member, Oversight;
Tom Wilbur, Digital Media Advisor; Phil Barnett, Staff
Director; Brian Cohen, Staff Director, Oversight and
Investigations, and Senior Policy Advisor; Kiren Gopal,
Counsel; Hannah Green, Staff Assistant; Bruce Ho, Counsel;
Elizabeth Letter, Press Secretary; and Alexandra Teitz, Senior
Counsel, Environment and Economy.
OPENING STATEMENT OF HON. TIM MURPHY, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA
Mr. Murphy. Good morning. Welcome to a hearing of the
Energy and Commerce Committee, subcommittee on Oversight and
Investigations, this hearing on Department of Energy Oversight,
Status of Clean Coal Programs. Today's hearing will review the
status of these programs. This oversight, we have focused on
the department's efforts to advance carbon capture and
sequestration or CCS technologies at coal-based power plants.
Legislation and regulation in this important area should
and must be based on sound scientific and economic facts. Where
are we? Where are we going? When can we get there? And how do
we do it?
Today's testimony, which builds on our oversight work from
this past October when we heard from workers and local
officials whose coal-dependent communities are suffering in
part because of EPA policies will help us review exactly where
DOE is today in its work on CCS.
There are many questions about the current status of this
technology. We are sure our panelists today will be able to
shed some light on this. Answering these questions and
gathering the underlying facts will help us understand how
carbon capture technologies can work effectively and reliably
on coal-powered plants. This testimony will also help the
committee develop a clear and accurate record of what will be
necessary, the innovation and operational experience,
economics, the timeframes to develop commercially competitive
CCS for coal-based power generation.
The technical and economic issues DOE confronts are not
everything that is needed to determine if CCS can work at a
large level in our nation's electricity system. There are legal
issues, regulatory issues, infrastructure issues. All must be
addressed appropriately.
Yet when looking at just the critical technical challenges
to CCS or coal plants, challenges for which Congress has
appropriated billions of dollars to DOE to address, we have a
way to go on several levels.
First, it has not yet been demonstrated that CCS systems
will work reliably at full-scale coal power plants. It is not
sufficient to rely upon paper estimates and laboratories or
speculation from EPA lawyers about technological feasibility.
Carbon dioxide capture and compression systems have to be
integrated into actual, full-scale coal power plants and be
shown to operate reliably over time while maintaining
predictable and safe plant operations. It does not appear DOE
will have complete answers about this for at least 6 to 10
years, so we need an update.
Second, the costs to produce electricity have come down by
a large amount to make any successful demonstrated CCS systems
commercially viable in open markets. The first generation CCS
technology, because of increased capital and operating costs
and decreased electricity produced, the electric grid has been
estimated to increase the cost of electricity significantly.
At a coal gasification facility, the cost of electricity
may be increased by 40 percent, at a pulverized coal power
plant by upwards of 80 percent. This is what DOE's own document
tells us. Demonstrating full scale CCS is alone not sufficient
to make it the standard for the nation's coal-based electricity
generation.
If coal power plants cost too much, nobody will build them.
Energy costs will increase making it even more difficult for
families and U.S. manufacturers to compete.
Which brings me to the third point, the research
development and innovative breakthroughs needed to produce
economically viable CCS technologies for coal power will take
operational experience and time, decades in fact. This is not
my opinion. DOE's own R&D timetables make this point to us.
Over the past 10 fiscal years, more than $7.6 billion have
been appropriated to DOE for its clean coal programs. This
spending reflects the confidence Congress has placed in DOE and
the National Energy Technology Laboratory, or NETL, to help
advance these technologies.
Given the spending and given the current economic and
regulatory landscape, oversight is necessary to ensure DOE's
stewardship of these funds and goals for its research are
effective.
It is also necessary to make sure energy and environmental
policies match the technological realities. We are all
committed to clean air, period. But moreover, we must be
committed to using North American energy resources rather than
continuing our trillion dollar trade deficit with OPEC or $4
trillion wars in the Mideast where we have to defend their oil
fields.
In this hearing, I hope we will get some straight answers
so that we can establish what is truly the status and prospects
of DOE's game plan for advancing coal power technologies. Our
two witnesses this morning should be up to the task, highly
qualified.
Dr. Friedmann presently heads DOE's coal programs and has
substantial experience working on energy projects at Lawrence
Livermore National Laboratory, and Scott Klara, an authority on
coal research from the National Energy Technology Laboratory
understands the R&D challenges.
We look forward to having you give us the plain facts, not
Washington spin. At the end of the day, straight answers will
help this committee determine whether DOE is up to the task of
shepherding the innovation that may dramatically advance coal-
based power both in terms of efficiency and environmental
goals.
But I worry that in the rush by the administration to
implement new standards and regulations on coal-based power
generation, the prospects for success or technological
advancements are at risk. All these are questions we hope you
can address today.
[The prepared statement of Mr. Murphy follows:]
Prepared statement of Hon. Tim Murphy
Today's hearing will review the status of the Department of
Energy's clean coal programs. This oversight will be focused on
the department's efforts to advance carbon capture and
sequestration, or CCS, technologies at coal-based power plants.
Legislation and regulation in this important area should
and must be based on sound scientific and economic facts. Where
are we? Where are we going? When can we get there? How do we do
it?
Today's testimony, which builds on our oversight work from
this past October when we heard from workers and local
officials whose coal-dependent communities are suffering in
part because of EPA policies--will help us review exactly where
DOE is today in its work on CCS. There are many questions about
the current status of this technology. Answering these
questions, and gathering the underlying facts, will help us
understand how carbon capture technologies can work effectively
and reliably on coal power plants. The testimony will also help
the committee develop a clear and accurate record of what will
be necessary--the innovation, the operational experience, the
economics, the timeframes--to develop commercially competitive
CCS for coal-based power generation.
The technical and economic issues DOE confronts are not
everything that is needed to determine if CCS can work at a
large level in our nation's electricity system. Various legal
issues, regulatory issues, infrastructure issues all must be
addressed appropriately.
Yet when looking at just the critical technical challenges
to CCS for coal plants--challenges for which Congress has
appropriated billions of dollars to DOE to address--we have a
way to go, on several levels.
First, it has not yet been demonstrated that CCS systems
will work reliably at full-scale coal power plants. It is not
sufficient to rely upon paper estimates in laboratories or
speculation from EPA lawyers about technological feasibility.
Carbon dioxide capture and compression systems have to be
integrated into actual, full-scale coal power plants and be
shown to operate reliably over time, while maintaining
predictable and safe plant operations. And it does not appear
DOE will have complete answers about this for at least 6 to 10
years.
Second, the costs to produce electricity have to come down
by a large amount to make any successfully demonstrated CCS
systems commercially viable in the open market. The first
generation CCS technology--because of increased capital and
operating costs and decreased electricity produced for the
electric grid--has been estimated to increase the cost of
electricity significantly. At a coal gasification facility, the
cost of electricity may be increased by 40 percent; at a
pulverized coal power plant, by upwards of 80 percent. This is
what DOE's own documents tell us.
Demonstrating full scale CCS is alone not sufficient to
make it the standard for the nation's coal based electricity
generation. If coal power plants cost too much, nobody will
build them.
Energy costs will increase making it even more difficult
for families and US manufacturers to compete.
Which brings me to the third point: the research,
development, and innovative breakthroughs needed to produce
economically viable CCS technologies for coal power will take
operational experience and time, decades in fact. This is not
my opinion; DOE's own R&D timetables make this point.
Over the past 10 fiscal years, more than $7.6 billion have
been appropriated to DOE for its clean coal programs. This
spending reflects the confidence Congress has placed in DOE and
the National Energy Technology Laboratory, or NETL, to help
advance these technologies.
Given this spending, and given the current economic and
regulatory landscape, oversight is necessary to ensure DOE's
stewardship of these funds and goals for its research are
effective. It is also necessary to make sure energy and
environmental policies match the technological realities. We
are all committed to clean air. Period. But moreover, we must
be committed to using North American energy resources rather
than continuing our trillion-dollar trade deficit with OPEC, or
our $4 trillion wards in the Mid East where we have to defend
their oil fields.
In this hearing, I hope we will get some straight answers
so that we can establish what is truly the status and prospects
of DOE's game-plan for advancing coal power technologies. Our
two witnesses this morning should be up to the task. Dr.
Friedman presently heads DOE's coal programs and has
substantial experience working on energy projects at Lawrence
Livermore National Laboratory. And Scott Klara, an authority on
coal research from the National Energy Technology Laboratory,
understands the R&D challenges. I look to you to give us the
plain facts, not Washington double-talk.
At the end of the day, straight answers will help this
committee determine whether DOE is up to the task of
shepherding the innovation that may dramatically advance coal
based power, both in terms of efficiency and environmental
goals. But I worry that in the rush by this administration to
implement new standards and regulations on coal based power
generation, the prospects for successful technological
advancement are at risk.
# # #
Mr. Murphy. And with that, I will now recognize Ms.
Schakowsky, who is sitting in for Ms. DeGette for 5 minutes.
OPENING STATEMENT OF HON. JANICE D. SCHAKOWSKY, A
REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS
Ms. Schakowsky. Thank you, Mr. Chairman. I appreciate our
witnesses appearing today to tell us about the progress of
DOE's important carbon capture and storage research development
and demonstration work. I often say that this Congress has an
opportunity to lead this country into the future with smart
action that will curb emissions and prevent irreversible
climate change, but our window to take action is rapidly
closing.
We know that the National Oceanic and Atmospheric
Administration announced that 2013 was the fourth warmest year
on record, and 9 of the 10 warmest years have occurred since
2000. For decades, the world's scientists have presented policy
makers with evidence that climate change is happening and that
human activities are responsible. Those warnings have only
grown stronger with time.
The president of the National Academy of Sciences has
explained that scientists are now as certain about human-caused
climate change as they are that smoking cigarettes can cause
cancer. We need to drastically reduce our carbon emissions and
quickly. We need to make a commitment to clean and renewable
sources that provide all of the jobs and energy benefits of
fossil fuels without the public health and environmental costs.
We also need to use the best technology available to reduce
carbon emissions wherever we can. Carbon capture and storage or
CCS is one of those technologies. CCS investments are proving
that coal-fired power plants can capture a significant
percentage of their carbon pollution and safely transport and
inject it underground.
The Kemper facility in Mississippi set to go online later
this year will be the first commercial scale coal-fired CCS
project, but it is not the only one. There are projects in
California, Texas, and elsewhere including my home state of
Illinois that have attracted billions of dollars in private
financing. Those projects are demonstrating all the individual
elements of advanced CCS systems, carbon capture, compression,
transport, and sequestration technologies.
In September, EPA proposed a rule requiring new coal-fired
power plants to cut carbon pollution. To meet the proposed
standards, new coal plants will have to use CCS technology to
capture a portion of their carbon pollution. Opponents have
argued that the EPA should not have a role in reducing carbon
pollution from coal-fired plants and that CCS technology isn't
available now.
In fact, this committee passed a bill just last week
essentially eliminating EPA's authority to regulate carbon
pollution from coal plants.
Today's hearing should provide some much needed facts about
CCS and the economics of pollution controls. First there is a
critical role for government to play. Right now, power plants
can pollute without any adverse financial impact. There is no
financial incentive for industry to develop and deploy
pollution controls on a widespread basis.
If EPA doesn't require responsible action, we have no
chance of protecting public health and our planet over the long
term. It is also important to recognize that CCS technologies
are already available. All the component pieces of CCS have
been used in industrial applications for a long time.
Industrial facilities have separated carbon dioxide for several
decades. Oil companies have transported carbon dioxide by
pipeline and injected it underground for nearly 40 years.
Existing DOE programs have helped apply those technologies
in the power sector. Multiple demonstration projects have
applied these technologies to coal plants. Several full-scale
projects are under construction today, and many vendors are
willing to sell CCS technologies right now.
CCS is the only proven set of technologies that would allow
us to cut carbon pollution while still using coal. I look
forward to hearing from our DOE witnesses today about their
important contributions to our nation's vital effort to cut
carbon pollution. And I don't know if anyone would like the
remaining time. I yield back. Thank you, Mr. Chairman.
Mr. Murphy. Gentlelady yields back, and I now recognize Dr.
Burgess for 5 minutes.
OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF TEXAS
Mr. Burgess. Well, thank you, Mr. Chairman, and this
hearing is the perfect example of our constitutional
obligation, the constitutional obligation that is required of
this subcommittee. On behalf of the taxpayers of this country,
we are required to do oversight. We are required to ask the
questions and get the answers. Our committee authorizes the
expenditure of money. The appropriators write the check. The
agency cashes the check, and it is our obligation to ensure
that that money has been spent appropriately for the benefit of
the taxpayer of this country.
Every program, every agency, should come under similar
scrutiny. This is not partisan. It is not political. It is
basic oversight and applying common sense principles to allow
the government the opportunity to work more effectively and
efficiently on behalf of the taxpayer.
So for over a decade, the Department of Energy has been
focused on assisting industry to develop ways to reduce carbon
dioxide emissions, most notably although not exclusively,
through the carbon capture and storage techniques. Research and
development for these technologies has cost the federal
government billions of dollars.
So what did we get for the money we spent? Where does this
technology stand? Are we nearing commercial viability? And if
so, what is the timeline for your average generating plant to
be able to acquire such technology?
