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S. HRG. 110–1084 

EMERGING TECHNOLOGIES AND PRACTICES FOR 

REDUCING GREENHOUSE GAS EMISSIONS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON PRIVATE SECTOR AND CONSUMER SOLUTIONS TO GLOBAL WARMING AND 

WILDLIFE PROTECTION 

OF THE

COMMITTEE ON 

ENVIRONMENT AND PUBLIC WORKS 

UNITED STATES SENATE 

ONE HUNDRED TENTH CONGRESS 

FIRST SESSION 

MAY 9, 2007 

Printed for the use of the Committee on Environment and Public Works 

( 

Available via the World Wide Web: http://www.access.gpo.gov/congress.senate 
(II) 

COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS 

ONE HUNDRED TENTH CONGRESS 

FIRST SESSION 

BARBARA BOXER, California, Chairman 

MAX BAUCUS, Montana 

JOSEPH I. LIEBERMAN, Connecticut 

THOMAS R. CARPER, Delaware 

HILLARY RODHAM CLINTON, New York 

FRANK R. LAUTENBERG, New Jersey 

BENJAMIN L. CARDIN, Maryland 

BERNARD SANDERS, Vermont 

AMY KLOBUCHAR, Minnesota 

SHELDON WHITEHOUSE, Rhode Island 

JAMES M. INHOFE, Oklahoma 

JOHN W. WARNER, Virginia 

GEORGE V. VOINOVICH, Ohio 

JOHNNY ISAKSON, Georgia 

DAVID VITTER, Louisiana 

CRAIG THOMAS, Wyoming 

LARRY E. CRAIG, Idaho 

LAMAR ALEXANDER, Tennessee 

CHRISTOPHER S. BOND, Missouri 

BETTINA POIRIER, Majority Staff Director and Chief Counsel 

ANDREW WHEELER, Minority Staff Director 

SUBCOMMITTEE ON PRIVATE SECTOR AND CONSUMER SOLUTIONS TO GLOBAL

WARMING AND WILDLIFE PROTECTION

JOSEPH I. LIEBERMAN, Connecticut, Chairman 

MAX BAUCUS, Montana 

FRANK R. LAUTENBERG, New Jersey 

BERNARD SANDERS, Vermont 

BARBARA BOXER, California (ex officio) 

JOHN W. WARNER, Virginia 

CRAIG THOMAS, Wyoming 

JOHNNY ISAKSON, Georgia 

JAMES M. INHOFE, Oklahoma (ex officio) 
(III) 

C O N T E N T S 

Page 

MAY 9, 2007 

OPENING STATEMENTS 

Lieberman, Hon. Joseph I., U.S. Senator from the State of Connecticut ........... 1 

Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma .................... 3 

Boxer, Hon. Barbara, U.S. Senator from the State of California ........................ 6 

Warner, Hon. John W., U.S. Senator from the Commonwealth of Virginia ....... 9 

Carper, Hon. Thomas R., U.S. Senator from the State of Delaware ................... 11 

Voinovich, Hon. George V., U.S. Senator from the State of Ohio ........................ 12 

Craig, Hon. Larry E., U.S. Senator from the State of Idaho ............................... 15 

WITNESSES 

Chiang, Yet-Ming, professor, Department of Materials Science and Engineering, Massachusetts Institute of Technology ....................................................... 17 

Prepared statement .......................................................................................... 20 

Response to an additional question from Senator Lautenberg ..................... 24 

Little, Mark M., senior vice president and director, GE Global Research .......... 25 

Prepared statement .......................................................................................... 27 

Stanway, James W., senior director, Global Supplier Initiatives, Wal-Mart 

Stores, Inc ............................................................................................................. 29 

Prepared statement .......................................................................................... 31 

Responses to additional questions from Senator Lautenberg ....................... 34 

Rencheck, Michael W., senior vice president for Engineering, Projects and 

Field Services, American Electric Power ........................................................... 35 

Prepared statement .......................................................................................... 37 

Response to an additional question from Senator Inhofe ............................. 50 

Fees, John A., chief executive officer, The Babcock and Wilcox Companies ...... 51 

Prepared statement .......................................................................................... 53 

ADDITIONAL MATERIAL 

Article, Financial Times (London, England), Thursday, April 26, 2007, London 

Edition 1, Industry Caught in ‘Carbon Credit’ Smokescreen, by Rebecca 

Bream, Stephen Fidler and Fiona Harvey ......................................................... 71 

News Release, American Electric Power (AEP), AEP to Install Carbon Capture on Two Existing Power Plants; Company will be First to Move Technology to Commercial Scale ................................................................................. 43 

Letter from John Bruton, Ambassador, Head of Delegation, European Union, 

Delegation of the European Commission, February 22, 2007 .......................... 73 

(1) 

EMERGING TECHNOLOGIES AND PRACTICES 

FOR REDUCING GREENHOUSE GAS EMISSIONS 

WEDNESDAY, MAY 9, 2007 

U.S. SENATE,

COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS,

SUBCOMMITTEE ON PRIVATE SECTOR AND CONSUMER

SOLUTIONS TO GLOBAL WARMING AND WILDLIFE PROTECTION,

Washington, DC. 

The subcommittee met, pursuant to notice, at 10:10 a.m. in room 

406, Dirksen Senate Office Building, Hon. Joseph I. Lieberman 

(chairman of the subcommittee) presiding. 

Present: Senators Lieberman, Boxer, Carper, Craig, Inhofe, 

Voinovich and Warner. 

Senator LIEBERMAN. Good morning and welcome to the hearing. 

I apologize to the witnesses and my colleagues that I am a bit 

late this morning. I had to go to a briefing that was unexpected in 

the Capitol. 

I want to welcome everyone here this morning. This is a hearing 

on Emerging Technologies and Practices for Reducing Greenhouse 

Gas Emissions. 

STATEMENT OF HON. JOSEPH I. LIEBERMAN, U.S. SENATOR 

FROM THE STATE OF CONNECTICUT 

Senator LIEBERMAN. Today, we are going to examine the private 

sector innovation that can put America on a path to curbing global 

warming without handicapping our economy, provided—and this is 

the ‘‘provided’’—the Federal Government sends a strong new signal 

to the marketplace. 

Last Friday, the Intergovernmental Panel on Climate Change 

(IPCC), issued a report on mitigating global warming. The report 

reflects the consensus reached by delegates from 120 countries. It 

finds that existing technologies—existing technologies—can reduce 

our greenhouse gas emissions significantly over the next two decades, and that commercializing these technologies would provide 

the cobenefits of increasing energy security and decreasing air pollution. 

The IPCC report also concludes, however, that without strong 

new Government action, market forces alone will not lead to significant emissions reductions. For example, the IPCC finds that 

most voluntary agreements between industry and governments 

have not achieved anything near the emissions reductions required. 

By contrast, an effective carbon price signal could realize the poten-
2 

tial of existing technologies to cut greenhouse gas emissions in all 

sectors of our economy. 

A portfolio of existing technologies could set us on a safe emissions reduction track if governments like ours establish effective 

policy drivers for further development, acquisition, deployment and 

diffusion of those technologies. 

So the purpose of today’s hearing is in a very sort of on the 

ground detailed practical way, to examine some of the technologies 

that could help fill out that winning portfolio that I have described. 

These innovative solutions, I want to stress again, exist today, but 

they need new Government action if they are to be commercialized 

widely enough and quickly enough to avert the climate disaster 

that we fear. 

The specific innovations that today’s witnesses will describe also 

illustrate the cobenefits that the IPCC report mentions. These are 

technologies and practices that can also enhance America’s energy 

independence and security, and improve public health, actually invigorate our economy, and improve our trading position in the 

world even as they preserve and enhance our ability to deal with 

the oncoming threat of global warming. 

Fortunately, some of the technologies that our witnesses will describe also demonstrate that we can curb global warming, while 

continuing to use our most abundant, reliable natural energy 

source in America, and that is coal, coal reserves, to generate electricity particularly. 

I am obviously not suggesting in what I have just said that we 

can accomplish all that we need to accomplish for nothing, that action will carry no price. What I am suggesting, however, is that all 

signs point to a very positive net return on any large new investment that we make in accelerating the deployment of these technologies to reduce global warming pollution. 

We have an extraordinary group of witnesses here today. Four of 

the five are executives at significant and respected American corporations: American Electric Power, Babcock and Wilcox, General 

Electric and Wal–Mart. These companies are really leaders in energy, industrial and commercial sectors within our economy. 

One of our witnesses is both a professor at one of the country’s 

most esteemed engineering institutions, MIT. I say that notwithstanding the fact that my long time legislative director, Bill 

Bonvillian, is now the Washington representative of MIT, so I resent the institution for taking him from me, but nonetheless. This 

particular witness, beyond being on the MIT faculty, is a principal 

of a company that is developing cutting edge vehicle technologies 

for General Motors and other automotive companies. 

So we are really privileged to have with us five witnesses that 

can speak with authority about emerging technologies that have 

the potential to start this country moving down a safe and productive pathway to greenhouse gas emission reductions. 

Senator Warner, who I would not normally call next, has yielded 

to Senator Inhofe, who has to go on to another meeting. I am proud 

to recognize him now. 

[The prepared statement of Senator Lieberman follows:] 
3 

STATEMENT OF HON. JOSEPH I. LIEBERMAN, U.S. SENATOR FROM THE

STATE OF CONNECTICUT

Good morning, and welcome to this hearing on emerging technologies and practices for reducing greenhouse gas emissions. Today, we will examine the private sector innovations that can put America on a path to curbing global warming without 

forcing us to abandon our coal, give up our cars, or handicap our economy, provided 

the Federal Government sends a strong, new signal to the marketplace. 

Last Friday, the Intergovernmental Panel on Climate Change, known as the 

IPCC, issued a report on mitigating global warming. This report reflects a consensus 

reached by delegates from 120 governments. It finds that existing technologies can 

reduce our greenhouse gas emissions significantly over the next two decades, and 

that commercializing these means of reducing greenhouse gas emissions would provide the cobenefits of increasing energy security and decreasing the air pollution 

that directly harms human health. 

The IPCC report also concludes, however, that without strong new government action, market forces alone will not lead to significant emissions reductions. For example, the IPCC finds that most voluntary agreements between industry and governments have not achieved significant emissions reductions beyond business as usual. 

By contrast, an effective carbon-price signal could, according to the IPCC, realize 

the potential of existing technologies to cut greenhouse gas emissions in all sectors 

of the economy. A portfolio of existing technologies could set us on a safe emissions 

track if governments like ours established effective policy drivers for the further development, acquisition, deployment, and diffusion of those technologies. 

The purpose of today’s hearing is to examine some of the technologies that could 

help fill out that winning portfolio. These innovative solutions exist today. But they 

need bold new government action if they are to be commercialized widely enough 

and quickly enough to preserve our ability to avert climate catastrophe. 

The specific innovations that today’s witnesses will describe also illustrate the cobenefits that the IPCC discusses. These are technologies and practices that can enhance America’s energy security, improve public health, invigorate our economy, and 

improve our trading position in the world even as they preserve our ability to avoid 

leaving our children a world wracked by global warming. 

Fortunately, some of the technologies that our witnesses will describe also demonstrate that we can curb global warming while continuing to use our abundant, 

reliable coal reserves to generate electricity. 

I do not mean to suggest that we can get something for nothing that action will 

carry no price. What I am suggesting, rather, is that all signs point to a tremendously positive net return on any large, new investment that we as a Nation make 

in accelerating the deployment of technology to reduce global warming pollution. 

Four of today’s five witnesses are executives at large American corporations: 

American Electric Power, Babcock & Wilcox, General Electric, Wal-Mart. These 

companies are titans of the energy, industrial, and commercial sectors of our economy. One of our witnesses is both a professor at one of the country’s most esteemed 

engineering institutions, MIT, and a principal of a company that is developing cutting-edge vehicle technology for General Motors and others. 

These witnesses can speak with authority about emerging technologies that have 

the potential to start this country moving down a safe emissions pathway. Gentlemen, I look forward to hearing your testimony. 

With that, I will invite my friend and colleague, Senator Warner, to make an 

opening statement. 

STATEMENT OF HON. JAMES M. INHOFE, U.S. SENATOR FROM 

THE STATE OF OKLAHOMA 

Senator INHOFE. Thank you, Mr. Chairman. 

I thank Senator Warner for yielding to me. 

Thanks for having a hearing focusing on technology. I believe 

that our Nation’s pioneering of technology has been a vital component in America’s prosperity, and I am fully committed to expanding new technologies and making our Nation a better place to live. 

What technology paths and goals we choose will help determine 

if further innovation acts as a catalyst or a drag to future economic 

growth. Mr. Chairman, clearly we disagree on the state of science. 

Just last year, we discovered for the first time that trees emit 
4 

methane, which is a greenhouse gas, which wasn’t included in any 

of the previous models. It seems as if we find out new things on 

almost a daily basis. New science is coming out all the time. 

After Katrina, Senator Gore and some of the others seized the 

opportunity to claim global warming is causing more hurricanes, 

but 3 weeks ago, a peer-reviewed study found warming will increase wind shear, which reduces both the severity and the number 

of hurricane. Just last week, another peer-reviewed study by one 

of our Government’s leading scientists, Dr. Christopher Landsea, 

found that the annual trend in the number of hurricanes since 

1900 has in fact not increased. 

My point is this: our policies should reflect a little humility when 

it comes to whether or not we are omnipotent. That is why I oppose 

propping up uncompetitive technologies for the sole purpose of trying to avert an over-hyped catastrophe by mandating attacks on 

carbon, or whether it is a cap and trade system. 

Make no mistake, the various proposals currently before the Senate are taxes. The Kyoto Protocol—and we have talked about this 

many times before—would have imposed a tax increase of approximately $2,700 on each family of four. That came out of the study 

that is quite old right now, but more recently, I say to Dr. Chiang, 

MIT has come out with a study of many of the proposals showing 

that, for example, the Sanders-Boxer bill would impose a tax equivalent of more than $4,500 on a family of four by 2015. Senator 

Lieberman, the Lieberman–McCain bill is not much better. It 

would be $3,500 by 2015. That is a tax equivalent, assuming that 

Government sells the allowances and the amount of money, and 

then divide that into the families. 

Now, if you carry that on out to 2020, the Sanders-Boxer bill 

would be $392 billion. Anyway, it would be even more substantial 

than it would be by 2015. I want to submit this report from MIT 

for the record immediately following my remarks. 

Who would bear these costs? According to the Congressional 

Budget Office study released 2 weeks ago, a carbon cap in trade 

would result in a massive wealth redistribution from the poor and 

the working class to wealthier Americans. In short, carbon caps 

would artificially and needlessly raise the cost of energy the most 

on people who can least afford it. It astounds me that any Senator 

could support such a proposal. 

I believe we should focus on approaches that unite, rather than 

divide. That is why I have supported for quite some time the Asia 

Pacific Partnership, and believe it should be fully funded and expanded. This would promote trade and transfers of technology between our Nation and developing countries, leading to increasing 

energy supplies and reducing pollution. 

Mr. Chairman, it would also help you in your goal of reducing 

greenhouse gases from countries such as China, which later this 

year will become the largest emitter of CO2. I think from my experience—I don’t know whether any of the other members of this 

committee share this experience—the criticism that countries like 

China, India, Mexico and other countries don’t have to share in all 

these problems and expenses that Americans do is something they 

find very offensive. 
5 

While we may disagree, Mr. Chairman, on the reasons, I share 

your view that nuclear energy is a vital component of our energy 

future. I applaud you that you have recognized its importance in 

the legislative proposals. We need more energy and we need to reduce our reliance on foreign sources. I think nuclear power and 

hydro—yes, I said ‘‘hydro’’—should be a part of this equation. They 

neither pollute nor emit greenhouse gases. 

We can’t stop there. Our Nation is abundant in coal, and we 

should pursue coal to liquid technologies for both energy security 

and military applications. I think you and I are both aware of the 

fact that they have used this on the B–52 now very successfully. 

It is something in the future that I am hoping we will be depending 

upon. 

Quite frankly, I see little difference between coal to liquids refineries and IGCC powerplants when it comes to carbon dioxide emissions. Unlike higher ethanol mandates, coal to liquids would increase our reliance on foreign sources. 

So that really is the fundamental question: Does our Nation have 

a vision of increasing domestically supplied energy? Or will we put 

ourselves on an energy diet and increase our reliance on foreign energy supplies? I hope that my colleagues join me in this vision of 

hope instead of defeat. 

Thank you, Mr. Chairman. 

[The prepared statement of Senator Inhofe follows:] 

STATEMENT OF HON. JAMES M. INHOFE, U.S. SENATOR FROM THE

STATE OF OKLAHOMA

I want to thank the Chairman for having this hearing focusing on technology. I 

believe that our Nation’s pioneering of technology has been a vital component in 

America’s prosperity and I am fully committed to expanding new technologies in 

making our Nation a better place to live. 

What technology paths and goals we choose will help determine if further innovation acts as a catalyst or a drag to future economic growth. Mr. Chairman, clearly 

we disagree on the state of science. Just last year, we discovered for the first time 

that trees emit methane, a potent greenhouse gas. This shocking news underscored 

how little we know about some of the most basic processes of the planet. 

And new science is coming out all the time. After Katrina, Gore and some others 

seized the opportunity to claim global warming is causing more hurricanes. But 3 

weeks ago, a peer-reviewed study found warming will increase wind shear, which 

reduces both the severity and number of hurricanes. And just last week, another 

peer-reviewed study by one of our government’s leading scientists, Dr. Christopher 

Landsea, found that the annual trend in the number of hurricanes since 1900 has, 

in fact, not increased. 

My point is this—our policies should reflect a little humility when it comes to 

whether or not we are omnipotent. That is why I oppose propping up uncompetitive 

technologies for the sole purpose of trying to avert an over-hyped catastrophe by 

mandating a tax on carbon—whether it is in the form of a direct tax or hidden in 

the guise of a cap and trade scheme. 

And make no mistake, the various proposals currently before the Senate are 

taxes. The Kyoto Protocol would have imposed a cost of $2,700 per family of four. 

The global warming bills before Congress today are even worse. A new MIT study 

of the many proposals shows that the Sanders-Boxer bill would impose a tax-equivalent of $366 billion annually, or more than $4,500 per family of four, by 2015. And 

the Lieberman-McCain bill is not much better, imposing more than $3,500 on families each year. 

I would like to submit the report for the record. 

And who would bear these costs? According to a Congressional Budget Office 

study released 2 weeks ago, a carbon cap and trade would result in a massive 

wealth redistribution from the poor and working class to wealthier Americans. In 

short, carbon caps would artificially and needlessly raise the cost of energy the most 
6 

on the people least able to afford it. It astounds me that any Senator could support 

such a proposal. 

I believe we should focus on approaches that unite, rather than divide. That is 

why I support the Asia Pacific Partnership and believe it should be fully funded and 

expanded. This would promote trade and transfers of technology between our Nation 

and developing countries, leading to increasing energy supplies and reduced pollution. Mr. Chairman, it would also help you in your goal of reducing greenhouse 

gases from countries such as China, which later this year will become the biggest 

emitter of carbon dioxide on the planet. 

Mr. Chairman, while we may disagree on the reasons, I share your view that nuclear energy is a vital component of our energy future. And I applaud that you have 

recognized its importance in legislative proposals. We need more energy and we 

need to reduce our reliance on foreign sources. I think nuclear power and hydro— 

yes, I said hydro—should be a part of this equation. They neither pollute nor emit 

greenhouse gases. 

But we cannot stop there. Our Nation is abundant in coal, and we should pursue 

coal-to-liquid technologies for both energy security and military applications. And, 

quite frankly, I see little difference between coal-to-liquids refineries and IGCC 

power plants when it comes to carbon dioxide emissions. And unlike higher ethanol 

mandates, coal-to-liquids will decrease our reliance on foreign sources. 

And that really is the fundamental question: does our Nation have a vision of increasing domestically supplied energy, or will we put ourselves on an energy diet 

and increase our reliance on foreign energy supplies? I hope my colleagues join me 

in a vision of hope, not defeat. 

Senator LIEBERMAN. Thank you, Senator Inhofe. I do want to say 

that the MIT report to which you referred will be included in the 

record without objection. 

[The referenced document was not available at time of print.] 

Senator LIEBERMAN. I was trained in the conduct of hearings by 

Senator Warner, whose example inspired me on the Armed Services Committee. Normally, in that committee only the chairman 

and the ranking member give opening statements. I have continued 

that in the Homeland Security Committee. This is a much more 

participatory committee. 

So we will invite opening statements from all the Members who 

are here. I hope they will keep them within the time limit because 

we have a series of votes later in the morning. 

Senator Boxer, who is the chair of the overall committee, thanks 

for being here. 

Senator BOXER. Senator, thank you. 

STATEMENT OF HON. BARBARA BOXER, U.S. SENATOR FROM 

THE STATE OF CALIFORNIA 

Senator BOXER. Mr. Chairman and Ranking Member of this distinguished subcommittee, thank you for your leadership on this important issue. 

I want to take on the question of cost here, since Senator Inhofe 

was on the attack on that point. I would recommend those of you 

who have a chance to go down the hall. A few doors down, there 

is a hearing now being called by Senators Biden and Lugar. It 

started about 9:30 a.m. Members of the intelligence community, 

foreign relations community, and Pentagon have all said that if left 

unchecked, global warming would be a major cause of war. This is 

not any other administration but the Bush administration’s own 

people. What is the cost of war? 

So although I am sure that it isn’t put into many scientists’ calculations, we better make sure we understand that our own Pentagon has warned us actually since 2003 that we must take action. 
7 

Also, I would put in the record the report of Sir Nicholas Stern, 

who was the lead economist at the World Bank, who said that 

spending $1 now save $5 later. 

I think the cost question is really debatable. In my former lifetime, I was a stockbroker. I know the difference between an investment that pays dividends and an expenditure. What we invest here 

makes sense. That is what we are going to learn today, because we 

are going to hear from the leaders in our society in terms of profits 

and economic motivation. We are going to learn from them that 

there is a great opportunity here. 

Now, the IPCC report, as Senator Lieberman noted, says that 

the market for energy technology between now and 2030 will be at 

least $20 trillion. The report found that addressing global warming 

is affordable. It will cost one tenth of a percent per year, while increasing business opportunity. As I said before, if we do nothing, 

the costs can’t even be calculated. We need to act now, and the earlier the better. Many businesses, who you have assembled here 

today, recognize this. 

We already had a hearing with some of the members of US CAP, 

including Duke Energy, DuPont, and BP, who called for action and 

recommended that we in Congress enact mandatory global warming legislation that reduce greenhouse gas emissions by at least 60 

percent, which is Senator Lieberman and Senator McCain’s bill, or 

80 percent, which is the Sanders-Boxer bill. 

Yesterday, and I think this is really important, and Senator Warner in particular I would address this to you, 14 new members 

joined US CAP, including General Motors, AIG, ConocoPhillips, 

and Shell. We will be planning a full committee hearing with this 

second group to hear about their strong commitments to address 

global warming, because they recognize that caps on greenhouse 

gas emissions are needed not only to save the planet, but also to 

give them a clear road map for the future in terms of global economics. 

I have been meeting with the leaders of the European Economic 

Community. They are so far ahead of us. They are reducing greenhouse gas emissions as we speak. Companies that want to do business all over the world understand that they have to adapt. They 

know what is coming. 

So I just want to say, and I again will put the rest of this in the 

record, we will hear from one of the world’s largest companies, GE, 

developing and selling carbon sequestration technology that is key 

to the whole coal business. They are also involved in wind turbines, 

compact fluorescent light bulbs, solar panels, efficient appliances. 

Another company, American Electric, is helping to lead the way in 

providing carbon capture and sequestration. 

Again, we will hear from Professor Chiang and he will also tell 

us about the possibilities for electric cars. As a driver of a hybrid 

vehicle—as a matter of fact, we in our family own three hybrid vehicles—I can tell you that I get between 40 miles a gallon and 55 

miles a gallon. That is here now, and they are affordable cars. Saturday night, I was in San Francisco with my husband and we 

stopped in front of a gas station because we couldn’t believe our 

eyes: gas over $4 a gallon. OK? This is where it is headed. Let’s 
8 

face facts. Getting 50 miles per gallon is one good temporary solution. 

Wal–Mart has reduced its energy consumption through the use 

of daylight harvesting. I see we have actually opened the curtains. 

I say to the staff, good thinking. We have to take advantage of outside lighting. These are small points, but it proves that there are 

things that we can do. Wal–Mart is aggressively monitoring their 

energy use nationwide. 

