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CLEAN COAL TECHNOLOGY 

HEARING 

BEFORE THE

SUBCOMMITTEE ON SCIENCE, TECHNOLOGY, 

AND INNOVATION 

OF THE

COMMITTEE ON COMMERCE, 

SCIENCE, AND TRANSPORTATION 

UNITED STATES SENATE 

ONE HUNDRED TENTH CONGRESS 

FIRST SESSION 

APRIL 26, 2007 

Printed for the use of the Committee on Commerce, Science, and Transportation 

( 

(II) 

SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION 

ONE HUNDRED TENTH CONGRESS 

FIRST SESSION 

DANIEL K. INOUYE, Hawaii, Chairman 

JOHN D. ROCKEFELLER IV, West Virginia 

JOHN F. KERRY, Massachusetts 

BYRON L. DORGAN, North Dakota 

BARBARA BOXER, California 

BILL NELSON, Florida 

MARIA CANTWELL, Washington 

FRANK R. LAUTENBERG, New Jersey 

MARK PRYOR, Arkansas 

THOMAS R. CARPER, Delaware 

CLAIRE MCCASKILL, Missouri 

AMY KLOBUCHAR, Minnesota 

TED STEVENS, Alaska, Vice Chairman 

JOHN MCCAIN, Arizona 

TRENT LOTT, Mississippi 

KAY BAILEY HUTCHISON, Texas 

OLYMPIA J. SNOWE, Maine 

GORDON H. SMITH, Oregon 

JOHN ENSIGN, Nevada 

JOHN E. SUNUNU, New Hampshire 

JIM DEMINT, South Carolina 

DAVID VITTER, Louisiana 

JOHN THUNE, South Dakota 

MARGARET L. CUMMISKY, Democratic Staff Director and Chief Counsel 

LILA HARPER HELMS, Democratic Deputy Staff Director and Policy Director 

CHRISTINE D. KURTH, Republican Staff Director and General Counsel 

KENNETH R. NAHIGIAN, Republican Deputy Staff Director and Chief Counsel 

SUBCOMMITTEE ON SCIENCE, TECHNOLOGY, AND INNOVATION 

JOHN F. KERRY, Massachusetts, Chairman 

JOHN D. ROCKEFELLER IV, West Virginia 

BYRON L. DORGAN, North Dakota 

BARBARA BOXER, California 

MARIA CANTWELL, Washington 

MARK PRYOR, Arkansas 

CLAIRE MCCASKILL, Missouri 

AMY KLOBUCHAR, Minnesota 

JOHN ENSIGN, Nevada Ranking 

JOHN MCCAIN, Arizona 

KAY BAILEY HUTCHISON, Texas 

GORDON H. SMITH, Oregon 

JOHN E. SUNUNU, New Hampshire 

JIM DEMINT, South Carolina 

JOHN THUNE, South Dakota 

(III) 

C O N T E N T S 

Page 

Hearing held on April 26, 2007 .............................................................................. 1 

Statement of Senator Boxer .................................................................................... 5 

Statement of Senator Dorgan ................................................................................. 46 

Statement of Senator Kerry .................................................................................... 1 

Statement of Senator Stevens ................................................................................ 3 

Prepared statement .......................................................................................... 4 

Statement of Senator Thune ................................................................................... 50 

WITNESSES

Chaisson, Joseph M., Technical and Research Director, Clean Air Task Force . 6 

Prepared statement .......................................................................................... 8 

Denis, Roberto R., Senior Vice President, Sierra Pacific Resources .................... 13 

Prepared statement .......................................................................................... 15 

McRae, Gregory J., Hoyt C. Hottel Professor of Chemical Engineering, Department of Chemical Engineering, Massachusetts Institute of Technology .. 19 

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

Rencheck, Michael W., Senior Vice President—Engineering, Projects, and 

Field Services, American Electric Power ........................................................... 24 

Prepared statement .......................................................................................... 26 

Wilson, John M., Chief Operating Officer, Siemens Environmental Systems 

and Services .......................................................................................................... 35 

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

(1) 

CLEAN COAL TECHNOLOGY 

THURSDAY, APRIL 26, 2007 

U.S. SENATE, SUBCOMMITTEE ON SCIENCE, TECHNOLOGY, AND

INNOVATION, COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION, 

Washington, DC. 

The Subcommittee met, pursuant to notice, at 10:02 a.m. in room 

SR–253, Russell Senate Office Building. Hon. John F. Kerry, Chairman of the Subcommittee, presiding. 

OPENING STATEMENT OF HON. JOHN F. KERRY, 

U.S. SENATOR FROM MASSACHUSETTS 

Senator KERRY. The hearing will come to order. Thank you all 

very much, welcome to our witnesses, thank you, folks, for taking 

time to come in today. 

I know that we have some other colleagues coming, but I also 

have a conflict. The Finance Committee is meeting now, and a 

number of members are caught up between them. We’re going to 

just proceed ahead and we’ll see who’s here. 

Obviously, the subject of climate change and emissions is increasing in its importance to the country and to the world as the 

evidence mounts regarding the impact of greenhouse gas emissions. 

This is a subject that I’ve followed in this Committee since 1987, 

or slightly before, when Al Gore and I held the first hearings on 

global climate change. Subsequently we wound up going down to 

Rio for the Earth Summit where the voluntary Framework was entered into in 1992. 

So, it’s been a journey of 20 years or more, with a lot of evidence 

mounting and a lot of knowledge gained in the interim. 

The science is pretty clear now, when you sit down with some of 

our top scientists from Jim Hansen to Ed Miles or John Holdren 

at Harvard or a bunch of folks. The feedback that we’re getting 

from the climate, from Earth itself, is indicating a much more 

rapid, and much more consequential rate of change than had been 

predicted. The predictions are coming true, but in greater degree, 

and greater intensity. 

Senator Stevens, welcome. 

So the question we face is of how to deal with this? The scientists 

are telling us we have a 10-year window within which to try to get 

it right, and that 10-year window has now narrowed in the sense 

that the consensus of those scientists was 2 years ago. Two years 

ago the consensus was that we could afford a three-degree centigrade increase in the Earth’s temperature, before you get to the 

2 

catastrophic tipping point, as they judge it, and that was deemed 

to be about 550 parts per million of greenhouse gases in the atmosphere. 

They have now revised that, based on the rapidity and size of the 

feedback that they’re getting. They now deem it to be a two-degree 

centigrade increase that we can tolerate, and a 450 parts per million level of greenhouse gases in the atmosphere. 

So, we face an enormous challenge, and the question that we are 

all grappling with is how to do this responsibly, minimize economic 

dislocation, maximize economic output, growth, productivity, and 

lead the world, hopefully, in the creation of technologies that we 

can sell to India, to China, less developed countries, and others. 

Obviously there’s a lot of money that’s already beginning to chase 

these technologies. Venture capital is moving in significant 

amounts into green technologies. But, at the same time leading industrialists, leading corporate chieftains, are telling us that they 

want the Government to create a certainty about the direction 

we’re going, and not to have a patchwork of, California doing this, 

and New England Regional Compact doing that, and different 

states maneuvering. They believe that it’s important to have a 

standard, and we need to wrestle with that. 

I happen to believe that’s true, I just came back from the Milken 

Conference out on the West Coast where this was one of the top 

topics of conversation with a lot of Wall Street folks and a lot of 

business people, all of whom believe that we probably need to move 

in that direction of having a cap and trade, some structure, with 

perhaps auctions, and create value and move in that direction. 

The big question within that framework is, what’s going to be the 

new mosaic of American energy sources? And to the greatest degree, most of us would like to let the marketplace decide that. I 

don’t think the Government ought to pick the winner or loser in 

that effort, but I think we should create some strong incentives for 

people to move in certain directions. 

Obviously, coal is a big deal to all of us. We have a lot of it, it’s 

abundant, it’s cheap, we know how to get it, and there’s every indicator that it’s going to be a significant part of the mix. But, to meet 

the challenge, we’re going to have to find a way to burn it clean. 

Half of our electricity is currently generated from coal. That coal 

currently produces approximately 1.5 billion tons of carbon dioxide 

annually. 

According to the National Energy Technology Laboratory at 

DOE, those numbers are going to get bigger, and get bigger fast. 

Over 150 new coal-fired power plants are proposed for construction in our country alone. And China, we are told, is going to build 

one to two per week. Over their lifetime, those plants, the new 

plants that come online, are going to spew an additional 30 billion 

tons of carbon dioxide into the air. 

We have witnesses today who will share with us their expertise 

and their views about what the prospects are as we go forward. In 

response to this challenge, today I am introducing the Clean Coal 

Act of 2007 which will seek to make certain that whatever plants 

we’re going to build are going to be built with the new state-of-theart technology that we’re going to hear about today from our witnesses. 

3 

Recently, one of the world’s top climate scientists, Jim Hansen, 

called for an end to building new coal-fired powered plants that use 

pulverized coal, without the new technologies, because of what they 

do with respect to global warming. Jim Hansen said, ‘‘Coal is the 

big amount. Until we have that clean coal power plant, we should 

not be building them, it is as clear as a bell.’’ 

The threat of those challenges, I’ve talked about a little bit, and 

I don’t want to go on about it. Let me just say that we look forward 

to hearing from our 5 witnesses today, Joseph Chaisson, the Director of Research and Technology for the Clean Air Task Force, based 

in Boston; Roberto Denis, the Senior Vice President for Sierra Pacific Resources, a utility in the Pacific Northwest; Dr. Gregory 

McRae, the Bayer Professor of Chemical Engineering at MIT, and 

one of the authors of the recent MIT Coal Study; Michael 

Rencheck, the Senior Vice President for Engineering, Projects, and 

Field Services at American Electric Power; Mr. John Wilson, Chief 

Operating Officer for the Environmental Systems and Services 

Group at Siemens Corporation. 

Before I introduce Senator Stevens and Senator Boxer, let me 

say that I have had a number of conversations in the recent weeks 

with Lou Hay at Florida Power and Light, and with AEP’s CEO, 

and AEP is, as we will hear today, building two new plants with 

IGCC technology, in West Virginia and Ohio, and FPL is a powerful advocate for the notion that we need this cap, as are other 

major CEOs from the USCAP effort. They are growing in number 

in terms of the companies they represent in the country. So, there’s 

a movement in this direction, but obviously time is of the essence, 

and we need to grab this baton and run with it. 

Senator Stevens? 

STATEMENT OF HON. TED STEVENS, 

U.S. SENATOR FROM ALASKA 

Senator STEVENS. Well, thank you very much, Mr. Chairman. I 

have a conflict and will have to leave soon. I did want to hear the 

witnesses if we could, but I ask that my statement appear in the 

record, if you will. 

And, I want to add to it that most people don’t realize that half 

of the coal in the United States is in Alaska. Access to it is denied 

because of a provision that was placed in Federal law back in the 

days when the projection was that we were entering into a new Ice 

Age, and the decision was made to prohibit the production of coal 

in Alaska unless the original contour of the land was restored. But, 

if you take out the coal, you have to melt the ice, and if you melt 

the ice, it would be hard to replace the act of God and freeze it 

back so that you had the same elevation and the same contour, so 

we haven’t had a new coal operation in Alaska for a long time. 

We are, now, proceeding with the coal gasification plant at 

Nikiski in the Kenai peninsula, that will allow the company known 

as Agrium to produce fertilizer and ammonia, and also clean diesel 

fuel. It is something that, as a project, we’re all looking forward to 

see if it will work, it is one of the alternative energy technologies 

currently being partially financed by the Federal Government, and 

I really support that activity. 

4 

I do have some serious questions, however, about the role of carbon and CO2 in the air, and I hope that one of these days we’ll listen to the scientists from International Arctic Research Institute 

who have studied this, this process of change, now, for 20 years, 

and they do disagree with the current concepts that are being pursued by—in this Nation, and to a certain extent, in Britain, and I 

think it’s time we took stock of looking at the accuracy of some of 

the comments that have been made in the past concerning the impact of global warming on our economy and its cause. 

But, I do ask that my statement be put in the record, completely. 

Thank you. 

Senator KERRY. Without objection, it will be put in the record. 

[The prepared statement of Senator Stevens follows:] 

PREPARED STATEMENT OF HON. TED STEVENS, U.S. SENATOR FROM ALASKA

Mr. Chairman, thank you for holding this hearing today on clean coal technologies. 

In the United States alone, coal-fired power plants satisfy more than half of the 

Nation’s energy needs and this percentage is likely to increase in the future. Coal 

is both abundant, inexpensive, and represents one of our most important natural 

resources. 

It is a stable commodity and a key component in satisfying the United States’ 

growing energy demands. Coal production is an important element to our national 

security. Without it, we would be increasingly reliant on unstable or unfriendly nations for our energy needs. 

Most people don’t realize that half the coal in the U.S. is located in Alaska. Access 

to it is denied because of a provision that was placed in Federal law back in the 

days when the projection was that we were entering into a new ice age. The decision 

was made to prohibit the extraction of coal in Alaska unless the original contour 

of the land was restored. But if you take out the coal you have to melt the ice, and 

if you melt the ice it is hard to replace the act of God and freeze it back so you 

have the same elevation and the same contours. We haven’t had a new coal operation in Alaska for a long time. 

Continued reliance on imported energy from volatile regions of the world is not 

a solution. We must increase our domestic production in order to remain globally 

competitive and we must do so in an environmentally responsible manner. New 

technologies to make this possible are on the horizon. Carbon capture and sequestration is just one of many processes already in development. Ground breaking research is being conducted to develop new ways to burn coal in order to maximize 

energy yield and employ cleaner and more efficient processes. 

One of these processes, which we will hear about today, is called Integrated Gasification Combined Cycle or IGCC. The IGCC process is a promising new technology 

which has the potential to increase efficiency by 40 percent. However, this process 

is not conducive to all regions because of its limitations on the type of coal which 

can be used. Solutions must be found that will accommodate these differences and 

we must continue to research and develop other methods. 

In my state, Agrium Incorporated is developing coal gasification at its Nikiski fertilizer plant. This process would allow the plant to switch from natural gas to coal 

as a chemical feedstock. This coal gasification project will allow Agrium to not only 

produce the fertilizer and ammonia currently in production but also clean diesel 

fuel. In addition, the excess energy produced by this project, estimated at 75 

megawatts, could be injected into the existing power grid of the surrounding community. Agrium is also evaluating carbon sequestration, which can be utilized in existing oil and gas fields to yield additional energy supplies. 

Like many of the alternative energy technologies currently in development, no one 

single solution will solve the problem of meeting energy needs in a responsible manner. However, we should continue to explore the benefits clean coal can continue to 

offer our economy. I look forward to hearing our witnesses’ testimony and their response and their insight into how we can achieve this goal. 

I do have some serious questions about the role of carbon and CO2 in the air and 

I hope that one of these days we will listen to the scientists from the International 

Arctic Research Institute who have studied this process of change for twenty years. 

They do disagree with the current concepts that are being pursued in this Nation 

5 

and to a certain extent in Britain. I think it is time we took stock of looking at the 

accuracy of some of the comments that have been made in the past concerning the 

impact of global warming on our economy and its cause. Thank you. 

Senator KERRY. And, Senator, I would be delighted, I think 

there’s nothing more important than to get at the science, so I’d be 

happy to have those folks come in here, have a good dialogue here 

with them and with some others that have a different point of 

view, because I think we obviously need to proceed forward intelligently, and whatever theories are out there, we are all smart 

enough here to pick our way through them. So, I’d be delighted to 

have those scientists come in here, and we’ll try to set that up as 

soon as we can. 

Senator Boxer? 

STATEMENT OF HON. BARBARA BOXER, 

U.S. SENATOR FROM CALIFORNIA 

Senator BOXER. Mr. Chairman, thank you so very much for your 

leadership, not only in this particular hearing this morning, but 

thank you for your leadership in general on global warming. We 

need that leadership from many people in the Senate and the 

House and the Administration, because as we know, we face a 

threat here that’s pretty grave. 

I’m going to speak, probably as long as Senator Stevens spoke, 

no longer than that. 

We know that advanced cleaner coal can help us solve one of 

the—this, this great threat that is facing us. And, you know, we’ve 

had seven hearings in the Environment Committee, Senator Kerry, 

you’ve been part of a couple of those. The most disturbing thing, 

of course, is what could happen if we don’t respond to this, and I 

won’t go through it—it’s in my statement—but what was stunning 

in new news, was that a scientist testified that 40 percent of the 

species on the planet could be at risk, if the worst predictions come 

true. We just can’t abide by that. 

Global warming puts the web of life that we take for granted in 

jeopardy. At current utilization rates we have more than 250 years 

worth of coal in the ground right here in the United States, we are 

the Saudi Arabia of coal. If we could figure this out, how to do this 

in a clean way, we’ll be way on our way to energy independence 

in a very, I think, responsible way that will lead the way for the 

world. 

Right now, 40 percent of our greenhouse gas emissions come 

from electricity generation. More than half of that comes from coalfired power plants. Plans are on the books to build hundreds of 

new coal-fired power plants. That’s why I think your legislation, 

we’re analyzing it now, is a very important contribution to this, because if we don’t deal with this we’re going to keep going backward. We can’t afford to go backward on global warming. 

So, we have a big challenge, but I think it’s doable. Some of the 

technologies are commercially available, some are in operation at 

pilot projects, others remain in early research. Some work on all 

kinds of coal, others do best with only one kind of coal, so this isn’t 

a kind of a one-size-fits-all operation. 

But, we need additional research. I’ve been one to say, we need 

a Manhattan Project on clean coal. We need to get very strongly 

6 

behind that effort, because all the countries in the world, I think, 

are looking to us. The Administration keeps saying, ‘‘We’re not 

going to get anywhere unless China and India get involved,’’ we 

can’t wait. We never wait for other countries when it comes to the 

health and safety of our people, our planet, or our economy. 

So, we need to move forward. If we do solve this problem, it will 

be exported across the world, we will create jobs, and our grandchildren will be able to have a similar experience living on this 

planet, as we have had. 

So, thank you, again, Mr. Chairman for your leadership, I look 

forward to working with you continually as we solve this problem. 

Senator KERRY. Thank you, Senator. I reciprocate—you’ve been 

terrific over in the Environment Committee and you’re moving 

ahead and we’re enjoying working together on this and we look forward to continuing to cooperate. 

Folks, thank you, again, for taking time to be here, this is a very 

important topic, there’s a lot of discussion here, as you know, about 

how to do this, so we anxiously look forward to your testimony. 

Mr. Chaisson? 

STATEMENT OF JOSEPH M. CHAISSON, TECHNICAL AND 

RESEARCH DIRECTOR, CLEAN AIR TASK FORCE 

Mr. CHAISSON. Mr. Chairman and Members of the Subcommittee, 

my name is Joseph Chaisson, I’m the Technical and Research Director of the Clean Air Task Force, or CATF. Thank you for the opportunity to testify this morning about advanced coal technology 

and the environment. 

Founded in 1996, CATF is the only national environmental advocacy organization with an exclusive focus on protecting the Earth’s 

atmosphere and human health from air pollution and climate 

change. 

A major CATF focus is working with state and regional environmental groups, state governments and private sector project developers to facilitate early domestic deployment of advanced coal gasification technology, including carbon capture and geologic storage, 

where feasible, today. 

We’re also exploring how to remove barriers to promising advanced coal technologies that have not yet entered the market. 

Today, I will address why we need to deploy radically cleaner 

coal technology, highlight several recent advanced coal market developments, list key challenges to deploying cleaner coal technologies, and outline what I think the Federal Government could 

do to address these challenges. 

Conventional coal combustion technology is responsible for some 

of the most important environmental problems on Earth, including 

air pollution that damages human health and ecosystems, land disruption, depletion of water resources, toxic solid waste production, 

and global warming. 

Despite these problems, coal will continue to be widely used 

throughout the world for many decades, at least. Therefore, we 

must act to develop and commercially deploy much cleaner coalusing technologies, as soon as possible. 

The good news is that much commercial activity, typically too recent to be reflected in available studies, is already underway in 

7 

both coal gasification power production, or IGCC, and in carbon 

capture and geologic storage. 

Some key highlights include, first, the emergence of Siemens and 

Mitsubishi as full-systems IGCC vendors, offering coal gasifiers as 

well as combustion and steam turbines in an integrated package, 

with both of these gasifiers being well-suited to using low-rank subbituminous and lignite coals. 

Second, we have several next-generation commercial IGCC 

plants under development, and these plants are driving important 

engineering design work, including serious exploration of options 

for adding carbon capture to these plants in the future. 

Third, we see innovative hybrid coal gasification projects moving 

forward by independent power project developers that combine 

electricity and substitute natural gas production. These are very interesting projects. 

We also see several promising advanced gas-fired technologies, 

moving into the process demonstration stage, it could be commercially available within the next 2 or 3 years. 

