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# David G. Hawkins

# Director, Climate Center

# Natural Resources Defense Council

# Testimony

# Before the

**Committee on Energy and Natural Resources**

**Unites States Senate**

# Hearing on 

# S. 731 and S. 962: Carbon Capture and Sequestration 

# April 16^th^, 2007

Summary

Coal use today is responsible for large and mostly avoidable damages to
human health and our water and land. Coal use in the future, along with
other fossil fuels, threatens to wreak havoc with the earth's climate
system. Because coal is so abundant, capture of carbon dioxide from
industrial coal sources and geologic disposal (CCD) is essential to
reconcile continued coal use with avoidance of this profoundly damaging
disruption of our climate. New coal plants forecast to be built in the
next 25 years, if not equipped with CCD, will emit 30 per cent more
carbon dioxide in their operating lives than has been released from all
prior human use of coal. We cannot afford to delay use of CCD on new
coal plants.

Fortunately, we know enough today to implement large scale CCD for coal
plants now in the design stages. Experts have concluded that such
operations can be conducted safely if an effective regulatory regime is
put in place to license and monitor operations of disposal sites and
that properly selected and operated disposal sites can retain injected
CO~2~ for the required long periods of time. EPA has the legal authority
to write such rules but direction from Congress is needed to assure the
rules will be written in a timely manner.

Policies to limit CO~2~ emissions and set performance standards are
essential to drive use of CCD at the required scale and pace. Such
policies should be enacted in this Congress. Well designed measures can
phase in CCD on new coal plants with only very modest impacts on retail
electricity prices. Government support of initial large-scale injection
projects can help speed deployment and build confidence.

Finally, CCD is only one of several tools available to cut global
warming emissions. The fastest and cheapest method remains energy
efficiency, with increased reliance on renewable energy resources
providing another essential tool.

Testimony of David G. Hawkins

Director, NRDC Climate Center

Thank you for the opportunity to testify today on S.731, the National
Carbon Dioxide Storage Capacity Assessment Act of 2007 and S.962, the
Department of Energy Carbon Capture and Storage Research, Development,
and Demonstration Act of 2007. Both of these bills address important
aspects of carbon capture and sequestration. My name is David Hawkins. I
am director of the Climate Center at the Natural Resources Defense
Council (NRDC). NRDC is a national, nonprofit organization of
scientists, lawyers and environmental specialists dedicated to
protecting public health and the environment. Founded in 1970, NRDC has
more than 1.2 million members and online activists nationwide, served
from offices in New York, Washington, Los Angeles and San Francisco,
Chicago and Beijing.

Today, the U.S. and other developed nations around the world run their
economies largely with industrial sources powered by fossil fuel and
those sources release billions of tons of carbon dioxide (CO~2~) into
the atmosphere every year. There is national and global interest today
in capturing that CO~2~ for disposal or sequestration to prevent its
release to the atmosphere. To distinguish this industrial capture system
from removal of atmospheric CO~2~ by soils and vegetation, I will refer
to the industrial system as carbon capture and disposal or CCD.

The interest in CCD stems from a few basic facts. We now recognize that
CO~2~ emissions from use of fossil fuel result in increased atmospheric
concentrations of CO~2~, which along with other so-called greenhouse
gases, trap heat, leading to an increase in temperatures, regionally and
globally. These increased temperatures alter the energy balance of the
planet and thus our climate, which is simply nature's way of managing
energy flows. Documented changes in climate today along with those
forecasted for the next decades, are predicted to inflict large and
growing damage to human health, economic well-being, and natural
ecosystems.

Coal is the most abundant fossil fuel and is distributed broadly across
the world. It has fueled the rise of industrial economies in Europe and
the U.S. in the past two centuries and is fueling the rise of Asian
economies today. Because of its abundance, coal is cheap and that makes
it attractive to use in large quantities if we ignore the harm it
causes. However, per unit of energy delivered, coal today is a bigger
global warming polluter than any other fuel: double that of natural gas;
50 per cent more than oil; and, of course, enormously more polluting
than renewable energy, energy efficiency, and, more controversially,
nuclear power. To reduce coal's contribution to global warming, we must
deploy and improve systems that will keep the carbon in coal out of the
atmosphere, specifically systems that capture carbon dioxide (CO~2~)
from coal-fired power plants and other industrial sources for safe and
effective disposal in geologic formations.

**The Toll from Coal**

Before turning to the status of CCD let me say a few words about coal
use generally. The role of coal now and in the future is controversial
due to the damages its production and use inflict today and skepticism
that those damages can or will be reduced to a point where we should
continue to rely on it as a mainstay of industrial economies. Coal is
cheap and abundant compared to oil and natural gas. But the toll from
coal as it is used today is enormous. From mining deaths and illness and
devastated mountains and streams from practices like mountain top
removal mining, to accidents at coal train crossings, to air emissions
of acidic, toxic, and heat-trapping pollution from coal combustion, to
water pollution from coal mining and combustion wastes, the conventional
coal fuel cycle is among the most environmentally destructive activities
on earth. Certain coal production processes are inherently harmful and
while our society has the capacity to reduce many of today\'s damages,
to date, we have not done so adequately nor have we committed to doing
so.  These failures have created well-justified opposition by many
people to continued or increased dependence on coal to meet our energy
needs. 