So clean technologies are creating jobs already, but the signal 

that we send here is absolutely crucial. We have the ingenuity, we 

have the spirit to lead the world in this. When you hear, Senators, 

anybody say, ‘‘Oh, China, we can’t do anything until China does it.’’ 

That is ridiculous. We don’t sit back and wait for China to do the 

right thing. We never have. We are the leader. We have to go for 

it, and then China will buy our green technologies and the world 

will be better for it. 

So to the two Senators leading the subcommittee, I am very 

grateful to you for your leadership. 

[The prepared statement of Senator Boxer follows:] 

STATEMENT OF HON. BARBARA BOXER, U.S. SENATOR FROM THE

STATE OF CALIFORNIA

Thank you, Chairman Lieberman and Ranking Member Warner for holding this 

hearing on emerging technologies and practices to reduce greenhouse gas emissions 

and address global warming. 

Increasing energy efficiency and developing new, advanced technologies can help 

us solve one of the greatest threats to the well being of mankind: global warming. 

It can also make the United States a world leader in new technologies that we can 

export to the rest of the world. 

There is great economic opportunity in addressing global warming. The most recent IPCC report notes that the market for energy technology between now and 

2030 will be at least $20 trillion. The report also found that addressing global 

warming is affordable and will only cost 0.1 percent per year, while increasing business opportunity. 

We need to act now, and the earlier we do so, the lower the costs will be. 

Many businesses have begun to recognize this fact. In January, a group of large 

businesses teamed up with environmental groups to form the U.S. Climate Action 

Partnership (or US CAP). 

The businesses in US CAP, including Duke Energy, DuPont, and BP, issued a 

‘‘Call for Action’’ and recommended that Congress enact mandatory global warming 

legislation and reduce greenhouse gas emissions by 60 percent to 80 percent. Yesterday, US CAP added 14 new members, including GM, AIG, ConocoPhillips, and 

Shell. 

We are now planning a second hearing on US CAP with members we have not 

yet heard from to learn about their strong commitments to addressing global warming. 

These businesses recognize that caps on greenhouse gas emissions are needed to 

save our planet and they embrace the opportunity to compete in the world market 

that will result. 

They are investing in clean technology and clean energy, because they believe, as 

I do. that there is an enormous business opportunity at stake and fighting global 

warming can also make American business more globally competitive. 

Today we will hear from a number of companies who are positioning themselves 

to take advantage of these opportunities. 

One of the world’s largest companies, GE has an aggressive business strategy to 

be the world leader in these technologies. GE is developing and selling carbon sequestration technology, wind turbines, compact fluorescent light bulbs, solar panels, 

efficient appliances, and other energy efficient technologies. 

Another company, American Electric Power, is helping to lead the way in proving 

carbon capture and sequestration technologies. By 2008, AEP will have in place a 

coal burning power plant in West Virginia that will use a new technology to capture 

and sequester their carbon dioxide. They are not standing still. 
9 

We will also hear from Professor Chiang from MIT who will tell us about the possibilities for electric cars and new advances in battery technologies. 

Finally, I am very excited to hear from Wal-Mart, who has taken aggressive action to significantly increase its energy efficiency. They will show us how we can 

fight global warming and save money at the same time. 

Wal-Mart has reduced its energy consumption through the use of ‘‘daylight harvesting’’ that adjusts the lighting in their stores to take advantage of outside lighting. They are using many energy efficient technologies, such as LED lighting and 

advanced refrigeration units. They aggressively monitor their energy use nationwide 

through a central location in Bentonville, Arkansas. 

Wal-Mart also has a goal to reduce its energy use and greenhouse gas emissions 

by 20 percent within 7 years. 

In 2006, clean energy investment in the United States was over $55 billion. This 

number is projected to increase in coming years, reaching $226 billion by 2016. 

Clean technology will create jobs. 1.4 million new jobs are projected in this area 

by the year 2025. Clean technology will reduce our dependence on foreign oil. And, 

of course, it will put the United States in position to stop global warming. 

I believe we must fight global warming to protect our economy as well as our 

planet. 

The United States can use its ingenuity and innovative spirit to lead the world 

in clean technology development. Mandatory greenhouse gas limits will require us 

to develop a wide range of commercial technologies that we can use at home and 

export to the rest of the world, including to India and China. 

Many have said global warming is not happening, but we now know that it is. 

Many have said we could not afford to address this problem, but now we know 

that is not the case either. There is no excuse for continued inaction. 

I look forward to the day when we can look back and tell our children and grandchildren that we were able to solve this problem and also succeed economically. 

The businesses before us today will help us get there and I commend them for 

their leadership. 

I look forward to hearing all of the witnesses’ testimony. 

Senator LIEBERMAN. Thank you, Senator Boxer. 

Senator Warner, it is all yours. 

STATEMENT OF HON. JOHN W. WARNER, U.S. SENATOR FROM 

THE COMMONWEALTH OF VIRGINIA 

Senator WARNER. Mr. Chairman, I think I will put my statement 

into the record so we can get to our witnesses here. 

I have been here for some many years in this wonderful institution. I am watching this issue in terms of how the Senator meets 

the challenges of a new frontier. We start off and there is enormous 

emotion in the hinterland, justifiably so. I think there are strong 

indications in science, fact finding, to bring to our attention something is going awry in terms of the fluctuations in our temperatures and the consequences that flow from them. 

Now, how do we deal with the problem? We come to the threshold issue here today. You have heard the honest opinions of colleagues here, all of whom I respect. They differ strongly. We are 

going to have to forge a consensus, and do it in such a way that 

we do not do undue damage to our economy. I draw from Chairman 

Boxer’s comment, that we do not just wait for others to lead. 

This is an opportunity for the United States of America to show 

strong leadership, but do it in a way that reflects a clear understanding that we can’t move much faster than technology will permit. We cannot thrust a burden upon our private sector to take 

steps, steps which scientifically indicate a reduction in the carbon 

problem, until such time as that technology and its relationship to 

our economics, is clearly understood and the consequences are understood. 
10 

We are in a one-world global market. As we try and get a few 

hours rest at night, the other half of the world is wide awake trying to figure out how to take the market away from us, and the 

jobs, and the like. That is the reality in which we live. But I feel 

that I want to try to join others in seeing what we can do to get 

a start, a significant start, but not a start that will suddenly deal 

a blow to our economy, because if we make a false start and fail 

to harness all the emotion and interest in this country behind that 

start, and then it just proves to have been wrong, I don’t know 

when we would be able to regain an opportunity like the one that 

is before us now. 

So we are fortunate on this committee to have strong leadership. 

My good friend, Joe Lieberman, and I, we have served on the military committee together for many, many, many years. We have 

partnered on quite a few things and taken some fairly bold initiatives, I might add. But I am prepared to try and work with my 

chairman of this subcommittee and the chairman of the full committee—my friend, Senator Inhofe, he and I have been here in the 

Senate almost the same length of time now—but do it in such a 

way that this start can continue to gather momentum and grow, 

and not halt and stop because of some faulty miscalculations. 

So having said that, Mr. Chairman, I yield the floor. 

[The prepared statement of Senator Warner follows:] 

STATEMENT OF HON. JOHN W. WARNER, U.S. SENATOR FROM THE

COMMONWEALTH OF VIRGINIA

I join Chairman Lieberman in welcoming our witnesses today to provide testimony on their views and experiences in developing and deploying new technologies 

to control carbon dioxide emissions. 

I am pleased that the subcommittee will hear from some of our Nation’s leading 

companies in supplying energy, manufacturing, retail and emerging technologies. 

As we examine the feasibility of a regulatory program to control carbon dioxide 

emissions, it is essential that we understand the commercial availability of existing 

technologies and the prospects for carbon reduction technologies that may be available in the near future. 

These technologies are critical to the environmental success of any program, and 

critical to maintaining a robust economy. 

Any future efforts in the Congress to develop a bipartisan consensus on this complex issue will depend on the successful efforts of the private sector, as represented 

by our witnesses today, to demonstrate the widespread use of existing technologies. 

While there may be technologies available today to begin the modest control of 

greenhouse gases, certainly, any significant reductions in carbon dioxide emissions 

will be achieved only by the development of new technologies. 

My general question to all of our witnesses today is what should the Federal Government be doing to further stimulate the marketplace to promote the broad deployment of existing technologies to reduce carbon emissions. I look forward to your testimony. 

Senator LIEBERMAN. I thank you, my dear friend, for a very 

thoughtful and important statement. Obviously, I look forward to 

working with you. I think this subcommittee can play a real leadership role in beginning a process that one recognizes the problem of 

global warming, the reality that you have stated, and second, 

achieves a workable consensus that we can take forward to the full 

committee and hopefully to the Floor. I thank you very much for 

that statement. 

Senator Carper. 
11 

STATEMENT OF HON. THOMAS R. CARPER, U.S. SENATOR 

FROM THE STATE OF DELAWARE 

Senator CARPER. Thanks, Mr. Chairman. 

I feel a special affinity to this panel, more so than usual. One of 

them is here representing a university where our oldest son goes 

to school. It is nice to have you with us today. Another of you represents a company whose sole energy business is headquartered in 

Newark, DE, near the University of Delaware. Several of you represent companies that are incorporated in the State of Delaware. 

For that, we are especially grateful. 

One of you knows that when—— 

Senator WARNER. All right. Enough. 

[Laughter.] 

Senator WARNER. You have so many conflicts of interest that I 

think you have to stop. Cease and desist. 

[Laughter.] 

Senator CARPER. I have to get this one in. One of you knows that 

when a guy from Columbus, OH—I went to Ohio State—says ‘‘O 

H’’ that the response is—— 

[Laughter.] 

Senator CARPER. I am delighted that you are all here. A lot of 

times we preface our statements by saying this is an important 

hearing. Sometimes they are, and sometimes they are not. This is 

an important hearing. We are just grateful that you all have joined 

us today to help us address what we all know is a big problem, and 

one that does not defy solution. I am convinced that by working together that we can whip global warming. 

Senator Boxer and I serve together on another committee called 

the Commerce Committee, and we have been working in the last 

week or so on legislation that seeks to reduce our dependence on 

foreign oil, and also improve fuel efficiency in our cars, trucks and 

vans. About one third of our CO2 emissions come from the transportation sector, and about 40 percent from the utility sector, and 

the rest comes from a bunch of different places. But if we can 

somehow focus on utilities and on transportation on mobile sources, 

that is about three quarters of the CO2 emissions that are going 

up into the air in this country. 

We believe that you are going to help us today figure out how 

to get our arms around that. It is not just enough for our universities and our companies to focus on it, including our science companies. We think the Federal Government has a role here, too, and 

I always say sort of a three or four part role. 

One, we need to provide a clear public policy, a regulatory framework, providing a clear path, what our expectations are. I think we 

need to pass climate change legislation. My hope is that we will do 

that, if not this year, then next. I believe a role of the Federal Government is to fund basic R&D. The role of the Federal Government 

is to help commercialize emerging technologies. An appropriate role 

of the Federal Government is to provide in certain instances tax 

credits or tax incentives to encourage people to purchase some of 

those hybrid vehicles like Senator Boxer drives, or low emission 

diesel vehicles that are just starting to work their way onto our 

roads. 
12 

I have been working on a couple of pieces of legislation for the 

utility sector and the transportation sector that seek to fulfill really 

all of these Federal roles. I recently introduced with some of my 

colleagues legislation to reduce CO2 emissions from powerplants, 

and I am proud to have, among others, Senator Lieberman and a 

number of our colleagues as cosponsors of that bill. 

While I believe in an economy-wide approach on CO2, we started 

on the utility sector and we would like to build out from there. If 

we do an economy-wide bill, my hope is that our utility sector will 

be part of that economy-wide bill. Our legislation also seeks to accelerate the deployment of new non-emitting powerplants with 

solar, nuclear, as well as clean coal technology with carbon recapture. 

For the transportation sector, just yesterday in the Commerce 

Committee, we reported out new legislation with much stronger 

fuel efficiency standards, and reducing CO2 emissions and reducing 

our reliance on foreign oil. Much like the power sector bill that I 

have introduced, the Commerce Committee’s CAFE bill not only 

provides specific targets and time lines, we also include incentives 

for technology advances. I added an amendment to the bill to increase our investment in new battery technology, lithium batteries, 

something that we very much need to do. Our friends in Japan are 

ahead of us. We need to catch up and the Federal Government has 

an obligation to help us do that. 

But those two measures are I think a couple of important steps 

to get us on the right track to reversing the increase in CO2 and 

the threat of global warming. 

We are delighted that you are here. We look forward to hearing 

from you and to asking questions of you. 

Thank you. 

Senator LIEBERMAN. Thanks very much, Senator Carper. It 

struck me that the one connection you have with the witnesses 

that you didn’t mention was Mr. Stanway from Wal-Mart. If your 

family is like most American families, there is an imbalance of payments between you and his company. 

[Laughter.] 

Senator CARPER. Mr. Stanway and I are from the same part of 

Arkansas, and when you hear him speak, you will know what I 

mean. 

[Laughter.] 

Mr. STANWAY. Yes, the assumption my family is American may 

well have been a jump there. 

[Laughter.] 

Senator LIEBERMAN. Welcome. 

Senator Voinovich. 

STATEMENT OF HON. GEORGE V. VOINOVICH, U.S. SENATOR 

FROM THE STATE OF OHIO 

Senator VOINOVICH. Thank you, Mr. Chairman. I thank you for 

holding this hearing today on global warming and emerging technologies and practices for reducing greenhouse gas emissions. 

As I have often said, this is a difficult and controversial topic. I 

understand the need to continue to debate this issue and work to-
13 

gether to better utilize advances in technology to reduce greenhouse gases. 

I believe solutions to global warming need to be addressed, and 

I look forward to hearing from the witnesses today. I am particularly happy to see two Ohio-based companies are being represented 

here today. Mr. Rencheck is the senior vice president of American 

Electric Power. Dr. John Fees is chairman and CEO of Babcock 

and Wilcox Companies. We appreciate your being here today. 

In the past, the EPW Committee has focused solely on the problem of global warming. I am glad that this subcommittee is now 

discussing solutions to the problem. Congress passed the Energy 

Policy Act of 2005 and I am concerned about the lack of funds 

available to implement the bill. The important research and development programs were authorized, including carbon sequestration, 

and IGCC technology that many believe will help this country tackle the problem of greenhouse gas emissions. 

The Energy Policy Act also authorized a loan guarantee program 

to encourage private sector investments for those energy projects 

that avoid, reduce or sequester air pollutants or greenhouse gases. 

Unfortunately in this fiscal environment, many important programs are not being funded. It is clear that we must get serious 

about partnerships and strategies that maximize Federal energy 

funding. It is critical that policymakers work in conjunction with 

the scientific community to develop policy solutions that are in the 

best interest of our State and Nation. 

For example, one area that requires further research is the development of technology to capture greenhouse gases and sequester 

carbon dioxide. I am hoping to hear some more about that today. 

We have to recognize, and I am glad that the Chairman does, that 

the United States is the Saudi Arabia in terms of coal, with a 250- 

year coal supply. In my State, 85 percent of the energy is generated 

by coal. 

We also need to follow through on the Energy Policy Act provisions to make sure that they are being adequately implemented. I 

am afraid that the Administration’s implementation of the loan 

guarantee provision has been slow at best, and left much to be desire. I met recently with Secretary Bodman and OMB’s Director 

Portman to discuss the importance of the 2005 energy bill provisions and getting the Administration to do something about implementing them. 

For the past 2 years, I have called for what I refer to as the ‘‘second Declaration of Independence,’’ independence from foreign 

sources of energy for our Nation’s competitiveness, and for our national security. I think that we also have to understand that if we 

are never going to get anywhere in this committee or in Congress, 

we have to harmonize our energy, our environment, and our economy. 

For some reason, we have never been able to. I have been here 

for 8 years, and we have never been able to get in the room and 

do that. It just doesn’t happen. We do need a Sputnik-like commitment to funding energy technology, particularly technology for carbon capture and sequestration. It is a worldwide problem and we 

have to realize that we have a role to play, but we also must recognize that others have a role to play. The more we engage them in 
14 

this debate, the better off we are going to be and better off the 

world is going to be. 

So I am glad that you have called this hearing. I just want to 

say, any climate change legislation must take into consideration 

the state of technology. I am going to ask that an article that appeared in the April 26 issue of Financial Times be inserted in the 

record. The title of the article is ‘‘Industry Caught in Carbon Credit 

Smokescreen.’’ 

[The reference document follows on page 71.] 

Senator VOINOVICH. I have to tell you, if what some people are 

proposing here for cap and trade is anything like they have in Europe, we are in big trouble, because our economy grew more during 

this period than theirs did, and their emissions increased more 

than our emissions here in the United States. So I think we have 

to be very careful in walking down this road that we do it right 

and make sure that it is in harmony with the technology that these 

folks are going to tell us about today. 

Thank you. 

[The prepared statement of Senator Voinovich follows:] 

STATEMENT OF HON. GEORGE V. VOINOVICH, U.S. SENATOR FROM THE

STATE OF OHIO

Chairman Lieberman and Senator Warner, I thank you for holding this hearing 

today on global warming and emerging technologies and practices for reducing 

greenhouse gas emissions. As I have often said, this is a difficult and controversial 

topic, and I understand the need to continue to debate this issue and work together 

to better utilize advances in technology to reduce greenhouse gas emissions. 

I believe solutions to global warming need to be addressed, and I look forward 

to hearing from the witnesses here today. I am particularly happy to see that two 

Ohio based companies are here to testify. I would like to thank Michael Rencheck, 

Senior Vice President of American Electric Power, and Dr. John Fees, Chairman 

and CEO of The Babcock and Wilcox Companies for being here to discuss technology 

options to address global warming. In the past the EPW Committee has focused 

solely on the problem of global warming, and I am glad this subcommittee is now 

discussing solutions to the problem. 

Congress passed the Energy Policy Act in 2005, but I am concerned about the lack 

of funds available to implement the bill. Important research and development programs were authorized including carbon sequestration and IGCC technology that 

many believe will help this country tackle the problem of greenhouse gas emissions. 

The Energy Policy Act also authorized a loan guarantee program to encourage private sector investments for those energy projects that avoid, reduce, or sequester air 

pollutants or greenhouse gases. Unfortunately, in this fiscal environment many important programs are not being properly funded. 

It is clear that we must get serious about partnerships and strategies that maximize Federal energy funding. It is critical that policymakers work in conjunction 

with the scientific community to develop policy solutions that are in the best interest of our State and Nation. For instance, one area that requires further research 

is the development of technology to capture greenhouse gases and sequester carbon 

dioxide so that we can continue to rely on coal for energy—we are the Saudi Arabia 

of coal as we have 250 years of supply—my state relies 85 percent on coal for electric generation, that not only protects our environment but public health. 

We also need to follow through on the Energy Policy Act provisions to make sure 

they are being adequately implemented. I am afraid that the Administration’s implementation of the loan guarantee provision has been slow at best and much to be 

desired. I recently met with Secretary Bodman and OMB Director Portman to discuss the importance of the 2005 energy bill provisions, especially the loan guarantee 

provision, in jump-starting new nuclear and clean coal projects. 

For the past 2 years, I have called for a ‘Second Declaration of Independence’— 

independence from foreign sources of energy—and for our Nation to take real action 

toward stemming our exorbitantly high oil and natural gas prices. Instead of considering them separately, we must harmonize our energy, environment, and economic 
15 

needs. This is an absolute must as we consider any additional solutions to address 

global warming. 

Today, we need a national, Sputnik-like commitment to funding energy technology, particularly technology for carbon capture and sequestration. We should also 

elevate this challenge, in the array of carbon capture and sequestration, to the international level. 

This is a worldwide problem. We have to realize that we have a role to play, but 

we also must recognize that others have a role to play and the more we can engage 

them in this debate, the better off we are going to be and the better off the world 

is going to be. 

The issue is what do we do from a responsible policy perspective to deal with the 

problem and offer economically sound solutions? It is something I hope the full EPW 

Committee can work together on to develop responsible global warming policies that 

ultimately harmonize our energy, environment, and economic needs—which we have 

not been able to do for the 8 years I have been a member of this committee. Any 

climate change legislation must take into consideration the state of technology. 

Chairman Lieberman and Senator Warner, I again thank you for holding this 

hearing today. 

Senator LIEBERMAN. Thanks, Senator Voinovich. Without objection, we will include the article from the Financial Times, as well 

as the full text of the opening statements of Senators Boxer and 

Warner, and the sections of the Stern Report, to which Senator 

Boxer referred. 

Thanks for your statement, too, Senator Voinovich. I hope that 

we can use this subcommittee as a forum for beginning to have exactly the kind of discussion about how we go forward together, including folks like this, who can tell us how to do it. 

Senator Craig, thanks for being here. 

STATEMENT OF HON. LARRY E. CRAIG, U.S. SENATOR FROM 

THE STATE OF IDAHO 

Senator CRAIG. Mr. Chairman, thank you for holding this hearing. I appreciate it. It is an issue that obviously we are all spending 

a good deal of time on, as we should. 

I have struggled over the last decade to bring this issue into perspective. I surprised a lot of conservatives at the tail end of the 

Clinton administration when I was in Belgium at a climate change 

conference announcing that, yes, I agree with the science, that our 

world is warming and we need to understand why it is. But the 

question is why is it, and we are still struggling with that. Some 

have already drawn conclusions. I am one of those who has not. 

Having said that, I want to share with you an experience I had 

last weekend that is really quite fascinating. It was in the setting 

of my home State of Idaho, which just happens to be by EPA standards the cleanest State in the Nation. We have less carbon in the 

atmosphere per capita. We emit less than any other State in the 

Nation. So we are very proud of that as a State. It is a marvelous 

place to live. The stars are very bright at night. 

But I was at what is known as Hagerman Fossil Beds. It is an 

area that I helped protect about a decade ago. It is a unique place. 

It is a large bend in the Snake River on a bluff that is about 500 

feet high from the river’s edge up to the top of a plateau. I was 

with a young anthropologist, and boy, when he was given the opportunity to get the attention of a U.S. Senator, did I get all of the 

information. I spent several hours with him. He explained to me 

something that I found fascinating. In another life, I might have 
16 

become a geologist. I spent a lot of time studying it at our university. 

Here is the story that he told me. He said if you start at the top 

layer of soil at the top of this bluff—we were standing across the 

river looking at it—he said that top layer is about 1 million years 

old. Then he said the 500-foot bluff represented 3.2 million years 

of time. He said, here, Senator, there are more fossils collected 

than any other place in the world, to our knowledge. They have 

found what is now known as the ‘‘Hagerman horse,’’ which was a 

predecessor of the horse. They have found mastodons, and then a 

myriad of other things. 

He said it is like a textbook. It is page after page after page, 

layer after layer after layer. The world now comes there, and all 

of the anthropological students of the world come there to study. 

It is a fascinating place. I am in a warehouse with fossils all 

around me. 

So I said, is there anything we can draw from this? Well, he said 

it is unique. It is interesting. He said, for example, at this 1-million-year-old layer, this place was about four times wetter than it 

is now, and much warmer. Then he says, you drop down here, and 

then it is much colder. These animals and plants could not have 

lived in that climate. He said in fact it was severely cold here at 

this time, at this period. 

Then you drop down, and further layers were down into the 2 

million plus, and then it is all of a sudden warmer again, and the 

plants and the animals, all of the insects that are captured in this 

huge time capsule. Then all of a sudden appears a mastodon, and 

then all of a sudden appears the horse. He said it is like pages in 

a textbook, Senator. We have never found anything quite like it. 

I said, conclusions to be drawn? No. He said it is just reality. It 

is time. It is the history of the evolution of the world in a 500 foot 

cliff with all of these pages to be turned and studied—warm, cold, 

warm, cold, wet, dry, wet, dry. Evolution. 

Well, that was the mission I took on a good number of years ago 

when I went up to Woods Hole to begin to study ocean decimal oscillation. Fascinating idea. A reality we now believe happened in 

the North Atlantic. It is happening in the Pacific. Some call is El 

Nin ̃ o or La Nin ̃ o. There is a lot about our world we don’t know. 

There is a lot about it we do know. 

I have drawn the conclusion that anything we do now and into 

the future ought to be clean, and all of our technologies ought to 

be clean. Frankly, George said it well. EPAct set us on that course. 

Last week, we introduced legislation to set us on another course of 

clean transportation fuels or cleaner transportation fuels. 

I have drawn the conclusion that technology leads us there. Commanding and controlling an economy does not necessarily do that. 

