**March 10^th^ Future of Coal Conference**

**Participant List**

**Question 2: Environmental: What are the environmental and regulatory
challenges associated with the future use of coal for power
generation?**

**Participants:**

-   Clean Energy Systems

-   Columbia University

-   Florida Municipal Electric Association

-   Kennecott

-   Interstate Mining Compact Commission

-   National Commission on Energy Policy

-   Natural Resources Defense Council

-   Western Organization of Resource Councils

**Senate Energy and Natural Resources Committee**

**Coal** **Conference**

**Clean Energy Systems**

# **[Executive Summary]{.underline}**

The following responses to the four study questions proposed for
participants in the Future of Coal Conference draw heavily on an
emerging technology. The technology has been under development for 10
years and is now being demonstrated in a power plant in California.
Funded by state and federal government, along with private industry, the
technology is one of several under development worldwide that will lead
to a fleet of zero-atmospheric emissions power plants utilizing coal or
other domestic fuel sources.

The ultimate objective is a fleet of utility-scale zero-emissions
coal-fired power plants with a cost of electricity below \$0.04/kWh.
These new plants will remove all environmental constraints blocking the
increased use of coal, and will unlock a secure energy source for the
United States over the next few centuries.

The technology format is described in each of the answers offered below.
In summary, the technology offers means of powering a plant, with any
one of several alternative fuels, offering improved plant efficiencies
as turbine capabilities are improved, and enabling pollution free
operation of the plants in which it is used.

Technology is available which permits the construction of power
generating plants that can operate on a wide range of fuels, without
pollution, and economically separate and capture all the carbon dioxide
generated. Properly managed, the carbon dioxide can be used as a
marketable commodity, and could serve to enhance oil recovery or coal
bed methane recovery. Further, hydrogen can be separated from the coal
syngas and piped offsite for use in the transportation industry. This
and similar technologies will directly address three of the most
challenging societal problems today -- air quality, global warming, and
national energy security.

To realize the major values of the emerging technology described, it
will be necessary to modify gas turbines to operate on slightly
different drive gases consisting of steam and carbon dioxide, without
any nitrogen present. This program is currently under development within
the US DOE. With these developments, higher efficiency power plants will
be enabled, with a clean technology producing electricity without a
premium being paid.

In the near-term, however, deployment of new technologies will be
greatly stimulated by tax credits for "climate neutral combustion
technology". Such legislation already exists in the Netherlands, which
provides equal treatment for green energy (renewables) and clean energy
(zero-emission plants). Legislation was introduced last year (HR 4704)
to modify the federal tax codes to provide similar treatment in the US.
Costs of this production tax credit would be offset by additional
revenues from increased oil and gas production (by reuse of the captured
carbon dioxide) and by improvements in air quality and a reduction in
greenhouse gases.

**Q. 2. Environmental**: *What are the environmental and regulatory
challenges associated with the future use of coal for power generation.*

The primary challenge to the future use of coal is the adverse
environmental attributes. The lack of development of new coal plants is
directly linked to the high cost of mitigating environmental effects of
burning coal. [Coal can only play a significant role in the future
energy mix if the negative environmental attributes are eliminated in a
cost-competitive manner.]{.underline}

The solution most likely will involve gasification of coal followed by
use in one or more innovative cycles that have zero atmospheric
emissions. So rather than loosening air quality limits, the key is to
deploy new technology that eliminates pollution. New technologies are
ready for deployment that enable power without pollution, yet in the
United States, there is no regulatory or fiscal framework recognizing
"zero-emissions fossil fuel" plants. This is not the case in other
countries, however. [A key to deployment of zero-emissions fossil-fuel
plants will be regulatory and fiscal support for "climate neutral
cmbustion technologies", similar to support provided green energy,
distributed energy, and other emerging technologies.]{.underline}

The US Government has actively promoted research and development to
examine, characterize, and demonstrate the separation, capture, and
sequestration of carbon dioxide. The Government has also continually
reduced the acceptable threshold of regulated pollutants such as nitrous
oxide, sulfur oxide, mercury, and particulate matter generated by power
plants. These tightening requirements push industry to offer viable,
affordable means of generating power without adverse impact on the
environment.

Over the past few decades the use of renewable technologies, such as
wind power, solar power, and others have been encouraged and afforded
significant governmental incentives in the form of tax credits.
Implementation of these programs requires formal applications,
satisfaction of definitions and a wealth of complex regulatory and
reporting machinery.

In addition, there is an emerging market in Europe, and developing in
the United States, for the sale or trading in credits afforded by
cleaner systems replacing formerly more polluting systems.

What is needed to reduce the regulatory burdens on state and federal
regulatory agencies is a body of technology that is self-policing,
designed to operate only in compliance with law, and readily verifiable
with minimal oversight.

Clean Energy Systems, Inc. (CES) has developed zero-emissions
fossil-fueled power generation technology, integrating proven aerospace
technology into conventional power systems. The core of CES' process
involves replacing steam boilers and flue gas cleaning systems with "gas
generator" technology adapted from rocket engines. The gas generator
burns a combination of oxygen and a gaseous hydrocarbon fuel to produce
a mixed gas of steam and carbon dioxide at high temperature and
pressure, which powers conventional or advanced steam turbines. High
efficiencies are obtained for utility-sized power plants, but without
any atmospheric emissions. Possible fuel sources include renewable
biomass, natural gas, or coal syngas, and the cycle is a net producer of
water when air cooled condensers are used.

From the turbines, the steam/CO~2~ exhaust gas is cooled, separating
into its components, water and CO~2~, with the latter either sold or
stored. The gas generator technology has been used successfully in
aerospace applications for decades, including in the Space Shuttle Main
Engines, where hydrogen and oxygen are combusted to produce pure steam
at high temperature and pressure. Likewise, high-temperature,
high-pressure turbines have been used successfully in aerospace
applications. Every other component in the CES process is commercially
proven and is standard in power generation or other industries.

CES' objective is to apply gas generators and high-temperature,
high-pressure turbines from aerospace applications to power generation,
much like the process by which aircraft jet engines were adapted for
aeroderivative turbines in conventional power plants.

CES technology works with today's turbines to produce power without
pollution. The first generation power plants will have energy cost
structures comparable to or below those of other clean energy sources,
such as wind and solar power. With the introduction of the advanced
turbines following these first generation plants, CES technology will
ultimately operate at efficiencies similar to combined cycle plants
without carbon capture.

There are no exhaust gases to be cleaned, and no emissions of sulfur
oxides, nitrogen oxides, carbon dioxide, mercury, or other pollutants.

There is much confusion over the phrases "green energy" and "clean
energy". They are often used as synonyms, but in fact there are green
energy sources that are not clean (conventional combustion of biomass
fuels) and there are clean energy sources that are not green
(zero-emissions fossil fuel). A key regulatory challenge is to properly
differentiate these two concepts, and to provide proper incentives to
achieve the ultimate objectives. For example, if the objective is to
reduce reliance on fossil fuels, then renewable energy portfolios (RFPs)
are one tool available. If the objective is to improve air quality,
reduce pollution and reduce emissions of greenhouse gases, then a clean
energy portfolio approach is required. This would be more encompassing
than standard RFPs , and would be more effective for achieving the
objective.

**Senate Energy and Natural Resources Committee**

**Coal** **Conference**

**Columbia University**

[Executive Summary]{.underline}

The availability of clean, cheap, and copious energy will allow the
United States to sustain its economic growth. Fossil fuels, especially
coal, play an important role in providing low cost energy, but also
cause environmental problems due to atmospheric emissions. This
submission examines the scenarios for increased coal consumption and the
environmental challenges faced by coal in the twenty-first century. It
describes a number of technological alternatives for converting the
energy of coal into other, cleaner forms of energy, such as electricity
or hydrogen. As the world becomes more populous and affluent, however,
carbon dioxide emissions will attract increasing scrutiny. The future of
coal depends upon technologies that enable long term capture and
disposal of carbon dioxide from the atmosphere, allowing continued
reliance on fossil fuels for many decades without atmospheric impact.
The submission compares the relative advantages of sequestration
techniques and demonstrates how early adoption of carbon sequestration
would endow coal with significant competitive advantages over other
fossil fuels. The future of coal in fact depends on strict environmental
controls for carbon dioxide. Comprehensive carbon controls would impose
equal purification costs on coal and other fossil fuels, allowing coal's
inherent cost advantages to make it the preferred feedstock for
electricity, hydrogen, and synthetic fuels.

2\) Environmental Challenges

The chief barrier to unrestricted exploitation of coal, the most
abundant fossil energy, is concern over environmental emissions,
especially carbon dioxide. Over the next century, the amount of fossil
carbon that will be extracted from the ground and burned for energy will
be too large to be absorbed by the world's ecosystems. It is tempting to
grow more trees to increase carbon storage, to augment soils with
additional carbon, to let the oceans absorb the carbon, or to simply
leave the carbon in the atmosphere. The quantities of fossil carbon that
will be used, however, far exceed the uptake capacity of these natural
sinks. For example, the amount of fossil carbon that will be produced in
the next one hundred years is several times the entire biomass carbon
currently on Earth, enough to make the ocean sufficiently acidic that
coral growth would be stunted, enough to increase atmospheric
concentrations of carbon dioxide to unprecedented levels of greenhouse
gas forcing.