Our progress of reducing harms from mining, transport, and use of coal
has been frustratingly slow and an enormous amount remains to be done. 
Today mountain tops in Appalachia are destroyed to get at the coal
underneath and rocks, soil, debris, and waste products are dumped into
valleys and streams, destroying them as well.  Waste impoundments loom
above communities (including, in one particularly egregious case, above
an elementary school) and thousands of miles of streams are polluted. 
In other areas surface mine reclamation is incomplete, inadequately
performed and poorly supervised due to regulatory gaps and poorly funded
regulatory agencies.

In the area of air pollution, although we have technologies to
dramatically cut conventional pollutants from coal-fired power plants,
in 2004 only one-third of U.S. coal capacity was equipped with scrubbers
for sulfur dioxide control and even less capacity applied selective
catalytic reduction (SCR) for nitrogen oxides control.  And under the
administration\'s so-called CAIR rule, even in 2020 nearly 30 per cent
of coal capacity will still not employ scrubbers and nearly 45 per cent
will lack SCR equipment.  Moreover, because this administration has
deliberately refused to require use of available highly effective
control technologies for the brain poison mercury, we will suffer
decades more of cumulative dumping of this toxin into the air at rates
several times higher than is necessary or than faithful implementation
of the Clean Air Act would achieve.  Finally, there are no controls in
place for CO~2~, the global warming pollutant emitted by the more than
330,000 megawatts of coal-fired plants;  nor are there any CO2 control
requirements adopted today for old or new plants save in California.

 

Mr. Chairman and members of the committee, I know the environmental
community is criticized in some quarters for our generally negative view
regarding coal as an energy resource.  But I would ask you to consider
the reasons for this.  Our community reacts to the facts on the ground
and those facts are far from what they should be if coal is to play a
role as a responsible part of the 21st century energy mix.  Rather than
simply decrying the attitudes of those who question whether using large
amounts of coal can and will be carried out in a responsible manner, the
coal industry in particular should support policies to correct today\'s
abuses and then implement those reforms.  Were the industry to do this,
there would be real reasons for my community and other critics of coal
to consider whether their positions should be reconsidered.

**The Need for CCD**

Turning to CCD, my organization supports rapid deployment of such
capture and disposal systems for sources using coal. Such support is not
a statement about how dependent the U.S. or the world should be on coal
and for how long.  Any significant additional use of coal that vents its
CO2 to the air is fundamentally in conflict with the need to keep
atmospheric concentrations of CO2 from rising to levels that will
produce dangerous disruption of the climate system.  Given that an
immediate world-wide halt to coal use is not plausible, analysts and
advocates with a broad range of views on coal\'s role should be able to
agree that, if it is safe and effective, CCD should be rapidly deployed
to minimize CO2 emissions from the coal that we do use.

Today coal use and climate protection are on a collision course. Without
rapid deployment of CCD systems, that collision will occur quickly and
with spectacularly bad results. The very attribute of coal that has made
it so attractive---its abundance\-\--magnifies the problem we face and
requires us to act now, not a decade from now. Until now, coal's
abundance has been an economic boon. But today, coal's abundance, absent
corrective action, is more bane than boon.

Since the dawn of the industrial age, human use of coal has released
about 150 billion metric tons of carbon into the atmosphere---about half
the total carbon emissions due to fossil fuel use in human history. But
that contribution is the tip of the carbon iceberg. Another 4 *trillion*
metric tons of carbon are contained in the remaining global coal
resources. That is a carbon pool nearly seven times greater than the
amount in our pre-industrial atmosphere. Using that coal without
capturing and disposing of its carbon means a climate catastrophe.

And the die is being cast for that catastrophe today, not decades from
now. Decisions being made today in corporate board rooms, government
ministries, and congressional hearing rooms are determining how the next
coal-fired power plants will be designed and operated. Power plant
investments are enormous in scale, more than \$1 billion per plant, and
plants built today will operate for 60 years or more. The International
Energy Agency (IEA) forecasts that more than \$5 trillion will be spent
globally on new power plants in the next 25 years. Under IEA's
forecasts, over 1800 gigawatts (GW) of new coal plants will be built
between now and 2030--- capacity equivalent to 3000 large coal plants,
or an average of ten new coal plants every month for the next quarter
century. This new capacity amounts to 1.5 times the total of all the
coal plants operating in the world today.

The astounding fact is that under IEA's forecast, 7 out of every 10 coal
plants that will be operating in 2030 don't exist today. That fact
presents a huge opportunity---many of these coal plants will not need to
be built if we invest more in efficiency; additional numbers of these
coal plants can be replaced with clean, renewable alternative power
sources; and for the remainder, we can build them to capture their
CO~2~, instead of building them the way our grandfathers built them.