It could in fact damage us severely. The rest of the world is struggling along behind us. They all complied with or attempted to, they 

ratified Kyoto, but none could comply, because they found out they 

had to shut down their economies to comply. Many are even talking about getting off of it by 2012. That doesn’t excuse the reality 

that our globe is getting warmer, and that we ought to push ourselves aggressively toward the new technologies. 
17 

But I am not about to turn to our country and our workforce and 

say, ‘‘turn out your lights; that is the way we survive this.’’ We 

don’t even known truly the impact of carbon in the atmosphere. We 

think we know. But we do know geologic time, and we know this 

world has gone through phenomenal changes over a long period of 

time. 

I just happened to be at the textbook of geologic time last week 

at the Hagerman Fossil Beds, and spent a good number of hours 

there. I thought I would relate that experience to you. It is interesting that all during that timeframe that that 500-foot cliff represents, European man was non-existent, and the emission of 

greenhouse gases, at least created by man, were nonexistent, and 

yet the world changed and changed and changed again. 

Thank you, Mr. Chairman. 

Senator LIEBERMAN. Thanks, Senator Craig. 

Now we turn to the witnesses. As you can hear, I think the debate about whether the globe is warming is over. There is still 

some debate about what is causing it. But obviously, I join with the 

IPCC in saying that humans are causing it. What we really want 

to focus on with this extraordinary panel is a description of the 

emerging technologies and practices that you are individually and 

corporately involved in, that will have the effect of reducing greenhouse gas emissions, and of course, what significance can the Government play in at least sending you market signals that will encourage the innovative developments that you have been part of. 

Dr. Chiang, thanks for being here. We will start with you. Dr. 

Chiang is the aforementioned Professor of Material Science and 

Engineering at MIT. 

Senator WARNER. Mr. Chairman, would you indulge me for 1 

minute? 

Senator LIEBERMAN. Certainly. 

Senator WARNER. I wonder if our panel would help us sort 

through the terms ‘‘global warming’’ and ‘‘global climate change.’’ 

We are proud to have some colleagues here from Alaska, and they 

pound the table, furious when you talk about global warming, because they claim there are parts of Alaska that are experiencing 

severe cooling compared to previous standards. If you could unite 

us on one term, it would help us begin to interpret this for the public. 

Thank you very much. 

Mr. CHIANG. I am not sure that I will in particular be able to 

do that, but I think that extremes in temperature are part of the 

phenomenon of global warming. So perhaps one of our other witnesses can address that later. 

STATEMENT OF YET–MING CHIANG, PROFESSOR, DEPARTMENT OF MATERIALS SCIENCE AND ENGINEERING, MASSACHUSETTS INSTITUTE OF TECHNOLOGY 

Mr. CHIANG. Mr. Chairman, Senator Warner, Madam Chairman, 

Senators, one of the problems I often have following such interesting speakers is I tend to forget what I want to say myself. So 

I will try not to do that. 

There are four basic points I want to make today. One is that 

there is a revolution going on in the electrification of vehicles. I be-
18 

lieve that the benefits to the environment and to national security 

from that can no longer be disputed. 

The second point is that the battery technology that I will talk 

about today. I am a technologist. I will talk about battery technology. We all use batteries. We never think they are good enough. 

But this battery technology I will talk about today is ready and 

able for a new type of hybrid vehicle called the plug-in vehicle. It 

is ready today and I hope to convince you of that. 

The third is that we believe this is really just the tip of the iceberg. Vehicles and their electrification will do a great deal for the 

environment and for our dependence on oil. But also, other forms 

of energy—nuclear energy, solar, and wind—will, over time, benefit 

from these battery advances as well. 

Then the final point has to do with American competitiveness in 

this area. We are at a position where for the first time in about 

20 years, we have the technological lead in advanced batteries. 

What this committee can do is to help ensure that we maintain 

that lead and build on it. 

So to my first point, the transportation sector accounts for about 

two thirds of our oil consumption today, and as Senator Carper alluded to earlier, about one third of the CO2 emitted is from the 

transportation sector. The number is really quite large. A gas car 

puts out upwards of 400 grams per mile driven. That is nearly a 

pound. If this were a pound of byproduct by the roadside, we would 

be all appalled, but we can’t see it and so we have become used 

to it. 

So the hybrid electric vehicles have been a very compelling solution. They are on their way, and by 2010 there will be some 65 or 

70 models of hybrid vehicles on the road. I just want to clarify the 

difference between the conventional hybrid vehicle and the plug-in 

hybrid that I will speak about. Conventional hybrids use gasoline 

and are assisted by a battery. A plug-in hybrid uses electricity from 

the grid. It is one solution on the continuum to all-electric vehicles. 

So the hybrid vehicles can give you that 45 to 55 miles per gallon, but what we like to say is that when hybrid vehicles dream, 

they dream of becoming plug-ins. 

[Laughter.] 

Mr. CHIANG. A plug-in will give you upwards of 100 miles per 

gallon. I will tell you more about that in a little bit. If we were to 

replace each gas-operated car with a plug-in, we would reduce the 

gas consumption of that car by 80 percent and we would reduce the 

CO2 output by 50 percent. Many people ask you if this electricity 

that we are using to power these plug-ins is coming from electricity 

generation, in particular coal, aren’t we just paying for our pollution in a different way? So it turns out that with the national blend 

of electrical power sources, we get that 50 percent reduction. If it 

were solely coal, the reduction is about 30 percent, which is still 

very significant. 

So let me turn to the technology that makes this happen. It is 

nanotechnology. It is research that we originally did under support 

from the U.S. Department of Energy at MIT. The fact that it is 

nanotechnology is scientifically interesting, but the important point 

today is what is has enabled in terms of battery technology. 
19 

In 2002, we started a company called A123Systems. It is named 

after a force constant. We have been told that the name does not 

roll off the tongue very well, but nonetheless what this company 

set out to do was to take this new nanotechnology and to commercialize it. Our first commercial test bed was power tools. Power 

tools are a nearer term target than vehicles. So today you can buy 

36 volt power tools made by DeWalt Power Company—Dewalt is 

Black and Decker. This puts four horsepower in a two pound package, five times the previous power tool technology. So you can 

think about what that could really do for vehicles. 

So from the very beginning, and currently today we are producing millions of those batteries for the power tool industry. This 

is truly scaled-up production. But from the beginning, what we 

were interested in was vehicles. So the most direct way that I can 

give you an example of what this could do for vehicles, and we are 

working on both HUVs—HUVs being conventional hybrids—and 

plug-ins. I refer to a car that I have actually brought with me 

today. It is parked over there, and I invite all of you to come down 

and see it and to even drive it. This is a hybrid vehicle which has 

been supplemented with a battery module, which takes the place 

of the spare tire. That is as big as it is. You get all your trunk 

space. 

With that, you can get 100 miles per gallon on the highway, and 

150 in the city. I have the ideal commute. 

Senator CARPER. Is your car for sale? 

[Laughter.] 

Mr. CHIANG. Yes, it is. We can talk. 

I have almost an ideal 40 mile commute, which is the electric 

range of this vehicle, when I commute to MIT. So I can drive to 

MIT and park in a special parking spot, one of several that have 

plugs, and for a 50 cent recharge, I get to go the next 40 miles. 

Of course, then I get MIT to pay for that 50 cents. 

This technology is ready and will be going to fleets this year, and 

next year our company aims to make it available to the individual 

consumer. 

Senator LIEBERMAN. So it is cost effective now? In other words, 

you have the costs down to where the market will afford it? 

Mr. CHIANG. At this point, the car that I will show you, the addon that gives you this capability is roughly $10,000 today, but it 

has already come down very significantly from just a couple of 

years ago and the costs continue to decrease. One of the things that 

will spur the adoption of these vehicles, in addition to the kind of 

legislation we are talking about today, are incentives to make it 

more affordable to consumers the same why that hybrids were 

made more affordable to the consumer. 

In short, it is still a little expensive, but we expect it to become 

very affordable. 

OK. So now what will happen, we are working with a number 

of manufacturers. In the plug-in area, for example, we are working 

with GM, but those cars will take about 5 years to come online. So 

one of the points I want to make is that in the interim, before the 

5 years, we really can do something. What we can do is to start 

implementing those modules and to help the existing and growing 
20 

fleet of hybrid vehicles become upgraded to this 100 miles per gallon. 

OK. Now, I will just speak very briefly to the adaptation of this 

technology to wind and solar. 

Senator LIEBERMAN. Speak as quickly as you can, just for the 

sake of time. I appreciate it. 

Mr. CHIANG. OK, very good. I will just say that we are going to 

get there, and it is going to be applied to wind and solar. We hope 

it will enable the adoption of those. 

My final point really has to do with American competitiveness at 

this point. 

Senator LIEBERMAN. Go right ahead. 

Mr. CHIANG. I am sorry? 

Senator LIEBERMAN. Please, go ahead and develop that last 

point. 

Mr. CHIANG. OK. So about 15 years ago when lithium batteries 

first reached the market, Asian companies really got the lead. Now 

that we have the lead in this new battery technology, the others 

are not far behind. What we need in order to develop an Americanbased high quality job profile for the American battery industry is 

to have incentive legislation that really speeds the adoption of 

these plug-in hybrids and other vehicles. The reason for that is because the more that we are able to get these into the marketplace 

and to learn how to continue to innovate, the more we will succeed 

in the long term. 

I have had my nose to the grindstone for 5 years developing the 

technology, so I am not an expert on cap and trade, but I think I 

can say that anything that can be done to help this technology get 

out there, we can accelerate the implementation by several years, 

and that will reap many benefits in the long term. 

Thank you. 

[The prepared statement of Mr. Chiang follows:] 

STATEMENT OF YET-MING CHIANG, PROFESSOR, DEPARTMENT OF MATERIALS SCIENCE

AND ENGINEERING AND MASSACHUSETTS INSTITUTE OF TECHNOLOGY

BREAKTHROUGH BATTERY TECHNOLOGY AT THE CENTER OF THE

PLUG-IN HYBRID REVOLUTION

Mr. Chairman, Senator Warner and Members of the Subcommittee; 

I thank you for the opportunity to appear before you today to explain and answer 

questions about a recent breakthrough in lithium ion battery technology that we 

and others believe will help enable this Nation to lead a worldwide plug-in hybrid 

transportation revolution starting now. 

Let me explain. 

THE TECHNOLOGY AND ITS CAPABILITIES

Five years ago, research conducted in my group at MIT under U.S. Department 

of Energy support resulted in new nanomaterials that we believed could enable 

breakthroughs in lithium ion battery power, safety, and durability. This technology 

was spun off by forming the company A123Systems, itself initially supported by the 

DOE with a $100,000 SBIR grant. Today the Company has raised over $100 million, 

has over 300 employees and operates facilities in Watertown, Massachusetts and 

Ann Arbor, Michigan. We sell millions of batteries annually to Black and Decker 

(Dewalt) and others for high powered handheld applications. We are simultaneously 

developing higher powered solutions for the aerospace and defense industries and 

have been chosen by GM, and other major American and European automakers, to 

help develop and power their hybrid and plug-in hybrid sedans, SUVs, trucks, buses 

and heavy equipment moving vehicles which will be coming on line over the next 

decade. 
21 

This has all been made possible by the development of our unique nanotechnology-enabled based lithium ion battery, which we call Nanophosphate, which has a 

combination of power, durability and safety in excess of any rechargeable battery 

that has come before. When I describe our innovation as nanotechnology, what I 

mean is that we have designed and engineered key active materials in the battery 

to take advantage of physical and chemical behavior only accessible when the materials are reduced to a few nanometers in dimension. This behavior enables the material to store and release lithium ions with great facility and over a very long service life, all while being much safer than any previous lithium ion battery. 

While the fact that our batteries are nanotechnology-enabled is of scientific interest—and indeed the science behind them is fascinating—what the end user and society benefits from are their new performance capabilities. In DeWalt’s new 36 volt 

power tool, our battery technology delivers twice the power of a corded tool with 2– 

3 times the runtime of conventional cordless tools. In vehicle applications, the advances over previous technology are no less dramatic, as I will now explain. 

The automotive industry is in the middle of a critical transition to electric drive 

because switching from imported oil to a diversifying electric grid is a national security and environmental imperative, now made possible as a result of these battery 

technology breakthroughs. The evidence for this transformation continues to mount. 

Fueled by strong consumer demand for greener vehicles and a growing awareness 

of our greater responsibilities to our planet and our national security, there are now 

over 65 hybrid vehicle (HEV) launches planned by 2010. A123Systems is working 

with leading American and European automakers to develop batteries for upcoming 

hybrids and are working with the DOE and the U.S. Advanced Battery Consortium 

(USABC) to optimize our technology and provide leading price/performance in this 

market. 

However, the next generation of technology beyond the conventional hybrid is the 

plug-in hybrid (PHEV). This game-changing technology will further displace the use 

of petroleum through shifting a much greater fraction of the vehicle’s power to electric drive, using advanced batteries that are recharged from the grid. This technology is one where the U.S. automakers have established technological leadership 

and which delivers many immediate benefits including 100 MPG or greater fuel 

economy and reduced emissions, not just measured at the tailpipe but including that 

due to the additional electricity generated. A123Systems is a leading developer and 

supplier of battery technology for plug-in hybrids. We are working with General Motors and other leading American and European automobile and heavy equipment 

manufacturers to validate and introduce this technology into the market. But how 

long will it take to see the benefits of these new vehicle technologies, which apply 

to passenger vehicles, large trucks, buses and fleet vehicles, and can change both 

the emissions and fuel consumption profiles of some of our largest concentrations 

of polluting commerce? 

INTERRELATIONSHIP WITH CAP AND TRADE

Over the years, the Congress has been in the forefront of recognizing the need 

to nurture these kinds of breakthrough technologies through legislation to kick start 

consumer demand. For example, putting the CLEAR ACT in place in 2005 was critical to both educating the public and producing the hybrid sale volumes that have 

lead to ever improving costs and economics. As a result, today’s growing demand 

for hybrid vehicles is a tribute to the public’s underestimated desire to do something 

about the health and national security risks of ever rising petroleum dependency 

when presented with economic choices. 

The overarching question before this committee today is how much more governmental stimulation is needed and how much faster can we go? 

Let me suggest that the answer to that question depends on both the availability 

of new technologies and the practicality of the additional government initiatives 

which can be deployed. 

On the first question of advanced technologies that are waiting and ready to enter 

the economy based on additional incentives, I can speak with some authority. They 

are here, ready to go, and await your leadership to make it happen as soon as possible. 

Let me be specific. We at A123Systems have spent substantial energy strategizing 

on how to best move along the continuum from producing millions of our high performance lithium ion batteries for handheld applications today, to adding the manufacturing bandwidth required in 3 to 5 years to supply the major automakers with 

batteries for their fully designed and tested original equipment plug-in hybrid vehicles. Speed of execution is of the utmost importance to us. To address the power 

tool market, we developed game-changing battery technology from initial concept to 
22 

full-scale manufacturing in just 33 months. Our customers tell us this is the fastest 

commercialization of a new battery system in history. It is testimony to the speed 

with which this type of technology can move when the will is there. Clearly, in the 

emerging and highly competitive plug-in hybrid arena, similar dedication to speed 

of execution will be critical to American competitiveness. 

So we asked ourselves how best to ensure the earliest and ultimate success of the 

tens of millions of original equipment plug-in hybrids that will need to be rolling 

off the major manufacturers’ production lines through the next decade. Our answer 

was to develop Battery Range Extender Modules that can be installed in the spare 

tire well of any existing hybrid. 

The result of that effort is parked right outside this building. On its face, it is 

one of the almost 1 million standard production hybrids now on the road in the 

United States. Its original equipment nickel metal hydride battery provides enough 

power to go a few miles on electricity alone. But this car differs from most of its 

brethren in that it also has a supplemental module small enough to fit into its spare 

tire well. This module contains our current production battery cells and delivers 

enough usable energy for the vehicle to achieve as much as 150 MPG in urban driving and 100 MPG in highway driving with a 40 mile electric range. This module 

is charged overnight from a regular 120 volt extension cord which plugs into the 

bumper. 

Since the average commuter travels under 30 miles per day, off-peak nightly 

charging of this module both improves a utility’s load factor, lowering everyone’s 

electricity bills, while reducing total gasoline consumption and emissions dramatically. In fact, DOE’s Argonne National Lab has tested an earlier version of this module providing independent validation of the 150 MPG urban efficiencies that plugin hybrids provide. Prototypes now being driven around the country, including here 

in Washington, have been obtaining the same results—mileage that is two to three 

times the 45 to 55 MPG today’s production hybrids achieve. Keeping in mind that 

this is the first fully-developed version of a new technology, the performance can 

only improve from here. 

Numerous studies have also shown that emissions will drop significantly even 

after accounting for the generation of additional electricity. With charging occurring 

predominantly in the off-peak evening hours, a large percentage of this generation 

is made up of no emission, constantly running nuclear and hydro resources. The remainder comes from coal, which will continue to be baseloaded until cleaned up or 

replaced, with or without a plug-in revolution. The bottom line is that today’s stateof-the-art baseload generating mix is far more efficient in terms of emissions than 

an individual tailpipe, and the policy choices we are in the process of making to improve the emissions profile of our electric generation grid will only improve that advantage. 

Over time as battery costs are reduced, these improvements in battery technology 

also will benefit renewable energy technologies such as wind and solar, for which 

storage is a key issue, and will allow them to take on an increasing fraction of the 

baseload. The durability seen in this new generation of lithium ion batteries suggests that life-cycle costs will be significantly reduced over older technologies, such 

as lead-acid batteries, that have lower initial costs but a much shorter lifespan and 

higher maintenance costs. Reduced emissions from the electrification of vehicles 

starting now will therefore be further accelerated in the future as the same advanced battery technologies are used to help additional renewables come on-line 

even while continuing to increase the number of plug-in vehicles. These are synergistic effects. 

So now let me be clear about where the technology stands: It is possible to achieve 

over 100 MPG with reduced emissions from a standard production hybrid equipped 

with a supplemental battery module using our current production lithium ion cells. 

And yes, it is affordable, reliable and a logical bridge between the even more efficient OEM plug-ins that we aim to enable in mass by the beginning of the next decade, and the ever growing millions of conventional hybrids that will be sold in the 

interim. A123Systems will be testing our current technology with various fleets in 

2007 and intends to market this standardized module nationwide in 2008 in order 

to accelerate the adoption of plug-ins. It will be certified to meet all applicable new 

car test standards and can be installed by trained mechanics in less than 2 hours, 

without any changes to the underlying electronics, mechanics or materially useable 

space of the production hybrid other than the installation of the plug in the rear 

bumper. 

Our battery modules that can create PHEVs from HEVs will be, for all intents 

and purposes, ready to go by the end of this year. The faster it is deployed, the 

cleaner and safer this country will become. So how much more should the government do? I would suggest that the greater the potential for known but not well pub-
23 

licized technologies to make a real difference in emissions and mileage, the more 

important it is for you to act aggressively. 

The applicable market in the United States is already the fastest growing segment of the automobile industry. There will be almost 1 million standard hybrids 

on the road through the course of this year. With over 60 hybrid models expected 

by 2009, there will be 5 million standard hybrids on the road by 2010. By 2015 

there may be as many as 15 million regular hybrids on American highways. As a 

matter of additional government action to stimulate deployment, it is clear that if 

several thousands of dollars in tax credits were needed to start moving consumers 

from 15 MPG vehicles to initially more expensive 45 MPG hybrid vehicles, one option would be to do at least as much to achieve the 80 percent oil savings and 50 

percent emissions reductions that would accumulate if each 45 MPG vehicle is now 

replaced with a 150 MPG comfortable, high performance plug-in hybrid. 

Given the reality of the technology sitting outside of this hearing room for everyone to see and touch and experience, what other measures could help make plugins the cutting edge of the transportation revolution not 5 years from now but 

NEXT YEAR? How do we work into the market’s pricing mechanism an accounting 

for the clear environmental benefits that tax incentives do not address? 

Clearly I know a lot more about how to make a battery than I do about how to 

construct a fair yet complicated regulatory framework. But from where I sit, the 

sooner PHEVs are deployed, the sooner we drastically cut our oil imports and improve our deteriorating environment. The transportation sector currently provides 

one third of all our CO2 emissions. If a fair cap and trade system that increases 

the cost to emit CO2 can be put in place and administered so all parties understand 

the rules and have to play by them, we have no doubt that the rate of deployment 

of cutting edge facilitators like these modules, and ultimately OEM plug-ins, will 

be significantly accelerated. 

Demand-pull incentives to kick start this promising breakthrough that holds the 

potential to cut our transportation-based use of oil by 80 percent and emissions by 

50 percent has strong precedent with clear success. Increased research dollars to 

further lower costs and create a level playing field with our Asian competitors in 

the battery industry, who until now have established superiority as a result of 

heavy government investment, also has established government precedence in other 

U.S. business sectors. Today, A123Systems is in the marketplace and in the lead 

ahead of the Asian governments who are our real competitors. They are investing. 

If we are to avoid the past mistakes of losing the commercialization race to Asia, 

we will have to level this playing field with active government involvement in ensuring the development of a new domestic battery industry. 

And finding a way to price the environmental benefits of our new American technologies, whether through cap and trade or other regulatory mechanisms, will be 

the ultimate show of national will and leadership needed to reverse our energy fortunes as quickly as we need. 

I urge all of you to come outside and look at the car and battery of the future 

to see what has already been done on the technology side. With your prompt collective action, over the course of the next year the average American can be in a full, 

responsive, comfortable sedan that can get over 100 MPG in combined city/highway 

driving for under $30,000. And as volumes increase, prices also can be expected to 

eventually fall as in any new breakthrough product. And with a cap and trade system, corporate America will demand more of these vehicles even sooner to stay in 

the game. 

Clearly the original equipment hybrids due out early in the next decade, utilizing 

even better batteries integrated directly into the vehicle at the factory, will be more 

efficient and less costly. But there can be as many as 15 million standard hybrids 

on the road when plug-in volumes skyrocket from 2012 to 2017. Like the initial 

version of any breakthrough product, our battery technology and the PHEVs it will 

enable in the immediate future, will be much better than what was there before, 

and not nearly as good as it is going to get. But it can be an important part of a 

logical technology and policy continuum as we inevitably move to a dominantly plugin hybrid national fleet. 

In summary, you can count on our technology as one of the presently available 

breakthrough tools at your disposal which requires creation of a regulatory and 

business environment that will assure its mass use at the earliest time to begin reducing GHG emissions and our dependence on foreign oil. If we are collectively able 

to move up by several years the adoption of this particular technological solution, 

it will: 

• Introduce a public hungry for tangible action now to a new American technology 

that lets them be part of the logical next step of a transportation revolution they 
24 

have already started with their unprecedented demand for the standard hybrids 

available today. • Gather invaluable experience and data for the next generation of factory produced vehicles through earlier widespread use of this new battery technology in real 

volumes in the everyday world. • Stimulate earlier battery cost reductions from the earlier volume sales • Advance by years the much needed 80 percent reduction in oil consumption and 

50 percent emissions savings associated with each plug-in on the road. • Serve the purpose of potentially speeding up the roll-out of the all important 

factory produced plug-ins as a result of the growing public awareness and demand. 

CONCLUSION

This Nation can turn our current energy vulnerabilities into a new technological 

renaissance that simultaneously reduces our greenhouse gas emissions, reduces our 

consumption of foreign oil, and produces an increasing number of good American 

jobs. We can do it by using a combination of incentives, grants to a more efficient, 

diversified, balanced and cleaner domestic electric grid, and fair and administrable 

pricing of the environmental value of new and enabling technologies. With your political will and leadership, and the kind of technological breakthroughs that I have 

discussed today, we will succeed. 

Thank you Mr. Chairman and Members of the committee for this opportunity to 

explain what we are doing and comment on what you propose. We appreciate your 

interest and support. We will now be glad to address any questions you may have 

on this or any other subject. 

RESPONSE BY YET-MING CHIANG TO AN ADDITIONAL QUESTION FROM

SENATOR LAUTENBERG

Question. Your testimony indicates that you need a regulated environment for 

greenhouse gases in order for your product to flourish. What must be the cost of 

carbon dioxide emissions for a company to start utilizing your technology? 

