**Written Testimony**

**Hearing of the Energy and Natural Resources Committee**

**United States Senate**

**Tom Wilson**

**Senior Program Manager**

**Global Climate Change Research**

**Electric Power Research Institute**

**June 25, 2008**

Thank you, Chairman Bingaman, Ranking Member Domenici, and Members of
the Committee. I am Tom Wilson, Senior Program Manager for Global
Climate Change Research at the Electric Power Research Institute (EPRI).
EPRI conducts research and development on technology, operations and the
environment for the global electric power industry. As an independent,
non-profit Institute, EPRI brings together its members, scientists and
engineers, along with experts from academia, industry and other centers
of research to:

-   collaborate in solving challenges in electricity generation,
    delivery and use;

-   provide technological, policy and economic analyses to drive
    long-range research and development planning; and

-   support multi-discipline research in emerging technologies and
    issues.

EPRI\'s members represent more than 90 percent of the electricity
generated in the United States, and international participation extends
to 40 countries. EPRI has major offices and laboratories in Palo Alto,
California; Charlotte, North Carolina; and Knoxville, Tennessee.

EPRI appreciates the opportunity to provide testimony on the challenges
to meeting future energy needs and to developing the technologies for
meeting increased global energy demand in the context of the need to
address global climate change. In my testimony, I will describe several
EPRI analyses of technology needs that complement the work in the recent
International Energy Agency's (IEA) report, "Energy Technology
Perspectives 2008", and compare and contrast our findings.

We are in considerable agreement with the IEA study on the need for
immediate investment in research, development and deployment of new
technologies to achieve significant to substantial greenhouse gas
emission reductions. The IEA study adds further detail and specificity
to a rapidly growing set of assessments reaching similar conclusions in
the U.S., in the OECD and around the world. With the global population
expected to increase by 40% by 2050, and with global aspirations for
economic growth (by 2050, the IEA projects global GDP to grow to 4 times
its current level), the challenge of providing dramatically expanded
energy services while simultaneously reducing greenhouse gas emissions
is formidable.

In addition to elaborating on the points of agreement, I will also
highlight a few insights that EPRI analysis has identified that are
mentioned in the IEA report, but that are not highlighted there. In
particular, technologies to modernize the electricity transmission and
distribution grid and energy storage technologies appear to us as
critical to enabling the widespread deployment of renewable generation
and to opening new approaches to demand-side efficiency improvements. I
will also provide you a brief update on EPRI's efforts in 2008 to move
from "analysis to action", promoting early deployment of the needed
technologies.

**EPRI analysis**

EPRI has conducted national and international research that has
highlighted the role of technology in addressing climate change since
the early 1990s. In 2007, EPRI released its own analysis, *The Power to
Reduce CO~2~ Emissions -- The Full Portfolio*[^1], which addressed the
technical feasibility for the U.S. electricity sector to achieve
significant future CO~2~ emissions reductions. The analysis examined the
technology development pathways and associated research, development and
demonstration (RD&D) funding needed to achieve this potential, as well
as the economic impact of realizing emissions reduction targets under
two different technology scenarios. This analysis is attached as
Appendix A of my testimony. The first element of EPRI's
analysis---called the "Prism" analysis because of its multi-colored
illustration of the results---examined the impact of enhanced
performance and expanded deployment of a group of advanced technologies
on potential CO~2~ emissions reductions for the U.S. electricity sector.
Key technologies included:

-   end-use energy efficiency

-   renewable energy

-   advanced light water nuclear reactors

-   advanced coal power plants

-   CO~2~ capture and storage

-   plug-in hybrid electric vehicles

-   distributed energy resources

The analysis revealed that if "aggressive, but technically feasible"
advanced technology performance and deployment levels could be achieved,
annual CO~2~ emissions from the U.S. electric sector could be reduced to
approximately 30% below 2005 levels in 2030. The analysis also
highlighted the critical role that enabling technologies -- energy
storage and a modernized transmission and distribution system -- would
play.

To understand the potential cost of making significant future CO~2~
emission reductions, EPRI subsequently completed an economic assessment
of the entire U.S. economy using the MERGE model[^2]. MERGE was used to
estimate the least-cost combination of technologies that meets a
representative CO~2~ emissions constraint. The MERGE analysis explored
two technology scenarios for achieving this constraint: 1) "Limited
Portfolio"; and 2) "Full Portfolio". The Limited Portfolio focused on
the currently-available technologies, while the Full Portfolio
incorporated significant improvements in a full-range of technologies,
including wind, solar, end-use efficiency, nuclear, advanced coal
plants, carbon capture & sequestration and plug-in hybrid electric
vehicles. The results from analyzing the two scenarios reveal that the
Full Portfolio provides a significant economic benefit, reducing the
policy cost of compliance by 50-66% (on the order of \$1 trillion) while
still meeting the specified emissions constraint.

