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[Senate Hearing 108-558]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 108-558

                         ELECTRICITY GENERATION

=======================================================================

                                HEARING

                               before the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                                   on

            SUSTAINABLE, LOW EMISSION ELECTRICITY GENERATION

                               __________

                             APRIL 27, 2004

                       Printed for the use of the
               Committee on Energy and Natural Resources

                                 ______

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               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                 PETE V. DOMENICI, New Mexico, Chairman
DON NICKLES, Oklahoma                JEFF BINGAMAN, New Mexico
LARRY E. CRAIG, Idaho                DANIEL K. AKAKA, Hawaii
BEN NIGHTHORSE CAMPBELL, Colorado    BYRON L. DORGAN, North Dakota
CRAIG THOMAS, Wyoming                BOB GRAHAM, Florida
LAMAR ALEXANDER, Tennessee           RON WYDEN, Oregon
LISA MURKOWSKI, Alaska               TIM JOHNSON, South Dakota
JAMES M. TALENT, Missouri            MARY L. LANDRIEU, Louisiana
CONRAD BURNS, Montana                EVAN BAYH, Indiana
GORDON SMITH, Oregon                 DIANNE FEINSTEIN, California
JIM BUNNING, Kentucky                CHARLES E. SCHUMER, New York
JON KYL, Arizona                     MARIA CANTWELL, Washington
                       Alex Flint, Staff Director
                   Judith K. Pensabene, Chief Counsel
               Robert M. Simon, Democratic Staff Director
                Sam E. Fowler, Democratic Chief Counsel
                 Pete Lyons, Professional Staff Member
                  Jonathan Epstein, Democratic Fellow

                            C O N T E N T S

                              ----------                              

                               STATEMENTS

                                                                   Page

Akaka, Hon. Daniel K., U.S. Senator from Hawaii..................     3
Bunning, Hon. Jim, U.S. Senator from Kentucky....................     3
Burke, Dr. Frank P., Vice President, Research and Development, 
  CONSOL Energy, Inc., on behalf of the National Mining 
  Association....................................................    25
Domenici, Hon. Pete V., U.S. Senator from New Mexico.............     1
Garman, David, Assistant Secretary for Energy Efficiency and 
  Renewable Energy, Department of Energy.........................    19
Moniz, Ernest J., Ph.D., Professor of Physics, Massachusetts 
  Institute of Technology........................................    10
Murkowski, Hon. Lisa, U.S. Senator from Alaska...................     4
Smalley, Richard E., Ph.D., Director, Carbon Nanotechnology 
  Laboratory, Rice University....................................     6

                                APPENDIX

Responses to additional questions................................    49

 
                         ELECTRICITY GENERATION

                              ----------                              

                        TUESDAY, APRIL 27, 2004

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:03 a.m. in 
room SD-366, Dirksen Senate Office Building, Hon. Pete V. 
Domenici, chairman, presiding.

 OPENING STATEMENT OF PETE V. DOMENICI, U.S. SENATOR FROM NEW 
                             MEXICO

    The Chairman. The hearing will please come to order. This 
hearing of the Energy and Natural Resources Committee on 
sustainable low-emissions electricity generation shall come to 
order. This committee has heard testimony in several previous 
hearings about our growing dependence on imports of oil and now 
we are beginning to see how we are going to become more and 
more dependent, if things do not change, on natural gas from 
overseas or a substitute for it.
    We have all heard serious questions about the availability 
of these precious resources. Past hearings have noted alarming 
statistics. Oil imports now fulfill about 55 percent of the 
total U.S. petroleum demand, with projection that imports will 
reach 70 percent of the U.S. needs by 2025. Natural gas imports 
are similarly expected, believe it or not, to be 23 percent of 
the total demand by 2025.
    These trends are disturbing enough in the near term, but in 
the longer term we face far greater challenges if we want to 
maintain our standard of living, our strong economy that runs 
on energy. Natural gas and crude oil are finite resources. 
Experts debate when supplies will dwindle to the point that it 
will no longer make economic sense to use them in electricity 
generation and transportation. Few people will argue that these 
resources are sufficient to maintain our thirst for energy 
throughout the next century.
    In this hearing, we look beyond the next few decades to the 
days when natural gas and oil simply cannot be used to provide 
economic electricity generation or transportation fuels. Today 
we want to ask what we should be doing today to prepare for 
that future. Only three sources of energy in use today have the 
potential to expand substantially to take up the slack when we 
are forced to shift from oil and gas. Those are renewable 
sources of energy, nuclear energy, and clean coal. Only these 
three sources clearly have the potential to protect the 
environment and meet our energy needs beyond this century.
    Some may argue that only one of these sources can meet our 
needs if only we expand our conservation efforts. I do not 
believe that. Conservation is vital, but it is not the whole 
answer to our future needs. Diversity of energy sources is 
equally vital. Our Nation will need all the energy resources it 
can produce, or maybe there I should say the new sources we can 
produce.
    I hope our witnesses today will share their perspective on 
the energy demands and the challenges of the future. In 
addition, I would like to hear their views on the research and 
development efforts that must be undertaken now to prepare for 
that future.
    Testifying today before us are Dr. Richard Smalley, a 
winner of the Nobel Prize for pioneering work in nanotechnology 
and director of the Carbon Nanotechnology Laboratory at Rice 
University. We are very, very appreciative that you joined us 
today and we are very pleased to know that we have an American 
of such accomplishments as you. Thank you so much.
    Dr. Smalley. Thank you.
    The Chairman. We have the Honorable David K. Garman, Acting 
Under Secretary for Energy Sciences and Environment and 
Assistant Secretary of Energy Efficiency and Renewable Energy 
in the Department; Dr. Ernest J. Moniz, professor of physics at 
MIT and Under Secretary of the Department of Energy in the 
Clinton administration. That is where I first met him and it 
was a pleasure working with him there then because he knew a 
lot and it was good to have somebody in the Department that 
knew a lot.
    Dr. Francis--I do not know what I am saying.
    Dr. Moniz. I appreciate it.
    The Chairman. I will just stop there.
    Dr. Francis P. Burke, vice president for research and 
development at CONSOL Energy, Inc. We look forward to your 
testimony today.
    Senator Bingaman, do you care to make an opening statement?
    Senator Bingaman. Well, very briefly, Mr. Chairman. Thanks 
for having the hearing. I think this is a very important issue. 
Obviously it is an important issue because of the problems that 
we can foresee related to price and availability of oil and gas 
in the future, but also of course with regard to emissions and 
how we position ourselves to deal with the need to reduce 
emissions, CO2 emissions in particular, as we move 
forward.
    The information I have been given here is that in 2002 
electricity generation represented 39 percent of the Nation's 
carbon dioxide emissions. In 2025, according to the EIA the 
estimate is that electricity production will account for about 
40 percent of our total carbon dioxide emissions.
    The Chairman. What is the 2002 one?
    Senator Bingaman. 39 percent. So clearly it is a major 
issue. The question of which technologies we can use to 
generate electricity is a major factor in determining whether 
we come to grips with this emissions problem as well. You have 
an excellent group of witnesses here and I look forward to 
hearing from them.
    Thank you.
    The Chairman. Thank you very much.
    Senator Bunning.

          STATEMENT OF HON. JIM BUNNING, U.S. SENATOR 
                         FROM KENTUCKY

    Senator Bunning. Thank you, Mr. Chairman. I am pleased that 
we are having this hearing today and I want to thank you for 
holding it.
    The Chairman. You are welcome.
    Senator Bunning. I think it is important that we remain 
focused on our needs to increase our domestic energy production 
and lessen our dependency on foreign nations such as those in 
the Middle East. While we appear to be trying to move away from 
combat in Iraq, there is still a lot of uncertainty in the 
Middle East. The need to increase our own production of energy 
has never been more important than now.
    This hearing is especially important because of the high 
price of oil and natural gas and gasoline. We need to have 
alternative forms of energy to keep the cost of energy in our 
country down.
    I am proud to be from a coal State. Generations of 
Kentuckians have made their living in coal fields and coal 
mines. For the last decade, coal in Kentucky has been on the 
downturn because of Federal legislation and regulation policies 
which forced electric generation to invest in natural gas-fired 
facilities instead of coal. Now I am glad to see that we have 
turned things around and are taking steps to make sure that 
coal continues to play a vital role in meeting our future 
energy needs.
    This focus on clean coal is good for the environment. It is 
certainly good for the economy and for putting people back to 
work. It is also a good way to decrease our reliance on foreign 
sources of energy. Clean coal technology will result in a 
significant reduction in emissions and a sharp increase in 
energy efficiency of turning coal into electricity. I hope that 
we can continue to work to bring new clean coal technology 
quickly into the commercial sector.
    I thank our witnesses for appearing before us today to 
discuss this important topic. I look forward to hearing their 
testimony.
    Thank you, Mr. Chairman.
    The Chairman. Thank you very much, Senator.
    The Senator from Hawaii.

        STATEMENT OF HON. DANIEL K. AKAKA, U.S. SENATOR 
                          FROM HAWAII

    Senator Akaka. Thank you Mr. Chairman, for convening 
today's hearing on this extremely important topic. I would like 
to add my welcome to our distinguished witnesses today, Dr. 
Richard Smalley, Dr. Ernie Moniz, and Dr. Francis Burke. I 
would like to offer a special aloha to Dave Garman whom I have 
known for many years when he worked for the Senate, and I want 
to send my aloha to the family, too, Dave, and welcome you to 
this hearing.
    Mr. Chairman, the quality of the air Americans breathe has 
improved significantly over the last 20 years, but many 
challenges remain in protecting public health and the 
environment. One of the most significant challenges is to 
reduce airborne pollutants released from the Nation's 
powerplants, especially those fueled by coal. I want to say to 
my friend the Senator from Kentucky that I am not against coal. 
I am just pointing out a fact here. Carbon dioxide emissions 
are not regulated under the Clean Air Act, but there is a 
growing interest in requiring reporting and reductions in 
carbon dioxide emissions.
    More than one-half of electricity generated in the United 
States today comes from coal. While coal is the Nation's major 
fuel for electric power, natural gas is the fastest growing 
fuel. Natural gas is more plentiful than oil in the United 
States, but as demand increases domestic producers must turn to 
deeper and more expensive gas reservoirs. As demand and costs 
for natural gas rise, alternative electricity sources such as 
clean coal, nuclear, and biomass will play an increasingly 
important role as potential sources of energy.
    Hawaii's overall energy prices are the second highest in 
the Nation, behind the District of Columbia. Our prices of 
electricity rank among the highest in the Nation, which is a 
dubious honor because our gasoline prices are also consistently 
the highest in the Nation. Most of Hawaii's electricity is 
generated by petroleum-fired plants, and data indicate that 
over the last decade, while sulfur dioxide emissions from 
utility plants in the State were falling, emissions of nitrogen 
oxides and carbon dioxide were increasing.
    The State of Hawaii has moved ahead in providing guidelines 
for requiring renewable sources of electricity for its 
residents. Currently, 8.4 percent of our electricity in the 
State is from renewables, while nationally just 2 percent of 
electricity is from renewable sources. Electricity generated 
from solar, wind, biomass, geothermal, municipal solid waste, 
and hydro sources all play a role in Hawaii's renewable 
portfolio.
    As you know, I have long been a supporter of sustainable 
energy sources. I am confident that American scientific 
ingenuity, through basic R&D can help make low-emission and 
sustainable electricity competitive in the markets of the 
future.
    Mr. Chairman, you have convened an outstanding panel of 
forward-looking witnesses today to help us understand the 
future of low emission and sustainable electricity generation. 
With Hawaii's unique situation, I look forward to hearing 
various perspectives on how we will be able to move from 
petroleum dependency to more sustainable and healthier 
electricity generation.
    Thank you very much, Mr. Chairman.
    The Chairman. Senator Murkowski.

        STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR 
                          FROM ALASKA

    Senator Murkowski. Mr. Chairman, thank you for calling this 
hearing on sustainable low emissions electricity generation. 
Promoting technologies to generate electricity in an 
environmentally friendly and cost-effective way is one of my 
top priorities. About 70 percent of our Nation's electricity is 
generated by the combustion of fossil fuels, 50 percent from 
coal, 18 percent from natural gas, 2 percent from oil. Despite 
sustained high natural gas prices, almost all new generating 
capacity in America built over the last few years is designed 
to run solely on natural gas. By 2025, EIA predicts natural gas 
will account for about 23 percent of all electricity 
generation. It is clear that Congress must act to increase our 
domestic supplies of natural gas.
    On April 2 I sent a letter to each of my colleagues 
outlining the importance of an Alaskan natural gas pipeline to 
our economic recovery and job creation. As this committee looks 
for ways to generate electricity in an environmentally 
responsible manner, I encourage my colleagues who are opposing 
the energy bill to reconsider their position. The energy bill 
takes some important first steps towards increased use of 
sustainable low emission electricity generation. It also 
includes the necessary fiscal and regulatory provisions to 
lesson the cost of financing the construction of an Alaska 
natural gas pipeline. It streamlines the permitting process and 
expedites judicial review of the project. In passing the energy 
bill, we can unlock 35 trillion cubic feet of proven reserves 
of natural gas stranded on Alaska's North Slope.
    While natural gas is increasingly important as part of our 
electricity generation mix and will become even more so in the 
future, coal still remains the backbone of our electricity 
portfolio. There are several emerging technologies that are 
being developed to find new ways to use our abundant coal 
resources in an environmentally responsible way. Again, I would 
like to remind my colleagues that this is an area where the 
energy bill, which is currently stalled in the Senate, can 
help.
    The coal title of the energy bill authorizes $2 billion to 
fund the Clean Coal Power Initiative. The development of clean 
coal technology will help our Nation use its abundant coal 
resources in an environmentally responsible manner. In Alaska 
we are working to find new ways to use our reserves while 
mitigating the impact on the environment.
    In Healy, Alaska, we have a small experimental clean coal 
powerplant which is sitting dormant because it just barely 
missed its emissions requirements. The Healy clean coal plant 
is illustrative of why the Federal Government must take the 
lead in investing in emerging technologies. Once the kinks can 
be worked out, new processes that will greatly benefit the 
environment and that may not have been developed without 
Federal support can become economically viable and eventually 
commercial.
    Once the Healy clean coal plant and other clean coal 
technologies demonstrate better ways for us to generate 
electricity from coal, we can utilize our Nation's vast coal 
resources in an environmentally responsible manner. As we work 
together to promote the construction of the Alaska natural gas 
pipeline and look for cleaner ways to utilize our coal 
resources, we must also consider other low-emission electricity 
generation, such as nuclear and renewables.
    The renewable energy production incentive program which is 
reauthorized in the energy bill is vital for the development of 
renewable energy technologies, such as wind and geothermal. 
This incentive program is particularly important for small 
rural electric cooperatives, like those in Alaska, which are 
seeking new ways to generate electricity in sustainable and 
cost-effective ways while protecting the environment at the 
same time.
    Part of this hearing and the testimony is going to focus on 
the need to have a work force educated in the physical sciences 
to work on these emerging technologies. I agree that as we 
promote new technologies we must always remember that our 
trained work force is vital if these technologies are going to 
become a commercial reality.
    Mr. Chairman, I appreciate the opportunity to listen to the 
panel of witnesses that you have brought before us today. I am 
looking forward to their comments, and again I thank you for 
the highlight on this very important issue.
    The Chairman. Thank you very much, Senator. I do want to 
say we are all aware now that the energy bill is at least in 
two parts: the part that is the tax provisions, which 
principally if completed in their totality would be production 
tax credits for solar, wind, bio, and then also the same for 
nuclear and a very similar one for clean coal; we will then, 
hopefully before the year is out, move to the rest of the bill. 
It will have a lot of amendments on it, just because there are 
many who do not share our interest in getting it done, and 
there are some with legitimate amendments.
    I am going to move now to Dr. Smalley. I just mentioned who 
you were and what you were and that little tiny bit was enough 
to distinguish you. I want to call to everyone's attention a 
statement, just a little tiny statement in his statement. It 
says at a point in your statement: ``However, I am an American 
scientist, brought up in the Midwest during the Sputnik era, 
and, like so many of my colleagues in the United States and 
worldwide''--most important five words--``I am a technology 
optimist.''
    With that, I would ask for your testimony.

   STATEMENT OF RICHARD E. SMALLEY, Ph.D., DIRECTOR, CARBON 
           NANOTECHNOLOGY LABORATORY, RICE UNIVERSITY

    Dr. Smalley. Thank you, chairman.
    Energy is the single most important challenge facing 
humanity today. As we peak in oil production and worry about 
how long natural gas will last, life must go on. Somehow we 
must find the basis for energy prosperity for ourselves and the 
rest of humanity for the 21st century. By the middle of this 
century, we will need to at least double world energy 
production from its current level, with most of this coming 
from some clean, sustainable, CO2-free source. For 
worldwide peace and prosperity, it must be cheap.
    We simply cannot do this with current technology. We need 
revolutionary breakthroughs to even get close. As the chairman 
said, let me repeat, I am an American scientist, brought up in 
the Middle West in the Sputnik era, and I am a technology 
optimist. I think we can do it. We can find the new oil, the 
new technology that provides massive clean, low-cost energy, 
the energy necessary for an advanced civilization of what may 
very well be ten billion human beings on this planet before 
this century is done.
    Electricity I am quite convinced, electricity is the key. 
Consider for example a vast interconnected electrical energy 
grid for the North American continent from above the Arctic 
Circle down to below the Panama Canal. By 2050 this grid will 
interconnect several hundred million local sites. There are two 
key aspects of this future grid that will make a huge 
difference: one, massive long-distance electrical power 
transmission; and two, electrical storage, storage of 
electrical power on local sites with real-time pricing.
    Storage of electrical power is critical for stability and 
robustness of the electrical power grid and it is absolutely 
essential if we are ever to use solar and wind as our dominant 
primary energy source. The best place to provide the storage is 
locally, near the point of use. Imagine by the middle of the 
century that every house, every business, every building, has 
its own electrical energy storage device, equivalent to an 
uninterruptible power supply capable of handling the entire 
needs of that site for 24 hours.
    Since the devices are small and relatively inexpensive, the 
owners can replace them with new models every 5 years or so as 
worldwide technological innovation and free enterprise 
continuously and rapidly develop improvements in this most 
critical of all aspects of the electrical energy grid.
    Today, using lead-acid storage batteries such a unit for a 
typical house storing 100 kilowatt-hours of energy would take 
up a small room and cost over $10,000. But through the 
revolutionary advances in nanotechnology, it may very well be 
possible to shrink the size of that unit down to the size of a 
washing machine and drop the cost below $1,000. With intense 
research and entrepreneurial effort, many schemes are likely to 
be developed over the years to supply this local storage 
technology, a market that very well may expand to several 
billion units worldwide. Think of the automobile industry, but 
in your home.
    With these advances, the electrical grid can become 
exceedingly robust. Its local storage protects the customers 
from power fluctuations and outages. With real-time pricing, 
the local customers have incentive to take power from the grid 
when it is cheapest. This in turn permits the primary 
electrical providers to deliver their power to the grid when it 
is most efficient for them to do so, and it vastly reduces the 
requirements for reserve capacity to follow peaks in demand. 
Most importantly, it permits a large portion or even all of the 
primary electrical power in the grid to come from solar and 
wind.
    The other critical innovation needed is massive electrical 
power transmission over continental distances, permitting, for 
example, hundreds of gigawatts of electrical power to be 
transported from solar farms in New Mexico to markets in New 
England. Then all primary power producers can compete with 
little concern for the actual distance to market.
    Clean coal plants in Wyoming or Kentucky, stranded gas in 
Alaska, wind farms in North Dakota, hydroelectric from northern 
British Columbia, biomass from Mississippi, nuclear power from 
Hanford, Washington, solar power from the vast deserts, all of 
these remote powerplants from all over the continent can now 
contribute power to consumers thousands of miles away on the 
grid. Everybody plans.
    Nanotechnology in the form of single-walled carbon 
nanotubes forming what we call the Armchair Quantum Wire may 
play a big role in this new electrical transmission system. 
Such innovations in power transmission, power storage, and the 
massive primary power generation technologies themselves can 
only come from miraculous discoveries in science together with 
free enterprise and open competition for huge worldwide 
markets.
    America, this land if technological optimists, this land of 
Thomas Edison, should take the lead. We should launch a bold 
new energy research program. Just a nickel for every gallon of 
gasoline, diesel oil, and fuel oil would generate $10 billion a 
year. That would be enough to transform the physical sciences 
in this country and to inspire a new Sputnik generation of 
American scientists and engineers.
    At minimum, it will create a cornucopia of new technologies 
that will drive wealth and job creation for this next 
generation in our country. At best, it will solve the energy 
problem within this generation, solve it for ourselves and, by 
example, solve it for the rest of humanity as well.
    It sounds corny, but I think it is a good line: Give a 
nickel, save the world.
    Thank you.
    [The prepared statement of Dr. Smalley follows:]