Response. The lithium ion battery technology that we have developed enables hybrid and plug-in hybrid automotive, bus, truck, and other transportation technologies which if implemented broadly will have a dramatic impact on US greenhouse gas emissions. Since the users of this technology will range from individual 

citizens to large corporations, the cost of carbon dioxide emissions that will motivate 

one to use this technology will vary widely. For example, an individual American 

citizen will be motivated to use the technology in order to reduce their driving expense, to improve the environment, and to reduce US dependence on imported oil, 

even in the absence of any charge for CO2 emission. On the other hand, measures 

such as cap-and-trade legislation would motivate a company that operates a large 

fleet of vehicles, as one example, to adopt our clean transportation technology if the 

cost of the carbon emissions is more than offset by the cost to transition to the new 

technology, with added benefit also accruing from the reduction in fuel costs. This 

is one ‘‘equation’’ by which the cost could be calculated, but naturally the specific 

numbers will depend on the industry involved and the specific scenario. The largest 

barrier to widespread adoption of our technology is the higher initial cost, but this 

will be reduced over time as the product matures and manufacturing costs are reduced due to economies of scale. 

Senator LIEBERMAN. Thank very much, Dr. Chiang. I find it very 

exciting. You took me beyond where I understood that the plug-in 

technology was. The other point to make, very briefly, insofar as 

we are concerned about energy independence, is that the last time 

I heard, we only derive 2 percent to 3 percent of electricity from 

oil, so that, yes, there are problems with coal, but coal at least is 

American coal, and 20 percent of the rest is gas and 20 percent nuclear, and the rest a mix of alternatives. 

So anytime we get somebody to plug-in for a mile of vehicular 

travel, it is a dramatic reduction in our dependence on foreign 

sources of oil. 

Mr. CHIANG. Just very briefly, much of this recharging I am talking about is a nighttime phenomenon, where the dependence is 

more on other forms that are nonpolluting than on coal. 
25 

Senator LIEBERMAN. Right. I must say the first time I heard 

about an electric car and a plug-in, I thought it was a big flaky, 

but then of course over the years, what am I doing and what we 

are all doing, we are plugging in our cell phones our Blackberrys 

and the rest at night. There is no reason why we couldn’t and 

shouldn’t be plugging in our cars. 

Dr. Little, thank you very much for being here. Dr. Mark Little 

is the director of GE Global Research, unfortunately located in 

Delaware, but the company overall is headquartered in Connecticut. Thank you for being here. 

[Laughter.] 

STATEMENT OF MARK M. LITTLE, SENIOR VICE PRESIDENT 

AND DIRECTOR, GE GLOBAL RESEARCH 

Mr. LITTLE. Mr. Chairman and members of the committee, good 

morning and thank you for the opportunity to address you. My 

complete comments have been submitted for the record. 

I do have the great privilege of leading GE Research, GE’s central research and development organization and one of the world’s 

largest and most diversified industrial research labs. I oversee 

28,000 technologists across the company and around the world, 

representing virtually every discipline. 

I am here to comment on available technologies that could readily be deployed if the Federal Government issues regulations to address climate change. As you know, GE is a founding member of 

the U.S. Climate Action Partnership and we launched a worldwide 

initiative called Ecoimagination, which focuses on getting more 

green technologies and products into the marketplace. 

If the Federal Government were to enact climate change legislation today, the regulated community has many viable technology 

options. I will focus my remarks on six key technologies that we 

believe could have the most immediate impact. They are IGCC or 

cleaner coal; wind energy; solar powered batteries; biofuels; and 

nuclear power. 

I will briefly highlight each technology and discuss how Government can partner with industry to maximize the opportunities each 

presents. 

For IGCC or cleaner coal, GE’s energy business has a product on 

the market today that converts coal and other fossil fuels in to 

cleaner burning energy systems. Along with dramatically reducing 

emissions and particulates, this technology provides a more advantageous and economical way to capture carbon dioxide by separating and capturing it before combustion. But to fully realize the 

environmental benefit of this technology, we will need a clear, consistent policy on carbon emissions set forth by the Government. 

Placing a monetary value on carbon and adopting rules governing carbon sequestration would go a long way toward ensuring 

that the Nation would meet its greenhouse gas objectives and that 

IGCC technology can be a viable solution in helping us get there. 

Wind energy is another available carbon-free technology. With 

the help of Government incentives like the production tax credit 

and individual States’ efforts to adopt renewable portfolio standards, wind technology today is economically competitive with other 

sources of energy, but we believe much more can be done. With 
26 

more investment in R&D by the industry, Government and academia, we can further improve the economics and accelerate the 

speed and scale with which wind power can be deployed. 

Solar power is another carbon-free technology available today. In 

States like California and New Jersey, where strong Government 

incentives are in place, solar is thriving. But to be a truly viable 

choice for residential and commercial consumers across the country, we need to accelerate the level of investment by Government, 

industry and academia in solar energy. A great initiative doing just 

that is the U.S. Department of Energy’s new Solar America initiative, in which GE is proud to be a partner. The thrust of this initiative is to accelerate new advancements in solar technology to reduce the cost of solar power to economically competitive levels by 

the year 2015. 

High energy batteries and hybrid systems are other available 

technologies. GE has made significant progress with its own battery research initiatives. They have been critical to our rail business in its development of a hybrid locomotive, which we will demonstrate for the first time this month at a GE Ecoimagination 

event in California. 

Within 2 to 3 years, batteries could have a real impact on heavy 

duty vehicle industries, and soon after plug-in hybrids for the automotive industry. GE is now collaborating with the U.S. Government on a variety of projects to advance battery research. 

Nuclear power is another carbon-free source of energy available 

today. Recent permitting, licensing and policy changes have helped 

to encourage new U.S. plant opportunities, but we believe much 

more can be done to promote nuclear power. While past incidents 

raised public concerns over safety and reliability of nuclear power, 

significant progress has been made since then to address these 

issues and to make nuclear an even safer and more reliable source 

of energy. 

Finally, although GE does not produce biofuels, we are working 

on new technologies that will enable our turbine products to burn 

many more types of fuels. GE Energy has a product today, the 

Jenbacher engine, which can operate on biofuels from many 

sources. We will continue to drive new developments in the research lab to make GE’s power generation and turbine products 

even more fuel flexible. 

I cannot emphasize enough that the success of each of these technologies is incumbent on having the right policies and committed 

research and development partner in the Government to help accelerate these advances. 

Mr. Chairman, I want to thank you and members of the committee for the opportunity to testify. Addressing the issue of climate change is one of the greatest challenges the United States, 

and indeed the world, will face this century. The good news is that 

we have a host of technologies available today that can support 

swift action by Congress to pass meaningful climate change legislation. 

Thank you. 

[The prepared statement of Mr. Little follows:] 
27 

STATEMENT OF MARK M. LITTLE, SENIOR VICE PRESIDENT AND DIRECTOR, GE GLOBAL RESEARCH

Mr. Chairman, members of the committee. Good morning and thank you for inviting me to address the committee and provide GE’s perspective on technologies that 

could be readily deployed in the event Congress passes climate change legislation. 

I am Mark Little, Senior Vice President and Director of GE Global Research, GE’s 

centralized R+D organization. We are one of the world’s largest and most diversified 

industrial research labs, with a proud heritage of innovation spanning the Center’s 

107-year history. 

From developing the first U.S. jet engine to developing many of the technologies 

that helped build today’s modern electrical grid, GE researchers have a proven 

record of moving the state of technology forward in a meaningful and practical way. 

Our breakthroughs have had real impact not only in transforming the Nation’s infrastructure, but also in improving people’s lives. 

In my role, I oversee more than 28,000 technologists across the company and 

around the world representing virtually every scientific discipline. Our mission 

today is the same as it was at the time of our founding in 1900—to drive innovations that create new or better GE products and meet the needs of our customers 

and of society. 

We gather at a time when concerns about energy security and global climate 

change are at the top of everyone’s list. In May 2005, GE launched ecomagination. 

Ecomagination represents the company’s commitment to develop cleaner, more efficient and environmentally friendly products. As part of this initiative, we have 

pledged to double our level of R+D investment in green technologies from $700 million to more than $1.5 billion by the year 2010. 

Since launching ecomagination, we already have more than doubled the number 

of green products from the 17 that had originally been identified. GE’s customers 

and consumers now have more and better choices to reduce their emissions and energy consumption. In the years ahead, we will introduce even more products to help 

address the challenges of global climate change. 

In February 2007, GE’s Vice Chairman, and President and CEO for GE Infrastructure, John Rice, testified before the Subcommittee on Energy & Power, Energy 

& Commerce Committee in the U.S. House of Representatives, and called for the 

enactment of U.S. legislation on climate change at the earliest date possible. He further stated that science has reached a point where such legislation is possible. 

Indeed if Congress enacted climate change legislation today, the technology now 

exists to support viable options for the regulated community. We have technologies 

available that can help prevent unacceptable greenhouse gas concentrations, such 

as those suggested by USCAP. I will focus my remarks on six key technologies that 

we believe could have the most immediate impact. They are: The Integrated Gasification Combined Cycle (IGCC) system, or cleaner coal; wind energy; solar power; 

batteries; biofuels; and nuclear power. 

In discussing each of these technologies, it’s important to understand that success 

in providing readily available solutions is directly tied to government setting a clear, 

consistent policy direction and continuing its strong commitment with industry and 

academia to aggressively invest in and accelerate the advancement of clean energy 

technology. We have already seen how government policies can positively impact the 

growth and availability of clean energy solutions. 

The enactment of the Federal Production Tax Credit (PTC) and new Renewable 

Portfolio Standards in more than 20 states have helped to fuel a three-fold expansion of the wind industry in the United States over the past few years. In Europe 

where policies have been more consistently applied, the growth has been more rapid 

and substantial. 

The first technology I would like to discuss is the Integrated Gasification Combined Cycle (IGCC) system, or cleaner coal. GE’s Energy business has an IGCC 

product on the market today that successfully converts coal and other fossil fuels 

into a cleaner burning energy source. Compared to a traditional pulverized coal 

plant, an IGCC plant emits less than half of the sulfur oxides, nitrogen oxides, mercury and particulate matter. It also provides a much more advantageous way to capture carbon. 

In an IGCC plant, the capability exists to separate and capture carbon before 

combustion. We believe this presents a much more effective and economical way of 

removing carbon versus the method that could be used today of removing it from 

the exhaust at the very end of the combustion process. 

We are focused on several advanced gasification technologies to improve our IGCC 

platform. We’re addressing everything from increasing process efficiency to reducing 

capital costs and emissions. 
28 

To fully realize the environmental benefits of IGCC technology, we will need a 

clear, consistent policy set forth by the government on carbon emissions. 

Currently, the increased environmental benefits for IGCC come with increased 

capital costs. With no value placed on carbon and no regulations governing carbon 

sequestration or liability associated with it, little incentive exists to adopt this technology. And while we have research programs that are aggressively working to reduce the capital costs of IGCC technology, those solutions will not be available in 

the short-term. 

Placing a monetary value on carbon and adopting rules governing carbon sequestration would go a long way toward ensuring that the Nation meets its greenhouse 

gas emissions goals, and that IGCC technology can be a viable solution in helping 

us get there. The fact that nearly 50 percent of the Nation’s electricity is derived 

from coal makes IGCC technology a critical part of the technology solutions needed. 

Wind energy is another available, carbon-free technology that already has had a 

tremendous impact in Europe and is beginning to have real impact here in the 

United States. With the help of government incentives like the Production Tax 

Credit (PTC) and individual states’ efforts to adopt Renewable Portfolio Standards, 

wind is economically competitive today with other traditional sources of energy. But 

for all of wind energy’s success, we believe there is much more room for improvement. 

Just consider that in the short time since GE got into the wind business in 2002, 

we have been able to improve the wind capture of our wind turbines by 30 percent. 

But with more investment in R+D by industry, government and academia, we can 

do even more to improve the economics and accelerate the speed and scale in which 

wind assets can be readily deployed. 

At GE’s research lab, we are exploring new, lighter and more aerodynamic blade 

designs, lighter composite materials and better electronics and controls to make further improvements to GE’s wind turbines and large-scale energy systems. We believe that another 15 percent wind capture can be added with more advanced technology development. By industry partnering with the government, we could greatly 

accelerate this effort. 

Solar power, when coupled with government incentives, is another carbon-free 

technology that is available today. In states like California and New Jersey where 

strong government incentives are in place, solar is thriving. But if solar is to be a 

truly viable choice for residential and commercial consumers across the country, we 

need to accelerate the level of investment by government, industry and academia 

in solar energy research. I want to commend the U.S. Department of Energy (DOE) 

for doing just that with the recent launch of its Solar America initiative. 

Solar America, of which GE is proud to be a partner, is exactly the kind of bold 

initiative that is needed to make solar power economically competitive across the 

United States. Right now, the price of solar power is around 30 cents per kilowatthour. That is much too high. To encourage more widespread availability and use, 

we need to cut that cost in half. This reduction is the whole thrust of DOE’s initiative. 

The general view across the solar industry is that the goal of economic viability 

will not be reached until at least the year 2030. Through Solar America, we believe 

that aggressively accelerating breakthroughs in less costly and more efficient materials and improvements to the solar module systems could cut that timeline in half 

to 2015. 

The next technology I would like to discuss is high-energy batteries and hybrid 

systems. 

GE has made significant progress with its own battery research initiatives. It has 

been critical to our Rail business and its development of a hybrid locomotive, which 

we will be demonstrating for the first time later this month at a planned GE 

ecomagination event in California. 

Within 2 to 3 years, we believe batteries could have a real impact on the heavyduty vehicle industry and soon after plug-in hybrids for the automotive industry. GE 

is currently collaborating with the U.S. government on a variety of projects to advance battery technologies. 

Although GE is a not a producer of biofuels, we are working on new technologies 

that will enable our turbine products to burn several types of biofuel. GE Energy 

already has a product, the Jenbacher engine, which can operate on biofuels such as 

methane gas from landfills. We will continue to drive new developments in the research lab to make GE’s power generation and turbine products more fuel flexible, 

so that they can accommodate a variety of more environmentally friendly, domestic 

generated biofuels. 

Finally, I would like to discuss a carbon-free technology alternative that is not 

only available today, it is providing 16 percent of the world’s electricity and 20 per-
29 

cent of all electricity produced in the United States—nuclear power. In fact, GE last 

week announced a contract with Dominion, one of the Nation’s largest energy producers, to supply critical project components in the event Dominion decides to build 

a third nuclear-powered electric generating unit at its North Anna Power Station 

in Mineral, Virginia. 

More recent permitting, licensing and policy changes have helped to encourage 

new U.S. plant opportunities, but we believe more can be done to promote new opportunities in nuclear power. 

In a world that is searching for carbon-free alternatives, nuclear represents one 

of the most mature and attractive solutions for bringing more carbon-free power online in a significant way. While past incidents raised public concerns over the safety 

and reliability of nuclear power that persist today, significant progress has been 

made since then to address these issues and make nuclear a safe, reliable source 

of energy. 

As the U.S. Congress considers climate change legislation, GE believes several 

technologies can be readily deployed today in the short-term to meet new greenhouse gas emissions goals set forth in such legislation. But the success of these technologies is incumbent upon having the right policies and a committed research and 

deployment partner in government to help accelerate needed advancements. 

Mr. Chairman, I want to thank you and members of the committee for the opportunity to provide testimony. Addressing the issue of climate change is one of greatest challenges the United States and indeed the world will face in the 21st century. 

The good news is that we have a host of technologies available today that can support swift action by Congress to pass meaningful climate change legislation. 

Thank you. 

Senator LIEBERMAN. Dr. Little, thank you. Great report. Really 

good news. Thank you. 

Mr. LITTLE. Thank you. 

Senator LIEBERMAN. Mr. James Stanway, director of Project Development at Wal-Mart, indicating by your manner of speech either 

that I am not familiar with all Arkansas dialects, or that Wal-Mart 

truly has become a global enterprise. 

[Laughter.] 

STATEMENT OF JAMES W. STANWAY, SENIOR DIRECTOR, 

GLOBAL SUPPLIER INITIATIVES, WAL–MART STORES, INC. 

Mr. STANWAY. Chairman Lieberman, Ranking Member Warner 

and distinguished members of the committee, no, I am not originally from Arkansas, but I have 3 years ago become a U.S. citizen. 

Senator LIEBERMAN. Welcome. Thank you. 

Mr. STANWAY. Wal-Mart Stores thanks the subcommittee for its 

work on this important issue and for holding this hearing today. 

As the largest retail company in the world, the largest private consumer of electricity in the United States, and the owner of one of 

the largest private truck fleets in the country, Wal–Mart takes a 

keen interest in the serious risks and opportunities of climate 

change. 

More than 2 years ago, our CEO Lee Scott, announced that Wal– 

Mart would make sustainability an organizing principle for the 

company and he announced three goals: to be supplied 100 percent 

by renewable energy; to create zero waste; and to sell products that 

sustain our resources and environment. 

Wal–Mart has already taken steps to mitigate its greenhouse gas 

emissions and we are dedicated to making further significant 

progress. Among other things, we are committed to reducing greenhouse gas emissions at our existing facilities—that is stores, clubs, 

and distribution centers—by 20 percent by 2012, and improving 

our truck fleet efficiency by 25 percent by 2008, and 100 percent 

by 2015. 
30 

The goals we have adopted for reducing energy consumption in 

our stores and our vehicle fleets are ambitious. Wal–Mart has installed auxiliary power units, APUs, on our trucks. These APUs 

alone save 10 million gallons of diesel fuel per year. Our installed 

lighting load, the daylight harvesting systems that were referred 

to, these turn out the lights when the curtains are open. It is not 

just simply opening the curtains. You have to turn off the lights, 

too. It is 40 percent than the baseline established in the Energy 

Policy Act of 2005. Our retrofits have resulted in a 15 percent to 

20 percent reduction in our energy load and a savings to our company of about $19 million a year. 

Within only 15 months, we have developed a prototype store that 

is 20 percent more energy efficient than our existing stores. These 

stores will form the model for our future construction. We operate 

a centralized energy management system from our home office in 

Bentonville. This allows us to dial down energy usage, for example 

in the event of a load crisis, such as the one we saw in California 

several years ago, and indeed at the request of utilities in Connecticut when they ask us to for system stability. 

Just this Monday, we announced a major purchase of solar power 

which, when fully implemented, could be one of the country’s, if not 

the world’s, top 10 largest ever solar power initiatives. 

While this is only a partial list of our accomplishments, the bottom line is that we are aggressively attacking our greenhouse gas 

footprint. Our successes within Wal–Mart have led to an aggressive 

program to work with our suppliers, to wring more efficiency and 

emissions reductions from our supply chain. Through our Wal– 

Mart energy program, we have arranged for surveys of selected 

suppliers’ facilities and suggested improvements. As an example, 

our first partner in this program was a manufacturer of children’s 

clothes and underwear in Georgia called Dana Undies. Wal–Mart 

engineers went to the 65,000 square foot facility and suggested a 

number of operational and capital improvements in the areas of 

lighting and cooling. The result was a 52 percent decrease in electricity costs for that company’s operation. 

While the payback from many of these technologies are short, 

small businesses and consumers are often turned off by the up 

front cost and complexity. I would like to mention two ways we are 

addressing this. Wal–Mart has launched a nationwide campaign to 

sell 100 million compact fluorescent, or CFL, light bulbs. We are 

making the CFL more affordable to consumers, as well as helping 

educate them on the benefits of this technology. We have already 

seen sales go from less than 5 percent to 15 percent of our total 

light bulb sales, and we hope that trend continues. 

Last month, our Sam’s Clubs in Phoenix, AZ test marketed a 

lighting retrofit program specifically designed for small business 

owners. Selling through a market channel such as Sam’s, direct 

buying the technology, and adopting a community-based marketing 

approach, we hope to deliver prices that will enable small businesses to make investments in energy efficiency, reduce their operating expenses, and thus reduce their greenhouse gas emissions. In 

other words, achieve the same efficiency that Wal-Mart and other 

large companies are already harvesting. 
31 

We believe we have shown that energy savings and emissions reductions can be achieved in ways that will benefit companies and 

consumers of all shapes, sizes and incomes. Clearly, however, a 

properly designed regulatory framework could help considerably. A 

properly designed system will enable the market where real carbon 

reductions have a value, and where this could be passed back to 

those customers by using the product’s carbon value to rollback the 

technology price. 

A market-based approach under a cap and trade system that allows downstream actors to monetize carbon value offers opportunities like Wal–Mart and others to innovate and deliver more value 

to customers. We urge Congress to recognize the type of progress 

we have already begun to make by including the mechanisms such 

as a carbon credit set-aside program that would allow more players 

to harvest the value of energy efficiency in the economy. The result 

would be more emissions reductions, more energy efficiency, and 

more savings to all. 

Thank you for your time in allowing me to speak on behalf of 

Wal–Mart on this very important topic. We look forward to working 

with you. 

[The prepared statement of Mr. Stanway follows:] 

STATEMENT OF JAMES W. STANWAY, SENIOR DIRECTOR, GLOBAL SUPPLIER

INITIATIVES, WAL-MART STORES, INC. 

Chairman Lieberman, Ranking Member Warner, and distinguished Members of 

the committee: 

Wal-Mart Stores, Inc., thanks the subcommittee for its work on this important 

issue and for holding this hearing today. Wal-Mart appreciates the opportunity to 

participate in this critical discussion. 

BACKGROUND

Wal-Mart is based In Bentonville, Arkansas. Our company employs approximately 

1.3 million Associates from all 50 states and approximately 1.8 million Associates 

worldwide. Each week over 176 million customers worldwide choose to shop at WalMart, which we feel reflects the success of our dedication to providing Every Day 

Low Prices to our customers. Wal-Mart does not just operate stores, clubs, and distribution centers in communities; we take a proactive stance in community involvement on a number of Issues. 

PURPOSE OF HEARING AND WAL-MART’S ROLE

As we understand it, the purpose of today’s hearing is to discuss emerging technologies and practices for reducing greenhouse gas emissions. As the largest retail 

company in the world, the largest private consumer of electricity in the United 

States, and the owner of one of the largest private heavy-duty truck fleets in the 

country, Wal-Mart takes a keen interest in the serious risks—and opportunities— 

of global climate change. More than 2 years ago our CEO Lee Scott announced that 

Wal-Mart would make ‘‘sustainability’’ an organizing principle for the company. In 

recognizing that climate change is among the greatest issues confronting our business, our customers, and our communities, he announced three goals for our company: to be supplied 100 percent by renewable energy; to create zero waste; and to 

sell products that sustain our resources and the environment. Since that time we 

have acted rapidly to become a cleaner, greener and more sustainable company. 

A crucial part of reaching the company’s environmental goals is reducing our impact on the world’s climate. Wal-Mart already has taken steps to mitigate its greenhouse gas emissions and we are dedicated to making significant further prowess. 

Among other things, we are committed to investing approximately $500 million annually in sustainable technologies and innovations; reducing greenhouse gas emissions at our existing stores, Sam’s Clubs and distribution centers by 20 percent over 

the next 5 years; designing and opening a viable prototype that is 25–30 percent 

more efficient and wilt use 30 percent less energy; and improving our vehicle fleet’s 

efficiency by 25 percent in 3 years and 100 percent in 10 years. Just this Monday, 
32 

we announced a major purchase of solar power from three solar power providers for 

22 combined Wal-Mart stores, Sam’s Clubs and a distribution center in California 

and Hawaii. When fully implemented, the aggregate purchase could be one of the 

country’s, if not the world’s, top-10 largest ever solar power initiatives. 

This past January we announced our support of the effort by the companies and 

organizations of the U.S. Climate Action Partnership (US–CAP), and endorsed the 

group’s call for strong mandatory national policies and market-based programs for 

greenhouse gas reductions. Wal-Mart looks forward to working with Congress and 

the White House to enact meaningful legislation to slow, stop and reverse the 

growth of greenhouse gas emissions. To be clear, we take this position because we 

believe it is in the best interest of our customers, our employees, our stockholders 

and our Nation to tackle this challenge. But we also believe that with the right policies, businesses large and small—from Wal-Mart, to our suppliers, to small businesses across the country—can save. We believe this because of what we are seeing 

every day as we undertake our aggressive sustainability agenda. 

In this testimony, we will address four subjects today: (1) how Wal-Mart has succeeded in mitigating its own carbon footprint and how that has added savings to 

our customers; (2) the successes we have had working with our suppliers to increase 

efficiency and reduce emissions; (3) how we are helping small businesses and consumers save money by reducing their own carbon footprint; and (4) the elements of 

any Federal climate legislation that we think are needed to achieve the greatest 

greenhouse gas reductions for the lowest cost while ensuring benefits for customers. 