And finally, projects using coal gasification, a new technology 

with significant implications, including the potential to avoid most 

adverse environmental impacts associated with coal mining, transportation and solid waste disposal, to significantly lower coal gasification project costs, and potentially to triple our economic coal reserves. 

The first domestic underground coal gasification project is being 

developed in Wyoming by the Gas Tech Company. 

However, several serious challenges exist to deploying these very 

clean coal technologies. First, proposed IGCC projects face the very 

significant global run-up in large energy project construction costs 

that is impacting and slowing down most proposed coal plants 

today. 

Second, and very importantly, in the absence of a stringent cap 

on carbon dioxide emissions, there is no economic incentive today 

to incorporate carbon capture and geologic storage into most IGCC 

projects. 

Third, Federal advanced coal research, development, and demonstration programs lack sufficient scope to help promptly develop 

and deploy the technologies we need. 

And, fourth, and this is actually quite important, we do not yet 

have a low-cost practical technology for capturing carbon dioxide 

from conventional coal-plant combustion flue gas, which will be essential to substantially reducing CO2 emissions from the existing 

global coal-powered plant fleet. 

Several Federal policies could help overcome these challenges. 

First, a production tax credit, or some other form of equivalent financial incentives for new coal power plants that include full carbon capture and geologic storage. 

Second, a carbon emissions performance standard for new fossil 

power plants that would require significant carbon capture and sequestration for all new coal-powered plants. 

Third, an effective carbon emissions cap and trade system; and 

fourth, to expand and broaden DOE’s advanced coal research, development and demonstration programs. 

8 

In summary, I believe the technology we need to transition coal 

to much more environmentally sustainable systems could be either 

deployed or developed promptly, if effective Federal advanced coal 

technology policies were implemented. 

Thank you for this opportunity to testify, and I look forward to 

your questions. 

[The prepared statement of Mr. Chaisson follows:] 

PREPARED STATEMENT OF JOSEPH M. CHAISSON, TECHNICAL AND RESEARCH

DIRECTOR, CLEAN AIR TASK FORCE

Introduction 

Mr. Chairman and Members of the Subcommittee, 

My name is Joseph Chaisson. I am Technical and Research Director of the Clean 

Air Task Force (CATF). Thank you for the opportunity to testify today on advanced 

coal technology and the environment. 

Founded in 1996, CATF is the only major national environmental advocacy organization with an exclusive focus on protecting the Earth’s atmosphere and human 

health from air pollution and climate change. This singular focus enables CATF to 

field deep analytic and strategic resources equal to the significant and complicated 

atmospheric challenges we face over the next fifty years. 

Over the past several years, one of CATF’s major activities has been to work with 

state and regional environmental groups, state governments and private project developers in several parts of the country to facilitate early domestic deployment of 

coal gasification technology—with carbon capture and geologic sequestration (storage) where currently feasible. We have briefed numerous Congressional offices—accompanied by state environmental partners—about the promise of coal gasification 

technology. Another related CATF focus has been exploring how to remove barriers 

to promising advanced coal gasification and carbon capture technologies that have 

not yet entered the market. This ‘‘hands on’’ project facilitation and market entry 

work provides us with a useful perspective on what is happening on the ground in 

today’s marketplace. 

In this testimony, I will briefly restate the importance of moving forward radically 

cleaner coal technology than is deployed today; highlight current market developments on the ground which the Subcommittee may not be aware of; and, finally, 

discuss key challenges to radically cleaner technology, and what the Federal Government might do to help tackle those challenges. 

I. The Current and Projected Environmental ‘‘Footprint’’ of Coal 

Coal-fired power generation is today one of the planet’s most environmentally destructive activities. It is responsible for most of the Nation’s sulfur dioxide emissions 

that, even after recent regulatory reductions, will still take 15,000 lives prematurely 

in the U.S. each year by EPA’s own estimate. It contributes substantially to nitrogen oxides, which add to smog, haze, and crop and ecological damage. It emits most 

of the Nation’s manmade mercury air pollution. Current coal mining practices have 

scarred land and threatened water and habitat. Coal power generation consumes 

and discharges enormous quantities of water, while generating nearly 100 million 

tons of toxic wastes each year, the disposal of which is not regulated by the Federal 

Government. Finally, coal power generation is responsible for nearly 40 percent of 

the planet’s man-made emissions of carbon dioxide that contribute to global warming. 

Despite these problems, coal-fired power generation is likely to be relied on for 

decades to come and is projected to expand dramatically. World electric demand is 

expected to triple by 2050, coming largely from developing countries like China and 

India. Most analyses agree that this underlying demand growth will substantially 

outpace even the most aggressive energy efficiency policies. Renewable energy, while 

it should and will be widely deployed, faces significant physical, environmental and 

economic challenges that will practically limit its share of total electrical supply for 

several decades. Natural gas is relatively expensive and its reserves are far more 

limited than coal. Finally, nuclear power faces considerable hurdles of scale, economics and environmental opposition. For these reasons among others, China is 

building as much new coal capacity each year as the entire U.K. power grid, and 

coal power generation in India is projected to grow rapidly—matching current U.S. 

coal consumption by 2020 and China’s current coal consumption by about 2030. The 

United States faces both growing demand for electricity and an aging power plant 

9 

fleet; coal will remain economically attractive to meet some portion of electricity demand growth and to replace some existing power plants. 

Turning to climate, numerous analyses performed or commissioned by such bodies 

as the Intergovernmental Panel on Climate Change, the European Union, the National Commission on Energy Policy, academic institutions such as Harvard, MIT, 

and Princeton University as well as environmental organizations such as Friends 

of the Earth-U.K. have concluded that, even with aggressive energy efficiency, renewable energy development and in some cases nuclear expansion, coal-fired power 

generation is likely to remain a significant part of any 2030–2050 global power supply. Accordingly, each of these studies has identified the critical importance of 

transitioning coal use to technologies that minimize health-related air emissions and 

allow for the removal and storage of carbon dioxide, and to begin to demonstrate 

and scale up those technologies on a commercial basis as soon as possible. 

In short, the planet is unlikely to be able to live without coal for some time to 

come. But, at the same time, the planet, from an environmental standpoint, can’t 

stand to live with coal as it is currently used to produce electricity. This leaves only 

one path forward: we need to change how we use it—and we need to do so as quickly 

as possible. 

II. What Is to Be Done? 

An environmentally responsible coal policy would do the following: 

• Ban the construction of new coal combustion plants due to their inherently unacceptable air, water, solid waste and climate impacts. 

• Rapidly commercialize the use of integrated coal gasification combined cycle 

(IGCC) for electric power generation, because it has a much smaller environmental footprint for air emissions and waste than does coal combustion. 

• Rapidly demonstrate the feasibility of large-scale geologic storage of carbon dioxide and then require all new coal power plants to capture and sequester at 

least 90 percent of their coal carbon content. 

• Demonstrate and deploy advancements such as underground coal gasification, 

that could further shrink IGCC’s environmental footprint by substantially minimizing mining impacts and waste management. 

• Reform coal mining practices worldwide, impose effective Federal regulation of 

coal plant solid waste disposal and reduce coal generation water use and associated impacts to the minimum practical levels. 

• Increase the energy efficiency of IGCC power generation to the maximum practical levels over time. 

• Establish effective carbon dioxide emissions controls. 

Commercializing IGCC is of special importance. Because it is an inherently cleaner process—the gas it produces from coal must be free of most contaminants to 

power a gas turbine—IGCC reduces deadly sulfur and nitrogen oxide emissions to 

very low levels—approaching those achievable by natural gas combined cycle power 

plants. Gasification is the only coal power generation technology that can virtually 

eliminate mercury air emissions and capture most of the coal mercury content in 

a concentrated form that can potentially be sequestered from environmental release; 

IGCC is the only way we can continue to use coal to produce power without adding 

significantly to the global mercury burden. Total solid waste from gasification is 

typically half the volume generated by conventional coal plants, and gasification 

water use is substantially lower as well. 

Underground coal gasification (UCG), a promising further advancement in IGCC 

would gasify the coal directly within the deep, unmineable coal seams. This process 

can potentially eliminate the environmental impacts of current coal mining and 

transportation practices, as well as significantly reduce the challenges of coal waste 

management. 

Finally, IGCC is the key enabling technology for capture and storage of carbon 

dioxide from coal power generation and will be essential to meeting any reasonable 

climate stabilization target. While it is possible to retrofit a coal combustion plant 

with carbon capture technology, it is expensive and inefficient to do so today, costing 

twice as much for plants using bituminous coal as capturing carbon from an IGCC 

plant and reducing plant efficiency by as much as 40 percent. While development 

of more cost-effective coal-combustion carbon capture alternatives is important, current efforts are very early in the technology development stage, and it is unclear 

whether and when cost-effectiveness will be fully demonstrated for this technology. 

If we are to turn the world coal tide to a near-zero carbon footprint in the next 20 

years, IGCC power generation is likely to be the most availing path forward based 

on current information. 

10 

III. Recent Market Developments 

The good news about cleaner coal power and carbon capture is the many recent 

coal gasification market developments, nearly all of which are too new to be reflected in academic studies and many of which are being conducted by companies 

not well represented by Washington trade groups or research organizations. When 

we ‘‘look out the window’’ at these market developments, we see a substantially different situation than is typically presented in available studies or by traditional institutions. 

Key highlights include the areas listed below. It should be noted that the coal gasification market developments described below do not reflect a complete survey of 

recent developments, but rather are intended to illustrate the contrast between the 

relatively static and out-of-date study characterizations of coal gasification technology with today’s rapid pace of market development. 

Emergence of New ‘‘Full System’’ IGCC Vendors 

Prior to last summer, GE was the sole ‘‘full systems’’ IGCC vendor capable of offering all major IGCC components (that is, gasifier, combustion turbines and steam 

turbines) in a single package. Since that time, Siemens and Mitsubishi have developed full system commercial IGGC offerings, significantly expanding vendor choice 

for potential IGCC project developers. Siemens emerged as a full systems vendor 

last summer when the company acquired the Future Energy gasifier. NRG’s recent 

selection of Mitsubishi as the technology supplier for their proposed domestic IGCC 

plants introduced the entry of Mitsubishi as a full systems vendor. 

Emergence of New Coal Gasifiers 

Up until last summer, there were only three serious commercial coal gasifier offerings: the GE (Texaco technology), ConocoPhillips (E-Gas technology) and Shell 

gasifiers. These gasifiers have different characteristics that affect their suitability 

for various coal types, with Shell appearing most suited to low-rank coals (sub-bituminous and lignite). These gasifiers are also estimated to vary significantly in cost. 

Nearly all IGCC studies and academic literature have been restricted to analysis of 

these gasifiers. 

Several additional coal gasifiers have moved into the marketplace over the past 

year: 

• The Future Energy gasifier, developed in the former East Germany and recently 

acquired by Siemens, should be well suited to low rank coals and shows promise 

of being quite economically competitive. 

• The British Gas Lurgi (BGL) gasifier is an evolution of the Lurgi gasifiers used 

extensively in South Africa and at the Dakota Gasification plant in the U.S. 

This gasifier should also be well suited to low-rank coals. 

• The Mitsubishi gasifier is partially oxygen blown, should also be well suited to 

low-rank coals and shows promise of being quite economically competitive. 

As all three of these gasifiers are well suited to low-rank coals, they provide a 

much more competitive set of market offerings for projects using these coals and 

should reduce pre-inflation low-rank coal IGCC project costs. This point is particularly important as some critics have suggested that some conventional gasifiers are 

not well-suited to low rank coals, and that there may not be an economic path for 

low-rank coal use. 

‘‘Next Generation’’ IGCC Plant Development 

At least four ‘‘next-generation’’ IGCC projects are moving forward in the U.S., in 

addition to the ‘‘hybrid’’ coal gasification plants described below. These projects are 

AEP’s Meigs plant in Ohio and Mountaineer plant in West Virginia, Duke Energy’s 

Edwardsport plant in Indiana and BP’s Carson Refinery Hydrogen project in California. 

These projects all use the most advanced available combustion turbine (for example, GE’s 7FB) and are a major ‘‘scale-up’’ from the several IGCC plants built at 

refineries in Europe about 5 years ago. They are also much larger than the two 

early demonstration plants built in the U.S. (Wabash Station in Indiana and Polk 

Station in Florida) about a decade ago. These projects will typically have about 600 

MW of generating capacity. The BP Carson project will use petroleum coke (a coallike refinery waste product) and will include 90 percent carbon capture, which reduces plant output to about 500 MW. The BP Carson project will be the first commercial project in the U.S. to include and demonstrate ‘‘full’’ carbon capture. 

Several additional ‘‘next-generation’’ plants may also be moving forward, but at 

a slower pace, including additional AEP-proposed plants in Kentucky and NRG’s 

proposed Huntley plant in New York State. 

11 

These ‘‘next generation’’ plants are important for several reasons, including lower 

inflation adjusted costs and higher operating efficiencies. They also are driving significant detailed engineering design work, including in the case of Duke and AEP, 

serious engineering analysis of options for adding carbon capture to these plants at 

some future time, and provisions that can economically be built into the initial plant 

to facilitate carbon capture retrofit. The good news is that this very significant 

amount of engineering work will provide much more detail than is currently available on next generation costs, performance and carbon capture retrofit feasibility. 

The bad news is that this information remains proprietary and is not yet available 

in open literature. 

‘‘Hybrid’’ Projects 

Some independent IGCC project developers like the ERORA Group and Summit 

Power are developing coal gasification projects that produce both electric power and 

substitute natural gas, typically allocating about 50 percent of the project coal 

syngas to each of these products. The ERORA group is developing projects in Illinois 

(Taylorville) and Kentucky (Cash Creek) and Summit Power is developing projects 

in Oregon and Texas. 

These developers are pursing ‘‘hybrid’’ projects because they have economic advantages over next-generation ‘‘power only’’ IGCC plants, including reduced overall 

project cost, high availability—particularly in projects using several of the new Siemens gasifiers—and attractive overall project economics for power generating companies that have existing natural gas power plants by allowing them to have coalbased fuel pricing for both their new coal generation and some portion of their existing natural gas generation. 

Some of these projects are close to final permitting and full financing. Several 

projects plan to include some carbon capture and will initially use the captured carbon for enhanced oil recovery (EOR). At least one project is exploring full carbon 

capture and sequestration. In many respects these projects reflect efforts by project 

developers to overcome current economic barriers to stand-alone IGCC plants. 

Advanced Coal Gasifiers 

Several innovative coal gasification technologies are conducting process demonstrations and could be commercially available within the next 2 years. Two examples among several such systems being developed include Great Point Energy’s catalytic coal gasifier (a technology originally explored in the 1970s) and Texas Syngas’ 

molten metal bath gasifier. Both technologies can potentially be produced modularly 

in a factory and both appear to have potential to reduce gasification costs compared 

with traditional gasifier designs. 

Underground Coal Gasification 

Underground coal gasification (‘‘UCG’’) is just beginning to be recognized as a potential option for utilizing coal. UCG is a gasification process conducted in deep coal 

seams. Injection and production wells are drilled into the coal seam and are then 

linked together. Once linked, air and/or oxygen is injected and the coal is ignited 

in a controlled manner to produce hot, combustible coal syngas that is captured by 

the production wells, brought to the surface and cleaned for power generation and/ 

or production of liquid hydrocarbon fuels or substitute natural gas. This technology 

has been used at a minor level since the early 2000s and DOE conducted many pilot 

UCG projects in the 1970s. 

A successful modern pilot project was conducted about 6 years ago in Chinchilla, 

Australia by the Ergo Exergy Technologies, Inc. and the first modern commercial 

UCG electric power production project started up this January in Mpumalanga, 

South Africa. I understand that two commercial UCG projects producing hydrogen 

for chemical plants have been developed in China. The GasTech Company is developing the first North American pilot UCG project in Wyoming. The initial GasTech 

project will be conducted in the Powder River basin and will use a coal seam 950 

feet deep. Current estimates are that the pre-clean-up syngas will be produced for 

about $1.90/mmbtu (as compared with current U.S. gas forward prices of about 

$8.00/mmbtu for the next several years). 

UCG technology is potentially quite significant for several reasons: 

1. It can avoid most of the adverse environmental impacts associated with coal 

mining and transportation; 

2. It leaves coal residuals (ash and some other constituents) underground; 

3. It can potentially reduce coal gasification costs—perhaps significantly; and 

12 

4. It can open up large amounts of deep coal reserves that are currently not 

economic to mine. Lawrence Livermore National Laboratory (LLNL) estimates 

that UCG could potentially triple domestic economic coal reserves. 

5. Carbon capture costs may be somewhat lower than with above-ground gasification and a significant fraction of captured carbon can potentially be stored in 

the underground gasification cavities created by a UCG project. 

Once this technology emerges from the pilot/demonstration stage, which will be 

necessary to clarify technology costs, it may be deployed rapidly if it proves to be 

more economic than conventional pulverized coal plants or advanced above-ground 

gasification system IGCC’s. LLNL has recently produced a summary of current UCG 

knowledge that is available at https://eed.llnl.gov/co2/11.php. 

IV. A Key Technology Gap 

Developing a practical and very-low cost method of capturing carbon dioxide from 

existing power plant flue gases would be an enormous boost to global efforts to reduce 

carbon dioxide emissions and may be the only practical opportunity to significantly 

reduce future carbon dioxide emissions from the rapidly developing coal power plant 

‘‘fleet’’ in China and India. Current technologies that can accomplish this task are 

too expensive and consume far too much energy to be practical to apply broadly 

throughout the world. While current research in this area is focused primarily on 

what are essentially incremental improvements in existing technology systems, a 

‘‘break through’’ technology is needed. Potential ‘‘high-risk/high-reward’’ breakthrough technologies, like structured fluids, have been identified (in this case by 

MIT researchers) but there appear to be no relevant sources of Federal support for 

such research. 

V. Challenges to Advanced Technology Deployment 

Several problems are constraining rapid deployment of advanced coal gasification 

technologies and associated carbon capture, including the recent substantial increase in large energy project costs; the lack of an economic incentive to build IGCC 

projects with full carbon capture today; and Federal advanced coal research, development and deployment programs that are not adequately funded or sufficiently 

broad. 

Recent Large Energy-Project Cost Inflation 

For several reasons, including massive infrastructure development in China and 

very large investments in Persian Gulf oil and gas projects, the construction cost 

of large energy projects has significantly increased over the past two to three years. 

In some cases, this cost inflation may have doubled project costs—including some 

domestic proposed coal plants. While it is not clear how long costs will continue to 

rise or for how long they will remain inflated, it does not appear that this cost-inflation period will be short. 

The current cost-inflation environment will also affect the economics of carbon 

capture and sequestration for new coal projects, raising the estimated costs from 

roughly 1.5 cents/kwh to about 2.5 cents/kWh. This suggests that if this cost environment prevails, carbon capture will begin to be economic at a carbon emissions 

price of about $40 per ton of CO2, at least initially. 

No Economic Incentive To Build New Coal Plants With Full Carbon Capture Today 

While the technology exists to develop new coal IGCC plants with full carbon capture and sequestration today, as is being demonstrated by BP’s Carson project, 

there is no economic basis to do so except possibly in the very few cases (like BP’s 

Carson project) where all captured carbon can be used for enhanced oil recovery. 

This disincentive to adding CCS to new coal plants will continue until captured and 

sequestered carbon is worth roughly $40/ton of carbon dioxide. 

Limitations of Federal Advanced Coal Research, Development and Demonstration 

Programs 

We have not conducted a serious review of the relevant Federal ‘‘clean coal’’ research, development and demonstration programs, but we have observed several 

‘‘disconnects’’ between such programs and both promising market activity and needed ‘‘breakthrough’’ technology. We note that all EPAct financial support for new 

IGCC projects has been awarded to next-generation commercial IGCC projects, 

which in nearly all cases are being proposed by large investor-owned utilities. In 

contrast, no innovative ‘‘hybrid’’ IGCC/SNG projects being developed by independent 

project development companies were awarded financial support. We also note that 

none of the promising advanced coal gasifiers being developed that we are aware 

of are receiving significant DOE support nor are these advanced gasifier concepts 

13 

listed in the various technology evolution ‘‘road maps’’ developed by DOE and others. And as we noted above, no Federal programs exist today that would provide 

financial support for new IGCC project developers seeking to include full carbon 

capture and sequestration in their projects. 

MIT’s Future of Coal Study reviewed current DOE clean coal research, development and demonstration programs and outlines one approach to expanding and better targeting these programs. We see MIT’s proposals as a good starting point for 

discussion, but believe they would not be sufficient to address all research, development and demonstration gaps or ‘‘disconnects’’ we have observed. 

VI. What Can the Federal Government Do to Accelerate Deployment of 

Needed Technology? 