   Prepared Statement of Richard E. Smalley, Ph.D., Director, Carbon 
               Nanotechnology Laboratory, Rice University

    I appreciate the opportunity today to testify to your committee on 
this most important of issues.
    We are heading into a new energy world. With economic recovery in 
the countries of the OECD and rapid development of China and soon 
India, huge new demands will be placed on the world oil and gas 
industry. Yet oil production will probably peak worldwide sometime 
within this decade, and the future capacity of natural gas production 
is unclear. Coal will be able to pick up some of the slack, but with 
current technology this will amplify the threat of massive climate 
change.
    Energy is at the core of virtually every problem facing humanity. 
We cannot afford to get this wrong. We should be skeptical of optimism 
that the existing energy industry will be able to work this out on its 
own.
    Somehow we must find the basis for energy prosperity for ourselves 
and the rest of humanity for the 21st century. By the middle of this 
century we should assume we will need to at least double world energy 
production from its current level, with most of this coming from some 
clean, sustainable, CO2-free source. For worldwide peace and prosperity 
it needs to be cheap.
    We simply cannot do this with current technology. We will need 
revolutionary breakthroughs to even get close.
    Oil was the principal driver of our economic prosperity in the 20th 
century. It is possible that Mother Nature has played a great trick on 
us, and we will never find another energy source that is as cheap and 
wonderful as oil. If so, this new century is certain to be very 
unpleasant.
    However, I am an American scientist brought up in the Midwest 
during the Sputnik era, and like so many of my colleagues in the US and 
worldwide, I am a technological optimist. I think we can do it. We can 
find ``the New Oil'', the new technology that provides the massive 
clean energy necessary for advanced civilization of the 10 billion 
souls we expect to be living on this planet by 2050. With luck we'll 
find this soon enough to avoid the terrorism, war, and human misery 
that will otherwise ensue.
    Electricity is the key. As we leave oil as our dominant energy 
technology, we will not only evolve away from a wonderful primary 
energy source, but we will also leave behind our principal means of 
transporting energy over vast distances. By 2050 we will do best if we 
do this transportation of energy not as oil, or coal, or natural gas, 
or even hydrogen. We should not be transmitting energy as mass at all. 
Instead we should transport energy as pure energy itself.
    Consider, for example, a vast interconnected electrical energy grid 
for the North American Continent from above the Artic Circle to below 
the Panama Canal. By 2050 this grid will interconnect several hundred 
million local sites. There are two key aspects of this future grid that 
will make a huge difference: (1) massive long distance electrical power 
transmission, and (2) local storage of electrical power with real time 
pricing.
    Storage of electrical power is critical for stability and 
robustness of the electrical power grid, and it is absolutely essential 
if we are ever to use solar and wind as our dominant primary power 
source. The best place to provide this storage is locally, near the 
point of use. Imagine by 2050 that every house, every business, every 
building has its own local electrical energy storage device, an 
uninterruptible power supply capable of handling the entire needs of 
the owner for 24 hours. Since the devices are small, and relatively 
inexpensive, the owners can replace them with new models every 5 years 
or so as worldwide technological innovation and free enterprise 
continuously and rapidly develop improvements in this most critical of 
all aspects of the electrical energy grid. Today using lead-acid 
storage batteries, such a unit for a typical house to store 100 
kilowatt hours of electrical energy would take up a small room and cost 
over $10,000. Through revolutionary advances in nanotechnology, it may 
be possible to shrink an equivalent unit to the size of a washing 
machine, and drop the cost to less than $1,000. Since the amount of 
energy stored is relatively small, there are many technologies that are 
being considered. One is a flow battery with a liquid electrolyte based 
on salts of vanadium. Another features a reversible hydrogen fuel cell 
which electrolyzes water to make hydrogen when it stores energy, then 
uses this hydrogen to make electricity as it is needed. Another uses 
advanced flywheels. With intense research and entrepreneural effort, 
many schemes are likely to be developed over the years to supply this 
local energy storage market that may expand to several billion units 
worldwide.
    With these advances the electrical grid can become exceedingly 
robust, since local storage protects customers from power fluxuations 
and outages. With real-time pricing, the local customers have incentive 
to take power from the grid when it is cheapest. This in turn permits 
the primary electrical energy providers to deliver their power to the 
grid when it is most efficient for them to do so, and vastly reduce the 
requirements for reserve capacity to follow peaks in demand. Most 
importantly, it permits a large portion--or even all--of the primary 
electrical power on the grid to come from solar and wind.
    The other critical innovation needed is massive electrical power 
transmission over continental distances, permitting, for example, 
hundreds of gigawatts of electrical power to be transported from solar 
farms in New Mexico to markets in New England. Now all primary power 
producers can compete with little concern for the actual distance to 
market. Clean coal plants in Wyoming, stranded gas in Alaska, wind 
farms in North Dakota, hydroelectric power from northern British 
Columbia, biomass energy from Mississippi, nuclear power from Hanford 
Washington, and solar power from the vast western deserts, etc., remote 
power plants from all over the continent contribute power to consumers 
thousands of miles away on the grid. Everybody plays. Nanotechnology in 
the form of single-walled carbon nanotubes (a.k.a. ``buckytubes'') 
forming what we call the Armchair Quantum Wire may play a big role in 
this new electrical transmission system.
    Such innovations in power transmission, power storage, and the 
massive primary power generation technologies themselves, will come 
from miraculous discoveries in science together with free enterprise in 
open competition for huge worldwide markets.
    It would be useful to have these discoveries now.
    America, the land of technological optimists, the land of Thomas 
Edison, should take the lead. We should launch a bold New Energy 
Research Program. Just a nickel from every gallon of gasoline, diesel, 
fuel oil, and jet fuel would generate $10 billion a year. That would be 
enough to transform the physical sciences and engineering in this 
country. After five years we should increase the funding to a dime per 
gallon. Sustained year after year, this New Energy Research Program 
will inspire a new Sputnik Generation of American scientists and 
engineers. At minimum it will generate a cornucopia of new technologies 
that will drive wealth and job creation in our country. At best we will 
solve the energy problem within this next generation; solve it for 
ourselves and, by example, solve it for the rest of humanity on this 
planet.
    Give a nickel. Save the world.

    The Chairman. Terrific. Thank you.
    I wanted to tell you that the bill that we are trying to 
get passed has some very, very pronounced and live sections on 
nanotechnology. We do not have the nickel, but if we think 
enough about it we will pay for it, because I would submit to 
you we paid for National Institutes of Health at a much higher 
rate than you have just suggested because we got excited about 
health. If we can get excited about what you are talking about, 
we certainly should be able to take the National Science 
Foundation and the Department of Energy and work toward 
doubling their spending in a 10-year period. There are a number 
of us that are going to introduce such legislation. The time 
has come to double that because you cannot add that much more 
to National Institutes of Health unless you just want to give 
every university in the United States carte blanche to fund 
every kind of research that anybody has to offer, which I do 
not want to do. I am the only one so far who spoke up against 
the funding, and NIH thought I was nuts when I did it, but I 
did it because I do not know how much more it can grow.
    The Senator from the great State of Kentucky, I want to 
suggest something to you and then we will go on to the next 
witness. There is a new invention that is currently in the 
market that is called Horizon Sensor. It is a little company in 
Ratone, New Mexico, where an engineer has invented a machine 
that is so simple with reference to coal that everybody forgot 
about it other than him. It cuts a swath of coal, in your coal 
and any other major coal veins. The physical evidence is that 
over 95 percent of the dirty stuff is in the top and bottom six 
inches. So the swath comes along and leaves the six inches and 
takes the rest out. When the coal comes out the other side to 
be mined, it is almost clear of the major pollutants, the 
mercury and the bad stuff.
    Currently the Department is considering submitting to the 
EPA that it be mandatory that it be used on mines that are 
producing coal that has the structure that I have just 
described. I thought it would be good maybe if we brought that 
person down to have a showing perhaps in your State at your 
leisure. I think it would be something very exciting.
    Now we are going to go to you, Dr. Moniz, because that is 
the way I have it in my list. So if you would proceed. I do not 
think I will go through your bio except to tell everybody that 
he was second in charge of the Department of Energy, his 
expertise was nuclear. When he left there he joined up with 
another very involved person, Dr. Deutche. They have since that 
time published a great manuscript on nuclear.
    I am going to suggest to you, Dr. Moniz, that I was just 
telling Senator Bingaman after all these years I am about 3 
weeks away from a book on nuclear power, the future of the 
world, and it will be ready.
    Mr. Smalley, I want to suggest that you probably know, that 
at Sandia National Laboratories there is the largest facility 
for nanoresearch in the world and it is about two-thirds 
finished. So I do not think we are short of money. I think we 
may be a little short of what we want to do with it, which 
people like you could be very helpful on.
    Your statement will be made part of the record, doctor. Let 
us proceed.

  STATEMENT OF ERNEST J. MONIZ, Ph.D., PROFESSOR OF PHYSICS, 
             MASSACHUSETTS INSTITUTE OF TECHNOLOGY

    Dr. Moniz. May I just note before starting, Senator, that I 
am looking very much forward to your book and recall your very 
interesting and important talk at the Kennedy School some years 
ago which put together nuclear power with nonproliferation 
issues in a way that I thought was extremely important. Also, I 
will mention for the gentleman from Kentucky that with John 
Deutsch our new study is on coal.
    But if I may go to my statement, Mr. Chairman, Senator 
Bingaman, and members: Thank you for the opportunity to discuss 
the results of our MIT study on the future of nuclear power. 
The study was framed by the global warming challenge of 
increasing energy use, especially electricity use, very 
substantially by mid-century to meet global human need while at 
the same time cutting emissions of greenhouse gases. We believe 
the United States will join others in this effort and stress 
the importance of enabling the technological solutions early 
on, really in the next decade to 2, if we have any chance of 
being on the glide path to addressing this problem by mid-
century.
    This is a very stiff challenge and we believe that all 
options represented here on this panel must be on the table, 
including nuclear power. The United States must certainly be a 
leader if this kind of global growth is to be realized on a 
scale big enough to seriously impact greenhouse gas emissions 
by mid-century, probably a tripling or so of American 
deployment by mid-century, again if this global scenario is to 
be realized.
    This is obviously very challenging for a technology that 
has, bluntly, not seen a new plant ordered in a quarter century 
because it is facing economic, safety, waste, proliferation, 
and public acceptance issues. The principal utility criteria 
for moving ahead with new plants in the United States includes 
operational confidence, licensability, and economics. This 
growth will be met for several decades by evolutionary versions 
of currently deployed technologies, so-called thermal reactors, 
principally light water reactors, with some possibility of 
heavy water reactors, and then in a couple of decades gas-
cooled reactors in the mix.
    But the advanced reactors and fuel cycles much discussed 
these days in the research community are many decades from 
deployment and thus are not relevant to the challenge that I 
have laid out, getting on the trajectory to meet greenhouse gas 
challenges in this first half century.
    Within this context, we offer several recommendations which 
I will summarize briefly: Economics. The economics of new 
nuclear plants are challenging in a restructured electric 
sector. A merchant plant model of costs shows that if nuclear 
power is to be competitive with coal and natural gas industry 
must demonstrate reactor capital cost reductions that are 
plausible, about 25 percent, but as yet unproved, and the 
social costs of greenhouse gas emissions need to be 
internalized. Enough plants need to be built on budget and 
schedule to remove the financing risk premium.
    For the United States, overcoming this first mover problem 
is really the key to determining the role of nuclear power. 
Based upon the public good of determining the competitiveness 
of evolutionary reactor designs in the evolved regulatory 
context, we recommend electricity production tax credits for 
first movers modeled after those in place for wind, with a 
total credit scaled to first mover costs. This has the 
advantages of technology neutrality in addressing carbon 
emissions and of still requiring substantial private sector 
equity investments and therefore keeping risk where it belongs.
    First mover demonstration of the economics and safety of 
new plants must occur within the next decade or so if nuclear 
power is to make a significant contribution to mitigating 
climate change in the first half of this century. We note that 
the 2003 energy bill conference report included such a 
mechanism, production tax credits, although with somewhat 
higher total credit and smaller first mover capacity relative 
to the MIT report.
    Waste management. In the growth scenario, long-term storage 
of spent fuel prior to geological emplacement, specifically 
including international spent fuel storage, we believe should 
be systematically incorporated into waste management 
strategies. The scope of waste management R&D should be 
expanded significantly as a very high priority. An extensive 
program on deep borehole disposal was one example that we put 
forward.
    Proliferation. The current international safeguards regime 
should be strengthened to meet the nonproliferation challenges 
of globally expanded nuclear power. The IAEA additional 
protocol needs to be implemented and the accounting and 
inspection regime should be supplemented with strong 
surveillance and containment systems for new fuel cycle 
facilities.
    The Nonproliferation Treaty implementation framework should 
evolve to a risk-based framework, keyed to fuel cycle activity. 
Central to this is having growth in global nuclear power 
realized by having fuel cycle services, especially fresh fuel 
supply and spent fuel removal, provided by a relatively small 
number of suppliers under international oversight. Such an 
approach needs to be established over the next decade prior to 
a possible acceleration in nuclear power deployment and 
American leadership is essential.
    R&D. The government nuclear energy R&D program is 
substantially underfunded. The MIT study group priorities for 
the next 5 to 10 years encompass waste management, thermal 
reactor development, safeguards, uranium resource assessment, 
and advanced fuel cycles. Specifically, a major international 
effort, the nuclear system modeling project, as we called it, 
should be launched to develop the analytical tools and to 
collect essential scientific and engineering data for 
integrated assessment of fuel cycles. Large demonstration 
projects are not justified in our view in the absence of this 
advanced analysis and simulation capability.
    Any international program, however, must be pursued with 
proliferation resistance as a key criterion, both in terms of 
fuel cycles explored and in terms of facilities required while 
pursuing the program. We recommend joint management of such 
programs by the Nuclear Energy and Nonproliferation Offices of 
the Department of Energy.
    Finally, we observe that public acceptance is critical to 
expansion of nuclear power in many countries. In the United 
States, the public does not yet see nuclear power as a way to 
address global warming. Environmental organizations, power 
providers, and the government need to engage in a much more 
open discussion of the benefits and problems associated with 
nuclear power and climate change.
    Thank you again for the opportunity. I will be most happy 
to address the committee's questions.
    [The prepared statement of Dr. Moniz follows:]

  Prepared Statement of Ernest J. Moniz, Ph.D., Professor of Physics, 
                 Massachusetts Institute of Technology

                        INTRODUCTION AND SUMMARY

    Mr. Chairman, Senator Bingaman, and members of the Energy and 
Natural Resources Committee, I thank you for the opportunity to discuss 
the results of an interdisciplinary study on The Future of Nuclear 
Power [1] carried out at MIT and published in Summer 2003. It produced 
a set of recommendations aimed at preserving the option for nuclear 
power to contribute significantly towards meeting the greenhouse gas 
(GHG) emissions challenge. That challenge is to maintain or reduce the 
level of anthropogenic global GHG emissions over the next several 
decades even as energy demand increases substantially, especially in 
the developing economies of the world. As a reference point, about 6.5 
Gigatonnes of carbon are emitted annually, principally from energy 
production and use, and a risky doubling of pre-industrial carbon 
dioxide concentrations in the atmosphere is expected in the second half 
of this century in a ``business-as-usual'' (BAU) scenario. Policy 
options and recommended actions for the next decade are offered in the 
MIT study with an eye towards possible Terawatt-scale global deployment 
of nuclear power by mid-century. That represents nearly a tripling of 
today's global capacity, which most likely would modestly increase 
nuclear power's market share of global electricity production. The 
Terawatt scale (which is about a third of total primary energy use per 
year in the United States) is that at which nuclear power (or other 
``carbon-free'' technologies) displaces carbon emissions from fossil 
fuel plants at the Gigatonne scale.
    A possible tripling of nuclear power capacity to mid-century is a 
major challenge for a technology that is projected by EIA to continue 
at more or less constant deployed capacity for the next two decades in 
a BAU scenario. Of course, international commitment to major reductions 
of energy sector carbon intensity would be far from BAU, and that 
provides the context for the MIT study. We believe that such a 
commitment will eventually be forthcoming, that the United States will 
join with others to do so, and that an early commitment will greatly 
improve the odds of holding GHG atmospheric concentrations at 
acceptable levels. Success will likely require Terawatt-scale or 
greater contributions from all technology pathways the ``negawatts'' of 
accelerated efficiency gains, renewables, nuclear power, and clean coal 
with carbon dioxide capture and sequestration.
    We shall discuss only the nuclear power pathway. To realize growth 
on the indicated scale, economic, safety, waste, and proliferation 
challenges must be met to the public's satisfaction. Some key 
observations and recommendations, elaborated in the rest of the 
testimony, include:

   A mid-century growth scenario on a scale that substantially 
        impacts greenhouse gas emissions would be realized with thermal 
        reactors operated principally in a once-through mode. This best 
        meets the principal utility criteria for moving ahead with new 
        nuclear plants in the United States [2]:
     Operational confidence based on familiarity with the 
            system designs and standardization of both design and 
            operation
     Licenseability, for which the extensive regulatory history 
            with light water reactors is very important
     Economics, requiring large reductions in overnight capital 
            costs compared to past experience.
   The economics of new nuclear plants are challenging in a 
        restructured electricity sector. A merchant plant model of 
        costs shows that, if nuclear power is to be competitive with 
        coal and natural gas, industry must demonstrate reactor capital 
        cost reductions that are plausible but as yet unproved, and the 
        social costs of greenhouse gas emission need to be internalized 
        [1]. For the United States, overcoming the ``first mover'' 
        problem is key to determining the role of nuclear power. Based 
        upon the public good of determining the competitiveness of 
        evolutionary reactor designs in an evolving regulatory context, 
        we recommend electricity production tax credits for ``first 
        movers'', modeled after those in place for wind, with a total 
        credit scaled to first mover costs. This has the advantages of 
        ``technology neutrality'' in addressing carbon emissions and of 
        still requiring substantial equity investments (and therefore 
        keeping risk with the private sector). First mover 
        demonstration of the economics and safety of new nuclear plants 
        must occur within the next decade or so if nuclear power is to 
        make a significant contribution to mitigating climate change in 
        the first half of this century. We note that the 2003 energy 
        bill conference report included such a mechanism, although with 
        somewhat higher total credit and smaller first mover capacity 
        relative to the MIT report.
   Long-term storage of spent fuel prior to geological 
        emplacement, specifically including international spent fuel 
        storage, should be systematically incorporated into waste 
        management strategies. The scope of waste management R&D should 
        be expanded significantly; an extensive program on deep 
        borehole disposal is an example. Successful operation of 
        geological disposal facilities and public acceptance of the 
        soundness of this approach are essential for large-scale new 
        nuclear power deployment.
   The current international safeguards regime should be 
        strengthened to meet the nonproliferation challenges of 
        globally expanded nuclear power. The International Atomic 
        Energy Agency (IAEA) Additional Protocol [3] needs to be 
        implemented, and the accounting and inspection regime should be 
        supplemented with strong surveillance and containment systems 
        for new fuel cycle facilities. The Nonproliferation Treaty 
        implementation framework should evolve to a risk-based 
        framework keyed to fuel cycle activity; central to this is 
        having growth in global nuclear power deployment realized by 
        having fuel cycle services, in particular fresh fuel supply and 
        spent fuel removal, provided by a relatively small number of 
        suppliers under international oversight. Such an approach needs 
        to be established over the next decade, prior to a possible 
        acceleration in nuclear power deployment. American leadership 
        is essential.
   Widespread deployment of nuclear power in the second half of 
        this century and beyond, as might be necessary in a GHG-
        constrained world, may call for advanced fuel cycles and 
        reactors requiring a sustained R&D effort. Gas-cooled reactors 
        have potential advantages with respect to safety, proliferation 
        resistance, modularity, and efficiency and could, given 
        accumulated experience, contribute earlier, perhaps in two 
        decades. A major international effort, the Nuclear System 
        Modeling Project, should be launched to develop the analytical 
        tools and to collect essential scientific and engineering data 
        for integrated assessment of fuel cycles (advanced fuels, 
        reactors, irradiated fuel reprocessing, waste management). 
        Large demonstration projects are not justified in the absence 
        of advanced analysis and simulation capability. Any 
        international program should be pursued with proliferation 
        resistance as a key criterion, both in terms of the fuel cycles 
        explored and in terms of capabilities required while pursuing 
        the program. Joint management of such programs by the nuclear 
        energy and nonproliferation offices of the Department of Energy 
        is called for.
   The government nuclear energy-related R&D program is 
        substantially underfunded. The MIT study group recommended 
        priorities for the next five to ten years encompass waste 
        management (engineered barriers, waste form characterization, 
        deep borehole disposal), thermal reactor development (cost 
        reduction, high burn-up fuels, gas cooled reactor development), 
        safeguards (MPC&A tracking systems, containment and 
        surveillance systems),uranium resource assessment, and advanced 
        fuel cycles (modeling, simulation and analysis project, new 
        separations approaches).
   Public acceptance is critical to expansion of nuclear power 
        in many countries. In the United States, the public does not 
        yet see nuclear power as a way to address global warming. 
        Environmental organizations, power providers, and the 
        government need to engage in a more open discussion of the 
        balance of risks associated with nuclear power and climate 
        change.