In order to prevent the accumulation of carbon dioxide in the
atmosphere, one needs to collect it from the emission source or take it
from the air and then dispose of the collected carbon dioxide
permanently and safely. Carbon dioxide disposal requires safe and
permanent sinks that have the capacity to absorb the bulk of the fossil
carbon consumed over the course of the twenty-first century. This poses
a major challenge; the mass of the carbon dioxide to be stored world
wide will be on the order of the water mass in Lake Michigan. Biomass,
soils, and the ocean are too limited in their uptake capacity to
accomplish this task. The most promising disposal options are the
chemical fixation of carbon dioxide as a carbonate and the injection of
carbon into underground reservoirs. This submission details the
prospects for carbon sequestration and identifies opportunities for
government policy to promote sequestration regimes.

Underground injection is probably the easiest route to carbon
sequestration, and it could start today in earnest. It is indeed
performed routinely for enhanced oil recovery, and it disposes of tens
of millions of tons of carbon dioxide most of which, unfortunately, is
not from fossil fuel use, but extracted itself from underground
reservoirs. Oil and gas sites that could benefit from carbon dioxide
injections are, however, limited in scope and it would not take long
before carbon dioxide would have to be injected into other sites, where
it would be treated as a waste and where it would not perform a useful
function. To set the scale of this endeavor, consider that at a typical
growth rate for the United States the CO~2~ emissions of the United
States over the next 50 years would form a 2 inch layer of liquid CO~2~
over its entire territory. It is hard to see how pumping that much
volume underground can be done without any impact or repercussions.

Underground injection does provide an excellent starting point for
carbon dioxide sequestration and disposal. There is no question that
there is substantial capacity for carbon storage that can be harnessed
at low costs and without much further development. Cost of carbon
sequestration even for a substantial amount of CO~­2~ could be low enough
to make this an attractive opportunity competing well on economic
grounds against nuclear energy, photovoltaic energy and even wind as a
carbon abatement technique.

This outlook suggests developing a technology that could replace
geological storage once the necessary capacity fails. This approach is
based on the observation that carbon dioxide in the environment reacts
with a variety of minerals to form carbonates. Solid mineral carbonate
formation occurs spontaneously albeit slowly in rock weathering. The
engineered process of mineral carbonation accelerates natural
carbonation in an industrial process. By mining readily accessible and
abundant magnesium silicates (e.g. peridotites or serpentinites),
grinding them up and letting them react with carbon dioxide, one
produces magnesium carbonate, silica, and usually some water. The
process is a net energy producer but current implementations waste more
energy than they gain. Mining, crushing, and grinding are similar in
scale to conventional mining and contribute less than ten dollars to the
disposal cost of a ton a carbon dioxide. That would add between 0.5
cents and 1 cent to the price of a kilowatt-hour of electricity and it
would add 8.5 cents to the price of a gallon of gasoline. The
engineering challenge lies in the chemical process. Recent research has
developed implementations that work in principle, but further
improvements are required to drive costs down. Estimates suggest that
the technology could work around \$100 per ton of CO~2~ without further
improvement. Recently a number of groups here and in Europe began
working to improve the process. The experience of other large scale
chemical processes would suggest that the necessary improvement to reach
a goal of twenty to thirty dollars per ton of CO~2~, or about 16 to 25
cents per gallon of gasoline is not out of reach.

Before one can dispose of carbon dioxide it needs to be captured.
Capture from existing power plants would entail retrofitting costs that
are best avoided. There are new plant designs, however that would
capture CO2 directly at the source. These plants could use abundant
energy sources, such as coal, to produce hydrogen or electricity and
deliver carbon dioxide and other wastes in separate concentrated streams
ready for environmentally acceptable disposal.

There are a number of designs for zero emission power plants. One
particular design pursued by the Zero Emission Coal Alliance (ZECA)
combines carbon dioxide capture and the elimination of all emissions to
the air with a conversion efficiency of 70%. If, however, one
temporarily would accept reduced efficiency, one could move to zero
emission power plants virtually immediately. This would provide a path
forward.

Zero emission plants are an excellent source of clean electricity and
clean hydrogen, which, in many peoples opinion represent the future of
energy. There are no hydrogen wells, however, and the energy to produce
hydrogen must come from somewhere. Zero emission coal plants are well
suited to generate hydrogen from water with energy from coal. Coal
energy is five to ten times cheaper than oil or gas. Electricity, which
is often used to produce hydrogen, is even more expensive than oil.
Consequently, gasification processes like the ZECA process would provide
a far more cost-effective basis for a hydrogen economy than other energy
sources. Potentially, hydrogen could become cheaper than natural gas.
Central plants could generate electricity or hydrogen and safely dispose
of all waste products including carbon dioxide. The most significant
cost factors for energy systems would become coal and carbon
sequestration.

Carbon dioxide capture may be most effective at power plants, yet a
large fraction of all emissions are from small, distributed sources like
cars and planes. It is difficult and expensive to collect carbon dioxide
on board these mobile sources. Consequently, we have investigated
capturing carbon dioxide directly from the air using wind as the
transport agent. This is seldom considered because carbon dioxide in the
air is very dilute. At first sight this low concentration seems to be a
huge obstacle, but in the case of wind energy we have learned to capture
a far more dilute commodity. At a reasonable wind speed of 6m/s, the
carbon dioxide flow through an aperture of 0.2m^2^ equals the per capita
production of carbon dioxide in the US. The aperture required for the
kinetic energy flux to equal the US per capita energy consumption is
80m^2^. We have sketched out a process to capture carbon dioxide from
the air using lime as the capture agent. Still far from optimal, the
process suggests a price between \$10 to \$20 per ton of CO2 for
capture, translating into a small addition in the price of gasoline. If
proven correct, this technology would represent a major breakthrough, as
it would allow the continuation of our current life style while
eliminating climate change concerns. It would allow carbon dioxide
capture by developed countries on behalf of countries that cannot afford
to do so and even allows one to consider reducing atmospheric carbon
dioxide levels some time in the future. Introduction of this approach
requires no substantive changes in today's infrastructure and the cost
would add less to the price of energy than recent price swings have
done. Development of air extraction does depend, however, on market
incentives for carbon. There may be many approaches to how the price of
carbon is set and how carbon markets function. But once carbon has an
economic value, these technologies will become commercially viable.

In short, fossil energy should not be ignored. It is capable of fueling
the world for generations to come. Low cost energy resources can produce
hydrogen and electricity which could be used in the markets for which
they are best suited. Cars could run on conventional or synthetic
hydrocarbons, which are excellent energy carriers. With increased energy
conservation and energy efficiency and the decoupling of the disposal of
carbon dioxide from the consumption of fossil fuels, fossil energy could
sustain the economy for several centuries. This would allow more than
enough time for alternative forms of energy to become competitive.
Predictions of energy technology for the next century should include
everything from fusion to photovoltaics, but especially fossil fuels.

It is clear that there is need for extensive and dedicated research to
solve many technical problems associated with the components of these
systems. For coal to maintain a leading role in the energy markets
requires solutions to its environmental impacts. Development of zero
emission coal plants can start by building on the existing clean coal
technology, but ultimately it will have to move beyond currently
available technology and develop bold new gasification designs,
desulphurization systems, reformers, and fuel cells. The field suffers
from only looking at solutions that are based on yesterday's research.

On the sequestration side it is important to start storing fossil carbon
in geological storage area, while at the same time assuring the
existence of long term alternatives for carbon sequestration. Without an
alternative to geological storage, fossil carbon could face a situation
not unlike that of the nuclear power industry where a single point
failure in a storage system would lead to the eventual shutdown of an
entire industry. Alternatives need to develop to the point that they
represent practically viable options, even if they cannot compete with
underground injection, today.

Successful development of zero emission coal technology would allow the
coal industry to eliminate the high carbon impact of coal as a fuel
source. Without such technology, the high carbon content of coal will
make it an obvious target for the early phases of carbon reductions.
This trend has already tilted the field in favor of natural gas. In the
long run, carbon dioxide emissions will have to be reduced so far that
even natural gas will require carbon sequestration. At that point, the
abundance of coal may shift demand back to coal with sequestration.
This, however, may well be too late to save today's coal industry. For
the industry to survive, it must adopt a serious approach to carbon
sequestration and seize the initiative with new and innovative power
plant design that effectively eliminates concerns over greenhouse gas
emissions.

**Senate Energy and Natural Resources Committee**

**Coal** **Conference**

**Florida Municipal Electric Association**

**Fair Environmental Treatment of Coal Critical for Energy Security**:
Overly stringent standards for coal-fired generation could force fuel
switching to natural gas. These so called "fuel neutral" standards are
often based on the environmental performance of natural gas generation
and do not take into account the inherent differences in the two fuels.
In addition, several multi-pollutant control (MPC) allowance allocation
schemes propose to award allowances to natural gas and coal generation
with the same "output based\" formula. This method over-allocates
operating allowances to gas-fired generation and under-allocates to
coal-fired generation. In the CAIR rule and Clear Skies legislation,
"fuel specific\" standards should be employed as opposed to \"fuel
neutral\" standards that penalize new coal generation.