Several Federal actions could accelerate development and deployment of the advanced coal technology needed to address climate change and dramatically reduce 

coal’s environmental impacts: 

1. Establish a production tax credit or some other form of equivalent financial 

incentives for new coal power plants with full carbon capture and sequestration. 

These incentives would be in effect until a national carbon emissions reduction 

program has been established that creates a carbon emissions allowance price 

sufficient to offset carbon capture and sequestration costs. At current energy 

project prices, such a production tax credit would likely need to be at least 2.5 

cents per kWh. 

2. Establish a carbon emissions performance standard at some future date for 

new fossil power plants that would require significant carbon capture and sequestration for new coal power plants. 

3. Establish effective carbon emissions controls. 

4. Significantly expand and broaden DOE’s advanced coal research development 

and demonstration programs. 

The recent MIT Future of Coal Study outlines one approach for expanding DOE’s 

advanced coal programs and suggests that such programs need to be funded at levels as high as $800–$900 million per year. Beyond MIT’s recommendations, it would 

be useful to review current research and market activity in this field to identify 

promising technologies that are slipping through the cracks in current DOE programs to help develop more effective programs. It is also critically important that 

appropriate support be established for developing ‘‘breakthrough’’ technology in critical areas like practical, low cost carbon capture at existing power plants. 

In summary, I believe that the technology we need to transition coal use to much 

more environmentally sustainable systems could be either deployed or developed 

promptly if effective Federal advanced coal technology policies were implemented. 

Senator KERRY. Thank you, sir, we look forward to it. 

Mr. Denis? 

STATEMENT OF ROBERTO R. DENIS, SENIOR VICE PRESIDENT, 

SIERRA PACIFIC RESOURCES 

Mr. DENIS. Thank you very much, Chairman Kerry, Members of 

the Committee. I’m Roberto Denis, I’m Senior Vice President of Sierra Pacific Resources, a holding company that serves the electrical 

needs of 1.2 million customers throughout most of Nevada. 

Our company has been taking significant steps to lessen our carbon footprint, while at the same time, investing in new technologies to meet our ever-increasing demand for energy. 

Nevada is a high-growth state. We have been adding about 

55,000 new customers per year, at an annual growth of 5 percent, 

an envy in the industry. 

Over the next several years, we intend to invest more than $1 

billion annually to add new generating capacity, and transmission 

infrastructure. 

In 1997, Nevada enacted one of the Nation’s first renewable portfolio standard laws. As a state and as a company, we are committed to renewable energy. As evidence of this commitment, by 

14 

year-end, Sierra Pacific Resources will lead the Nation in generation of solar and geothermal energy in relation to the total electric 

energy sold to consumers, even exceeding California. 

However, Sierra Pacific Resources cannot meet our future energy 

demands solely from renewable projects. We are building over 

2,800 megawatts of new, efficient natural gas generation. This will 

cause our company to become about 75 percent dependent on natural gas for the electricity that we deliver. 

Last year, we announced that we were pursuing the development 

of the Ely Energy Center, a four-unit coal-powered complex totaling 

2,500 megawatts. The first two units will utilize the newest, commercially available, supercritical generation, highly efficient and 

emissions controls technology. These two units will be followed by 

two more Integrated Gasification Combined Cycle, or IGCC units, 

once those units become commercially viable. 

Ely will also be the catalyst for the development of wind-to-en- ergy in the mountains of eastern Nevada. Ely will make a $600 

million, 250-mile transmission line economically possible, providing 

the means for wind energy to reach consumers. 

It is also important to point out, as new generation is developed, 

Sierra Pacific Resources is decommissioning older, less efficient 

coal and natural gas units, a move that mitigates our CO2 emissions. These combined actions will ensure that even when the first 

two coal units of the Ely Energy Center are completed, our company’s carbon footprint will mirror that of a utility that burns 100 

percent natural gas. 

We particularly urge Congress to be mindful that the most 

knowledgeable source of our collective ability to capture and store 

CO2, the Electric Power Research Institute, estimates that even 

with the most aggressive technology development actions that can 

be realistically contemplated, we will not have the ability to capture and sequester carbon on a commercial scale until 2020. Thus, 

a policy—any policy choices should recognize that our economically 

viable generation strategies must include clean supercritical coal 

generation, and when viable, IGCC. 

As recognized in the recent MIT study, instead of excluding the 

most viable domestic energy source, we must focus on seeking technological solutions to mitigate the adverse effect of the current and 

future use of coal. In such regards, we’re working with EPRI and 

25 other utilities to fund a pilot-scale demonstration project in Wisconsin of a promising new CO2 capture technology for pulverized 

coal. While integrated gasification combined cycle technology offers 

promise in the near-term, it has been shown to be more economic 

using eastern bituminous coals. 

The use of IGCC with eestern sub-bituminous coals, which have 

different characteristics and contain higher moisture, has not yet 

been proven commercially viable, particularly at the higher altitude 

sites available in our State. 

I would like to quote Dr. Bryan Hannegan’s recent testimony before the Senate Energy and Natural Resources Committee. ‘‘EPRI 

stresses that no single advanced coal generating technology . . . 

has clear-cut economic advantages across the range of U.S. applications. The best strategy for meeting future electricity needs while 

addressing climate change concerns and economic impacts lies in 

15 

developing multiple technologies from which power producers—and 

their regulators—can choose the best, when suited, to local conditions and preferences.’’ 

In conclusion, innovative technological advances must be supported and encouraged to the maximum extent feasible. But, in the 

meantime, we should not curtail the construction of new generation 

needed to serve our customers. Walking away from coal-powered 

generation altogether would mean higher prices for consumers, and 

even a greater national reliance on energy imports. 

We must be careful to avoid arbitrary efforts to pre-ordain winners in the race to develop new generation technologies. Our industry is large, and geographically diverse, and winners must be market-driven if we are to serve our customers well. 

Thank you. 

[The prepared statement of Mr. Denis follows:] 

PREPARED STATEMENT OF ROBERTO R. DENIS, SENIOR VICE PRESIDENT, 

SIERRA PACIFIC RESOURCES

Introduction 

Chairman Kerry, Senator Ensign, Members of the Committee, thank you very 

much for the opportunity to be with you today. My name is Roberto Denis and I’m 

Senior Vice President of Energy Supply for Sierra Pacific Resources, a holding company that serves most of the electrical energy needs of Nevada. Our company has 

been taking significant steps to lessen our carbon footprint while at the same time 

meeting the ever increasing demand for energy in one of fastest growing regions of 

the country. There are many factors that make this an especially difficult task. 

These involve managing the tradeoffs between renewable energy and fossil fuel 

plants, different fuel types, self generation versus market purchases, the commercial 

application of current and emerging technologies and of course, the cost of energy 

to our customers. 

Company Profile 

Sierra Pacific Resources is the holding company for two utility subsidiaries, Nevada Power Company and Sierra Pacific Power Company that provide electricity to 

1.2 million electricity customers in Nevada and around the Lake Tahoe area of California. We are interconnected to the western transmission grid and are significant 

participants in the western power markets since we currently purchase about half 

the energy we deliver. It is noteworthy that Nevada was a major victim of the meltdown in the western markets several years ago when Enron and others were found 

to be illegally manipulating the power purchase market in California. 

Our state’s high growth rate is also a very important consideration. We have been 

adding about 55,000 new customers per year, an annual growth rate of 5 percent, 

which is much higher than the electric industry as a whole. Investing to meet this 

growth is a constant challenge. Our company owns nine power plants with a diverse 

mix of fuels including coal and natural gas. For 10 years, Nevada has had a renewable portfolio standard in place and we have been contracting for geothermal, wind 

and solar energy and expect to be making direct investments in renewable energy 

projects as well for years to come. Because of our state’s rapid economic growth plus 

the hard lessons learned from being over reliant on the power purchase markets 

during the Enron years, Sierra Pacific Resources is committed to delivering a diverse power portfolio that protects against the volatility of fluctuating fuel costs and 

swings in the purchased power markets. Over the next several years we intend to 

invest more than $1 billion annually to add to our generating capacity and build 

the infrastructure necessary to support the strong growth. 

Renewable Energy: An Important Source of Power 

Our utility in northern Nevada, Sierra Pacific Power Company leads the Nation 

in use of renewable energy as a percentage of total energy consumed. In 1997, Nevada enacted one of the Nation’s first Renewable Portfolio Standard (RPS) laws. It 

required all electric providers in the state to acquire renewable electric generation 

or purchase renewable energy credits so that 1 percent of the energy consumption 

of each utility was produced from renewable sources. 

16 

In 2001, the state amended the RPS law to become the country’s most aggressive 

renewable portfolio standard. The law then required that 15 percent of all electricity 

consumed in Nevada be derived from new renewables by the year 2013, with 5 percent of that amount coming from solar energy. In June 2005, the Nevada legislature 

extended the deadlines and raised the requirements of the RPS to 20 percent of 

sales by 2015. The bill also allows utilities to receive credits toward meeting the 

state’s RPS by investing in certain energy efficiency measures capped at one-quarter 

of the total standard in any particular year. The law phases in the renewable energy commitment over time as follows: 9 percent by 2007, increasing to 12 percent 

by 2009, 15 percent by 2011, 18 percent by 2013 and 20 percent by 2015. 

We are committed to renewable energy and believe that such investment needs 

to be stimulated; in that regard, we call upon Congress to extend the Investment 

Tax Credit (ITC) and the Production Tax Credit (PTC) for all types of renewable 

energy for at least 8 years and to remove the outdated provision which excludes 

utilities from participating in the ITC for renewables. This nation needs the financial strength of the Nation’s utility industry if we are to substantially attract the 

investment of large sums of capital to renewable energy. 

This year, state regulators approved three new geothermal contracts that will 

bring an additional 73 megawatts of renewable energy to our customers. Two major 

Nevada solar projects, including the largest solar thermal plant built anywhere in 

the past 15 years, will this year begin delivering a total of 74 megawatts of power. 

Just this past Monday, I attended an event at Nellis Air Force Base in Las Vegas 

celebrating the beginning of construction for the largest solar photovoltaic system 

ever to be built in North America. I can assure that our company, in cooperation 

with our state leaders, is doing everything possible to be at the forefront of renewables development. By year end, Sierra Pacific Resources will lead the Nation in the 

generation of solar and geothermal energy in relation to total electric energy consumed. 

Energy Conservation Programs 

Sierra Pacific Resources places a high priority on helping our customers conserve 

energy. It is our goal to achieve 50 percent of our energy savings from our residential customers. Our demand side management (DSM) program will result in the installation of 2 million compact fluorescent light bulbs each year. This is accomplished through a buy down subsidy we provide local retailers who sell these energy 

saving light bulbs. We perform energy efficiency audits for our customers and help 

almost 23,000 per year to improve the efficiency of residential AC units. We continue to work with the gaming properties to convert the bright lights along the famous Las Vegas strip to efficient lighting. We have a program to improve energy 

efficiency of swimming pools and outdoor water features. One-quarter of the RPS 

goal of 20 percent by 2015 may come from DSM programs. Below is a projection 

of our DSM goals by company. 

Includes Both Sierra Pacific Power Company and Nevada Power Company 

2007 2008 2009 

Budget 36,553,000 45,265,000 44,886,000 

MWh Saved 205,220 242,417 233,750 

Sales MWh 28,771,765 29,639,965 30,756,233 

Customers 1,127,132 1,160,946 1,195,774 

$/Customer $32.43 $38.99 $37.53 

kWh Save as % of Sales 0.71% 0.82% 0.76% 

Fossil Fueled Generation 

Despite years of experience coupled with one of the most aggressive renewable energy programs in the nation, it must be noted that Sierra Pacific Resources cannot 

meet our future energy demands solely from new wind, solar or geothermal. By 

2008, we expect to be about 75 percent reliant on natural gas as the source of fuel 

for the power we sell. This dependence is due to the addition of more than 2,800 

megawatts of new, efficient combined cycle natural gas generation. We are concerned however about the price stability of natural gas which was the fuel choice 

for the majority of new power plant additions during the past decade. 

Ely Energy Center 

Last year we announced that we were pursuing the development of the Ely Energy Center, a four unit coal power complex totaling 2,500 megawatt in eastern Nevada. This facility will utilize the newest high efficiency, supercritical boilers, water 

17 

saving dry cooling and the latest emission-control technologies. The first two, 750- 

megawatt units located near Ely, Nevada will not be completed until 2011 and 2013, 

respectively. The project is an important part of our company’s ongoing strategy to 

maintain a balanced energy portfolio that is in the best interests of the state. Ely 

will also be the catalyst for the development of more renewable energy resources 

(particularly wind energy in the mountains of eastern Nevada) by providing transmission access to northern and southern Nevada via a proposed 250-mile transmission line between our two companies. This transmission line that would not be 

economically justifiable to serve a stand alone renewable energy project. Therefore, 

this project and its associated transmission should provide the opportunity to develop additional renewable projects that would not otherwise be developed in Nevada. 

It also is important to point out that, as new generation is developed, Sierra Pacific Resources is decommissioning older, less-efficient coal and natural gas plants, 

a move that conserves the use of natural resources and mitigates our CO2 emissions. After the Ely facility is built, we are planning to retire three aging coal units 

at the Reid Gardner Station in southern Nevada. And, with the anticipation of Ely, 

Nevada Power will not participate in efforts to restart the coal-fired Mohave power 

plant that was shuttered in 2006. These actions combined with the aggressive development of renewables will insure that even when the first two units of the Ely Energy Center are completed, our company’s carbon footprint will mirror that of a utility that burns 100 percent natural gas. 

Climate Change Legislation 

As you can tell, we at Sierra Pacific Resources have not been waiting for Congress 

to impose carbon controls before we developed our own carbon mitigation and reduction program. In addition to striving to meet a 20 percent RPS goal and replacing 

our older natural gas units with highly efficient combined cycle plants and building 

new state-of-the-art supercritical coal units, we have also implemented aggressive 

energy conservation programs. All of these measures will be needed if we are to face 

the challenge. Like Sierra Pacific Resources, many other utilities in the Nation are 

also moving to implement carbon reduction strategies. 

Should Congress eventually conclude however that these voluntary efforts are not 

sufficient; we would favor Federal legislation which imposes an economy-wide approach to carbon control with trading mechanisms for allowance distribution. Should 

Congress impose a cap and trade regime as is reflected in most of the legislation 

that has been introduced, we believe that caps must be applied with great care to 

avoid inequitable distribution of carbon allowances. 

As the fastest growing state for nineteen of the past twenty years and with expected high growth anticipated far into the future, a simple cap would, relative to 

other states, severely and unfairly disadvantage Nevada’s economy. Additionally, 

Nevada has for many years imported a large proportion of its electricity. After the 

serious market disaster created by the California energy crisis and with all western 

states growing far faster than the electric supply can accommodate, it is clear that 

consideration must be given in any capping mechanism to both the historic use of 

carbon by a utility (really by a group of customers) (whether self generated or not) 

and the growth of the state’s economy. If Congress adopts a cap and trade system, 

it must allocate carbon emission allowances for growth states (as was done for SO2

allowances in the 1990 Clean Air Act Amendments) and for power purchased and 

not just self generated. CO2 emission allowances must be distributed taking into account both historic and projected use of carbon. 

CO2 Capture and Sequestration and IGCC Technologies 

We particularly urge the Congress to be mindful that the most knowledgeable 

source about our collective ability to capture and store CO2, the Electric Power Research Institute (EPRI), estimates that even with the most aggressive technology 

development actions that can be realistically contemplated, there will be no ability 

to effectively capture and sequester carbon until at least 2020. 

Thus, any policy choices that may be made by the Congress should recognize that 

every economically viable set of generation strategies to serve the electric needs of 

the U.S. economy until then must include coal, clean supercritical coal or when viable, IGCC. As recognized in the recent MIT study, instead of excluding the most viable domestic energy source, we must focus on seeking technological solutions to mitigate any adverse effect of the current and future use of coal. 

Much has been said of the recent MIT study on the future of generation in a carbon constrained world. It is important to remember that the MIT study did not recommend that the United States should stop building coal-fired generation. Its conclusion, with which we agree, was that new coal units must utilize the best commerVerDate Nov 24 2008 12:54 Feb 14, 2013 Jkt 075679 PO 00000 Frm 00021 Fmt 6633 Sfmt 6621 S:\GPO\DOCS\78880.TXT JACKIE
18 

1 EPRI House Testimony Carbon Capture and Sequestration, March 6, 2007 (Subcommittee 

on Energy and Air Quality). 

cially available technologies and must be built to accommodate retrofits when new 

large scale carbon capture and sequestration (CCS) technologies are demonstrated 

feasible. Our new Ely coal complex will do just that. The first two units are being 

designed so that when CCS is available we will have a physical facility that can 

be retrofitted to enable us to capture the CO2 and identified the land for a CO2 storage site. Additionally, we are working with the Electric Power Research Institute 

(EPRI) and 25 other utilities to fund a pilot-scale demonstration project in Wisconsin of a promising new CO2 capture technology for pulverized coal units. American Electric Power has already announced plans for scale-up of this technology at 

two of its coal-fired plants in West Virginia and Oklahoma. We hope we will be able 

to deploy these emerging technologies by the time the final two units of our Ely 

complex are scheduled to be constructed. 

While integrated gasification combined cycle (IGCC) offers promise in the near 

term, it has been shown to be more economic using eastern bituminous coals. The 

use of IGCC with western subbituminous coals which have different characteristics 

and contain higher moisture has not yet been proven commercially viable. Quoting 

from recent testimony given by EPRI’s Mr. Stuart Dalton: 

‘‘The COE cost premiums . . . vary in real-world applications, depending on 

available coals and their physical-chemical properties, desired plant size, the 

CO2 capture process and its degree of integration with other plant processes, 

plant elevation, the value of plant co-products, and other factors. Nonetheless, 

IGCC with CO2 capture generally shows an economic advantage in studies 

based on low-moisture bituminous coals. For coals with high moisture and low 

heating value, such as subbituminous and lignite coals, a recent EPRI study 

shows PC with CO2 capture being competitive with or having an advantage over 

IGCC.’’ 1

The Pin ̃ on Pine Clean Coal Technology Project 

Indeed, Sierra Pacific has a history with gasification of coal. In 1992, near Reno, 

we partnered with U.S. Department of Energy in one of the few western Clean Coal 

Technology Projects. The Pin ̃ on Pine Project attempted to extract synthetic gas from 

coal under pressure and burn the synthetic gas stream in gas fired turbines. Because of significant challenges, the Pin ̃ on Pine Project was not completed until late 

2001 and at a cost of $335 million. It was never able to operate commercially because of problems we encountered with the first-of-a-kind technologies used in the 

plant. Ultimately, the plant was abandoned and converted to a pure natural gas facility. Our company ventured and lost millions of dollars on this experiment. 

I would like to quote from Dr. Bryan Hannegan’s recent restimony before the Senate Energy and Natural Resources Committee given on March 22, 2007. In expressing EPRI’s view on the MIT report he said: 

‘‘EPRI stresses that no single advanced coal generating technology (or any generating technology) has clear-cut economic advantages across the range of U.S. 

applications. The best strategy for meeting future electricity needs while addressing climate change concerns and economic impact lies in developing multiple technologies from which power producers (and their regulators) can choose 

the one best suited to local conditions and preferences.’’ 

I would also like to submit with my testimony a copy of the EPRI report entitled 

‘‘Technologies for a Carbon Constrained World’’ that was first released to the public 

in February 2007. 

[This information is being retained in Committee files.] 

Conclusion 

Clearly, innovative technological advances must be supported and encouraged and 

successful outcomes must be embraced, but in the meantime we should not stop the 

development of new generation needed to serve customers today and in the immediate future. Walking away from coal-powered generation altogether would mean 

higher prices for consumers and an even greater national reliance on energy imports. Our nation’s energy independence must include the use of coal, our most plentiful energy resource, in the production of new, environmentally responsible electric 

generation. We must be careful to avoid arbitrary efforts to pre-ordain winners in 

the race to develop new generation technologies. Ours is a large and geographically 

diverse industry and winners must be market driven if we are to best serve our customers. We believe this is an appropriate and responsible approach to addressing 

19 

environmental concerns while keeping our commitment to deliver reliable power to 

our customers. Thank you. 

Senator KERRY. Thank you very much, Mr. Denis. 

Dr. McRae? 

STATEMENT OF GREGORY J. MCRAE, HOYT C. HOTTEL 

PROFESSOR OF CHEMICAL ENGINEERING, DEPARTMENT OF 

CHEMICAL ENGINEERING MASSACHUSETTS INSTITUTE OF 

TECHNOLOGY 

Dr. MCRAE. Senator Kerry and members of the Committee, 

thank you very much for this opportunity to address you on this 

important topic. 