If we decide to do it, the world could build and operate new coal plants
so that their CO~2~ is returned to the ground rather than polluting the
atmosphere. But we are losing that opportunity with every month of
delay---10 coal plants were built the old-fashioned way last month
somewhere in the world and 10 more old-style plants will be built this
month, and the next and the next. Worse still, with current policies in
place, none of the 3000 new plants projected by IEA are likely to
capture their CO~2~.

Each new coal plant that is built carries with it a huge stream of CO~2~
emissions that will likely flow for the life of the plant---60 years or
more. Suggestions that such plants might be equipped with CO~2~ capture
devices later in life might come true but there is little reason to
count on it. As I will discuss further in a moment, while commercial
technologies exist for pre-combustion capture from gasification-based
power plants, most new plants are not using gasification designs and the
few that are, are not incorporating capture systems. Installing capture
equipment at these new plants after the fact is implausible for
traditional coal plant designs and expensive for gasification processes.

If all 3000 of the next wave of coal plants are built with no CO~2~
controls, their lifetime emissions will impose an enormous pollution
lien on our children and grandchildren. Over a projected 60-year life
these plants would likely emit 750 billion tons of CO~2~, a total, from
just 25 years of investment decisions, that is 30% greater than the
total CO~2~ emissions from all previous human use of coal. Once emitted,
this CO~2~ pollution load remains in the atmosphere for centuries. Half
of the CO~2~ emitted during World War I remains in the atmosphere today.

In short, we face an onrushing train of new coal plants with impacts
that must be diverted without delay. What can the U.S. do to help? The
U.S. is forecasted to build nearly 300 of these coal plants, according
to reports and forecasts published by the U.S. EIA. We should adopt a
national policy that new coal plants be required to employ CCD without
delay. By taking action ourselves, we can speed the deployment of CCD
here at home and set an example of leadership. That leadership will
bring us economic rewards in the new business opportunities it creates
here and abroad and it will speed engagement by critical countries like
China and India.

To date our efforts have been limited to funding research, development,
and limited demonstrations. Such funding can help in this effort if it
is wisely invested. But government subsidies\--which are what we are
talking about\--cannot substitute for the driver that a real market for
low-carbon goods and services provides. That market will be created only
when requirements to limit CO~2~ emissions are adopted. This year in
Congress serious attention is finally being directed to enactment of
such measures and we welcome your announcement that you intend to play a
leadership role in this effort.

**Key Questions about CCD**

I started studying CCD in detail ten years ago and the questions I had
then are those asked today by people new to the subject. Do reliable
systems exist to capture CO~2~ from power plants and other industrial
sources? Where can we put CO~2~ after we have captured it? Will the
CO~2~ stay where we put it or will it leak? How much disposal capacity
is there? Are CCD systems "affordable"? To answer these questions, the
Intergovernmental Panel on Climate Change (IPCC) decided four years ago
to prepare a special report on the subject. That report was issued in
September 2005 as the IPCC Special Report on Carbon Dioxide Capture and
Storage. I was privileged to serve as a review editor for the report's
chapter on geologic storage of CO~2~.

**CO~2~** **Capture**

The IPCC special report groups capture or separation of CO~2~ from
industrial gases into four categories: post-combustion; pre-combustion;
oxyfuel combustion; and industrial separation. I will say a few words
about the basics and status of each of these approaches. In a
conventional pulverized coal power plant, the coal is combusted using
normal air at atmospheric pressures. This combustion process produces a
large volume of exhaust gas that contains CO~2~ in large amounts but in
low concentrations and low pressures. Commercial post-combustion systems
exist to capture CO~2~ from such exhaust gases using chemical
"stripping" compounds and they have been applied to very small portions
of flue gases (tens of thousands of tons from plants that emit several
million tons of CO~2~ annually) from a few coal-fired power plants in
the U.S. that sell the captured CO~2~ to the food and beverage industry.
However, industry analysts state that today's systems, based on publicly
available information, involve much higher costs and energy penalties
than the principal demonstrated alternative, pre-combustion capture.

New and potentially less expensive post-combustion concepts have been
evaluated in laboratory tests and some, like ammonia-based capture
systems, are scheduled for small pilot-scale tests in the next few
years. Under normal industrial development scenarios, if successful such
pilot tests would be followed by larger demonstration tests and then by
commercial-scale tests. These and other approaches should continue to be
explored. However, unless accelerated by a combination of policies,
subsidies, and willingness to take increased technical risks, such a
development program could take one or two decades before post-combustion
systems would be accepted for broad commercial application.