                         GLOBAL GROWTH SCENARIO

    The MIT study group constructed a scenario for global growth of 
electricity demand to mid-century and for nuclear power's share of that 
growth. The scenario for electricity demand was based on U.N. world 
population and urbanization projections and an assumption of national 
per capita electricity consumption rising towards a world standard. The 
resulting projection for global electricity production is consistent 
with EIA projections over the next two decades (slightly below the EIA 
reference case) and yields an increase of nearly a factor of three by 
mid-century. The nuclear power market share, assuming a strong impetus 
to deploy nuclear power (presumably because of greenhouse gas emission 
``caps'' and of satisfactory resolution of the challenges noted above), 
is based upon national capabilities and infrastructure. The resulting 
scenario is shown in Table 1.

                    Table 1.--GLOBAL GROWTH SCENARIO
------------------------------------------------------------------------
                                                            Nuclear
                                           Projected  electricity market
                 Region                    2050 GWe          share
                                           capacity  -------------------
                                                        2000      2050
------------------------------------------------------------------------
Total world.............................    1,000        17%       19%
Developed world.........................      625        23%       29%
    U.S.................................      300
    Europe & Canada.....................      200
    Developed East Asia.................      115
 
FSU.....................................       50        16%       23%
Developing world........................      325         2%       11%
    China, India, Pakistan..............      200
    Indonesia, Brazil, Mexico...........       75
    Other developing countries..........       50
------------------------------------------------------------------------
Projected capacity comes from the global electricity demand scenario in
  Appendix 2, which entails growth in global electricity consumption
  from 13.6 to 38.7 trillion kWhrs from 2000 to 2050 (2.1% annual
  growth). The market share in 2050 is predicated on 85% capacity factor
  for nuclear power reactors. Note that China, India, and Pakistan are
  nuclear weapons capable states. Other developing countries includes as
  leading contributors Iran, South Africa, Egypt, Thailand, Philippines,
  and Vietnam.

    Several features of the scenario deserve note. The total deployment 
of 1000 GWe globally is nearly a tripling of today's deployment. This 
corresponds to an approximately level world market share and would 
displace about 1.8 Gigatonnes of carbon (equivalent) emissions annually 
from coal plants of equivalent capacity [4]. Such a displacement might 
represent about 25% of incremental greenhouse gas emissions from energy 
use in a business-as-usual scenario, a significant amount. Indeed, one 
may question whether difficult public policy steps are worthwhile from 
a climate change perspective unless one envisions nuclear power 
contributing to the ``solution'' at this level.
    To reach such a level, the developed world will need to increase 
its nuclear market share substantially, up to about 30%. In particular, 
the United States must play a lead role, because of the combination of 
high per capita demand and projected population increase of about 100 
million people. The reality that no new nuclear plants have been 
ordered in the United States for a quarter century is one indicator of 
the difficulty in realizing this global scenario. In contrast to the 
U.S. situation, projected stable (e.g., France) or declining (e.g., 
Japan) populations in countries seen today as more favorably disposed 
to nuclear power serve to limit demand growth.
    A substantial part of the growth also occurs in the developing 
economies, but in a relatively small number of countries. This has 
important implications for addressing proliferation concerns, 
particularly since China, India and Pakistan already have nuclear 
weapons capabilities and thus are not major concerns for fuel cycle-
associated proliferation (since they are likely to continue with 
dedicated weapons programs). An incentive structure that has the 
relatively small number of remaining countries engaged in nuclear 
reactor construction and operation but not in enrichment or 
reprocessing has major nonproliferation benefits; we return to this 
below.

                               ECONOMICS

    The economic comparison of new nuclear plants with baseload coal 
and natural gas plants and the economics of closing the fuel cycle 
underpin many of the recommendations. The baseline costs for new plants 
were compared within a framework of

   merchant plants (i.e., a competitive generation market in 
        which investors bear the primary risk)
   experience, rather than engineering analyses lifetime 
        levelized costs.
    Table 2 shows that, with gas prices of about $4.50/MCF, both 
pulverized coal and natural gas combined cycle plants have a 
substantial cost advantage relative to the nuclear plant baseline in 
the absence of a carbon ``tax'' (detailed discussions of the 
methodology and of the input parameters can be found in the MIT 
report). An independent analysis performed by Deutsche Bank [5] is in 
quite close agreement. This comparison may be altered significantly by 
two factors.

                    Table 2.--COMPARATIVE POWER COSTS
------------------------------------------------------------------------
                                                                Real
                                                              levelized
                    Case (year 2002 $)                       cost cents/
                                                               kWe-hr
------------------------------------------------------------------------
Nuclear (LWR).............................................       6.7
    + Reduce construction cost 25%........................       5.5
    + Reduce construction time 5 to 4 years...............       5.3
    + Further reduce O&M to 13 mills/kWe-hr...............       5.1
    + reduce cost of capital to gas/coal..................       4.2
Pulverized coal...........................................       4.2
CCGT \1\ (low gas prices, $3.77/MCF)......................       3.8
CCGT (moderate gas prices, $4.42/MCF).....................       4.1
CCGT (high gas prices, $6.72/MCF).........................       5.6
------------------------------------------------------------------------
\1\ Gas costs reflect real, levelized acquisition cost per thousand
  cubic feet (MCF) over the economic life of the project.

   First, as shown in Table 2, plausible reductions in new 
        nuclear plant costs can bring them in line with coal and gas. 
        Reducing capital costs by 25% to $1500/kWe, a target that has 
        not yet been met but appears plausible with new systems 
        approaches and enough experience, has a large financial impact. 
        A similar impact would arise from eliminating the risk premium 
        (higher equity requirements and higher return on equity) for 
        financing nuclear plants. Presumably, this reduction in the 
        cost of financing would be achieved only by building and 
        operating several plants successfully.
   The second major factor is the uncertainty surrounding 
        internalization of carbon emission costs. Table 3 shows the 
        impact of a carbon ``tax'' on the levelized costs for coal and 
        gas. Clearly, the competitiveness of nuclear power would be 
        enhanced significantly if carbon emission costs are 
        internalized at $50 to $100 per tonne, which is considerably 
        less than the cost of carbon dioxide capture and sequestration 
        using today's technologies for either pulverized coal or 
        natural gas, close to $200/tonne [6]. Also, $50/tonne is about 
        the bid price today in the nascent European carbon trading 
        market.

                 Table 3.--POWER COSTS WITH CARBON TAXES
------------------------------------------------------------------------
               Carbon tax cases levelized electricity cost
-------------------------------------------------------------------------
         Cents/kWe-hr            $50/tonne C  $100/tonne C  $200/tonne C
------------------------------------------------------------------------
Coal..........................       5.4           6.6           9.0
Gas (low).....................       4.3           4.8           5.9
Gas (moderate)................       4.7           5.2           6.2
Gas (high)....................       6.1           6.7           7.7
------------------------------------------------------------------------

    If nuclear power is to be deployed at mid-century on the scale 
being discussed, substantial construction of new plants must be 
underway within ten to fifteen years. Both the economics and new 
regulatory procedures need to be demonstrated. We recommend, for the 
United States, that production tax credits be offered to first mover 
nuclear plants at a rate set by that for wind. This is currently 1.8 
cents/kWh, which can be thought of as about $75/tonne [4] of avoided 
carbon from a coal plant (and with the public benefit of carbon 
avoidance for decades following expiration of the credit). A production 
tax credit has the advantages of fundamentally keeping the risk with 
the private sector and of being applicable to any carbon-free option. 
Because of the very different natures of nuclear power and wind with 
respect to baseload characteristics, we recommended limiting the credit 
to 10 GWe of first mover capacity and to a total of about $200/kW. This 
recommendation is reflected in the 2003 energy bill conference report, 
although with less eligible capacity and a potentially much higher 
credit per installed kilowatt. The public good argument for such a 
mechanism rests with the importance of having government, industry, and 
financial markets understand in a timely way whether new nuclear power 
will be competitive with fossil fuels and thus a serious option for 
simultaneously meeting electricity demand and addressing climate 
change.
    The ``first mover'' reactors are overwhelmingly likely to be 
evolutionary advances of operating reactors, with passive safety 
features replacing some of the active systems in today's plants. This 
addresses the first two principal criteria noted in the introduction 
[2], while the tax credit provides the incentive to determine the 
economics. Clearly other criteria will also need to be met to make a 
business decision [2]: reliable demand for baseload electricity; cost 
of alternatives, especially natural gas prices; continued successful 
operations of existing nuclear plants and a path to resolve plant 
security and spent fuel disposal issues; regulatory predictability 
through the Combined Operating License process; possible risk sharing 
through a ``first mover consortium;'' and recognition of the 
environmental benefits.
    If the industry is not confident in meeting cost targets with a 
substantial production tax credit available for several plants 
(allowing cost reduction through experience and by spreading one-time 
costs), then the credit will go unused with the obvious implications 
for nuclear power's role in meeting greenhouse gas challenges. The 
experience of successfully building and operating several plants is 
needed to work down the substantial risk premium for private sector 
financing of new nuclear plants.
    The MIT study also looks at the economics of plutonium recycling in 
the PUREX/MOX fuel cycle, which creates a significant proliferation 
risk by separating weapons-usable plutonium during normal operation. 
Not surprisingly, the once-through fuel cycle costs less. This is 
reflected indirectly in the difficulty of funding military plutonium 
disposition programs, where MOX fabrication costs alone are seen to 
equal the entire once-through fuel costs, and in the indefensible 
accumulation in several countries of about 200 tonnes of separated 
plutonium from power reactors. The arguments given in the past for 
pursuing PUREX/MOX have been inadequacy of uranium resources, which is 
no longer a credible argument, and the energy value in the plutonium, 
which is basically answered by the unfavorable economics. The current 
reason offered is the benefit to long-term waste management, to which 
we now turn.

                        NUCLEAR WASTE MANAGEMENT

    The management and disposition of irradiated nuclear fuel has not 
yet been dealt with anywhere in the world. This is a major impediment 
to the growth of nuclear power. The Yucca Mountain repository is moving 
towards a licensing decision and, if it proceeds to successful 
implementation, a major milestone will have been achieved. 
Nevertheless, the MIT study's growth scenario calls for a dramatically 
expanded capacity for waste management in any fuel cycle.
    Partitioning of the spent fuel to remove plutonium and possibly 
other actinides unquestionably reduces long-term radioactivity and 
toxicity of the waste. Nevertheless, the MIT study group did not find 
the benefits of partitioning and transmutation to be compelling on the 
basis of waste management. There are several reasons. First, although 
successful implementation has not yet been demonstrated, the scientific 
basis for long-term geological isolation appears sound. Partitioning 
leads to a large volume and mass reduction, but these are not terribly 
important criteria for repository design. Heat and radioactivity, which 
are far more important criteria, are only marginally reduced on the 
century time scale, since the fission products remain with the waste. 
In addition, the trade-off of benefits possibly of small consequence to 
human health--in the millennium time scale against near-term increases 
in waste streams, occupational exposure, and safety concerns is not 
clear. There is certainly little evidence that the public is more 
concerned with the millennium rather than the generational time scale. 
Finally, other approaches may yield even greater confidence in long-
term isolation and may do so more economically and simply. This would 
include advanced engineered barriers and other disposal approaches, 
such as deep boreholes. These are modest diameter holes drilled 4 to 5 
kilometers deep into stable crystalline rock. The approach looks 
promising and economical because of drilling advances, because the 
geochemical environment (highly reducing) is favorable, and because the 
emplacement is not subject to surface vagaries. This is not to say that 
deep boreholes will prove to be the best approach, since major 
uncertainties exist. The point is that important alternatives to 
partitioning exist for adding even greater confidence to long-term 
waste isolation and these should be explored vigorously through new R&D 
programs.
    An important role for advanced fuel cycles well into the future 
cannot be excluded, although significant economic and technical 
barriers must be overcome. The MIT study recommends a program of 
analysis, simulation tool development, and basic science and 
engineering of advanced concepts, and eventually appropriate project 
demonstrations. Such a program carries some risk of itself aiding 
possible proliferants by providing technology know-how with respect to 
actinide separation and metallurgy, as well as associated research 
facilities. However, the U.S. approach of rejecting plutonium recycle 
and cutting off research and international cooperation on fuel cycles 
demonstrably proved ineffective, since other countries have moved 
forward anyway. Rejection of the civilian MOX option should continue. 
Our recommendation is one of U.S. engagement to shape international 
advanced fuel cycle R&D properly, with an open mind to its eventual 
outcome, even while pursuing and advocating the open fuel cycle with 
thermal reactors as the basis for growth over the next decades. We also 
recommend that the U.S. government offices responsible for 
nonproliferation have an explicit management role, along with the 
nuclear energy office, in defining the scope, scale and location of 
such international R&D programs.

                            NONPROLIFERATION

    Global expansion of nuclear power into numerous new countries 
raises concerns about proliferation. This is not new, since a similar 
concern formed the backdrop for President Eisenhower's ``Atoms for 
Peace'' speech fifty years ago. However, the nonproliferation regime 
rooted in the Nuclear Nonproliferation Treaty (NPT) framework faces new 
circumstances: the end of the Cold War has changed security threats and 
relationships; the dramatic spread of manufacturing capability and 
technology lowers the barriers for translating nuclear know-how into 
nuclear weapons; and the post-9/11 world is more aware of the 
capabilities of terrorist groups and their interest in nuclear 
materials. These realities have refocused attention on the control and 
elimination of weapons-usable fissionable material (HEU and plutonium) 
and on the uncomfortable recognition that countries can move to the 
threshold of a nuclear weapons capability within the NPT regime.
    Strengthening the nonproliferation regime in the face of a possible 
global nuclear power growth scenario calls for many coordinated 
actions. One fundamental change to the NPT implementation regime, 
discussed in the MIT report, would focus on a risk-based framework 
rooted in the technology, as opposed to political views. The key issue 
is that power reactors are not themselves the major proliferation 
threat, as opposed to enrichment and reprocessing plants, in the fuel 
cycle. Thus, states that deploy only reactors, with international 
assistance as desired, would have internationally secured fresh fuel 
supply and spent fuel removal. This would involve either ``fuel cycle 
states'' or internationally operated fuel cycle centers. The advantages 
of a country taking a ``reactor-only'' path would be avoidance of 
significant nuclear fuel cycle infrastructure development and 
maintenance costs, of intrusive safeguards regimes (since spent fuel 
and refueling operations for light water reactors are relatively easily 
monitored), and, most important, of nuclear waste challenges. The 
relatively inexpensive fresh fuel services (in particular enrichment) 
might even be offered at cost or below through international agreement 
and support. An insistence on developing a full fuel cycle 
infrastructure, given the option of internationally guaranteed, 
economically attractive fuel cycle services and avoidance of 
significant challenges (especially waste management), would greatly 
heighten suspicions about proliferation intent, presumably leading to 
toughened international control mechanisms with regard to such 
countries. The major obstacle is acceptance of the spent fuel in a 
multiplicity of countries. So far, only Russia has expressed interest 
in receiving such fuel. This willingness of Russia to accept return of 
spent fuel may yet facilitate a resolution of the concerns about Iran's 
nuclear infrastructure development, a resolution much along the lines 
being suggested here for broader application. Clearly, establishing the 
validity of long-term secure spent fuel and/or high-level waste 
geological isolation is a critical step for responsible growth of 
nuclear power in response to electricity supply and climate change 
imperatives.

                            PUBLIC ATTITUDES

    The MIT study carried out a poll of well over 1000 Americans on 
their attitudes and understanding of energy-related issues. By and 
large, the public has a good understanding of relative costs and 
environmental impacts of different technologies; the cost of renewables 
was a notable exception, in that these were widely thought to be 
inexpensive. Nevertheless, it was interesting that perceptions of 
technology, rather than ``external'' factors such as politics or 
demographics, were at the core of their attitudes. A majority of 
respondents did not believe that nuclear waste can be stored safely for 
many years, and the typical respondent believed that a serious reactor 
accident is somewhat likely in the next ten years. The poll also showed 
that, in the United States, the public does not connect concern about 
global warming with carbon-``free'' nuclear power. There is no 
difference in support for building more nuclear power plants between 
those who are very concerned about global warming and those who are 
not. This may prove to be either an opportunity for nuclear power 
advocates to better educate the public or a major obstacle to 
motivating the growth scenario. A more open discussion is needed among 
interested constituencies about the balance of risks in dealing with 
nuclear power expansion and climate change.

                           CONCLUDING REMARKS

    The MIT study sought to define actions needed to enable nuclear 
power as an option for significantly mitigating greenhouse gas 
emissions while satisfying increasing global demand for electricity. If 
expansion of nuclear power is to contribute in a meaningful way up to 
mid-century, a robust growth period must commence within ten to fifteen 
years. This in turn means that very soon costs of new plants must be 
understood, including those costs driven by the licensing process and 
possible litigation, and issues surrounding waste management must be 
resolved. Addressing the financial risks associated with first mover 
plants, perhaps through first mover production tax credits, is an 
important step. However, resolving the economics is a necessary but not 
sufficient condition for the robust growth scenario. In addition, 
difficult international nonproliferation measures must be adopted and 
nuclear spent fuel management programs must demonstrate successful 
implementation and earn widespread public acceptance. These challenges 
are linked in ways that are complicated by the very different nuclear 
policies of the United States and some of its allies. Only if these 
challenges are met can nuclear power responsibly expand to the Terawatt 
scale needed for seriously contributing to climate change mitigation at 
mid-century.

                          REFERENCES AND NOTES

    [1] The Future of Nuclear Power, ISBN 0-615-12420-8 (July 2003), 
available on-line at http://web.mit.edu/nuclearpower/; this workshop 
paper is largely drawn from this report. The study was funded 
principally by the Sloan Foundation. Study group members were 
Professors S. Ansolabehere, J. Deutch (co-chair), M. Driscoll, P. Gray, 
J. Holdren, P. Joskow, R. Lester, E. Moniz (co-chair), and N. Todreas.
    [2] Long-Term Strategy for Nuclear Power, Marilyn C. Kray, Exelon 
Corporation, presented to the Pew Center for Global Climate Change/
National Commission on Energy Policy 10-50 Workshop (March 2004)
    [3] The Additional Protocol permits the IAEA to inspect undeclared 
facilities suspected of use in a nuclear weapons development program.
    [4] For the reference coal plant, we take a capacity factor of 85%, 
a heat rate of 9,300 BTU, and a carbon intensity of 25.8 kg-C/mmBTU.
    [5] Adam Siemenski, Deutsche Bank, presentation at the 2002 EIA 
NEMS conference
    [6] David, J. and H. Herzog, ``The Cost of Carbon Capture'', Fifth 
International Conference on Greenhouse Gas Control Technologies 
(Australia, 2000); available at http://sequestration.mit.edu

    The Chairman. Thank you very much.
    Now, David, you are next. I am just going to say that you 
worked for us here and we were very proud of you then. I was 
personally proud to recommend you. It seems, however, that with 
the passage of each month you get another job. I do not know 
how many more you can handle. But when they cannot get 
somebody, they fill another niche with you. You have done a 
great job in Renewables and I am sure you will as Under 
Secretary.
    Dr. Smalley, I made a misstatement. The biggest facility at 
Los Alamos--excuse me--at Sandia is not a nanocenter. It is a 
microengineering center. There is a nanocenter, but it is equal 
to four others. So I am sorry that I misstated.
    David, would you proceed.