In Texas, many questions remain as to how carbon capture
and storage will affect neighborhoods and the environment
around generation plants. When pressurized carbon is injected
deep into the earth, how does that affect the ground above? Are
people's homes and businesses at risk from seismic activity
should this carbon accidentally be released? Will the earth's
surface around such sequestration attempts be changed due to
the injection of emissions? The federal government must be
honest and must be up front with the American people as to the
potential pitfalls as well as the benefits to such technology.
So over $7.5 billion has been appropriated over the last
decade for the development of clean coal's technologies. We
must have an accounting of every dollar and how the American
taxpayer is better off by each dollar having been spent. Where
has the money gone? What do we have to show for it? I hope
these questions can be answered during today's hearing.
With eight demonstration projects of carbon capture and
storage technology beginning around the country, two in my home
State of Texas, how many are close to actual operation? How
many are producing electricity that consumers can use today?
And if they are producing electricity that consumers can use
today, what effect has that had on the price for the consumer?
A lot is riding on this. The federal agency is setting
regulations and standards based upon these demonstration
projects. We need to know where they stand. So today's hearing
is the kind of oversight this committee can do and should do.
It is the kind of oversight that we do best. Asking questions
as to how the authorizations passed by this committee are being
utilized by the department and how the money the department
received is being spent and ultimately how that benefits the
taxpayer.
I thank the chairman for the recognition. I will yield back
the time.
Mr. Murphy. Gentleman yields back. Now recognize Mr. Waxman
for 5 minutes.
OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Mr. Waxman. Thank you very much, Mr. Chairman. The subject
of today's hearing is one that is vital for the future of coal
and the climate, the development of carbon capture and storage,
or CCS technologies. Investments that the Department of Energy
is making in CCS will help industry produce cleaner power, help
provide a market for coal as the world moves to cut carbon
pollution, and help avoid a catastrophic degree of climate
change.
There is a long history of government investment driving
private sector technological advances. Government investment
led to the creation of the Internet, GPS positioning, and even
Apple's voice assistant Siri. Google's Search algorithm was
financed by a grant from the National Science Foundation.
In the case of CCS, DOE is partnering with the coal
industry and utilities to build next generation clean coal
power plants, helping to create new jobs and control carbon
emissions. Investing in CCS makes sense because our nation and
the world must reduce our carbon emissions.
My Republican colleagues accuse the president of waging a
war on coal. In fact, the president is trying to create a
future for coal. His administration has invested billions of
dollars, more than any other administration, to develop clean
coal technologies. It is the policies pursued by Republicans on
this committee, not the president's policies, that are a real
threat to coal.
In fact, I am confident that the coal industry and
Republican members from coal states will soon regret the day
that they opposed the Waxman-Markey Climate Bill and the $60
billion we proposed to invest in carbon capture and
sequestration.
Mr. Chairman, this committee is powerful. We have the
authority to shape our Nation's environmental and energy laws.
But there is one set of laws we cannot change. Those are the
laws of nature. The greenhouse effect tells us that we will
irrevocably change our atmosphere and cause catastrophic
climate change if we continue to burn coal without developing a
technology to capture its carbon emissions. That is not a
bright future for coal or any of us.
The DOE investments in CCS are under the spotlight now
because of EPA's proposed new power plant rule, but these
investments are crucially important and are starting to pay
off. Later this year, Southern Company's Kemper County Energy
Facility in Mississippi will begin operations and capture 67
percent of its CO2 emissions. DOE's $270 million
investment helped to make this plant a reality and attracted
billions of dollars in private financing.
Opponents of CCS say that technology used in Kemper's
facility is too expensive. But the cost of virtually all new
technologies decrease over time with experience, continued
innovation, and economies of scale.
We have seen that repeatedly under the Clean Air Act with
scrubbers, NOx controls, and mercury controls. The expert
witnesses today will tell us that they expect to see similar
cost reductions with CCS technology.
In contrast, the costs of climate disruption are only going
to get worse, much worse, if we don't act now to cut carbon
pollution. Our choice is a simple one. We can do nothing while
coal plants continue to spew dangerous emissions into the air,
endangering the welfare of our children and our planet. Or we
can develop the new clean energy technologies of the future.
The President and DOE Secretary Moniz have made the right
choice, invest in CCS. Our choice should be to support them in
this effort. Mr. Chairman, yield back my time.
Mr. Murphy. Gentleman yields back. I would like to now
introduce our panel today. Dr. Julio Friedmann is the Deputy
Assistant Secretary for Clean Coal, Office of Fossil Energy at
the Department of Energy. In this capacity, he is responsible
for the DOE's research and development programs and advance of
fossil energy systems, large demonstration projects, carbon
capture utilization and storage, and clean coal deployment.
Before assuming his current position, Friedmann was Chief
Energy Technologist for Lawrence Livermore National Laboratory.
Scott Klara is accompanying Dr. Friedmann today, and he is
currently the acting director of the Department of Energy's
National Energy Technology Laboratory where he is responsible
for managing the day-to-day execution of all aspects of the
lab's mission. He has 22 years of federal government experience
with NETL and its predecessor organizations.
I will now swear in the witnesses. You are aware the
committee is holding an investigative hearing and when doing
so, has the practice of taking testimony under oath. Do you
have any objections to testifying under oath? Both witnesses
say no, and the Chair then advises you that under the rules of
the House and rules of the committee, you are entitled to be
advised by counsel. Do you desire to be advised by counsel
during testimony today? Both waive that.
In that case, if you will please rise and raise your right
hand, I will swear you in.
[Witnesses sworn.]
Mr. Murphy. Both witnesses answer in the affirmative, so
you are now under oath and subject to the penalties set forth
in Title 18, Section 1001 of the United States Code. You may
now each give a 5-minute opening statement. Dr. Friedmann, we
will begin with you.
TESTIMONY OF JULIO FRIEDMANN, DEPUTY ASSISTANT SECRETARY FOR
CLEAN COAL DEPARTMENT OF ENERGY, ACCOMPANIED BY SCOTT KLARA,
ACTING DIRECTOR FOR THE NATIONAL ENERGY TECHNOLOGY LABORATORY,
DEPARTMENT OF ENERGY
Mr. Friedmann. Thank you, Chairman Murphy, Ranking Member
Schakowsky, Ranking Member Waxman, and other members of the
subcommittee. Thank you for this opportunity to speak to you
today. It is really an honor and a privilege.
By way of introduction, I am the only Julio Friedmann you
will ever meet and was recently appointed to be the Deputy
Assistant Secretary for Clean Coal in the Office of Fossil
Energy. This is my second time testifying before this
committee, my first time in this role.
Prior to that appointment, I served as the Chief Energy
Technologist at Lawrence Livermore National Laboratory where I
coordinated and managed energy research programs across
laboratory. I have also worked in industry, 5 years at Exxon
Mobil in Houston and in academia as part of the faculty of the
University of Maryland.
I am joined today by Mr. Scott Klara. He is the acting
director of our National Energy Technology Laboratory, the only
government-owned, government-operated laboratory with the sole
mission on fossil energy. Mr. Klara is responsible for the
execution and management of the program work here where he
served the Nation for over 20 years following a 7-year stint in
industry.
We appreciate this opportunity to discuss the Department of
Energy's coal research and development activities and carbon
capture and storage in particular. It is worth noting that
although I am the deputy assistant secretary for clean coal,
carbon capture, and storage technology is not a coal technology
per se. It is an environmental technology whose job is to
reduce carbon dioxide emissions.
It has special relevance and importance to the coal-powered
systems in this country and in particular the existing and
future coal fleets. In that context, the Department of Energy
continues to play a leadership role in the development of clean
coal technologies with our focus on carbon capture and storage.
As part of this in December, the department released an $8
billion draft loan guarantee solicitation to promote the early
deployment of innovative fossil energy technologies in projects
that reduce carbon emissions. This solicitation is added to the
already $6 billion the Obama Administration is committed to
clean coal technologies. This reflects the president's
commitment, continued commitment, to an all-of-the-above
strategy. And it embraces an energy mix of nuclear power,
renewable energy sources, and fossil energy including clean
coal.
The clean coal research program is addressing the key
challenges that confront the development and deployment of
clean coal technologies. These include research and cost-
effective capture technologies, the development and
demonstration of advanced coal conversion and environmental
control technologies, and the safe and effective storage of
carbon dioxide in deep geological formations including
monitoring, verification, and accounting systems.
To get there, we are pursuing three technical pathways for
carbon capture: post-combustion, pre-combustion, and oxygen-
fired combustion or oxy-combustion. Research in these pathways
is exploring a wide range of approaches that, coupled with
advances in efficiency improvement and cost reduction,
including the developments in gasifications, turbines, and
advance combustion systems, will help provide a technology base
for commercial deployment of CCS broadly.
On the side of storage, we have pursued projects designed
to develop innovative advanced technologies and protocols for
the monitoring, verification, accounting of CO2
storage in geological formations as well as simulating the
behavior of geologically stored CO2.
The regional carbon sequestration partnerships are an
essential component of this effort and have successfully
executed 19 small-to-large-scale CO2 injection
projects nationwide including Texas, Alabama, Mississippi,
Ohio, Montana, Michigan, and Illinois. The program is currently
in the development phase during which large scale field testing
involves at least one million tons of carbon dioxide per
project implemented. Several of the large scale tests are
currently underway, and one project has safely injected over
three-and-a-half-million tons of carbon dioxide which continue
to be monitored for safe and permanent storage.
Right now, the crown jewels of our program are the eight
major large CCS demonstrations deployed around the country.
They are selected in part on three important bases: likelihood
of technical success, likelihood of financial success, and
covering a wide set of national needs. We have industrial and
power projects, saline formation, and enhanced oil recovery
projects, pre-, post-, and oxy-fired projects, and both new-
build plants and retrofits.
The plants within our portfolio produce power, fertilizer,
ethanol, and methanol. They are important advances in several
aspects of these projects. For example, in east Texas, the Air
Products and Chemicals, industrial CCS project is capturing
CO2 from two steam-methane reformation units,
basically hydrogen plants.
The CO2 captured there is being used for
enhanced oil recovery operations, and will pass one million
tons of total injection this fall. As mentioned by several
members, the construction of Kemper County's IGCC project by
Southern Company is near completion as is the completion of the
Archer Daniels Midland Industrial CCS Project in central
Illinois.
And just last month, FutureGen 2.0 moved closer to
construction after the DOE approved the record of decision
needed to go forward with continued work and spending.
Since the inception of the carbon storage program, the
Department of Energy has recognized that a number of
utilization technologies could also play important mitigating
roles.
Aside from enhanced oil recovery though, the potential for
these approaches is limited for a number of technical reasons
including cost and market factors. In the meantime, enhanced
oil recovery represents the most commercially attractive
utilization option for CO2 storage and produces
substantial quantities of oil while storing carbon dioxide in
geological formations.
There are currently six of those large eight projects which
are employing CO2 enhanced oil recovery, two doing
saline and aquifer storage projects across the U.S. As with the
saline storage projects, the CO2 EOR projects are
subject to rigorous monitoring, verification and accounting
procedures to validate the storage of CO2 and verify
their safety and effectiveness.
To conclude, Mr. Chairman, CCS can play a critical role in
mitigating CO2 emissions under many potential future
carbon stabilization scenarios. Since challenges remain to
commercial deployment of these technologies, it is the
department's goal and the focus of our research efforts to
spearhead the research and development that would not have
occurred otherwise and has successfully leveraged private
investments in advancing the readiness of these emerging clean
coal technologies. Based on our, I believe, successful track
record, I believe that our clean coal research program
demonstrates that we can help meet the challenges associated
with CCS deployment.
With that, Mr. Chairman, I would be happy to answer any
questions you and the subcommittee have. Thank you for your
attention.
[The prepared statement of Mr. Friedmann follows:]
[GRAPHIC] [TIFF OMITTED]
Mr. Murphy. Thank you. Mr. Klara, we understand you are
here to answer questions but not to provide an individual
statement. So thank you. So I will recognize myself first for 5
minutes.
Dr. Friedmann, thank you for that testimony. The DOE's
fossil energy office is responsible for overseeing all of DOE's
research and development and demonstration work for clean coal
technologies. Am I correct on that?
Mr. Friedmann. Yes, sir.
Mr. Murphy. Thank you. And you are the person in charge of
the clean coal work and report to the assistant secretary,
correct?
Mr. Friedmann. That is correct.
Mr. Murphy. OK, the project and research evaluations
funding recommendations come from your people, your team. Is
that right too?
Mr. Friedmann. Yes, in partnership with NETL.
Mr. Murphy. And, Mr. Klara, quickly, I know and respect the
National Energy Technology Laboratory, but for the record, NETL
brings the science, the technical and engineering expertise to
DOE's programs, and your people do the research and development
and conduct day-to-day project management. Is that correct?
Mr. Klara. Correct.
Mr. Murphy. Make sure your microphone is on. Now, Dr.
Friedmann, carbon capture and sequestration has never been
implemented commercially yet on a full scale at functioning
power plants. Is that correct?
Mr. Friedmann. That is a moving definition, sir.
Mr. Murphy. But so far. You are anticipating that it is
going to happen, but it hasn't happened yet. Am I correct?