Pre-combustion capture is applied to coal conversion processes that
gasify coal rather than combust it in air. In the oxygen-blown
gasification process coal is heated under pressure with a mixture of
pure oxygen, producing an energy-rich gas stream consisting mostly of
hydrogen and carbon monoxide. Coal gasification is widely used in
industrial processes, such as ammonia and fertilizer production around
the world. Hundreds of such industrial gasifiers are in operation today.
In power generation applications as practiced today this "syngas" stream
is cleaned of impurities and then burned in a combustion turbine to make
electricity in a process known as Integrated Gasification Combined Cycle
or IGCC. In the power generation business, IGCC is a relatively recent
development---about two decades old and is still not widely deployed.
There are two IGCC power-only plants operating in the U.S. today and
about 14 commercial IGCC plants are operating, with most of the capacity
in Europe. In early years of operation for power applications a number
of IGCC projects encountered availability problems but those issues
appear to be resolved today, with Tampa Electric Company reporting that
its IGCC plant in Florida is the most dispatched and most economic unit
in its generating system.

Commercially demonstrated systems for pre-combustion capture from the
coal gasification process involve treating the syngas to form a mixture
of hydrogen and CO~2~ and then separating the CO~2~, primarily through
the use of solvents. These same techniques are used in industrial plants
to separate CO~2~ from natural gas and to make chemicals such as ammonia
out of gasified coal. However, because CO~2~ can be released to the air
in unlimited amounts under today's laws, except in niche applications,
even plants that separate CO~2~ do not capture it; rather they release
it to the atmosphere. Notable exceptions include the Dakota Gasification
Company plant in Beulah, North Dakota, which captures and pipelines more
than one million tons of CO~2~ per year from its lignite gasification
plant to an oil field in Saskatchewan, and ExxonMobil's Shute Creek
natural gas processing plant in Wyoming, which strips CO~2~ from sour
gas and pipelines several million tons per year to oil fields in
Colorado and Wyoming.

Today's pre-combustion capture approach is not applicable to the
installed base of conventional pulverized coal in the U.S. and
elsewhere. However, it is ready today for use with IGCC power plants.
The oil giant BP has announced an IGCC project with pre-combustion CO~2~
capture at its refinery in Carson, California. When operational the
project will gasify petroleum coke, a solid fuel that resembles coal
more than petroleum to make electricity for sale to the grid. The
captured CO~2~ will be sold to an oil field operator in California to
enhance oil recovery. The principal obstacle for broad application of
pre-combustion capture to new power plants is not technical, it is
economic: under today's laws it is cheaper to release CO~2~ to the air
rather than capturing it. Enacting laws to limit CO~2~ can change this
situation, as I discuss later.

While pre-combustion capture from IGCC plants is the approach that is
ready today for commercial application, it is not the only method for
CO~2~ capture that may emerge if laws creating a market for CO~2~
capture are adopted. I have previously mentioned post-combustion
techniques now being explored. Another approach, known as oxyfuel
combustion, is also in the early stages of research and development. In
the oxyfuel process, coal is burned in oxygen rather than air and the
exhaust gases are recycled to build up CO~2~ concentrations to a point
where separation at reasonable cost and energy penalties may be
feasible. Small scale pilot studies for oxyfuel processes have been
announced. As with post-combustion processes, absent an accelerated
effort to leapfrog the normal commercialization process, it could be one
or two decades before such systems might begin to be deployed broadly in
commercial application.

Given, the massive amount of new coal capacity scheduled for
construction in the next two decades, we cannot afford to wait until we
see if these alternative capture systems prove out, nor do we need to.
Coal plants in the design process today can employ proven IGCC and
pre-combustion capture systems to reduce their CO~2~ emissions by about
90 percent. Adoption of policies that set a CO~2~ performance standard
now for such new plants will not anoint IGCC as the technological winner
since alternative approaches can be employed when they are ready. If the
alternatives prove superior to IGCC and pre-combustion capture, the
market will reward them accordingly. As I will discuss later, adoption
of CO~2~ performance standards is a critical step to improve today's
capture methods and to stimulate development of competing systems.

I would like to say a few words about so-called "capture-ready" or
"capture-capable" coal plants. I will admit that some years ago I was
under the impression that some technologies like IGCC, initially built
without capture equipment could be properly called "capture-ready."
However, the implications of the rapid build-out of new coal plants for
global warming and many conversations with engineers since then have
educated me to a different view. An IGCC unit built without capture
equipment can be equipped later with such equipment and at much lower
cost than attempting to retrofit a conventional pulverized coal plant
with today's demonstrated post-combustion systems. However, the costs
and engineering reconfigurations of such an approach are substantial.
More importantly, we need to begin capturing CO~2~ from new coal plants
without delay in order to keep global warming from becoming a
potentially runaway problem. Given the pace of new coal investments in
the U.S. and globally, we simply do not have the time to build a coal
plant today and think about capturing its CO~2~ down the road.