Four major conclusions emerged from this analysis:

-   A technology-based strategy for the electric sector has the
    potential to lead to sustainable and dramatic reductions in future
    U.S. CO~2~ emissions. Further, this strategy also creates
    opportunities to de-carbonize beyond the electricity sector and
    outside the US.

-   A diverse portfolio of advanced technologies will be required. No
    single technological "silver bullet" will suffice. Removing any one
    of the advanced technologies from the portfolio significantly
    increases the cost of achieving any greenhouse gas emission
    reduction constraint.

-   Significant additional public and private sector research,
    development and demonstration (RD&D) funding is needed over a
    sustained period to achieve these technological outcomes. In the
    near-term early demonstration of new technologies -- e.g., carbon
    capture and storage, new nuclear, advanced transmission and
    distribution system -- is critical to rapidly move them to
    commercial status. Longer-term research to enable full scale
    deployment of key technologies is equally critical. Given that the
    lead time for moving technology from the drawing board to full
    commercial status is measured in decades, the time for starting is
    *now*.

-   A technology-based strategy reduces the economic costs of achieving
    a greenhouse gas emissions constraint. An investment in RD&D
    investment (public and private) will lower the cost of emissions
    reductions in the U.S. on the order of \$1 trillion between now and
    2050.

    **IEA analysis**

The IEA also examined two scenarios in its analysis: 1) technologies
needed to reduce global CO~2~ emissions to 2005 levels by 2050 (the ACT
scenario); and 2) technologies needed to reduce CO~2~ emissions by 50%
below 2005 levels in 2050 (the "Blue" scenario). Similar to EPRI's
analysis, the IEA Blue scenario concludes that a full portfolio of both
improved and fundamentally new technologies will be needed to meet the
50% reduction target. The IEA report delineates 17 technologies that
must be deployed in order to achieve the goals of the second scenario.
IEA also urges immediate RD&D investment to develop the necessary
technologies, including CO~2~ capture and storage (CCS), renewable
energy, and nuclear power. Finally, IEA perceives tremendous opportunity
to de-carbonize other sectors through electrification.

Major conclusions from the IEA analysis include:

-   Deep global emissions cuts are technically achievable.
    Implementation of RD&D roadmaps for 17 technologies identified by
    the IEA are expected to make the largest contributions.

-   All technologies will be needed, including new and emerging
    technologies, such as coal with carbon capture and storage,
    renewable energy, and nuclear power.

-   A major acceleration in RD&D is needed both to bring forward new
    technologies and to reduce the costs of those already available.

-   Energy efficiency represents a tremendous opportunity and a
    cost-effective near-term option. However, if we are to reduce CO~2~
    emissions by 50% over 2005 levels in 2050, new technologies still
    under development must also be deployed that can achieve
    de-carbonized power generation.

**Differences between EPRI and IEA Analyses**

The key findings of the EPRI and IEA analyses -- as you have seen \--
are strikingly similar. Significant reductions in emissions are
possible, but they require fundamental technological change. Technology
change is slow and requires immediate investment in RD&D as well as the
commitment to deal with regulatory, siting, and public perception
issues.

The methodologies that led to these similar conclusions are quite
different:

-   Geographic Scope. EPRI's Prism and MERGE analyses in 2007-8 focused
    on the United States. Prism specifically focused even more narrowly
    on the electric sector. In contrast, the IEA study provides a global
    picture with significant detail for 10 countries.

-   Modeling Approach.

    -   The IEA approach uses a bottoms-up, partial equilibrium approach
        (ETP-MARKAL) , and calculates the amount of emissions and
        technology development/deployment costs associated based on
        specific assumptions about CO~2~ emissions costs and technology
        deployment levels. In this sense, the IEA analysis assumes that
        certain deployment goals will be met and reflects the
        consequences of these assumptions.

    -   EPRI's Prism analysis took a similar approach to the IEA
        analysis. We made technology deployment assumptions and
        calculated resulting emissions.