**Visibility Constraints on Environmental Permitting**: Currently the
number one air quality constraint limiting the construction of new
coal-fired generation is the visibility impact on Class I areas. This is
especially true for EGUs locating at greenfield sites that often have
little ability to generate internal emission offsets or acquire
locally-generated offsets. The Interior Department's federal land
managers (FLMs) have developed visibility assessment criteria in their
FLAG (Federal Land Manager's Air Quality Related Values Working Group)
procedures that are so stringent that proposed new coal-fired EGUs
locating within 100-200 kilometers of a Class I area cannot pass the FLM
visibility criteria, even after employing BACT. EPA's visibility model
indicates that the 50% SO2 and NOx reduction in Phase I and the nearly
70% reduction in Phase II will provide a "geographic enhancement" for
visibility that should allow FLMs to relax their criteria for certifying
visibility impairment from BART eligible sources. This same argument
should apply to new EGUs. Since these EGUS must live under the same SO2
and NOx caps, the concept of geographic enhancement is just as
applicable to those sources. To mitigate the most serious constraint to
siting new coal-fired EGUs near Class I areas, the Interior Department
should be directed to seek guidance from EPA for the states and FLMs on
how to incorporate the visibility improvement from CAIR in evaluating
the visibility [impacts from new EGUs locating near Class I
areas.]{.underline}

**Need to Involve Multiple Agencies in Coal Environmental Scientific
Research:** Having Departments and Agencies other than just EPA conduct
health effects research brings valuable, differing perspectives to
answering critical environmental scientific questions. Single agency
research poses the danger that when an Agency does not like the answers
it gets from outside researchers, they will lose their funding. DOE,
which currently conducts a significant amount of health-effects
research, should be funded to continue both mercury health effects and
particulate matter speciation research.

**Environmental: What are the environmental and regulatory challenges
associated with the use of coal for power generation.**

The achievement of the goals of Clean Air Act of 1977 and 1990 were
based in part on the belief that economic forces would cause the
eventual shutdown of older, less efficient and higher polluting sources
and their replacement with more cost-effective rebuilt or new plants
employing new source performance standards (NSPS) or best available
control technology (BACT). However, in the case of coal-fired steam
electric generating units, it could be argued that economic and
regulatory forces in the 1980s and 90s have worked to actually extend
the operations of older plants and units. For example, it typically
takes 10 years to get a new coal-fired generating facility on line from
conception to generating due to regulatory uncertainty and delays in
obtaining construction permits. Opposition to new coal generating
facilities often results in utilities electing to continue to run
existing plants to meet capacity needs.

# **Fair Environmental Treatment of Coal Critical for Energy Security:** Coal-fired generation is the largest and most economical source of electric power in the country (over 50%). Nearly all energy experts have concluded that America's energy security depends on a diverse fuel mix with coal playing a dominant role for the foreseeable future. 

Coal-fired generation is also one of the largest sources of major air
pollutants including SO2, NOx and mercury. Fortunately air pollution
control technologies exist which can significantly reduce air pollutant
emissions from older existing coal-fired power plants while technologies
for new, clean coal plants will provide even greater reductions.

Overly stringent standards for coal-fired generation could force fuel
switching to natural gas. These so called "fuel neutral" standards are
often based on the environmental performance of natural gas generation
and do not take into account the inherent differences in the two fuels.
In addition, several multi-pollutant control (MPC) allowance allocation
schemes propose to award allowances to natural gas and coal generation
with the same "output based\" formula. This method over-allocates
operating allowances to gas-fired generation and under-allocates to
coal-fired generation. [Both the "fuel neutral" standard and "output
based" allowance allocation method penalize coal-fired generation and
encourage a shift away from coal to gas-fired generation.]{.underline}

It should be noted that both natural gas and coal have advantages and
disadvantages related to environmental quality and energy security.
Natural gas is inherently cleaner and is easy to transport. However, it
is limited in supply, requiring ever-greater imports, is costly and is
not normally stored at industrial sites. Coal is economical with
abundant domestic supplies and is normally stored at industrial sites
(often 90 to 120-day supplies). However, coal has greater air pollutant
emissions and requires significant and costly emission controls to
operate.

**Solution:** It is important to [recognize the inherent difference in
fuel type when establishing emission limiting standards and allowance
allocation formulas in the CAIR rule and Clear Skies legislation. \"Fuel
specific\" standards should be employed as opposed to \"fuel neutral\"
standards that penalize new coal generation. Any output- based allowance
allocation method should be based on different fuel types and allocation
formulas should be established accordingly]{.underline}. The proper
comparison and benchmark for new coal standards is improvement from
existing coal emissions and the emission performance required to achieve
the National Ambient Air Quality Standards of the Clean Air Act.

**Visibility Constraints on Environmental Permitting**: [Currently the
number one air quality constraint limiting the construction of new
coal-fired generation is the visibility impact on Class I
areas.]{.underline} This is especially true for EGUs locating at
greenfield sites that often have little ability to generate internal
emission offsets or acquire locally-generated offsets. [The Interior
Department's federal land managers (FLMs) have developed visibility
assessment criteria in their FLAG (Federal Land Manager's Air Quality
Related Values Working Group) procedures that are so stringent that
proposed new coal-fired EGUs locating within 100-200 kilometers of a
Class I area cannot pass the FLM visibility criteria, even after
employing BACT.]{.underline} (See attachment for technical explanation).
The effect is that many excellent sites for locating coal-fired EGUs
cannot be considered viable due only to visibility criteria, which many
air modeling experts feel do not reflect true visibility impairment. The
only practical way that a new coal-fired EGU can be built within 200
kilometers of a Class I area is to locate near or at an existing power
plant or industrial site and reduce emissions from an existing source to
offset the new unit emissions. Since offsets are not generally available
at greenfield sites, many of these potential coal-fired sites will
remain undeveloped due to unnecessarily over-restrictive visibility
criteria.

**Solution:** At a minimum the FLMs should revise their FLAG visibility
criteria to better reflect actual visibility impairment and to
facilitate the building of clean coal EGUs. In addition[, both the EPA's
Clean Air Interstate Rule (CAIR) and the Administrations Clean Skies Act
(CSA) propose to reduce SO2 and NOx in two phases by 50% and 70%
respectively. These reductions amount to de-facto offsets of those
pollutants and will enhance visibility over the entire geographic
region. Such reductions should be incorporated into FLAG visibility
assessments]{.underline}. In the Preamble of the CAIR SNPR, EPA makes an
excellent case that the proposed rule will improve visibility in Class I
areas in a manner superior to controls on "BART Eligible" sources (P.
32704-32707). [EPA's visibility model indicates that the 50% SO2 and NOx
reduction in Phase I and the nearly 70% reduction in Phase II will
provide a "geographic enhancement" for visibility that should allow FLMs
to relax their criteria for certifying visibility impairment from BART
eligible sources. This same argument should apply to new EGUs. Since
these EGUS must live under the same SO2 and NOx caps, the concept of
geographic enhancement is just as applicable to those
sources.]{.underline}

[To mitigate the most serious constraint to siting new coal-fired EGUs
near Class I areas, the Interior Department should be directed to seek
guidance from EPA for the states and FLMs on how to incorporate the
visibility improvement from CAIR in evaluating the visibility impacts
from new EGUs locating near Class I areas]{.underline}. It is suggested
that the guidance provide that new EGUs locating at distances greater
than 50 km from a Class I area should be deemed to "not adversely impact
visibility" in the Class I area if the EGU owner is in compliance with
the provisions of CAIR and the unit meets BACT requirements. (Note that
S 131 has this provision) EGUs locating within 50 km of a Class I should
be able to include geographic enhancement from CAIR in determining the
visibility impact of the EGU on the Class I area.

**Need to Involve Multiple Agencies in Coal Environmental Scientific
Research:** Without impugning anyone's integrity, it should not be
unexpected that if only one Agency is involved in designing and funding
scientific research in any given area, that Agency's biases will become
part of the final research product. The questions asked, the assumptions
used, who is picked to conduct the study and participate in the peer
review panel, all of these will reflect a given Agency's views and
perspective, and will influence the final research product. This is
particularly true of regulatory agencies whose research tends to be
biased towards further regulation.

Having Departments and Agencies other than just EPA conduct health
effects research brings valuable, differing perspectives to answering
critical environmental scientific questions. For example, for ten years
EPA has conducted particulate matter (PM) research but has never looked
at the comparative toxicology of PM in order to learn what components of
PM have the greatest negative health impact and which sources
(industrial, utility, mobile sources) are the most harmful. EPA has
focused on the size of the particles, not their chemical composition.
The Department of Energy (DOE) saw a hole in the research (also
suggested by John Graham of OIRA in a "prompt letter" to EPA in 2001)
and has funded PM speciation research at the National Energy Technology
Laboratory (NETL). DOE is looking at questions that EPA has never posed
or put out as an RFP. DOE brings an important and different perspective
to this research.

Another reason to avoid single agency research is the danger that when
an Agency does not like the answers it gets from outside researchers,
those researchers will lose their funding. For example, EPA funded the
National Research Center for Statistics and the Environment (NRCSE) in
2001 to critique EPA's Criteria Document for PM air pollution. The
NRCSE's comments were highly critical of EPA's "cavalier attitude
towards statistical interpretation issues" and the fact that large
questions of uncertainty and variability were of concern but that the
Criteria Document was written in a manner "as to imply that none of
these issues ultimately affect the conclusions." Overall, the NRCSE
stated that the Criteria Document did not take into account much of the
recent statistical literature questioning the validity of the
methodology used in many of the studies that EPA relied on for its
conclusions (to tighten the PM standard). The NRCSE lost its EPA
funding.