Implementation of the Energy Policy Act of 2005 approach to this topic
needs a review in my opinion. The Act provides significant subsidies for
coal plants that do not actually capture their CO~2~ but rather merely
have carbon "capture capability." While the Act limits this term to
plants using gasification processes, it is not being implemented in a
manner that provides a meaningful substantive difference between an
ordinary IGCC unit and one that genuinely has been designed with early
integration of CO~2~ capture in mind. Further, in its FY2008 budget
request, the administration seeks appropriations allowing it to provide
\$9 billion in loan guarantees under Title XVII of the Act, including as
much as \$4 billion in loans for "carbon sequestration optimized coal
power plants." The administration request does not define a "carbon
sequestration optimized" coal power plant and it could mean almost
anything, including, according to some industry representatives, a plant
that simply leaves physical space for an unidentified black box. If that
makes a power plant "capture-ready" Mr. Chairman, then my driveway is
"Ferrari-ready." We should not be investing today in coal plants at more
than a billion dollars apiece with nothing more than a hope that some
kind of capture system will turn up. We would not get on a plane to a
destination if the pilot told us there was no landing site but options
were being researched.

**Geologic Disposal**

We have a significant experience base for injecting large amounts of
CO~2~ into geologic formations. For several decades oil field operators
have received high pressure CO~2~ for injection into fields to enhance
oil recovery, delivered by pipelines spanning as much as several hundred
miles. Today in the U.S. a total of more than 35 million tons of CO~2~
are injected annually in more than 70 projects. (Unfortunately, due to
the lack of any controls on CO~2~ emissions, about 80 per cent of that
CO~2~ is sources from natural CO~2~ formations rather than captured from
industrial sources. Historians will marvel that we persisted so long in
pulling CO~2~ out of holes in the ground in order to move it hundreds of
miles and stick in back in holes at the same time we were recognizing
the harm being caused by emissions of the same molecule from nearby
large industrial sources.) In addition to this enhanced oil recovery
experience, there are several other large injection projects in
operation or announced. The longest running of these, the Sleipner
project, began in 1996.

But the largest of these projects injects on the order of one million
tons per year of CO~2~, while a single large coal power plant can
produce about five million tons per year. And of course, our experience
with man-made injection projects does not extend for the thousand year
or more period that we would need to keep CO~2~ in place underground for
it to be effective in helping to avoid dangerous global warming.
Accordingly, the public and interested members of the environmental,
industry and policy communities rightly ask whether we can carry out a
large scale injection program safely and assure that the injected CO~2~
will stay where we put it.

Julio Friedmann's testimony addresses these questions at length and with
much greater authority that I can supply so I will simply summarize the
findings of the IPCC on these issues. In its 2005 report the IPCC
concluded the following with respect to the question of whether we can
safely carry out carbon injection operations on the required scale:

"With appropriate site selection based on available subsurface
information, a monitoring programme to detect problems, a regulatory
system and the appropriate use of remediation methods to stop or control
CO2 releases if they arise, the local health, safety and environment
risks of geological storage would be comparable to the risks of current
activities such as natural gas storage, EOR and deep underground
disposal of acid gas."

The knowledge exists to fulfill all of the conditions the IPCC
identifies as needed to assure safety. While EPA has authority regulate
large scale CO~2~ injection projects its current underground injection
control regulations are not designed to require the appropriate showings
for permitting a facility intended for long-term retention of large
amounts of CO~2~. With adequate resources applied, EPA should be able to
make the necessary revisions to its rules in two to three years. We urge
this Committee to work with other committees of Congress to require EPA
to undertake this effort this year.

Do we have a basis today for concluding that injected CO~2~ will stay in
place for the long periods required to prevent its contributing to
global warming? The IPCC report concluded that we do, stating:

"Observations from engineered and natural analogues as well as models
suggest that the fraction retained in appropriately selected and managed
geological reservoirs is very likely to exceed 99% over 100 years and is
likely to exceed 99% over 1,000 years."

Despite this conclusion by recognized experts there is still reason to
ask what are the implications of imperfect execution of large scale
injection projects, especially in the early years before we have amassed
more experience? Is this reason enough to delay application of CO~2~
capture systems to new power plants until we gain such experience from
an initial round of multi-million ton "demonstration" projects? To
sketch an answer to this question, my colleague Stefan Bachu, a
geologist with the Alberta Energy and Utilities Board, and I wrote a
paper for the Eighth International Conference on Greenhouse Gas Control
Technologies in June 2006. The obvious and fundamental point we made is
that without CO~2~ capture, new coal plants built during any "delay and
research" period will put 100 per cent of their CO~2~ into the air and
may do so for their operating life if they were "grandfathered" from
retrofit requirements. Those releases need to be compared to
hypothetical leaks from early injection sites.

Our conclusions were that even with extreme, unrealistically high
hypothetical leakage rates from early injection sites (10% per year), a
long period to leak detection (5 years) and a prolonged period to
correct the leak (1 year), a policy that delayed installation of CO~2~
capture at new coal plants to await further research would result in
cumulative CO~2~ releases twenty times greater than from the
hypothetical faulty injection sites, if power plants built during the
research period were "grandfathered" from retrofit requirements. If this
wave of new coal plants were all required to retrofit CO~2~ capture by
no later than 2030, the cumulative emissions would still be four times
greater than under the no delay scenario. I believe that any objective
assessment will conclude that allowing new coal plants to be built
without CO~2~ capture equipment on the ground that we need more large
scale injection experience will always result in significantly greater
CO~2~ releases than starting CO~2~ capture without delay for new coal
plants now being designed.