My name is Greg McRae, I am a Professor of Chemical Engineering at MIT, and I’m one of the co-authors of the recent MIT report 

on the future of coal, where we set out to address what are the 

issues about how we might burn this fuel in an environmentally responsible way. 

Our study involved many colleagues from across MIT, as well as 

advisory groups from outside of MIT, in fact, our first panelist Joe 

Chaisson was, in fact, a member of one of our advisory committees. 

The key premise that drove our report was, in fact, the need to 

think about global climate, and warming, and the need to think 

about—by mid-century—that we’re going to have to sequester several gigatons of carbon, or carbon dioxide. The size of the problem 

is enormous, and one of the things that we were interested in is 

how do we actually go about developing a strategy for coping with 

these problems. 

A key conclusion, and you touched on it in your introduction, is 

that coal is an important part of this problem. And while we fully 

support and are actively involved in a lot of developments associated with solar and wind and biomass conversion, the key issue is 

that in order to meet our energy demands today, in fact, there are 

very few other fuel sources that we can supply at scale, other than 

coal. And so the key question is, how do we use this important fuel 

in an environmentally friendly way? 

And so, we believe that there are two crucial issues that need to 

be addressed in order to use coal as a fuel in the future. The first 

is the issue of sequestration. Our belief is that there’s a critical 

need for demonstration projects at scale to show that you can safety store and capture CO2 in a way that imposes no risk to the community. We believe that most of the technology that’s available to 

do this exists already, what’s missing is the opportunity to do it at 

scale. 

And just to give you a sense of the size of the problem, a typical 

500 megawatt coal-fired power plant will produce about ten to 

twelve thousand tons a day of carbon dioxide, that’s roughly 4 million tons a year. There are about, roughly, 500 power plants of this 

size in the United States. The biggest sequestration experiment 

that’s going on right now is less than 1 million tons a year. And 

so, in order to be able to develop the regulatory framework, the 

monitoring framework, and to build public confidence that you can 

safely mitigate and store carbon, we believe that it’s crucial that 

we immediately start to look at three or four demonstration 

projects at scale, in the order of a million tons per year. 

20 

We view this as an important investment—almost as an insurance policy—because this provides us with the information and 

data that we will need to build these systems at scale over the 

longer time period. 

The second part associated with sequestration is the issue of capture of CO2 in the first place. And again, while we believe that 

many of the existing technology exists to be able to do that, and 

there are exciting developments taking place on a daily basis, 

again, we believe that these should be done at scale. We do not believe that focusing on IGCC per se is the right way to go. 

We, in fact, think that we need to look at a spectrum of technologies from pressurized oxified combustion processes, chemical 

looping combustion systems—there are many, many other technologies that are potentially out there that could significantly lower 

the cost of CO2 capture, but the issue is how to do it at scale. And, 

we believe that, again, that you need demonstration projects to 

show that you can, in fact, capture CO2 at that scale. 

The third point is that we basically need to put the two pieces 

of the problem together—how do you actually capture CO2 at scale, 

and how do you sequester it at scale? And, again, our belief is that 

the demonstration project should be supported with adequate monitoring, so that the data that’s going to be available to help, builds 

public confidence that this is a viable option for mitigating carbon 

in the future. 

We believe that there are many opportunities for the United 

States to become leaders in the supply of this important technology 

to the rest of the world. These, and many other, topics are discussed in our report, and I thank you very much for the opportunity to discuss these this morning. Thank you. 

[The prepared statement of Dr. McRae follows:] 

PREPARED STATEMENT OF GREGORY J. MCRAE, HOYT C. HOTTEL PROFESSOR OF

CHEMICAL ENGINEERING, DEPARTMENT OF CHEMICAL ENGINEERING, 

MASSACHUSETTS INSTITUTE OF TECHNOLOGY

Senator Kerry and Members of the Committee, good morning and thank you for 

the opportunity to address you on this important topic. My name is Gregory McRae 

and I am a professor of chemical engineering at the Massachusetts Institute of 

Technology. In addition to my research and teaching on energy and environmental 

issues I am also one of the co-authors of the recent MIT Report called the Future 

of Coal—Options for a Carbon Constrained World.1 This study involved eleven colleagues from various disciplines at MIT as well as an external advisory group that 

represented diverse perspectives on the problem. This morning I would like to draw 

your attention to a few of the key recommendations from the report related to clean 

coal technology. 

Four key premises drove our study: 

1. There is a pressing need to address the global warming problem. The risks 

are real and the United States and other governments should take action to restrict the emissions of carbon dioxide (CO2) and other greenhouse gases 

(GHG).1,2

2. Our second and equally important premise is that coal will continue to play 

a large and indispensable role in a greenhouse gas constrained world because 

it is cheap, abundant, and in the short term one of the fuel sources that can 

meet, at scale, the growing demands for electricity. 

3. We believe that CO2 capture and sequestration (CCS) are the critical enabling technologies that would significantly reduce CO2 emissions associated 

with coal combustion. Much of the needed technology exists (CO2 capture, transport and storage) but there is a critical need for several large scale demonstraVerDate Nov 24 2008 12:54 Feb 14, 2013 Jkt 075679 PO 00000 Frm 00024 Fmt 6633 Sfmt 6621 S:\GPO\DOCS\78880.TXT JACKIE
21 

tion projects to give policymakers and the public confidence that a practical carbon mitigation control option exits. 

4. A key conclusion based on experience in other RD&D programs is that the 

government should not pick a ‘‘technology winner’’ per se, but rather create an 

environment that will enable the development of a diverse range of cost effective options to reduce green house gas emissions. 

These and other issues are discussed in much more detail in.1 In this morning’s 

testimony I will focus on two key technical recommendations related to the future 

use of coal. 

The Driving Force for Change 

The risk of adverse climate change from global warming is serious forced in part 

by growing greenhouse gas emissions. While projections vary, there is now wide acceptance among the scientific community that global warming is occurring, that the 

human contribution is important, and that the effects may impose significant costs 

on the world economy. As a result, governments are likely to adopt carbon mitigation policies that will restrict CO2 emissions; many developed countries have taken 

the first steps in this direction. For such carbon control policies to work efficiently, 

national economies will need to have many options available for reducing greenhouse gas emissions. The Future of Coal 1 addresses one option, the continuing use 

of coal with reduced CO2 emissions. 

Coal is an especially crucial fuel in this uncertain world of future constraint on 

CO2 emissions. Because coal is abundant and relatively cheap ($1–$2 per million 

Btu, compared to $6–$12 per million Btu for natural gas and oil)—it is often the 

fuel of choice for electricity generation, and perhaps for extensive synthetic liquids 

production in the future in many parts of the world. Its low cost and wide availability make it especially attractive in major developing economies for meeting their 

pressing energy needs. On the other hand, coal faces significant environmental challenges in mining, air pollution (including both criteria pollutants and mercury) and 

importantly, emissions of carbon dioxide (CO2). Indeed coal is the largest contributor 

to global CO2 emissions from energy use (41 percent), and its share is projected to 

increase. 

The U.S. has 27 percent of the total global recoverable coal reserves, enough for 

about 250 years at current consumption. Over 50 percent of U.S. electricity was generated from coal last year. It is important to understand the magnitude of CO2

emissions associated with power generation. A single 1,000 MWe coal-based power 

plant emits between 5 and 8 million tonnes of CO2 per year. A few statistics give 

a sense of the enormity of the challenge.4

• There are the equivalent of more than five hundred 500 megawatt, coal-fired 

power plants in the United States with an average age of 35 years. 

• China is currently constructing the equivalent of two 500 megawatt, coal-fired 

power plants per week, a capacity comparable to the entire U.K. power grid 

each year. 

• At present the largest sequestration project is injecting one million tons/year of 

carbon dioxide (CO2) from the Sleipner gas field into a saline aquifer under the 

North Sea. 

By mid-century, given the expectation that coal use will grow substantially, the 

annual sequestration of several gigatonnes of carbon dioxide is the scale needed for 

a major impact on climate change mitigation,. This translates into sequestration of 

the CO2 emissions from many hundreds of utility scale plants worldwide. Each plant 

will need to capture millions of metric tonnes of CO2 each year. Over a fifty-year 

lifetime, one such plant would inject about a billion barrels of compressed CO2 for 

sequestration 5,6

Recommendation 1—Large Scale Demonstration of Carbon Dioxide Capture 

and Storage (CCS) 

Carbon dioxide capture and sequestration (CCS) is the critical enabling technology 

that would reduce CO2 emissions significantly, while also allowing coal to meet the 

world’s pressing energy needs. What is needed is a successful large-scale demonstration of the technical, economic, and environmental performance of the technologies 

that make up all of the major components of a large-scale integrated CCS system— 

capture, transportation, and storage. 

We have confidence that megatonne scale injection at multiple well-characterized 

sites can start safely now, but an extensive program is needed to establish public 

confidence in the practical operation of large scale sequestration facilities over exVerDate Nov 24 2008 12:54 Feb 14, 2013 Jkt 075679 PO 00000 Frm 00025 Fmt 6633 Sfmt 6621 S:\GPO\DOCS\78880.TXT JACKIE
22 

tended periods, and to demonstrate the technical and economic characteristics of the 

sequestration activity.1,6

An important additional objective of the demonstration program is to create an 

explicit and rigorous regulatory process that gives the public and political leaders 

confidence in effective implementation of very large scale sequestration. A regulatory framework needs to be defined for sequestration projects, including site selection, injection operation, and eventual transfer of custody to public authorities after 

a period of successful operation. 

Present government and private sector sequestration projects are inadequate to 

demonstrate the practical implementation of large scale sequestration on a timely 

basis. 

Thus, we believe that the highest priority should be given to a program that for 

demonstrating CO2 sequestration at megatonne scale in several geologies, following 

‘‘bottom-up’’ site characterization. For the United States, this means about three 

megatonne/year projects with appropriate modeling, monitoring and verification 

(MMV), focusing on deep saline aquifers. Each demonstration project should last 

about eight to 10 years. We estimate the cost for the total program to be about 

$500M over a decade, not including the cost of CO2 acquisition. The CO2 costs are 

likely to be considerable and highly variable depending on the acquisition strategy 

(natural reservoirs, capture from existing plants, supply from large scale demonstrations of new coal combustion and conversion plants).1,6

We estimate that for new plant construction, a CO2 emission price of approximately $30/tonne (about $110/tonne C) would make CCS cost competitive with coal 

combustion and conversion systems without CCS. This would be sufficient to off set 

the cost of CO2 capture and pressurization (about $25/tonne) and CO2 transportation and storage (about $5/tonne). This estimate of CCS cost is uncertain; it might 

be larger and with new technology, perhaps smaller. 

The pace of deployment of coal-fired power plants with CCS depends both on the 

timing and level of CO2 emission prices and on the technical readiness and successful commercial demonstration of CCS technologies. The timing and the level of CO2

emission prices is uncertain. However, there should be no delay in undertaking a 

program that would establish the option to utilize CCS at large scale in response 

to a carbon emission control policy that would make CCS technology economic. Sequestration rates of one to two gigatonnes of carbon (nearly four to eight gigatonnes 

of CO2) per year by mid-century will enable appreciably enhanced coal use and significantly reduced CO2 emissions. 

In addition to the value of the scientific and engineering data that will emerge 

from this sequestration demonstration program, we should not underestimate the 

value of demonstrating the ability to successfully manage the program over an extended time. Such practical implementation experience will be important for public 

confidence in committing to very large sequestration over many decades. 

Our highest priority recommendation is that as soon as possible the Congress, the 

Department of Energy, and other private and public sector entities work to launch 

a sequestration demonstration program with the characteristics identified above, including those associated with development of the regulatory system. A sense of urgency has been absent and this needs to change. 

Recommendation 2—Avoid Picking ‘‘Technology Winners’’ 

Our second recommendation is for the U.S. Government to provide incentives to 

several alternative coal combustion and conversion technologies that employ CCS. 

At present, integrated gasification combined cycle (IGCC) is the leading candidate 

for electricity production with CO2 capture because it is estimated to have lower cost 

than pulverized coal with capture. For lower rank coals this choice may not be so 

clear, particularly as the traditional CO2 capture technology continues to improve. 

Thus, it is too early to declare IGCC the winner for all situations at this time.1,5

History teaches us that one single technology is almost never the winner in every 

situation. However, neither IGCC nor other coal technologies have been demonstrated with CCS at large scale. CO2 capture will add significantly to the Cost 

of Electricity (COE), independent of which approach is taken. 

It is critical that the government RD&D program not pick a technology ‘‘winner’’ 

especially at a time when there is great coal combustion and conversion development activity underway in the private sector in both the United States and abroad. 

Approaches with capture other than IGCC could prove as attractive with further 

technology development for example, oxygen-fired pulverized coal combustion, especially with lower quality coals. Of course, there will be improvements in IGCC as 

well. R&D is needed on sub-systems, for example on improved CO2 separation techniques for both oxygen and air driven power systems and for oxygen separation from 

air. The technology program would benefit from an extensive modeling and simulaVerDate Nov 24 2008 12:54 Feb 14, 2013 Jkt 075679 PO 00000 Frm 00026 Fmt 6633 Sfmt 6621 S:\GPO\DOCS\78880.TXT JACKIE
23 

tion effort in order to compare alternative technologies and integrated systems as 

well as to guide development. Novel separation schemes such as chemical looping 

should continue to be pursued at the process development unit (PDU) scale. The reality is that the diversity of coal type, e.g., heat, sulfur, water, and ash content, 

imply different operating conditions for any application and multiple technologies 

will likely be deployed. 

The U.S. Department of Energy (DOE) program needs considerable strengthening 

and diversification in looking at a range of basic enabling technologies that can have 

major impact in the years ahead, particularly in lowering the cost of coal use in a 

carbon-constrained world. This work needs to be done at laboratory or process development unit scale, not as part of large integrated system demonstrations. A significant increase in the DOE coal RD&D program is called for, as well as some restructuring. 

Government assistance is needed for a portfolio of coal combustion and conversion 

demonstration projects with CO2 capture—IGCC, oxyfuel retrofits, new combustion 

technologies, coal to synthetic natural gas, chemicals and fuels are examples. Given 

the technical uncertainty and the current absence of a carbon dioxide emissions 

charge, there is no economic incentive for private firms to undertake such projects 

at any appreciable scale. The DOE coal program is not on a path to address our 

priority recommendations namely—enabling technology, sequestration demonstrations, coal combustion and conversion demonstrations with capture. The level of 

funding falls far short of what is required and perhaps as a result the program is 

imbalanced. 

The flagship project FutureGen is consistent with our priority recommendation to 

initiate integrated demonstration projects at scale. However, we are concerned that 

the project needs more clarity in its objectives. Specifically, a project of this scale 

and complex system integration should be viewed as a demonstration of commercial 

viability at a future time when a meaningful carbon policy is in place. Its principal 

call on taxpayer dollars is to provide information on such commercial viability to 

multiple constituencies, including the investment community. To provide high fidelity information, it needs to have freedom to operate in a commercial environment. 

We believe that the Congress should work with the Administration to clarify that 

the project objectives are commercial demonstration, not research, and reach an understanding on cost-sharing that is grounded in project realities and not in arbitrary 

historical formulas. In thinking about a broader set of coal technology demonstrations, including the acquisition of the CO2 needed for the sequestration demonstration projects, we suggest that a new quasi-government corporation should be considered. 

The 2005 Energy Policy Act contains provisions that authorize Federal Government assistance for coal plants containing advanced technology projects with or 

without CCS. We believe this assistance should be directed only to plants with CCS, 

both new plants and retrofit applications on existing plants. 

Recommendation 3—Regulatory Action 

Success at capping CO2 emissions ultimately depends upon adherence to CO2

mitigation policies by large developed and developing economies. We see little 

progress to moving toward the necessary international arrangements. Although the 

European Union has implemented a cap-and-trade program covering approximately 

half of its CO2 emissions, the United States has not yet adopted mandatory policies 

at the Federal level. U.S. leadership in emissions reduction is a likely prerequisite 

to substantial action by emerging economies. Recent developments in the American 

business sector and in Congress are encouraging. 

A more aggressive U.S. policy appears in line with developing public attitudes. 

Our study has polled the American public, following a similar poll conducted for the 

earlier MIT study on nuclear power. Americans now rank global warming as the 

number one environmental problem facing the country, and seventy percent of the 

American public think that the U.S. Government needs to do more to reduce greenhouse gas emissions. Willingness to pay to solve this problem has grown 50 percent 

over the past 3 years. 

Conclusion 

In conclusion the central message of the MIT study on the Future of Coal is that 

demonstration of technical, economic, and institutional features of carbon capture 

and sequestration at commercial scale coal combustion and conversion plants, will 

(1) give policymakers and the public confidence that a practical carbon mitigation 

control option exists, (2) shorten the deployment time and reduce the cost for carbon 

capture and sequestration should a carbon emission control policy be adopted, and 

(3) maintain opportunities for the lowest cost and most widely available energy form 

24 

to be used to meet the world’s pressing energy needs in an environmentally acceptable manner. 

Mr. Chairman, thank you again for inviting my testimony on this important topic. 

References 

1. The Future of Coal—Options for a Carbon Constrained World, Massachusetts 

Institute of technology, 2007. (See the website http://web.mit.edu/coal for the report and the executive summary). 

2. Ernest J. Moniz and John M. Deutch, Hearing on the MIT Interdisciplinary 

Study: The Future of Coal, Options for a Carbon-Constrained World, Comments 

made to the Senate Committee on Energy and Natural Resources, 22 March 2007, 

Washington, D.C. 

3. Intergovernmental Panel on Climate Change, Climate Change 2007: The physical science basis, Summary for Policy makers, http://www.ipcc.ch/. 

4. A few statistics from 1 that illustrate the scale of the problem. 

• 50 percent of the electricity generated in the U.S. is from coal. 

• Today fossil sources account for 80 percent of energy demand: Coal (25 percent), 

natural gas (21 percent), petroleum (34 percent), nuclear (6.5 percent), hydro 

(2.2 percent), and biomass and waste (11 percent). Only 0.4 percent of global 

energy demand is met by geothermal, solar and wind. 

• There are the equivalent of more than five hundred, 500 megawatt, coal-fired 

power plants in the United States with an average age of 35 years. 

• China is currently constructing the equivalent of two, 500 megawatt, coal-fired 

power plants per week and a capacity comparable to the entire U.K. power grid 

each year. 

• One 500 megawatt coal-fired power plant produces approximately 3 million 

tons/year of carbon dioxide (CO2). 

• The United States produces about 1.5 billion tons per year of CO2 from coalburning power plants. 

• At present the largest sequestration project is injecting one million tons/year of 

carbon dioxide (CO2) from the Sleipner gas field into a saline aquifer under the 

North Sea. 

5. James R. Katzer, Coal-Based Power Generation with CO2 Capture and Sequestration, Comments made to the Senate Committee, on Commerce, Science, and 

Transportation, Science, Energy, and Innovation Subcommittee, March 20, 2007, 

Washington, D.C. 

6. Julio Friedmann, Technical Feasibility of Rapid Deployment of Geological Carbon Sequestration, Comments made to the House Energy and Commerce Committee, 

Energy and Air Quality Subcommittee. 2007: Washington, D.C. 

Senator KERRY. Well, we welcome it. Thank you very much. 

Mr. Rencheck? 

STATEMENT OF MICHAEL W. RENCHECK, SENIOR VICE 

PRESIDENT—ENGINEERING, PROJECTS, AND FIELD 

SERVICES, AMERICAN ELECTRIC POWER 

Mr. RENCHECK. Good morning, Mr. Chairman and Members of 

the Committee. Thank you for inviting me to participate in this 

hearing. 

I am Mike Rencheck, Senior Vice President of Engineering, 

Projects, and Field Services for American Electric Power. 

American Electric Power is one of our nation’s largest utilities 

with more than 5 million customers in 11 states. We are also one 

of the Nation’s largest power generators, with more than 38,000 

megawatts of generating capacity from a diverse fleet. 

But of particular note for today, AEP is one of the largest coalfired generators in the U.S., and we have implemented a portfolio 

of voluntary actions to reduce and avoid and offset greenhouse 

gases during the past decade. 

25 

Coal generates over 50 percent of the electricity used in the U.S., 

and is extensively used worldwide. As the demand for electricity increases significantly, coal use will increase as well. In the future, 

coal-fired electric generation must be zero emission, or near-zero 

emission. This will be achieved through new technologies that are 

being developed today, and are not yet commercially proven, or 

commercially available. Like most companies in our sector, AEP 

needs new generation. We are investing in a new clean coal technology that will enable AEP, and our industry, to meet the challenge of reducing greenhouse gases in the near-term, and for the 

long-term. This includes plans to build new, integrated gasification 

combined cycle plants, IGCC plants, and two state-of-the-art, ultra 

supercritical coal units. These will be the first of the new generation of ultra supercritical plants in the U.S. 