OUR OWN EFFORTS

The goats we have adopted far reducing energy consumption in our stores and our 

vehicle fleet are ambitious. However, with the remarkable innovation and dedication 

of our associates and our partners, we have found these changes to be not only 

achievable, but cost effective, and we are ahead of our own aggressive schedule. 

• With regard to our goal of a 25 percent improvement in our vehicle fleet efficiency, we are ahead of schedule. Wal-Mart has installed auxiliary power units 

(APUs) on its trucks as part of our fuel conservation policy. For individual trucks, 

we have achieved 28 percent improvement over our base 2005 truck/trailer (that improvement consists of fuel additives, aerodynamic improvements to the truck/trailer, 

weight reduction, fuel efficient tire application, and APUs). We have over half of 

that improvement installed on all 7,200 trucks (8 percent from APU, 2 percent from 

additives, 6 percent from tires). The use of the Mills alone saves 10 million gallons 

of diesel fuel and prevents 100,000 metric tons of CO2 from entering the atmosphere, 

• We have developed over the last decade what might be the most efficient lighting system in the world. We have implemented daylight harvesting, computer controlled continuous dimming, T8 lighting and other efficiency technologies in 1,000 

stores. We vary light output on our sales floor from 100 percent to 0 percent (completely off on bright sunny days) and reduce late night light levels (35 percent). In 

fact, our installed lighting load is more than 40 percent less than the baseline established in the Energy Policy Act of 2005 and our retrofits have resulted in a 15–20 

percent reduction in our energy load and a savings to the Company of about $90 

million per year. 

• Within only 15 months, we have developed and opened two new prototype 

stores that are mare than 20 percent more efficient than our existing stores. These 

stores will farm the model for future construction. 

• The EER rating of our High Efficiency HVAC units ranges between 10.8 and 

13.2, versus the industry standard of 9.0. Units are 4–17 percent more efficient than 

California’s Title 24 standard requirements. 

• We now utilize LED Lighting in all of our internally illuminated building signage far new construction (except Sam’s Clubs) and are replacing existing signs with 

LEDs. These changes represent a 70 percent increase in efficiency. 

• We recently opened a new facility in Savannah, Georgia, which included what 

was at the time the first low temperature CO2 secondary (pop refrigeration system 

in the United States. On the day of the grand opening we conducted tours of the 

facility, including detailed descriptions of the systems, to representatives from our 

competitors Target, Food Lion, Publix, and Costco. 

• In 2006 we committed to examine the packaging of every product we sell, and 

have encouraged our suppliers to reduce packaging and to use reusable or recyclable 

materials. February 1, 2007 we made our ‘‘packaging scorecard’’ available to all 

60,000 suppliers. We will improve that scorecard between now and February 1, 

2008, when it will become a factor in merchandise buying decisions. 
33 

• Wal-Mart has adopted its Plastic Sandwich BaleΤΜ program in over 3,000 

stores, a process that greatly increases the recycling of packaging plastics. In 2005, 

the company recycled over 5,734 tons of plastic significantly saving energy and reducing greenhouse gases. • In 2005 Sam’s Club partnered with NatureWorks to introduce use of PIA fresh 

cut produce packaging to replace conventional packaging, saving the equivalent of 

800,000 gallons of gasoline and reducing more than 11 million lbs. of greenhouse 

gases. • Centralized Energy Management—All U.S. stores are monitored and controlled 

from our home office in Bentonville. This allows us to dial down energy usage, for 

example, in the event of a load crisis such as the one we saw in California several 

years ago. • Wal-Mart Supercenters and Neighborhood Markets (over 2,000) capture waste 

heat from refrigeration equipment to heat water for the kitchen prep areas of the 

stores, saving 165 million BTUs per year. 

WORKING WITH OUR SUPPLIERS

The bottom line is that we are dramatically improving our greenhouse as footprint. These savings help us to fulfill our commitment to our customers to provide 

them with low prices. And our successes within Wal-Mart have led to an aggressive 

program to work with our suppliers to wring more efficiency and emissions reductions from the supply chain. Through ‘‘Wal-Mart Energy’’, we offer an energy efficiency program that can significantly lower our suppliers’ energy costs. We arrange 

for a survey of our suppliers’ facilities and suggest improvements based an technologies Wal-Mart is already using. We then use our existing supplier relationships 

and bid management expertise to arrange the lowest-cost services for the supplier. 

Wal-Marts supply chain is dispersed across all 50 states; small companies and large 

are already seeing great success. 

As an example, our first partner in this program was a manufacturer of children’s 

clothes and underwear in Georgia called Dana Undies. Like many U.S. companies, 

Dana Undies was facing challenges competing on price with competitors and pointed 

to energy costs for much of the problem. Wal-Mart engineers went to the 65,000 

square foot Dana facility in Georgia and suggested a number of operational and capital improvements in the areas of lighting and cooling. The result was a 52 percent 

decrease in energy costs. As Dana Undies CEO Steve Varon has said, the technology 

to achieve significant energy reductions exist today, ‘‘All you need is the will and 

a great partner like Wal-Mart.’’ 

WORKING WITH SMALL BUSINESSES AND HELPING CUSTOMERS SAVE ENERGY

Because of our buying power and size, we are able to invest in energy efficiency 

in a cost effective manner. For small businesses and consumers, there are often 

challenges to taking advantage of these opportunities and we are working to address 

those. In our energy related business efforts, we are looking to address two key challenges: the upfront costs of dean energy technologies and inadequate channels to 

market. 

While the payback for many of these technologies is short, small businesses and 

consumers often are turned off by the upfront costs and complexity. Below are two 

examples of how we are addressing this. 

• 18 Seconds. Wal-Mart has launched a nationwide campaign to sell 100 million 

compact fluorescent light bulbs (CFLs). Our partner GE sells CFLs to Wal-Mart in 

large numbers and we offer them to consumers. Here is where we are doing what 

we do best—offering products at everyday low prices—and we are making the CFL 

more affordable to consumers, as well as helping educate them on the benefits of 

this available technology. We are dedicating prime display space for CFLs, adding 

educational displays, educating our sates associates and creating friendly competition among stores based on CFL sales. We have already seen sales go from less than 

5 percent to 15 percent. 

• Energy Efficiency for Small Businesses. Last month, our Sam’s Clubs in Phoenix, Arizona test marketed a lighting retrofit program designed for small business 

owners. Selling through a market channel such as Sam’s, direct buying the technology and adopting a community based marketing approach, we hope to deliver 

prices that enable small businesses to make investments in energy efficiency, reduce 

their operating expenses and reduce greenhouse gas emissions. Hughes Performance, a small manufacturer of transmissions for dragsters and race cars in Phoenix 

was our first customer. After working with our program CEO Jim Hughes said, 

‘‘The program was great because as a small business owner you get so caught up 

in the daily activities of running a company that this kind of improvement doesn’t 
34 

even cross your mind. I didn’t realize how much small efficiencies could add up and 

improve my bottom line. Now I expect to save on my electric bill each month, and 

as a small business owner, every bit helps.’’ 

Our small business program is also meant to overcome the challenge of getting 

efficiency technologies to market. Many traditional Energy Service Companies focus 

on Large corporations, since the transaction costs of pursuing smaller entities prohibit downstream sales. Utilities have also undertaken to market energy efficiency 

but sometimes operate in a regulated environment that discourages such efforts and 

they often have a limited relationship or brand with their customer base. Non-traditional energy efficiency providers can greatly reduce these marketing and sales 

costs. We are proving this model. 

DESIGNING A REGULATORY PROGRAM TO HELP CONSUMERS AND SMALL BUSINESSES

We believe we have shown that energy savings and emissions reductions can be 

achieved in ways that will benefit companies and consumers of all shapes, sizes and 

incomes. Clearly, however, a properly designed regulatory framework could help 

considerably. 

In a greenhouse gas regulators/regime, the value of energy savings will include 

both the savings in the cost of energy and the value of the greenhouse gas emissions 

avoided. A properly designed system will enable a market where real carbon reductions have a value and this value could be monetized and passed back to those customers by using the products’ ‘‘carbon value’’ to rollback the technology price. Companies like Wal-Mart are in an excellent position to add that value into the product 

delivery and value chain and use the competitive pressures of the market to pass 

that value an to consumers in the form of reduced costs. We believe that making 

that carbon value available downstream will increase efficiency and speed to market. As with any business sector, the more economic opportunity, the more market 

entrants, the more innovation and an acceleration of products to market occurs. A 

regulatory regime that creates a robust carbon market can drive innovation—both 

in technological and marketing fields—which U.S. companies could excel at in both 

domestic and global markets. 

A market-based approach under a cap and trade system that allows downstream 

actors to monetize carbon value offers opportunities for businesses like Wal-Mart to 

innovate and deliver more value to customers. The utility sector will require many 

years to decarbonize its electricity production, but that does not mean other sectors 

of the economy—such as the end user—cannot economically reduce consumption and 

effectively ‘‘buy time’’ for the new low or no carbon electricity sources to be built. 

We urge the Congress to recognize the type of progress that we have already begun 

to make by including a mechanism—such as a carbon credit set-aside program— 

that would allow more players to ‘‘mine’’ the value of energy efficiency. The result 

will be more emissions reductions, more energy efficiency and more savings to all. 

CONCLUSION

At Wal-Mart, we are known for saving our customers money, and we have been 

successful because we innovate our way to savings. We believe that the challenge 

of global warming presents just another opportunity for innovation and the creation 

of value. We support Congress’ efforts to craft climate legislation because we believe—and we have shown—that reducing emissions and saving energy will be profitable and that the benefits can be shared by all. 

Thank you for your time in allowing me to speak on behalf of Wal-Mart on this 

very important topic. We look forward to working with you to effectively and constructively address these issues. 

RESPONSES BY JAMES W. STANWAY TO ADDITIONAL QUESTIONS FROM

SENATOR LAUTENBERG

Question 1. Last year, CEO Lee Scott stated a goal of reducing Wal-Mart’s greenhouse emissions by 20 percent and reducing energy costs by 30 percent in 7 years. 

How confident are you that you can meet that goal, and which ‘‘green building’’ 

technologies have yielded the highest emissions reduction and cost savings? 

Response. We have begun to implement technologies to achieve our goal and have 

seen great progress. Because we are truly attempting unprecedented energy and 

emission-saving changes, we do not yet know if all the technologies we have planned 

to develop and deploy will work. Nevertheless, we fully intend to meet our stretch 

goals. The best results so far have been in the area of lighting technologies. Simply 

upgrading to the latest fluorescent technologies and adding new controls, for exam-
35 

ple, has proved very successful. These controls range from motion sensors to daylight harvesting systems which turn lights off on sunny days when integrated with 

skylights/windows. LED lighting is evolving quickly and we are adopting this technology for use in our refrigerated food cases. We expect further LED product evolution to enable this technology to be applied more widely. Variable speed drives applied to our refrigeration systems and white roofs are also delivering good results. 

Question 2. The work that you are starting to undertake in improving energy efficiency in your supply chain is very important. You have reportedly helped one of 

your suppliers reduce electricity bills by 60 percent by using simple efficient lighting 

technology. When your suppliers make these improvements, does Wal-Mart keep the 

energy savings or does the supplier? Does Wal-Mart re-negotiate the price of the 

goods based on these savings to the supplier? 

Response. The supplier retains the energy savings and Wal-Mart does not re-negotiate the price of goods based on these initiatives. 

Question 3. If there was a cap-and-trade system in place for carbon dioxide, would 

you require your supply chain to provide your company with the credit for the emissions reductions? Is Wal-Mart considering doing this? 

Response. We would only negotiate for the ‘GHG credits’ if we invested or were 

otherwise involved in creating the efficiency gain. We do intend to do this by selling 

technology to our supply chain at prices they could not achieve on their own—in 

other words bulk buying and deployment of energy efficient technology within the 

Wal-Mart supply chain. If the GHG value was assigned to Wal-Mart then the cost 

of the technology could be lowered—it simply becomes another source of economic 

value. Some suppliers may wish to retain the GHG value but many would not have 

the scale of operations to effectively harvest the financial value of these credits 

under any foreseeable regulatory regime. Just as we would bulk buy technology for 

the supply chain—we would bulk sell the GHG credits if such a mechanism existed. 

We believe that by adopting a supply chain approach to energy technology we can 

overcome a profound market failure currently existing, i.e., the inability of energy 

efficient technologies to be sold and deployed without significant transaction costs. 

Senator LIEBERMAN. Thanks, Mr. Stanway. Again, and I know 

we are going to hear it from our last two witnesses, but you have 

told a story of good business practices, innovation to make the business more efficient and profitable, but also tremendous what I call 

corporate citizenship to deal with the problem. I thank you for it. 

Mr. STANWAY. Thank you. 

Senator LIEBERMAN. Michael Rencheck is next, senior vice president for Engineering, Projects and Field Services, American Electric Power. He apparently has something to do with the State of 

Ohio. 

Mr. RENCHECK. That is correct. 

STATEMENT OF MICHAEL W. RENCHECK, SENIOR VICE PRESIDENT FOR ENGINEERING, PROJECTS AND FIELD SERVICES, 

AMERICAN ELECTRIC POWER 

Mr. RENCHECK. Good morning, Mr. Chairman and members of 

the committee. Thank you for inviting me to participate in today’s 

hearing. 

American Electric Power is one of the Nation’s largest electric 

utilities with more than 5 million retail customers in 11 States. We 

are also one of the Nation’s largest power producers, with over 

38,000 megawatts of generating capacity with a very diverse mix 

of generating assets. But of particular note today, AEP is one of the 

largest coal-fired electric generators in the United States and we 

have implemented a portfolio of voluntary reductions to avoid and 

offset greenhouse gases during the past decade. 

Coal generates over 50 percent of the electricity used in the 

United States, and is extensively used worldwide. As the demand 

for electricity increases significantly, coal will increase as well. In 
36 

the future, coal-fired electric generation must be zero emission or 

close to it. 

This will be achieved through new technologies that are being 

developed today, but are not yet proven or commercially available. 

Like most companies in our sector, AEP needs new generation. We 

are investing in new clean coal technology that will enable AEP 

and our industry to meet the challenge of reducing greenhouse gas 

emissions for the long term. This includes plans to build two new 

integrated gasification combined cycle plants, IGCCs, and two state 

of the art ultrasupercritical coal plants. These will be the first new 

generation of ultrasupercritical coal plants in the United States. 

AEP has also taken the lead in commercialization of carbon capture technology for use on new generation, and more importantly, 

for retrofit on existing generation. We signed a memorandum of understanding with Alstom for post-combustion capture technology, 

using Alstom’s chilled ammonia system. Starting with the commercial performance verification project in mid to late 2008 in West 

Virginia, a project that will also include storage in deep geological 

sequestration in a saline aquifer, we will move to the first commercial size project at one of our 450 megawatt coal-fired units, our 

Northeastern Plant, in Oklahoma by late 2011. This will capture 

about 1.5 million metric tons of CO2 a year, which will be primarily 

used for enhanced oil recovery. 

We are also working with Babcock and Wilcox to take its oxycoal combustion technology from the drawing board to commercial 

scale activity in the next decade. 

AEP is very comfortable leading technology. We have a long and 

impressive list of technological firsts that we have achieved during 

our first 100 years. But we have identified one very important caveat during our century of technological achievement and engineering excellence. Proving technology to be commercially viable and 

proving it out for wide scale commercial use are two different 

things. It takes time to develop off the shelf commercial technology 

offerings. 

AEP is not calling for indefinite delay in the enactment of mandatory climate change legislation until the advanced technology 

such as carbon capture and storage is developed. However, as the 

requirements become more stringent during the next 10 years to 20 

years, and we move beyond the ability of current technology to deliver those reductions, it is essential that the requirements for 

deeper reductions allow sufficient time for the demonstration and 

commercialization of advanced technologies. 

How can you help? It is also important to establish public funding, as well as incentives for private funding, for the development 

of commercially viable technology solutions, as well as providing 

the legal and the regulatory structures to facilitate their development. AEP believes that IGCC, advanced coal and carbon capture 

technologies, need to be advanced. But the building of an IGCC and 

the timely commercial development of carbon capture and sequestration technologies will require additional public funding. 

AEP and others in our sector have already invested heavily in 

the research and the early deployment of technologies that may be 

commercially viable at some point in the future to address greenhouse gas emissions. For this reason, separate investment tax cred-
37 

its are needed to facilitate both the construction of IGCC, advanced 

coal technologies, and carbon capture and sequestration technologies. 

Of significance here, the final decider on the type of power generation that can be built in many States is the public utility commission of that State. The commission determines how or if a utility can recover the costs of new generation or retrofits of existing 

generation. How do you reconcile a Federal mandate for expensive 

greenhouse gas mitigation, with States that desire to cap energy 

costs? The utilities and their shareholders remain caught in the 

middle and need your help to research, develop and build this type 

of generation. 

American industry has long been staffed by excellent problem 

solvers. I am confident we will be able to develop technologies to 

address emissions of greenhouse gases in a more efficient manner. 

We have the brain power. We need the time, funding assistance, 

and legal and regulatory support. 

Thank you very much for allowing me to participate today. 

[The prepared statement of Mr. Rencheck follows:] 

STATEMENT OF MICHAEL W. RENCHECK, SENIOR VICE PRESIDENT FOR ENGINEERING, PROJECTS AND FIELD SERVICES, AMERICAN ELECTRIC POWER

Good morning Mr. Chairman and distinguished members of the Senate Committee on Environment and Public Works Subcommittee on Private Sector and Consumer Solutions to Global Warming. 

Thank you for inviting me here today. Thank you for this opportunity to offer the 

views of American Electric Power (AEP) and for soliciting the views of our industry 

and others on climate change technologies. 

My name is Mike Rencheck, Senior Vice President-Engineering Projects & Field 

Services of American Electric Power (AEP). Headquartered in Columbus, Ohio, we 

are one of the Nation’s largest electricity generators—with over 36,000 megawatts 

of generating capacity—and serve more than five million retail consumers in 11 

states in the Midwest and south central regions of our Nation. AEP’s generating 

fleet employs diverse sources of fuel—including coal, nuclear, hydroelectric, natural 

gas, and oil and wind power. But of particular importance for the committee members here today, AEP uses more coal than any other electricity generator in the 

Western hemisphere. 

AEP’S TECHNOLOGY DEVELOPMENT

Over the last 100 years, AEP has been an industry leader in developing and deploying new technologies beginning with the first high voltage transmission lines at 

345 kilovolt (kV) and 765kV to new and more efficient coal power plants starting 

with the large central station power plant progressing to supercritical and 

ultrasupercritical power plants. We are continuing that today. We implemented over 

11 selective catalytic reactors (SCRs), 9 Flue Gas Desulphurication units with others 

currently under construction, and we are a leader in developing and deploying mercury capture and monitoring technology. In addition, we continue to invest in new 

clean coal technology plants and R&D that will enable AEP and our industry to 

meet the challenge of significantly reducing GHG emissions in future years. For example, AEP is working to build two new generating plants using Integrated Gasification Combined Cycle (IGCC) technology in Ohio and West Virginia, as well as two 

highly efficient new generating plants using the most advanced (e.g. 

ultrasupercrifical) pulverized coal combustion technology in Arkansas and Oklahoma. We are also supporting a leading role in the FutureGen project, which once 

completed, will be the world’s first near-zero CO2 emitting commercial scale coalfueled power plant. We are also working to progress specific carbon capture and 

storage technology. 

AEP’S MAJOR NEW INITIATIVE TO REDUCE GHG EMISSIONS

Just this past month, AEP announced several major new initiatives to reduce 

AEP’s GHG emissions and to advance the commercial application of carbon capture 

and storage technology and Oxy-coal combustion. Our company has been advancing 
38 

technology for the electric utility industry for more than 100 years. AEP’s recent announcement continues to build upon this heritage. Technology development needs 

are often cited as an excuse for inaction. We see these needs as opportunities for 

action. 

AEP has signed a memorandum of understanding (MOU) with Alstom, a worldwide leader in equipment and services for power generation, for post-combustion 

carbon capture technology using Alstom’s chilled ammonia system. It will be installed at our 1300-megawatt Mountaineer Plant in New Haven, W.Va., as a ‘‘30- 

megawatt (thermal) commercial performance verification’’ project in mid- to late2008 and it will capture go to 100,000 metric tons of carbon dioxide (CO2) per year— 

Once the CO2 is captured, we will store it. The Mountaineer site has an existing 

deep saline aquifer injection well previously developed in conjunction with DOE and 

Battelle. Working with Battelle and with continued DOE support, we will use this 

well (and develop others) to store and further study CO2 injection into deep geological formations. 

Following the completion of commercial verification at Mountaineer, AEP plans to 

install Alstom’s system on one of the 450-megawatt coal-fired units at its Northeastern Plant in Oologah, Oklahoma, as a first-of-a-kind commercial demonstration. 

The system is expected to be operational at Northeastern Plant in late 2011, capturing about 1.5 million metric tons of CO2 a year. The CO2 captured at Northeastern Plant will also be used for enhanced oil recovery. 

AEP has also signed an MOU with Babcock and Wilcox to pursue the development of Oxy-coal combustion that uses oxygen in lieu of air for combustion, which 

forms a concentrated CO2 post combustion gas that can be stored without additional 

post combustion capture processes. AEP will work with B&W on a ‘‘30-megawatt 

(thermal) pilot project in mid-2007 then use the results to study the feasibility of 

a scale 100–200MW demonstration. The CO2 from the demonstration project would 

be captured and stored in a deep saline or enhanced oil recovery application. 

In March, AEP voluntarily committed to achieve an additional five million tons 

of GHG reductions annually beginning in 2011. We will accomplish these reductions 

through a new AEP initiative that will add another 1000 Mw of purchased wind 

power into our system, substantially increase our forestry investments (in addition 

to the 62 million trees we have planted to date), as well as invest in domestic offsets, such as methane capture from agriculture, mines and landfills. 

AEP PERSPECTIVES ON A FEDERAL GHG REDUCTION PROGRAM

While AEP has done much, and will do much more, to mitigate GHG emissions 

from its existing sources, we also support the adoption of an economy-wide cap-andtrade type GHG reduction program that is well thought-out, achievable, and reasonable. Although today I intend to focus on the need for the development and deployment of commercially viable technologies to address climate change and not on the 

specific policies issues that must be addressed, AEP believes that legislation can be 

crafted that does not impede AEP’s ability to provide reliable, reasonably priced 

electricity to support the economic well-being of our customers, and includes mechanisms that foster international participation and avoid creating inequities and competitive issues that would harm the U.S. economy. AEP supports reasonable legislation, and is not calling for an indefinite delay until advanced technology such as carbon capture and storage (CCS) is developed. However, as the requirements become 

more stringent during the next 10 to 20 years, and we move beyond the ability of 

current technology to deliver those reductions, it is essential that requirements for 

deeper inductions coincide with the commercialization of advanced technologies. 

PHASED-IN TIMING AND GRADUALLY INCREASING LEVEL OF REDUCTIONS CONSISTENT

WITH TECHNOLOGY DEVELOPMENT THAT IS FACILITATED BY PUBLIC FUNDING

As a practical matter, implementing climate legislation is a complex undertaking 

that will require procedures for measuring, verifying and accounting for GHG emissions, as well as for designing efficient administration and enforcement procedures 

applicable to all sectors of our economy. Only a pragmatic approach with achievable 

targets, supported by commercial technology, and reasonable timetables—that does 

not require too many reductions within too short a time period—will succeed. Past 

experience with the Clean Air Act Amendments of 1990 (which involved a vastly 

simpler SO2 allowance trading system for just the electric power sector), strongly 

suggests that a minimum of 5 years will be necessary to have the administrative 

mechanisms in place for full implementation of the initial GHG emission targets. 

AEP also believes that the level of emissions reductions and timing of those reductions under a Federal mandate must keep pace with developing technologies for reducing GHG emissions from new and existing sources. The technologies for effective 
39 

carbon capture and storage from coal-fired facilities are developing, but are not commercially engineered to meet production needs, and cannot be artificially accelerated 

through unrealistic reduction mandates. 

While AEP and other companies have successfully lowered their average emissions and emission rates during this decade, further substantial reductions will require the wide-scale commercial availability of new clean coal technologies. AEP believes that the electric power industry can potentially manage much of the expected 

economic (and CO2 emissions) growth over the course of the next decade (2010– 

2020) through aggressively deploying renewable energy, further gains in supply and 

demand-side energy efficiency, and new emission offset projects. As stated above, 

AEP supports reasonable legislation, and is riot calling for an indefinite delay of 

GHG reduction obligations until advanced clean coal technology is developed. However, as the reduction requirements become more stringent, and move beyond the 

ability of current technologies to deliver those reductions, it is important that those 

stringent requirements coincide with the commercialization of advanced technology. 