   STATEMENT OF DAVID GARMAN, ASSISTANT SECRETARY FOR ENERGY 
     EFFICIENCY AND RENEWABLE ENERGY, DEPARTMENT OF ENERGY

    Mr. Garman. Thank you, Mr. Chairman. Since my written 
statement is part of the record, I will be brief, and I will 
focus on renewable energy as I was asked to by the committee.
    Over the past 3 years we have invested about a billion 
dollars in renewable energy technologies, plus another nearly 
$3 billion to promote efficient use of energy from all 
resources. Let me make my pitch for energy efficiency here. 
There are environmental consequences to any kind of power 
generation and energy use--coal, wind, nuclear, hydro, solar. 
The environmental consequences may vary, but there still are 
consequences. Therefore, the cleanest, most sustainable, 
environmentally benign form of energy is in essence the energy 
we do not need, the energy we manage to save, the so-called 
negawatt.
    So any discussion of sustainability should recognize the 
value of energy efficiency at the start, and I need not dwell 
on that point because the members of this committee all 
understand the importance of smart energy use and have been 
leaders in the effort to promote energy efficiency.
    So with that said, let me turn to a discussion of renewable 
energy research and development, because even with solid 
efforts toward energy efficiency we are still going to need 
much more energy supply. As a consequence of the renewable 
energy R&D undertaken by the Department of Energy and our 
partners, the cost of wind-generated electricity has fallen 
from roughly 80 cents per kilowatt hour in 1980 to as little as 
4 cents today. The cost of solar photovoltaic electricity has 
fallen from over $2.00 per kilowatt hour in 1980 to less than 
25 cents today. The cost of geothermal electricity has fallen 
from 15 cents per kilowatt hour in 1985 to between 5 and 8 
cents today.
    Continued research and development will and it must yield 
further progress. We believe we can achieve onshore wind 
generation at 3 cents per kilowatt hour by 2012 in all areas of 
the Nation with average annual wind speeds of 13 miles per hour 
or greater, the so-called class 4 areas and above. We believe 
we can achieve solar photovoltaic power generation at a cost of 
6 cents a kilowatt hour by 2020. We also hope to move 
geothermal power down to the 5 to 8 cent range by 2010.
    If we continue to succeed in bringing down the cost of 
these technologies, we think their market share will continue 
to increase and any policy measures that a future 
administration or Congress might wish to employ to accelerate 
renewable energy deployment will be less expensive for 
taxpayers and ratepayers alike.
    Even with business as usual policies, the analyses that we 
perform as part of our budget formulation process suggest that 
the R&D we are currently engaged in can increase our production 
of renewable energy from today's roughly 6.8 quadrillion Btu's 
to some 27 quadrillion Btu's in 2050. Now, that is not a 
prediction of the future. I know I am not clever enough to 
design or predict a particular energy future. But instead, Mr. 
Chairman, we see ourselves as being in the options business. We 
are working to provide a rich set of technology options. We do 
so because we know we ultimately face limits in the amount of 
carbon dioxide or criteria pollutants we can safely emit or 
limits in the amount of petroleum we can affordably extract or 
other limiting factors we cannot yet fully appreciate.
    Recognizing that there is no silver bullet, we invest in a 
diverse technology portfolio that includes renewables, nuclear, 
clean coal with carbon sequestration, as well as associated 
technologies such as hydrogen, superconductivity, and fuel 
cells that can help us to move or store or utilize that energy 
more efficiently.
    With that, Mr. Chairman, I will look forward to questions 
and discussion. Thank you.
    [The prepared statement of Mr. Garman follows:]

  Prepared Statement of David Garman, Assistant Secretary for Energy 
         Efficiency and Renewable Energy, Department of Energy

    Mr. Chairman, Members of the Committee, I appreciate the 
opportunity to discuss the Administration's views on the role that 
renewable energy technologies can play in sustainable electricity 
generation.
    As stated in the President's National Energy Policy, the 
Administration believes that renewable sources of energy can help 
provide for our future energy needs by harnessing abundant, naturally 
occurring sources of energy with less impact on the environment than 
conventional sources. We are committed to a research, development, 
demonstration and deployment program that supports that role. The 
Department of Energy (DOE) FY 2005 budget request for renewable 
technologies totals $374.8 million, a $17.3 million increase over the 
FY 2004 appropriation. This year's budget proposes increases in our 
programs for wind, hydropower, geothermal, hydrogen, and (when the 
impact of Congressional earmarks is taken into account), solar and 
biomass as well. Over the past three years we have invested nearly a 
billion dollars in renewable energy technologies, not including 
substantial cost-sharing from our private sector partners.
    Advances in technology over the past 25 years have brought us great 
strides in lower costs, improved performance and competitiveness of 
renewable energy technologies. Today, electricity is being produced 
from the wind, the sun, the earth's heat and biomass in a variety of 
applications across the Nation.
    The current contribution of non hydropower renewable energy 
resources to America's total electricity supply is relatively small 
(about 2.3 percent), and we expect it to remain relatively small for 
years to come. Nevertheless, the promise is great. For example, since 
2000, nationwide installed wind turbine capacity in the United States 
has more than doubled. We believe that renewable power technologies are 
still at the stage where significant advances are likely to result from 
strong R&D programs. Such advances coupled with lowered manufacturing 
costs, increased user confidence that results from increased 
deployment, and appropriate market-based incentives proposed in the 
President's FY 2005 Budget can lead to a significant role for these 
technologies in serving future electricity demands.
    My testimony today will discuss those renewable energy technologies 
in DOE's Renewable Energy Portfolio.

                           WIND TECHNOLOGIES

    Wind energy is a virtually emissions free electricity generation 
technology that eliminates environmental concerns associated with 
conventional fuel cycles, such as mining or other extraction, 
combustion and other emissions, and waste disposal. Wind energy is also 
one of the most widely used and fastest growing renewable energies in 
the world. According to the American Wind Energy Association, worldwide 
installed capacity increased by 26 percent in 2003. Globally the total 
amount of installed wind power has grown 500 percent since 1997, from 
7,636 megawatts (MW) to 39,294 MW in 2003.
    Wind resources are widespread and substantial in many areas of the 
nation, particularly in the Midwest and West. The Department estimates 
that in 2003 nearly $2 billion was invested in new wind power 
facilities. Installed wind power capacity reached 6,374 MW by the end 
of 2003 with utility-scale turbines now installed in 30 states.
    Improvements driven by DOE sponsored research have dramatically 
reduced costs. A recent study by the National Renewable Energy 
Laboratory showed that wind energy systems are currently capable of 
producing electricity for less than $0.05 per kilowatt hour (kWh) in 
locations with Class 4 \1\ wind speeds. At higher speed Class 6 \2\ 
wind speed sites, the cost of electricity is less than $0.04/kWh 
without subsidies.
---------------------------------------------------------------------------
    \1\ Class 4 sites are locations with average annual wind speeds of 
13 miles per hour, measured at a height of ten meter.
    \2\ Class 6 sites are higher wind speed sites, with average annual 
speeds of 15 miles per hour.
---------------------------------------------------------------------------
    While significant potential remains to tap in to high quality wind 
resources with today's technology, these resources are generally not in 
the areas where people live or where transmission is available. The 
Department is now focused on developing technology that can cost-
competitively harvest more widely available, lower speed wind resources 
that are generally closer to populations and load centers. This so-
called ``low wind speed'' technology will expand the land area where 
wind can be developed by a factor of 20, while reducing the average 
distance between the wind resources and where power is needed by a 
factor of five.
    We are also looking at off-shore wind energy resources off the 
coasts and in the Great Lakes of the United States. These areas offer 
immense, economically viable wind energy resources that are close to 
major urban areas with growing demand and increasingly limited energy 
production and delivery options. Wind turbines located in shallow 
waters offshore could produce electricity for $0.07-0.08/kWh in Class 4 
sites with current technology, with the potential for future cost 
reductions with further research.
    DOE's Wind Energy program has a long term goal of $0.03/kWh for 
onshore systems in Class 4 sites in 2012. DOE projects that the 
development of technology for onshore Class 4 wind sites will result in 
an installed capacity level in 2025 of an estimated 59,000 MW, the 
largest portion of which will be represented by turbines designed 
specifically for use in moderate wind areas.

                         GEOTHERMAL TECHNOLOGY

    Geothermal energy uses steam and hot water from the Earth to create 
energy. Geothermal power plants have a proven track record of 
performance as baseload facilities, with capacity factors and 
availabilities often exceeding 95 percent. Today, domestic geothermal 
energy production is a $1 billion a year industry that accounts for 
about 15 percent of all non-hydropower renewable electricity 
production, and about 0.35 percent of total U.S. electricity 
production. Geothermal's net summer capability in the U.S. has grown 
from about 500 MW in 1973 to over 2,200 MW today in the states of 
California, Nevada, Hawaii, and Utah. Other states with significant 
near-term potential include Alaska, Arizona, Colorado, Idaho, New 
Mexico, Oregon, and Washington. Recent estimates by industry of 
hydrothermal potential ranges from 5,000 MW with current technology to 
over 18,000 MW with advanced technology.
    The U.S. Geological Survey estimates that already-identified 
hydrothermal reservoirs hotter than 150 C have a potential generating 
capacity of about 22,000 MWe and could produce electricity for 30 
years. We further estimate that additional undiscovered hydrothermal 
systems may have a capacity of 72,000-127,000 MWe. At depths accessible 
with current drilling technology, virtually the entire country 
possesses some geothermal resources. The best areas are in the western 
United States where bodies of magma rise closest to the surface.
    The Energy Information Administration projects geothermal 
installations totaling 6,800 MWe by 2025, based on the assumption that 
natural gas prices will remain relatively stable. Geothermal output is 
projected to increase from 13 billion kWh in 2002 to 47 billion in 
2025. The EIA projection does not forecast new geothermal capacity 
occurring from the undiscovered hydrothermal resource base or the 
potential of non-hydrothermal resources, such as the heat energy that 
underlies much of the country, which may be recoverable by use of 
enhanced geothermal systems (EGS) technology being developed through 
our research and development program.
    EGS technology has the potential to make a sizeable addition to the 
inventory of geothermal resources available for production. When that 
broader resource base is considered, 40,000 MW of resources could be 
made economic in the 2020-2040 timeframe. Of course, these projections 
also depend heavily on the ability to reduce the cost of energy using 
EGS technology to competitive levels.

                        SOLAR ENERGY TECHNOLOGY

    Fifty years ago scientists at Bell Laboratories developed the first 
silicon solar cell. With efficiencies of less than six percent, these 
solar cells offered, for the first time, the ability to power a wide 
range of electrical equipment. Photovoltaic (PV) arrays convert 
sunlight to electricity without moving parts and without fuel wastes, 
air pollution, or greenhouse gasses. PV systems can be installed as 
either grid supply technologies or as residential or commercial scale 
customer-sited alternatives to retail electricity.
    Today solar energy accounts for one percent of non-hydroelectric 
renewable electricity generation and 0.02 percent of total U.S. 
electricity supply. But PV technology has progressed remarkably in 
terms of both performance and cost in recent decades. The cost of PV-
generated electricity has dropped 15 to 20 fold over the past 25 years 
and such systems are highly reliable. Thousands of systems are 
successfully operating today, serving applications that range from 
water pumping to residential power to remote utility power 
applications.
    Crystalline silicon wafer technology dominates today's PV market. 
Direct manufacturing costs (labor and materials) for crystalline 
silicon module power in the United States are around $1.95/watt. This 
corresponds to an installed system vendor price for grid-tied PV energy 
of about $0.22 per kWh over a 25-year lifetime. Crystalline silicon 
module reliability has greatly improved to the point where modules are 
now warranted for 25 years, and many will probably have a functional 
lifetime much longer than this.
    DOE's photovoltaic program is focused on the next-generation 
technologies such as thin-film photovoltaic cells, leap-frog 
technologies such as polymers and nanostructures, and technologies to 
improve interconnections with the electric grid. Our research and 
development seeks primarily to reduce the manufacturing cost of highly 
reliable photovoltaic modules. DOE's research goal is to achieve grid-
tied systems with lifetime energy costs around $0.06/kWh and 30 years 
lifetime by 2020.
    Even though some thin-film modules are now commercially available, 
their real impact is expected to become significant during the next 
decade. Thin films using amorphous silicon, a growing segment of the 
U.S. market, have several potential advantages over crystalline 
silicon. They can be manufactured at lower cost, are more responsive to 
indoor light, and can be manufactured on flexible or low-cost 
substrates. Other thin film materials are expected to become 
increasingly important in the future.
    In addition to improvements in crystalline silicon technology, 
other notable technical accomplishments achieved over the past decade 
through our research and development programs include:

   The price of inverters (for changing direct current of the 
        PV modules into alternating current suitable for the commercial 
        power grid) is decreasing, and their reliability is steadily 
        increasing. DOE seeks at least ten year warranted reliability.
   Production of thin film modules is expected to increase 
        sharply in CY 2004 and 2005. The environmental issues of safely 
        retiring these modules have been successfully resolved by DOE 
        researchers at Brookhaven National Laboratories.
   The development of super-high efficiency cells, with 
        efficiencies now nearing 38 percent under concentrated 
        sunlight, has progressed faster than expected ten years ago, in 
        part due to the major investment in this technology by the 
        space PV industry in collaboration with NREL researchers.
   DOE made extensive contributions to Article 690 of the 
        National Electric Code which deals with PV safety issues. This 
        is a major development because it helps to remove a serious 
        impediment to wide-scale PV grid-tied deployment--the 
        reluctance of commercial power companies to allow PV systems to 
        be interfaced to their power lines.

    In the longer term, DOE expects wide-scale deployment of very 
inexpensive systems made from novel specially engineered materials, 
e.g., quantum dot and organic material technologies. Such systems will 
allow not only utility scale power, but also inexpensive production of 
fuels such as hydrogen, or complex carbon-based fuels through synthesis 
using atmospheric carbon dioxide.
    Concentrating solar power may also offer significant potential. DOE 
recently contracted for an independent study by Sargent and Lundy, a 
draft of which was reviewed by the National Academy of Sciences (NAS). 
The report found that concentrating solar power troughs could reach 
costs of 4.3-.6.2 cents per kWh and solar power towers could reach 3.5 
to 5.5 cents per kWh by 2020. (These cost estimates are predicated on 
significant R&D investments and market incentives not included in the 
President's FY 2005 Budget).

                                BIOMASS

    Biomass represents an abundant, domestic and renewable source of 
energy that has significant potential to increase domestic energy 
supplies. Biomass is used to generate electricity through the direct 
combustion of wood, municipal solid waste, and other organic materials, 
cofiring with coal in high efficiency boilers, or combustion of biomass 
that has been converted chemically into fuel oil.
    Biomass power is a proven electricity generating option that today 
accounts for about 70 percent of nonhydroelectric renewable electricity 
generation and 1.6 percent of total U.S. energy supply, or about 9,733 
MW in 2002 of installed capacity. This includes about 5,886 MW of 
forest product and agricultural residues, 3,308 MW of generating 
capacity from municipal solid waste, and 539 MW of other capacity such 
as landfill gas. The majority of electricity production from biomass is 
used as base load power in the existing electrical distribution system. 
EIA projects that electricity output from biomass combustion will 
increase from 37 billion kWh in 2002 (1.0 percent of generation) to 81 
billion kWh in 2025 (1.3 percent of generation).
    More than 200 companies outside the wood products and food 
industries generate power in the United States from biomass. Where 
power producers have access to very low cost biomass supplies, the 
choice to use biomass in the fuel mix enhances their competitiveness in 
the marketplace. This is particularly true in the near term for power 
companies choosing to co-fire biomass with coal to save fuel costs and 
earn emissions credits. An increasing number of power marketers are 
starting to offer environmentally friendly electricity in response to 
consumer demand and regulatory requirements.
    The Department estimates that the total available domestic biomass, 
beyond current uses for food, feed, and forest products, is between 
500-600 million dry tons per year. Within the continental U.S., we can 
literally grow and put to use hundreds of millions of tons of 
additional plant matter per year on a sustainable basis. These biomass 
resources represent about 3-5 quadrillion Btus (quads) of delivered 
energy or as much as 5-6 percent of total U.S. energy consumption. In 
terms of fuels and power, that translates into 60 billion gallons of 
fuel ethanol or 160 gigawatts of electricity. This is enough energy to 
meet 30 percent of U.S. demand for gasoline or service 16 million 
households with power.
    The current focus of our biomass program is the simultaneous 
production of liquid fuels, products, and power in a so-called 
``biorefinery.'' Simultaneous production of products, fuels, and 
electricity enables the selection of the highest value outputs while 
providing synergies that can lower production costs. Successful 
development of these technologies could provide important jobs and 
income for rural America through the sustainable production of biomass 
feedstocks for biorefineries that produce power, fuels, chemicals and 
other valuable products.

                   THE EERE PORTFOLIO OF TECHNOLOGIES

    The overall EERE portfolio provides a combination of multiple 
renewable energy technologies-solar, wind, biomass, geothermal, and 
others--together with research and development of energy efficiency 
technologies. Such a diverse portfolio offers benefits that extend 
beyond those of the individual technologies described above, and we 
believe it is important that EERE's research, development, 
demonstration, and deployment activities continue as a balanced 
portfolio.
    A diverse and balanced portfolio offers several benefits:

   near, mid, and long term research activities and associated 
        deployment opportunities are included, ranging from low-wind 
        speed turbines to quantum-dot photovoltaics.
   degrees of risk are balanced within technology areas--such 
        as research on several types of thin-film photovoltaics 
        technologies along with high-risk work on advanced concepts--as 
        well as across technologies.
   synergies are identified and built between technologies. For 
        example, geothermal, biomass, hydropower, wind, and solar offer 
        power in different regions of the country according to the 
        available resources, at different times of the day and year, 
        and in ways that can complement each other, filling in where 
        another resource is not available. Further, the natural gas 
        saved by producing power using wind turbines, for example, will 
        be available for conversion to hydrogen.

    The current portfolio will take us far toward a clean energy 
future, as we continue to fund innovative ideas. For example, our 
Future Generation photovolatics solicitation in 1998 funded 18 
competitively awarded projects out of 72 proposals from 1999 to 2002. 
In addition to contributing to our program goals, these activities 
helped to build our national capacity for innovation, as each project 
was with a different university.

                               CONCLUSION

    Renewable energy technologies hold tremendous promise in moving the 
Nation toward sustained, low-emission electricity supply. Government-
sponsored research and development efforts over recent decades have 
been very successful in helping to lower the costs and improve the 
reliability of renewable energy technologies, and more can be achieved 
with robust research and development in the future.
    The Administration believes that, in the context of a comprehensive 
energy strategy, more is needed for renewables to gain market share and 
contribute to our energy independence and environmental objectives. 
That is why the President's FY 2005 Budget includes energy tax 
proposals devoted to increasing efficiency and renewable energy, such 
as extending and modifying the tax credit for producing electricity 
from biomass and wind, providing tax credits for energy produced from 
landfill gas, residential solar energy systems, and investment in 
combined heat and power; and extending the ethanol tax exemption.
    Another important factor is that these renewable sources of 
generation must be able to integrate into our existing distribution 
system. The tools that form the necessary interface between distributed 
energy systems and the grid need to be less expensive, faster, more 
reliable and more compact. And as pointed out in the National Energy 
Policy, renewables don't fit into traditional regulatory categories and 
are often subjected to competing regulatory requirements. The lack of 
uniform interconnection protocols and regulatory treatment is another 
area where developers of small renewable energy projects have to 
negotiate interconnection agreements on a site-by-site basis.
    That completes my statement, Mr. Chairman. I would be happy to 
respond to questions the Members of the Committee may have.