AEP is also taking the lead in commercializing carbon capture 

technology for use on new generation, and more importantly, for 

retrofitting the existing generation fleet. 

We signed a Memorandum of Understanding with Alstom for 

post-carbon capture combustion technology, using Alstom’s chilled 

ammonia system. Starting with a commercial performance 

verification project in mid- to late-2008 in West Virginia—a project 

that will also include storage and capture of carbon dioxide in a saline aquifer, we will move then—after that’s completed—to the first 

commercial-size project at one of our 450-megawatt coal plants, our 

Northeastern plant, in Oklahoma, in 2011. 

This would capture about 1.5 million metric tons of CO2 a year, 

which will be used for enhanced oil recovery. We are also working 

with Babcock & Wilcox to take its oxy-coal combustion technology 

from the drawing board, to a commercial-scale application in the 

next decade. 

AEP is very comfortable leading the way on technology. We have 

had a long and impressive list of technological firsts during our 

first 100 years, being in existence. But, we have identified one very 

important caveat during our century of technological achievement, 

and engineering excellence—providing a technology to be commercially viable, and having that technology ready for widespread commercial use, are two very different things. It takes time to develop 

off-the-shelf commercial offerings for technology to be widely deployed. 

AEP is not calling for an indefinite delay in the enactment of 

mandatory climate change legislation until advanced technology, 

such as carbon capture and storage is developed, however, as the 

requirements become more stringent during the next 10 to 20 

years, and we move beyond the ability of current technology to deliver those reductions, it is essential that requirements for deeper 

reductions allow sufficient time for the demonstration and commercialization of technologies. 

How can you help? It is also important to establish specific public 

funding, as well as incentives for private funding, for the development of commercially viable technology solutions, as well as providing the legal and regulatory structures to facilitate development. 

AEP believes that IGCC and carbon capture technology need to 

be advanced, but the building of IGCC and the timely development 

26 

of commercially viable carbon capture technologies will require additional public funding. 

AEP and others in our sector have already invested heavily in 

the research and early development of the technologies that may 

eventually be commercially viable solutions to address greenhouse 

gases. For this reason, separate investment tax credits are needed 

to facilitate both construction of IGCC plants now, and the development of carbon capture technologies for future use. 

Of significance here, the final decider on the type of power generation that can be built in many states is the public utility commission of that state. That commission determines how, or if, a 

utility can recover the cost of new generation, or retrofits of existing generation. 

How do you reconcile a Federal mandate for expensive greenhouse gas mitigation with states that desire to cap energy costs? 

The utilities and their shareholders remain caught in the middle, 

and need your help to research, develop, and build this type of generation. 

American industry has long been staffed by excellent problem 

solvers, I am confident that we will be able to develop technologies 

to efficiently address emissions of greenhouse gases, in an increasingly cost-effective manner. We have the brain power, we need 

time, funding assistance, and legal and regulatory support. 

Thank you very much. 

[The prepared statement of Mr. Rencheck follows:] 

PREPARED STATEMENT OF MICHAEL W. RENCHECK, SENIOR VICE PRESIDENT— 

ENGINEERING, PROJECTS, AND FIELD SERVICES, AMERICAN ELECTRIC POWER

Good morning, Mr. Chairman and distinguished Members of the Senate Subcommittee on Science, Technology, and Innovation. 

Thank you for inviting me here today. Thank you for this opportunity to offer the 

views of American Electric Power (AEP) and for soliciting the views of our industry 

and others on climate change technologies. 

My name is Mike Rencheck, Senior Vice President—Engineering, Projects and 

Field Services of American Electric Power (AEP). Headquartered in Columbus, Ohio, 

we are one of the Nation’s largest electricity generators—with over 36,000 

megawatts of generating capacity—and serve more than five million retail consumers in 11 states in the Midwest and south central regions of our Nation. AEP’s 

generating fleet employs diverse sources of fuel—including coal, nuclear, hydroelectric, natural gas, and oil and wind power. But of particular importance for the 

Committee members here today, AEP uses more coal than any other electricity generator in the Western hemisphere. 

AEP’s Technology Development 

Over the last 100 years, AEP has been an industry leader in developing and deploying new technologies beginning with the first high voltage transmission lines at 

345 kilovolt (kV) and 765 kV to new and more efficient coal power plants starting 

with the large central station power plant progressing to supercritical and 

ultrasupercritical powers plants. We are continuing that today. We implemented 

over 11 selective catalytic reactors (SCRs), 9 Flue Gas Desulphurization units with 

others currently under construction, and we are a leader in developing and deploying mercury capture and monitoring technology. In addition, we continue to invest 

in new clean coal technology plants and R&D that will enable AEP and our industry 

to meet the challenge of significantly reducing GHG emissions in future years. For 

example, AEP is working to build two new generating plants using integrated gasification combined cycle (IGCC) technology in Ohio and West Virginia, as well as two 

highly efficient new generating plants using the most advanced (e.g., 

ultrasupercritical) pulverized coal combustion technology in Arkansas and Oklahoma. We are also supporting a leading role in the FutureGen project, which once 

completed, will be the world’s first near-zero CO2 emitting commercial scale coalVerDate Nov 24 2008 12:54 Feb 14, 2013 Jkt 075679 PO 00000 Frm 00030 Fmt 6633 Sfmt 6621 S:\GPO\DOCS\78880.TXT JACKIE
27 

fueled power plant. We are also working to progress specific carbon capture and 

storage technology. 

AEP’s Major New Initiative to Reduce GHG Emissions 

Just this past month, AEP announced several major new initiatives to reduce 

AEP’s GHG emissions and to advance the commercial application of carbon capture 

and storage technology and oxy-coal combustion. Our company has been advancing 

technology for the electric utility industry for more than 100 years. AEP’s recent announcement continues to build upon this heritage. Technology development needs 

are often cited as an excuse for inaction. We see these needs as opportunities for 

action. 

AEP has signed a memorandum of understanding (MOU) with Alstom, a worldwide leader in equipment and services for power generation, for post-combustion 

carbon capture technology using Alstom’s chilled ammonia system. It will be installed at our 1,300-megawatt Mountaineer Plant in New Haven, W.Va. as a ‘‘30- 

megawatt (thermal) commercial performance verification’’ project in mid to late 2008 

and it will capture up to 100,000 metric tons of carbon dioxide (CO2) per year. Once 

the CO2 is captured we will store it. The Mountaineer site has an existing deep saline aquifer injection well previously developed in conjunction with DOE and 

Battelle. Working with Battelle and with continued DOE support, we will use this 

well (and develop others) to store and further study CO2 injection into deep geological formations. 

Following the completion of commercial verification at Mountaineer, AEP plans to 

install Alstom’s system on one of the 450-megawatt coal-fired units at its Northeastern Plant in Oologah, Oklahoma, as a first-of-a-kind commercial demonstration. 

The system is expected to be operational at Northeastern Plant in late 2011, capturing about 1.5 million metric tons of CO2 a year. The CO2 captured at Northeastern Plant will also be used for enhanced oil recovery. 

AEP has also signed an MOU with Babcock and Wilcox to pursue the development of oxy-coal combustion that uses oxygen in lieu of air for combustion, which 

forms a concentrated CO2 post combustion gas that can be stored without additional 

post combustion capture processes. AEP will work with B&W on a ‘‘30-megawatt 

(thermal) pilot project in mid-2007 then use the results to study the feasibility of 

a scale 100–200 Mw demonstration.’’ The CO2 from the demonstration project would 

be captured and stored in a deep saline or enhanced oil recovery application. 

Just last month, AEP voluntarily committed to achieve an additional five million 

tons of GHG reductions annually beginning in 2011. We will accomplish these reductions through a new AEP initiative that will add another 1,000 Mw of purchased 

wind power into our system, substantially increase our forestry investments (in addition to the 62 million trees we have planted to date), as well as invest in domestic 

offsets, such as methane capture from agriculture, mines and landfills. 

AEP Perspectives on a Federal GHG Reduction Program 

While AEP has done much, and will do much more, to mitigate GHG emissions 

from its existing sources, we also support the adoption of an economy-wide cap-andtrade type GHG reduction program that is well thought-out, achievable, and reasonable. Although today I intend to focus on the need for the development and deployment of commercially viable technologies to address climate change and not on the 

specific policies issues that must be addressed, AEP believes that legislation can be 

crafted that does not impede AEP’s ability to provide reliable, reasonably priced 

electricity to support the economic well-being of our customers, and includes mechanisms that foster international participation and avoid creating inequities and competitive issues that would harm the U.S. economy. AEP supports reasonable legislation, and is not calling for an indefinite delay until advanced technology such as carbon capture and storage (CCS) is developed. However, as the requirements become 

more stringent during the next ten to twenty years, and we move beyond the ability 

of current technology to deliver those reductions, it is essential that requirements 

for deeper reductions coincide with the commercialization of advanced technologies. 

Phased-in Timing and Gradually Increasing Level of Reductions Consistent 

with Technology Development that is facilitated by Public Funding 

As a practical matter, implementing climate legislation is a complex undertaking 

that will require procedures for measuring, verifying, and accounting for GHG emissions, as well as for designing efficient administration and enforcement procedures 

applicable to all sectors of our economy. Only a pragmatic approach with achievable 

targets, supported by commercial technology, and reasonable timetables—that does 

not require too many reductions within too short a time period—will succeed. Past 

experience with the Clean Air Act Amendments of 1990 (which involved a vastly 

simpler SO2 allowance trading system for just the electric power sector), strongly 

28 

suggests that a minimum of 5 years will be necessary to have the administrative 

mechanisms in place for full implementation of the initial GHG emission targets. 

AEP also believes that the level of emissions reductions and timing of those reductions under a Federal mandate must keep pace with developing technologies for reducing GHG emissions from new and existing sources. The technologies for effective 

carbon capture and storage from coal-fired facilities are developing, but are not commercially engineered to meet production needs, and cannot be artificially accelerated 

through unrealistic reduction mandates. 

While AEP and other companies have successfully lowered their average emissions and emission rates during this decade, further substantial reductions will require the wide-scale commercial availability of new clean coal technologies. AEP believes that the electric power industry can potentially manage much of the expected 

economic (and CO2 emissions) growth over the course of the next decade (2010– 

2020) through aggressively deploying renewable energy, further gains in supply and 

demand-side energy efficiency, and new emission offset projects. As stated above, 

AEP supports reasonable legislation, and is not calling for an indefinite delay of 

GHG reduction obligations until advanced clean coal technology is developed. However, as the reduction requirements become more stringent, and move beyond the 

ability of current technologies to deliver those reductions, it is important that those 

stringent requirements coincide with the commercialization of advanced technology. 

This includes the next generation of low- and zero-emitting technologies. In the case 

of coal, this means demonstration and full-scale deployment of new IGCC units with 

carbon capture, new ultrasupercritical or oxy-coal plants with carbon capture and 

storage, as well as broad deployment of retrofit technologies for carbon capture and 

storage at existing coal plants. The next generation of nuclear technology will also 

play an important role in meeting significant reduction targets. 

However, today’s costs of new clean coal technologies with carbon capture and 

storage are much more expensive than current coal-fired technologies. For example, 

carbon capture and storage using current inhibited monoethanolamine (MEA) technology is expected to increase the cost of electricity from a new coal-fired power 

plant by about 60–70 percent and even the newer chilled ammonia carbon capture 

technology we plan to deploy on a commercial sized scale by 2012 at one of our existing coal-fired units will result in significantly higher costs. It is only through the 

steady and judicious advancement of these applications during the course of the 

next decade that we can start to bring these costs down, in order to avoid substantial electricity rate shocks and undue harm to the U.S. economy. 

Simply put, our Nation cannot wait a decade or longer to begin the development 

and commercialization of IGCC and carbon capture and sequestration technologies. 

The need for new electric generating capacity is upon us now. The need is real and 

it is pressing. Unfortunately, the deployment of advanced coal electric generation 

technology, such as IGCC, is expensive now and will only become more so if development is postponed. 

AEP believes that IGCC is the best commercially-ready technology for the future 

inclusion of CCS but that the timely development of commercially viable CCS technologies will require additional public funding. Our IGCC plants will incorporate the 

space and layout for the addition of components to capture CO2 for sequestration, 

but AEP does not plan to incorporate CCS equipment until after the plants are operating and the technology is demonstrated and proven. 

Our IGCC plants will be among the earliest, if not the first, deployments of largescale IGCC technology. The cost of constructing these plants will be high, resulting 

in a cost of generated electricity that would be at least twenty percent greater than 

that from conventional pulverized coal (PC) combustion technology. As more plants 

are built, the costs of construction are expected to come into line with the cost of 

PC plants. 

To help bridge the cost gap and move IGCC technology down the cost curve, there 

is a need for continuation and expansion of the advanced coal project tax credits 

that were introduced by the Energy Policy Act of 2005. All of the available tax credits for IGCC projects using bituminous coal were allocated to only two projects during the initial allocation round in 2006. More IGCC plants are needed to facilitate 

this technology. AEP believes an additional one billion dollars of section 48A (of the 

Internal Revenue Code) tax credits are needed, with the bulk of that dedicated to 

IGCC projects without regard to coal type. 

Along with an increase in the amount of the credits, changes are needed in the 

manner in which the credits are allocated. Advanced coal project credits should be 

allocated based on net generating capacity and not based upon the estimated gross 

nameplate generating capacity of projects. Allocation based upon gross, rather than 

net, generating capacity potentially rewards less efficient projects, which is antithetical to the purpose of advanced coal project tax incentives. AEP also believes that 

29 

the Secretary of Energy should be delegated a significant role in the selection of 

IGCC projects that will receive tax credits. 

On a critical note, the inclusion of carbon capture and sequestration equipment 

must not be a prerequisite for the allocation of these additional tax credits due to 

the urgent need for new electric generating capacity in the U.S. AEP also believes 

that this requirement is premature and self-defeating, since the technology to capture and sequester a significant portion of an IGCC project’s CO2 does not currently 

exist. The addition of yet-to-be-developed carbon capture and sequestration technology to an IGCC project would cause the projected cost of a project to increase 

significantly, making it that much more difficult for a public utility commission to 

approve. 

AEP also believes that additional tax incentives are needed to spur the development and deployment of greenhouse gas capture and sequestration equipment for 

all types of coal-fired generation. We suggest that additional tax credits be established to offset a significant portion of the incremental cost of capturing and sequestering CO2. These incentives could be structured partly as an investment tax credit, 

similar to that in section 48A (of the Internal Revenue Code), to cover the upfront 

capital cost, and partly as a production tax credit to cover the associated operating 

costs. 

In summary, AEP recommends a pragmatic approach for phasing in GHG reductions through a cap-and-trade program coincident with developing technologies to 

support these reductions. The emissions cap should be reasonable and achievable. 

In the early years of the program, the cap should be set at levels that slow the increase in GHG emissions. Allowing for moderate emissions increases over the first 

decade is critical due to limitations on currently available GHG control options and 

technologies. The stringency of the cap would increase over time—first stabilizing 

emissions and then requiring a gradual, long-term decline in emissions levels. The 

cap levels should be set to reflect projected advances in new carbon-saving technologies, which advances AEP believes can be facilitated by Federal incentives. In 

the case of the electric power sector, additional time is necessary to allow for the 

deployment of new nuclear plants as well as the demonstration and deployment of 

commercial-scale gasification and advanced combustion facilities fully integrated 

with technologies for CO2 capture and storage. Substantial GHG reductions should 

not be required until after the 2020 time-frame. 

Requiring much deeper reductions sooner would very likely harm the U.S. economy. For AEP and the electric sector, the only currently available strategy to 

achieve substantial absolute CO2 reductions prior to 2020 without the full-scale deployment of new technologies will inevitably require much greater use of natural 

gas, in lieu of coal-fueled electricity, with the undesirable effects of higher natural 

gas prices and even tighter supplies. 

Technology is the Answer to Climate Change 

The primary human-induced cause of global warming is the emission of CO2 arising from the burning of fossil fuels. Put simply, our primary contribution to climate 

change is also what drives the global economic engine. 

Changing consumer behavior by buying efficient appliances and cars, by driving 

less, and by similar steps, is helping to reduce the growth of GHG emissions. However, these steps will never be nearly enough to significantly reduce CO2 emissions 

from the burning of coal, oil and natural gas. Such incremental steps, while important, will never be sufficient to stabilize greenhouse gases concentrations in the atmosphere at a level that is believed to be capable of preventing dangerous humaninduced interference with the climate system, as called for in the U.S.-approved 

U.N. Framework Convention on Climate Change (Rio agreement). 

For that, we need major technological advances to effectively capture and store 

CO2. The Congress and indeed all Americans must come to recognize the gigantic 

undertaking and significant sacrifices that this enterprise is likely to require. It is 

unrealistic to assume, and wrong to argue, that the market will magically respond 

simply by the imposition of severe caps on CO2 emissions. The result will not be 

a positive response by the market, but rather a severe impact on the economy. Not 

when what we are talking about, on a large scale, is the capture and geologic storage of billions and billions of tons of CO2 with technologies that have not yet been 

proven anywhere in the world. 

CCS should not be mandated until and unless it has been demonstrated to be effective and the costs have significantly dropped so that it becomes commercially engineered and available on a widespread basis. Until that threshold is met, it would 

be technologically unrealistic and economically unacceptable to require the widespread installation of carbon capture equipment. The use of deep saline geologic formations as the primary long-term geologic formations for CO2 storage has not yet 

30 

been sufficiently demonstrated. There are no national standards for permitting such 

storage reservoirs; there are no widely accepted monitoring protocols; and the standards for liability are unknown (and whether Federal or state laws would apply), as 

well as who owns the rights to these deep geologic reservoirs remains a question. 

Underscoring these realities, industrial insurance companies point to a lack of scientific data on CO2 storage as one reason they are disinclined to insure early 

projects. In a nutshell, the institutional infrastructure to support CO2 storage does 

not yet exist and will require years to develop. In addition, application of today’s 

CO2 capture technology would significantly increase the cost of an IGCC or a new 

efficient pulverized coal plant, calling into serious question regulatory approval for 

the costs of such a plant by state regulators. Further, recent studies sponsored by 

the Electric Power Research Institute (EPRI) suggest that application of today’s CO2

capture technology would increase the cost of electricity from an IGCC plant by up 

to 50 percent, and boost the cost of electricity from a conventional pulverized coal 

plant by up to 60–70 percent, which would again jeopardize state regulatory approval for the costs of such plants. 

Despite these uncertainties, I believe that we must aggressively explore the viability of this technology in several first-of-a-kind commercial projects. AEP is committed to help lead the way, and to show how this can be done. For example, as 

described earlier in this testimony, AEP will install carbon capture controls on two 

existing coal-fired power plants, the first commercial use of this technology, as part 

of our comprehensive strategy to reduce, avoid or offset GHG emissions. 

AEP is also building two state-of-the-art advanced ultrasupercritical power plants 

in Oklahoma and Arkansas. These will be the first of the new generation of 

ultrasupercritical plants in the U.S. 

AEP is also advancing the development of IGCC technology. IGCC represents a 

major breakthrough in our work to improve the environmental performance of coalbased electric power generation. AEP is in the process of permitting and designing 

two of the earliest commercial scale IGCC plants in the Nation. Construction of the 

IGCC plants will start once traditional rate recovery is approved. 

IGCC technology integrates two proven processes—coal gasification and combined 

cycle power generation—to convert coal into electricity more efficiently and cleanly 

than any existing uncontrolled power plants can. Not only is it cleaner and more 

efficient than today’s installed power plants, but IGCC has the potential to be retrofitted in the future for carbon capture at a lower capital cost and with less of an 

energy penalty than traditional power plant technologies, but only after the technology has been developed and proven. 

AEP is also a founding member of FutureGen, a groundbreaking public-private 

collaboration that aims squarely at making near-zero-emissions coal-based energy a 

reality. FutureGen is a $1.5 billion, 10-year research and demonstration project. It 

is on track to create the world’s first coal-fueled, near-zero emission electricity and 

hydrogen plant with the capability to capture and sequester at least 90 percent of 

its carbon dioxide emissions. 

As an R&D plant, FutureGen will stretch—and indeed create—the technology envelope. Within the context of our fight to combat global climate change, FutureGen 

has a truly profound mission—to validate the cost and performance baselines of a 

fully integrated, near zero-emission coal-fueled power plant. 

The design of the FutureGen plant is already underway, and we are making great 

progress. The plant will be on-line early in the next decade. By the latter part of 

that decade, following on the advancements demonstrated by AEP, FutureGen and 

other projects, CCS technology should become a commercial reality. 