This includes the next generation of low- and zero-emitting technologies. In the case 

of coal, this means demonstration and full-scale deployment of new IGCC units with 

carbon capture, new ultrasupercritical or oxy-coal plants with carbon capture and 

storage, as well as broad deployment of retrofit technologies for carbon capture and 

storage at existing coal plants. The next generation of nuclear technology will also 

play an important role in meeting significant reduction targets. 

However, today’s costs of new clean coal technologies with carbon capture and 

storage are much more expensive than current coal-fired technologies. For example, 

carbon capture and storage using current inhibited monoethanolamine (MEA) technology is expected to increase the cost of electricity from a new coal fired power 

plant by about 60–70 percent and even the newer chilled ammonia carbon capture 

technology we plan to deploy on a commercial-sized scale by 2012 at one of our existing coal-fired units will result in significantly higher costs. It is only through the 

steady and judicious advancement of these applications during the course of the 

next decade that we can start to bring these costs down, in order to avoid substantial electricity rate shocks and undue harm to the U.S. economy. 

Simply put, our Nation cannot wait a decade or longer to begin the development 

and commercialization of IGCC and carbon capture and sequestration technologies. 

The need for new electric generating capacity is upon us now. The need is real and 

it is pressing. Unfortunately, the deployment of advanced coal electric generation 

technology, such as IGCC, is expensive now and will only become more so if development is postponed. 

AEP believes that IGCC is the best commercially ready technology for the future 

inclusion of CCS but that the timely development of commercially viable CCS technologies will require additional public funding. Our IGCC plants will incorporate the 

space and layout for the addition of component to capture CO2 for sequestration, but 

AEP does not plan to incorporate CCS equipment until after the plants are operating and the technology is demonstrated and proven. 

Our IGCC plans will be among the earliest, if not the first, deployments of largescale IGCC technology. The cost of constructing these plants will be high, resulting 

in a cost of generated electricity that would be at least twenty percent greater than 

that from conventional pulverized goal (PC) combustion technology. As more plants 

are built, the costs of construction are expected to come into line with the cost of 

PC plants. 

To help bridge the cost gap and move IGCC technology down the cost curve, there 

is a need for continuation and expansion of the advanced coal project tax credits 

that were introduced by the Energy Policy Act of 2005. All of the available tax credits for IGCC projects using bituminous coal were allocated to only two projects during the initial allocation round in 2006. More IGCC plants are needed to facilitate 

this technology. AEP believes an additional $1 billion of section 48A (of the Internal 

Revenue Code) tax credits are needed, with the bulk of that dedicated to IGCC 

projects without regard to coal type. 

Along with an increase in the amount of the credits, changes are needed in the 

manner in which the credits are allocated. Advanced coal project credits should be 

allocated based on net generating capacity and not based upon the estimated gross 

nameplate generating capacity of projects. Allocation based upon gross, rather than 

net, generating capacity potentially rewards less efficient projects, which is antithetical to the purpose of advanced coal project tax incentives. AEP also believes that 

the Secretary of Energy should be delegated a significant role in the selection of 

IGCC projects that will receive tax credits. 

On a critical note, the inclusion of carbon capture and sequestration equipment 

must not be a prerequisite for the allocation of these additional tax credits due to 

the urgent need for new electric generating capacity in the U.S. AEP also believes 
40 

that this requirement is premature and self-defeating, since the technology to capture and sequester a significant portion of an IGCC project’s CO2 does not currently 

exist. The addition of yet-to-be-developed carbon caption and sequestration technology to an IGCC project would cause the projected cost of a project to increase 

significantly, making it that much more difficult for a public utility commission to 

approve. 

AEP also believes that additional tax incentives are needed to spur the development and deployment of greenhouse gas capture and sequestration equipment for 

all types of coal fired generation. We suggest that additional tax credits be established to offset a significant portion of the incremental cost of capturing and sequestering CO2. These incentives could be structured partly as an investment tax credit, 

similar to that in section 48A (of the Internal Revenue Code), to cover the upfront 

capital cost, and partly as a production tax credit to cover the associated operating 

costs. 

In summary, AEP recommends a pragmatic approach for phasing in GHG reductions through a cap-and-trade program coincident with developing technologies to 

support these reductions. The emissions cap should be reasonable and achievable in 

the early years of the program, the cap should be set at levels that slow the increase 

in GHG emissions. Allowing for moderate emissions increases over the first decade 

is critical due to limitations on currently available GHG control options and technologies. The stringency of the cap would increase over time-first stabilizing emissions and then requiring a gradual, long-term decline in emissions levels. The cap 

levels should be set to reflect projected advances in new carbon-saving technologies, 

which advances AEP believes can be facilitated by Federal incentives. In the case 

of the electric power sector, additional time is necessary to allow for the deployment 

of new nuclear plants as well as the demonstration and deployment of commercialscale gasification and advanced combustion facilities fully integrated with technologies for CO2 capture and storage. Substantial GHG reductions should not be required until after the 2020 timeframe. 

Requiring much deeper reductions sooner would very likely harm the U.S. economy. For AEP and the electric sector, the only currently available strategy to 

achieve substantial absolute CO2 reductions prior to 2020 without the full-scale deployment of new technologies will inevitably require much greater use of natural 

gas, in lieu of coal-fueled electricity, with the undesirable effects of higher natural 

gas prices and even tighter supplies. 

TECHNOLOGY IS THE ANSWER TO CLIMATE CHANGE

The primary human-induced cause of global warming is the emission of CO2 arising from the burning of fossil fuels. Put simply, our primary contribution to climate 

change is also what drives the global economic engine. 

Changing consumer behavior by buying efficient appliances and cars, by driving 

less, and by similar steps, is helping to reduce the growth of GHG emissions. However, these steps will never be nearly enough to significantly reduce CO2 emissions 

from the burning of coal, oil and natural gas. Such incremental steps, while important, will never be sufficient to stabilize greenhouse gases concentrations in the atmosphere at a level that is believed to be capable of preventing dangerous humaninduced interference with the climate system, as called for in the U.S.-approved 

U.N. Framework Convention on Climate Change (Rio agreement). 

For that, we need major technological advances to effectively capture and store 

CO2. The Congress and indeed all Americans must come to recognize the gigantic 

undertaking and significant sacrifices that this enterprise is likely to require. It is 

unrealistic to assume, and wrong to argue, that the market will magically respond 

simply by the imposition of severe caps on CO2 emissions. The result will not be 

a positive response by the market, but rather a severe impact on the economy. Not 

when what we are talking about, on a large scale, is the capture and geologic storage of billions and billions of tons of CO2 with technologies that have not yet been 

proven anywhere in the world. 

CCS should not be mandated until and unless it has been demonstrated to be effective and the costs have significantly dropped so that it becomes commercially engineered and available on a widespread basis. Until that threshold is met, it would 

be technologically unrealistic and economically unacceptable to require the widespread installation of carbon capture equipment. The use of deep saline geologic formations as the primary long-term geologic formations for CO2 storage has not yet 

been sufficiently demonstrated. There are no national standards for permitting such 

storage reservoirs; there are no widely accepted monitoring protocols; and the standards for liability are unknown (and whether Federal or state laws would apply), as 

well as who owns the rights to these deep geologic reservoirs remains a question. 
41 

Underscoring these realities, industrial insurance companies point to a lack of scientific data on CO2 storage as one reason they are disinclined to insure early 

projects. In a nutshell, the institutional infrastructure to support CO2 storage does 

not yet exist and will require years to develop. In addition, application of today’s 

CO2 capture technology would significantly increase the cost of an IGCC or a new 

efficient pulverized coal plant, calling into serious question regulatory approval for 

the costs of such a plant by state regulators. Further, recent studies sponsored by 

the Electric Power Research Institute (EPRI) suggest that application of today’s CO2

capture technology would increase the cost of electricity from an IGCC plant by up 

to 50 percent, and boost the cost of electricity from a conventional pulverized coal 

plant by up to 60–70 percent, which would again jeopardize state regulatory approval for the costs of such plants. 

Despite these uncertainties, I believe that we must aggressively explore the viability of this technology in several first-of-a-kind commercial projects. AEP is committed to help lead the way, and to show how this can be done. For example, as 

described earlier in this testimony, AEP will install carbon capture controls on two 

existing coal-fired power plants, the first commercial use of this technology, as part 

of our comprehensive strategy to reduce, avoid or offset GHG emissions. 

AEP is also building two state-of-the-art advanced ultrasupercritical power plants 

in Oklahoma and Arkansas. These will be the first of the new generation of 

ultrasupercritical plants in the United States. 

AEP is also advancing the development of IGCC technology. IGCC represents a 

major breakthrough in our work to improve the environmental performance of coalbased electric power generation. AEP is in the process of permitting and designing 

two of the earliest commercial scale IGCC plants in the Nation. Construction of the 

IGCC plants will start once traditional rate recovery is approved. 

IGCC technology integrates two proven processes—coal gasification and combined 

cycle power generation—to convert coal into electricity more efficiently and cleanly 

than any existing uncontrolled power plants can. Not only is it cleaner and more 

efficient than today’s installed power plants, but IGCC has the potential to be retrofitted in the future for carbon capture at a lower capital cost and with less of an 

energy penalty than traditional power plant technologies, but only after the technology has been developed and proven. 

AEP is also a founding member of FutureGen, a groundbreaking public-private 

collaboration that aims squarely at making near-zero-emissions coal-based energy a 

reality. FutureGen is a $1.5 billion, 10-year research and demonstration project. It 

is on track to create the world’s first coal-fueled, near-zero emission electricity and 

hydrogen plant with the capability to capture and sequester at least 90 percent of 

its carbon dioxide emissions. 

As an R&D plant, FutureGen will stretch—and indeed create—the technology envelope. Within the context of our fight to combat global climate change, FutureGen 

has a truly profound mission—to validate the cost and performance baselines of a 

fully integrated, near zero-emission coal-fueled power plant. 

The design of the FutureGen plant is already underway, and we are making great 

progress. The plant will be on-line early in the next decade. By the latter part of 

that decade, following on the advancements demonstrated by AEP, FutureGen and 

other projects, CCS technology should become a commercial reality. 

It is when these technologies are commercially demonstrated, and only then, that 

commercial orders will be placed on a widespread basis to implement CCS at coalfueled power plants. That is, roughly around 2020. Widespread deployment assumes 

that a host of other important issues have been resolved, and there is governmental 

and public acceptance of CCS as the proven and safe technology that we now believe 

it to be. AEP supports rapid action on climate change including the enactment of 

well thought-out and achievable legislation so that our Nation can get started on 

dealing with climate change. However, the complete transformation of the U.S. electricity system will take time, and we can’t put policy ahead of the availability of 

cost-effective technology. The development of technology must coincide with any increase in the stringency of the program. 

What will happen if the Congress does the opposite, and mandates deep reductions in the absence of a proven, viable technology? It is the proverbial road of good 

intentions, and only dangerous consequences can follow. The most immediate would 

be a dramatic—and very likely costly—increase in the use and price of natural gas 

by the utility sector, since there would be no other identifiable alternative. This 

would have significant adverse impacts on consumers and workers by driving up the 

cost of gas for home heating and cooking, and would further increase costs to any 

industry dependent upon natural gas as a feedstock, such as chemicals and agriculture with a further exporting of jobs overseas. 
42 

A huge challenge that our society faces over the remainder of this century is how 

we will reduce the release of GHG emissions from fossil fuels. This will require 

nothing less than the complete reengineering of the entire global energy system over 

the next century. The magnitude of this task is comparable to the industrial revolution, but for this revolution to be successful, it must stimulate new technologies and 

new behaviors in all major sectors of the economy. The benefits of projects like 

FutureGen and the ones AEP is pursuing will apply to all countries blessed with 

an abundance of coal, not only the United States but also Nations like China and 

India. 

In the end, the only sure path to stabilizing GHG concentrations over the long 

term is through the development and utilization of advanced technologies. And we 

must do more than simply call for it. Our Nation must prepare, inspire, guide, and 

support our citizens and the very best and the brightest of our engineers and scientists; private industry must step up and start to construct the first commercial 

plants; and our country must devote adequate financial and technological resources 

to this enormous challenge. AEP is committed to being a part of this important process, and to helping you achieve the best outcome at the most reasonable cost and 

timelines possible. Thank you again for this opportunity to share these views with 

you. 
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BACKGROUND: AMERICAN ELECTRIC POWER’S ACTIONS TO ADDRESS

CLIMATE CHANGE

GHG REDUCTION COMMITMENT

American Electric Power (AEP) was the first and largest U.S. utility to join the 

Chicago Climate Exchange (cop and make a legally binding commitment to gradually reduce or offset its greenhouse gas emissions to 6 percent below the average 

of 1998–2001 emission levels by 2010. 

As a founding member of CCX, AEP committed in 2003 to reduce or offset its 

emissions gradually to 4 percent below the average of 1998–2001 emission levels by 

2006 (1 percent reduction in 2003, 2 percent in 2004, 3 percent in 2005 and 4 percent in 2006). In August 2005, AEP expanded and extended its commitment to a 

6 percent reduction below the same baseline by 2010 (4.25 percent in 2007, 4.5 percent in 2008, 5 percent in 2009 and 6 percent in 2010). Through this commitment, 

AEP expects to reduce or offset approximately 46 million metric tons of greenhouse 

gas emissions. 

OPERATIONAL IMPROVEMENTS

AEP has been able to reduce its carbon dioxide (CO2) emission by improving plant 

efficiency for its fossil-fueled plants through routine maintenance and investments 

like turbine blade enhancements (installing new turbine blades) and steam path replacements that improve the overall heat rate of a plant and, in turn, reduce CO2

emissions. A one-percent improvement in AEP’s overall fleet efficiency can reduce 

the company’s greenhouse gas emissions by 2 million metric tons per year. 

AEP has also reduced its CO2 emissions by improving the performance and availability of its nuclear generation. AEP’s D.C. Cook Nuclear Plant in Michigan set 

plant records for generation and capacity factor in 2005. The plant had a capacity 

factor (energy generated as compared to the maximum possible) of 96.8 percent in 

2005 and generated 17,471 gigawatt-hours (GWH) of electricity. Additionally, AEP 

will invest $45 million to replace turbine motors in one unit at D.C. Cook in 2006, 

which will increase that unit’s output by 41 megawatts. 

As a member of the U.S. EPA’s Sulfur Hexafluoride (SF6) Emission Reduction 

Partnership for Electric Power Systems, AEP has significantly reduced emissions of 

SF6, an extremely potent greenhouse gas, from 1999 levels of 19,778 pounds (a leakage rate of 10 percent) to 2004 emissions of 1,962 pounds (a leakage rate of 0.5 percent). 

MANAGING FORESTS AND AGRICULTURAL LANDS FOR CARBON SEQUESTRATION

To reduce carbon dioxide (CO2) concentrations in the global atmosphere, AEP has 

invested more than $27 million in terrestrial sequestration projects designed to conserve and reforest sensitive areas and offset more than 20 million metric tons of 

CO2 over the next 40 years. These projects include protecting nearly 4 million acres 

of threatened rainforest in Bolivia, restoring and protecting 20,000 acres of degraded 

or deforested tropical Atlantic rainforest in Brazil, reforesting nearly 10,000 acres 

of the Mississippi River Valley in Louisiana with bottomland hardwoods, restoring 

and protecting forest areas in the Sierra Madres of Guatemala, and planting trees 

on 23,000 acres of company-owned land. 

DEPLOYING TECHNOLOGY FOR CLEAN-COAL GENERATION

AEP is focused on developing and deploying new techeology that will reduce the 

emissions, including greenhouse gas emissions, of future coal-based power generation. AEP announced in August 2004 its plans to build a commercial-scale Integrated Gasification Combined Cycle (IGCC) plants to demonstrate the viability of 

this technology for future use of coal in generating electricity. AEP has filed for regulatory approval in Ohio and West Virginia to build a 629-megawatt IGCC plant 

in each of these states. The plants are scheduled to be operational in the 2010 to 

2011 timeframe and will be designed to accommodate retrofit of technology to capture and sequester CO2 emissions. 

DEVELOPING TECHNOLOGY FOR CO2 CAPTURE AND STORAGE

AEP’s Mountaineer Plant in New Haven, W.Va., is the site of a $4.2 million carbon sequestration research project funded by the U.S. Department of Energy, the 

Ohio Coal Development Office, and a consortium of public and private sector participants. Scientists from Battelle Memorial Institute lead this climate change mitigation research project, which is designed to obtain data required to better understand 
49 

and test the capability of deep saline aquifers for storage of carbon dioxide emissions from power plants. 

AEP is a member of the FutureGen Alliance, who, along with the Department of 

Energy, will build ‘‘FutureGen,’’ a $1 billion, near-zero emission plant to produce 

electricity and hydrogen from coal while capturing and disposing of carbon dioxide 

in geologic formations. 

Additionally. AEP funds research coordinated by the Massachusetts Institute of 

Technology Energy Laboratory and the Electric Power Research Institute that is 

evaluating the environmental impacts, technological approaches, and economic 

issues associated with carbon sequestration. The MIT research specifically focuses 

on efforts to better understand and reduce the cost of carbon separation and sequestration. 

RENEWABLE ENERGY AND CLEAN POWER

AEP strongly supports increased renewable energy sources to help meet our Nation’s energy needs. AEP is one of the larger generators and distributors of wind 

energy in the United States, operating 311 megawatts (MW) of wind generation in 

Texas. The company also purchases and distributes an additional 373.5 megawatts 

of wind generation from wind facilities in Oklahoma and Texas. Additionally, AEP 

operates 2,285 megawatts of nuclear generation and 884 megawatts of hydro and 

pumped storage generation. 

More than 125 schools participate in AEP’s ‘‘Learning From Light’’ and ‘‘Watts on 

Schools’’ programs. Through these programs, ALE partners with learning institutions to install 1 kW solar photovoltaic systems, and uses these systems to track 

energy use and demonstrate how solar energy is a part of the total energy mix. 

Similarly, AEP’s ‘‘Learning From Wind’’ program installs small-scale wind turbines 

to provide wind power education and renewable energy research at educational institutions. 

BIOMASS ENERGY

Until the company sold the plants in 2004, AEP co-fired biomass in 4,000 MW 

of coal-based power generation in the United Kingdom (Fiddler’s Ferry and Ferry 

Bridge). AEP has been evaluating and testing biomass co-firing for its smaller coalfired power plants in the United States to evaluate potential reductions in CO2

emission levels. 

ENERGY CONSERVATION AND ENERGY EFFICIENCY

AEP is implementing ‘‘Energy Efficiency Plans’’ to offset 10 percent of the anneal 

energy demand growth in its Texas service territory. In 2003 alone, AEP invested 

more than $8 million to achieve over 47 million kilowatt-hours (kWH) of reductions 

from installation of energy efficiency measures in customers’ homes and businesses. 

Total investments for the 4-year program will exceed $43 million, achieving more 

than 247 million kWh of energy efficiency gains. 

2005 EPA CLIMATE PROTECTION AWARD

In May 2005, the EPA selected AEP to receive a 2005 Climate Protection Award 

for demonstrating ingenuity, leadership and public purpose in its efforts to reduce 

greenhouse gases. EPA began the Climate Protection Awards program in 1998 to 

recognize outstanding efforts to project the earth’s climate. 

SUMMARY

American Electric Power (AEP) is one of the Nation’s largest electricity generators 

with over 5 million retail consumers in 11 states. AEP has a diverse generating 

fleet—coal, nuclear, hydroelectric, gas, oil and wind. But of particular note, AEP is 

one of the largest coal-fired electricity generators in the United States. 

Over the last 100 years, AEP has led the Industry in developing and deploying 

new technologies beginning with the first high voltage transmission lines at 345 

kilovolt (kV) and 765 kV to new and more efficient coal power plants starting with 

the large central station power plant progressing to supercritical and ultra critical 

power plants. During the past decade, American Electric Power has implemented 

a portfolio of voluntary actions to reduce, avoid or offset greenhouse gases (GHG). 

During 2003–05, AEP reduced its GHG emissions by 31 million metric tons of CO2

by planting trees, adding wind power, increasing power plant generating efficiency, 

and retiring less-efficient units among other measures. 
50 

We also continue to invest in new clean coal technology that will enable AEP and 

our industry to meet the challenge of reducing GHG emissions for the long term. 

This includes plans to build two new integrated gasification combined cycle (IGCC) 

plants and two-state-of-the-art, ultrasupercritical plants. These will be the first of 

the new generation of ultrasupercritical plants in the U.S. AEP plans to take the 

lead role in commercializing carbon capture technology. We signed a memorandum 

of understanding (MOU) with Alstom for post-combustion carbon capture technology 

using its chilled ammonia system. Starting with a ‘‘commercial performance 

verification’’ project in mid- to late-2008 in West Virginia, we would move to the 

first commercial-sized project at one of our 450-megawatt coal-fired units at Northeastern Plant in Oklahoma by late 2011. This would capture about 1.5 million metric tons of CO2 a year, which will be used to enhance oil recovery. 

Over all, AEP supports the adoption of an economy-wide cap-and-trade type GHG 

reduction program that is well thought-out, achievable, and reasonable. We believe 

legislation can be crafted that does not impede AEP’s ability to provide reliable, reasonably priced electricity to support the economic well-being of our customers, and 

includes mechanisms that foster international participation and avoids harming the 

U.S, economy. A pragmatic approach for phasing in GHG reductions through a capand-trade program coincident with developing technologies to support these reductions will be critical to crafting achievable and reasonable legislation. 

The development of these technologies will be facilitated by and are dependent on 

public funding through tax credits and similar incentives. AEP is doing its part as 

we aggressively explore the viability of this technology in several first-of-a-kind commercial projects. We are advancing the development of IGCC and other necessary 

technologies as we seek to build two IGCC plants and two state-of-the-art 

ultrasupercritical power plants. In addition, we are a founding member of 

FutureGen, a groundbreaking public-private collaboration that aims squarely at 

making near-zero-emissions coal-based energy a reality. Simply put, however, commercially engineered and available technology to capture and store CO2 does not 

exist today and we strongly recommend that any legislation you adopt reflect this 

fact. 

RESPONSE BY MICHAEL RENCHECK TO AN ADDITIONAL QUESTION FROM

SENATOR INHOFE

Question. What would the cost be to your company if a federally mandated climate 

policy were instituted that created a price of $85 a ton for CO2 emissions? 

Response. It is very difficult to answer this question precisely because of the large 

uncertainties involved. We believe that any Federal mandated climate policy that 

creates a price of $85 per ton would either require a very large amount of reductions 

that would result in an $85 price or be a tax set at $85 per ton. If it was a carbon 

tax then the costs would on the order of $10–12 billion per year costs for AEP (and 

its customers) with the majority of the costs being carbon taxes paid. A cap and 

trade program that results in a price of $85 would cost AEP significantly less than 

a tax to the extent allowances are allocated at no cost rather than auctioned. We 

would not support legislation that would result in a carbon price of $85 per ton. 

Senator LIEBERMAN. Thanks, Mr. Rencheck. Again, a great statement, accepting the future goal of zero emissions, accepting the 

challenge of greenhouse gas emissions. AEP I know has supported 

an economy-wide cap and trade system, but quite reasonably saying to us not that we ought to wait to set the goals, but we have 

to acknowledge that all the technologies you need to meet the goals 

are not there now. I think asking for some reasonable help from 

Government will help get you there. Thank you for a really good 

statement. 

The next witness on the panel is Dr. John Fees. We are honored 

to have you here as chairman and chief executive officer of the 

Babcock and Wilcox Companies. Good morning. 
51 

STATEMENT OF JOHN A. FEES, CHIEF EXECUTIVE OFFICER, 

THE BABCOCK AND WILCOX COMPANIES 

Mr. FEES. Good morning, Mr. Chairman. Thank you, Senator 

Warner. It is great to be here with you. My name is John Fees. As 

the Senator has indicated, I am the chief executive officer of The 

Babcock and Wilcox Companies. We employ about 20,000 people 

worldwide that work on advanced energy solutions. 

I am here today to testify to you on a technology that will limit 

carbon dioxide emissions from coal combustion generation plants, 

those that provide essentially all of our coal-based electric power. 

Constructive actions by Government will make is possible for this 

and other near-commercial technologies to be ready for wide-scale 

use in the next decade. 