Mr. Friedmann. No, again it is a moving definition.
Mr. Murphy. What does that mean?
Mr. Friedmann. For example, we have deployed carbon capture
and storage at the Beulah Gasification Facility for over 30
years and done carbon capture and storage from there for
enhanced oil recovery for over 10 years. That produces high
quality natural gas which goes into a pipeline that powers
power plants.
Mr. Murphy. All right, I am talking about commercial. Are
those commercial plants, research plants?
Mr. Friedmann. No, that plant has been in commercial
operation for 30 years.
Mr. Murphy. OK, I am talking about coal power plant.
Mr. Friedmann. That is Burns North Dakota Lignite, sir.
Yes, it is a coal plant.
Mr. Murphy. Now, there presently are five coal powered
demonstration projects as part of the DOE funding. Is that
correct?
Mr. Friedmann. Yes, five power projects.
Mr. Murphy. One is FutureGen 2.0 which you refer to, and
four are authorized under the Energy Policy Act of 2005. Is
that correct?
Mr. Friedmann. I am sorry. Can you say that again, please?
Mr. Murphy. One is the FutureGen which----
Mr. Friedmann. Yes.
Mr. Murphy [continuing]. You mentioned, and four others are
authorized under the Energy Policy Act of 2005.
Mr. Friedmann. Yes, sir.
Mr. Murphy. OK, now pursuant to the Energy Policy Act, the
technologies of these power plants supported by DOE go well
beyond the level of what is commercial service at coal power
plants or has previously been successfully demonstrated on coal
power plants. Is that correct?
Mr. Friedmann. I would say that is fair.
Mr. Murphy. OK, and the point of the current demonstrations
according to your agency is to demonstrate that CCS can be
integrated at commercial scale while maintaining reliable,
predictable, and safe plant operations. Is that correct?
Mr. Friedmann. Yes, sir.
Mr. Murphy. Thank you. But DOE says it won't really know
the result of these demonstration projects until they are
completed and evaluated. Is that correct?
Mr. Friedmann. The technical findings from these projects
have been brought forward as the projects proceed. So again
even though it is not a power project, I would point to the air
products project in Texas which came online earlier this year,
and the technical findings and results from that are already
available. And as more come forward, more are available.
Mr. Murphy. Now, I understand that reporting these
demonstrations, according to your own project schedule, to take
6 to 9 years----
Mr. Friedmann. Yes.
Mr. Murphy [continuing]. For many of these? OK, thank you.
Mr. Klara, we have spoken about this before. NETL says that the
CCS technologies in a current state of development are cost
prohibitive for full commercial service. What is a realistic
timeframe based on NETL's best estimates for a commercially
viable technology successfully completing demonstration and
coming to market?
Mr. Klara. With our program, we divide our technology up
into three development buckets. We call them first generation
technology, second generation, and transformational. And with
each one of those development horizons, the cost and
performance gets better. The first generation technology are
the technologies that you will find in our current
demonstration program. And these technologies indeed can be
commercially offered and commercially deployed. With any
development, and I think Congressman Waxman referred to this
relative to NOx and SOx control, that with any development that
with a learning curve as well as continued development within
the Office of Fossil Energy's Program, you can't expect those
costs to go down and the performance to increase.
Mr. Murphy. But your documents suggest it will take until
after about the mid 2020s for second generation technologies
and more than 20 years for what you call transformational
technologies. Am I correct in what your documents say?
Mr. Klara. The additional buckets of technology, second
generation and transformational, will indeed take some more
time to achieve.
Mr. Murphy. So why do you believe that those estimates are
realistic? What will take the time?
Mr. Klara. I am not sure I understand when you say when do
we believe.
Mr. Murphy. Well that it is going to take to the mid 2020s
or longer. Why do you believe those timeframes are needed?
Mr. Klara. Well, with every bucket of our technologies, we
are constantly evaluating the R&D portfolio every year looking
at how developments are proceeding as well as the scope of the
portfolio. Some projects drop out. Additional projects are
brought in. And as part of that, we are constantly doing
analysis to evaluate when and to what level we believe those
technologies will achieve.
Mr. Murphy. Do you also assess commercial viability in that
process?
Mr. Klara. We assess the cost and performance. We rely on
industry and others to determine when it is viable.
Mr. Murphy. OK, thank you. I see my time has expired. Mr.
Klara, when you talk, if you could move that microphone closer
to your face. Now recognize Ms. Schakowsky for 5 minutes.
Ms. Schakowsky. I wanted to underscore something you said.
You said that there is CCS technology in play used right now
commercially and has been for several years. Is that true?
Mr. Friedmann. Yes, it is. There is commercially available
technology that can be sold by a wide number of vendors, U.S.-
based and international with the heavy of equipment
manufacturing made in this country. Pursuant to the earlier
conversation, most of those technologies have been applied to
industrial facilities. For example, the Beulah site is a
synthetic natural gas plant.
But in point of fact, the same technologies have been
demonstrated around the world in other coal-fired facilities.
Ms. Schakowsky. And would that technology fit into bucket
one? Is that what you are saying?
Mr. Friedmann. Yes, first generation.
Ms. Schakowsky. And to what extent does that reduce then
the carbon pollution? I mean you are saying that we want to get
to the third generation.
Mr. Friedmann. Right, so that actually varies by site and
by plant. Some of the plants, for example the Beulah one I
mentioned before, basically acts as about a 50 percent
decarbonization. Other plants we have seen, for example, the
Air Products plant is essentially 90 percent decarbonization.
We believe FutureGen will be effectively 100 percent
decarbonization when it is active. But it depends on the
technology. It depends on the plant. It depends on the type of
coal used and has to be calculated as such.
Ms. Schakowsky. I think what we are going to hear today is
that somehow this technology is not ready for commercial use,
that the production and the timeline is very long and that what
the president is doing to regulate carbon pollution from new
coal-fired power plants is not appropriate. Could you comment
on the veracity of that argument?
Mr. Friedmann. We see our role chiefly as enabling the
reduction of cost and the improved performance of these
technologies as they enter the market and to work with
commercial industrial partners on the commercialization
themselves. Our job is not the commercialization or the
determination of economic viability. Our job is to support the
technology and the development of that.
Ms. Schakowsky. OK, am I correct that there are three basic
steps in CCS, separately and compressing CO2,
transporting it by pipeline and injecting it underground?
Mr. Friedmann. Correct.
Ms. Schakowsky. And, Dr. Friedmann, do we know how to
separate and compress CO2 with current technology?
Mr. Friedmann. Yes, we do.
Ms. Schakowsky. And have we figured out how to transport
CO2 by pipeline?
Mr. Friedmann. Yes, ma'am.
Ms. Schakowsky. And do we understand how to inject carbon
into the ground? Is there enough viable storage underground to
ensure that we can inject CO2 without constraints?
And a safety question was raised as well.
Mr. Friedmann. Yes, ma'am.
Ms. Schakowsky. And so the basic building blocks are all
technologically viable?
Mr. Friedmann. The large-scale components of CCS have been
shown and demonstrated. And that is an important technical
finding.
Ms. Schakowsky. OK, finally, Dr. Friedmann, are there
companies today that will sell technology to power plant
operators looking to implement CCS technology?
Mr. Friedmann. Yes, ma'am, with a performance guarantee.
Ms. Schakowsky. With?
Mr. Friedmann. With a performance guarantee.
Ms. Schakowsky. So it sounds as if CCS is both real and
available. We also hear from the Republicans that CCS simply
costs too much, but the history of large-scale technology
development and the Clean Air Act in particular is full of
examples of pollution control costs decreasing over time with
continued innovation and economies of scale as technologies
mature and become widespread, costs naturally come down. Would
you anticipate that CCS costs will come down as the technology
matures and is put in place in more locations?
Mr. Friedmann. Indeed.
Ms. Schakowsky. And why would that happen?
Mr. Friedmann. As with all clean energy technologies, the
value comes from deployment and cost reduction comes from
deployment. Engineers learn things, and they come up with new
ideas. We have seen this for many, many different kinds of
technology deployment, but it has been clearly demonstrated for
many energy technologies as well, from wind turbines to solar
panels to coal gasifiers to many other kinds of technologies.
And based on our thermodynamic assessments and based on our
engineering assessments, we see multiple clear pathways to
substantial cost production.
Ms. Schakowsky. Thank you. It seems to me what we can't
afford is the cost of carbon and other pollution from coal. And
as Mr. Waxman said, what we are hoping for today is both to
help the environment and coal. And I yield back.
Mr. Murphy. Gentlelady yields back. Can you just clarify on
her question? Were you referring to costs going down on current
plants or future plants?
Mr. Friedmann. Both.
Mr. Murphy. OK, so current plants that have already made
their investment will see their cost decline because they are
saying they will make further investments. I just want to make
sure on her question.
Mr. Friedmann. Thank you for providing me the opportunity
to clarify that. That is an excellent question. Any retrofit to
an existing power plant will necessarily add cost, but the cost
of abatement itself today is a certain price and will go down
over time as more technology is developed and deployed.
Mr. Murphy. Thank you. Now recognize the Chairman Emeritus
of the Committee, Mr. Barton, an engineer himself.
Mr. Barton. Well, thank you, Mr. Chair. I am not a
registered professional engineer anymore. I used to be, but to
the registered professional engineers, that is as it should be
a sensitive issue. So I have been registered, but I am not at
this time. But I was trained as an engineer and did practice as
a registered professional engineer.
I know that the purpose of this hearing is not on the
legality of these standards, but I do just want to point out
that in the Energy Policy Act in 2005, there is a section
402(i) that very specifically says that these clean coal
standards cannot be set on projects that are demonstration
projects that are receiving assistance. It is explicit. The
chairman and several others of us have sent a letter to the EPA
and DOE on that. I mean to EPA, but that is a subject for a
different issue.
My generic question is pretty straightforward. All of these
carbon capture sequestration technologies add cost to these
coal plants. Could you all give the subcommittee kind of a
baseline estimate of how much it adds to the cost? Does it
double the cost? Does it increase it by 25 percent, 50 percent?
What is the generic estimate?
Mr. Friedmann. Thank you very much for your question. I am
happy to provide that answer. It is a question that a great
number of people are asking. First a quick caveat. Again that
number, the precise number, will vary by plant whether it is
subcritical or supercritical by coal rank, and by the kind of
technology used.
Typically we express these costs as a range. So for the
first generation technology that Dr. Klara was mentioning
earlier, we are looking at something on the order of $70 to $90
a ton. In that context, that looks something like a 70 or 80
percent increase on the wholesale price of electricity.
For the second generation technologies, which we are
developing, it is our strong expectation that that number will
be roughly half. We will be looking at something like a $40 or
$50 a ton cost.
Mr. Barton. So the initial technology almost doubles the
cost, and the next generation is going to add 25 percent to the
cost. Is that fair?
Mr. Friedmann. Again with respect to the wholesale price,
yes. The retail price, of course, will vary by market. One of
the points that I would like to make though, it is in fact a
substantial percentage increase in the cost of electricity. But
in part, that is because the current price of coal is so low
that it represents a large percentage increase.
Mr. Barton. Now, what has to happen to go from doubling to
only increasing by 25 to 50 percent? What is the timeframe for
that? And how many plants have to be built and how many more
billions of dollars or hundreds of millions of dollars have to
be spent?
Mr. Friedmann. I am going to answer partly and then leave
the rest of the answer to Mr. Klara for that. Again we have
laid out a very clear road map for R&D programs, and we believe
that we will hit the marks that we have laid out in terms of
major milestones and deliverables. We are looking towards a
second generation of demonstrations coming forward in the next
few years. They would be completely deployed and the learnings
provided back to the public about the middle of the next
decade, 2022 to 2025 timeframe. And those second generation
demonstrations would have substantially reduced costs. Mr.
Klara.
Mr. Klara. Yes, and I will just confirm what Dr. Friedmann
said in terms of a 10 year or less timeframe to get to that
second generation developmental efforts. Relative to costs to
do that, our assumption for that is that we will have levels
commensurate with what we have today going forward. And that is
our basis in determining if and when we can hit those marks.
And again the 10-year time horizon or less is the horizon we
believe we are looking at right now for these.
Mr. Barton. So 10 years is good. Now, all of these
demonstration projects, I believe, so far are on capture and
sequestration, but former Congressman Rick Boucher when he was
on the committee and the subcommittee chairman of the Energy
Subcommittee had a bill that he tried very hard to get me to
cosponsor. I never was able to unfortunately, but I got him to
put in that bill some language on conversion of CO2.
I happen to think that it is going to be much more cost
effective to convert CO2 as opposed to capture and
sequester it. Is EPA or DOE doing any research right now on
CO2 conversion as compared to capture and
sequestration? And this will be my last question.
Mr. Friedmann. Yes, sir. The good news is indeed we are. In
addition to carbon capture and storage, we also do research in
carbon utilization which includes using CO2 to make
beneficial products or converting the CO2 into other
substances or products themselves. Currently the majority of
that effort is in enhanced oil recovery, which provides many
benefits to the country including domestic secure fuel supply
at low cost. There are other pathways to utilization which we
are pursuing. There is a project actually in Texas, the
Skyonics Project which we are piloting at about $110 million.