It is when these technologies are commercially demonstrated, and only then, that 

commercial orders will be placed on a widespread basis to implement CCS at coalfueled power plants. That is, roughly around 2020. Widespread deployment assumes 

that a host of other important issues have been resolved, and there is governmental 

and public acceptance of CCS as the proven and safe technology that we now believe 

it to be. AEP supports rapid action on climate change including the enactment of 

well thought-out and achievable legislation so that our Nation can get started on 

dealing with climate change. However, the complete transformation of the U.S. electricity system will take time, and we can’t put policy ahead of the availability of 

cost-effective technology. The development of technology must coincide with any increase in the stringency of the program. 

What will happen if the Congress does the opposite, and mandates deep reductions in the absence of a proven, viable technology? It is the proverbial road of good 

intentions, and only dangerous consequences can follow. The most immediate would 

be a dramatic—and very likely costly—increase in the use and price of natural gas 

by the utility sector, since there would be no other identifiable alternative. This 

would have significant adverse impacts on consumers and workers by driving up the 

31 

cost of gas for home heating and cooking, and would further increase costs to any 

industry dependent upon natural gas as a feedstock, such as chemicals and agriculture with a further exporting of jobs overseas. 

A huge challenge that our society faces over the remainder of this century is how 

we will reduce the release of GHG emissions from fossil fuels. This will require 

nothing less than the complete reengineering of the entire global energy system over 

the next century. The magnitude of this task is comparable to the industrial revolution, but for this revolution to be successful, it must stimulate new technologies and 

new behaviors in all major sectors of the economy. The benefits of projects like 

FutureGen and the ones AEP is pursuing will apply to all countries blessed with 

an abundance of coal, not only the United States, but also nations like China and 

India. 

In the end, the only sure path to stabilizing GHG concentrations over the long 

term is through the development and utilization of advanced technologies. And we 

must do more than simply call for it. Our nation must prepare, inspire, guide, and 

support our citizens and the very best and the brightest of our engineers and scientists; private industry must step up and start to construct the first commercial 

plants; and our country must devote adequate financial and technological resources 

to this enormous challenge. AEP is committed to being a part of this important process, and to helping you achieve the best outcome at the most reasonable cost and 

timelines possible. Thank you again for this opportunity to share these views with 

you. 

NEWS from AEP 

Media Contact: 

PAT D. HEMLEPP

Director, Corporate Media Relations 

Analysts Contact: 

JULIE SLOAT

Vice President, Investor Relations 

For Immediate Release 

AEP to Install Carbon Capture on Two Existing Power Plants; Company 

Will Be First to Move Technology to Commercial Scale 

As climate policy advances, ‘‘it’s time to advance technology for commercial use,’’ 

CEO says Columbus, Ohio, March 15, 2007—American Electric Power (NYSE:AEP) 

will install carbon capture on two coal-fired power plants, the first commercial use 

of technologies to significantly reduce carbon dioxide emissions from existing plants. 

The first project is expected to complete its product validation phase in 2008 and 

begin commercial operation in 2011. 

‘‘AEP has been the company advancing technology for the electric utility industry 

for more than 100 years,’’ said Michael G. Morris, AEP chairman, president and 

chief executive officer. ‘‘This long heritage, the backbone of our company’s success, 

makes us very comfortable taking action on carbon emissions and accelerating advancement of the technology. Technology development needs are often cited as an 

excuse for inaction. We see these needs as an opportunity for action.’’ 

‘‘With Congress expected to take action on greenhouse gas issues in climate legislation, it’s time to advance this technology for commercial use,’’ Morris said. ‘‘And 

we will continue working with Congress as it crafts climate policy. It is important 

that the U.S. climate policy be well thought out, establish reasonable targets and 

timetables, and include mechanisms to prevent trade imbalances that would damage 

the U.S. economy.’’ 

Morris will discuss AEP’s plans for carbon capture during a presentation today 

at the Morgan Stanley Global Electricity & Energy Conference in New York. A live 

webcast of the presentation to an audience of investors will begin at 12:10 p.m. EDT 

and can be accessed through the Internet at http://www.aep.com/go/webcast. The 

webcast will also be available after the event. Visuals used in the presentation will 

be available at http://ww.aep.com/investors/present. AEP has signed a memorandum of understanding (MOU) with Alstom, a worldwide leader in equipment and services for power generation and clean coal, for postcombustion carbon capture technology using Alstom’s Chilled Ammonia Process. 

This technology, which is being piloted this summer by Alstom on a 5-megawatt 

(thermal) slipstream from a plant in Wisconsin, will first be installed on AEP’s 

1,300-megawatt Mountaineer Plant in New Haven, W.Va., as a 30-megawatt (thermal) product validation in mid-2008 where up to 100,000 metric tons of carbon dioxide (CO2) will be captured per year. The captured CO2 will be designated for geological storage in deep saline aquifers at the site. Battelle Memorial Institute will serve 

as consultants for AEP on geological storage. 

Following the completion of product validation at Mountaineer, AEP will install 

Alstom’s system on one of the 450-megawatt (electric) coal-fired units at its NorthVerDate Nov 24 2008 12:54 Feb 14, 2013 Jkt 075679 PO 00000 Frm 00035 Fmt 6633 Sfmt 6621 S:\GPO\DOCS\78880.TXT JACKIE
32 

eastern Station in Oologah, Okla. Plans are for the commercial-scale system to be 

operational at Northeastern Station in late 2011. It is expected to capture about 1.5 

million metric tons of CO2 a year. The CO2 captured at Northeastern Station will 

be used for enhanced oil recovery. 

Alstom’s system captures CO2 by isolating the gas from the power plant’s other 

flue gases and can significantly increase the efficiency of the CO2 capture process. 

The system chills the flue gas, recovering large quantities of water for recycle, and 

then utilizes a CO2 absorber in a similar way to absorbers used in systems that reduce sulfur dioxide emissions. The remaining low concentration of ammonia in the 

clean flue gas is captured by cold-water wash and returned to the absorber. The CO2

is compressed to be sent to enhanced oil recovery or storage. 

In laboratory testing sponsored by Alstom, EPRI and others, the process has demonstrated the potential to capture more than 90 percent of CO2 at a cost that is far 

less expensive than other carbon capture technologies. It is applicable for use on 

new power plants as well as for the retrofit of existing coal-fired power plants. 

AEP has signed an MOU with The Babcock & Wilcox Company (B&W), a world 

leader in steam generation and pollution control equipment design, supply and service since 1867, for a feasibility study of oxy-coal combustion technology. B&W, a subsidiary of McDermott International, Inc. (NYSE:MDR), will complete a pilot demonstration of the technology this summer at its 30-megawatt (thermal) Clean Environment Development Facility in Alliance, Ohio. 

Following this demonstration, AEP and B&W will conduct a retrofit feasibility 

study that will include selection of an existing AEP plant site for commercial-scale 

installation of the technology and cost estimates to complete that work. Once the 

retrofit feasibility study is completed, detailed design engineering and construction 

estimates to retrofit an existing AEP plant for commercial-scale CO2 capture will 

begin. At the commercial scale, the captured CO2 will likely be stored in deep geologic formations. The plant, with oxy-coal combustion technology, is expected to be 

in service in the 2012–2015 time-frame. 

B&W, in collaboration with American Air Liquide Inc., has been developing oxycoal combustion, a technology that utilizes pure oxygen for the combustion of coal. 

Current generation technologies use air, which contains nitrogen that is not utilized 

in the combustion process and is emitted with the flue gas. By using pure oxygen, 

oxy-coal combustion excludes nitrogen and leaves a flue gas that is a relatively pure 

stream of carbon dioxide that is ready for capture and storage. B&W’s and Air 

Liquide’s collaborative work on oxy-coal combustion began in the late 1990s and included pilot-scale development at B&W’s facilities with encouraging results, burning 

both bituminous and sub-bituminous coals. 

The oxy-coal combustion process, as envisioned, uses a standard, cryogenic air 

separation unit to provide relatively pure oxygen to the combustion process. This oxygen is mixed with recycled flue gas in a proprietary mixing device to replicate air, 

which may then be used to operate a boiler designed for regular air firing. The exhaust gas, consisting primarily of carbon dioxide, is first cleaned of traditional pollutants, then compressed and purified before storage. B&W, working with Air 

Liquide, can supply the equipment, technology and control systems to construct this 

new value chain, either as a new application or as a retrofit to an existing unit. 

The Alstom technology provides a post-combustion carbon capture system that is 

suitable for use in new plants as well as for retrofitting to existing plants. It requires significantly less energy to capture CO2 than other technologies currently 

being tested. 

The B&W technology provides a pre-combustion boiler conversion option for existing plants that promotes the creation of a pure CO2 stream in the flue gas. 

Both pre- and post-combustion technologies will be important for companies facing 

decisions on carbon reduction from the wide variety of coal-fired boiler designs currently in use. 

AEP anticipates seeking funding from the U.S. Department of Energy to help offset some of the costs of advancing these technologies for commercial use. The company will also work with utility commissions, environmental regulators and other 

key constituencies in states that have jurisdiction over the plants selected for retrofit to determine appropriate cost recovery and the impact on customers. 

‘‘We recognize that these projects represent a significant commitment of resources 

for AEP, but they are projects that will pay important dividends in the future for 

our customers and shareholders,’’ Morris said. ‘‘Coal is the fuel used to generate half 

of the Nation’s electricity; it fuels about 75 percent of AEP’s generating fleet. By 

advancing carbon capture technologies into commercial use, we are taking an important step to ensure the continued and long-term viability of our existing generation, 

just as we did when we were the first to begin a comprehensive, system-wide retrofit 

program for sulfur dioxide and nitrogen oxide emissions controls. We have comVerDate Nov 24 2008 12:54 Feb 14, 2013 Jkt 075679 PO 00000 Frm 00036 Fmt 6633 Sfmt 6621 S:\GPO\DOCS\78880.TXT JACKIE
33 

pleted the sulfur dioxide and nitrogen oxide retrofits on more than two-thirds of the 

capacity included in the program and we are on schedule to complete all retrofits 

by shortly after the end of the decade.’’ 

‘‘By being the first to advance carbon capture technology, we will be well-positioned to quickly and efficiently retrofit additional plants in our fleet with carbon 

capture systems while avoiding a potentially significant learning curve.’’ 

AEP has led the U.S. electric utility industry in taking action to reduce its greenhouse gas emissions. AEP was the first and largest U.S. utility to join the Chicago 

Climate Exchange (CCX), the world’s first and North America’s only voluntary, legally binding greenhouse gas emissions reduction and trading program. As a member of CCX, AEP committed to gradually reduce, avoid or offset its greenhouse gas 

emissions to 6 percent below the average of its 1998 to 2001 emission levels by 

2010. Through this commitment, AEP will reduce or offset approximately 46 million 

metric tons of greenhouse gas emissions by the end of the decade. 

AEP is achieving its greenhouse gas reductions through a broad portfolio of actions, including power plant efficiency improvements, renewable generation such as 

wind and biomass co-firing, off-system greenhouse gas reduction projects, reforestation projects and the potential purchase of emission credits through CCX. 

American Electric Power is one of the largest electric utilities in the United 

States, delivering electricity to more than 5 million customers in 11 states. AEP 

ranks among the Nation’s largest generators of electricity, owning nearly 36,000 

megawatts of generating capacity in the U.S. AEP also owns the Nation’s largest 

electricity transmission system, a nearly 39,000-mile network that includes more 

765 kilovolt extra-high voltage transmission lines than all other U.S. transmission 

systems combined. AEP’s utility units operate as AEP Ohio, AEP Texas, Appalachian Power (in Virginia and West Virginia), AEP Appalachian Power (in Tennessee), Indiana Michigan Power, Kentucky Power, Public Service Company of 

Oklahoma, and Southwestern Electric Power Company (in Arkansas, Louisiana and 

east Texas). AEP’s headquarters are in Columbus, Ohio. 

* * * * * * * 

This report made by AEP and its Registrant Subsidiaries contains forward-Looking statements within the meaning of Section 21E of the Securities Exchange Act 

of 1934. Although AEP and each of its Registrant Subsidiaries believe that their expectations are based on reasonable assumptions, any such statements may be influenced by factors that could cause actual outcomes and results to be materially different from those projected. Among the factors that could cause actual results to differ materially from those in the forward-looking statements are: electric load and 

customer growth; weather conditions, including storms; available sources and costs 

of, and transportation for, fuels and the creditworthiness of fuel suppliers and transporters; availability of generating capacity and the performance of AEP’s generating 

plants; AEP’s ability to recover regulatory assets and stranded costs in connection 

with deregulation; AEP’s ability to recover increases in fuel and other energy costs 

through regulated or competitive electric rates; AEP’s ability to build or acquire generating capacity when needed at acceptable prices and terms and to recover those 

costs through applicable rate cases or competitive rates; new legislation, litigation 

and government regulation including requirements for reduced emissions of sulfur, 

nitrogen, mercury, carbon, soot or particulate matter and other substances; timing 

and resolution of pending and future rate cases, negotiations and other regulatory 

decisions (including rate or other recovery for new investments, transmission service 

and environmental compliance); resolution of litigation (including pending Clean Air 

Act enforcement actions and disputes arising from the bankruptcy of Enron Corp. 

and related matters); AEP’s ability to constrain operation and maintenance costs; 

the economic climate and growth in AEP’s service territory and changes in market 

demand and demographic patterns; inflationary and interest rate trends; AEP’s ability to develop and execute a strategy based on a view regarding prices of electricity, 

natural gas and other energy-related commodities; changes in the creditworthiness 

of the counterparties with whom AEP has contractual arrangements, including participants in the energy trading market; actions of rating agencies, including changes 

in the ratings of debt; volatility and changes in markets for electricity, natural gas 

and other energy-related commodities; changes in utility regulation, including the 

potential for new legislation or regulation in Ohio and/or Virginia and membership 

in and integration into regional transmission organizations; accounting pronouncements periodically issued by accounting standard-setting bodies; the performance of 

AEP’s pension and other post-retirement benefit plans; prices for power that AEP 

generates and sell at wholesale; changes in technology, particularly with respect to 

new, developing or alternative sources of generation; other risks and unforeseen 

34 

events, including wars, the effects of terrorism (including increased security costs), 

embargoes and other catastrophic events. 

Background: American Electric Power’s Actions to Address Climate 

Change GHG Reduction Commitment 

American Electric Power (AEP) was the first and largest U.S. utility to join the 

Chicago Climate Exchange (CCX) and make a legally binding commitment to gradually reduce or offset its greenhouse gas emissions to 6 percent below the average 

of 1998–2001 emission levels by 2010. 

As a founding member of CCX, AEP committed in 2003 to reduce or offset its 

emissions gradually to 4 percent below the average of 1998–2001 emission levels by 

2006 (1 percent reduction in 2003, 2 percent in 2004, 3 percent in 2005 and 4 percent in 2006). In August 2005, AEP expanded and extended its commitment to a 

6 percent reduction below the same baseline by 2010 (4.25 percent in 2007, 4.5 percent in 2008, 5 percent in 2009 and 6 percent in 2010). Through this commitment, 

AEP expects to reduce or offset approximately 46 million metric tons of greenhouse 

gas emissions. 

Operational Improvements 

AEP has been able to reduce its carbon dioxide (CO2) emissions by improving 

plant efficiency for its fossil-fueled plants through routine maintenance and investments like turbine blade enhancements (installing new turbine blades) and steam 

path replacements that improve the overall heat rate of a plant and, in turn, reduce 

CO2 emissions. A one-percent improvement in AEP’s overall fleet efficiency can reduce the company’s greenhouse gas emissions by 2 million metric tons per year. 

AEP has also reduced its CO2 emissions by improving the performance and availability of its nuclear generation. AEP’s D.C. Cook Nuclear Plant in Michigan set 

plant records for generation and capacity factor in 2005. The plant had a capacity 

factor (energy generated as compared to the maximum possible) of 96.8 percent in 

2005 and generated 17,471 gigawatt-hours (GWH) of electricity. Additionally, AEP 

will invest $45 million to replace turbine motors in one unit at D.C. Cook in 2006, 

which will increase that unit’s output by 41 megawatts. 

As a member of the U.S. EPA’s Sulfur Hexafluoride (SF6) Emissions Reduction 

Partnership for Electric Power Systems, AEP has significantly reduced emissions of 

SF6, an extremely potent greenhouse gas, from 1999 levels of 19,778 pounds (a leakage rate of 10 percent) to 2004 emissions of 1,962 pounds (a leakage rate of 0.5 percent). 

Managing Forests and Agricultural Lands for Carbon Sequestration 

To reduce carbon dioxide (CO2) concentrations in the global atmosphere, AEP has 

invested more than $27 million in terrestrial sequestration projects designed to conserve and reforest sensitive areas and offset more than 20 million metric tons of 

CO2 over the next 40 years. These projects include protecting nearly 4 million acres 

of threatened rainforest in Bolivia, restoring and protecting 20,000 acres of degraded 

or deforested tropical Atlantic rainforest in Brazil, reforesting nearly 10,000 acres 

of the Mississippi River Valley in Louisiana with bottomland hardwoods, restoring 

and protecting forest areas in the Sierra Madres of Guatemala, and planting trees 

on 23,000 acres of company-owned land. 

Deploying Technology for Clean Coal Generation 

AEP is focused on developing and deploying new technology that will reduce the 

emissions, including greenhouse gas emissions, of future coal-based power generation. AEP announced in August 2004 its plans to build commercial-scale integrated 

gasification combined cycle (IGCC) plants to demonstrate the viability of this technology for future use of coal in generating electricity. AEP has filed for regulatory 

approval in Ohio and West Virginia to build a 629-megawatt IGCC plant in each 

of these states. The plants are scheduled to be operational in the 2010 to 2011 timeframe and will be designed to accommodate retrofit of technology to capture and sequester CO2 emissions. 

Developing Technology for CO2 Capture and Storage 

AEP’s Mountaineer Plant in New Haven, W.Va., is the site of a $4.2 million carbon sequestration research project funded by the U.S. Department of Energy, the 

Ohio Coal Development Office, and a consortium of public and private sector participants. Scientists from Battelle Memorial Institute lead this climate change mitigation research project, which is designed to obtain data required to better understand 

35 

and test the capability of deep saline aquifers for storage of carbon dioxide emissions from power plants. 

AEP is a member of the FutureGen Alliance, who, along with the Department of Energy, will build ‘‘FutureGen,’’ a $1 billion, near-zero emission plant to produce 

electricity and hydrogen from coal while capturing and disposing of carbon dioxide 

in geologic formations. 

Additionally, AEP funds research coordinated by the Massachusetts Institute of 

Technology Energy Laboratory and the Electric Power Research Institute that is 

evaluating the environmental impacts, technological approaches, and economic 

issues associated with carbon sequestration. The MIT research specifically focuses 

on efforts to better understand and reduce the cost of carbon separation and sequestration. 

Renewable Energy and Clean Power 

AEP strongly supports increased renewable energy sources to help meet our Nation’s energy needs. AEP is one of the larger generators and distributors of wind 

energy in the United States, operating 311 megawatts (MW) of wind generation in 

Texas. The company also purchases and distributes an additional 373.5 megawatts 

of wind generation from wind facilities in Oklahoma and Texas. Additionally, AEP 

operates 2,285 megawatts of nuclear generation and 884 megawatts of hydro and 

pumped storage generation. 

More than 125 schools participate in AEP’s ‘‘Learning From Light’’ and ‘‘Watts on 

Schools’’ programs. Through these programs, AEP partners with learning institutions to install 1 kW solar photovoltaic systems, and uses these systems to track 

energy use and demonstrate how solar energy is a part of the total energy mix. 

Similarly, AEP’s ‘‘Learning From Wind’’ program installs small-scale wind turbines 

to provide wind power education and renewable energy research at educational institutions. 

Biomass Energy 

Until the company sold the plants in 2004, AEP co-fired biomass in 4,000 MW 

of coal-based power generation in the United Kingdom (Fiddler’s Ferry and Ferry 

Bridge). AEP has been evaluating and testing biomass co-firing for its smaller coalfired power plants in the United States to evaluate potential reductions in CO2

emission levels. 

Energy Conservation and Energy Efficiency 

AEP is implementing ‘‘Energy Efficiency Plans’’ to offset 10 percent of the annual 

energy demand growth in its Texas service territory. In 2003 alone, AEP invested 

more than $8 million to achieve over 47 million kilowatt-hours (kWh) of reductions 

from installation of energy efficiency measures in customers’ homes and businesses. 

Total investments for the four-year program will exceed $43 million, achieving more 

than 247 million kWh of energy efficiency gains. 

2005 EPA Climate Protection Award 

In May 2005, the EPA selected AEP to receive a 2005 Climate Protection Award 

for demonstrating ingenuity, leadership and public purpose in its efforts to reduce 

greenhouse gases. EPA began the Climate Protection Awards program in 1998 to 

recognize outstanding efforts to protect the Earth’s climate. 