The IPCC also made estimates about global storage capacity for CO~2~ in
geologic formations. It concluded as follows:

"Available evidence suggests that, worldwide, it is likely that there is
a technical potential of at least about 2,000 GtCO2 (545 GtC) of storage
capacity in geological formations. There could be a much larger
potential for geological storage in saline formations, but the upper
limit estimates are uncertain due to lack of information and an agreed
methodology."

Current CO~2~ emissions from the world's power plants are about 10 Gt
(billion metric tons) per year, so the IPCC estimate indicates 200 years
of capacity if power plant emissions did not increase and 100 years
capacity if annual emissions doubled.

**Policy Actions to Speed CCD**

As I stated earlier, research and development funding is useful but it
cannot substitute for the incentive that a genuine commercial market for
CO~2~ capture and disposal systems will provide to the private sector.
The amounts of capital that the private sector can spend to optimize CCD
methods will almost certainly always dwarf what Congress will provide
with taxpayer dollars. To mobilize those private sector dollars,
Congress needs a stimulus more compelling than the offer of modest
handouts for research. Congress has a model that works: intelligently
designed policies to limit emissions cause firms to spend money finding
better and less expensive ways to prevent or capture emissions.

Where a technology is already competitive with other emission control
techniques, for example, sulfur dioxide scrubbers, a cap and trade
program like that enacted by Congress in 1990, can result in more rapid
deployment, improvements in performance, and reductions in costs.
Today's scrubbers are much more effective and much less costly than
those built in the 1980s. However, a CO~2~ cap and trade program by
itself may not result in deployment of CCD systems as rapidly as we
need. Many new coal plant design decisions are being made literally
today. Depending on the pace of required reductions under a global
warming bill, a firm may decide to build a conventional coal plant and
purchase credits from the cap and trade market rather than applying CCD
systems to the plant. While this may appear to be economically rational
in the short term, it is likely to lead to higher costs of CO~2~ control
in the mid and longer term if substantial amounts of new conventional
coal construction leads to ballooning demand for CO~2~ credits. Recall
that in the late 1990's and the first few years of this century,
individual firms thought it made economic sense to build large numbers
of new gas-fired power plants. The problem is too many of them had the
same idea and the resulting increase in demand for natural gas increased
both the price and volatility of natural gas to the point where many of
these investments are idle today.

Moreover, delaying the start of CCD until a cap and trade system price
is high enough to produce these investments delays the broad
demonstration of the technology that the U.S. and other countries will
need if we continue substantial use of coal as seem likely. The more
affordable CCD becomes, the more widespread its use will be throughout
the world, including in rapidly growing economies like China and India.
But the learning and cost reductions for CCD that are desirable will
come only from the experience gained by building and operating the
initial commercial plants. The longer we wait to ramp up this
experience, the longer we will wait to see CCD deployed here and in
countries like China.

Accordingly, we believe the best policy package is a hybrid program that
combines the breadth and flexibility of a cap and trade program with
well-designed performance measures focused on key technologies like CCD.
One such performance measure is a CO~2~ emissions standard that applies
to new power investments. California enacted such a measure in SB1368
last year. It requires new investments for sale of power in California
to meet a performance standard that is achievable by coal with a
moderate amount of CO~2~ capture.

Another approach is a low-carbon generation obligation for coal-based
power. Similar in concept to a renewable performance standard, the
low-carbon generation obligation requires an initially small fraction of
sales from coal-based power to meet a CO~2~ performance standard that is
achievable with CCD. The required fraction of sales would increase
gradually over time and the obligation would be tradable. Thus, a
coal-based generating firm could meet the requirement by building a
plant with CCD, by purchasing power generated by another source that
meets the standard, or by purchasing credits from those who build such
plants. This approach has the advantage of speeding the deployment of
CCD while avoiding the "first mover penalty." Instead of causing the
first builder of a commercial coal plant with CCD to bear all of the
incremental costs, the tradable low-carbon generation obligation would
spread those costs over the entire coal-based generation system. The
builder of the first unit would achieve far more hours of low-carbon
generation than required and would sell the credits to other firms that
needed credits to comply. These credit sales would finance the
incremental costs of these early units. This approach provides the
coal-based power industry with the experience with a technology that it
knows is needed to reconcile coal use and climate protection and does it
without sticker shock.

A bill introduced in the other body, S. 309, contains such a provision.
It begins with a requirement that one-half of one per cent of coal-based
power sales must meet the low-carbon performance standard starting in
2015 and the required percentage increases over time according to a
statutory minimum schedule that can be increased in specified amounts by
additional regulatory action.