    The Chairman. Thank you very much.
    Dr. Burke.

 STATEMENT OF DR. FRANK P. BURKE, VICE PRESIDENT, RESEARCH AND 
  DEVELOPMENT, CONSOL ENERGY, INC., ON BEHALF OF THE NATIONAL 
                       MINING ASSOCIATION

    Mr. Burke. Thank you, Mr. Chairman. I am vice president of 
research and development for CONSOL Energy, which is the 
largest Eastern U.S. coal producer, with production in 
Kentucky, Ohio, Pennsylvania, West Virginia, and Virginia. I am 
testifying on behalf of CONSOL and the National Mining 
Association to discuss technology to enable coal to continue to 
provide low emission electricity to our Nation that we will 
need to meet our energy demand in the future.
    Mr. Chairman, we agree with the statement in your letter of 
invitation that action should be taken today to prepare the 
Nation for a future time when oil and gas prices and 
availability limit their uses to areas other than electricity 
generation.
    In 2003, the United States mined a billion tons of coal, 
primarily to generate electricity. 52 percent of U.S. 
electricity comes from coal. We are self-sufficient in coal. In 
fact, coal is the Nation's only net energy export. The 
Department of Energy forecasts that U.S. coal use will grow to 
1.4 billion tons in 2020. This will require the construction of 
120 gigawatts of new coal-fired powerplants while maintaining 
most of our existing 300 gigawatts of existing capacity.
    The United States is not unique in its dependence on coal 
and it is vital to our national interest to promote the 
increased use of coal, not only domestically but worldwide. The 
most compelling evidence of this is China. The Chinese, who 
already use 50 percent more coal than the United States, expect 
to double their coal-fueled electric generating capacity by 
2020 and to nearly triple it by 2040.
    Therefore, throughout the world economic growth and 
political stability are tied to electricity and electricity 
throughout the world is tied to coal. The desire and in fact 
the necessity of the world to utilize its abundant coal 
resources will not be denied. Energy availability and energy 
quality are key to meeting all three aspects of sustainable 
development: economic, societal, and environmental. The 
question is not whether we will use coal for human development, 
but how we will use it.
    We can reconcile our need for coal with our environmental 
and economic needs through technology. Clean coal technology 
can preserve our existing coal-based electricity capacity and 
can replace and expand as needed in the future, all while 
continuing to reduce emissions. Many of the technical 
challenges and opportunities for future coal generation 
technology are embodied in a clean coal technology road map 
that has been developed by industry and the Department of 
Energy. This is discussed in more detail in my written 
testimony.
    The road map sets power cost, efficiency, and environmental 
performance objectives for technologies that will allow 
existing plants to meet anticipated future environmental 
restrictions, such as expected mercury regulations. The road 
map also lays out the R&D pathway for the next generation of 
coal-based plants. Furthermore, the road map allows us to 
determine the costs for the necessary R&D and demonstration 
work. We estimate this to be $10 to $14 billion in public and 
private funds between now and 2020.
    Unfortunately, the Federal funding in the administration's 
fiscal year 2005 budget for both the core R&D program and the 
clean coal power initiative demonstration is low, barely half 
of what is needed to follow the road map. Without adequate 
support from the public sector, it will not be possible to meet 
the road map's schedule.
    A new aspect of DOE's program is the FutureGen project. 
FutureGen would minimize pollutant emissions to near-zero 
levels. This facility would be based around a coal gasification 
system with the capability to make hydrogen and to sequester a 
million tons of carbon dioxide per year. We believe that a 
program like FutureGen that defines the cost and feasibility of 
advanced coal use options is a prudent strategic investment. 
Furthermore, FutureGen would serve as an important research 
platform capable of testing advanced powerplant components as 
they emerge from the R&D program.
    My company is one of a consortium of ten coal and 
electricity companies offering to provide the public sector 
resources to conduct the FutureGen project. As discussions 
about FutureGen proceed, it is important to understand that it 
is not a substitute for either the core R&D program or the CCPI 
demonstration program. We need the core research to bring new 
technologies to the status that they can be tested at FutureGen 
and elsewhere and we need to continue R&D and demonstration 
projects on technologies that are not part of the FutureGen 
design.
    Furthermore, it will be critical for government to commit 
to fully funding its share of the project before major costs 
are incurred.
    Beyond R&D, we need to plan for the commercial deployment 
of these new technologies. The coal-related provisions of 
Chairman Domenici's pending energy legislation are critical in 
this regard. First, the bill authorizes $2 billion to 2012 for 
the Clean Coal Power Initiative, which will help ensure that we 
can bring products out of the R&D program to commercial 
readiness. Second, the energy bill contains over $2 billion in 
vital tax incentives that are necessary to the deployment of 
clean coal technologies. We strongly urge the Senate to act on 
energy legislation and we applaud Chairman Domenici for his 
steadfast leadership.
    In conclusion, Mr. Chairman, we need to continue to define, 
follow, and fund a technology road map that focuses on the 
costs, efficiency, and environmental performance of coal-based 
electricity generating technologies in order to preserve our 
existing infrastructure and build new coal-based powerplants.
    Thank you.
    [The prepared statement of Mr. Burke follows:]

 Prepared Statement of Dr. Francis P. Burke, Vice President, Research 
and Development, CONSOL Energy, Inc., on Behalf of the National Mining 
                              Association

    Mr. Chairman, my name is Frank Burke. I am Vice President of 
Research and Development for CONSOL Energy Inc. (CONSOL). I am 
appearing here on behalf of CONSOL and the National Mining Association 
(NMA) to testify on how technology can permit coal to provide the fuel 
to generate low emission electricity that our nation will need to meet 
our energy demands of the future.
    I would like to commend you, Mr. Chairman, for holding these 
important hearings. Mr. Chairman, we agree with the statement in your 
letter of invitation to testify that ``actions should be taken today to 
prepare the nation for a future time when oil and gas prices and 
availability limit their uses to areas other than electricity 
generation.'' As emphasized in the Energy Information Administration's 
(EIA) latest Annual Energy Outlook published in January of this year, 
the demand for electricity is expected to increase by nearly 50% by 
2025 and we can only assume that this growth will continue beyond that 
time. Affordable and clean electric energy must be available to allow 
our nation to reach its full economic potential. Clean electric energy 
means economic growth and it means jobs. Coal, which is over 90% of our 
nation's domestic energy resource on a Btu basis, and now provides over 
50% of the electricity we use, is - and must continue to be - the 
source for much of this electricity. Advanced clean coal technologies 
that are being developed under long-standing federal/private 
partnerships will assure that coal can continue to be used in a manner 
consistent with environmental needs.
    CONSOL Energy Inc., founded in 1864, is the largest producer of 
high-Btu bituminous coal in the United States, is the largest producer 
of coal by underground mining methods, and is the largest exporter of 
U.S. coal. CONSOL has 19 bituminous coal mining complexes in seven 
states. We have a substantial technology research program focused on 
energy extraction technologies and techniques, coal utilization, 
emission management and byproduct utilization. CONSOL has been an 
active partner with DOE in the advancement of many technologies and in 
basic research. CONSOL is a publicly held company (NYSE:CNX) with over 
6,000 employees.
    The NMA represents producers of over 80 percent of the coal 
produced in the United States, the reliable, affordable, domestic fuel 
used to generate over 50 percent of the electricity that we use today. 
NMA's members also produce another form of fuel uranium that is the 
source of just over 20 percent of our electricity supply. NMA also 
represents companies that produce metals and non-metals, companies that 
are amongst the nation's largest energy consumers. Additionally, NMA 
members include manufacturers of mining and processing equipment, 
machinery and mining supplies, and transporters, engineering, 
consulting and financial institutions serving the mining industry.

        THE DEMAND FOR ENERGY WILL INCREASE DURING THE NEXT TWO 
                           DECADES AND BEYOND

    Energy, whether it is from coal, oil, natural gas, uranium, or 
renewable sources, is the common denominator that is imperative to 
sustain economic growth, improve standards of living and simultaneously 
support an expanding population. The significant economic expansion 
that has occurred in the United States over the past two decades, and 
the global competitiveness of U.S. industry, was in no small measure 
due to reliable and affordable energy.
    Our demand for energy will continue to increase. The 2004 Annual 
Energy Outlook issued by EIA in January of this year forecasts that 
total energy use in the United States will grow by 40% percent between 
2002 and 2025. All sources of energy will be required to meet this 
increase in use. Over this period, continuing a trend that began over 
two decades ago, the nation will become even more dependent on 
electricity to meet final energy demands. The same EIA report predicts 
that electricity demand will increase by nearly 50% by 2025. Unlike the 
forecast of a year ago, EIA is now predicting that much of this 
increase will come from coal-fired power generation. The demand for 
coal for electricity is expected to grow from today's nearly 1 billion 
tons to 1.5 billion tons annually by 2025 when coal will produce 
approximately 52% of the electricity used by U. S. consumers.
    New coal fired capacity will be needed to meet this growing demand 
for electricity. For first time in several years, EIA has increased its 
estimate of new coal fired capacity that will be built within their 
forecast timeframe. EIA is now forecasting that 112 GW of the 356 GW of 
capacity that will be built between now and 2025 will be coal fired, a 
forecast that is over 50% greater than a year ago. At the same time, we 
cannot overlook the importance of the existing coal fired generating 
fleet which will remain the source for 75% of future coal fired power. 
Very little of the 305 GW of coal-fired capacity that is in operation 
today will be retired over the next 20 years. The existing units will 
have to be operated at a higher capacity and with lower emissions. 
Considerable additional investment will be required to maintain these 
plants and to install pollution control equipment needed to meet new 
SO2, NOx and mercury requirements.
    The reason that coal demand is expected to grow more quickly than 
previously forecast is the expectation that the natural gas supply will 
be limited and much higher in price. Indeed we have seen a substitution 
of coal for natural gas in the past year as natural gas prices have 
hit, and remained at, near record highs. In 2003, generation from coal 
increased by more (29,856 million kWh) than the total increase in 
demand for electricity (12,491 million kWh). Conversely, generation 
from natural gas dropped by more than 8% (or by 58,377 million kWh) to 
the lowest level since 2000. Use of coal-fired capacity has increased 
while use of natural gas capacity has declined despite the large number 
of new natural gas-fired units built over the last decade. Again, the 
reason is price. The use of natural gas for electricity generation 
increased by 75% between 1990 and 2002, while use of gas by industry 
declined by 2%, and total gas use increased by 20%. This resulted in 
concerns about supply and caused prices to escalate.
    Clearly, the trends of the past are unsustainable in the future. 
Higher prices for natural gas mean higher prices for electricity and 
higher raw material costs for industries using gas as a feedstock. 
Considerable job losses have already occurred due to the higher gas 
prices brought about by over-reliance on gas for power generation. Both 
of these factors impair our overall economic growth and employment 
levels. Fuel diversity is a requirement for stability. We cannot - as 
we have done over the past decade - put all our eggs in the natural gas 
basket. Coal generation will have to increase at existing plants and 
new coal power plants must be brought on line. The challenge for coal 
is to build these plants with low emission technologies. This will 
require support from Congress in terms of public policy.
    The fact that coal generation can increase while emissions decline 
has been demonstrated by history. In 2004, sulfur dioxide 
(SO2) and nitrogen oxides (NOx) emissions will be 
40% less than in 1980 while electricity from coal will be approximately 
70% greater. Existing air pollution controls already have reduced 
mercury emissions by 40%, and emissions will continue to decrease as a 
result of current and future regulations and legislation. This history 
is a good indication of the trends that can be expected in the future 
lower emissions as more coal is used for generation of electricity.
    The United States is not unique in its dependence on coal, and it 
is vital to our national interest to promote the increased use of coal 
not only domestically, but worldwide as a key component of our energy 
and economic security. The most compelling evidence of this is China. 
This year, the Chinese will mine and consume 1.5 billion tons of coal. 
In 15 years, they will consume 2.5 billion tons; China's increase alone 
will equal our current consumption. They expect to double their coal-
fueled electricity generating capacity to 600 GW by 2020. By 2040, the 
Chinese expect to use 4 billion tons of coal annually.
    Throughout the world, economic growth and political stability are 
tied to electrification, and electricity is tied to coal. Therefore, 
the desire and, in fact, the necessity of the world to utilize its 
abundant coal resources will not be denied. Energy availability and 
energy quality are key to meeting all three aspects of sustainable 
development: economic, societal and environmental. The question is not 
whether we need or will use coal for human development, but how we will 
use it.

                  THE NEED FOR CLEAN COAL TECHNOLOGIES

    One of the principal reasons for developing new coal-fired 
generating technologies is to ensure that electricity generation from 
coal does not compromise environmental quality. Because of its chemical 
composition, coal poses more environmental concerns than other fossil 
fuels. On average, coal contains more sulfur and nitrogen, and more 
mineral matter, than oil or natural gas. Fortunately, the means are 
available to control the emission of these substances into the 
environment to levels that meet current regulatory limits with the wide 
range of technologies already deployed on many coal-fired power 
stations. These include particulate collection devices, such as 
electrostatic precipitators and fabric filters that control emissions 
of coal ash, flue gas desulfurization scrubbers of various designs that 
control emissions of sulfur dioxide (SO2) and a variety of 
methods and devices for reducing nitrogen oxide (NOx) 
emissions. Many of these were developed under the DOE-industry 
partnerships of the Clean Coal Program. There are no technologies in 
widespread commercial use today to control emissions of mercury or 
carbon dioxide from coal-fired power plants, but as I will discuss, 
these are the subjects of active research programs.
    Like others throughout the world, the United States faces the 
challenge of meeting our need for low cost energy while reducing the 
environmental impact of energy production and use. The EPA recently 
proposed new environmental regulations that will reduce SO2, 
NOx, and mercury emissions from existing power plants to 
levels well below current regulatory limits. This will require the 
widespread deployment of improved technology that further reduces 
SO2 and NOx emissions below current regulatory 
levels at an acceptable cost. Mercury will be substantially reduced as 
a co-benefit of increased SOx and NOx control, 
but, in the long run, it probably will be necessary to develop and 
deploy technology specific to mercury emissions. In addition, there are 
opportunities to improve the efficiency of existing generating units. 
Increasing efficiency can reduce emissions, because less fuel is 
required for each unit of electricity generated, and efficiency 
improvement is the only method currently available to reduce 
CO2 emissions from power production.
    These Clean Coal systems will need to be designed and integrated in 
a way that achieves the expected benefits of each, without creating any 
unintended consequences. For example, the use of combustion 
modifications to reduce NOx emissions can result in 
increased carbon in coal fly ash, making fly ash less valuable as a 
byproduct. Selective Catalytic Reduction, which is an effective means 
for NOx control, can cause deposition that impairs 
efficiency in the boiler system. On the other hand, the intelligent 
integration of technologies can have synergistic benefits. As noted 
earlier, emission control devices installed for other pollutants can 
remove a limited amount of mercury from some coals from the flue gas 
coming out of the plant's stack at no additional cost. As another 
example, the solid byproducts from coal combustion can be converted 
into salable materials such as wallboard gypsum and road aggregates. 
Research is underway to learn how to take full advantage of co-benefits 
such as these, and to incorporate them into the design of existing and 
new power plants.
    In the future, we will need new coal-fired power plants to meet 
electricity demand growth and to replace existing facilities as they 
reach the end of their economic lives. Notable among these new 
technologies are supercritical pulverized coal combustion, advanced 
combustion, integrated gasification combined cycle (IGCC), and various 
hybrid power systems. These technologies hold the promise of high-
energy efficiency and minimal environmental impact if they are 
developed and successfully deployed at an acceptable cost. For example, 
IGCC technology is currently being demonstrated at several sites, but 
it must still be considered pre-commercial technology because of its 
relatively high capital cost. Nevertheless, IGCC systems can produce 
some of the cleanest power available from coal; emissions from these 
systems approach the levels generated by modern natural gas-fired power 
plants, and research is underway to reduce the capital cost through 
design improvements. As with all technologies, the full benefits of 
potential design optimization will not be gained until a sufficient 
number of full-scale commercial units have been built and operated.

                   THE CLEAN COAL TECHNOLOGY ROADMAP

    The term ``Clean Coal Technology'' (CCT) is used to describe 
systems for the generation of electricity, and in some cases, fuels and 
chemicals from coal, while minimizing environmental emissions. This is 
accomplished through increased efficiency (i.e., electricity produced 
per unit of fuel [energy] input), equipment for reducing or capturing 
potential emissions, or a combination of the two. Various CCTs are 
commercially available, or have been demonstrated at full commercial 
scale, but need further commercial use for economic optimization. Other 
CCTs are in the research and development stage.
    Currently available CCTs include the efficient pulverized-coal-
fired boiler (supercritical type) equipped with a full complement of 
fully-developed, state-of-the-art pollution control technologies. An 
example of this would be a supercritical boiler equipped with selective 
catalytic reduction for NOx, high efficiency flue gas 
desulfurization for SO2, and a particulate collection 
device. It is important to realize that many coal-fired generating 
units are currently equipped with these CCT systems, some of which were 
brought to the state of commercial readiness since 1986 in the 
Department of Energy's previous Clean Coal Technology program.
    Clean Coal Technology also refers to high-performance technologies 
that are well along the development path, but not yet fully 
demonstrated to be commercially available because of either technical 
or economic risks. Examples of these are integrated gasification 
combined cycle (IGCC) and advanced combustion power plant technologies.
    ``Advanced'' Clean Coal Technology refers to technology concepts 
that are in development for future use, such as advanced IGCC or 
ultrasupercritical boiler technology. In this context, the term 
``advanced'' refers to improvements in costs, efficiency, and 
performance that are expected at some future date, assuming successful 
development.
    Moving advanced clean coal technologies to full commercial 
operation will take a continuing commitment to research, development, 
demonstration and a strategy to ensure that the technologies, once 
developed, will be deployed commercially. To provide a means of 
planning future research needs, and to chart progress toward meeting 
them, the industry, largely through the efforts of the Coal Utilization 
Research Council, the EPRI, and the Department of Energy, has devised a 
Clean Coal Technology roadmap that sets cost and performance targets 
and a timeline (See Tables, below) for new coal technology.
    It must be clearly understood that these are merely research 
targets and are not intended to serve as a basis for regulatory 
requirements. Moreover, as noted later, progress along the roadmap will 
depend upon adequate funding. If the roadmap were followed, technology 
would be available in the near term to allow operators of existing 
coal-fueled power plants to meet increasingly stringent environmental 
regulations, such as those of the Clear Skies Act. Again, were the 
roadmap followed, it would be possible in 2015 to design a high 
efficiency power plant, capable of carbon capture, with near-zero 
emissions; by 2020, the first commercial plants of this design would be 
built.

                       DOE/CURC/EPRI CCT Roadmap I
------------------------------------------------------------------------
                                     Reference
    Roadmap performance targets       plant *       2010         2020
------------------------------------------------------------------------
SOx, % removal....................         98%           99%        >99%
NOx, lb/MMBtu.....................        0.15          0.05       MMBtu......        0.01         0.005       0.002
Mercury...........................       ``Co-           90%         95%
                                    benefits''
By-product utilization............         30%          50%       100%
------------------------------------------------------------------------
* Reference plant has performance typical of today's technology.
  Improved performance achievable with cost/efficiency tradeoffs.

                      DOE/CURC/EPRI CCT Roadmap II
------------------------------------------------------------------------
                                      Reference
    Roadmap performance targets        plant *       2010        2020
------------------------------------------------------------------------
Plant efficiency (%, HHV).........            40       45-50       50-60
Availability, %...................           >80        >85          90
Capital cost, $/kW................     1000-1300    900-1000     800-900
Cost of electricity, $/MWh........            35       30-32         efficiency tradeoffs. W/o
  carbon capture and sequestration.