EPA had PM research funds of about \$50 million a year for 5 years (the
funding has declined) while DOE had about \$5 million over three years.
OMB has indicated in the 2006 budget (and told DOE) that DOE's research
funds in this area will be eliminated due to budget constraints. We
believe this is exactly the wrong answer. Different agencies bring
valuable and differing perspectives to environmental research. Rather
than eliminating DOE's funds, we believe that some of the funds from EPA
should be transferred to DOE to continue the important work they are
doing in the area of PM speciation studies.

We would make a similar argument concerning mercury studies. In
developing its Clean Air Mercury Rule (CAMR), EPA failed to undertake
competing health studies that examine the benefits of minuscule
reductions of mercury in fish consumed by Americans compared with the
negative health impacts of scaring Americans away from healthy fish
consumption. Different agencies conducting research in the same area
bring important checks and balances to the enterprise, and we would
argue that both HHS and DOE should share in the funding for mercury
health-related studies.

**Senate Energy and Natural Resources Committee**

**Coal** **Conference**

**Kennecott**

**Kennecott Energy Company**

**[Summary and Response to Question 2]{.underline}**

**Financial and Technological Improvements for Coal Utilization**

As the United States (US) seeks to develop a balanced policy to address
its ongoing energy needs, coal continues to provide the nation secure
and affordable energy. Investment in coal production, generation and use
is needed to support secure energy supplies and the growing demand for
energy. However, the environmental performance of coal use must continue
to improve if coal is to maintain a role in the transition to a
sustainable energy future. The steady advance of technology has
delivered major reductions in emissions of sulphur, nitrogen and
particulates from coal-based generation. Developing technologies also
offer the prospect of virtually eliminating CO~2~ and other emissions
from coal-fired power generation.

As the US Senate considers ways to address these important issues,
Kennecott Energy Company believes it is important for the Senate Energy
Committee to consider focusing on the following issues:

-   Short-term emissions reductions of conventional pollutants -- reform
    of the Clean Air Act will help accomplish this goal in a more rapid
    and cost effective manner. Kennecott Energy believes market based
    mechanisms, such as cap and trade, are the most effective way to
    reduce emissions from coal-fuelled generation.

-   Longer-term needs to develop near-zero emissions technologies --
    although the benefits from this effort will not be felt immediately,
    immediate action is required to begin developing these technologies
    or they will not be available when required, resulting in higher
    energy and environmental costs for US taxpayers.

    **Building a Long-Term Future for Coal.**

If the US (and the rest of the world for that matter) is going to
maximize the value of its extensive coal reserves, deep cuts in
emissions are needed. Efforts to reduce SO~2~, NOx and mercury
eventually will have to be expanded to include cuts in CO~2~ emissions.

Kennecott Energy, therefore, believes immediate action is needed to
identify cost effective, long-term solutions that will minimize the
overall costs to society. Short term, policies that result in
inappropriate investment decisions have the potential to add significant
national costs. Kennecott considers CO~2~ to be a long-term issue that
will ultimately require setting long-term goals and long-term policy
approaches. Immediate efforts must focus on identifying and developing a
portfolio of technologies that will allow significant reductions in
future emissions. For this effort to be effective it ultimately will
require participation and emissions reductions from all sectors of the
economy.

It is essential, therefore, that the US continues to develop a balanced
energy policy that includes a diverse mix of energy supplies. Without
this careful balance and diversity, it is very possible US energy
security will remain vulnerable to strong outside influences.

Addressing coal emissions will require a similar, balanced, broad-based
approach. Effective reductions that will not cause undue harm to local
communities will require a broad portfolio of options, all of which must
be pursued. These options will necessarily include: energy efficiency,
demand-side management, advanced conventional coal technologies, and
renewable technologies. Near-zero emissions technologies, such as
integrated gasification combined cycles (IGCC) combined with
geo-sequestration offer significant potential to contribute to a
sustainable energy future. Development of this class of technology
should be pursued immediately.

**Short-term needs.**

In order to provide options and opportunities for the future, the US
will need to accelerate development and deployment of low-emission
technology generally, and, more specifically, carbon capture and storage
(CCS, or geo-sequestration) technology. (*CCS is technology that can
allow industry to capture the CO~2~ before it leaves their facilities
and store in deep underground reservoirs similar to those that have held
oil and natural gas for millions of years.*) Support for development of
these technologies can come in many forms, from tax incentives to direct
subsidies; however, industry must not be burdened in ways that places it
in a competitive disadvantage internationally.

Developing short-term, low-emission technology, with a focus on CCS, is
important for the long-term sustainability of the nation's energy
supply. Geo-sequestration has been identified by industry experts as the
key enabling technology for the development of near-zero emission
coal-fired generation. Through the development of this technology, CCS
is expected to reduce the global cost of emissions reductions, which in
turn will allow a more rapid reduction in emissions.

**Increased Community Acceptance.**

One immediate priority that both industry and government will need to
undertake is an effort to increase public acceptance of CCS and
ultimately develop the regulatory structures that will allow deployment
of this class of technology. This will require numerous international
demonstrations conducted under a variety of conditions and cooperative
partnership efforts. Kennecott Energy believes one important part to
this process is the proposed FutureGen project. Kennecott Energy is a
founding member of the FutureGen Alliance and it supports the
President's proposed budget to fully fund this program.

While FutureGen is a worthy effort, it is not enough, on its own, to
ensure the viability and public acceptance of CCS technology. The
ultimate viability of this class of technology will require many more
large-scale demonstrations, both domestically and internationally. This
will require increased effort in international forums to promote
technology development and demonstration. Kennecott believes there is
potential for the US to demonstrate increased leadership in this area
via increased efforts in the Carbon Sequestration Leadership Forum
(CSLF), an international initiative focused on developing improved
cost-effective technologies for the separation and capture of CO~2~ for
its transport and long-term safe storage.

Ultimate acceptance of CCS will require concerted stakeholder engagement
including regular and involved discussions with industry, major
non-governmental organizations (NGOs), regulators, states, etc.

**Diversity of Technology.**

Geo-sequestration, however, is only one technology in a broad portfolio
of options the US and other nations will need to pursue in order to
minimize the cost of emissions reductions. Kennecott Energy believes the
guiding principle in this effort should be to support the lowest cost
emissions reductions wherever they may occur. New technologies, whether
they be renewables, or low emission fossil fuel technologies, tend to
have higher costs early in their development cycle.  Policies introduced
to support the deployment of technologies that contribute to lower
emissions should apply to all technologies that meet emissions criteria
in preference to specific policies targeting one technology.

**Summary.**

Coal has the potential to play a significant role in the US as it
transitions into long-term sustainable energy security, provided the
environmental concerns associated with its use can be addressed.
Achieving this will require policy action to support projects that
develop and demonstrate a sound portfolio of low-emission technologies.
This is necessary to increase public acceptance, and lower the costs of
these new technologies. The US will also need to work internationally
and with other governments to build shared international momentum for
technical solutions, accelerate the timing, and share the cost of this
important research and development.

**Senate Energy and Natural Resources Committee**

**Coal** **Conference**

**Interstate Mining Compact Commission**

Summary and Response to Question 2:

On behalf of the Interstate Mining Compact Commission and the National
Association of Abandoned Mine Land Programs, we submit the following
proposal for your consideration at the upcoming Coal Conference being
hosted by your Committee on March 10. It concerns one of the most
successful programs to grow out of the state/federal partnership under
the Surface Mining Control and Reclamation Act of 1977 (SMCRA). For
almost 30 years, the states and tribes that we represent have worked in
concert with the Office of Surface Mining (OSM) to address the
environmental impacts and health and safety hazards associated with past
and present coal mining. During that time, the Abandoned Mine Land (AML)
program under Title IV of SMCRA stands out as perhaps the most
significant and meaningful example of leveraging federal funds to
accomplish the greatest good for the greatest number of our citizens.
The list of reclamation accomplishments by the states and tribes is
extensive and impressive and serves as clear and convincing evidence of
both the efficiency and effectiveness of a federally funded, state-run
program that protects public health and safety and the environment.

As the Committee is aware, the future of this critical program is
threatened by the looming expiration of fee collection authority, which
is set to expire on June 30^th^ of this year. While notable work has
been accomplished to date, much remains to be done, and we therefore
strongly recommend that Congress enact appropriate legislation that will
reauthorize AML fee collection for the number of years necessary to
address remaining AML-eligible problems. We stand ready to work with
your Committee to craft appropriate legislative language.

When considering the challenges associated with coal production and use,
we believe it is essential to factor in the legacy of past mining and to
think about the lessons we have learned and how they can influence our
future. In this regard, we believe it is essential to balance effective
regulation of active mining operations while addressing the abandoned
mines that continue to scar our landscapes and threaten our citizens.
Both of these goals can be accomplished while ensuring a healthy and
productive coal mining industry that will meet the growing energy needs
of our Nation. The past 25 years of success under SMCRA proves that we
can achieve this balance.