That is going to convert carbon dioxide to basically mineral
aggregate and cement admixtures.
We are also looking at converting carbon dioxide into algae
and then that algae into other useful products including animal
feed on one end of the spectrum and possibly biofuels on the
other. We have a project at the Polk Plant in Florida where we
are doing that today.
Mr. Barton. You were ready for that question. Thank you.
Mr. Murphy. The gentleman's time has expired. Now recognize
Mr. Waxman for 5 minutes.
Mr. Waxman. Thank you, Mr. Chairman. Well that is what this
hearing is all about, so I would expect you to be ready for all
of our questions since this is the field in which you both work
so carefully.
Industry can pollute because it costs less to dump
pollution than to pay to clean it up. Unfortunately dumping
pollution is never really free. There are costs. The American
people bear those costs and bad health, and our environment is
also polluted. And we pay a price for that. So the Clean Air
Act is one of the most successful environmental laws in the
world, and one reason the Clean Air Act works so well is that
it sets standards to drive technological innovation in
pollution controls often called technology forcing standards.
Currently there are no limits on carbon pollution from
coal-fired power plants. These plants are allowed to emit
unlimited carbon pollution into the atmosphere, and that is
just what they do. EPA is proposing carbon pollution standards
that would address this problem by requiring the new power
plants, coal-burning power plants, to reduce carbon pollution
by 30 to 50 percent through the use of partial carbon capture
and sequestration technology or CCS.
Dr. Friedmann, if we didn't have an EPA requirement, would
you expect the power sector to use CCS at new coal-fired power
plants?
Mr. Friedmann. It is unlikely that they would deploy CCS
technology in large part because they would not be able to get
return on their investments through the public utilities
commission process.
Mr. Waxman. And they don't want to make an investment on
something where their competitors aren't spending that money
either. Isn't that correct?
Mr. Friedmann. It is worth mentioning that I am not a
utility executive, but that has been my experience.
Mr. Waxman. Well, if you don't have this requirement, why
spend the money? Why would a coal company or a power plant want
to spend the money if they didn't have to if they could do it
without having to spend the money and they can continue doing
business as usual?
In 2011, American Electric Power abandoned its plan to
install full-scale CCS at the Mountaineer Plant because the
company could not recover its costs in the absence of a
government requirement. So without a mandate, we are not going
to get carbon pollution controls on coal, and that is why EPA
rules are so essential.
Of course, government can also help industries develop the
technology to meet pollution standards. There is a long history
of government investment spurring private sector innovation in
areas such as defense, technology, energy development. Even
small government investments can produce big gains for the
public and create huge new markets. Dr. Friedmann, isn't this
what your office does? You invest in new technologies and work
with the private sector to help clean up coal?
Mr. Friedmann. Indeed it is. We spend our appropriations
with the purpose of developing this technology, demonstrating
its validity, and helping commercialize it in partnership with
both utilities and heavy equipment manufacturers and other
industrial partners.
Mr. Waxman. Besides CCS, what are some examples of
pollution control technologies for coal or coal efficiency
technologies that DOE has invested in and helped bring to
market?
Mr. Friedmann. One example is the TRIG Gasifier. The
transport gasifier was developed as a partnership between
Southern Company and the Department of Energy over the past 30
years. That is the core technology in the Kemper County
demonstration, and we have helped bring that from pilot reactor
scale up to large scale commercial demonstration.
Another example is a coal drying technology. This was
funded actually between 2000 and 2004 in North Dakota with the
Coal Creek Plant in which the lignite drying was used to
increase the efficiency of the power plant output and did so
between two and four basis points on the plant.
Mr. Waxman. So you had SCR and more efficient boilers. Is
that right?
Mr. Friedmann. SCR is another technology which
desulfurization and de-NOx technology, mercury technologies,
they are all technologies which the Department of Energy has
supported over the years.
Mr. Waxman. But we have a long record of DOE's investments
and EPA standards that work hand in hand. For example, DOE
funded the first U.S. demonstration of a technology, this SCR,
the selective catalytic reduction, which was ultimately used to
comply with EPA's NOx standards in the 1990s. The same is now
true with CCS. DOE has helped develop the CCS technologies
needed to reduce carbon pollution from new coal-fired power
plants, and now EPA has proposed reasonable standards that will
take advantage of these demonstrated technologies to reduce
carbon emissions.
Dr. Friedmann, what are the other advantages of these
government investments? Do you think there will be a global
market for American CCS technologies?
Mr. Friedmann. Indeed we are already seeing that. We are
seeing companies around the world, most notably in Japan and in
China, which are interested in United States technology that is
considered clean coal technology both because of high
efficiency and because of potential for carbon capture.
Mr. Waxman. So it is good for American business? We can
export this?
Mr. Murphy. The gentleman's time has expired.
Mr. Waxman. Well, I want to at least go as long as my
colleague.
Mr. Friedmann. I think that would remain to be seen.
Mr. Murphy. He went over 55 seconds, so----
Mr. Waxman. So I think we ought to celebrate the ability of
the new technologies to go along with the standards because it
is going to be a win-win proposition. Thank you, Mr. Chairman,
for your indulgence.
Mr. Murphy. We will get the facts. You are welcome. I will
now recognize Dr. Burgess for 5 minutes.
Mr. Burgess. Thank you, Mr. Chairman. Again, thanks to our
witnesses for being here and being so thoughtful in your
preparation and your answers. Can we talk just a little bit
about the feasibility and what you have been able to
demonstrate commercially? I mean, I get it that small projects
may hint at the feasibility of doing this type of activity. But
where do you think we stand as far as pushing at the commercial
viability? Because after all, that is what I think the
government investment was working toward, not just an
interesting experiment but something that will actually work.
So can you give us a sense of that feasibility versus
commercial viability?
Mr. Friedmann. Absolutely. Thank you for your question and
again this is a core question which is asked of the CCS
community regularly. I am happy to provide some clarification.
As I mentioned before, this first generation CCS technology is
commercially available today. You can call up a number of U.S.
and international manufacturers, and they will sell you a unit
at a large scale for capture of more than a million tons per
year. In fact, a number of our large projects, for example, the
Petro Nova Project in east Texas is run by NRG, in fact is
using commercially available post-combustion capture technology
unit. That procurement we expect to happen this year after they
reach financial closure.
Mr. Burgess. Now do you have any projection for the return
on investment, say for that NRG project in east Texas?
Mr. Friedmann. Thank you. I am very happy to answer that
question. Again this is an important one, and it will take just
a moment to answer so please bear with me. We consider it an
important function of the Department of Energy and as a
government public goods return to help fund the first-of-a-kind
project. First-of-a-kind projects are not projects which a bank
will finance ever. So typically we provide anywhere from 10 to
30 percent of the cost share into a project to match the
private capital do the rest.
It is also our experience that the second-of-a-kind project
is something the market takes on itself. In our communications
with NRG so far, they have been very pleased with the return on
investments they are going to get, granted given that
government money that helped get the project over the top. In
large part, that is because of the return on investment from
enhanced oil recovery revenues. And they purchased a component,
an equity into the field which are producing additional oil
from the CO2 injections.
The last thing I wanted to say on this is that they have
also told us that they believe that what they have learned on
the first project is sufficiently good that they can do a
second project and get sizable returns on investment without
government assistance.
Mr. Burgess. And have they prepared for you then any sort
of pro forma or any type of accounting where the taxpayer
investment may be expected to return a yield in the future?
Mr. Friedmann. One of the things that is important about
the deployment of these technologies is that it spurs new
business models. One of the things that we have seen is they
are creating a new business model by aggregating and holding
company projects like this one and the other to get those
returns.
Mr. Burgess. Yes, my time is going to run out, so I am
going to need to interrupt you. I am not trying to be rude
here, but you did, I think, reference into another question
that some of this activity has been going on for what did you
say, 30 years or 35 years in the commercial production of
carbon for oil recovery? Is that correct?
Mr. Friedmann. Yes, sir.
Mr. Burgess. So at what point? It has been 30 or 35 years.
At what point can we expect to see a return on investment if
there is in fact a commercial application for recovered carbon
dioxide?
Mr. Friedmann. For most applications in the power sector,
which is the area of greatest concern, I believe, to this
committee, there is still a gap between how much you can sell
CO2 for in post-combustion and how much you can--how
much it costs to deploy. A typical CO2 off-take
agreement for enhanced oil recovery is between $30 and $40 a
ton. Typical post-combustion capture is between $40 and--I am
sorry--is between $70 and $90 a ton. And you can't make that up
on volume.
Mr. Burgess. No, you can't.
Mr. Friedmann. So that is part of the basis on which we
continue to develop low cost technologies.
Mr. Burgess. Again I am going to interrupt you because I
need to go in another direction very quickly. I mean we are--in
my home State of Texas, energy production is a big deal. There
are some concerns surrounding a different type of energy
technology and energy production with recent effects on seismic
activity. Now, the head of the Texas Railroad Commission came
and talked to us in 2005. He said the State of Texas was going
to take title to the carbon that was being sequestered at one
of the projects. How important is that that a state take that
title to that compound? And then I guess the inference in that
is the state would then have the liability that would not be
borne by the industry.
Mr. Friedmann. We continue to do work with the Bureau of
Economic Geology, which is in close partnership with the
Railroad Commission in Texas. We have a number of programs in
our house which look at the potential risks associated with
CO2 leakage, events like seismicity and how to
manage those and monitor it well. The questions of long-term
liability are ones which still remain open. There are many,
many potential policy pathways to manage transfer of liability
and these sorts of issues.
At this point, I believe that mechanisms like the one you
described were put in place in part to attract industry to find
ways to make it more advantageous and more possible in a state
such as yours and Texas to execute CCS projects.
Mr. Burgess. Thank you. Thank you, Mr. Chairman.
Mr. Murphy. The gentleman's time has expired. Now recognize
the gentlelady from Florida, Ms. Castor, for 5 minutes.
Ms. Castor. Well, good morning, and thank you, Mr.
Chairman, for calling this Oversight hearing on the Department
of Energy's clean coal initiatives. Last June, President Obama
issued a climate action plan, correctly noting that we have a
moral obligation to leave our children a planet that is not
polluted or damaged.
One way we can do that is through smart, clean technology
investments like the kind that the Department of Energy is
demonstrating with the next generation of power plants that
employ carbon capture and storage. And I would like to find out
from our witnesses how they believe their work fits in with the
president's climate action plan and how the clean coal research
program is helping to combat climate change and reduce
emissions of harmful greenhouse gases.
Dr. Friedman and Mr. Klara, coal constitutes a significant
percentage of this country's carbon emissions, approximately 30
percent. So logically cleaning up coal is essential to tackling
climate change. Do you both agree with that statement?
Mr. Friedmann. I am sorry. Could you make that statement
again? I want to make sure I am answering correctly.
Ms. Castor. Coal constitutes a significant percentage of
the country's carbon emissions, approximately 30 percent. So
logically cleaning up coal is essential to tackling climate
change.
Mr. Friedmann. There have been many economic analyses of a
whole slate of clean energy technologies, and what has been the
overwhelming conclusion of all of those studies is that if you
take any clean energy technology option off the table, the cost
of reducing CO2 emissions globally goes up. If you
don't have an option like CCS, the total cost of managing
climate change goes up. But that is true of all of the clean
energy technologies.
Ms. Castor. Mr. Klara?
Mr. Klara. And I think it is important to note also that
our technology set is not just about coal. Our technology set
is about CO2. So if you look at the capture
technology portfolio, most if not all of those technologies
could work on natural gas, fire electricity, et cetera. If you
look at the transport and storage component, a CO2
molecule is a CO2 molecule.
So the importance here is that the portfolio is truly a
global portfolio that could impact future CO2
emissions.
Ms. Castor. Now, your testimony so far has illuminated that
you have done substantial work on clean coal and carbon capture
really probably more than most people appreciate that has been
going on not just under the Obama Administration but under the
Bush Administration before that.
But now with the new climate action plan that is very
broad-based and focused on a number of different strategies to
reduce carbon pollution, Dr. Friedmann, how do the Department
of Energy's carbon capture and storage investments fit in with
the president's climate action plan?
Mr. Friedmann. It is actually literally central to the
plan. It is in the middle of the document that carbon capture
and storage is an important part of the strategy, and the basis
for that is what I described before. Removing any option
actually ends up increasing the net cost of the body public.
Ms. Castor. And are there any other coal technologies that
can reduce carbon pollution as much as carbon capture and
storage?
Mr. Friedmann. There are many coal technologies that could
improve the efficiency of coal conversion that could reduce the
emissions some. In order to dramatically reduce CO2
emissions, carbon capture and storage would be required.
Ms. Castor. OK, if the Department of Energy and researchers
and your industry partners are able to successfully develop and
advance CCS technology portfolio for large-scale deployment by
2020, what kind of impact do you think that could have on
CO2 emissions and our climate?
Mr. Friedmann. That ultimately really is a function of the
rate of deployment, and the rate of deployment is contingent on
many, many things. It is our hope to see increase in large-
scale deployment quickly so that, say by 2050, somewhere
between 12 and 20 percent of U.S. emissions and 12 and 20
percent of global emissions would be managed through carbon
capture and storage.