    The roadmap contains considerable detail on the specific 
technological advances that are necessary to meet the roadmap coal. 
Some of these ``critical technologies'' are listed below.
Improvements for Existing Plants
   Mercury control
   Low-NOx combustion at reduced costs
   Fine particle control
   By-product utilization
Advanced Combustion
   Ultra-supercritical steam
   Oxygen combustion
   Advanced concepts (e.g., oxygen ``carriers'')
Gasification Systems
   Gasifier advances and new designs (e.g., transport gasifier)
   Oxygen separation membrane
   Syngas purification (cleaning) and separation (e.g., 
        hydrogen, CO2)
Energy Conversion Advanced gas turbine technology using H2-rich syngas
   Fuel cell systems using syngas
   Fuels and chemicals
Carbon Management
   CO2 capture and sequestration
  90% removal of 
        CO2 (including sequestration)
   ``Hydrogen economy''
Systems Integration
   Integrated power plant modeling and virtual simulation
   Sensors and smart-plant process control

    Finally, the roadmap makes it possible to estimate the cost of the 
research, development and demonstration programs necessary to achieve 
the performance targets, as shown in the table below. These values 
represent the total cost of the research programs, including both 
federal funds and private sector cost shares.

------------------------------------------------------------------------
         Coal technology platforms           RD&D spending through 2020
------------------------------------------------------------------------
IGCC/gasification.........................  $3.5 billion
Advanced combustion systems...............  $1.7
Innovations for existing plants...........  $1.4
Carbon capture/sequestration..............  $2.8 (?)
Coal derived fuels and liquids............  $1.2
                                           -----------------------------
    Total.................................  $10.6
------------------------------------------------------------------------

    The cost for carbon capture and sequestration research is shown 
with a question mark, to denote the relatively greater uncertainty in 
the estimate of the cost of research in this unprecedented area. It 
could be substantially higher, particularly because a number of large 
scale, long-term demonstrations will be needed to understand the 
technical, economic and environmental feasibility of carbon 
sequestration technology. This was one conclusion of a recent National 
Coal Council report, entitled ``Coal-Related Greenhouse Gas Management 
Issues,'' which provides a detailed discussion of the opportunities and 
impediments to developing, demonstrating and implementing greenhouse 
gas management options related to coal production and use.
      the role of the federal government in technology development
    The DOE Office of Fossil Energy, through its Coal and Environmental 
Systems program, expended about $198 million in 2004 to co-fund coal-
related R&D, in addition to providing $170 million for the Clean Coal 
Power Initiative demonstration program. The DOE is supporting the 
development of new technology for mercury reduction and carbon 
management. The DOE coal program seeks to develop advanced, highly 
efficient, low-emitting energy complexes, for the production of 
electricity, fuels and chemicals. The federal government has had a 
significant role in the development of clean coal technology. The 
original Clean Coal Technology (CCT) program and the current Clean Coal 
Power Initiative support the first-of-a-kind demonstrations of new coal 
use technologies. These demonstrations encompass a wide range of 
technologies, including environmental controls, new power generating 
facilities and fuel processing. Forty projects were conducted in the 
original CCT program, with a total value of $5.4 billion, consisting of 
$1.8 billion in federal funds and $3.4 billion in non-federal funds (a 
2/1 leverage on federal dollars).
    In 2002, the Energy Department announced the selection of eight 
projects to receive $316 million in funding under Round 1 of the Clean 
Coal Power Initiative program, the first in a series of competitions to 
be run by the Energy Department to implement President Bush's 10-year, 
$2 billion commitment to clean coal technology. Private sector 
participants for these projects have offered to contribute over $1 
billion, well in excess of the department's requirement for 50 percent 
private sector cost-sharing.
    Three of the projects are directed at new ways to comply with the 
President's Clear Skies Initiative that calls for dramatic reductions 
in air pollutants from power plants over the next decade-and-a-half.
    Three other projects are expected to contribute to President Bush's 
voluntary Climate Change initiative to reduce greenhouse gases. Two of 
the projects will reduce carbon dioxide by boosting the fuel use 
efficiency of power plants. The third project will demonstrate a 
potential alternative to conventional Portland cement manufacturing, a 
large emitter of carbon dioxide.
    The remaining two projects will reduce air pollution through coal 
gasification and multi-pollutant control systems.
    CONSOL has been an active participant in coal-use research since 
the 1940s. Our goals are closely aligned with those of the DOE coal 
program, and much of our research has been done in partnership with the 
DOE. We were a member of the project teams for two of the CCT projects, 
and we made both financial and technical contributions to these 
projects. We also were selected for award under the recent Power Plant 
Improvement Initiative program to demonstrate a multi-pollutant control 
technology, targeted at the smaller power plants that generate about 
one-fourth of our coal-based electricity.
    Much of our research is directed at helping our utility customers 
deal with the consequences of environmental regulations. For example, 
we developed a new technology for the beneficial use of the solid 
byproduct of flue gas desulfurization, by converting it into aggregates 
for use in road and masonry construction. This technology, which we 
piloted in partnership with DOE, reduces the cost and the land-use 
consequences of solid waste disposal. It can provide a valuable source 
of construction materials in areas without good indigenous sources, 
such as Florida, and areas of high growth, such as the southwestern 
states. Projects like this, which are a win for the economy and a win 
for the environment, justify CONSOL's commitment to work in partnership 
with the DOE to develop technology that makes sense from both 
perspectives.
    In some cases, research and demonstration projects, such as those 
conducted under the DOE Coal and CCT programs, have been sufficient to 
bring important technologies directly to the marketplace. For example, 
over $1 billion in Low-NOx burners have been installed at 
U.S. power plants since being demonstrated in the CCT program. However, 
other CCT program technologies, such as Integrated Gasification 
Combined Cycle systems, have not been widely commercialized at their 
current stage of development because of the technical and economic 
risks that remains despite these one-of-a-kind demonstrations. 
Nevertheless, large scale demonstrations are essential to understand 
the technical and economic performance of these new technologies and to 
provide potential owners and inventors with sufficient confidence to be 
able to attract financing.
    The DOE has issued a second CCPI solicitation. We believe that 
these large-scale demonstration projects are essential to reduce the 
technical and economic risks of new advanced clean coal technology.
    The government has a critical role to play in providing resources 
to follow the Clean Coal Technology roadmap, but unfortunately, current 
funding levels are not sufficient to meet the roadmap goals. The table 
below compares the funding levels required to follow the roadmap to the 
level in the Administration's FY 2005 budget.

------------------------------------------------------------------------
                                                         CURC roadmap
Technology program  (all figures   Administration FY   annual R&D budget
          in $millions)              2005 request             \1\
------------------------------------------------------------------------
IGCC/Gasification...............  34.5..............  106
Advanced combustion.............  0.0...............  18
Advanced turbines...............  12................  17 (sungas from
                                                       coal)
Existing plants.................  18.1..............  43
Carbon sequestration............  49................  79
Advanced research
    Advanced materials only.....  4.65..............  4.0
Coal derived fuels & liquids....  16.0 (H2 only)....  13 (Fuels only)
 
    Total R&D...................  160...............  280
 
Clean coal power initiative.....  50................  240.0
FutureGen.......................  227...............  (\2\)
------------------------------------------------------------------------
\1\ This number is 80% of the total R&D amount required and represents
  the federal contribution.
\2\ The CURC roadmap does not explicitly include the FutureGen
  initiative.

    Although it varies by program area, the overall R&D funding level 
is little more than half of that called for in the CURC roadmap. 
Unfortunately, this continues a pattern of past years of under funded 
clean coal research. Unless research and demonstration funds are 
increased, it is unlikely that technology will be developed on the 
roadmap schedule, if at all.
    Similarly, the funding level for the CCPI falls well below the 
roadmap requirements. Furthermore, the progress of the CCPI program is 
hampered by the requirement for annual, as opposed to advance 
appropriations. Because of the size and cost of demonstration projects, 
it is necessary for the DOE to use money from both FY04 and FY05 
appropriations to be able to fund the current solicitation. Future CCPI 
solicitations are likely to be delayed or limited in scope for the same 
reason. It is even possible that some necessary demonstrations will not 
be done because the available appropriations are insufficient. Given 
this situation, it may be appropriate for the Department to consider 
targeted solicitations focused on the roadmap objectives, or to utilize 
other approaches to match demonstration priorities with budgetary 
limitations.
    Because it was proposed after much of the work on the Roadmap was 
completed, the FutureGen initiative is not explicitly included in the 
Roadmap or in the CURC funding recommendations. However, the goals of 
the FutureGen project are consistent with the Roadmap, and properly 
coordinated with the core R&D and demonstration programs, FutureGen can 
be an important element in meeting its objectives, as discussed below.

                         THE FUTUREGEN PROJECT

    In February of last year, the Department of Energy announced plans 
to build a prototype of a coal-based power plant of the future. Dubbed 
``FutureGen,'' this facility would be based around a 275MW IGCC system, 
but it would have the capability to convert synthesis gas into hydrogen 
and to capture and sequester up to one million tons per year of carbon 
dioxide. FutureGen would be designed to minimize emissions of criteria 
pollutants and mercury to ``near zero'' levels. Furthermore, the 
FutureGen facility would be designed to serve as a ``research 
platform'' capable of testing advanced components, such as air 
separation membranes or fuel cells, during the ten year duration of the 
project, and perhaps beyond. The Department issued a ``Request For 
Information'' soliciting responses last June from parties willing to 
undertake the FutureGen project. My company, CONSOL Energy Inc., is a 
member of a ten-company group of major U.S. coal producers and users, 
which submitted a response to the DOE RFI, offering to enter into 
negotiations to conduct the FutureGen project. In part, our submittal 
says that the FutureGen mission should have four key elements:

          1. develop commercially competitive and affordable coal-based 
        electricity and hydrogen production systems that have near-zero 
        emissions;
          2. develop large-scale CO2 sequestration 
        technologies that are technically and economically viable and 
        publicly acceptable;
          3. provide a large-scale research platform for the 
        development and commercialization of advanced technology; and,
          4. provide opportunity for stakeholder involvement and 
        education.

    The vision of FutureGen as a research platform is particularly 
significant because it means that the FutureGen facility can be used as 
a test site to bring promising technologies out of the core R&D program 
and to accelerate their testing at scales up to full commercial 
implementation without the need for separate stand-alone test 
facilities.
    However, it is important to understand that FutureGen should not be 
viewed as a substitute for either the core R&D program or the CCPI 
demonstration program for at least two reasons: First, the FutureGen 
facility will not be operating for at least five years. During that 
time we need to continue the research needed to bring new technologies 
to the state that they can be tested at FutureGen. Second, we need to 
continue R&D on technologies, such as combustion-based systems, that 
are not part of the FutureGen design. That said, as the FutureGen 
concept is further defined, industry and government should look for 
opportunities for efficiencies in the coordination of the R&D program, 
the CCPI, and FutureGen to produce the greatest benefits at the lowest 
possible cost. This coordination should be an integral part of the 
ongoing technology road-mapping process.
    Finally, although the exact cost is not known, DOE originally 
estimated the project cost as $1 billion, with 80% provided by the 
federal government, and 20%, or $200 million, provided by the 
industrial alliance and its partners. Both an acceptable cost share 
ratio and the ability of the Government to commit its full cost share 
to the project before major costs are incurred are critical to the 
project's success.

            INCENTIVES FOR CLEAN COAL TECHNOLOGY DEPLOYMENT

    The foregoing discussion in this statement deals with the need for 
research, development and demonstration of advanced clean coal 
technology, and discusses technical and economic criteria that these 
new technologies will need to meet to achieve acceptance in the 
commercial marketplace. However, while the Clean Coal Power Initiative 
and the enhanced core Fossil Energy authorization that are included in 
the pending conference report of the energy bill, H.R. 6, are necessary 
for the continued development of coal technologies, they are not by 
themselves sufficient to ensure that these technologies will find their 
way into widespread commercial use. When they are initially introduced, 
they will need to be built with substantial engineering contingencies 
to assure their operability and reliability, which will increase 
capital and operating costs. Over time, as operating experience is 
gained, these costs will come down. Therefore, there is a need for 
financial incentives to offset the increased technical and financial 
risk inherent in the initial deployment of advanced clean coal 
technologies. These critical incentives are included in the conference 
report to H.R. 6, in the tax package that is part of the new ``leaner'' 
energy bill, S. 2095 and in the energy tax provisions that have been 
incorporated in S. 1637, the FSC/ETI bill. We strongly urge the Senate 
to act on these energy provisions on an expedited basis so that 
comprehensive energy legislation can be enacted this year.

                              CONCLUSIONS

    Mr. Chairman, there is little doubt that coal will continue to be 
widely used in the United States and abroad as a principal fuel for 
electricity generation, and coal's use will grow over time. We 
appreciate your strong recognition of that fact. The interests of the 
economy, society, and the environment in coal can be reconciled if we 
invest now in the development and deployment of advanced clean coal 
technology which will allow coal to be truly a low emission form of 
electricity. By working with industry to develop a coal technology 
development roadmap, the Department of Energy has and continues to 
align its program with a logical path forward to support the 
development of advanced clean coal technology. The coal industry 
remains committed to do our part to see that coal remains an abundant, 
affordable fuel for power generation, and to help to advance the 
technologies needed to meet the goals of societal, economic and 
environmental betterment.