I ask Congress to ensure that any draft legislation on carbon capture set standards that will encourage the emergence of improved 

technologies. During the development of climate policy, it will be 

extremely important for Congress to avoid pre-selecting technology 

winners through legislation or regulatory provisions that would be 

biased towards or against specific technologies. Our country’s interests will be best served if Congress promotes marketplace competition among a variety of viable technology solutions. 

B&W has a long history of providing technology solutions for efficient baseload electrical generation throughout the United States, 

North America and around the globe. The first utility plant in the 

United States had a B&W boiler designed and supplied by B&W. 

B&W has literally written the book on steam, which is difficult to 

lift, but here it is, and its use for power generation. It is the longest 

continuously public engineering textbook of its kind in the world, 

first published in 1875, and recently updated in 2005. 

In addition to our coal interests, we are the only United States 

manufacturer of heavy nuclear components for the emergence of 

the nuclear renaissance that is upon us. Coal combustion and nuclear plants provide over two thirds of the domestic-generated electricity, and they are the foundation of our economic competitiveness, our energy security, and the basis of our standard of living. 

With coal, B&W has been an environmental technology leader at 

the forefront of the development of technology solutions for things 

like mercury, SOx and NOx emissions, and particulates. In power 

generation, B&W has been awarded a number of new, highly efficient, supercritical coal-fired plants in the United States, including, 

as Mike indicated, the first next generation ultrasupercritical coalfired plant. The plant is about 20 percent more efficient than the 

average of the installed based on coal-fired technology in the 

United States. Therefore, it is 20 percent less coal-intensive and 20 

percent less CO2-intensive, using advanced technology. 

These plants, with their higher efficiencies, are able to produce 

electricity at these lower carbon intensities and ongoing efforts will 

be able to deliver higher efficiencies in the future. 

B&W understands that now we must provide realistic solutions 

and timely solutions to climate challenge. B&W is doing just that. 

We are among the leading developers of technology in carbon dioxide at the powerplant for subsequent storage. Most notably, we are 

working to commercialize oxy-coal combustion. This technology inherently produces a stream of undiluted carbon dioxide, with a 
52 

powerplant configuration very close to that of a conventional plant. 

The process captures essentially all of the carbon dioxide produced 

by burning the coal fuel. The carbon dioxide stream is amenable to 

geological storage or for such commercial beneficial uses such as 

enhanced oil recovery. 

We have been working on oxy-coal combustion technology for 7 

years, and we are ready to move forward with the first full-scale 

demonstrations. I am particularly pleased to be on this panel with 

Michael Rencheck, whose company, AEP, is evaluating the array of 

potentially viable solutions for this challenge, as he indicated. We 

are partnered with AEP in the feasibility study of oxy-coal combustion, with a goal of retrofitting the technology to capture carbon dioxide from the existing plants, not new plants, but existing plants. 

We are in a parallel effort with Saskatchewan Power, the major 

utility in Saskatchewan, Canada. That plant envisions building a 

new oxy-coal combustion powerplant that will provide 300 

megawatts of additional electricity for the grid, while simultaneously supplying 8,000 metric tons per day of carbon dioxide for 

advanced oil recovery. 

Presuming that both of these projects are successful, we will 

have demonstrated the applicability of oxy-coal combustion for capturing nearly all the carbon dioxide produced at both a new and 

an existing powerplant. AEP and Saskatchewan Power, along with 

seven other organizations, are members of our Oxy-coal Advisory 

Group. They will witness the operation this summer of our large 

pilot-scale oxy-combustion facility in Alliance, OH. We will conduct 

oxy-combustion test operations on three different coals: eastern bituminous, western sub-bituminous, and a lignite. This will be the 

largest full-scale demonstration associated with this type of technology that ever existed. It is funded 100 percent by our company. 

The first deployment of near-zero emission coal plants, including 

carbon capture and storage, could start operations around 2012, 

which is not very far away. Given appropriate Government action, 

we anticipate that a suite of technology alternatives will be available for the commercial use and storage of carbon in the next decade. 

While publicized technology such as oxy-coal combustion are a 

path toward commercialization, other carbon friendly concepts can 

be expected to emerge from B&W and some of our competitors. At 

B&W, we are working on a portfolio of solutions that is being nurtured by about a 300 percent increase in our R&D. We will spend 

this year on R&D nearly $48 million of our own money trying to 

develop these technologies for a currently unregulated emission. At 

B&W, we envision advanced technology concepts that will enable 

reductions in CO2 emissions and the associated costs. We envision 

small-scale demonstrations of new advanced concepts beginning in 

the 2010 timeframe, with scale-up demonstrations around 2015. 

Finally, disposition of captured carbon dioxide is a critical dimension toward solving climate change. We and other technology developers may be able to provide the technical capability for carbon 

capture to be able to get our hands on the carbon well before the 

resolution of the issues with the storage in place. We are encouraged by the increased technical and public policy attention towards 

the storage of captured carbon. We strongly advocate for a large- 
53 

scale demonstration of captured carbon projects in the neighborhood of 1 million tons stored of carbon per year. 

Thank you for inviting me to testify before the committee. 

[The prepared statement of Mr. Fees follows:] 

STATEMENT OF JOHN A. FEES, CHIEF EXECUTIVE OFFICER, THE BABCOCK & WILCOX COMPANIES

Chairman Lieberman, Senator Warner and Members of the subcommittee: My 

name is John Fees and I am the Chief Executive Officer of The Babcock & Wilcox 

Companies. 

It is my privilege to present this testimony on the combustion-based technology 

alternatives available on the near horizon, which are designed to capture carbon dioxide emissions from electric power plants. 

The Babcock & Wilcox Company has a rich legacy of providing reliable engineered 

technology solutions for efficient, base load electric generation throughout the 

United States, North America and across the globe. We have sustained our business 

by developing and commercializing realistic solutions. For over a century, we have 

successfully met the challenges of power generation and provided the technologies 

and equipment to resolve the associated environmental control issues. We provide 

commercially viable solutions to meet emissions control requirements of regulated 

pollutants. We will provide practical technologies to resolve the challenges of greenhouse gas emissions as well. B&W is a premier, comprehensive provider of clean energy. 

B&W was formed in 1867. The first utility power plant in the United States had 

a boiler designed and supplied by B&W. Steam remains the most economic means 

to transfer the heat energy released by burning fuel to the turbine/generator, to 

produce electricity. B&W has literally written the book on steam. ‘‘Steam, Its Generation and Use’’ a text book produced by B&W, is the longest continuously published engineering textbook of its kind in the world, first published in 1875 and last 

updated in 2005. 

Our manufacturing capabilities have also powered national security since the 

start of the last century. Teddy Roosevelt’s Great White Fleet was primarily powered by B&W boilers. At the end of World War II, at the surrender of Japan, 395 

of the 400 U.S. Navy ships in Tokyo Bay were powered by B&W boilers. In the 

1950s, B&W became a major U.S. manufacturer and supplier of components for the 

U.S. Navy’s fleet of nuclear powered ships and submarines which are now built in 

Groton, Connecticut and Newport News, Virginia. 

Beyond defense, nuclear power is a route to carbon-free electricity generation for 

civilian purposes. We are the only U.S. manufacturer of the heavy nuclear components that will be required for the emerging civilian nuclear power plant build-up. 

As such we anticipate playing a critical role in the coming nuclear renaissance to 

provide clean, safe nuclear power. I could easily write a substantial amount on nuclear power and its potential to help reduce carbon emissions, but the principal 

focus of this testimony is coal fired generation and carbon capture. 

Coal-fired and nuclear power plants provide the vast majority of the reliable and 

lowest cost electricity generation in this country. Coal-fired and nuclear power 

plants combined comprise 41 percent of the Nation’s electric generation capacity. 

However, due to their cost effectiveness, these plants are highly dispatched, and actually produce 69 percent of all the electricity in the country. These technologies are 

the foundation of our economic competitiveness, energy security, and increasing 

standard of living. 

B&W’s position as a premier developer and manufacturer of coal technologies and 

facilities is widely recognized. Thirty-eight percent of U.S. coal-fired boilers have 

been designed and manufactured by B&W. We supply around one-third of all environmental control technologies and equipment to the U.S. coal power marketplace. 

We have been selected to provide many of the emission control technology solutions 

used by electric power generators to meet the strictest requirements under the 

Clean Air Act, the Clean Air Interstate Rule (CAIR) rule and various stringent air 

permitting requirements in the states. B&W has also been awarded a number of the 

new, highly efficient supercritical coal fired power plant projects, including the first, 

next-generation, high efficiency Ultra Supercritical Power plant in the U.S. 

ADVANCED COAL POWER TECHNOLOGIES

Efficiencies 

Efficiency at a power plant is measured by the ratio of the electricity generated 

compared to the energy in the fuel used. Increasing steam temperatures and pres-
54 

sures provides more energy to the steam turbine, enabling higher efficiency and allowing the same amount of electricity to be generated by burning less coal. This results in less production of CO2 and pollutants derived by coal combustion, reduced 

fuel costs and smaller and less costly power plants for the same power generated. 

Many existing U.S. coal-fired plants operate with relatively low steam temperatures and pressures (subcritical steam conditions). These old plants are generally 

used during high electricity demand periods because of the low generation efficiency, 

typically in the 30–35 percent range. When steam conditions exceed the combination 

of both 760F and 3200psi, the steam (or working fluid) is said to reach supercritical 

conditions. Efficiencies of these plants exceed 37 percent. Replacement of a relatively common 37 percent efficient subcritical unit with a 40 percent supercritical 

unit of same generating capacity would reduce CO2 emissions by about 8 percent. 

Supercritical plants with efficiencies around 40 percent are already commercially 

available and being increasingly deployed. R&D projects with advanced materials 

and manufacturing methods are underway to permit increases of working fluid temperatures to 1200F, and then to around 1400F. When this happens efficiencies will 

rise above 43 percent toward 48 percent. Carbon intensity will be reduced by a further 20 percent versus current modern plants. 

It is important to note when evaluating coal plant performance, that efficiency 

numbers, taken at face value, can be misleading. The U.S. convention for calculating 

efficiency, called ‘‘higher heating value (HHV),’’ is different from that used in Europe, ‘‘lower heating value (LHV).’’ One of the factors responsible for the difference 

is the way moisture in coal is treated in the efficiency calculation. There are other 

factors that enter into the calculation as well. The result is that, for virtually identical plant performance (coal fuel in vs. power out), the U.S. efficiency (HHV basis) 

would be reported as being up to 5 percent lower than European efficiency (LHV 

basis). 

Pollutants 

The emissions from pulverized coal-fired power plants have been reduced tremendously over the past three decades, with this achievement due in part to market 

based regulatory structures pulling technology forward for deployment. Great 

strides have been made in SO2 and NOx reduction through scrubbing and selective 
55 

catalytic reduction technologies. Fabric filters and improvements in electrostatic 

precipitators have reduced particulate emissions and more recently, technologies 

such as wet electrostatic precipitators and sorbent injection are capable of further 

reductions including fine particulates (PM2.5). 

With technologies available to address regulated pollutants and major programs 

to retrofit the existing fleet in progress, public and industry attention turned to 

mercury. As a result, commercially available mercury control, for both eastern and 

western coals are being deployed. Now, concerns about climate change have intensified leading to the pressing need for the development of ways to address carbon dioxide emissions. 

Carbon Dioxide Capture 

There are several promising technologies to address capture of CO2 from the use 

of fossil fuels and all are dependent upon development of a safe means of permanent 

storage. Assuming storage technologies can be commercialized and enabled, the 

challenge for coal combustion processes becomes one of extracting the CO2 from the 

combustion process. A modern power plant using sub-bituminous coal will produce 

about 1,800 lbs. of CO2 per MWh. In an uncontrolled state, the CO2 is diluted in 

the exhaust gas to about 15 percent of its volume; this creates a challenge to 

produce a concentrated CO2 stream for storage. 

Three approaches are presently seen as plausible carbon capture techniques: (1) 

Oxy-Coal Combustion for new and existing plants that burn coal, (2) amine or other 

solvent scrubbing for new or existing plants that burn coal, and (3) pre-combustion, 

or integrated gasification combined cycle, if the IGCC system is designed and fitted 

with facilities to accommodate CO2 capture. Oxygen combustion produces a concentrated stream of CO2 in the combustion process by supplying pure oxygen instead of air for combustion eliminating nitrogen which dilutes the CO2 concentration. Pre-combustion and amine or other solvent scrubbing processes extract the 

CO2 from the gas stream using a regenerable solvent such as monoethanolamine 

(MEA). Some current studies now show oxygen combustion as the least costly while 

other studies lean toward pre-combustion or advanced amines, indicating that technology development is underway and competition is strong. None of the technologies 

has been demonstrated at significant size in an integrated full-scale system for electricity generation. 

Oxy-Coal Combustion 

The Oxy-Coal combustion process is based upon equipment and systems that are 

already commercially available at the required scale. However, there are integration 

requirements, operating parameters and final designs that require verification at 

larger scale. Oxygen combustion and the major operational processes have been 

demonstrated at pilot scale. B&W has been actively engaged in oxy-coal combustion 

R&D since the late 1990s. We will complete a large pilot demonstration this summer with a variety of coal types at our 30 MWth combustion test facility. 

A new 300 MWe commercial plant using this technology is being developed by 

B&W for the SaskPower Corporation to be located at Estevan, Saskatchewan. At 

this facility the captured CO2 will be used for enhanced oil recovery. 

In addition, American Electric Power, one of the largest utilities in the U.S., has 

announced it is undertaking a feasibility study with B&W with the proposed objective of retrofitting one of its existing coal fired power plants with B&W’s Oxy-Coal 

combustion technology for carbon capture and storage (CCS). 

In spite of the additional cost to concentrate a CO2 stream for storage, recent 

studies show oxygen combustion to be competitive with the other capture technologies. Since this technology utilizes conventional equipment, it is likely to have 

a considerably lower deployment and operational risk, and has potential for retrofit 

to some of the existing fleet of conventional plants. 

Oxygen combustion provides a means of replacing the nitrogen in air with CO2

gas exiting the combustion chamber. By recirculating a portion of the combustion 

stream the oxy-coal combustion plant effectively replaces the nitrogen in a conventional system with CO2 thereby inherently creating a concentrated CO2 stream for 

permanent storage. The net effect is that the system looks and acts like a conventional power plant with which power plant operators are comfortable, but which is 

capable of near zero emissions given carbon storage. Additionally, by excluding air 

conveyed nitrogen from the combustion chamber there is a sharp reduction in nitrogen oxide emissions from this technology, which is likely to obviate the need for selective catalytic reduction facilities. 

Although the properties of the flue gas differ from those with air firing due to the 

lack of nitrogen, it has been found that with the proper recycle ratio, an existing 

boiler can be converted to oxy-coal combustion without changing heat transfer sur-
56 

faces and only experiencing a small impact on fuel efficiency in the boiler island. 

For new units, optimized arrangements are being studied that offer some reduction 

in equipment size and improved performance. 

The first generation of full-scale units is intended to require minimal change to 

the conventional power plant as reasonable to permit retrofit application and minimize risk. Advanced air separation technologies and optimization of the product gas 

specification and the cleanup/compression process are also expected to improve both 

performance and cost. 

Development of Other Innovations 

While we see oxy-coal technology as one of the potential carbon management solutions for the relatively near future, B&W is also developing a portfolio of potential 

solutions—including some that are radically different from any that are currently 

approaching readiness for full scale testing. We have increased our R&D budget by 

300 percent in the last 5 years, with the great majority of this increase directed toward advanced technology. With similar amounts planned on an ongoing basis, we 

envision development of new advanced techniques for the capture of CO2 (in addition to oxy-coal combustion); and materials developments that will both greatly increase the efficiency of new coal plants and synergistically enable reductions in carbon capture cost impacts. We envision small scale demonstrations of new advanced 

concepts beginning in the 2010 timeframe, with scale-up demonstrations anticipated 

around 2015. 

Carbon Storage 

Disposition of captured CO2 is a critical dimension to solving climate challenges. 

Providing technologies to effectively capture CO2 will accomplish little if storage is 

not simultaneously enabled. We, and other technology developers, may be able to 

provide the technical capability for carbon capture well before resolution of the 

issues associated with large scale storage. We are encouraged that issues pertaining 

to actual storage of captured CO2 are drawing increasing technical and policy attention. Legislation must support the acceleration of technical efforts promoting large 

scale carbon injections associated with advanced coal technology and storage. In addition there is a need for clear policies regarding legal ownership of and liability 

for the injected CO2, and concise communications to overcome local concerns with 

large annual injections at storage sites. We believe that unless the regulatory and 

technical obstacles to the long-term storage of carbon dioxide from electric power 

plants are resolved, these will become the limiting factors in reducing carbon emissions. 

Closing Comments 

B&W believes that from a technology standpoint that CO2 storage from power 

plants could commence wide scale around 2020. The first wave of near-zero emission 

coal plants are expected to start operation around 2012–2013. As industry learns 

from these early commercial deployments, we will make adjustments to improve efficiency, competitiveness and performance. After this, around 2015, commercial 

availability of CCS technologies should be available for new plants and retrofit of 

some existing plants. These will take 4–5 years to build before the plants come online and begin storing CO2 in the 2020 timeframe. 

Technology development, economic and market incentives are essential to accelerate the timeframe for implementing widespread carbon capture deployments on a 

commercial scale. This will only be successful if legislation does not favor one technology over another. 

We are confident that our Oxy-Coal Combustion technology can provide the most 

cost-effective solution for some power plants, while other technologies are better 

suited for others. 

We are encouraged by indications that a consensus is building toward a marketbased system for carbon management. A market-based system should encourage an 

efficient allocation of resources for reductions of carbon emissions both at new 

plants and, where tenable, at some existing plants. It is important to recognize that 

to significantly reduce our Nation’s CO2 emissions, capture of CO2 will have to occur 

at a number of existing fossil-fired plants. 

B&W is in general agreement with many of the perceptions and recommendations 

cited in the MIT report, ‘‘The Future of Coal’’: 

• The U.S. Government should promote a suite of technology approaches to CCS, 

and avoid picking winners. Biasing RD&D funds towards one technology and/or 

biasing commercial deployment incentives will only discourage investment in technologies that have significant potential for marketplace acceptance, improved performance and reduced cost. 
57 

• An array of large scale CCS projects should be implemented in the near to midterm, with the ∼ 1 million ton of captured carbon dioxide per plant annually stored 

at a variety of CO2 storage sites across the country. 

To facilitate the attainment of commercial readiness of CCS technologies, the government will need to provide funding levels well in excess of those traditionally 

available through DOE’s Fossil Energy programs. 

Thank you for the privilege to testify before the subcommittee on these critically 

important matters. 

MAJOR POINTS

• Society will be best served if an array of competitive technologies is available 

to meet the climate challenge. The promise of marketplace competition will stimulate investment in technology development. Therefore, while considering carbon 

management legislation, Congress should reject provisions in bills that would explicitly or implicitly provide preferential advantage or disadvantage to any potentially 

viable technology. The regulatory system must be based on a ‘‘level playing field’’. 

• Many ways will emerge to capture the CO2 that would be otherwise be emitted 

from coal power plants. The three major approaches with the potential to be commercially available in the near to mid term may be categorized as oxygen combustion, post-combustion scrubbing using sorbents such as amines and other chemicals, 

and pre-combustion IGCC, if configured to capture CO2. Of these, studies by B&W 

and others lead us to believe that oxycombustion shows great promise in terms of 

cost effectiveness and nearness to commercialization. 

• B&W continues to make significant technical progress in oxycombustion. We are 

on track to deploy the first commercial scale near zero emissions coal power plant 

with carbon capture and storage in North America using oxycombustion technology. 

B&W also has a Memorandum of Understanding to undertake a feasibility study to 

retrofit an existing U.S. coal-fired power plant for CO2 capture and storage utilizing 

Oxy-Coal Combustion technology. 

• It will be necessary to have clear policies regarding legal ownership of and liability for the injected CO2; concise communications to overcome local concerns with 

large annual injections at storage sites; and, accelerated demonstrations of several 

large scale CO2 injection projects each on the order of ∼ 1 million tons annually. 

• We anticipate that the first wave of commercial carbon capture plants will 

begin operation around 2012. Through lessons learned at these plants and with additional innovations/modifications, improvements in efficiency and cost will be attained with subsequent installations. We believe commercial storage of CO2 can 

commence on a large scale in approximately 2020. 

• Deployment of coal combustion units with higher steam (working fluid) conditions, such as those in modern supercritical steam plants, will result in higher efficiency. Increasing the efficiency reduces the intensity of CO2 emissions, as less coal 

fuel is required to generate a unit of electric power. Efficiency increases also cause 

proportionately lower generation of traditional pollutants. Very low levels of pollutant emissions can be attained with modern environmental control facilities. 

Senator LIEBERMAN. Mr. Fees, thanks very much. 

Because a vote may go off sometime in the next half hour, I am 

going to limit us each to five minutes of questioning so each of us 

can get a chance to ask a question. 

The totality of your testimony to me is both impressive and encouraging, because you said, in very many ways, that there are 

technologies now available that if implemented or acquired and dispersed throughout the economy, can begin to reduce greenhouse 

gases, and also have a great effect on our energy security and on 

air pollution. 

I go back to what you said, Mr. Rencheck, I think it is important 

that even where the technologies are not exactly where we will 

need them eventually to be, that should not be an excuse for not 

setting out in law a series of goals, because everybody knows we 

are not going to hit the goals overnight, alongside support for the 

increasingly advanced technologies that will enable us to do that. 
58 

The other thing that strikes me, and may I will just ask a few 

of you to comment on it, is that some of the pioneering work that 

you are doing is done on the presumption that global warming is 

real and that at some point before long, the Government is going 

to require people to do something about it. Let me ask Dr. Little 

and Mr. Fees is you would comment on that. 

Mr. LITTLE. Senator, I have the great privilege of traveling the 

world over, and I talk to politicians and Government officials of all 

parties in all places. What I see everywhere I go is a tremendous 

interest in this subject, and recognition that somehow and some 

way there will be strong Government action to deal with the issue. 

The forms and opinions may differ about what it would take, but 

around the world there is a strong view that there will be something put in place. 

So our company is very well recognizing that we need to be a 

global leader in this technology and is pushing ahead very aggressively in developing technologies even ahead of the missions requirements. 

Senator LIEBERMAN. Thanks. 

Mr. Fees. 

Mr. FEES. We as a company are a technology provider. The thing 

that I need to be able to do is when Mr. Rencheck needs a solution, 

I have to have it. 

Senator LIEBERMAN. Right. 

Mr. FEES. We believe that based upon where the discussion is 

going, the dialogue that we are having in the country, that there 

is going to be some type of limits and regulation associated with 

carbon and we want to be there to be able to serve our clients and 

to be able to get it done. That is why we are spending basically $49 

million of our own money on an unregulated substance at this 

point. 

Senator LIEBERMAN. I am not asking you to endorse any particular program, although if you would like to endorse the 

Lieberman–McCain bill, I wouldn’t object, but I take it that from 

a purely business point of view, the sooner the Government sends 

a signal that this is happening, this is going to happen as a matter 

of law, the better it is for the work that you are doing. Correct? 

Mr. LITTLE. More than anything, we need clarity of purpose to 

have a long-term view of where the country, where the globe, and 

where our company is going. So clarity of purpose and definition 

of goals is critical to developing technologies for success. 

Senator LIEBERMAN. Mr. Rencheck. 

Mr. RENCHECK. Regulatory certainty is absolutely important in 

our business. The assets that we build last 40, 60, 80 years. Without that framework and an understanding of what the regulatory 

framework will entail, then it certainly creates great distress in 

making incremental decisions about asset additions. In our business, we have an obligation to our customers to keep our rates as 

low as reasonably achievable, and at the same time we have an obligation to protect the environment. So we have to keep all of this 

in balance. 

Senator LIEBERMAN. Dr. Chiang, did you want to answer that? 

Mr. CHIANG. Yes. From the point of view of a small company like 

ours, and we are relatively small at this point, the most important 
59 

thing is giving us the opportunity to practice our technology. Technology development is a contact sport. Our competitors are very 

able and, as I said earlier, they are not too far behind us. They 

have the benefit of Government action over a couple of decades. 

So any form of legislation that allows us to get the technology 

out to where we can practice it and learn from it and develop the 

best practices in the long term is of great benefit. 

Senator LIEBERMAN. Mr. Fees, do you want to add something? 

Mr. FEES. Yes. I think there are two things. One is that I think 

industry and our clients need some level of certainty. I think this 

dialogue is creating a level of uncertainty. 