We also believe it is essential that adequate funding be provided to
states to implement both their regulatory programs for active mining
operations and their abandoned mine land programs. Should states be
unable to operate these programs due to funding constraints, the federal
government will be faced with the burden of running the programs at a
substantially increased cost. In the final analysis, it behooves
everyone -- OSM, the Congress and the states and tribes -- to commit the
resources necessary to assure strong and effective programs that will
achieve the purposes and objectives of SMCRA, thereby protecting the
environment where active coal mining operations occur, enhancing the
environment through remediation of past problems associated with
abandoned mines, and ensuring the development of our Nation's most
abundant energy resource.

**Senate Energy and Natural Resources Committee**

**Coal** **Conference**

**National Commission on Energy Policy**

**[Executive Summary]{.underline}**

The National Commission on Energy Policy was launched in 2002 by the
Hewlett Foundation and several other private, philanthropic foundations.
Its diverse and bi-partisan 16-member board includes recognized energy
experts from business, government, academia, and the non-profit sector.
The group's objective was to develop a comprehensive strategy for
meeting the central energy challenges of the 21^st^ Century ---
challenges that include improving the nation's energy security, reducing
climate change risks, and developing the ample, clean, and affordable
energy resources that are needed to meet future energy needs. In its
efforts over the course of three years, the Commission explored a number
of policy issues and developed numerous recommendations that relate
specifically to coal and to the questions posed by the Senate Committee
on Energy & Natural Resources in preparation for its March 10, 2005
Clean Coal Conference.

This submission contains our detailed responses to the first three of
the Committee's questions (the Commission did not address the fourth set
of issues the Committee has identified, regarding the need for
transportation or transmission infrastructure to improve coal use). In
brief, these responses cover Commission work exploring the future of
coal use in relation to other energy options under different regulatory
scenarios; the Commission's proposal for a gradual, flexible,
market-based, and cost-limited approach to curbing future growth in
greenhouse gas emissions; and the Commission's recommendations
concerning the need for substantial investments to advance new
technologies --- notably promising coal technologies such as integrated
gasification combined cycle (IGCC) technology and carbon sequestration.
These recommendations reflect the Commission's belief that the United
States must find ways to continue using coal in a manner that is both
cost-effective and compatible with environmental stewardship. The
Commission has concluded that the best strategy for doing so lies in
combining market-based regulatory programs with substantial new
investments in technology innovation, development, and early deployment.

**National Commission on Energy Policy**

**Submission to Senate Committee on Energy & Natural Resources for**

**March 10, 2005 Clean Coal Conference**

**Question #2: What are the environmental and regulatory challenges
associated with the future use of coal for power generation?**

Environmental concerns and related regulations are likely to present the
most significant single set of challenges to an ongoing expansion of
coal-based energy in the United States and the world over the coming
decades. The most important of these fall into three categories:

1.  Concerns about coal-related emissions of conventional air pollutants
    such as sulfur dioxide (SO~2~), nitrogen oxides (NO~x~), and
    particulate matter (PM), as well as airborne toxic emissions such as
    mercury; and

2.  Concerns about the land and water quality impacts of coal mining,
    and (to a somewhat lesser extent) impacts related to the transport
    of coal from mine to point-of-use and the disposal of ash waste from
    power plants.

3.  Concerns about emissions linked to the risk of global climate
    change. Because of its high carbon content relative to other fossil
    fuels, coal tends to release significant quantities of carbon
    dioxide (CO~2~), especially when it is used in conventional
    steam-electric power plants. In fact, coal combustion alone now
    accounts for more than a third of global carbon emissions.

Successfully overcoming these challenges is, in the Commission's view,
central to the broader objective of making certain that the nation, and
the world, have access to ample, secure, clean, and affordable energy
supplies --- now and in the future. As we note in our response to
Question #1, coal is one of the most abundant and least costly energy
sources available throughout the world and the only fossil fuel that
exists within the United States in quantities that are more than
sufficient to meet projected demand. Thus it is critically important for
the coal industry, on one hand, to engage these challenges proactively
and to undertake the innovation and investment needed to ensure its
future and for regulators and policymakers, on the other hand, to design
policies that promote such innovation and investment, while providing a
regulatory and business climate in which the industry can successfully
transition to new technologies and not only survive, but thrive.

The Commission's general approach, therefore, combines gradual,
flexible, and market-based regulatory strategies with a substantial
emphasis on technology investment in the form of expanded public support
for research, development, demonstration, and early deployment
activities aimed at advancing a next generation of cleaner coal
technologies. Specifically, we recommend a mandatory, but explicitly
phased and cost-limited tradable-permits system for limiting future
growth in carbon emissions, together with \$7 billion in new federal
expenditures over ten years to provide early deployment incentives for
integrated gasification combine cycle (IGCC) coal technology and to
develop and demonstrate commercial-scale carbon capture and
sequestration. IGCC technology, in particular, has the potential to be
both cleaner and more efficient than burning coal in a steam boiler to
make electricity --- a process which generates considerable waste heat
and leads to the release of myriad undesirable emissions. By contrast,
the gasification process offers the potential for cost-effectively
isolating and collecting nearly all impurities --- including mercury and
other pollutants, as well as a large portion of the carbon --- before
combustion. (Specific aspects of the Commission's recommendations with
respect to IGCC and other advanced coal technologies are described in
our response to Question #3.)

**[Commission Findings and Recommendations Concerning
Non-Climate-Related Environmental Issues for the Coal
Industry]{.underline}**

With regard to the first category of environmental concerns noted above
(i.e., conventional and toxic air pollutant emissions associated with
coal-fired power generation), the Commission recommends better
coordination and greater certainty regarding targets and timetables for
achieving long-term air quality objectives. The latter recommendation is
one of several the Commission has proposed in an effort to improve the
reliability and performance of the electricity sector generally, but it
is of particular relevance to the coal industry given the substantial
contribution of coal-fired power plants to overall electric sector
emissions of key air pollutants. Specifically, the Commission recommends
that Congress establish an integrated multi-pollutant regulatory
structure that: (1) sets forth a firm multi-year schedule of phased
emission reductions that accommodates both environmental and system
reliability needs; and (2) uses market-based mechanisms to the maximum
extent feasible to minimize compliance costs and encourage innovation.

The Commission also considered the second category of concerns noted
above --- that is, upstream impacts associated with coal use.
Specifically, the Commission sponsored a separate study to explore what
challenges and opportunities might be associated if the successful
commercialization of coal IGCC and other advanced technologies leads to
a doubling of U.S. coal production over the next 25 years. The study ---
which is titled "*Coal: Planning Its Future and Its Legacy"* ---
addresses economic and industrial, as well as environmental impacts
associated with extracting, transporting, and processing coal. It
concludes that with continued improvement in coal production
technologies and methods, and careful planning, increased coal use in
the future can be achieved in a manner that advances both local and
national interests.

In sum, the Commission believes that the conventional air pollution and
upstream environmental impacts associated with coal use can largely be
managed through well-designed regulatory programs, careful planning, and
continued technology progress. By contrast, finding solutions to the
climate concerns that are currently associated with coal use presents a
more difficult challenge and one that will likely require more time and
more fundamental technological breakthroughs. Here too, however, the
Commission is optimistic that a well-integrated and comprehensive
approach will yield results that ensure a healthy future for coal.

**[The Commission's Climate Recommendations]{.underline}**:

The Commission believes that climate change is a century-scale problem
that will take decades to solve. Our proposal for an initial step toward
addressing the U.S. contribution to this global problem is explicitly
designed to promote gradual change and minimize adverse impacts on
important sectors of the economy, including the coal industry. Like the
Bush Administration, the Commission proposes to target emissions
reductions on the basis of emissions intensity --- a metric that is
compatible with continued economic growth --- rather than to establish
absolute caps. Our proposal aims to slow, not stop, projected growth in
domestic greenhouse gas emissions over the decade from 2010--2020 to
allow time for the technology advances needed to cost-effectively stop
and then reverse current emissions trends in later years (see Figure 1
below). In contrast to current U.S, policy, however, the Commission
concluded that only a mandatory program would provide the market
incentives and regulatory certainty required to achieve reductions and
justify significant investments in new technology.

The Commission's climate proposal therefore consists of a package of
complementary initiatives in which the implementation of a mandatory,
economy-wide, tradable-permits system for reducing greenhouse gas
emissions is fundamentally linked to efforts to promote improved
technology. As noted above, the Commission proposal ---unlike the U.S.
acid rain program and the European Union's carbon cap and trade systems
--- would allow for continued emissions growth, albeit at a slower pace,
for the first decade of implementation. Equally important, the
Commission proposal significantly reduces the economic uncertainty and
potential economic impacts of a mandatory program by capping the cost of
allowances. Under the Commission proposal, emitters could buy additional
permits from the government at a pre-determined price (initially \$7 per
metric ton of CO~2~-equivalent). This "safety-valve" would establish an
upper limit on compliance costs: if compliance costs are low, as many
argue, then the environmental targets will be reached. If not, then the
pace of emissions reductions will slow, but the economy will be
protected.