    Senator Bunning [presiding]. Thank you, Mr. Burke.
    I am going to pinch-hit for the chairman since he has been 
called away. I will get my questions or some of them out of the 
way, then I will proceed with Senator Bingaman and Senator 
Akaka.
    Mr. Garman, in the past the Government pushed the use of 
natural gas. Today that singlemindedness is causing serious 
problems for Americans because of the current high price of 
natural gas. The presidential fiscal year 2005 budget, as Mr. 
Burke mentioned, request is for $237 million for FutureGen and 
only $50 million for Clean Coal Power Initiative.
    The President's clean coal plan has pledged to commit over 
$2 billion over 10 years for advanced clean coal technology. 
Funding only $50 million will not meet that pledge. While the 
prospect of FutureGen seems promising, why does it seem that 
DOE is pushing one program over another by focusing more on 
FutureGen rather than the Clean Coal Power Initiative.
    What do the other witnesses think about this and what do 
you think about it?
    Mr. Garman. I thank you for that question. One of the 
reasons that we are going after FutureGen is because it is 
analogous to the long bomb. It is a daunting R&D effort. It is 
something that is worthy of Federal participation. If we are 
successful in FutureGen, if we are successful in being able to 
design and deploy and demonstrate a coal plant with virtually 
zero emissions, no emissions of carbon dioxide, then we will 
have made a tremendous stride toward stabilizing greenhouse gas 
concentrations in the atmosphere. We would have developed U.S. 
leadership in a new technology that could be applicable in 
India, China, and all of the other high coal-burning countries 
of the world.
    It is a high-risk, high-reward proposition. Yes, it is true 
that we have in our budget submissions taken some money from 
nearer term incremental improvements in the performance of 
clean coal technology and shifted it to that longer-term 
higher-risk effort. But we think there is an argument for doing 
that.
    Senator Bunning. Well, let me ask you. It is my 
understanding that DOD has not yet announced projects for 
FutureGen, but it has projects already under way for Clean Coal 
Power Initiatives. How does the DOE plan to spend $237 million 
for FutureGen if no projects have been announced?
    Mr. Garman. We sent a plan to the Congress on FutureGen 
outlining our future plans, I believe, on March 4 of this year. 
We described a FutureGen program where we envision about a----
    Senator Bunning. But you do have Clean Coal Projects----
    Mr. Garman. Yes, we do, and we will continue that work in 
that area. But I will tell you it is my understanding that we 
will be using some of that budget authority in the context of 
FutureGen in the future.
    Senator Bunning. Well, it seems disproportionate when you 
have $50 million on one side and $237 million on the other, and 
you are throwing the long bomb with $237 million and you are 
developing clean coal technologies at a--well, at a much lesser 
rate, and you actually have programs in clean coal technology 
right now.
    Mr. Garman. Correct.
    Senator Bunning. So why the disparity?
    Mr. Garman. Because FutureGen is also a clean coal program.
    Senator Bunning. Well, I understand that, but it is a maybe 
program.
    Mr. Garman. It has risk, yes, it does.
    Senator Bunning. Big time.
    Mr. Garman. Yes, sir.
    Senator Bunning. Well, it is my opinion--and maybe some of 
the other panelists can weigh in; I would like for them to.
    Mr. Burke. Could I address that?
    Senator Bunning. Yes, please do.
    Mr. Burke. My company is one of ten companies that last 
year responded to DOE's request for information and offered, 
contingent upon our ability to negotiate an appropriate 
agreement, to do the private sector portion of the FutureGen 
project. We view FutureGen as being a very important strategic 
element in the overall clean coal technology area. It is a 
longer term strategic issue compared to some of the nearer term 
issues that are being funded out of the core R&D program and 
out of the Clean Coal Power Initiative program right now.
    FutureGen is one technology, the FutureGen project will be 
one technology. We think that, in addition to FutureGen, it is 
necessary to continue to develop other parallel clean coal 
technologies.
    [Buzzer sounds.]
    Mr. Burke. I am sorry.
    Senator Bunning. Do not bother about that.
    Mr. Burke. I am sorry, I did not know if I was supposed to 
do something.
    Senator Bunning. No, we are, but you do not have to.
    Mr. Burke. I apologize.
    So FutureGen is important from the strategic point of view. 
Probably the most important thing about FutureGen is it will be 
a full-scale demonstration of carbon sequestration, which is a 
very important element in the overall clean coal technology 
program. But it is only one demonstration of carbon 
sequestration. We need demonstrations of carbon sequestration 
at a number of sites. We need the development of a variety of 
clean coal technologies that stress not only new facilities, 
not only gasification-based systems, but combustion-based 
systems and technologies that address existing plants.
    So I think in that context the FutureGen project is an 
important strategic objective, but the CCPI and the core R&D 
programs are essential to continue to develop a range of clean 
coal technologies that we need to use now and in the near term, 
as well as to provide technologies which will ultimately be 
tested at facilities like FutureGen.
    Senator Bunning. Dr. Moniz.
    Dr. Moniz. Thank you Senator Bunning. First let me just 
repeat, as I said earlier to the chairman, that at MIT John 
Deutsch and I have a new major study going on on coal, so I 
would be especially happy to answer your questions in 
approximately a year. However, a few comments may be at least 
framing some of the questions. I do share some of your concern.
    FutureGen I believe has extremely important objectives. 
Having said that--and I am fully supportive of going forward 
with research and development in gasification technologies and 
others, other of the technologies that are part of FutureGen. I 
think some of the questions that legitimately can be raised, 
however, involve questions about when is the right time for a 
major integrated demonstration project. Let us face it, we have 
had in the history, in our history, a number of large 
initiatives that proved to be premature in terms of their 
demonstration of commercial technologies.
    I do not know the answer, but I think that that is a 
legitimate question. I believe that one needs clarity on the 
goals. For example, any project, FutureGen or any other, that 
is, let us say, focused on trying to demonstrate commercial 
viability versus providing a flexible research platform for 
looking at different technologies typically have a hard time 
coexisting. I have to be honest, I do not have complete clarity 
as to which of these is the leading effort.
    The integration is a little bit of concern in the sense 
that I believe, as David said, and I completely agree with him, 
and Francis as well, that there are several risky technologies 
here being integrated and a strategy of trying to separate some 
of those for research may or may not prove more effective for 
getting to the goal I think we all share.
    From that point of view, what I believe is missing--and not 
only in this part of the research portfolio, but the entire 
energy R&D budget I believe remains underfunded. In that 
context, we do not have the kind of overall portfolio balance 
between shorter term projects, longer term home runs that I 
think we need in the Federal R&D portfolio.
    Senator Bunning. Thank you.
    Dr. Smalley, you have something to add?
    Dr. Smalley. No.
    Senator Bunning. Okay. Senator Bingaman.
    Senator Bingaman. Thank you very much.
    Let me just frame the issue the way I hear it being 
discussed here. Senator Bunning made a very good point by 
referring to the effort of, his characterization as I took it, 
of the FutureGen project as throwing a long bomb. It strikes me 
that on the one hand we have got the administration trying in 
various ways in this R&D area to throw the long bomb.
    We are committed to a new hydrogen economy and we have this 
hydrogen posture plan which we have been given by the 
Department of Energy. When you get over here to figure 6 on 
page 10 and look at when all of this is going to start 
happening, not a whole lot starts happening in the marketplace 
until you get past 2020. This is a long bomb as I see it.
    FutureGen is the same way. It is a proposed project to 
develop hydrogen from coal production and also sequester 
emissions. It sort of feeds into the hydrogen economy that we 
are aiming for, which is this long bomb.
    Now, what you have talked about, Dr. Smalley, in your 
testimony is very different than that, at least the way I 
understood it. You suggested that we launch a bold new energy 
research program, as you were putting it. As I understand, you 
particularly put emphasis on the need for advances in storage 
technology and advances in technology, much of the work which 
you are credited with related to transmission of electricity 
over long distances with great efficiency.
    What I understood you to be talking about is a very 
multifaceted, robust energy research effort that would move us 
ahead in a lot of different areas to make what progress could 
be made as quickly as it can be made in each of these areas, 
rather than throwing the long bomb. My concern, frankly, is 
when I look at the budget of the administration DOE-wide, the 
request for hydrogen this next year is up 43 percent for R&D 
related to hydrogen. The request for other energy R&D 
activities in the DOE over the next 5 years all shows a 
decline. Renewables are proposed for a 21 percent decline, 
fossil energy production 22 percent decline, conservation R&D--
which, David, you referred to the importance of conservation--
is scheduled for a 26 percent decline over the next 5 years.
    It seems to me we are putting all of our eggs in one 
basket. We are saying, look, let us go for the long bomb, it 
will solve all our problems and it will happen after 2015 or 
2020, and in the mean time we can afford to cut back on funding 
of research in these other areas.
    Dr. Smalley, maybe you would have a comment as to whether I 
have correctly characterized what you have proposed and whether 
there is any validity to that characterization of what we are 
talking about.
    Dr. Smalley. Yes, Senator, I think that is a fair summary. 
I believe the path that we are on right now is not going to get 
us there. We are not going to be in a situation where we will 
have energy security. The economic basis for strength of this 
country and, for that matter, the world is going to be eroded. 
It is hard to fully internalize what it means when we do in 
fact peak in worldwide oil and as natural gas prices continue 
to go up. We have never been in this circumstance before in the 
history of this country.
    Oil and gas are so wonderful. What we need to do is find 
something to replace them. I am a great believer that we should 
try to do what we possibly can with coal. We should push it. I 
believe we should push it even stronger than what is being 
talked about now. But the big answer is probably someplace 
else.
    The status of basic research and even the development 
enterprise in the physical science and engineering in this 
country is in decay. What you mentioned as the budget 
projections for DOE is only going to enhance this decay. We are 
just not going to get there on this path. That is why I am 
calling for a major program.
    As Senator Domenici pointed out, we still would be talking 
about something tiny compared--well, not tiny, but about half 
of what is currently the NIH budget. The NIH budget is what we 
do when we are serious about something. I believe it is time to 
get very serious about not only our energy problem here in this 
country--energy is a worldwide business. We compete worldwide 
for the energy that is produced.
    There will be a new energy technology that will come out. 
There will be a new oil. We will get to it some time. Maybe it 
will be 50 or 100 years from now. It will be there. When we are 
there, it will transform the largest enterprise of humankind, 
energy. I do not believe the United States can afford to be out 
of that business. We need to be the leaders in it, to take the 
opportunity to develop our science and engineering capability 
and to get the new startup companies and the major divisions of 
existing large companies involved in this.
    So I am a great fan of clean coal and nuclear, both fission 
and fusion, biomass and so forth. I do not think we can afford 
to take anything out of the equation. We are going to need all 
the energy we can possibly get. But even doing that is not 
going to get us there. This is a bigger problem than we are 
giving it credit for.
    Senator Bingaman. I think my time is up. I guess, David, go 
ahead.
    Do you mind if he responds? Go ahead.
    Mr. Garman. Sure. Thanks for the chance to maybe give a 
slightly different characterization of our resource portfolio 
than you provided. We believe that our research portfolio is 
balanced several different ways, with a variety of 
technologies, against a spectrum of risks, both high risks and 
lower risks. Yes, it is true that we are engaged in some very 
high-risk long-term propositions, such as FutureGen and the 
President's hydrogen initiative.
    But it is also true that we are engaged in much shorter-
term types of R&D activities such as making more efficient 
building insulation or window material for a building. Our 
technology spectrum is arrayed to deliver results in the mid 
and the short and the long term, not to mention technology 
deployment activities that can be as simple as the President's 
commitment to low-income weatherization, which is not included 
in the figures that you portrayed. It is $291 million that we 
want to use today to upgrade the energy efficiency for those 
low-income Americans that can least afford higher energy 
prices. That is taking technology and putting it to work right 
now.
    So in that sense we think our portfolio is balanced and, 
just as in the case of an individual stock investor if--I had 
money and could invest in something, I would invest in a wide 
variety of things, some high risk, maybe some more speculative 
equities, but I would also have something in T-bills. And we do 
that. The weatherization program is in essence our T-bill. But 
we have some high-risk propositions as well, looking for high 
rewards down the road.
    Senator Bingaman. Mr. Chairman, I will wait for my next 
round. I will come back to the issue because I think Dr. Moniz 
and Mr. Burke both pointed out--I think Dr. Moniz said that the 
R&D budget for nuclear is woefully underfunded. Mr. Burke said 
that the funding for this road map toward clean coal is barely 
half of what, the projected funding is barely half of what the 
road map requires.
    So I think we have a serious problem as to whether we are 
putting the resources behind these things to actually make any 
major progress.
    Go ahead.
    Senator Bunning. Thank you, Jeff.
    I would be remiss as a U.S. Senator from Kentucky, since 
you are here, David, if I did not get into this a little bit. 
As the new Under Secretary, you have the responsibility for the 
Energy Employee Compensation Program. As of late March, the 
Department of Energy had completed only 4.5 percent of over 
2,700 Kentucky workers' requests for assistance. 88 percent of 
those completed cases were found ineligible cases or were 
withdrawn. Zero Kentuckians have received any payment for their 
claims.
    After almost 4 years and $10 million spent on the program, 
when will the thousands of workers at Paducah who need ongoing 
medical benefits from workers compensation get the help they so 
desperately need?
    Mr. Garman. Thank you, Senator, and this was one of the 
first briefings I received. I have been on the job precisely 1 
week and 1 day, but am already trying to get as immersed in 
this issue as I can be.
    I think my predecessor sat in this chair and said that he 
had not been satisfied with the way that the Department of 
Energy got out in front of this issue, and clearly we did not 
get a quick start, no doubt about it. Similarly, I read very 
carefully the transcript of the hearing that was held on this 
issue recently, and I sense something else is going on here 
beyond simply the slow pace of the Department of Energy's 
progress in going through the EEOICA Part D provisions. That 
is, even when we are successful--and we have moved a number of 
cases to the physician review panel and cases have emerged from 
the physician review panel; about 476 actually have come out of 
the process on the other end. But I am hearing that Senators 
are not satisfied with what came out of the other end--a piece 
of paper from a physician that gives them perhaps a leg up when 
they go before State compensation boards and try to get 
compensated for the exposures they had.
    We pledge to work with you, I think as my predecessor did, 
to try to grapple with some of these very difficult issues, 
willing payer issues among them, and how to speed this process 
along. I am going to be very careful not to overpromise to you, 
Senator, because I think there has been a lot----
    Senator Bunning. It would not do any good, promising after 
almost 4 years.
    Mr. Garman [continuing]. Of overpromising that has been 
done in relation to this program, and I do not want to make it 
worse. But I think we need to envision a two-track approach. 
Track one is to speed up the process--and we have committed to 
that. We are now running through 100 cases a week. We want to 
ramp that up to 300 cases a week.
    But we also want to explore with you alternative aspects, 
different ways of dealing with this problem.
    Senator Bunning. I have a bill to do just that.
    Mr. Garman. I know you do, and I am preparing to engage 
with you and the Deputy Secretary and the Secretary as well on 
that. So we do want to work with you.
    Senator Bunning. Do you have an Assistant Secretary, by the 
way?
    Mr. Garman. No, sir, we do not.
    Senator Bunning. You do not?
    Mr. Garman. No, sir.
    Senator Bunning. Okay. Well, the whole point I am trying to 
make is that the DOE has not lived up to their commitment to 
get it done. They have kind of thought that it would go away, 
and it is not going away. It is getting worse.
    My suggestion is to get as many of those people with their 
certificates so they can at least try to find a willing payer. 
If we have a willing payer in Kentucky or any other areas--New 
Mexico, Colorado, or wherever it might be--they ought to be 
able to get some kind of compensation out of workers comp.
    My suggestion is to take a look at our new bill and see if 
that is not going to be an alternative to what has been a very 
frustrating 3\1/2\ years for the workers.
    Mr. Garman. Yes, sir.
    Senator Bunning. Thank you.
    The Chairman.
    Mr. Chairman [presiding]. Thank you very much, Senator.
    Senator Bingaman.
    Senator Bingaman. I already had one round, Mr. Chairman, if 
you want to go ahead.
    The Chairman. Thank you very much. I have about three and 
that is it. I will submit a few in writing.
    Dr. Moniz, I strongly concur with most of the key points 
that you made. Expansion of nuclear is needed in the country. 
Production of tax credits is a good way to encourage the 
construction. I am glad you have come out that way. Interim 
storage of spent fuel is essential in the near term, and 
international safeguards through the IAEA should be 
strengthened, and significant research should be accomplished 
on multiple fronts to determine our best path forward.
    I would put a little different emphasis on a few areas 
overall, but overall I think we are thinking alike. Your 
thoughtful testimony is appreciated. In your testimony you 
emphasize that the Department's nuclear energy program is 
substantially underfunded. I previously expressed my amazement 
that the current budget proposal calls for a 26 percent cut in 
nuclear R&D after Congress worked to restore that funding from 
zero in 1997.
    What level of R&D funding would you recommend for 2005 for 
nuclear energy compared to the administration's proposed level 
of $96 million and $130 million in the current year?
    Dr. Moniz. Mr. Chairman, first if I may again say that I 
think the first context is the entire energy R&D budget I think 
is too low. We are literally back in 1965 levels in terms of 
real dollars, before we had our first energy crisis.
    With regard to nuclear energy, let me first note that the 
budget recommendations we made for R&D in the current 
organization of the Department of Energy would not be only in 
the Nuclear Energy Office. It would be nuclear energy, it would 
be in waste, etcetera. But we recommended going up to, ramping 
up to approximately $450 million per year in this area.
    This would fund, the discussion we were having a few 
minutes ago, we believe an appropriate portfolio of activities 
that would have relatively short-term impacts, for example, the 
very important issue of high burn-up fuels in thermal reactors, 
to the much longer term focused issues like literally we 
believe a $50 to $100 million a year analytical simulation 
project to understand how one should design fuel cycles and 
acquire the bench-scale scientific and engineering data 
required to inform those analyses.
    These are, unfortunately, not there.
    The Chairman. Right. Well, you know, I understand how bad 
things look, but I have been here when we had no nuclear 
activity to speak of and when we had a Department that was 
embarrassed to have any indication that they were doing 
anything in the nuclear field. You came along at the end of 
that era and I am very appreciative that at least you broke 
that, but you surely did not get it broken--you did not break 
it and cause a great surge of research even in your day.
    Dr. Moniz. May I add a comment, Mr. Chairman?
    The Chairman. Sure.
    Dr. Moniz. In fact, one of those initiatives is an example 
of what I think is very unfortunate, is in a bipartisan way the 
administration and the Congress--I testified with Senator 
Bingaman on this a couple of years ago--we did start this NERI 
program, the Nuclear Energy Research Initiative, specifically 
focused on new concepts developed especially in the university 
and university-laboratory partnership settings.
    That is now--I believe 2 years ago I noted that it was 
really time to get beyond paper and raise that level. Well, 
actually it has gone now to zero, which is not a very good 
approximately to $100 million.
    The Chairman. Well, as far as I am concerned as the 
appropriator, I have not been sitting by. I am the one started 
all of those. They were zero a few years ago, whoever was 
President. I do not even remember who was. But I am the one 
that got them up, with your help and others.
    Dr. Moniz. Yes.
    The Chairman. And this year it is back down, you know, 
which is to me kind of goofy. I mean, you get started in the 
right way and all of a sudden because you have got a tight 
budget you do away with something that is terrifically 
important.
    Dr. Moniz. And in particular, if I may say, things like the 
NERI go exactly along the lines of what Dr. Smalley was saying 
about we have to be building our young people up and investing 
in longer term university-based research as well.
    The Chairman. Well, I want to just talk about another one 
with you. You know, you talk a little bit in your remarks about 
how important it is that the environmentalists, whatever that 
is, that somehow they come to an understanding how well nuclear 
power addresses some of their major issues, not all of them, 
but clearly the dirty air, it is a model. That does not mean we 
know yet how to satisfy everybody on where to put the waste, 
but if we did it like France we know how to do that in a 
nickel. That is nothing, temporary, but it is pretty much 
everybody knows how to do it. We could do it with a big team of 
existing engineers.
    But can you suggest how a wider appreciation of the 
environmental benefits of nuclear power might be achieved?
    Dr. Moniz. Well, if I may bring up and recall an editorial 
in Science magazine written by Richard Meserve earlier this 
year, former Chairman of the NRC. He wrote an editorial that 
was interesting. It picked up from the poll done in our study 
that said that the public did not certainly connect 
particularly global warming issues with nuclear power.
    What he noted really was that, not his words, but there is 
almost a conspiracy of silence in making the connection. Many 
in the environmental community have not been willing to 
readdress the question of nuclear power in this role. However, 
he points out as well that in the utility industry this point 
is not being made either, often because the same utility that 
may be promoting a nuclear plant is also promoting coal plants 
and they do not want to get into that discussion. And frankly, 
the administration has not been very forthcoming in making 
especially this link between nuclear power and global warming.
    I do not know what to say other than the obvious, that we 
need to have I think much more open and frank discussions. I 
want to make it clear, I am an advocate not of nuclear power; I 
am an advocate of energy supply, of clean environment, and of 
energy security. I am not pushing any particular technology.
    But nuclear power simply has to be discussed openly, its 
plusses and its minusses, in terms of the challenges that we 
face for energy supply and clean energy supply.
    The Chairman. Well, I disagree with you that the energy, 
electricity companies are not attempting to promote nuclear. I 
have been amazed at what they have been doing and how they have 
been putting themselves out front. The consortium they just put 
together to see if the statute we drew will work is pretty 
exciting.
    Dr. Moniz. Yes.
    The Chairman. But I do agree that if you are looking for 
promotion and that kind of activities, there seems to be 
something running into each other where you cannot get that 
done.
    Dr. Moniz. We actually do not disagree on the point that 
you just mentioned, Senator. Clearly, these consortia going 
forward to test combined construction and operating licenses, 
etcetera, are an important movement. I was referring more 
specifically to the role of nuclear power in global warming, 
which is not a link that is being made by the companies. 
Frankly, I believe in the end, certainly for me, that is 
uniquely the principal driver for having to address the 
question of nuclear power's future on a relatively short time 
scale.
    The Chairman. My last question is directed at Dr. Smalley 
and Mr. Garman. I realize that if wind and solar renewable 
sources are accompanied by energy storage we can compensate for 
their intermittent production of electricity. Dr. Smalley 
discussed the vision for such storage in his testimony, and I 
will be brief. It was very emphatic in his testimony and he 
emphasized the importance of it.
    I would be interested in the perspectives from both of you 
on current studies of energy storage and whether you think we 
need to expand that research or cause something to change so it 
will happen with more effectiveness. In addition, I wonder if 
you have made estimates of the additional costs incurred by 
renewables if storage is required.
    Do you want to start, David?
    Mr. Garman. There is substantial work going on in energy 
storage technologies today. Compressed air energy storage 
systems for utility-scale work have been demonstrated. Flow 
batteries are showing some promise as storage media; reversible 
fuel cells, something we are working on in the context of the 
hydrogen so that when you have excess electricity generation 
you can make hydrogen; when you do not have it you let the 
hydrogen flow back into electricity.
    These are all things that are being worked. Of course, we 
can always discuss the scale of the activity and whether more 
can be done. In all of these activities that the panel has 
raised, I think we all agree that more can be done. I am also 
mindful of what you said in our Appropriations Committee 
hearing: The money is limited. So we have this tension built 
into the system where we are trying to make sure the portfolio 
is optimized as best we can.
    The Chairman. All right.
    Dr. Smalley.
    Dr. Smalley. It has been over 150 years since the lead-acid 
battery was discovered. We still have not really beat it. It is 
not for lack of trying. There has been a tremendous effort for 
pretty much this entire time to get the lead out of the 
batteries.
    As you commented, I am a technological optimist. I assume 
that mother nature really has provided a way for us to do this. 
We just really have not found it yet. It may very well turn out 
that that new battery that is transformingly better than the 
lead-acid battery just cannot be made with the materials we 
have today. It might take a few little miracles.
    Now, you may have heard me say this before, but let me say 
it again. The good news is that miracles do happen. I have been 
involved in the physical sciences for over 30 years and I have 
seen quite a number of them during my time period. They come 
out of this thing we call the garden of physical sciences and 
engineering. I think of it as a garden. And I think the real 
issue in front of us is just how should we handle that garden, 
how big should it be, how should we nurture it, how should we 
cultivate it, weed it, how do we learn how to direct resources 
in a way that actually treats it as a serious enterprise of 
humanity and we get technologies out.
    We have a huge problem to solve here that is connected to 
essentially every other problem facing humanity. We have to 
solve it. Electricity I think is going to be at the core of 
this. Storing that energy in vast amounts cheaply will be 
transforming. That is the major reason I made my testimony 
about this. You do not need me to tell you that it would be 
wonderful to have photocells at the cost of paint, of course. 
But I think this is one area that deserves more attention in 
our research portfolio. It is something else for us to work on 
that actually connects to so much else, nanoelectronics, the 
whole push for new nanomaterials. This is something that could 
have a huge impact on energy while following these paths that 
we are taking really for other reasons.
    The Chairman. Well, I would say, at least from my 
standpoint, just so you know how mundane we are still working 
at what level of activity in terms of electricity transmission, 
for the first time we got Republicans to agree to a bill that 
essentially says if you have got a bottleneck that we can solve 
it by eminent domain. It is not that simple. A lot of things 
have to be tried. But essentially the bottom line is in the 
bill that is pending you go through all those hoops and we have 
agreed that at the end of them, if they do not work, that the 
law will establish the fact that somebody will do it.
    Now, you have told us that that is an essential thing, but 
it is also such a baby step that one wonders why we are still 
here today talking about it. But that is the kind of problem 
that we have in this field.
    Superconductivity, we know how important that is and we 
have been pumping money into it and we have been told by our 
scientists we are right there or almost there, and frankly I am 
not sure we are very much further than when Ronald Reagan 
announced I do not know how many centers, but he put one of 
them in our State after we complained up at Los Alamos. But 
there have not been great strides; some, but not great.
    Senator Bingaman.
    Senator Bingaman. Thank you.
    I wanted to just ask Mr. Burke. Some of the statements you 
make in your testimony I think need to be focused on here. You 
say over on page 6, talking about this clean coal technology 
road map, ``Were the road map followed, it would be possible by 
2015 to design a high efficiency powerplant capable of carbon 
capture with near-zero emissions, and by 2020 the first 
commercial plants of this design would be built.'' So, that is 
possible?
    Then, on page 10 you say: ``Unfortunately, current funding 
levels are not sufficient to reach the road map goals.'' Then 
you go on to say: ``This continues the pattern of underfunding 
clean coal research and unless research and demonstration funds 
are increased it is unlikely that technology will be developed 
on the road map schedule, if at all.''
    Mr. Burke. Right.
    Senator Bingaman. So, you are basically saying this whole 
notion that we are going to have emission-free use of coal may 
never happen.
    Mr. Burke. We do not have the technology to do it now, 
Senator, and the road map envisions that technology and 
attempts to define the time in the future when it would be 
available if research, development, demonstration, and 
commercial deployment follows a particular path. Then the 
people that put the road map together, people in industry and 
people in the Department of Energy--this road map is a combined 
effort of industry and the Department of Energy. The people 
that put the road map together then attempted to determine what 
the specific pieces of research were that were needed from 
laboratory scale up to demonstration scale and what those would 
cost and put together an estimate for the cost to follow the 
road map within that time frame.
    That is the comparison I am making, between the cost as 
estimated to achieve that vision of the future and the funding 
levels that have been and are now in the DOE budget.
    Senator Bingaman. So basically what you are saying is, if 
we keep funding clean coal R&D at the levels we have been 
funding it and at the levels that are proposed for next year, 
we will not develop the technology needed to have emission-free 
power production from coal any time in the foreseeable future?
    Mr. Burke. Well, I think the road map sets out goals, 
quantitative goals in terms of emissions levels and costs and 
efficiencies, performance and cost and efficiency goals. The 
work that is being done today, that is being done now, will 
help to move toward those goals. There will be improvements. So 
I do not think that the fact that the funding levels are below 
what we think are necessary obviates any value in doing that 
research. There is still a high degree of value in doing that 
research.
    Some of it is directed at much more near-term objectives, 
like mercury control for example, which we will need to 
implement in the next decade, and that technology will be 
developed. We need more funding for that, but nevertheless 
those technologies, those near-term technologies, we developed.
    I think that the road map also addresses this longer term 
strategic issue and, as I said, sets performance goals. The 
likelihood I believe is not that we will not make progress 
toward those goals, but that we will not achieve those specific 
goals within that time frame, particularly the cost goals. 
There is a lot we can do if we are willing to spend money. We 
can build a power plant now that can capture and sequester 
CO2, but we would not want to pay what that is going 
to cost.
    So the road map constrains this technology development in 
terms of the cost of electricity. We think that is what coal 
delivers, is low-cost electricity that really helps to vitalize 
our economy, and that is what we want to protect.
    Senator Bingaman. Yes. David, go ahead.
    Mr. Garman. I would just make an observation, having been 
through several roadmapping exercises in technology 
development. Road maps, as Mr. Burke said, are developed with a 
consortia of folks from the Department of Energy, from the 
national labs, from civil society, and from industry. It is an 
aspirational product, really. We say: We want to achieve this 
technological result in this time frame. And most technology 
road maps are underfunded because there is not enough money to 
go around to fully fund all of them.
    So what we do is, instead of pursuing five paths to a 
particular technology, we will pursue three. Instead of 
achieving this goal in the time frame of 2015, well, if the 
money is not there we will let it slip to 2020. So the 
roadmapping exercise is still extremely valuable because it 
does present a consensus view on how we can overcome 
technological obstacles to get to a shared vision.
    However, there is rarely enough money to do precisely what 
everybody wants to do in their various road maps. I would argue 
that is probably true of just about every road map that is 
developed in the Department of Energy and in industry as well.
    Senator Bingaman. Mr. Chairman, let me just make a comment 
to summarize the point I made earlier when you were not here.
    The Chairman. Sure.
    Senator Bingaman. It seemed to me that the portfolio, as I 
think various people have referred to it, portfolio of 
activities that we are pursuing in the R&D area related to 
energy, I think we need to do a real analysis as to whether or 
not it is balanced. I know David's view is that it is balanced, 
that this is the proper allocation.
    My own sense is that we are putting so much money into this 
new hydrogen economy idea and some of the long distance goals 
that are involved in that that. You can say maybe that does not 
come out of the rest of the R&D activities, but it seems to me 
there are a lot of R&D-related activities that could be pursued 
as part of the energy budget that are being neglected while we 
put very substantial amounts into some of these other things. 
That is a concern to me. I just wanted to make that point 
again.
    Thank you again for the hearing.
    The Chairman. Thank you.
    Well, let me thank you for your observations and 
thoughtfulness. Let me close by my own observation, and in 
particular I want to address this at you, Dr. Smalley. Maybe it 
will prompt an answer, maybe it will not.
    I am a technology optimist, but I never have called myself 
that. In the book I am writing I call myself something else, 
but I think if you were reading it you would say, well, there 
it is; that is his way of saying it. I just think there are no 
humankind problems that are not solveable. That is my theory. I 
thought it was based upon faith, but you believe it and I do 
not think you believe it on faith. You believe it because you 
have seen things happen, and your vision is pretty big. I have 
not seen that many happen where I am party to it, but I look at 
it and I have seen it happen.
    But I actually believe that our future depends on a 
regularity of breakthroughs that are big enough to make us make 
our economy continue to be more powerful and able to cope in a 
competitive world. I think we cannot make it without that.
    So looking back at what happened, well, I guess the first 
thing I would say, the computer chip and computerization was 
the recent one. It took us from an era to another era and we 
did not even know it was happening, and then as it evolved 
further it made us more and more capable of doing things the 
rest of the world could not keep up with us on. But lo and 
behold, they are almost there.
    You are looking around, I assume, for what is next. I am. 
And I wonder if you have an idea, based upon what you know, 
some aspect of nanotechnology, microengineering. Do you have an 
idea what might be next?
    Dr. Smalley. Those of you who know me will know that I am 
going to say carbon nanotubes. I believe that they may very 
well offer a path to this long distance power transmission that 
we have been looking for.
    But let me not talk so much about my research, just the 
more broad issue. I have wondered often in my life why I live 
in Houston, Texas. It is not the hottest place for scientific 
research. It is not MIT, although we will get there. The one 
thing I have learned in Houston, Texas, from people I have 
talked to is how huge the energy business is, and Houston is 
the capital of the oil and gas business worldwide.
    Over this past couple of years I have every day realized 
just how massive and wonderful oil and gas were. You know, in 
1900 people got crazy rich as this magnificent energy source 
came self-propelled out of the ground. If you read this 
wonderful book by Daniel Yergin, ``The Prize,'' it is the 
history of oil for the past 100 years. It is pretty much the 
history of the entire world. It is how we got rich.
    We have grown up, lived in a world where it seemed like 
that was going to go on forever. Well, some time over this next 
20 or 30 years we have got to go invent something completely 
new. We have never been in this position before.
    Yes, I believe in miracles coming out of the garden and I 
have seen a lot of them--lasers, microelectronics for example, 
these stop lights that we see these days that actually came 
from Sandia, the strained layer super-lattice--just stunning 
miracles. If you told me before that you were going to have 
diodes in your street lights that you could see even though the 
sun is shining, I would have said you are crazy. These things 
do happen.
    But if you look over the past 50 years at the rate at which 
these major inventions happened and you look at what is going 
to be necessary to make the fuel cells work in our automobiles, 
for example, we need more miracles quicker than we have had in 
history. The challenge is how do we, with the resources of this 
country, nurture that enterprise to make miracles happen. You 
cannot predict them. It is a tremendous challenge, but it is in 
fact the one that is in front of us today.
    The Chairman. Well, I was going to say--first of all, I 
thank you very much for your thoughts. I assume that the 
members of the panel are just as impressed as I am with what he 
has said. Every one of us, whether we are well read or not, 
have read enough recently to know that these miracles occur 
because of people. They are well trained or they are full of 
ideas or they are just innovative people.
    I was reading just the other day on how jet engines that we 
now take for granted, somebody in England literally developed 
that and right off the bat it worked. It was not like he took 
20 experiments. He just had an idea that if he pushed that hot 
air out there was a way to push it so that it would push 
whatever it was pushing against through air. And he was a 
little short man nobody thought much of, and there he came up 
with that thing.
    That was one of the pieces, that was one of those miracles. 
It may not be the one, but it is a pretty big one. And whoever 
came up with the computer chip has a big one. I think we have 
got to come up with a couple more, not just because we need it 
to stay big in the world, which is probably true, and to stay 
alive and stay healthy. But I think we need it because the 
world needs it, whether it is a breakthrough in energy, which 
you have just told us today that is where it has got to be, I 
think. You have said the world runs on energy and I assume if 
it is going to run out we had better start running to catch it 
right.
    So anyway, I thank you very much. Good to be with you.
    [Whereupon, at 11:45 a.m., the hearing was adjourned.]