    -   In contrast, the EPRI MERGE model uses a general equilibrium
        approach and calculates the lowest cost combination of
        technology deployments which achieve a specified emissions
        constraint. CO~2~ emission costs, wholesale electricity
        production costs, and the economic impact of a CO~2~ constraint
        on U.S. GDP are also calculated.

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-   The emission reduction scenarios are different. The IEA Blue
    scenario, which reaches 50% below 2005 levels in 2050, is most
    directly comparable to the EPRI MERGE Full Portfolio scenario.

-   For the IEA Blue and EPRI Full Portfolio scenarios,

    -   Electricity production costs in the IEA study for the different
        technologies look reasonably comparable to those used in the
        MERGE analysis.

    -   For the electricity sector results in the Blue scenario, the IEA
        global generation shares (in percentage terms) for each
        technology in 2050 are comparable, although somewhat different,
        to results EPRI has obtained for the U.S. based on MERGE
        analysis:

        -   The nuclear, coal+CCS generation shares are a little lower
            in the IEA Blue scenario.

        -   The gas + CCS, tidal, solar, biomass and biomass + CCS
            generation shares are higher in the IEA Blue scenario.

-   The IEA study examines the possibility of CCS retrofits. This is
    particularly important for rapidly developing countries, which have
    many relatively new, high-emitting coal plants. Recent EPRI analyses
    are exploring the economics and technical feasibility of CCS
    retrofits in the US.

Given these methodological differences, we find the results to be both
complementary and reinforcing.

**Conclusions and Next Steps -- Analysis to Action**

One fundamental implication of our work and of the IEA study is very
clear---we must move from analysis to action if we are to deploy this
full portfolio of technologies in a timely and effective manner. EPRI is
planning additional action in two areas:

**[EPRI Demonstration Projects]{.underline}**. EPRI has identified a
number of technology demonstration projects that target critical gaps
that must be filled to achieve this "Full Portfolio" of technologies.
One project came on-line in February of this year. EPRI, Alstom and We
Energies are testing a 1.7 MWe post-combustion CO~2~ capture process
using a chilled ammonia solvent.

In April, EPRI's Board of Directors approved six larger-scale technology
demonstration projects with the intention of accelerating progress
towards a low-carbon future: hyper-efficient electric end-use
technologies; smart grids; compressed air energy storage; pulverized
coal (PC) with partial CCS (two alternate capture technologies);
integrated gasification combined cycle (IGCC) with partial CCS, and
lower-cost O~2~ production. EPRI is currently launching these
initiatives with public and private sector partners as a vital first
step to meet the growing demand for electricity while reducing
greenhouse gas emissions.

[Global Prism and MERGE analyses]{.underline}. The IEA effort breaks new
ground on examining the technology options for reducing emissions in the
so-called 'G8+5' (the Group of Eight developed nations and the five
largest emerging economies of the developing world: China, India,
Brazil, South Africa, and Mexico). EPRI is carrying out a complementary
effort to illustrate the global value of advanced electricity
technologies and to add additional technological detail to the MERGE
global model so that we can provide an integrated, but detailed view of
the possible implications of global climate policies. If we are
successful at developing and globally deploying the "Full Portfolio" of
low-cost, low-carbon electricity options, we will likely achieve more
benefit for the global climate than would be accomplished through years
of protracted negotiations.

Mr. Chairman, this concludes my prepared remarks, and I look forward to
your questions and those of your colleagues. Thank you.

[^1]: This EPRI report was released in August 2007. It is attached and
    is publically available at:
    <http://mydocs.epri.com/docs/public/DiscussionPaper2007.pdf>. The
    Prism analysis has subsequently been updated to reflect the baseline
    assumptions in the Energy Information Administration's *Annual
    Energy Outlook 2008*, Report DOE/EIA-0383 (March 2008).

[^2]: MERGE is a general equilibrium model of the global economy
    originally developed by Dr. Alan Manne (Stanford University) and Dr.
    Richard Richels (EPRI) to assess a wide range of energy and
    environmental issues. MERGE has been used for more than a decade to
    analyze the cost of CO2 emissions mitigation as a function of
    technology cost, availability, and performance. MERGE models long
    time horizons to capture economic effects of potential climate
    change and encompasses all major greenhouse gases and all emitting
    sectors of the economy. Using technology descriptions and policy
    constraints as inputs, the model outputs not only energy production
    by technology, but also prices for wholesale electricity and carbon
    emissions. While the model is global in scale, the current analysis
    focuses on the U.S.