Ms. Castor. OK, well I am glad the Department of Energy is
making these important investments because the dangers of
climate change are real. The costs that face our communities
all across this country are very significant, the costs to all
Americans, the cost to businesses. We simply cannot put our
head in the sand. Yet you see power plants today. They still
have that business incentive to emit unlimited amounts of
carbon into our atmosphere, and that means the rest of us will
pay the price. So we have got to work on this together. It is
important that we make smart, clean technological investments
now. Otherwise, we will not only make climate change worse, but
we will make it harder and more expensive to address the
problem in the future. And we can't afford to ignore the
crisis. This is America, and we can tackle this together. Thank
you very much.
Mr. Murphy. Thank you. The gentlelady's time has expired.
Now recognize Dr. Gingrey for 5 minutes.
Mr. Gingrey. Dr. Friedmann, you have been so accurate in
answering all these questions. I am thinking about asking you
your opinion on how much CO2 would be released into
the operating room if you did a hysterectomy by robotic surgery
versus the open convention method. I am just kidding, of
course. I won't ask you that. You probably would have the
answer to it.
The first generation CCS project is currently on the way to
full-scale demonstration do not all demonstrate the same
technologies, do they?
Mr. Friedmann. No, sir.
Mr. Gingrey. What is the value of demonstrating different
types of technologies?
Mr. Friedmann. Let me start answering this and then leave
Mr. Klara some time as well. Today on a thermodynamic basis and
on a cost basis, all of the pathways look equally viable. Given
that, it is hard to decide which technologies the market will
select based on engineering and based on long-term cost
reduction and viability. That is the basis on which we are
pursuing pre, post and oxy-combustion pathways because on a
thermodynamic limit basis and on an engineering improvement
basis, they all look like they could be winners.
Mr. Gingrey. Before we go to Mr. Klara, the second part of
that question. Are the current technologies being demonstrated
sufficient to answer all the technical questions about full-
scale operations of CCS for all types of coal plants using all
types of coal?
Mr. Friedmann. We would say the overwhelming majority of
questions on the overwhelming majority of plants.
Mr. Gingrey. Mr. Klara, did you want to comment on that?
Mr. Klara. Yes, I would like to comment that relative to
our portfolio of technologies that one size doesn't fit all.
Sorry about that. Better? Relative to our portfolio that one
size doesn't fit all. So a portfolio of technology is sometimes
needed to get the widest deployment. And also too it is
important, I think, in a portfolio to have multiple
technologies essentially competing with one another.
And so what that does is it tends to really be a forcing
factor to drive the cost down substantially relative to these
competing options.
Mr. Gingrey. Let me go back to Dr. Friedmann. According to
DOE's December 2010 CCS R&D and demonstration roadmap, there
were seven CCS demonstration projects for coal power plants.
Three of these plants were estimated to start up in 2014, three
2015, and one in 2016. To date, only one project, Kemper
County, Mississippi gasification project operated by the
Southern Company, the great Southern Company headquartered in
Atlanta, Georgia, is expected to start operations this year
roughly on schedule. Two of the projects have been cancelled,
and the remaining four projects are 2, 3, and 4 years behind
schedule according to project summaries reviewed by our
committee staff.
First do you agree that some of these projects are
significantly behind schedule? And secondly is it possible that
we will see further delays or even abandonments before getting
to the point of pushing the switch to start up operations given
that four of the five projects are still only on paper?
Construction has not commenced, and finance hasn't all been
closed.
Mr. Friedmann. Thank you. That is an excellent question,
and I am happy to answer it. It is the nature of large projects
that they take longer than expected, cost more than expected,
and some of them don't make it. In this context, it is part of
the reason why we are so committed to the portfolio of projects
that we have.
Sometimes things just get in the way, and you can't
anticipate them. In that exact context, we are passionately
committed to seeing all of those projects succeed, all eight of
them. And right now, we are on a trajectory where all eight of
those projects are headed for commercialization. And I want to
just reiterate, I do not believe and I would not say that I am
concerned about the delays. It is the nature of large projects,
in particular getting the debt financing and the equity.
Mr. Gingrey. Let me ask Mr. Klara to comment on that too as
well, Dr. Friedmann.
Mr. Klara. On the same topic?
Mr. Gingrey. Yes, on the same topic, yes.
Mr. Klara. Yes, it is a difficult environment right now
relative to putting new plants in play, and that difficult
environment has a couple factors to it. One is that it requires
billions of dollars worth of financing to put a plant into play
and financing is----
Mr. Gingrey. OK, I am going to stop you because I have one
last question that I want to get in and I don't want to run
over time. Now, if that is the case, how has the Department of
Energy been adjusting its timeframes and game plan to ensure
that CCS technologies for coal-fired power plants are
sufficiently demonstrated across the types of coal and various
types of coal plants? Will you have all the answers by 2025,
2030? And what happens if two or three of these coal projects
are significantly stalled or indeed cancelled?
Mr. Friedmann. Again we are still on track for what we
think is the second generation of demonstrations by 2025, and
that that is the timeframe in which the most important
learnings will be needed. Even if one or two of the projects
should unfortunately happen to fall apart, that would leave a
gap in our understanding but would still provide a lot of
information and a lot of technical findings around what is
necessary to get projects off the ground and the likely
performance of the technologies.
Mr. Gingrey. My time has expired.
Mr. Murphy. Thank you. The gentleman's time has expired.
Now recognize Mr. Tonko for 5 minutes.
Mr. Tonko. Thank you, Mr. Chair. House Republicans have
talked incessantly about the administration's supposed war on
coal. This simply doesn't square with reality. The fact is the
Obama administration has invested billions of dollars in
projects with industry partners to advance technologies for
coal-fired power generation.
DOE's CCS investments along with the EPA's proposed carbon
emission rules for electric plants will assure that coal has a
way to remain viable even as we have to cut carbon pollution
and avoid catastrophic climate change. That being said, Dr.
Friedmann, how do you react to the allegations that the
administration is waging this war on coal? You work with the
coal industry on a regular basis. What is your relationship
with the industry like?
Mr. Friedmann. It is both my pleasure and my privilege to
work with the coal industry, which contains some of the best
minds and the best businesses in the United States. And I
continue to believe that coal is actually a required part of a
vibrant American economy and part of the future. In this
context, the work we are doing on CCS is critical. It is a key
pathway forward for a sustainable low-carbon energy future with
an era of abundance of fossil energy that we live in today.
Mr. Tonko. Thank you. And, Dr. Friedmann, how important do
you think DOE's CCS investments are for the future of the coal
industry?
Mr. Friedmann. Again it is very hard to achieve climate
change goals and deep emissions reductions in the fossil energy
sector without CCS. Secretary Abraham in 2002 called it
basically a cine qua non technology. It is a technology which
we simply need to have.
Mr. Tonko. And DOE invested some $270 million, I believe,
in the Kemper facility.
Mr. Friedmann. $270 million, sir.
Mr. Tonko. Right.
Mr. Friedmann. Yes.
Mr. Tonko. In the Kemper facility that is set to come
online later this year. How much private capital was added to
that DOE initial investment?
Mr. Friedmann. I believe at this point, it is up about $4.5
billion total.
Mr. Tonko. Four point five billion?
Mr. Friedmann. Yes, sir.
Mr. Tonko. Well, that is an immense investment to new coal
spurred by DOE funds. And according to Southern Company
subsidiary, Mississippi Power, the project is creating nearly
12,000 direct and indirect construction jobs and will create
over 1,000 direct and indirect permanent jobs.
Dr. Friedmann, DOE has also invested $450 million in this
Summit Texas Clean Energy Project. How much private financing
was added to DOE's investment in that given project?
Mr. Friedmann. OK, we have committed to Kemper--I am
sorry--to Summit, it is a commitment. It has not yet been
spent. But it is close to financial closing. It has not yet
closed financially. It is our expectation that we will
ultimately lever about $3 billion of foreign direct investment
into that project.
Mr. Tonko. And again according to the company, my
information is that the project is expected to create up to
2,000 direct construction jobs and 150 direct permanent jobs.
So what do you think these projects tell us about the future of
CCS? Are private financiers going to invest billions in
projects like this if they don't see them as viable or
profitable?
Mr. Friedmann. Again a critical finding for the Department
of Energy's work in all energy sectors is that we cannot
attract investment in the first plant absent government
support. Once the first plant is built and demonstrated and
improvements are made in engineering, business model and
financing, then the second project and the third project can
get done by the private sector. Absent that initial federal
investment, the project won't get built.
Mr. Tonko. We are focusing on CCS today, but there are
other ways to reduce carbon emissions through increasing the
efficiency of coal-fired generation. And Representative Waxman,
I believe, asked you a bit about that efficiency. What level of
efficiency improvements are being targeted by your research
program?
Mr. Friedmann. We are basically looking to make for the
most part incremental improvements in the efficiency. For
people who aren't engineers, a one or two percent plant
efficiency sounds small, but it is not. It is actually a big
improvement on the output of the plant. Just a couple of basis
points actually is big. For individual components of the
program, for example sensors and control systems, advanced
manufacturing, these sorts of things, for the most part can
improve the existing fleet each a couple of percent.
Mr. Tonko. I know that I have used up my 5 minutes. So with
that, I will yield back, Mr. Chair.
Mr. Murphy. Thank you. Just to clarify what you said, you
said $270 million, is that what your----
Mr. Friedmann. For the Southern Company Project, yes.
Mr. Murphy. Energy. And I think there was also some
investment tax credits, $130 million or so.
Mr. Friedmann. So the $130 million of investment tax
credits are set to lapse in May because of the delays
associated with the project.
Mr. Murphy. So they will not get that investment tax
credit?
Mr. Friedmann. We are still in discussions with the IRS,
but at this point, no, they would not be eligible to receive
those investment tax credits.
Mr. Murphy. And just can you follow up. So the initial
costs, I think, were $1 billion now. It is $4.5 to $5 billion
talking about the plant costing?
Mr. Friedmann. I think the original plant costs were more
like $2 billion, but yes, there has been substantial increases
in the cost of the plant.
Mr. Murphy. Thank you. Thank you for clarifying that. Now I
recognize Mr. Scalise for 5 minutes.
Mr. Scalise. Thank you, Mr. Chairman. I appreciate you
holding this hearing, and I want to thank our two guests for
coming from the department. The 2010 report on interagency task
force on carbon capture and storage. I believe that was both
Department of Energy and EPA that put that report together. But
it notes that existent CO2 capture technologies for
coal-based power plants ``are not ready for widespread
implementation primarily because they have not been
demonstrated at the scale necessary to establish confidence for
power plant application.'' And the DOE goal of developing
systems that result in a less than 10 percent increase in the
cost of energy by 2015 is still at a conceptual stage.
So we had Kemper here before our committee talking about
some of the challenges that they are facing in kind of being
that first company to come out and do this. I think you all
recognize that, you know, we still don't have a replicable
model. It seems like there is a difference between Department
of Energy and EPA on whether or not you have got one plant
being built, how their experience is working, especially with
the uniqueness of their location to energy sites where, if you
can use that carbon capture to do enhanced oil recovery, which
is definitely something that is important to our state in
Louisiana, Texas, other states.
But if you don't have that same proximity, then the
viability isn't the same either, and do you all recognize that
especially when you are looking at whether this facility is a
replicable facility?
Mr. Friedmann. So because it has been brought up twice, let
me mention that Mr. Klara was an important contributor to the
2010 report. I would be remiss if he didn't have a chance to at
least speak to it. But to the pursuant of your question, the
technical availability is independent of the economic
viability. And we in fact have--you can deploy the same
technology in Illinois where there is not enhanced oil recovery
opportunities as you would deploy in Texas.
The return on investment would vary, and part of the goal
is to find ways and pathways that we can pursue to reduce the
cost so much that the local increase in cost of electricity is
as low as possible.
Mr. Scalise. And I will let Mr. Klara give his answer
first, and then I want to get into that, that increased cost of
electricity because at the end of the day, consumers are
concerned as people are out advancing new technologies, we all
promote the advancement of new technologies. But you have also
got to be concerned about the impact on consumers when they
talk about whether or not it is going to increase their
household electricity rates. That is their main concern, and
clearly we are seeing increases in a number of these areas on
the amount people pay for their household electricity. That
affects lower income people most, and yet that is one piece of
the equation that I am not sure if EPA is really that concerned
about right now. But, Mr. Klara, if you want to go.
Mr. Klara. The purpose of our demonstrations is indeed to
get us over that hurdle of proving the technologies in a
commercial scale, and you mentioned the cost issue. These
projects are first of a kind, and, as Dr. Friedmann indicated,
that is why the government investment is so important to get
them up over that hurdle.
And what we can speak of relative to cost, again going back
to some earlier comments, would be the fact that our portfolio
is designed to drive that cost down substantially in addition
to these learning curves which these demonstrations are
critical to get started.
Mr. Scalise. Let me ask you. We know that at present none
of the CCS technologies for coal-fired plant power generation
has successfully completed demonstration. Is that correct?
Mr. Friedmann. In this country, that is correct.
Mr. Scalise. OK, we know that this will take upwards of 10
years to establish. Is that correct?
Mr. Friedmann. I don't think that is correct actually.
Mr. Scalise. How long do you think it would be?