Senator LIEBERMAN. Right. 

Mr. FEES. So I think the sooner we can get to that point, the 

more we can sustain our investments and know where we are 

going as a company. 

The other thing that I think is important, the second point, is 

that the amount of carbon that we are talking about sequestering 

is very large. If you take just coal-fired generation today that exists, and if you want to sequester half of it, you need an infrastructure that is anywhere, depending on whose calculations you believe, to do half of it, one to three times the infrastructure for dealing with oil in the United States today. So this is a big deal. 

I believe that we will be there as a technology supplier for technologies that will put the carbon in your hand, but will we be prepared to be able to put it somewhere is the real question. The investment is going to be huge. It took us 100 years as a country to 

establish that infrastructure that we are enjoying today. I think we 

have to get our minds wrapped around the limit that the size of 

that challenge presents. 

Senator LIEBERMAN. That is a very important point. We don’t, at 

this point. I will just say, because my time is up, that in addition 

to giving you as soon as possible a legal and regulatory certainty 

about what is happening, the other thing your testimony says is 

that we have a parallel responsibility to continue to invest public 

funds either directly or through investment tax credits in stimulating as rapidly as possible the existence of these technologies that 

we don’t fully have yet at competitive prices. I am very proud that 

Senator McCain and I have included such a section in our bill. 

Senator Warner. 

Senator WARNER. Thank you, Mr. Chairman. I want to commend 

you and others for bringing this distinguished panel. This has really been a fascinating session for me. I put myself in the category 

of one who is in the learning process, even though I have been on 

this committee now two decades. We really haven’t come to grips 

with this, although we had pioneers like Mr. Carper—he is not listening to what I am saying—but he has been out here with bills. 

How many bills have you introduced in the last 5 years? 

Senator CARPER. Five. 

Senator WARNER. Five. He has given them all to me and I have 

looked at them and filed them. 

[Laughter.] 

Senator WARNER. We really have to get down to work on this 

thing. 
60 

To what extent can you as an industry, without getting into antitrust troubles and competitive troubles, try and put some benchmarks of what you really want to see in a Federal regulatory program together. Then we will have to do the final analysis, but it 

seems to me it would help us if we could get some common starting 

place. 

Do you want that program to not only have a regulatory aspect 

like we have been successful with the sulfur one? Or do you want 

a grant program out here, direct Federal grant subsidies? Do you 

want some tax relief for the heavy investment, Mr. Fees, that your 

company has made and others? 

Where are we in this thing? Have you got any consensus on that? 

Why don’t we just start off, Mr. Little? 

Mr. LITTLE. Senator, if I may, GE, of course, is a member of the 

U.S. Climate Action Partnership, where we have collected our resources with a number of nongovernment organizations and other 

very large companies, including, as Senator Boxer mentioned, several others including GM, which has just joined. That group has 

put forward some ideas of a policy framework to be used as a starting point for discussion about what Government might want to consider. 

In there, we talk about a cap and trade regime to enable the 

Government to move forward. As you well know, we have had a 15- 

year-old sulfur dioxide cap and trade regime that has worked, we 

think, quite well. That is a policy framework. 

Senator WARNER. So we use that as sort of a blueprint and build 

on that? 

Mr. LITTLE. That is what we think, Senator. Yes. 

Senator WARNER. Now, what about grants and tax? 

Mr. LITTLE. Well, as you well know also, we have the production 

tax credit, which is supporting wind power today. Stability in that 

regime has had a huge impact. You may know that it has been an 

on again-off again sort of a program, and you can see the industry 

flip on when it is on, and flip off when it is off. We have had stability for the last 2 years, and that has ignited a tremendous run 

toward wind power in the United States so we think it is a very 

successful thing. So that model also works. 

Senator WARNER. I am still a little bit of a skeptic on whether 

the wind power is returning enough net gain into the whole energy 

system, but we really did do some heavy lifting for the wind power. 

They were very clever. Their lobbyist got in here and got these provisions. I am quite concerned about you are trying to do down in 

Babcock and Wilcox. 

Mr. FEES. Yes, I think a very strong R&D tax credit for work 

that is going on that is directed towards carbon capture technologies would be very beneficial for the industry. We are spending 

a lot of money without a broader-based benefit there already, but 

it would be very, very helpful to encourage industry. 

Senator WARNER. That is not to be drawn tight enough so as to 

not let it leak out and give tax relief elsewhere and concentrate on 

carbon capture? 

Mr. FEES. I think if we dilute it, it will become a problem. 

Senator WARNER. Yes. 
61 

Mr. FEES. The other thing is that there is a lot of talk about capturing carbon and sticking it in the ground. That is really the 

available thing that we can see in front of us. If you go into the 

decade that goes beyond 2020, into the 2020 timeframe, we are 

working on some technologies that would make very safe forms of 

carbon, like bicarbonate, which is an inert substance that could be 

disposed of in regular waste repositories at no harm to the environment, so anything we can do to encourage that technology to move 

forward. 

We are working hard to look at how we can do that. Can we 

avoid all this infrastructure that we have to build to stick this billions or trillions of tons into the earth by coming up with another 

form and another technology to be able to make that happen? We 

think the technology road map for that is into the 2020-plus timeframe, and whatever we can do to move that forward would save 

trillions of dollars in capital investment in the United States to put 

holes into the earth and pump it into the ground. 

So I think a good strong R&D tax credit and taking a look at 

those advanced technologies in the future and how could we bring 

those forward would be very helpful. 

Senator WARNER. Yes? 

Mr. RENCHECK. We are members of the Edison Electric Institute. 

We have taken a look that a cap should be applied to all the economy in all sectors on all greenhouse gases. It should be an unfettered cap and trade framework that takes a look at levels and 

gradually implements them over time, allowing a timeframe for 

technology to take hold and take root. 

We also think we should be able to use the unrestricted use of 

real and verifiable domestic and international offsets. Also as part 

of a cap and trade system, we ought to be able to take a look at 

historic caps, and then provide those cap and trade allowances to 

companies who need the technology to advance the technology. 

Also from that perspective, companies should be given credit for 

the voluntary actions they have already taken over the past several 

decades. We are going to need long-term public and private funding 

for the development of technology. It is not going to happen overnight. With increased funding and with the increased resources, it 

can move faster. 

We have also the need for regulatory pre-approval for utility cost 

recovery for energy efficiency and demand side management to 

help stimulate those programs and get them off the ground and 

running. 

Senator WARNER. My time is up, and we have to stick to it. Edison, I have worked with them for years. They have an established 

record. Could they bring forth, for instance, some assessment? All 

of the colleagues to my left here have bills in. I have not yet put 

anything in. But you have been a pioneer, the Senator from Delaware, for years on this issue. I need some help in evaluating the 

merits of their different pieces of legislation as we reach towards 

trying to get a consensus on this committee. 

I tell you, I want to join to move this ball forward, but there are 

some very distinguished colleagues to my right here who are not 

quite as enthusiastic as I am. This is going to be a hard fought legislative battle. So the more help we can get, and the more concept 
62 

of we are going to take carefully a step at a time, and not take an 

enormous leap, and then end up failing and then losing all the benefit of the momentum and the interest you have now. 

I thank the Chair. 

Senator LIEBERMAN. Thanks, Senator Warner. I think you and I 

should talk, but I would like to see us sometime soon work towards 

some just working sessions with some of these folks and other 

stakeholders in this discussion, which is important. It remains controversial in some quarters, but I appreciate very much your commitment to try to move the ball forward. 

Senator Carper, you are much appreciated on this end of the 

panel for your leadership here over the years. 

Senator CARPER. I am happy to yield to the Chairman of the full 

committee, if she would like. 

Senator BOXER. No. Go ahead. 

Senator CARPER. Thanks for sharing. This has been fascinating 

and most helpful. We are grateful for your participation and your 

counsel. 

Several of you have said words like ‘‘clarity of purpose,’’ and ‘‘regulatory certainty.’’ Several of you have talked about Federal support for basic R&D. A couple of you talked about the need for the 

Federal Government to help commercialize technologies, whether it 

is using our purchasing power on the defense side or the civilian 

side, or both. Some of you have alluded to tax policy, which would 

incentivize the production of or the purchase of certain kinds of 

technology. 

I am going to be just real frank with you. Going back to what 

Senator Warner said, we kind of fall apart as a body, and with the 

Administration, when we get to the point of putting mandatory 

caps on carbon emissions. There is a concern, and I won’t say his 

name but he is sitting right over there, and used to be a Governor 

of a State, but he has a huge concern. He has watched the economic meltdown of his State over the last decade or so. He has a 

huge concern that we not do anything that will further that economic disadvantage for his State or for our country to put us in an 

uncompetitive position with somebody like China, which may not 

have any intention of doing anything about CO2 for some time. 

In my heart, I believe it is possible to forge these new technologies, to address CO2 emissions, and frankly to reduce SOx, 

NOx and mercury from our utility plants, and to do it in a way 

that fosters economic growth, that leads to technologies that will 

lead to new products that we can sell not just in this country, but 

around the world. 

I would welcome any comments. We will just start with you, Dr. 

Chiang, to just respond to that potential. 

Mr. CHIANG. Yes. With respect to what Government can do, I 

think that we can think about it, or at least I think about it, in 

terms of how far off is the opportunity and therefore how it is addressed. So for things that are essentially ready today, a tax incentive of course would work very well, but if it is technology that 

needs to be developed, you might need to find a different route. 

So for this plug-in technology that I have been talking about, we 

believe it is here and ready today so a tax incentive is a very appropriate way to accelerate that. 
63 

But looking forward, clearly there is going to need to be more 

R&D. We are at the beginning of a new wave in battery technology 

to compete and to grow. For instance, we hear regularly about 

overseas efforts, new national projects in Japan. There is a pan-European effort that is attempting to unite 50 research labs and industry to develop better batteries. That is what we are competing 

against. So near-term, we need to compete with that. 

But in the area of vehicles, the main thing that we want to do 

is to enable the American auto companies to leapfrog their competitors. They are our customers, and by doing that, you create a lot 

of jobs in the United States and that is very significant. 

Senator CARPER. Dr. Little. 

Mr. LITTLE. Senator, I argued earlier that we see a trend around 

the world of trying to do something to go toward greener technologies, as I will call them. I believe the United States should be 

a leader in that. I believe our industry should be strong and in 

every phase of it in a portfolio of technologies leading the way. I 

would rather see our country lead than follow in nuclear, lead than 

follow in solar, lead than follow in wind. 

Wind is a very interesting example for me. The European manufacturers were long the leaders in wind technology, and they were 

importing things into the United States. GE took a hold of the 

wind business from Enron’s bankruptcy and that business today is 

a $5 billion business for us. Many U.S. jobs are associated with 

that. That business is as big today as our commercial aviation business, as our conventional fossil fuel gas turbine and steam turbine 

business, and is a very, very strong business with very high technology and investment. 

I have seen in our gas turbine business us take emissions of NOx 

15 years ago at 200 parts per million. Today, we can make in the 

same turbines three parts per million of NOx, a tremendous technology advance. At the same time, efficiency has improved and 

costs have gone down. That was all driven by a societal thrust to 

drive emissions down, and our company has benefitted from that 

and is able thus to develop high technology products that we export 

all over the world. I think that is a great thing for America’s economy. 

Senator CARPER. Thank you. 

Mr. Stanway, go ahead. 

Mr. STANWAY. Another point that I would just like to make is 

there are technologies around today which are perfectly economic. 

You look at them, and a small business can invest in them and 

make a 2-year simple payback. One of the issues here is not only 

do we need to do R&D on new technologies, is we need to focus on 

how do we sell the ones which exist on the market today 

transactionally efficiently. 

Some of these technologies are seriously struggling to make inroads not just in the United States, but across a lot of industrialized economies. So how do we move that more efficiently? I think 

that is another area that we need to look at because it is another 

area, potentially, of great U.S. competitiveness. 

The American economy is good not only both at innovation and 

R&D, but also in the ability to sell. 
64 

Senator CARPER. One of the things that my colleague, Senator 

Boxer, has been focusing on is how can the Government set a good 

example with respect to reducing our own levels of emissions. For 

example, I was looking at the light bulbs in the ceiling of my office 

yesterday. They are all incandescent light bulbs. 

I don’t know what these are. They feel pretty warm. There is so 

much that we can do in terms of helping to commercialize these 

technologies, not just the basic R&D. It is not just using the U.S. 

Government’s purchasing power to commercialize these technologies, but it is the tax policy as well. 

Mr. Rencheck, my time has expired, and more than expired. The 

Chair has been very generous. Let me halt for now, and I will come 

back. I have to slip out, but I will be right back. 

Thank you. 

Senator LIEBERMAN. Thanks, Senator Carper. 

Senator Voinovich. 

Senator VOINOVICH. Thank you, Mr. Chairman. 

The question that I would like to have answered is, and I was 

at a meeting a couple of weeks ago, and your folks were there from 

Babcock—we’ve got it; we capture carbon; we can do sequestration. 

Another gentleman came into my office that wants to do coal to liquid, and, we are going to capture carbon; and we are going to sequester it. 

When is this going to be ‘‘commercially viable’’ in terms of your 

best guess? Because if we are going to deal with this whole program, and we go to something like cap and trade, it should be reflective of reality. I ran into Carol Browner a couple of weeks ago 

and she said, cap and trade; that is the thing to do. We will cap 

and trade, and by golly, everybody will go out there and they will 

spend the money to get the technology that we need to capture carbon and sequester it. 

I said, hold on a minute. I said, do you really understand where 

the technology is and how many years it is going to take to develop 

so it is commercially viable, for example, to put capturing carbon 

on the back end of a retrofit of a coal-fired facility we have today? 

So I would like to ask all of you, what is realistic in terms of 

when this would come on to the point where it is commercially viable? That is No. 1. No. 2, the issue of how to pay for it. Can the 

private sector do it? Or is the Federal Government going to have 

to pitch in? Or should we look more internationally and say this 

whole issue of capturing carbon and sequestration is something important to the world in terms of doing something about greenhouse 

gases? So No. 1, how long is it going to take realistically to do it? 

Who is going to pay for it? 

The last one would be new source review, which I understand is 

just a tough one for everybody out there because they don’t know 

if they do certain things whether it is subject to new source review 

or not because this thing is in limbo right now. 

Thank you. 

Mr. Rencheck. 

Mr. RENCHECK. Yes, to address that, we are moving forward with 

carbon capture and sequestration projects. The first will be a product validation in roughly the 10 megawatt electric scale for a backend retrofit. We are also working with B&W on an oxy-coal process. 
65 

So that will pan out whether or not it can be scaled, and the scale 

that we would be looking is in the 2011 to 2012 timeframe for the 

first time. 

We are also working with General Electric on IGCC plants for 

installing those from an efficiency perspective. 

Senator VOINOVICH. The IGCC does a good job on NOx, SOx, carbon and mercury, and the potential to do something about carbon, 

and become more efficient, so you are going to emit less gases. 

Mr. RENCHECK. That is correct. 

Senator VOINOVICH. But the issue still is, even when you are 

building these plants, you are still going to have the carbon problem. 

Mr. RENCHECK. That would work on the capture piece, so we 

would see the first type of demonstration projects that capture in 

that 2011 timeframe. At our Mountaineer facility, we are also 

working on a sequestration project. For the past several years, we 

have worked with the DOE and Battelle and others in drilling a 

9,200 foot hole into the earth and studying the geology. We now 

understand the geology. We understanding the saline aquifers. We 

are moving to the next step with the carbon capture process now 

to begin the injection of CO2 into those aquifers and begin to study 

its behavior. 

We hope start doing that with approximately 100,000 tons a year 

at the end of 2008, and are working that in parallel with the backend capture. 

Senator VOINOVICH. What we need to make good decisions here 

is what is the reality of this in terms of, and I don’t mean dragging 

feet, but trying to move forward? When does it become viable so 

that if we put something in place that the company says, I am 

going to natural gas or someplace else because I can’t afford to do 

what they are making us do. 

Mr. RENCHECK. In the next decade, we need tax incentives to 

support that. Then to address your question on NSR, NSR impedes 

the efficiency improvements on some of these plants, so we could 

effectively make the existing fleet produce less CO2 by making 

them more efficient with the regulation corrected. 

Senator VOINOVICH. Mr. Fees. 

Mr. FEES. Senator, I think it is important when we talk about 

this to think about it from a framework of when would a technology provider like ourselves or GE or others be willing to enter 

into a fixed price contract to deliver to American Electric Power 

some of the utility technology. So when I talk about these frameworks, I think about it in that realm. 

Right now today, sitting here today I don’t think oxy-coal, IGCC, 

or any of those things are quite at that level. These are in early 

stage development, so we are going to be in a position, however, 

thinking about this at three different tranches. 

First tranche, having plants capable of being sold and delivered 

that can provide captured carbon ready for sequestration early next 

decade. Several technologies are available. The more advanced 

technologies, where you may not have to put it in the ground and 

do things along those lines, is probably early in the following decade, in the 2020 timeframe, in terms of when we would go off to 
66 

a utility and be ready to sign a contract to be able to do those kind 

of things. 

So those are about the road maps. I still think that the long pole 

in the tent is what are we going to do with all the carbon; where 

is the infrastructure for it; and also legislatively, who owns it. I 

think there is going to be a big debate about when the carbon goes 

in the ground, who is responsible for the carbon? That is a solution 

that needs to be worked on very, very heavily. 

Senator VOINOVICH. Mr. Chairman, I have spent some time with 

Sam Bodman. I said, sequestration of carbon is a lay-up shot. That 

is easy. So wait a second, we are not sure about that, is the question about the geology that you need, and then once you put it in 

the ground, whether or not that is going to matriculate out of that, 

and then cause other problems. It is not that easy as you think it 

is. 

Senator LIEBERMAN. I hear you. Part of our challenge here, assuming we want to do something, which I believe a majority of us 

do, is to kind of calibrate how we create statutory and regulatory 

certainty that drives the technology. But also, obviously we don’t 

want to demand so much that it is unrealistic, and actually has an 

adverse effect. I think that is the sweet spot, if I can put it that 

way, that we are looking for here. 

The vote has gone off, but we have a good 10 minutes before we 

have to go over there. 

Senator Boxer. 

Senator BOXER. Thanks, Mr. Chairman. I will take just 5 minutes, and again thank you for a fantastic hearing. You have had 

a series of wonderful hearings. The reason we divided the global 

warming task between two subcommittees is because there is so 

much work to be done. 

I think Senator Voinovich has certainly put his finger on an 

issue, which is we have to deal with clean coal. My belief is that 

we need to have a Manhattan Project for clean coal. We need to 

give both incentives and we need to make investments, and we 

need to deal with the issue of the sequestration and the responsibility after you have stored the carbon and the rest. 

I am very optimistic on this matter because I approach this 

whole thing with hope. I do want to put a couple of things in the 

record. One is, because Senator Voinovich raised the issue of the 

European Union versus the United States, I have a chart that 

shows just the opposite of what he said, so for what it is worth, 

I am going to place it in. 

Senator LIEBERMAN. Without objection. 

[The referenced document follows:] 
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Senator BOXER. Also showing the increase in just U.S. emissions 

over the past few years. It is dramatic. If you take it out, it is just 

a straight line up. So we don’t have a lot of time to waste. 

What has encouraged me so much about this hearing is not only 

the can-do attitude from America’s business and scientists and researchers, but also Senator Warner’s comments about looking for 

what he basically calls the benchmarks of what we ought to look 

at with legislation, Mr. Chairman. If I could kind of summarize 

what I think I heard this panel discuss, and I would like you to 

correct me if I leave something out or if I misstate what I heard 

you say, just from this panel. 

A carbon credit set-aside I think is a really important point. 

There are people out there now doing the right thing. They are 

doing the right thing. They may be motivated by all the good reasons. They may be motivated by business reasons. They may be 

motivated by the global marketplace. It doesn’t matter to me. What 

matters to me is there are people out there doing the right thing 

who ought to get a reward for doing the right thing, and ought to 

get a carbon credit set-aside. 

So I think that ought to be part of whatever we do because as 

we do move toward a cap and trade, which I think inevitably we 

will do, and I want to point out that there are now four candidates 

for President on the Democratic side who have gone onto the Sanders–Boxer bill, and you have Senator McCain who is working with 

Senator Lieberman on cap and trade, and we have other Republicans out there who seem very inclined to do something. 

When we started talking about this, I said I had two goals. One 

was to make this a bipartisan issue, move forward legislation, and 

also make this part of the presidential debate. So looking forward, 

given the Supreme Court’s decision, Mr. Chairman, saying that in 

fact the EPA can just move forward on its own. 

So just reading the tea leaves here, whatever reason you are 

doing the right thing, I want to say thank you. I want, too, as a 

legislator and Chair of this great committee, to say there ought to 

be a way to reward those who are doing the right thing now. So 

I thank you, Mr. Stanway, for that point of talking about a carbon 

credit set-aside. 

Then, I think you also are talking about tax credits, whether it 

is to get these batteries moving faster, or to stimulate your R&D 

investments. I hear you talking about, and you didn’t say a Manhattan Project, but you talked about some help from the Federal 

Government, which makes a lot of sense. We are dealing with a situation where, and I want to say this very clearly, 40 percent of the 

species that God created could be gone if we do nothing. We are 

talking about a crisis that could come where, just listen to what 

happened down the hall today in Foreign Relations, our intelligence officials and defense officials are saying this could be the 

cause of major wars in the future. 

So we need to move forward. I think what has happened here 

today, Mr. Chairman, if I might thank you, is that we are coming 

up with these ideas. Cap and trade is already out there. I think 

we have had pretty much an endorsement of that. So credit for 

work done, Manhattan Project, I think we have some concepts here 

which could really work. 
69 

The very last point I want to make is, Senator Craig is struggling with why the world is warming. He has really plunged into 

this issue. I respect him for it. But I want to say that over the history of America, we have in fact embraced science. The IPCC includes hundreds of the leading scientists in the world from over 

100 governments, including our own Government is part of the 

IPCC. They are unanimous in saying global warming is 100 percent certainty and 90 percent certainty that mankind is causing it. 

Now, we could have walked away from the scientists when they 

told us to vaccinate after the polio epidemic. We could have walked 

away from scientists when they said the Cuyahoga River is on fire 

because of toxic pollution there. We could have walked away when 

scientists said, you know, the reason you can see the air is it is 

filthy and dirty and you have to clean it up. We could have walked 

away on AIDS. We could have walked away on the Safe Drinking 

Water Act when the scientists told us what we had to do. We could 

have walked away on brownfields, the Endangered Species Act and 

all the rest. We didn’t and we are better for it. 

So thank you, Mr. Chairman, for doing this. You are such a cando legislator and it gives me great confidence that we are going to 

really move forward with your leadership in the subcommittee. 

Thank you very much. 

Of course, with Senator Warner’s as well. 

Senator LIEBERMAN. Thanks very much, Senator Boxer. Look, 

you are the Chair of the overall committee. You are driving this vehicle fuel efficiently, I am sure. 

Senator BOXER. Yes. 

[Laughter.] 

Senator LIEBERMAN. Meaning we are at zero greenhouse gas 

emissions on this committee. 

I want to thank you. 

Senator BOXER. A lot of hot air, but no greenhouse gas. 

[Laughter.] 

Senator LIEBERMAN. The can-do spirit that comes out of this 

panel, and actually will-do, is so classically America at its best, 

which is its combination of innovation and entrepreneurship for the 

general benefit. This country, and you look at some of those surveys of public opinion, we need to show each other that we can 

tackle a big problem and solve it. I can’t think of a better one than 

this one, because if we do this, we also tackle the energy dependence problem, which is so serious to us in so many different ways. 

You have been a wonderful panel. I thank you not only for great, 

inspiring testimony, frankly, but for what you are doing in your 

work every day to help us deal with this problem. 

We are going to leave the record of the hearing open for another 

10 days if you would like to add anything, an afterthought, or we 

have questions that we want to add to you. 

I do want to restate to everyone here, to you and to Senator 

Boxer, that we are going to work very hard on this subcommittee 

to see if we can find a consensus that hopefully everybody on the 

subcommittee, but at least a good bipartisan majority, can support 

and send to the full committee a bill that will really begin to take 

the steps America needs to take to confront this great challenge. 
70 

But here is the final word. The testimony today says this is a 

solvable problem. That is the most exciting thing that I have 

learned again today. 

Thank you very much. The hearing is adjourned. 

[Whereupon, at 12 p.m. the subcommittee was adjourned.] 

[Additional material submitted for the record follows.] 
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