Senator KERRY. Thank you very much, Mr. Rencheck, we appreciate that. 

Mr. Wilson? 

STATEMENT OF JOHN M. WILSON, CHIEF OPERATING OFFICER, SIEMENS ENVIRONMENTAL SYSTEMS AND SERVICES 

Mr. WILSON. Thank you very much. Greetings, Chairman Kerry, 

and the Committee. 

My name is John Wilson, I am the Chief Operating Officer for 

Siemens Environmental Systems and Services. It’s a company created out of a 90-year-old air pollution control business. 

I’m really pleased to be able to give the overall presentation from 

the practical side for air pollution control here for clean coal. 

Today I’m speaking on behalf of Siemens power generation, it’s 

a $10 billion organization, part of the $100 billion global infrastrucVerDate Nov 24 2008 12:54 Feb 14, 2013 Jkt 075679 PO 00000 Frm 00039 Fmt 6633 Sfmt 6601 S:\GPO\DOCS\78880.TXT JACKIE
36 

ture supplier. And, what I’d like to do, is really like to let you know 

about Siemens Power Generation first. 

We’ve basically grown by consolidating many of the well-known 

companies out in the industry—Westinghouse, Wheelabrator, 

Bonus Energy, as well as the industrial turbine business of Alstom. 

And what we invest right now, every year, is about $600 million 

a year in R&D in the energy sector, so we’re fully vested in this 

energy sector. 

Siemens recognizes that clean coal doesn’t have to be an 

oxymoron, either, because that’s our business. We basically focus 

on the safe environmental use of coal today, and in the future. 

So, what we’ve done, is we basically participate with DOE and 

bring our expertise to funding on clean coal technology programs 

like the hydrogen fuel gas turbine, like CO2 separation technologies, membrane technologies, oxy-fuel combustion, and ultra 

supercritical steam turbines. So we participate in that, all of these 

efforts because we believe that coal is going to be a part of our 

global future. As you mentioned, it’s 50 percent today, in terms of 

electricity generation, growing to 60 percent by 2030, according to 

the Energy Administration. 

So, that’s 325,000 megawatts, essentially, of installed base out 

there that’s already operating—it’s not going to go away—that’s basically going to be there in providing our needs. It take decades, 

essentially for these plants to amortize their value, and my business is actually focused on cleaning up the emissions at these 

plants. 

We fundamentally are now in a boom, where we have State regulatory commissions, with consent decrees that are forcing higher 

levels of emissions controls on the existing plants. And so, what we 

see today, is that with the appropriate engineering design, we’re 

able to design emissions control systems that basically are on par 

with the proposed IGCC plants that are out there today. 

There’s a real potential for improvement, essentially, out there 

today in the existing fleet, because we see the opportunity and capability to retrofit these plants with additional controls that aren’t 

deployed today. If you want to permit a new plant today, you have 

to have a full suite of environmental controls for a new source review, but fundamentally, the existing plants that are out there are 

not necessarily all compliant with that, and they’re just now being 

upgraded. 

So, with the fact that there’s a lot of technology out there, we 

also focus—as we’ve said—across the whole technology spectrum— 

gasification and gas-turbine technology for IGCC, emissions control, and ultra supercritical combustion based technologies. So, we 

provide essentially whatever the market asks for in terms of technology. 

But clearly efficiency, or CO2 avoidance, is superior to CO2 capture—either post-combustion or pre-combustion. So, we see the efficiency improvements in the existing fleet as one of the areas that 

we could look at. Because, clearly, with the average fleet efficiency 

of 33 percent—and now plant technologies that are in excess of 40 

percent efficient—there’s a great deal of improvement potential for 

the existing fleet, both in emissions and also in efficiency. 

37 

Gasification is a real option, too. Basically, Siemens has over 

320,000 hours of operation on gasification (or integrated gasification combined cycle) plants around the world. We’ve also recently 

acquired one of the leading gasification technologies. This technology is very favorable and works very well on Western coals, 

higher moisture coals and lower-quality coals. So, we’re also part 

of the overall gasification technology business. 

But clearly the CO2 policy issue not only involves important advanced technology questions but also the ultimate cost to the consumer and the economy. For example, current estimates suggest 

that CO2 capture and storage will add several cents a kilowatt to 

existing utility bills. 

So, fundamentally, Siemens believes that the long-term storage 

of carbon, is one of the critical areas—that we have to focus on in 

the regulatory environment. 

So, in closing, I want to make it clear that there are existing 

technologies out there today to make the coal, much cleaner coal 

and that we are providers of most of these technologies. In addition, we’d like to see further R&D development across the suite of 

technologies because there is no clear ‘‘winner’’ technology today. 

We need investment and demonstration programs in all of these 

technologies because it takes years to prove out the right technology and the right application. We also support the development 

of industry-wide performance-based/efficiency-based standards as 

well as a reevaluation of the new source rules. These changes 

would facilitate the deployment of newer, more advanced coalbased technologies which would result in improved environmental 

performance, including CO2. 

Thank you very much. 

[The prepared statement of Mr. Wilson follows:] 

PREPARED STATEMENT OF JOHN M. WILSON, CHIEF OPERATING OFFICER, SIEMENS

ENVIRONMENTAL SYSTEMS AND SERVICES

Greetings, Chairman Kerry and Ranking Member Ensign and Subcommittee 

members. My name is John Wilson; I am the Chief Operating Officer of Siemens’ 

Environmental Systems and Services business unit which was created out of a company with over 90 years of experience in air pollution control technology. I am honored to be here today to discuss the current state of clean coal technology from an 

infrastructure suppliers’ perspective. 

Today I am speaking primarily on behalf of the power generation business at Siemens. For the last several years, I was the vice president of strategy for the Power 

Generation Group, headquartered in Orlando, Florida, and Erlangen Germany, 

which is a 10 billion dollar segment of Siemens 100 billion dollar global infrastructure business. 

Before I speak specifically to clean coal issues, I’d like to direct the Subcommittee’s attention to a unique global project and recently published report entitled 

‘‘Megacity Challenges’’ that is based upon research conducted by two independent 

organizations with the support of Siemens. The goal of the project was to carry out 

research at the megacity level to gather data as well as perspectives from mayors, 

city administrators and other experts on infrastructure challenges, like energy supply and delivery systems, in which this Subcommittee takes great interest. Over 500 

public and private sector experts from 25 cities were interviewed. The results were 

fascinating, including the projection that by 2030 over 60 percent of the world’s population will live in cities. The key megatrends identified in this report that are guiding Siemens’ priorities are: healthcare challenges, urbanization and associated mobility challenges, scarcity of clean and reliable natural resources such as clean air 

and water, and reliable energy supplies. Siemens has been investing in the technologies that address these massive shifts that are driving the current and future 

needs of society. In addition to the energy infrastructure technologies that I will 

38 

1 A cooperative venture with Air Products, Inc. 

2 Recent communication with U.S. EPA 

focus upon today, other examples of our forward-looking technologies include efficient lighting, automation and controls, intelligent traffic controls, water purification and efficient technologies for buildings and rapid transit. 

Siemens’ power generation business has grown to its current size by consolidating 

some of the best known names in the power generation industry, such as Westinghouse, KWU, Parsons, Wheelabrator, Bonus Energy, and the Alstom industrial turbine business. Our technology portfolio in this business sector is comprehensive, and 

we will invest over $600 million in research and development in the next fiscal year 

in technology enhancements that will improve both efficiency and overall performance. Siemens recognizes that clean coal does not have to be an oxymoron, because 

there are many technologies that can facilitate the safe environmental use of coal, 

both today, and into the future, as an integral part of a balanced energy supply 

portfolio. As part of our strategy, we have been working jointly with the Department 

of Energy on several key efficiency and CO2 capture technologies which will play 

a role in the continued use of coal. Areas of cooperative research include: 

• Development of hydrogen fueled gas turbines for gasification plants, possibly 

one approach for reducing the carbon footprint of power generation (FutureGen 

Alliance); 

• Ion Transport Membrane (ITM) for improved efficiency in gas separation.1 Efficient, low cost gas separation is a key enabling technology as part of a CO2 mitigation strategy; 

• Oxy-Fuel Turbine: This is a new turbine design that capitalizes on advances in 

gas separation and hydrogen turbine design, providing a unique pathway for 

CO2 separation, and ultimately, CO2 sequestration; 

• USC (ultra supercritical) steam turbine materials—developing better materials 

for more efficient, higher temperature and pressure steam turbines. 

The continued usage of coal will be an integral part of any solution in power generation in our lifetimes, because coal currently provides 50 percent of the United 

States’ generation needs. According to the Energy Information Agency, this usage 

will grow to almost 60 percent by 2030. Compare this demand trend to that for renewable energy, which, excluding hydropower, makes up a little more than 2 percent of capacity in the United States. For some of the world’s largest economies, coal 

represents the dominant domestic energy resource. Today, Siemens’ generating 

equipment provides over 25 percent of electricity worldwide, and we also provide 

services to our customers to maintain and upgrade their equipment. 

The United States’ fleet of 325,000 megawatts of coal-fired generating capacity 

was built over generations, and cannot be replaced quickly. Unlike commodities or 

consumer goods, power plants are massive in scale, take years to build, and require 

decades to recover their costs. Economics and regulatory requirements demand that 

we efficiently extract the most energy from this installed base. Currently, in the 

United States, the average age of a coal-fired power plant exceeds 40 years (and is 

increasing). 

SOX, Mercury, NOX and Particulate Matter 

Today with appropriate engineering design, we can routinely reduce criteria pollutants from these existing power plants by 90 percent compared to an uncontrolled 

power plant; for some pollutants 99 percent reduction is the norm. Modern air pollution control technologies that are readily available today, with no substantial investment in research and development, can reduce emissions of criteria pollutants from 

any coal-fired plant to levels that are projected to be achieved by integrated gasification combined cycle (IGCC) plants. The attached table in Appendix One compares 

the performance of retrofit air pollution controls to IGCC performance. Even though 

the performance is basically the same at this point, Siemens recognizes the need 

to invest in multiple technological pathways, and so Siemens not only provides the 

technology for the world’s highest efficiency supercritical steam power plants, along 

with total emissions controls, it also has gas turbines and gasification technology 

for IGCC plants (to be discussed later herein). 

Although substantial fossil fuel plant upgrades are available, in fact very little of 

the fleet has the emissions control that would be required for a new power plant. 

For example, while most units have particulate controls, about one-third of capacity 

has SO2 scrubbers, most have low-NOX burners, and only one-third of the capacity 

in the Eastern United States has advanced NOX controls.2 Our business in retroVerDate Nov 24 2008 12:54 Feb 14, 2013 Jkt 075679 PO 00000 Frm 00042 Fmt 6633 Sfmt 6621 S:\GPO\DOCS\78880.TXT JACKIE
39 

3 Approximately 500 million tons of CO2 reduction if the fossil fleet were to operate at 42.5 

percent efficiency. 

fitting SO2 air pollution controls to existing plants has recently boomed in the U.S., 

with many states regulating existing units under consent decrees. 

Today, all new plants will include either wet or dry flue gas desulphurization as 

required by the Clean Air Act Amendments. Trading in SO2 credits is an incentive 

for the implementation of new, high efficiency flue gas desulphurization (FGD) systems. FGD systems also efficiently recycle the sulfates extracted from the process 

streams. Over 90 percent of the sulfates extracted from FGDs are recycled for use 

as wallboard in the construction industry. The largest single-stage FGD system in 

the United States utilizes Siemens technology, and was installed at the Big Bend 

Plant near Tampa, Florida. 

In addition to sulfur, burning coal can generate a great deal of particulate matter, 

or dust. The technology of capturing dust has been available for decades as electrostatic precipitators—or bag houses—that have been widely applied in the power 

generation sector. According to the American Coal Ash Association, nearly 71 million tons of fly ash is collected today, with over 40 percent of this is recycled for 

uses in concrete products, cement, and agriculture. 

More recently, small particulate matter and aerosols less than 2.5 microns in size 

have been identified as serious health hazards, and therefore, to meet even tighter 

ambient air quality standards, there has been a renewed interest in improving the 

performance of these emission control devices. Siemens emissions control technology 

products include wet electrostatic precipitator (WESP) designs that can meet the 

most stringent requirements. WESPs and bag house filtration systems can yield 

greater than 99 percent particulate capture and achieve compliance with the most 

stringent air quality requirements. 

Mercury is a unique chemical element exhibiting no health benefits at any concentration (lead is another); mercury can damage the central nervous system, endocrine system, kidneys, and other organs. In the United States, mercury has been 

identified as a hazardous air pollutant to be regulated. Today, coal plants in the 

United States emit between 30 and 50 tons of mercury per year. Siemens provides 

technology to capture mercury, incorporating some of the same design features for 

particulate capture. 

NOX, which contributes to visible smog and is a respiratory health concern, is also 

emitted from automobiles and is one of the more challenging pollutants to control 

because it is formed from the nitrogen and oxygen in the atmosphere at high heat. 

Several technologies are now available for NOX control, including third- and fourthgeneration low NOX burners that minimize the creation of NOX, and selective catalytic reduction technologies, or multi-pollutant technologies, that convert NOX back 

to stable nitrogen and water vapor. Siemens offers new, advanced burner designs 

to reach 75 percent NOX reduction compared to uncontrolled emissions, and can provide advanced catalysts, or multi-pollutant technology, to reduce NOX by over 95 

percent. 

Carbon Dioxide and Other Greenhouse Gases 

Any fossil fuel used in any application will have CO2 emissions associated with 

the process. Because of CO2’s potential role in global warming, reducing or mitigating emissions is a central strategy for Siemens. Siemens offer the tools to manage all the emissions from power plants. And while emissions of CO2 are linked to 

climate change, other emissions including methane and particulates are also factors 

of concern for climate change. The technology to address emissions of criteria pollutants that impact climate change (NOX, CH4, particulates) are available as described 

above. 

Carbon dioxide, however, is radically different. None of the current capture technologies that are used for the priority pollutants can be directly applied to CO2 capture. The best way today to address the reduction of CO2 in the power generation 

fleet is the same as for automobiles, by essentially increasing the output of the fleet 

without increasing the fuel used. The current United States fossil fleet operates at 

approximately 33 percent efficiency (with the remainder of that energy lost as heat 

to the environment). If we could improve that fleet efficiency by even just 1 percentage point, we could reduce CO2 emissions by 50 million tons per year, with no loss 

in net generation. The most efficient coal plants today can reach well over 40 percent efficiency, and if the entire United States fleet were operating at that efficiency, nearly one-quarter of the CO2 emissions from power generation would be 

eliminated.3 Siemens offers advanced technology to improve the efficiency of any 

40 

power plant, thus indirectly reducing the CO2 generated for each unit of electricity 

produced. 

Integrated Gasification Combined Cycle (IGCC) 

As an alternative to the discussed technologies to capture emissions post-combustion, some of the next generation of clean coal power plants are proposing pre-combustion coal gasification to capture these same pollutants during the fuel processing 

steps. The most desirable part of the fuel is the energy content in the form of CO 

and hydrogen, which is extracted in gasification, leaving behind most of the pollutants. Siemens offers gasification for applications such as power generation (IGCC) 

as well as for production of synthetic fuels. 

Siemens has demonstrated 320,000 hours of gas turbine operation with gasification processes at scales ranging from 8 MW to over 300 MW. Our current product 

strategy is to provide a 630 MW IGCC plant here in the United States. To broaden 

its portfolio in this sector, Siemens recently acquired one of the longest demonstrated and commercially offered technologies for gasification for the production 

of petrochemical liquids or for conversion to synthetic natural gas, and for power 

generation applications. 

The DOE clean coal initiative has focused on pre-combustion capture of emissions, 

along with CO2 capture. The debate on pre-combustion versus post-combustion capture has now fully developed, with the industry planning demonstration projects for 

both technologies underway. One feature of gasification is that carbon can be effectively extracted from the concentrated high pressure gas stream leaving the gasifier, 

resulting in reduced energy losses and less adverse impact on the cost of electricity. 

Post-combustion capture operates similarly using solvents, like an amine, or ammonia, to capture the CO2 from the exhaust gases at much lower pressures, after they 

have had all the other pollutants removed. Neither of these processes has been commercially demonstrated on a full-scale power generation facility, however we are 

working to demonstrate this application on existing power plants. 

Nearly every scenario we have explored reveals that all CO2 recovery comes at 

a cost of energy, sometimes substantial amounts of energy. Increased research, 

along with demonstration projects are needed to find ways to reduce the energy intensity of CO2 capture and removal for both pre-combustion and post-combustion 

capture. Equally important, we must also resolve the issue of carbon storage, because if there is no long-term storage for the carbon, then CO2 capture and recovery 

is moot. We agree with the MIT study, The Future of Coal, that CO2 Capture and 

Storage (CCS) is ‘‘the critical enabling technology that would reduce CO2 emissions 

significantly while also allowing coal to meet the world’s pressing energy needs’’. As an Original Equipment Manufacturer (OEM), we are also aware that our customers and end-users are sometimes reluctant to upgrade or repair facilities to improve plant efficiency which may trigger new reviews. Output-based efficiency 

standards could be used as a tool to encourage upgrades and to improve environmental and output performance. Such an approach has been used for gas turbine 

emission regulations in the recent New Source Performance Standards updated in 

February 2005. 

To close, Siemens believes that there are currently many technologies to provide 

the Nation with cleaner coal power generation, and that what is needed is a meaningful commitment from the Government to encourage greater efficiencies. We urge 

increased support for research, development and deployment of more efficient enduse technologies, low or zero-emitting technologies, and cost effective carbon capture 

and storage technologies. We also urge support for incentives to encourage private 

sector risk taking for the development and deployment of these technologies. 

APPENDIX ONE

Comparison of Retrofit Projects and IGCC 

Parameter Units Recent AQCS IGCC 

SO2 % Removal 95–99 99 

SO2 Lb/MMBtu 0.03–0.18 0.03 

PM Lb/MMBtu 0.010–0.015 0.011 

PM10 Lb/MMBtu 0.015–0.03 0.011 

HCL Lb/MMBtu 0.00001–0.003 0.0006 

HCL % Removal 97–98 95 

HF Lb/MMBtu 0.00001–0.00026 N/A 

Mercury Lb/TBTu 0.28–2.2 0.56–0.74 

Lead Lb/TBTu 0.9–16.2 10.2 

41 

Senator KERRY. Thank you, Mr. Wilson, very, very much. I appreciate that. I want to follow up with you on some of the tech notions that you just put forward. 

But, before I do, let me try to get the big picture here a little bit 

if we can. I thought one of the most important points put forward, 

you’ve all talked about the technology that’s out there, we’ve got 

technology, but the big question is, how to sequester? Big question—how to capture carbon? And what we can do to do that rapidly. 

The date, 2020, rang a bell. This is an issue where you kind of 

can’t be half-pregnant. If you believe the scientists, I assume you 

all accept, you’re all accepting the science, or are you simply doing 

this because you see it coming? Let me just establish that as a 

front line. Do you accept the science on global climate change, Mr. 

Chaisson? 

Mr. CHAISSON. Yes. 

Senator KERRY. Mr. Denis? 

Mr. DENIS. Yes. 

Senator KERRY. Dr. McRae? 

Dr. MCRAE. Yes. 

Senator KERRY. Mr. Rencheck? 

Mr. RENCHECK. Yes. 

Mr. WILSON. Yes. 

Senator KERRY. OK. So, if you accept the science, and you have 

2,000-plus scientists from around the globe, including some of, 

what we consider to be our smart folks, from Jim Hansen and John 

Holdren, Ed Miles, Bob Correll, others, all coming together, and if 

those scientists are telling us, with alarm, that the indicators that 

they see are moving more rapidly, and with greater impact, species 

movement already showing up, millions of acres of forest with bug 

infestation that didn’t used to exist because they’d die, because of 

the cold, now they don’t. No ducks for hunting in South Carolina 

or Arkansas, because migratory patterns have changed—I mean, 

you run the list. All of the feedback is coming back faster, ice melting, et cetera, et cetera, et cetera. Question marks about oceans 

currents’ impact on climate, all of these things. 

So, here you are, you’ve got the science, and those same scientists are telling us, ‘‘You’ve got a 10-year window,’’ to get on the 

track where you’re able to get the 3.2 reduction you need going out 

to 2050, or if you don’t get 3.2 percent, you’re going to have to get 

a much higher percentage faster in out-years. 