Recognizing that no proposal will be politically viable if it is seen as
harmful to the U.S. economy or to the international competitiveness of
U.S. businesses, the Commission's approach explicitly links subsequent
U.S. action to progress by other developed and developing nations in
addressing their own emissions. To provide further assurance that any
adverse economic impacts would be kept to a minimum, the Commission also
undertook a detailed modeling analysis of the impacts of its proposal on
energy prices generally --- and on future coal use in particular. The
results of that analysis are described in our response to Question #1;
they indicate that coal use would decline somewhat relative to the 2020
business-as-usual reference case, but would still grow in absolute terms
by 16 percent over current (2004) levels.

**Figure 1: "Slow, Stop, Reverse" Emissions Trajectory Under the
Commission's Climate Proposal**

![](media/image1.png){width="6.5in" height="3.607638888888889in"}

Key features of the Commission's climate proposal include:

-   ***Mandatory, economy-wide, tradable-permits system*** would go into
    effect in 2010. The program would cover carbon dioxide (CO~2~) and
    other major greenhouse gases (including methane, nitrous oxide,
    hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride).

-   ***Environmental target based on annual reductions in emissions
    intensity,*** where intensity is measured in tons of
    CO~2~-equivalent emissions per dollar of GDP. Between 2010 and 2019,
    the Commission recommends a target emissions intensity decline of
    2.4 percent per year. Based on current GDP forecasts, achieving this
    target would reduce projected emissions growth from a
    business-as-usual rate of 1.5 percent per year to 0.4 percent per
    year. Starting in 2020 and subject to the Congressional review
    described below, the Commission proposes raising the target
    intensity decline to 2.8 percent per year (the "stop phase" in the
    figure).

-   ***Cost cap*** is achieved by making additional permits (beyond the
    quantity of permits established through the target intensity decline
    described above) available for purchase from the government at a
    pre-determined price. The Commission proposes an initial cost cap or
    "safety valve" permit price of \$7 per metric ton of
    CO~2~-equivalent. This price would increase by 5 percent per year in
    nominal terms.

-   ***Permit allocation*** for a given year would be calculated well in
    advance based on available GDP forecasts. For the first three years
    of program implementation, the Commission recommends that 95 percent
    of initial permits be issued at no cost to emitting sources. The
    remaining 5 percent would be auctioned. Starting in 2013 and every
    year thereafter, an additional 0.5 percent of the target allocation
    would be auctioned, up to a limit of 10 percent of the total permit
    pool.

-   ***Congressional review in 2015 and every five years thereafter***
    to assess the U.S. program and evaluate progress by other countries.
    If major U.S. trading partners and competitors (including China,
    India, Mexico, and Brazil) fail to implement comparable emission
    control programs, further U.S. efforts (including continued
    escalation of the safety valve price and permit auction, as well as
    more aggressive intensity reduction target in 2020) could be
    suspended. Conversely, the U.S. program could be strengthened if
    international progress, technology advances, or scientific
    developments warrant.

As has already been noted, the Commission regards its recommendations
related to technology innovation as a vital complement to its proposal
for a mandatory program to limit future greenhouse gas emissions. Our
submission in response to Question #3 goes into some detail about the
Commission's specific recommendations with regard to coal IGCC and
carbon sequestration. Successfully commercialization of these two
breakthrough technologies would offer a long-term solution to many of
the environmental concerns that are currently associated with coal use
and holds out the promise of making policy responses to the risk of
climate change compatible with a new era of expansion for the coal
industry.

**[Conclusion]{.underline}**

Environmental and regulatory concerns --- particularly those related to
climate change --- are likely to pose major challenges for the coal
industry in the years to come. But the National Commission on Energy
Policy is optimistic that a combination of well-designed policies,
strategic investments in technology, and effective public-private
partnerships can overcome these challenges and ensure a continued role
for what is surely one of America's most important energy resources.
IGCC technology, in particular, offers considerable promise for
substantially reducing numerous types of pollutant emissions associated
with conventional coal use and, in combination with carbon capture and
sequestration, could allow coal to play a central role in reconciling
future energy needs and energy security imperatives with climate
concerns. Our response to Question #3 therefore focuses in some detail
on this technology option.

**Senate Energy and Natural Resources Committee**

**Coal** **Conference**

**Natural Resources Defense Council**

 

Executive Summary for Coal Conference

The future of coal in the U.S. electric power sector is an uncertain
one. The major cause of this uncertainty is the government's failure to
define future requirements for limiting greenhouse gas emissions,
especially carbon dioxide (CO~2~). Coal is the fossil fuel with the
highest uncontrolled CO~2~ emission rate and coal power plants are
expensive, long-lived investments. Key decision makers understand that
the problem of global warming will need to be addressed within the time
needed to recoup investments in power projects now in the planning
stage. Since the status quo is unstable and future requirements for coal
plants and other emission sources are inevitable but unclear, there will
be increasing hesitation to commit the large amounts of capital required
for new coal projects.

While the U.S. EIA and others predict strong growth in new U.S. coal
capacity, those predictions are based on computer models that ignore the
changing policy landscape. Community opposition, new requirements from
utility commissions and other state agencies, litigation, and investor
hedging all are likely to result in substantially less new coal capacity
being built unless and until requirements for global warming emission
control are defined.

The environmental and economic penalties of further delay in
establishing programs to limit global warming emissions are severe. The
long life of CO~2~ in the atmosphere and the long lives of energy
investments, especially coal-fired power plants, create a buildup of
heat-trapping gases that will continue to produce adverse impacts long
after emission reduction efforts begin. The longer we wait to start
cutting emissions, the more costly and disruptive it will be to avoid
any particular climate protection goal. To avoid harmful impacts of
climate change tomorrow we must begin to change investment decisions
today.

Energy efficiency and renewable energy are well-known low-carbon methods
that are essential to any climate protection strategy. But technology
exists to create a sustainable path for continued coal use as well.
Methods to capture CO~2~ from coal gasification plants are commercially
demonstrated, as is the injection of CO~2~ into geologic formations for
disposal. However, these systems will not be brought to market in the
absence of a program that requires limits on CO~2~ emissions. Combining
such limits with financial incentives to deploy CO~2~ capture and
storage technologies is economically and politically feasible and would
serve a number of important strategic interests of the U.S. and its
allies.

Congress should enact such a program without further delay.

**Environmental:** What are the environmental and regulatory challenges
associated with the future use of coal for power generation?

Electric power plants are the largest source of global warming pollution
in the United States, responsible for 40 percent of U.S. carbon dioxide
(CO~2~) emissions.[^1] Yet past energy bills have not included any
binding, effective measures to reduce these emissions, or even limit
their growth. Neither does the administration's air pollution bill
(S.131). This is not just an omission; it is a policy choice that will
take us down the wrong path. It will lock us into dangerous emissions
increases and, paradoxically, deny the coal and power industries any
long-term stability.

***Global Warming Is Real and Urgent.*** Over the past four years, it
has become increasingly obvious that the failure to address emissions of
CO~2~ and other emissions that cause global warming is out of sync with
scientific and economic reality. Scientific evidence continues to
accumulate on the reality of global warming and urgency of curbing the
CO~2~ emissions that are causing it.

# The administration's own 2002 [Climate Action Report]{.underline}[^2] concluded that unless global warming emissions are reduced, average temperatures could rise another 3 to 9 degrees Fahrenheit in the United States by the end of the century -- with far-reaching effects: Higher temperatures will worsen air pollution. Sea levels will rise, flooding coastal areas. Heat waves will be more frequent and intense. More droughts and wildfires will occur in some regions, more heavy rains and flooding in others. Species will disappear from historic ranges as habitats are lost.

Other reports produced or endorsed by the administration highlight
additional research findings:

-   [Our Changing Planet 2004-2005]{.underline},[^3] released in August
    2004, found that observed global and North American temperatures
    during the 20th century can be explained only when the effect of
    heat-trapping gases is included along with natural factors. The
    report found that the severe Western U.S. drought since 1998 is part
    of a persistent climate pattern strongly influenced by the tropical
    oceans and consistent with climate model simulations of future sea
    surface temperatures. Research also shows that shifts in animal and
    plant populations due to global warming are already discernible.

-   The robust scientific consensus was re-stated again last year in the
    [Arctic Climate Impact Assessment]{.underline}[^4] -- an
    international scientific report accepted by the U.S. government.
    According to the Assessment's most conservative estimates, about
    half the summer sea ice in the Arctic is projected to melt by the
    end of this century, along with a significant portion of the
    Greenland Ice Sheet, as the region warms an additional 7 to 13
    degrees Fahrenheit by 2100.

> ![](media/image2.jpeg){width="5.991666666666666in"
> height="2.357638888888889in"}

Projected loss of Arctic Sea Ice

Source: Arctic Climate Impact Assessment

-   The Assessment also found that average winter temperatures in
    Alaska, Western Canada, and Eastern Russia have increased as much as
    4 to 7 degrees F in the past 50 years, and are projected to rise
    7-14 degrees F over the next 100 years. Rising sea levels have
    already been observed worldwide and are predicted to accelerate as
    warming continues. Low-lying coastal states like Florida and
    Louisiana are particularly susceptible to rising sea levels.

![](media/image3.jpeg){width="1.9020833333333333in"
height="2.313888888888889in"}

Impact of 3.3 foot sea level rise.