Mr. Friedmann. Again we are already gathering learnings
from our demonstrations as they are standing up. Kemper will be
operational at the end of this year. That will be an important
technical finding, and within sort of 2 or 3 years of
operation, we should have a strong sense as to whether or not
that plant is replicable in a viable option for the future.
Mr. Scalise. Well, and I hope you would know that Southern
Company, the owner of the Kemper plant, has said that this
plant ``cannot be consistently replicated on a national
level.'' Were you aware that they said that?
Mr. Friedmann. Yes, sir. We have had those conversations
with the CEO and the senior staff of Kemper and of Southern
Company. That is exactly the basis on which we have a wide
portfolio of plans.
Mr. Scalise. Because they are the ones that are out there
making this big investment. They are seeing that the costs are
a lot more than anybody expected, and they are also recognizing
the geographical limitations that you can't just--and if EPA
wants to go and say OK, look, they were able to do it and they
figured out a way to make it work, cost them a whole lot more
than they were expecting, but they made it work, discounting
the fact that the way they had to make it work was having this
close proximity for EOR. Then they are going to go and say OK,
well now everybody can do it and come up with some rules that
literally shut down power plants or raise the cost so high that
again you get to this problem that consumers then would have 10
percent, 20 percent, maybe higher increases in their
electricity rates.
And I just hope that that would be a big part of the
consideration too is the impact on consumers, especially poor
people, when they are going to have to pay the bill.
Mr. Friedmann. Thank you again for that question. We really
do understand the issues that consumers and the power
generators share about concern about cost.
Mr. Scalise. I just hope EPA has that same concern, and I
yield back the balance of my time.
Mr. Murphy. Gentleman yields back, and now to the gentleman
from Mississippi who represents the third district, the home of
Kemper plant, which we hope he invites this committee to. Mr.
Harper is recognized for 5 minutes.
Mr. Harper. Thank you very much, Mr. Chairman. I appreciate
the opportunity, and certainly we are enjoying watching that
massive facility being built in Kemper County, and as you know
that is in my district in Mississippi. But it is clear others
around the world are watching to see how this goes forward. If,
as EPA says, this has all been done before, what is it about
Kemper that makes it so important to the future of clean coal
technology in this country and around the world?
Mr. Friedmann. Let me start by stating that there is just
an immense body of evidence around the function, cost, likely
future cost, and technology pathways, current performance and
so forth for carbon capture and storage. That said, we have a
special place in our hearts for the Kemper plant. In part
because it is truly demonstrating a novel gasification
technology, the TRIG gasifier at commercial scale, in part
because it is testing a new business model, this co-location of
mining, upgrading, and refining.
Kemper is not just a power plant. It is basically a carbon
refinery which sets out a number of products including ammonia,
naphthenes, liquid fuels, as well as CO2 for
enhanced oil recovery. That business model is every bit as
important as the technical findings that we are going to get
from this.
Mr. Harper. Mr. Klara, anything you would like to add to
those remarks?
Mr. Klara. Well, I concur with that, but also just a couple
comments on our demonstration program in general. My belief
would be that none of these project developers, none of these
companies came into this with their view of this is going to be
a one-off, one-of-a-kind. And so a lot of business models
certainly going into our demonstration program are indeed
looking at replication of this technology at some point.
Mr. Harper. And that replication you would view as just in
the United States or worldwide?
Mr. Klara. Well, if you look back to the history of things
like criteria pollutants, NOx and SOx control that the United
States showed technology leadership. And much of that
technology is being deployed internationally. I would expect
the same to occur with the development of carbon capture and
storage.
Mr. Harper. And then Mr. Friedmann.
Mr. Friedmann. If I could add a little bit to that.
Mr. Harper. Yes, please.
Mr. Friedmann. Our conversations with Southern make clear
that they very much see a Kemper 2.0 and a Kemper 3.0 and
imagine some of those plants around the world where low-cost
lignite is also available.
Mr. Harper. OK, and as you said the Kemper project works in
this particular situation in Mississippi because of the TRIG
technology, which gasifies local lignite coal and uses the
carbon to increase nearby oil production. Where else in the
world is there this sort of potential where you have a
generation source no one would otherwise use and the
CO2 can be used for oil production?
Mr. Friedmann. In the United States, we are looking all
along the Gulf Coast, also in North Dakota in the lignite belt.
Outside the United States, we are looking at Turkey. We are
looking at inner Mongolia. We are looking at Kazakhstan. There
are other places where there are a combination of resources in
the form of lignite and enhanced oil recovery opportunities.
Pakistan is another one where one could imagine building a
plant like this and reaping the commercial benefits.
Mr. Harper. You know, a few years ago, people were saying
that there is nowhere near the capacity in enhanced oil
recovery to take the output of the CO2 from a large
part of the coal fleet. Now I am hearing some say that the
capacity for EOR is growing substantially. But what is the
potential for enhanced oil recovery in this country? And is
there potential for this technology to grow particularly in
light of recent advances in oil exploration and production?
Mr. Friedmann. Thank you. That is an excellent question. It
also gives me the opportunity to acknowledge the outstanding
work of Advanced Resources International here in Virginia,
which has done a lot of this analysis. Indeed detailed
characterization and assessments of fields in the United States
and worldwide shows a much higher opportunity for enhanced oil
recovery than previously recognized in the United States, well
north of 60 billion barrels of potential additional recovery.
Beyond that, we are seeing advanced technology and practice in
enhanced oil recovery, in particular, looking at residual oil
zone production as a further multiplier, possibly two to three
times that much in the United States, creating the opportunity
for hundreds of billions of barrels around the world. In all
those locations, the primary limiting step is the availability
of carbon dioxide for EOR.
Mr. Harper. Thank you both for being here, and, Mr.
Chairman, I yield back the balance of my time.
Mr. Murphy. Gentleman yields back. Now go to Mr. Olson of
Texas for 5 minutes.
Mr. Olson. I thank the chair, and welcome to Dr. Friedmann
and Mr. Klara. Back home in Texas, we have a saying you
probably have heard: ``Always put the horse before the cart.''
The research you all are doing with CCS is the horse that makes
CCS viable in the free market. You are pulling the cart.
Unfortunately EPA is using the research as a model for the
entire country that CCS is viable. That is putting the cart
before the horse. It is not viable.
And, Dr. Friedmann, you testified with Ms. Schakowsky that
your job is not to determine viability, just the science of it.
I am glad to hear that. As she brought up, there are pockets of
viability here in America for CCS. They are in Texas in my
district outside of Houston. They are viable by using captured
CO2 for enhanced oil recovery operations, EOR. EPA
knows this.
In the new plant rules' impact analysis, here is a quote
from EPA's report. ``The opportunity to sell the captured
CO2 for EOR, rather than paying directly for its
long-term storage, strongly improves the overall economics.''
I was pleased to hear you mention Petra Nova. That is the
Parish power plant in Needville, Texas. I can see that power
plant walking out on my front lawn. It is one of the largest
ones in the country, as you know. Four natural gas generators
of power, four coal generators of power with the natural gas,
the fifth one, coming online quickly.
The plant sits on top of an old oil field, very close to
it. They are planning to capture CO2 to use it to
get oil, but their situation is unique, and that is why it may
be viable. There is another project in my district called
Denbury Resources there in Alvin, Texas. In 2001, they bought
the Jackson Dome in Mississippi. As my colleague to my left,
Mr. Harper knows, that is the largest natural CO2
deposit east of the Mississippi River. It is 98 percent pure
CO2.
With a massive pipeline infrastructure between their fires
on the Gulf Coast, going up to New England, the eastern part of
the United States, they have access to pipelines. They are
shipping that CO2 from Mississippi down to Texas,
the old Hastings Oil Field, and using that CO2 to
get enhanced oil recovery operations.
My question is, is it fair to say there are few situations
like Parish and Denbury. Now, most states have little
opportunity, no chance for enhanced oil recovery operations
inside their borders.
Mr. Friedmann. Thank you. I am happy to answer that
question having spent happily 5 years living in Texas myself, I
am sure you are familiar with the saying you don't want to be
all hat, no cattle.
Mr. Olson. Yes, sir.
Mr. Friedmann. And we view our job in that context. CCS, in
particular enhanced oil recovery, we view as the bridge to the
bridge of the future. That if we are building a bridge through
CCS deployment to a clean energy future, then EOR is an
important bridge to that bridge. There are a couple of
important benefits that come from EOR early deployment.
The first of these is that you actually get to build the
plant. That is the critical increment that leads to reduced
costs widely. In order for us to see a viable future for CCS
widely deployed, we believe that the cost must come down
broadly. That means building plants and demonstrating how and
learning how to reduce those costs. The EOR projects give us
those first-of-a-kind opportunities to figure out how to do
that.
The second thing I would add is that there may be more of
those opportunities than initially recognized. Per my last
comments to Mr. Harper, it is looking like these residual oil
zones are more broadly distributed than originally understood,
and that provides more opportunity nationwide.
We are also seeing projects like the Boundary Dam Project
in Canada, which is a post-combustion capture project like
Petra Nova's project where they are taking CO2 by
pipeline to the Midale Field in Saskatchewan. And they have
also learned enough from doing that first project that they are
preparing to commit to a second project to do the same thing.
Where those EOR opportunities exist, we believe it is critical
to anchor early projects to reduce the total cost to the
taxpayer, to increase the viability of the projects and to
harvest the key learnings that we need to see CCS widely
deployed.
Mr. Olson. Yes, so it sounds like they are rare. You have
to have some sort of confluence with power generation with some
sort of structure near the power generation to get the
CO2 to use for enhanced oil recovery operations. I
am out of my time. I just want to invite you back to Texas. You
know, you will have your term up in DOE next 4 years probably.
Come back to The Woodlands. You know, ExxonMobil, your former
company, has built a big research center up there. The one from
Fairfax, Virginia is moving to Texas. So come on back. I yield
back.
Mr. Murphy. The gentleman yields back. Now recognize Mr.
Griffith from Virginia for 5 minutes.
Mr. Griffith. Thank you very much, Mr. Chairman. I do
appreciate it. I have in my all-of-the-above policy, I have the
four Ds, dig, drill, deregulate, and discover. Today's hearing
obviously deals with discover. I do appreciate the work that
you all are doing in trying to find ways that we can discover
ways that we can continue to use coal because I come from a
coal mining region in central Appalachia.
That being said, I have been very excited about the work
that has been done by Dr. Fan at Ohio State University in
regard to chemical looping, and as I understand it, last time I
talked to him, he hadn't yet gotten the keys to the facility in
Wilsonville, Alabama, but he was expecting to get that soon.
My question is, because I see that is so exciting because
we end up with, I guess, whatever remnants are left over what
is a very pure burning process of the coal ash and carbon
dioxide. So we eliminate most of the cost of the capture. So
let us assume for the sake of argument that it is successful,
and we get to September and the experiment has worked as well
as all of us could hope. What is next? Where do we go? And what
does DOE do? And I appreciate NETL has been involved in this
project and I appreciate that.
But what do you all do next to try to encourage industry to
go to an even larger project and actually build a plant that
would use this technology that doesn't have to be near lignite
alone or any particular type of coal but could be used anywhere
in the United States or the world.
Mr. Friedmann. Again, thank you for that question, and
again because Mr. Klara's organization does so much of that, I
will make sure he has time to answer in part. Chemical looping
technology is an example of what we would call a second
generation technology in these different buckets. The work that
is going on in Ohio is very exciting. We have another chemical
looping project as well with Austin in Connecticut. And in
fact, we are in discussions right now with ARPA-E to take over
that project and to see if we can't set it up at Wilsonville
and give it a run.
There are a series of technical challenges that come with
association of scale-up demonstration and so forth. But I do
want to mention that one of the interesting values of chemical
looping is that it is actually a dual technology. It can be
used on coal feed as well as on natural gas.
Mr. Klara. And I would just like to add that we are doing
everything we can to push that technology forward.
Mr. Griffith. Well, and I guess my question is that
assuming that it goes well, do you all think you are ready to
step in and say OK, we will help fund this at some plant
because we really need some help in the coal fields? And I see
this as the light at the end of the tunnel. I don't see how it
can possibly be done in less than 7 years, and that is with the
government using the money that it has to take this discovery
and make it real for people where we don't raise the cost of
electricity to where people can't afford it and we continue to
use the rich coal resources of central Appalachia.
Mr. Klara. I began this job just 3 months ago, and in that
context, we are considering exactly what pieces we need to
build into our research portfolio. One thing that we have begun
to realize is that we need second generation large pilot
projects as the critical, technical undergirding of those next
generation of large demonstrations. We are trying to put
together the technical considerations and specifications in
partnership with NETL to figure out what that will look like in
terms of technical work, milestones, and costs so that we can
bring forward those proposals in future budgets.
Mr. Griffith. I appreciate that. I am concerned that we do
have the cart before the horse, and I appreciate what you all
are doing moving forward. But I do think that some of the
regulations coming out of your sister agency, not you all, but
out of your sister agency, are making it hard for people to
survive in the coal industry when we see technology coming down
the pike that may very well solve the problems that a lot of
times we hear of people bringing up in regard to the use of
coal.
I would have to say in September of 2012 testimony before
the Energy and Power Subcommittee, a representative from Austin
who you mentioned earlier, a maker of CCS-related technology,
said that it is unaware that any supplier of CCS technology is
ready or able to offer commercial guarantees for full-scale
systems of carbon capture. What does a technology supplier need
to know to warrant and be ensured for its CCS technologies for
use in a coal power plant?