A word about costs is in order. With today's off the shelf systems,
estimates are that the production cost of electricity at a coal plant
with CCD could be as much as 40% higher than at a conventional plant
that emits its CO~2~. But the impact on average electricity prices of
introducing CCD now will be very much smaller due to several factors.
First, power production costs represent about 60% of the price you and I
pay for electricity; the rest comes from transmission and distribution
costs. Second, coal-based power represents just over half of U.S. power
consumption. Third, and most important, even if we start now, CCD would
be applied to only a small fraction of U.S. coal capacity for some time.
Thus, with the trading approach I have outlined, the incremental costs
on the units equipped with CCD would be spread over the entire coal
-based power sector or possibly across all fossil capacity depending on
the choices made by Congress. Based on CCD costs available in 2005 we
estimate that a low-carbon generation obligation large enough to cover
all forecasted new U.S. coal capacity through 2020 could be implemented
for about a two per cent increase in average U.S. retail electricity
rates.

**Specific comments on S. 731 and S. 962**

**S. 731**

In considering a portfolio of sites for permanently disposing of CO~2~,
it will be useful for operators to have a general overview of candidate
formations before proceeding to spend funds to test and characterize a
site further. A comprehensive assessment of geological capacity to store
carbon dioxide in the U.S. such as that called for in S. 731 will be
needed to enable large-scale use of CCD. Such a survey can provide
considerable benefits for fairly modest costs.

To date, the Carbon Sequestration Regional Partnerships, funded by DOE,
have conducted some mapping of disposal capacity and other parameters.
In particular, the sources of CO~2~ around the country have been
characterized and mapped very well. However, limitations exist on the
existing mapping of disposal sites, and industry does not have a usable,
comprehensive product with which to consider and further investigate
suitable sites for CO~2~ disposal.

The national carbon atlas, NATCARB, is a significant advance but it has
not been compiled according to a uniform, peer-reviewed methodology,
with the result that that some data classes over-represented and others
under-represented. A more rigorous methodology is essential to the
quality of the mapping. The bill requires USGS to devise precisely such
a methodology, subjecting it to review and public consultation.

In the Regional Partnerships' mapping work, geographical and geological
coverage has not been uniform or comprehensive. Several regions were not
assessed. It is crucial that the capacity assessment covers all
formations in all 50 states. This is a reasonable requirement, which
will result in a complete picture of our geological disposal options.

In regions that were examined, uncertainties in geology still exist in
some cases, while well data and cross-sections are often absent. The
USGS is already in possession of a sizeable portion of the data that
would be published as part of the survey proposed by the bill, and we
believe is a body capable of producing a product that will be
comprehensive, scientifically rigorous and usable by industry. In doing
so, the bill would require it to address four key parameters: the
available volume for disposing of CO~2~, the rate at which it can be
injected and how long such injection rates can be sustained, the
associated risks with reservoirs, and an estimate of the costs that
would be involved in carrying out the injection.

S. 731 calls for a modest appropriation of \$20 million to be
distributed to the USGS and DOE. We believe this legislation is not a
threat to DOE's CCD program efforts to date but a complement. We view
the work called for by this bill as a logical continuation of work that
has been carried out already. The bill calls for coordination between
USGS and DOE to ensure that existing work is fed into the process in a
meaningful way.

A comprehensive mapping effort for the U.S. is very important if we are
to choose good disposal sites effectively, avoid pitfalls and reduce
survey CO~2~ transportation costs. Australia has already demonstrated
the merits of this approach, as well as its feasibility, through the
GEODISC project. We should be aiming to replicate and improve on their
success.

**S. 962**

Current criteria and objectives under the Energy Policy Act of 2005 for
the Carbon Capture Research and Development Program are not sufficiently
focused, nor do they ensure that funds are spent in a manner optimal for
addressing pending research questions and accelerating the use of the
technology. Reforming these requirements is necessary, and we welcome
Senator Bingaman's initiative to do so.

S. 962 would ensure that authorized funds are not spent only on research
and development, but lead to *actual demonstration* of the technologies.
Additionally, the general objective of the Program would be broadened
from "carbon dioxide capture technologies on combustion-based systems"
to "capture and storage technologies related to energy systems". These
two amendments send a much clearer signal as to what the program should
aim to achieve. The demonstration requirement would provide a much
stronger safeguard that any research conducted leads to real
applications that have the potential to be commercialized and/or used
widely. The inclusion of storage alongside capture is also of prime
importance: one of the key needs for moving forward with carbon capture
and storage in the energy sector is the integration of the capture and
storage elements of the technology. Conducting large-scale injections of
CO~2~ for demonstration and more comprehensive documentation purposes is
recognized as a priority -- we fully concur that this there is a
pressing need to conduct these injections promptly, and to ensure that
they are conducted in a way that will shed light in areas where
uncertainties currently remain.