Source: Arctic Climate Impact Assessment

-   In December 2004, the scientific journal [Nature]{.underline} linked
    global warming pollution to the European heat wave of 2003 that
    killed more than 15,000 people. Emissions of CO~2~ and other global
    warming pollutants have already at least doubled the risk of extreme
    heat waves like 2003 event, according to a team of scientists led by
    Peter Stott at the British Met Office. As greenhouse gas emissions
    continue to rise, 2003 temperatures will become the *norm* by the
    2040s, with half of the summers being *even* *hotter* than last
    year's. [^5] A companion paper describes this work as "a
    breakthrough" -- "the first successful attempt to detect man-made
    influence on a specific extreme climatic event."[^6]

-   These findings also dramatize the liability risks for companies that
    emit greenhouse gases, according to a third [Nature]{.underline}
    paper.[^7] Global warming pollution has "loaded the weather dice" --
    raising the chances of repeating the weather conditions of summer
    2003 by a factor of two to four, with higher risks to follow as
    emissions continue to rise. They conclude: "\[I\]t will become
    increasingly hard to argue that any resulting damage was
    unforeseeable," and they predict a rise in litigation to determine
    who pays for damage caused by global warming.

***Industry Leaders Know It.*** While pockets of denial remain in the
business and political worlds, each year more industry leaders and
elected officials recognize that scientific consensus makes action on
global warming both inevitable and increasingly urgent. These voices
include leaders in the electric power industry itself. For example:

-   American Electric Power, the nation's largest power company: "Enough
    is known about the science and environmental impacts of climate
    change for us to take actions to address its consequences."[^8] Linn
    Draper, AEP's former CEO: "Eventually, you're going to have to have
    a hard cap of some kind."[^9] AEP senior vice-president Dale
    Heydelauf: carbon constraints are "inevitable."[^10]

-   John Rowe, CEO of Exelon Corp.: "We accept that the science on
    global warming is overwhelming." And: "There should be mandatory
    carbon constraints."[^11]

-   Jim Rodgers, CEO of Cinergy Corp.: "One day we will live in a
    carbon-constrained world."[^12]

-   Wayne Brunetti, CEO of Xcel Energy: "Give us a date, tell us how
    much we need to cut, give us the flexibility to meet the goals, and
    we'll get it done."[^13]

These leaders understand that the current policy impasse makes the U.S.
coal industry's future very uncertain. No one really believes action on
global warming can be delayed indefinitely, and this is making investors
leery of large new investments in conventional coal-fired power plants.
On the other hand, without a policy to limit CO~2~ emissions over time,
most investors are also leery of large investments to develop and deploy
advanced coal technologies like gasification and CO~2~ capture systems.
That is why there is growing understanding in the power sector and the
coal industry that we must face up to the need for carbon limits.

# ***Protecting the Planet While Keeping Coal in the Game.*** As noted in answer to Question 1, we can do three things to limit CO~2~ emissions from the electricity sector: First, produce and use electricity more efficiently. Second, dramatically increase our reliance on renewable energy resources. Third, pursue methods to capture and permanently store CO~2~ from the fossil energy sources we continue to use. 

Adoption of these technologies is proceeding far too slowly to avert
reaching exceedingly dangerous CO~2~ concentrations. Because fossil-fuel
CO~2~ can still be emitted to the air in unlimited amounts for free,
there is no adequate economic incentive to use and improve existing
technology to reduce these emissions. Nor is there an adequate incentive
to innovate to bring down the costs of today's gasification and CO~2~
capture systems.

The administration and others will point to current voluntary programs
and modest public investments in new technology. But we must not fool
ourselves into thinking that we can do this with voluntary programs and
fiscal incentives alone. Without a real market signal, such as that
provided by real limits on CO~2~ emissions, voluntary efforts and
incentives are not sufficient even to stem the steady increase in power
plant CO~2~ emissions.

The president's voluntary "emissions intensity" target lets total carbon
pollution keep increasing every year at essentially the business as
usual rate. Even if the administration's target is met, total U.S.
global warming emissions will *increase* *by* *14* *percent* between
2002 and 2012 -- exactly the same rate as they grew in the 1990s.[^14]
The power industry's latest voluntary pledge is a promise to keep
increasing carbon pollution. The industry plan, announced in December
2004, would let power plant carbon emissions *grow by 15 to 17.5
percent* between 2002 and 2012 -- about the same rate as the Energy
Information Administration's business-as-usual projections.[^15]

Without the real market signal from a limit on emissions, the
administration's policy of voluntary programs and small investments in
technology R&D is an expensive, inefficient, and ineffective strategy
for changing emissions trends. The plain fact is that in the absence of
a real market signal power sector emissions will keep increasing.

# ***Policies to Send a Real Market Signal.*** An effective policy must change market signals enough to promote large-scale investment in efficiency, renewables, and advanced coal technologies (gasification with CO~2~ capture) in the next decade and beyond. This kind of market signal cannot be provided by voluntary programs and modest fiscal incentives alone. The necessary market signal can be provided only by placing a real limit that slows, stops, and reverses emissions of CO~2~ and other global warming pollutants. Including such a limit in legislation will speed the process of bringing advanced technologies to market; leaving a real emission limit out will keep that activity on the back burner.

There are many sensible policies that can be adopted to start limiting
CO~2~ emissions and there are many compelling reasons to do so. Working
together, members of both parties and the administration would be able
to identify a path forward that all could embrace and all could point to
as a real accomplishment. NRDC will work with you to help make that
happen.

**Senate Energy and Natural Resources Committee**

**Coal** **Conference**

**Western Organization of Resource Councils**

***Executive Summary***

Many of WORC\'s members live and work in communities impacted by coal
mining, and most are taxpayers in coal-producing states. We have worked
for over 30 years to ensure that the benefits of natural resource
extraction are shared with local people, and that federal coal
management takes into account the needs of local people and communities
to plan with certainty for their futures.

The U.S. coal mining industry has evolved dramatically in the years
since surface mining of coal began in the West. WORC credits the 1977
passage of the federal Surface Mining Control and Reclamation Act
(SMCRA) and numerous state laws with many of the positive changes that
have taken place in the industry. SMCRA's requirements for surface owner
consent before leasing and mandatory replacement of damaged water
resources are just two examples of policies that have provided a
framework for responsible coal mining and defused some of the
controversies surrounding coal mining.

That said, WORC has a number of significant concerns with coal mining
practices in the West, with policy proposals in the Congress, and with
air pollution from coal mining and coal-fired power plants. WORC
strongly believes that the federal government's role in oversight of
coal mining and regulation of pollutants is critical, and should be
expanded.

Our comments are focused on three areas:

-   Air Quality -- Prevention of Significant Deterioration

-   Coal Leasing Amendments Proposed in the 108^th^ Congress

-   Coal Mine Reclamation and Bond Release

**Environmental:** What are the environmental and regulatory challenges
associated with the future use of coal for power generation?

***Air Quality -- Prevention of Significant Deterioration***

Many coal-fired power plants operate without modern pollution controls.
Air pollution from these plants, combined with pollution from over 100
new plants proposed nationwide as well as from existing coal mines and
planned increases in coal mining, raises grave concerns about the
impacts of coal power generation on air quality and public health. EPA
studies show that air pollution from coal-fired power plants triggers
asthma attacks, bronchitis, and heart disease, and contributes to about
30,000 premature deaths a year.

One mechanism for improving air quality is enforcement of federal
standards for Prevention of Significant Deterioration (PSD). Passed in
the 1977 Clean Air Act Amendments, PSD was meant to prevent industry
from increasing pollution in areas that are in compliance with National
Ambient Air Quality Standards by setting incremental caps on how much
pollution concentrations can increase. In Class I areas such as national
parks and wilderness areas, these incremental caps are more restrictive
than in Class II areas.

North Dakota is the only state to have done comprehensive PSD modeling.
The North Dakota modeling showed numerous sulfur dioxide violations in
the state's Class I areas such as Theodore Roosevelt National Park.
Results in North Dakota suggest that PSD violations in Class I areas are
probably common in many areas, especially in the West.

WORC urges Congress to encourage the Environmental Policy Agency to use
PSD modeling in the permitting of new power plants, and use PSD
violations as a basis to call for State Implementation Plan revisions.
This approach would undoubtedly result in the disclosure of many
violations, forcing clean up of pollution from older coal-fired power
plants "grandfathered" under the Clean Air Act and providing valuable
information on the public health impacts of proposed new plants as
permitting decisions are being made.

***Coal Leasing Amendments***

Provisions in the energy bill from the last Congress would eliminate
many of the requirements Congress placed on the federal coal leasing
program to encourage a fair return to federal and state taxpayers for
the use of public minerals, and promote the diligent development of
those minerals. WORC is concerned that the broad changes proposed would
result in a return to policies that allowed coal companies to amass
control of large amounts of public land and coal, and hold them for
indefinite periods without mining.

Although there may be specific cases where the requirements of current
law are impeding further development, we do not believe that the case
has been made that the overall program is not functioning well and that
broad changes are needed. We are not opposed to allowing narrow
exemptions for individual companies in specific cases where burdensome
problems can be alleviated, but we are concerned that the proposed
amendments would return us to a day of speculation with public
resources.