Mr. Friedmann. Thank you. Since that time, a number of
those companies have actually do now offer performance
guarantees. In part, that is because we have run these large
scale pilots that they need to validate their technology. And
more importantly they have had installation in some of these
large-scale demonstrations. That helps provide the confidence
along with other technology tools like advanced simulation to
allow them to put a performance guarantee in a wrapper around
those facilities.
Mr. Griffith. All right, I appreciate that. Thank you very
much. I yield back the remainder of my time, Mr. Chairman.
Mr. Murphy. Mr. Johnson, you are now recognized for 5
minutes.
Mr. Johnson. Thank you, Mr. Chairman and gentlemen, thank
you for being here with us today. I represent a part of our
nation in eastern and southeastern Ohio that is very dependent
upon the coal industry, both for the energy that we use and
also for the livelihood for the people that work in the
industry. So let me ask you a quick yes-or-no question to get
started off right away. Do both of you believe that America can
solve the technological concerns that the environmentalists
have so that we can use and continue to use coal
environmentally soundly? Just a quick----
Mr. Friedmann. Unquestionably yes.
Mr. Klara. Absolutely.
Mr. Johnson. And do you believe that coal and the vast
resources of coal that we have should comprise a significant
part of our energy portfolio moving forward?
Mr. Friedmann. Yes, I do.
Mr. Klara. Yes.
Mr. Johnson. OK, well thank you. Then let me get into some
specific questions. In December 2010, the DOE and NETL issued a
CCS research development and demonstration roadmap. Among the
goals of that roadmap was that the DOE would develop
technologies that can separate capture, transport, and store
CO2 using either direct or indirect systems that
result in a less than 10 percent increase in the cost of energy
by 2015. When does DOE and NETL anticipate demonstrating CCS
systems that result in less than 10 percent increase in the
cost of energy compared with the non-CCS coal-powered plants?
Mr. Friedmann. Thank you again for that question. The
issues of cost is just forward in our minds, and we are doing
everything we can to reduce it. In that context, we again see
sort of a 2025 timeline for this second generation of
technologies to lead to 10 or 15 or 20 percent cost of
electricity increases that are retail cost.
Mr. Johnson. OK, Mr. Klara, any comments?
Mr. Klara. Correct, and I just say that relative to our
technology portfolio, that those technologies are in our
transformational bucket of technologies. And yes, the 2025 to
2030 timeframe is the current pathway.
Mr. Johnson. OK, your technology assessment published about
a year ago suggests the three technologies which include
sorbents and pre-combustion membranes that may help achieve the
goal are only at the concept stage. Would you say that your
plans of December 2010 are still on target?
Mr. Friedmann. Yes, absolutely. In fact, we have seen great
progress on a number of those which at the time were sort of
leading technologies, things like advanced membranes,
everything from oxygen separation membranes to CO2
separation membranes. The money that we have invested has
allowed those to go from sort of bench scale to small pilot
testing and in one or two cases to large pilot testing. That is
part of the pipeline and the pathway to that large scale
commercialization.
Mr. Johnson. OK.
Mr. Klara. Yes.
Mr. Johnson. Same thing? Over the past several years, the
president's budget request for coal R&D funding has steadily
declined from a request in fiscal year 2010 for $404 million to
the most recent request in fiscal year 2014 for $277 million.
Congress did not agree with these levels of funding and
recently passed an omnibus appropriations bill increasing the
funding by more than $100 million. So what does this say about
your department's aggressive planning and the administration's
priorities to advance coal technology if you are cutting
funding for this work?
Mr. Friedmann. Thank you again for that question. We
recognize that the budget process is complicated, that there
are many, many competing interests, and so we make our
requests. And we make our recommendations to the secretary, and
the secretary brings those to OMB and to the White House. And
together they figure out what is in fact what they want to put
into an omnibus budget.
I would say that in general I think about these kinds of
questions as a tradeoff with urgency. The more urgency one has,
the more one is willing to spend on any particular issue.
Mr. Johnson. I understand the budget process, and I realize
there are conflicting priorities. But do you agree with the
additional funding levels that Congress has appropriated?
Mr. Friedmann. What I would say is that we have very clear
ideas about how we would use that well.
Mr. Johnson. Good, because that was my last question. And I
am sorry. I got 15 seconds so let me get that one in. Would you
please submit to this subcommittee how you plan to spend this
additional funding?
Mr. Friedmann. Yes, we will be happy to take that question
for the record----
Mr. Johnson. OK.
Mr. Friedmann [continuing]. And to have follow up with
additional meetings.
Mr. Johnson. All right, thank you. Mr. Chairman, I yield
back.
Mr. Murphy. The gentleman yields back. I now recognize the
gentlelady from North Carolina, Ms. Ellmers, for 5 minutes.
Mrs. Ellmers. Thank you, Mr. Chairman. And thank you to our
panel. Dr. Friedmann, as I understand it, without government
subsidies, and I think you have already mentioned this, the CCS
demonstrations for coal plants would not be going on. Is this
correct?
Mr. Friedmann. Yes, that is correct.
Mrs. Ellmers. OK, can you briefly describe to me the
taxpayers, how I could go home to my North Carolina taxpayers
and explain to them what return they are getting for these
subsidies and technology development?
Mr. Friedmann. There is a handful benefits that come
forward that I think are pretty clear. In the near term, we
actually get advanced technology that can be used to underlie
manufacturing in the United States. Another thing I would say
is that we actually bring a lot of information back to the body
public, scientific, technical engineering, and business
information, economic information, which is used to make
important investment decisions in the United States.
I would add that our enhanced oil recovery projects provide
two additional benefits. One of those is with additional secure
U.S. oil supply. And the third is actually with the tax
revenues from that. Something that is lost by many people is
that the additional tax returns on enhanced oil recovery
actually pay for all of the government investment in a span of
7 to 8 years. After that, it is actually net revenue positive.
Mrs. Ellmers. So in my understanding, and assuming that the
success of the first generation technologies does take place,
there really will not be wide commercial use of these things
until the 2020s. Is that correct?
Mr. Friedmann. For widespread commercial use, yes, that is
correct.
Mrs. Ellmers. For widespread. So is this why the DOE's
fiscal year 2014 congressional budget states, and I am quoting,
``in the case of electricity generation first generation CCS
technology, cost is not expected to be low enough to achieve
widespread deployment in this near term''?
Mr. Friedmann. Yes.
Mrs. Ellmers. Yes, OK. So now being that that is correct,
at a coal gasification facility, the cost of electricity may be
increased by 40 percent? Is this with the current carbon
capture and compression technology, is this----
Mr. Friedmann. For the first generation technologies, yes,
that is correct.
Mrs. Ellmers. So there will be a 40 percent increase?
Mr. Friedmann. Where deployed.
Mrs. Ellmers. Where deployed. And at a pulverized coal
plant, this cost of electricity increases up to 80 percent?
Mr. Friedmann. Yes, that is correct.
Mrs. Ellmers. That is correct. What size commercial
development for coal plants does DOE think is possible with
current CCS technology given its highest costs?
Mr. Friedmann. I am sorry. One more time. I just didn't get
that.
Mrs. Ellmers. What size commercial deployment for coal
plants does DOE think is possible with current CCS technology
given its high cost?
Mr. Friedmann. At this point, it would be niche
applications. There will be a couple of places in the country,
as we heard from Mr. Olson----
Mrs. Ellmers. OK.
Mr. Friedmann [continuing]. Where you have the correct
confluence of opportunity, resource, and revenue.
Mrs. Ellmers. Just and there again, and I am probably just
asking you to speculate on this. But how many would you say
that would be? When you say niche, are we talking about a
small--like one to five?
Mr. Friedmann. Maybe a few dozen.
Mrs. Ellmers. A few--OK, so 24----
Mr. Friedmann. But I would not consider that widespread.
Mrs. Ellmers [continuing]. Across the country about.
Mr. Friedmann. Just kicking around numbers, sure.
Mrs. Ellmers. OK, that is good, and I appreciate that.
Thank you very much. Mr. Chairman, I yield back the remainder
of my time.
Mr. Murphy. Thank you. Now I recognize Mr. Long for 5
minutes.
Mr. Long. Thank you, Mr. Chairman, and thank you all for
being here today and your patience so far. Mr. Klara, has the
Department of Energy estimated how many billions of tons per
year will need to be stored if the United States is to
sequester a substantial portion of coal-based carbon dioxide?
Mr. Klara. There are many estimates that are out there
relative to what the future could be for CO2
production.
Mr. Long. Many estimates from the Department of Energy?
Mr. Klara. We rely mainly on estimates from others. So for
example the Intergovernmental Panel on Climate Change, the
Electric Power Research Institute has looked at these.
Mr. Long. Do you know a ballpark range on how many billions
of tons they are talking about? Have you looked at any of that
or not?
Mr. Klara. Well, some of the estimates, and we could give
you specifics for a record, question for the record. But some
of the specifics would be looking at CCS having to handle
potentially 20 percent or more of the reduction needed to get
the CO2 stabilization. And yes, that could be in the
range of a billion tons or more.
Mr. Long. Billion or multiple billions?
Mr. Klara. I would have to go back and look.
Mr. Long. OK, if you wouldn't mind if you could get that
for my staff, I would appreciate it.
Mr. Klara. Yes.
Mr. Long. And, Dr. Friedmann, I would like to draw your
attention to this major CCS, which is carbon capture and
sequestration demonstration projects, project locations, and
cost share. This is a document that you all provided to the
committee, is it not, in your packet?
Mr. Klara. Yes, sir.
Mr. Long. OK, I heard it recently mentioned that there are
several capture and storage projects that are up and running
now. There has been a lot of discussion on that here today. And
yet from this graphic that you all provided, almost all these
projects displayed have start dates that are a few years down
the road, 2017, estimated start dated 2017, 2019, 2016, 2012,
2017, 2014, and 2015 which are all, as I say, down the road.
And according to a recent congressional research report on
carbon capture and sequestration, the Department of Energy has
spent approximately $6 billion on CCS since 2008, most of which
came from the stimulus bill that was passed a few years ago.
And according to the capture, transport, and inject industrial
scale, quantities of CO2 solely for the purpose of
carbon sequestration. Can you clarify one final time, I guess
for the committee, why we are hearing different things in the
sites and if you could cite any commercial scale carbon capture
and sequestration projects that are currently now up and
running generating electricity.
Mr. Friedmann. Right, again so to clarify, there are a
number of large-scale industrial facilities operating in the
United States and around the world. There are 12 large projects
which the Global CCS Institute recognizes. With respect to
power generation, the closest fit is the Beulah, North Dakota
plant which generates synthetic natural gas. That gas goes into
the pipeline and is used to generate power. It is not a power
plant per se. It is the synthetic natural gas facility.
Mr. Long. It is a synthetic natural gas facility?
Mr. Friedmann. Yes, it was built actually in the early 80s
when there was an expectation that we would have decreased
production of natural gas in the country and we needed to
generate synthetic natural gas. That plant is----
Mr. Long. They kind of missed their bet there, didn't they?
Mr. Friedmann. One of the reasons why we do everything we
do is that the future is opaque, and it is important to prepare
as many options for the market as possible.
Mr. Long. That is why I think that the private sector
should be involved in more of this than the government, but I
will stick with you, Dr. Friedmann. Does the Department of
Energy intend to intervene to make sitting pipelines for
distant carbon injection a more realistic option? I understand
this has been a barrier to some utilities who want to pursue
CCS projects.
Mr. Friedmann. What I can say is that we have--so for any
project that we have been involved in, we have supported the
development and deployment of those pipelines. Where we see
opportunities for regional networks to emerge that would help
anchor CCS industries and large coal projects, we are keenly
committed to seeing those pipelines come forward. One example
of this is actually the support we have given to the FutureGen
project in the FutureGen Alliance and their efforts to build a
pipeline within Illinois.
Mr. Long. OK, and, Mr. Chairman, I yield back and thank you
all again for my time.
Mr. Friedmann. Mr. Chairman, if I can clarify something for
the record.
Mr. Murphy. Yes.
Mr. Friedmann. Thank you. This actually had to do with
respect to Representative Ellmers' questions. She was asking
about the price of capture. The answers which I gave were for a
high fraction of capture, basically 90 or 95 percent capture.
At small fractions of capture, say 50 percent capture, the
actual integrated cost is much less. And that is relevant with
respect to how you can deploy either modular units or smaller
fractions of capture on the new or existing fleets.
Mr. Murphy. Is that a reference to a question about the 40
percent increase in costs?
Mr. Friedmann. Yes, exactly.
Mr. Murphy. Do you have the information, or can you provide
it for this committee in addition to her question about what
this breaks down to in a cost-per-megawatt generation and what
this would then cost the average family? Do you have that
information now, or is that something you can get to us?
Mr. Friedmann. We prefer to bring that to you as a question
for the record and give it back to the committee later. We have
made many of those kinds of calculations. Again it is the
excellent work of National Energy Technology and their
assessment team have done that for a wide range of power
plants, a wide range of technologies, and a wide range of fuel
prices. We are happy to provide that to the committee.
Mr. Murphy. That would help the committee and the families
who are trying to pay attention to this and see what this
means.