We also very pleased to note the bill's provisions that prescribe
well-thought out and specific programmatic activities. The description
of these activities sets a much clearer direction as to how research
should be applied. The intended role of the Regional Partnerships is
also further focused, with emphasis being placed on injection projects
and monitoring operations. We welcome the intent to consider a variety
of geological formations. The objectives spelled out for the tests
carried out by the Partnerships also help to ensure that they are
conducted in a concerted way, and are designed and carried out in order
to answer concrete questions. We also hope that these objectives will
ensure the dissemination of all relevant information and lessons learned
in a comprehensive and timely manner.

S. 962 would ensure that at least seven large-scale injection projects
are carried out, and that they are carried out with defined objectives.
We believe an objective to collect additional information needed to
assure long-term retention of injected CO~2~ should be added to the
bill. We urge that the bill define "large-scale" to mean injection of
more than one million metric tons of CO~2~ annually. In addition, we
believe it is important to provide for independent review and oversight
of this injection program to ensure its benefits are maximized. The
National Academy of Sciences is one institution that should be
considered to carry out this function.

NRDC believes that the large-scale injections should be understood as an
integral component of a policy to move forward with near-term deployment
of CCD. New coal-fired power plants continue to be proposed in the U.S.
and NRDC believes any such plants should employ CCD. The large-scale
injection projects called for in S.962 can serve as repositories for the
CO~2~ produced by such plants. Thus, these projects should not be
thought of as short-term operations that will be operated for a few
years and then shut down. This should be clarified in the bill by
requiring a timeline for these projects to receive permits from EPA for
operation as permanent repositories. We urge that the bill also specify
that anthropogenic CO~2~ be used in the projects funded by the
legislation, as opposed to the use of naturally occurring or recycled
CO~2~.

Moreover, we believe that the need for these projects is urgent enough
to justify their prompt commencement, and therefore propose that they
begin at the earliest possible opportunity, and not later than FY2009.
In this regard, the bill should direct the Secretary to give priority to
projects that can be deployed rapidly. A likely sequence would be to
commence large-scale injection with existing high-concentration
industrial sources, followed by injection of larger amounts of CO~2~
from coal-based power plants. The bill should direct the Secretary to
structure the program to enable this approach.

Although we note the threefold or more increase in the authorization
compared to EPAct 2005, we have serious concerns that the suggested
funding levels would not suffice to carry out the large scale injections
described in the bill, or meet the overall objectives. The recently
published MIT coal study presents a breakdown of the cost components of
such an injection project. These include a site survey and information
gathering, the drilling of wells, purchase costs for CO~2~, compression,
monitoring and verification, modeling and site closure costs. The MIT
study produces annual cost estimates of \$13-28 million per project, for
projects that inject about one million tons of CO~2~ annually. In order
to conduct seven projects of over one million tons annually, as well as
carry out other supporting work increased funding levels on the order of
\$200 million per year are likely to be needed. We recommend the
duration of program funding be increased to four and preferably five
years.

We also welcome the minimum industry participation requirements for the
activities funded by S. 962. It is important to ensure that the private
sector will have an incentive to invest in these technologies and that
public funds lead to wide-scale diffusion and not one-off
demonstrations.

Finally, I want to repeat the importance of complementing the activities
called for in these bills with prompt adoption of permitting and
operational requirements for CO~2~ disposal by EPA. We believe Congress
should pass legislation this year directing EPA to carry out such
rulemaking without delay. We encourage this Committee to work with the
Environment and Public Works and the Appropriations Committees to
promote this goal.

**Conclusions**

To sum up, since we will almost certainly continue using large amounts
of coal in the U.S. and globally in the coming decades, it is imperative
that we act now to deploy CCD systems. Commercially demonstrated CO~2~
capture systems exist today and competing systems are being researched.
Improvements in current systems and emergence of new approaches will be
accelerated by requirements to limit CO~2~ emissions. Geologic disposal
of large amounts of CO~2~ is viable and we know enough today to conclude
that it can be done safely and effectively. EPA must act without delay
to revise its regulations to provide the necessary framework for
efficient permitting, monitoring and operational practices for large
scale permanent CO~2~ repositories. The survey and capture and
large-scale injection projects that are called for in S. 731 and S.962
are important steps to take and NRDC supports this work.

Finally CCD is an important strategy to reduce CO~2~ emissions from
fossil fuel use but it is not the basis for a climate protection program
by itself. Increased reliance on low-carbon energy resources is the key
to protecting the climate. The lowest carbon resource of all is smarter
use of energy; energy efficiency investments will be the backbone of any
sensible climate protection strategy. Renewable energy will need to
assume a much greater role than it does today. With today's use of
solar, wind and biomass energy, we tap only a tiny fraction of the
energy the sun provides every day. There is enormous potential to expand
our reliance on these resources.

We have no time to lose to begin cutting global warming emissions.
Fortunately, we have technologies ready for use today that can get us
started.

Mr. Chairman, that completes my testimony, I will be happy to take any
questions you or other committee members may have.