We have three specific concerns:

First, although the Mineral Leasing Act\'s requirement that lessees
produce commercial quantities of coal within ten years would not be
changed, a series of provisions in H.R. 6 as passed by the House-Senate
conference committee would remove other important protections that
currently ensure that coal leases are developed in a timely way, and
that the leasing program is not misused to speculate with the people's
coal. When the investment required to hold a lease is reduced below the
fair market value, and the requirements for timely production are
relaxed, a lessee is more free to hold a lease during the period when it
can be economically mined, then terminate the lease and walk away.

H.R. 6 would:

-   Eliminate the requirements of a surety bond or other financial
    assurance to guarantee cash bonus payments,

-   Give the Secretary of Interior broad discretion to allow operators
    to mine \"logical mining units\" for longer than 40 years,

-   Allow companies to stop producing coal for 20 years instead of ten,
    and pay advance royalties instead of production royalties during
    this period,

-   Give the Secretary the discretion to reduce, suspend or forgive
    advance royalties during such periods of non-production, and

-   Eliminate the requirement that operating and reclamation plans be
    submitted within three years of lease issuance.

The provision that would allow the waiving of advance royalties is
particularly disturbing. There is no protection against uneven
application of royalty waivers. The only way this provision, when
implemented, could be viewed as anything other than a special favor for
specific companies is if it is applied across the board to all lessees.
Neither of these options is a desirable alternative.

In addition, Congress had the foresight to allow bonus payments to be
deferred over a five-year period. In return, the lessee must secure a
surety bond or other financial assurance mechanism to protect the
government\'s interests. Requiring such financial assurance is a
well-established business practice and entirely appropriate in this
case. Bonus payments are part of the cost of securing a federal
leasehold, and should not be forgiven if a lessee changes its business
plan or the market changes.

WORC's second area of concern is about the impact many of these
amendments would have on the states. Since bonus payments and royalties
are shared equally with the states in which the coal is located, state
as well as federal revenues would be impacted if:

-   Raising the 160-acre limit on lease modifications to 1,280 acres
    results in reduced bonus payments,

-   Deferred bonus payments are not paid in full due to lack of
    financial assurance,

-   Advance royalty waivers are granted, and/or

-   We see a return to speculation that reduces the overall development
    of federal coal resources.

Finally, we are concerned that raising the limit on lease modifications
from 160 acres to 1,280 acres is too extreme. A reasonable acreage limit
provides an incentive for lessees to design lease tracts that are big
enough, and allow lease configurations that split deposits that would be
competitive as a whole into a series of noncompetitive parcels that can
be added later without undergoing the competitive bid process. In
addition, a reasonable acreage limit helps ensure that the lease
modification process is used as it was intended, for adjustments to
borders, and that the lease by application process is used when the
lessee needs more coal. Although the version of H.R. 6 passed by the
House-Senate conference committee included some protections that attempt
to ensure that lease modifications not be used to add acreage where
there is a competitive interest, we remain concerned that an eight-fold
increase in the acreage that can be added by lease modification creates
potential for abuse that will result in the public's coal not being
properly valued.

***Coal Mine Reclamation and Bond Release***

When surface mining of coal began in the West, mining operators did not
have to reclaim the land, but simply mined the coal and moved their
equipment to another location leaving the mined land unusable for
agriculture. One of the central purposes of SMCRA is to "assure that
adequate procedures are undertaken to reclaim surface areas as
contemporaneously as possible with the surface coal mining operations."
Unfortunately, there are no clear standards for how quickly land must be
reclaimed, and there are no requirements that coal operators ever apply
for bond release.

WORC is concerned about the timely release of bonds for reclaimed lands.
In placing permitted land under bond, mining operators enter into a
relationship of trust with the public. Bond release hearings give the
mines an opportunity to demonstrate to the public the success of their
reclamation efforts. Mining operators incur their largest reclamation
expenses during its early stages, when they return the land to its
original contours, re-spread topsoil and re-establish vegetation.
However, the most vital proofs of the success of reclamation are the
productivity of agricultural lands and the replacement of water supplies
affected by mining. Only at final bond release are the mining operators
required to demonstrate publicly that they have met these standards.

Reclaiming land is a lengthy process. In those regions of the country
where the annual average precipitation is twenty-six inches or less
(including most parts of the West), federal law requires that mine
operator\'s responsibility and liability will extend for a period of ten
full years after the last year of augmented seeding, fertilizing, or
other related work. WORC's concern is that the number of acres still
under bond, which have been through the full ten-year period, is growing
steadily each year. Especially on active mines, final bond release
applications simply have not been forthcoming.

**Acreage Permitted, Disturbed and In Final Bond Release**

State, federal and Indian program permitting statistics.

Source: www.osmre.gov/progpermit04.htm

+-----------------+-----------------+-----------------+-----------------+
|                 | **Total Acreage | **Acreage**     | **Acreage of    |
|                 | Permitted**     |                 | Phase III Bond  |
|                 |                 | **Disturbed**   | Release**       |
+-----------------+-----------------+-----------------+-----------------+
| Colorado        | 162,900         | 21,478          | 1,868           |
+-----------------+-----------------+-----------------+-----------------+
| Montana         | 62,687          | 32,158          | 18              |
+-----------------+-----------------+-----------------+-----------------+
| New Mexico      | 79,325          | 24,620          | 793             |
+-----------------+-----------------+-----------------+-----------------+
| North Dakota    | 93,218          | 53,107          | 2,400           |
+-----------------+-----------------+-----------------+-----------------+
| Wyoming         | 345,570         | 110,578         | 0               |
+-----------------+-----------------+-----------------+-----------------+
| 5-State Region  | 743,700         | 241,941         | 5,079           |
+-----------------+-----------------+-----------------+-----------------+
| Nationwide      | 4,282,456       | NA              | 50,084          |
+-----------------+-----------------+-----------------+-----------------+

Clarification from the Office of Surface Mining (OSM) on what is
considered "contemporaneous reclamation" is long overdue. WORC urges
Congress to encourage OSM to finalize rules in this area as soon as
possible. In addition, we urge Congress to correct what we believe is an
oversight by amending SMCRA to require that coal operators apply for
bond release within a specific timeframe after reclamation is completed.

[^1]: This submission is limited to the impacts of coal on global
    warming. Attachments to this submission discuss other serious
    remaining problems caused by current patterns of coal extraction and
    use.

[^2]: U.S. Department of State, *U.S. Climate Action Report -- 2002* 84
    (2002), *available at*
    <http://yosemite.epa.gov/oar/globalwarming.nsf/UniqueKeyLookup/SHSU5BWHU6/$File/uscar.pdf>.

[^3]:
    #  *Our Changing Planet: The U.S. Climate Change Science Program for Fiscal Years 2004 and 2005*,

    A Report by the Climate Change Science Program and the Subcommittee
    on Global Change Research,
    <http://www.usgcrp.gov/usgcrp/Library/ocp2004-5/>

[^4]: Statement by Dr. Robert W. Corell, Chair, Arctic Climate Impact
    Assessment, before the Committee on Commerce, Science, and
    Transportation, United States Senate (November 16, 2004).

[^5]: Stott, *et al.*, "Human Contribution to the European Heatwave of
    2003," *Nature* (432:610), Dec. 2, 2004.

[^6]: Schär and Jendritsky, "Hot News from Summer 2003," *Nature*
    (432:559), Dec. 2, 2004.

[^7]: Allen and Lord, "The Blame Game: Who Will Pay for the Damaging
    Consequences of Climate Change?" *Nature* (432:551), Dec. 2, 2004

[^8]: American Electric Power, *Position Paper on Global Climate Change*
    1
    <http://www.aep.com/environmental/climate/docs/Climate_Change_Position_Paper.pdf>

[^9]: *A Pre-emptive Strike on Global Warming*, (New York Times, May 15,
    2001).

[^10]: *AEP and Cinergy To Outline Ways to Cut Emissions*, Wall Street
    Journal (Feb. 19, 2004), p. A8.

[^11]: *Global Warming*, Business Week, Aug. 16, 2004.

[^12]: "Cinergy: Awakening a Sustainability Giant," GreenBiz,
    <http://www.greenbiz.com/news/reviews_third.cfm?NewsID=27409>

[^13]: *Global Warming*, Business Week, Aug. 16, 2004.

[^14]: ^NRDC\ (2002),\ "Untangling\ the\ Accounting\ Gimmicks\ in\ White\ House\ Global\ Warming,\ Pollution\ Plans,"\ [[http://www.nrdc.org/globalWarming/agwcon.asp]{.underline}](http://www.nrdc.org/globalWarming/agwcon.asp).^
    Past voluntary programs have failed. In the DOE "1605(b)" program,
    power companies claimed to have made nearly 140 million tons of
    "reductions" even as their total global warming emissions
    skyrocketed by *420 million tons*. Instead of making real
    investments to reduce their overall pollution, most power companies
    simply claimed credit for business-as-usual actions, thus making no
    real difference in rising emission trends. NRDC (2001), "Reported
    'Reductions,' Rising Emissions,"
    <http://www.nrdc.org/globalWarming/reductions/execsum.asp>.

[^15]: *Compare* Edison Electric Institute (2002), "EEI, Industry Allies
    Launch 'Power Partners' to Support President Bush's Climate
    Initiative," <http://www.eei.org/issues/news/releases/030212.htm>,
    *with* Energy Information Administration (2003), *Annual Energy
    Outlook 2003*, Reference Case Forecast, Table 19.