                                APPENDIX

                   Responses to Additional Questions

                              ----------                              

                                CONSOL Energy Inc.,
                                    Research & Development,
                                      May 13, 2004, South Park, PA.
Senator Pete V. Domenici,
Chairman, Committee on Energy and Natural Resources, U.S. Senate, 
        Washington, DC.
    Dear Chairman Domenici: Attached are responses for the record to 
the questions concerning my testimony of April 27, 2004 and posed in 
your letter of April 29. I am grateful for the opportunity to testify 
before your committee on the need for Clean Coal Technology, and my 
optimism that, with the proper dedication of private and public 
resources, coal will deliver its full value as America's most abundant 
energy resource.
            Sincerely,
                                                        F.P. Burke.
                      Responses of Dr. Frank Burke

    Question 1. Dr. Burke, the Administration has proposed reducing 
Mercury emissions from power plants by 70 percent by 2018. Would you 
please provide the Committee with an assessment of the present state of 
technology associated with Mercury emissions reduction in currently 
operating plants and in the new coal-fired power generation 
technologies?
    Answer. At present, there is no mercury-specific control technology 
in use on power plants in the U.S. To some extent, devices installed to 
control SO2, NOx and particulate emissions remove 
mercury, but the amount removed is highly variable, depending on a 
number of factors including the type of control device (e.g., wet 
scrubber, dry scrubber, fabric filter, electrostatic precipitator), 
boiler type and operating conditions, and coal composition. Although 
the mercury removed as a ``co-benefit'' of existing control technology 
may for some units be sufficient to achieve the 2018 goal, it is clear 
to me that new technology will be needed to avoid severely disrupting 
the reliability of the U.S. coal supply and coal-based electricity.
    With respect to the 70% mercury reduction requirement posed in the 
question, it is important to realize that 70% is the average mercury 
reduction required for all coals and sources. However, coals vary 
widely in mercury content. For coals that contain more mercury than the 
average, a greater percentage of mercury reduction may be required, 
depending on the form and implementation of the final rule. For 
example, if a hypothetical rule required the emissions from bituminous 
coal units be reduced to a level corresponding to a 70% reduction from 
the average coal, half of the coal would require more than 70% 
reduction, 20% would require more than 80% reduction, and 10% would 
require more than 90% reduction. Therefore, a great deal of the U.S. 
coal supply could be jeopardized by a rule based on the hypothetical 
performance of a developing technology applied to an ``average'' coal. 
To some extent, this would be mitigated under a cap-and-trade program, 
for which the average performance of the fleet of boilers is a more 
meaningful concept. Nevertheless, even a cap-and-trade program would 
not guarantee the ability of many coals to be used at a 70% overall 
reduction level. In that context, EPA's discussion of developing and 
existing removal technologies in the Supplemental Notice to the mercury 
rule is instructive. EPA explains that technologies for 50-70% mercury 
removal may be commercially achievable after 2010.\1\
---------------------------------------------------------------------------
    \1\ Supplemental Notice to the Proposed Rule, 69 Fed. Reg. 12,403 
(March 16, 2004).
---------------------------------------------------------------------------
    ``Although pursuit is continuing on some mercury emission control 
technologies at the bench and pilot scale, much work has already been 
completed at these smaller scales. However, some technologies, like 
sorbent injection, have entered the large-scale field testing stage, 
and we have initiated a full-scale demonstration project for sorbent 
injection technology. It appears that these technologies, with at least 
50-70% mercury emission reduction, will be ready for broader full-scale 
demonstration. on bituminous coal in 2005, and on subbituminous coal 
and lignite in 2007. If these demonstrations are successful, commercial 
deployment could occur on a large scale after 2010, or perhaps later.''
    In general, I concur with EPA's opinion as it pertains to the 
installation of technology on new units. Therefore, to reliably meet a 
70% average mercury reduction requirement without eliminating much of 
the existing coal supply from the market will require the development 
and commercial deployment of new technology with performance beyond 
that expected to be achieved in 2010. With respect to existing units, 
the situation is further complicated by the diversity of sources in 
operation and the problems that are likely to be encountered in 
retrofitting first-of-a-kind technology at full scale. Therefore, the 
performance of new technology with an ``average'' coal in a new-plant 
installation, may overstate its performance with a higher mercury coal 
in a retrofit application.
    Question 2. Dr. Burke, I know that there are many different types 
of coal used in the U.S. to generate electricity. What kind of problems 
arise in developing new, clean technologies when you are confronted 
with such a wealth of diverse energy sources?
    Answer. The principal challenges are the lack of a sound, 
fundamental understanding of mercury chemistry, the diversity of 
sources and their coals that must be controlled, the difficulty in 
designing mercury control tests that can be extrapolated to a wide 
range of sources, and the cost of and time needed to do long-term 
performance tests that will be necessary to convince potential users of 
the efficacy of candidate technology.
    As explained in my response to the first question, coals are highly 
variable in mercury content, mercury chemistry in the boiler 
environment is poorly understood, and the efficacy of various control 
technologies with the wide range of U.S. coals is largely unknown. 
Fundamental research on mercury is needed to better understand the 
results of previous and current mercury control technology tests and to 
identify and develop new approaches. Intensive long-term measurements 
of mercury emissions are essential to provide underlying information 
for applying the research to practical applications. Short-term 
episodic measurements of mercury emissions, like those done in EPA's 
1999 Information Collection Request program, while valuable, are wholly 
inadequate to provide the basis for intelligent rule-making, 
particularly if the rule anticipates the availability of as yet to be 
developed technology, as explained above. To illustrate the point, the 
EPA data used in the mercury rule-making consists of the results of 
three one-hour tests at only of 80 of the over 1100 coal-fueled 
electricity generating units in the country. Thus the mercury sampling 
time used to obtain the data bears the same relationship to the total 
annual operating time of the 1100 units as 3 seconds does to a day.
    One of the fundamental problems with mercury technology development 
is that mercury is present in very low concentrations in coal and 
therefore in flue gas. The analogy has been made that the concentration 
of mercury in flue is equivalent to 30 ping-pong balls dispersed in the 
Astrodome. As a result it is difficult to measure mercury 
concentrations accurately (the standard measurement method has an 
uncertainty of 20% or more) and mercury concentrations, even from a 
single mine, are much more variable (by a factor of 2-to-3) than other 
coal constituents of concern, such as sulfur. This creates problems 
with designing and executing well-controlled experiments. In addition, 
mercury control can be greatly affected by unrelated factors, such as 
coal chemistry (primarily chlorine and sulfur), carbon burn-out in the 
boiler, flue gas temperature profile, boiler load, and others. This 
makes it problematic to extrapolate or generalize the results of even a 
well-designed and controlled experiment to predict the performance of a 
technology in all circumstances for all coals.
    Another challenge to the development and deployment of mercury 
control technology is cost. To be confident in the application of a 
technology it must be subject to long term testing at full scale. The 
operation of most coal-fired boiler units changes frequently, such as 
when the unit is cycled daily and seasonally to follow load demand, 
shuts down for a planned or unplanned maintenance outage, or performs 
operational procedures such as soot-blowing. Long-term testing and 
performance monitoring are expensive (-$2-3 million per test), and as 
a result relatively little has been done. The Department of Energy's 
budget over the last several year, combined with private-sector cost 
sharing, has only been sufficient to initiate eight long-term tests 
which are just getting under way.
    Question 3. Dr. Burke, you mention in your prepared remarks that 
China's use of coal to generate electricity will grow by a billion tons 
from 1.5 billion annually to 2.5 billion tons by about 2020. I assume 
that India and other developing nations in the Far East will experience 
similar growth in the use of coal. Do you think our efforts to develop 
new clean coal power technologies will be available and affordable to 
these nations to help them reduce their emissions of sulfur and 
nitrogen oxides, mercury and carbon?
    Answer. I believe that the developing economies will utilize their 
indigenous coal resources. Helping them to do so contributes to global 
economic and political stability. If we pursue our current research and 
deployment agenda in a timely manner, U.S.-developed technologies can 
have a major impact in helping coal-using countries throughout the 
world to meet economic and environmental objectives.
    The United States is leading the world in the development of power 
generation and emission control technologies for coal-fueled power 
plants. The principal drivers behind the technology development program 
in the U.S. are defined in a technology ``roadmap'' jointly developed 
by the Department of Energy and the coal and electric utility 
industries, and described more fully in my written testimony. The 
roadmap lays out cost and performance targets designed to do two 
things: First, to develop suitable technologies so that coal can be 
used in a manner that meets our environmental objectives. Second, to 
ensure that the capital and operating costs of these technologies are 
low enough to allow coal to be used in a way that meets our economic 
need for affordable energy. These needs and aspirations are not unique 
to the United States. We should look for opportunities for 
international collaboration where they exist, such as in the DOE Carbon 
Sequestration Leadership Forum, which is fostering international 
cooperation to address greenhouse gas emissions. However, we need to 
set and follow our own research, development and deployment agenda to 
ensure the continued availability of our domestic coal resources.
    Question 4. You also discuss the difficulties associated with 
controlling carbon dioxide emissions in your prepared statement. Can 
you please elaborate on the challenges associated with controlling 
carbon emissions?
    Answer. All fossil fuels (coal, oil and natural gas) consist mostly 
of carbon (75-85% by weight). Carbon dioxide is the thermodynamically 
stable end product of fossil fuel combustion. In a sense, the purpose 
of fossil fuel technologies, whether used in cars, furnaces or power 
plants, is to turn carbon into carbon dioxide and utilize the energy 
produced by that chemical transformation. Therefore, there is no 
practical way to avoid the production of carbon dioxide in fuel use, 
although its production can be minimized through efficiency 
improvements. Beyond that, ``carbon management'' implies that carbon 
dioxide be ``captured'' from the source and ``sequestered'' to prevent 
its emission into the atmosphere.
    Because of thermodynamic limitations, fuels are converted to useful 
energy (such as electricity) with some unavoidable loss of the original 
energy value of the fuel. Conventional power plants operate at 30-40% 
efficiency (the U.S. average is about 33%). Increasing efficiency 
reduces the amount coal needed to generate a unit of electricity and 
reduces carbon dioxide emissions accordingly. For example, replacing a 
33% efficient technology with one 40% efficient would reduce carbon 
dioxide emissions by about 20%. Advanced systems under research now 
have the potential to increase power plant efficiency to about 60%. The 
employment of these systems provides the benefit of lower fuel usage 
and, thus cost, so efficiency gain can be pursued based on its economic 
advantage alone. The principal challenge is to gain the efficiency 
improvement, while maintaining an acceptably low capital cost. I 
believe that power production efficiency improvement should be pursued 
as the first and most expedient approach to reducing carbon dioxide 
emissions.
    The first challenge to controlling carbon dioxide emissions is to 
develop energy efficient and cost effective technologies for the 
capture of carbon dioxide from the variety of sources that produce it. 
Technologies to capture carbon dioxide from sources such as flue gas 
exist, in the sense that commercial technologies developed for other 
uses, like amine scrubbing of natural gas, could be applied. However 
these technologies exact a large energy penalty, and are prohibitively 
expensive for application to large combustion sources like coal-fueled 
power plants. Some sources, such as coal gasification systems, may 
offer advantages in terms of ease of carbon dioxide capture, but these 
have not been proven in practice. In any event, the vast majority of 
coal-fueled power plants in the U.S. and elsewhere are combustion-
based, and it is likely that most plants built for the next several 
decades will be combustion-based. Relatively little research has been 
done on the important issue of carbon dioxide capture, particularly 
from combustion sources, but some promising approaches have been 
identified, and there is reason for optimism.
    Once captured, the carbon dioxide must be stored or ``sequestered'' 
for geologically long times to avoid its emission to the atmosphere. A 
number of opportunities for ``terrestrial'' sequestration (i.e., 
biomass accumulation) exist. However, in all likelihood, large-scale 
carbon management would require injection into suitable geologic 
formations. There are some relevant examples of this, such as the 
injection of carbon dioxide into oil-bearing formations to stimulate 
production, and a project in the North Sea in which carbon dioxide 
recovered from a natural gas production facility was injected into a 
saline aquifer. These examples are encouraging, but the sheer volume of 
carbon dioxide that would need to be sequestered worldwide to eliminate 
global emissions is staggering, about 25 billion tons per year. 
Therefore, there is an urgent need for large, long-term tests to assess 
the economic and technical feasibility of carbon dioxide sequestration 
in variety of geologic and geographic sinks. Projects like the U.S. 
FutureGen initiative, which would involve sequestration of about 1 
million tons of carbon dioxide per year, are a step in the right 
direction. However, considerably more needs to be done in both 
fundamental, research and practical application testing before carbon 
sequestration can have an assured place in energy and environmental 
policy decisions.
    I call your attention to a report prepared by the National Coal 
Council in May 2003 entitled ``Coal-Related Greenhouse Gas Management 
Issues.'' The report is available on the NCC web-site at: (http://
www.nationalcoalcouncil.org/Documents/fpb.pdf). This report describes 
in more detail the principal approaches to carbon dioxide management 
described briefly above, discusses current research and public policy 
actions addressing the issue, and makes recommendations to the 
Department of Energy in the three areas of implementing, developing and 
demonstrating greenhouse gas management technologies.

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