Mr. Friedmann. Of course.
Mr. Murphy. I now recognize Mr. Gardner for 5 minutes.
Mr. Gardner. Thank you, Mr. Chairman, and I thank the
witnesses for joining us today. Mr. Klara, is it correct that
successful development and deployment of second generation
technologies are aware the Department of Energy expects the
cost savings that may help make CCS for coal power competitive
in the marketplace?
Mr. Klara. I mentioned earlier, but we have three buckets
of technologies that we are going after. First generation,
which is the technologies deployed now. Second generation is
what you are referencing, and then we have transformational
technologies. And with second generation technologies, we are
headed toward a reduction in cost as indicated by your remark.
Mr. Gardner. And what is NETL's assessment of the readiness
of the technologies most critical to driving down costs?
Mr. Klara. Certainly when it comes to carbon capture and
storage, capture is by far the key element to drive the cost
down, and that is the majority of the focus of our research
program.
Mr. Gardner. Have any of these second generation
technologies have been taken to the demonstration phase to
validate they work at commercial scale in a coal-fired power
plant?
Mr. Klara. Not at this time, second----
Mr. Gardner. Not at this time?
Mr. Klara. Yes, so demonstration of those would be part of
your planning.
Mr. Gardner. Dr. Friedmann, about how much of DOE's $7.6
billion over the past decade has been dedicated towards the
second generation technologies?
Mr. Friedmann. The overwhelming majority of the $7.6
billion that we have dedicated so far is actually to the large-
scale commercial demonstrations. So, but in that context, to
generate and develop the second demonstration technologies, as
you said, we have put already several hundred millions of
dollars into that research effort.
Mr. Gardner. OK, and the information that I have says that
we spent around $3 billion towards the second generation
technologies. Would that be correct, of the $7.6 billion?
Mr. Friedmann. No, I don't think that is correct actually.
Mr. Gardner. OK, maybe we can get----
Mr. Friedmann. We would be happy to clarify that. Yes, sir.
Mr. Gardner. When do you expect demonstrations of these
second generation technologies will be completed?
Mr. Friedmann. The question is actually how quickly can we
pilot them first. That is the critical lynchpin. Once they have
been piloted at, say, that 20- to 50-megawatt scale, then the
next step is commercial demonstration.
Mr. Gardner. OK, and how long until pilot?
Mr. Friedmann. One of those technologies is in fact being
piloted now. For most of them, it is a question of how quickly
can we put together the project.
Mr. Gardner. OK, and so major scale, that is 20 to 50--what
did you say 20 to 50?
Mr. Friedmann. We are looking for--the soonest that we
could get a second generation pilot up would be in 2015/2016
kind of timeline for solicitation, maybe 2018 demonstration,
and then large-scale demonstrations of those technologies
between 2018 and 2025.
Mr. Gardner. OK, and do you or Mr. Klara have an estimate
for when those technologies will be available commercially,
warrantable, insurable, fundable on the open market?
Mr. Friedmann. For the second generation technologies,
again, you need to have the large-scale pilots before they can
get to a warranty stage.
Mr. Gardner. And you said around 2022 would be about when
they get to demonstration?
Mr. Friedmann. You might be able to do things sooner than
that. I would point actually to an existing program we have
under our cross-cutting budget line which is the carbon capture
simulation initiative in which we are trying to use advanced
super-computing technology to accelerate the sureness by which
companies can provide those kinds of performance guarantees.
Mr. Gardner. So would it be safe to say that we are looking
at, based on current cost estimates, commercially warrantable,
insurable, and fundable on the open market, we are looking at
around 2030 or so, maybe beyond that?
Mr. Friedmann. Sooner than that, but 2020 to 2025
timeframe, yes.
Mr. Gardner. OK, can you describe in lay terms what the
scale of cost savings will be expected for the so-called second
generation technologies?
Mr. Friedmann. To a first cut, we expect the cost to cut in
half. We expect them to come in at something like $40 to $60 a
ton for an integrated system.
Mr. Gardner. And you are also working what you call
transformational technologies. What would be the cost savings
of these expected transformational technologies?
Mr. Friedmann. Again, on a thermodynamic and an engineering
basis, they can get maybe another $10, another $15 a ton
cheaper. So something on the order of $30 a ton is probably
about the limit of what you can reasonably expect.
Mr. Gardner. And so when do you expect the demonstrations
of those transformation technologies to be completed?
Mr. Friedmann. Again we have laid out our road map, and we
are hoping to see those deployed in the field by 2025.
Mr. Gardner. OK, deployed in the field commercially?
Mr. Friedmann. Yes.
Mr. Gardner. OK, at what price of CO2 capture
per ton or percentage of capture will the cost be low enough to
put a system on a level playing field economically with
traditional coal-fueled electrical power production?
Mr. Friedmann. I honestly don't understand your question.
Mr. Gardner. So basically at what, the price point, the
break point of CO2 capture per ton or percentage of
capture will the cost be low enough? Basically when will this
be economic, low enough to put a system on a level playing
field economically with traditional coal-fueled electrical
power production?
Mr. Friedmann. It is my contention that the second
generation technologies are going to be the clean energy choice
in terms of a competitive market in a variety of markets. In
some markets, they won't be. In some markets, they will be. And
the transformational technology would just increase the market
share at that time.
Mr. Gardner. But in terms of the cost, putting it on a
level playing field from where we are today with costs from
where you want to be with these new technologies cost. Do you
have estimates? Have you produced estimates and that will
produce estimates of when this break point will be?
Mr. Friedmann. Again all environmental technologies add
cost. So it is not appropriate nor do we for the purpose of
policy decision compare the cost of carbon capture and storage
with an unretrofitted plant or with a new build plant without
it. We do that to demonstrate the delta, but a clean plant is
not comparable to a Dickensian plant. They are different
things.
Mr. Gardner. OK, if you could supply any cost estimates
that you have made, comparisons to the committee, that would be
fantastic. And have any of your estimates changed in light of
current market conditions?
Mr. Friedmann. First of all, we are happy to provide those
numbers. The market conditions are constantly changing. We
actually try to bring that uncertainty into the way that we
make our price calculations in terms of availability for labor,
availability for materials, global markets for things, and so
forth. In that context, as the market has changed, our
estimates don't change as much as you might guess. Some of that
information is baked into the way we do the calculations.
Mr. Gardner. Thank you. And thank you, Mr. Chairman, for
being generous of time.
Mr. Murphy. Thank you, and although we are done, I am going
to recognize Ms. Schakowsky for a quick clarifying question,
comment, and then I will have a final clarifying question.
Ms. Schakowsky. Thank you, Mr. Chairman. First, I want to
say, Dr. Friedmann, you are one of the best witnesses that I
have heard before this committee, and your answers are
informative and concise and I think very fair. And I appreciate
that. I hope I speak for the rest of the committee. When we
talk about the cost of CCS and you estimate that, I just wanted
to clarify, you aren't considering that at some point there may
be a cost for carbon emissions. I know that the major oil
companies have already built into their business plans that
there may at some point in the not-too-distant future be some
sort of perhaps a carbon tax, some sort of cost. So when you
estimate the cost of this technology and applying it primarily
we are talking about to coal today, you aren't taking into
consideration any kind of cost for the pollution that these
plants produce, are you?
Mr. Friedmann. Let me take just a minute to answer that if
I may.
Ms. Schakowsky. OK.
Mr. Friedmann. Again, thank you for the question and for
your compliment. It was very nice of you to say so. Shell Oil
Company has announced that they use a $50-a-ton estimate for
carbon dioxide for any project that they put together. Other
companies, most Fortune 500 companies have a similar kind of
number which they keep in terms of how they assess risk in a
carbon-constrained future.
We do not actually use those numbers to estimate cost of
capture. Those are straight-up technical calculations based on
the facility, the technology, the rank of coal, et cetera. What
we do is we think about deployment in the context of those
costs. Cost of carbon is something which is actually outside of
what the Department of Energy does, but we do believe that we
are in a carbon-constrained world and that increasingly the
cost of carbon dioxide emissions will be internalized into the
cost of doing business.
As that happens, it is our privilege and our pleasure and
my passion to find ways to drop the cost so that that
deployment of clean energy technology can be as widely
successful as possible to create the brightest possible clean
energy future for the United States.
Ms. Schakowsky. Perfect ending as far as I am concerned.
Thank you.
Mr. Murphy. Thank you, and I have a clarifying question
here too. So you mentioned about Kemper. They have that
advantage of being able to use enhanced oil recovery from their
plant. Different coal plants around the nation may not have
that same advantage. And as you were preparing information for
us, would you let us know what you believe the costs are for
new plants or retrofitting old plants?
Mr. Friedmann. Yes.
Mr. Murphy. Give us some comparisons and having that public
because we would like the companies themselves to be able to
respond to those estimates if you would be able to get that for
us.
Mr. Friedmann. Yes, we would be happy to.
Mr. Murphy. Thank you.
Mr. Friedmann. Let me add that the availability of EOR
doesn't affect the cost of the project. It affects the revenue,
and so that of course affects the economics. But we try to keep
the revenues and the benefits and the costs in separate
categories for exactly that kind of comparison.
Mr. Murphy. Thank you. And also for the sake of the
American people, to help us translate that into what is going
to be the cost for homeowners in order to make these kind of
transitions as well as for businesses so we all share a concern
that energy cost increasing means the impact upon
manufacturing. We see that affecting some countries in the EU
as well.
So thank you, and I echo the comments of Ms. Schakowsky.
Dr. Friedmann and Mr. Klara, you have been very informative. We
appreciate just giving us the facts. That was very helpful and
will help us move forward. So I want to thank both the
witnesses that participated in today's hearing and remind
members they have 10 business days to submit questions for the
record, and I ask you to respond to questions promptly. And we
will leave it at that. So with that again I thank the panel,
and this hearing is adjourned.
[Whereupon, at 12:03 p.m., the Subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
Prepared statement of Hon. Fred Upton
This hearing continues the committee's ongoing oversight of
the Department of Energy, and the status of its work to develop
technologies that will help advance cleaner and more efficient
electricity production from coal-based power generation.
For several decades, Congress has entrusted DOE through
appropriations and legislative direction to help advance the
technologies that will dramatically improve how we use our
abundant coal resources to the benefit of the American economy.
With its vast scientific, technical, and engineering
capabilities, DOE continues to have great potential for helping
to promote cleaner, less expensive electricity production.
DOE also plays a central role coordinating the nation's
energy policy and is most directly responsible for ensuring
America has a secure, affordable, diverse, and reliable energy
supply.
So our oversight of DOE should help illuminate two issues.
One involves the agency's stewardship of the taxpayer
funding Congress has provided the agency to pursue clean coal
technologies. In addition to nearly $3.5 billion in Recovery
Act funding, the agency has been provided an average of $350-
$400 million dollars annually over the past decade to pursue
important answers about carbon capture and sequestration
technologies for coal-based electricity generation.
According to DOE's program plans, the purpose of this
research is to develop workable and less expensive CCS
technologies, and to introduce new efficiencies that will
benefit any type of coal generation systems. But DOE's own
plans expect this will take decades to prove. We have a
responsibility on this committee to ensure the groundbreaking
work we entrust DOE to pursue is on track and not sidetracked
by rushed decision-making or shortsighted policy initiatives
that threaten meaningful technological progress.
Secondly, we also must work to spotlight how DOE is
performing its role in the nation's energy policy making. Over
the past five years, we have witnessed an onslaught of EPA
rules and proposals that have significantly affected or
threaten to affect the nation's ability to provide a diverse
and abundant supply of electricity. At the same time,
assumptions about the relative economic potential of various
sources of energy have shifted over the past decade, with the
newfound abundance of natural gas. This is raising new
challenges and opportunities for an abundant energy future.
It is not yet clear whether DOE is really in the driver's
seat or taking a backseat to EPA on the policy or the
technology matters that may have a direct impact on our
national energy policy. So as we conduct our oversight, we
should be mindful of and think about whether, in fact, DOE is
truly up to the task, given existing authorities, for guiding
policy and providing the research to support a secure energy
future.
# # #
Prepared statement of Hon. G.K. Butterfield
Each year the science of climate change is reinforced. How
much more proof is needed for my Republican colleagues to
accept reality and acknowledge that humans contribute to
climate change?
The number and intensity of severe weather instances are
increasing according to NOAA. Science continues to point out
the human impact on severe weather. My constituents in eastern
North Carolina were hard hit by Hurricanes Irene and Sandy. A
15 year old girl in Goldsboro and a man taken in his home by a
felled tree were amongst several North Carolinians who lost
their lives.
I would be remiss if I failed to mention the third largest
coal spill in our nation's history which occurred in Eden,
North Carolina on February 2nd. The spill jeopardizes the
drinking water of North Carolinians and the ecosystem of the
Dan River and Lake Gaston. We must keep in mind the impacts on
those in close proximity to power plants and their coal ash
ponds, many of which are in low-income communities and
communities of color.
The President's Climate Action Plan will help our nation
reduce our contribution to climate change. It is a decisive
step toward creating new energy jobs and being innovative
instead of remaining complacent. I look forward to working with
all stakeholders to find sensible and affordable ways to reduce
climate change.
[GRAPHIC] [TIFF OMITTED]