To know whether or not we can capture or have capture online 

by 2020 or sometime seems unacceptable when measured against 

the 10-year window. Can you speak to that? Let me throw one 

other ingredient out there. Back when we negotiated the Clean Air 

Act in 1990, I was part of those negotiations and we were working 

to put the SO2, acid rain provisions in. The industry came in, and 

everybody said, ‘‘Oh, we can’t do this, it’s going to take us 10 years, 

it’s going to cost eight billion bucks, don’t make us do it, you’ll kill 

the industry.’’ The environmental community said, ‘‘No, no, no, it’s 

not going to take 8 years, it’s going to take 4 years, it’ll cost about 

$4 billion, and we must do it, we can afford it.’’ 

To the credit of George Herbert Walker Bush, Bill Reilly, and 

John Sununu, we did it. They bought the science, they said, ‘‘We 

42 

have to do it.’’ Guess what? It took half the time that the environmental community thought it would, and half the money. Why? Because nobody was capable of predicting what happens once you 

make the Federal commitment, once you create the standard, once 

you have moved all of these industries toward a now-existing marketplace. And nobody is able to predict the rapidity with which the 

technology then takes over and provides you with something. 

Aren’t we in that kind of situation here, folks? Where we’ve got 

to put up whatever we think it takes for those demonstration 

projects, for the tax credit, for the science, and guarantee we’re setting a goal, and we’ve got to get this done within 10 years. I’d like 

everybody to comment. 

Mr. CHAISSON. Certainly. I mean, I think that from our perspective, the issue here is, how do you transition from where we are 

today, to where you need to be in 2020? And I guess, our view 

would be that you need a suite of policies, no one policy will do it. 

On a national scale, requiring that all new coal plants have carbon capture and sequestration wherever they might be located, and 

having the knowledge to do nationwide geologic sequestration is 

probably something that’s going to take 10 years—perhaps 2018. 

There has been a lot of expert testimony presented in the Energy 

Committee or whatever, about the geologic demonstration projects. 

In the short-term, you have a lot of companies like BP and others, 

I’m sure several of the folks pursuing IGCC projects today would 

be perfectly happy to do carbon capture early, in carefully selected 

situations, with financial incentives to, to support the cost of doing 

that. Given the recent run-up in energy project costs, we’re going 

to need to see CO2 allowance prices somewhere in the $40 a ton 

range to actually offset the cost of adding carbon capture and storage, so the third piece we need is an effective carbon cap and trade 

system, but it’s going to take awhile for that to ramp up to $40. 

So, from our view, the complementary policies would be, first of 

all, financial incentives for the companies willing to move right 

now—and I think we’d find that many would be willing to move 

right now—that would cover the cost of carbon capture and storage 

between their plants starting up, and us eventually getting to, say, 

$40 a ton of CO2 with a cap and trade system. 

A second piece would be something along the lines of your proposed legislation, Senator Kerry—an absolute date by which all 

new coal plants will simply have to have carbon capture and storage—that puts people on notice today, their behavior will change 

based on that, and that will be a date certain, rather than a questionable date as to when, when we might reach $40 a ton. But behind all that, I think the foundation is, an effective carbon cap and 

trade system, which will eventually drive prices sufficient to offset 

any need for financial support. 

Senator KERRY. Anybody else? 

Mr. DENIS. Certainly, Senator. 

Certainly, like yourself, I wish we could have this tomorrow, and 

not 10 years from now. But, I believe that we do have to be realistic in the timeframe that it takes to develop—not only the technology, but to be able to establish the framework under which we 

can store the carbon that is going to be sequestered. 

43 

I have to observe that, really, the focus really should be on the 

development of technology—whether it’s 1 year, 2 years, 10 years 

or twelve years. You know, yesterday, the DOE even said it was 

2045, which I believe it’s a date that’s unacceptable to everybody. 

Nevertheless, the development of technology really needs to move 

forward. And the reason I say—— 

Senator KERRY. What if we can’t capture it? What if we can’t 

store it? What if you can’t find a sufficient storage capacity, it 

leaks, or it’s just too costly or geologically problematic? 

Mr. DENIS. That is problematical, and that is a quandary that we 

have. However, I do believe that current research has it that there 

can be found some geological structures where the carbon, the CO2

can be stored. 

It is not in all parts of the country. There are some parts of the 

country that are unsuitable for this, so we need to talk about infrastructure that may be needed to transport such CO2 to those areas 

that are geologically safe. 

Senator KERRY. Obviously we can’t store it in some places, because we’re using it now to push fuel. We actually tap into naturally produced CO2 in order to improve our capture of oil out of old 

wells and things, so I assume, I don’t know what the amount is, 

but I know there’s a sufficient capacity. 

Mr. DENIS. And we have to deal with the liability loss associated 

with such capture, and Congress needs to address that, also. 

But, one of the reasons I say we really need to address the technology is, because the focus, and our discussion centers around 

coal. But we really can’t overlook the fact that a modern gas plant 

produces 50 percent of the carbon dioxide that a coal plant does. 

So, the problem is wider than just coal, the problem is carbon dioxide. So, the technology that gets developed for coal, hopefully is 

some technology that’s also applicable to some of the gas generation that exists, because even if we replace all the coal units with, 

or do away with coal units, and have just gas units, we will still 

have half of the problem, and that half of the problem is still a 

large problem. 

Senator KERRY. Senator Boxer’s asked for some time, and I have 

no problem with that, I can come back. 

Senator BOXER. I don’t have to leave until eleven. 

Senator KERRY. No, that’s OK, I’ll let you do it now, and I’ll come 

back afterwards and follow up, make sure we do. 

So, Senator Boxer? 

Senator BOXER. Mr. Chairman, thank you so much, I wish I 

could stay all morning, but I have another Committee I need to go 

to. 

Again, Senator Kerry, thank you for doing this. 

I don’t know if you share my view, but Mr. Denis, you said that 

you don’t believe we’ll have the ability to capture and sequester 

carbon till at least 2020, that was your initial—— 

Mr. DENIS. That, we will have the viable commercial means to 

do so in a large scale. 

Senator BOXER. OK, but you said at least 2020. 

Mr. DENIS. Yes, ma’am. 

Senator BOXER. Now, I just have to say to my Chairman, that’s 

3 years after scientists tell us we’ve reached a tipping point. So, 

44 

just speaking for myself, I can’t speak for anybody else, we need 

a better attitude about this. It’s just not realistic. I mean, really. 

And I don’t, in any way want to minimize what we’re facing. 

We’ve done a lot in this country when we’ve put our mind to it. I 

want to see what it is you think we can do as policymakers to help. 

And, I guess I’ll ask Mr. Wilson, since he’s out there now, already, putting out some technologies that are helpful. Do you think 

we need a Manhattan-like Project? To do more model projects, to 

help us find the way here? Because I don’t see how we wait until 

at least—at least—2020. 

Mr. WILSON. Clearly, a more intensive effort would be highly valuable in terms of demonstrating these technologies at the commercial scale. 

Here is the challenge we face. All of these plants, are basically 

massive in scale; they take years to build and years to prove out 

their operational efficiency and their performance. At the same 

time, these facilities must demonstrate economic viability within 

the regulatory climates, (i.e., a guaranteed rate of return), along 

with all of the other elements associated with business investments. Without significant Federal guarantees, in many cases, 

these projects will not move ahead. If you’re talking about a Manhattan-type Project, then we have to have a Manhattan-type 

Project, not a business as usual scenario which is how most of 

these plants have to operate today. 

Senator BOXER. Would you support a Manhattan-like Project in 

this area? 

Mr. WILSON. Of course, we would support—I mean, we’re a technology provider, and we will provide to any, any need that was 

identified in terms of what our customers want. 

Senator BOXER. Mr. Rencheck, you were a bit more optimistic 

than Mr. Denis, I think, trying to find some out here, because in 

your statement you said, ‘‘Over the last 100 years, AEP has been 

an industry leader in developing and deploying new projects.’’ You 

said that you have a Memorandum of Understanding for post-carbon capture using Alstom’s chilled ammonia system, it will be installed at your 1,300 megawatt plant in New Haven, West Virginia 

as a ‘‘commercial performance verification project in mid- to late2008, it will capture up to 100,000 metric tons of carbon dioxide.’’ 

Once the CO2 is captured, you’ll store it. So, you hope to do that 

by 2008. 

Mr. RENCHECK. Yes, ma’am. 

Senator BOXER. So, are you a little bit more optimistic than is 

Mr. Denis on future of the sequestration issue? 

Mr. RENCHECK. We believe technology is the answer, and AEP is 

pushing technology on several fronts, we talk about an IGCC plant 

being constructed, new, more efficient coal plants, being the ultra 

supercritical coal plant, the oxy-coal plant for combustion, and we 

also are looking at back-end retrofit technologies, like carbon capture and sequestration using the chilled ammonia process. 

Senator BOXER. So, are you more optimistic than is Mr. Denis, 

that we could solve this before 2020? He said at least, at the earliest 2020. 

Mr. RENCHECK. We are working to solve it very quickly. 

Senator BOXER. Good, good. 

45 

Mr. RENCHECK. Technology will evolve, and in R&D efforts, 

sometimes you take a few steps forward, and it stalls, and you 

have to take a few steps back. So, we are working to make that 

reality at AEP—— 

Senator BOXER. Could you use more incentives? 

Mr. RENCHECK. We definitely need incentives from the Government. We could use additional investments up to $1 billion a year 

in the R&D program for DOE. We could use investments in areas 

for understanding geological sequestration. 

At our Mountaineer Facility, for example, in 2004, we have 

drilled a well, a 9,200-foot well, where we have studied the geological structure underneath the plant, looking for saline aquifers that 

could store carbon. We’ve done that with the DOE and Battelle, 

and we believe we’ve identified porosity of the geological structure 

that would enable carbon capture to take place there. We want to 

test that out with these projects. We’re going to need help, we’re 

going to need additional funding to study that. 

Senator BOXER. Well, I appreciate your work, your attitude, it’s 

very helpful. I have one last question if I might? 

Senator KERRY. Yes, absolutely. 

Senator BOXER. And then I’ll leave. 

Mr. Wilson, you say that you are working every day, your company is, to get cleaner coal going, and you have success. I’m trying 

to understand where we are right now, with the technologies you’re 

using. So, you say you have cleaner coal, does this mean, you’re not 

only dealing with carbon, but NOX, SOX and mercury, as well? 

Mr. WILSON. We’re dealing predominantly with NOX, SOX and 

mercury, because we—all of the technologies we have, basically, 

are capture technologies, filtration technologies, which are able to 

clean all of the pollutants out of the exhaust stream to where you’d 

have—you basically have no, negligible pollutants left. 

Senator BOXER. OK. 

Mr. WILSON. With respect to CO2, the only real option available 

is to improve the overall efficiency of the plant so that it uses less 

fuel, therefore produces less kilowatts per unit output. The capture 

and sequestration objective is clearly the issue that the whole 

panel was talking about—— 

Senator BOXER. OK. 

Mr. WILSON.—which does need additional work, and a lot of additional work, to get—— 

Senator BOXER. So, you’re not doing any of the work of carbon 

capture? 

Mr. WILSON. Not predominantly, not yet. 

Senator BOXER. So, you’re doing cleanup of NOX, SOX and mercury, and not to minimize that, that’s absolutely crucial under the 

Clean Air Act, and it’s important to our families, but—— 

Mr. Chairman, I think what you’ve identified today is really critical, here. And I think this panel is so interesting, because you 

really do have, I believe, different attitudes on how we can move 

forward. 

I hope we can get bipartisan support to really move forward on 

this. Because, without solving this problem, it’s going to create obstacles for us. I’ve learned a lot, and I thank you so much for your 

46 

leadership, and I’m sure we will be doing more of this together. 

Thank you. 

Senator KERRY. We will, indeed, thank you very, very much. 

I’ll let the others ask some questions, and then I’ll come back 

afterwards. Who was next? I think, yes, Senator Dorgan? 

STATEMENT OF HON. BYRON L. DORGAN, 

U.S. SENATOR FROM NORTH DAKOTA 

Senator DORGAN. Mr. Chairman, thank you very much. 

We have, in my State, lignite coal, something around 800 years 

worth of lignite coal reserves, and my guess is that we are going 

to continue to use coal—the question isn’t whether, I mean, I don’t 

think we have much choice—but the question is how do we use it, 

and do we use it in a way—especially combined with new technology, to make it much, much less difficult for our environment. 

In, I would say to the Chairman, we have—I believe—the only 

coal gasification plant in the country, in North Dakota, it produces 

synthetic natural gas from lignite coal. And the production of synthetic natural gas from lignite coal is a—it’s using old technology, 

the plant was built about 25 years ago, but it’s an unbelievable 

plant, very productive, and we take CO2 from that plant, put it in 

a pipe in the world’s—I believe—the world’s largest application of 

CO2 sequestration. We put it in a pipe, and move it to the oil fields 

of Alberta, Canada, invest it in the ground, to make more productive marginal oil wells in Canada. So, you have beneficial use of 

CO2, even as you sequester. 

Now, that obviously is not a solution for all of that which we 

have to deal with, but it’s a demonstration that there are some 

things you can do that make some sense. 

I’d just like to ask a couple of questions, because I—I think we’re 

going to use coal. The question is, can we—in a robust way—invest 

in technology to get to the point where we have zero emissions 

coal-fired electric generating plants? Do we do it by capturing and 

storing CO2? Or do we do it by, hopefully, with some technology 

that is an avoidance technology, with the production of CO2? I don’t 

know what the technology will give us. 

But, here’s the situation, what I want to ask you about. The 

President and the Administration says, ‘‘Let’s go with FutureGen,’’ 

big old project, really a big project. In fact, in Fiscal Year 2008, the 

Fossil Energy and Coal Request is $426 million, by the President, 

that’s a $1 million increased over the previous year. So, essentially, 

flat funding for fossil energy and coal—which is mostly research. 

And flat funding for that at a time—it seems to me—when we 

ought to be saying, ‘‘Wait a second, we can’t hardly run fast enough 

to catch up to this, we need to be really aggressive.’’ Flat funding 

for that, and then we have $108 million for FutureGen, which is 

20—fully 25 percent of that which we’re going to put into fossil energy and coal research. 

So, tell me your thoughts on that, is that what we ought to be 

doing? Or, is that kind of a slow motion approach to finding our 

top speed, using technology to address these questions? 

Yes, sir? 

Mr. CHAISSON. Senator, a couple of responses. First all, on the 

DOE program funding, I think the MIT report does a pretty good 

47 

job of reviewing that, and I think—for all practical purposes— 

they’re talking about something like $1 billion a year being, sort 

of minimum. And I think both Professors Deutsch and Moniz testified, or have stated that, when they both have been at DOE, running those programs, you know, many years ago, at least Professor 

Deutsch, in those-year dollars, the program was actually larger 

than that. So, it’s just sort of getting it back to what it used to be. 

I think, in addition, as far as near-term carbon capture, whether 

it be in North Dakota, or Indiana, we’re going to—it costs two and 

a half cents a kilowatt hour to add carbon capture to a plant today. 

And, as I said, you’re going to have to get to $40 a ton of CO2 before you offset that. I think there are a lot of companies—not every 

company—but there are many companies that would do this today, 

if there was some way to bridge that financial gap between having 

to add two and a half cents cost today with no ability to offset those 

costs, and some future point in time where that would be offset, because of the CO2 benefits. 

Senator DORGAN. But, the implication of your answer is that the 

technology is there, it’s just a matter of cost. I don’t think that’s 

the case. I mean, it’s true, we can capture in certain areas, but capture and storage—it seems to me—requires much, much, much 

more technology. And, the pursuit of that technology is going to require substantially new investment. And, it looks to me like the 

President’s budget is, perhaps, less than half of what is necessary, 

with no increase from the previous year, which suggests that this 

is not a priority. I think it’s a huge priority. 

Others? Yes, sir, Mr. Rencheck? 

Mr. RENCHECK. We need additional support in funding, I recommend approximately a billion dollar a year, consistent with the 

MIT folks. And, we also support FutureGen, and we think it’s important for the further development of the IGCC technology. We 

are working now, off of a platform technology to go commercial that 

was developed in the early eighties, to mid-nineties, we’ll take that 

to a commercial scale with today’s present technology and prove it 

in operation, but then FutureGen takes it to the next step, where 

it will, truly, involve the invention of new technology, such as a hydrogen combustion turbine that will truly enable them to generate 

electricity, separate out CO2, and capture. 

We also need monies to study the geologies. As you know, different areas of the country have different formations, and at times, 

the formations aren’t consistent within a region. So, we have to 

drill more holes, understand more about the geology, and start injection projects in those areas, so we can understand how CO2 will 

behave in those rock formations. 

Senator DORGAN. Are any of you bullish on where we’re headed 

here? Are you bullish on technology? 

Mr. WILSON. Yes. 

Senator DORGAN. OK. 

Mr. WILSON. Yes, I’m bullish on technology and I—— 

Senator DORGAN. Give me some encouragement, would you, Mr. 

Wilson? 

Mr. WILSON. Yes, the point I just wanted to make is we’ve always been an advocate of higher funding, essentially, on the development programs, we’re a participant in virtually every DOE proVerDate Nov 24 2008 12:54 Feb 14, 2013 Jkt 075679 PO 00000 Frm 00051 Fmt 6633 Sfmt 6601 S:\GPO\DOCS\78880.TXT JACKIE
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gram that comes out. And we provide our expertise, essentially, 

into these programs. And we are very bullish that, if we want to 

accomplish a greater goal, we certainly think we can. 

It’s the political will that has to be behind it in order for funding, 

and also for the demonstration project that my compatriots all talk 

about. Is that their significant projects have to be demonstrated, in 

order for them to be commercially viable, and adopted wholesale. 

So that, we believe, yes, indeed, I’m bullish, that the technology 

is there. The question is, it has to be brought to the scale that utility plants operate at. 

Senator DORGAN. And I’m not suggesting, by the way—just to 

finish this thought—I’m not suggesting that the demonstration 

through FutureGen of IGCC is irrelevant, it is not. I’m not suggesting it’s not valuable, it is. What I am saying is that, even as 

we do this, and claim a significantly larger part of our budget, and 

our appropriations for FutureGen, we’re not seeing the ramp up of 

a country that says there’s an urgent need to deal with coal research, and the research on carbon capture, so that we open up and 

unlock the opportunities to be able to continue to use our coal. 

That’s my, that’s my problem with this. 

And so I, let me thank Senator Kerry, for leadership in this area. 

I think all of us—Senator Thune, myself, and others—all of us 

have to figure out that this is urgent. I mean, this isn’t something, 

this isn’t like every other problem. 

If we’re going to be able to continue to use these resources in the 

future, given the intersection we’ve now come to with respect to energy and climate change, if we’re going to continue to use these resources, we had better figure out that these minds of ours—the fertile minds of, that exist here in this country that have unlocked a 

lot of mysteries through scientific inquiry and research, we can do 

the same with technology in coal development. 

But it requires significant investment. And it is not coming in 

this budget. So, we have to be attentive—that’s why I think this 

hearing is very important. 

I appreciate—I interrupted you, Mr. Chaisson, I’m sorry for interrupting you—— 

Mr. CHAISSON. That’s fine. 

Senator DORGAN.—but let me thank the Chairman for the time, 

and I thank all of the witnesses for your presentations. I was 

chairing another hearing so I, but I had read your presentations, 

and I appreciate your contributions. 

Senator KERRY. Senator Dorgan, thank you very much. Couldn’t, 

couldn’t agree with you more. Part of the purpose of this hearing 

and the others we’re holding is to raise the level of urgency about 

this. 

And, as I said, you can’t be half-pregnant on this thing. Either 

you accept the science, and then you’ve got to, if you’re accepting 

the science for valid reasons, to act on it. And, we’re not. So, we 

have a huge challenge. 

Let me establish something quickly before I turn to Senator 

Thune. 

Senator Dorgan spoke about the capture of CO2 that’s taking 

place now, and the piping that takes on, and I had mentioned earVerDate Nov 24 2008 12:54 Feb 14, 2013 Jkt 075679 PO 00000 Frm 00052 Fmt 6633 Sfmt 6601 S:\GPO\DOCS\78880.TXT JACKIE
49 

lier, we’re able to pipe CO2 naturally out of the Earth, and we’re 

using it also for enhanced oil recovery, I guess it’s called. 

What’s the restraint here, on the capture? You keep saying, 

‘‘Well, we’re going to have to develop the ability to be able to capture out of the IGCC,’’ can you share with us, what do we get out 

of IGCC, what’s left to get, and why can’t we get that other piece 

yet? 

Mr. Rencheck, go ahead. 

Mr. RENCHECK. Yes, on an IGCC plant, the fundamentals of the 

way it works with the flue gas stream, when you shift the gas reaction into hydrogen and CO2, you now have to combust the hydrogen. That CO2 adds mass flow into the gas turbine, so it’s like adding horsepower into a car engine—when you remove that, you generate much less electricity, and then you have to supply energy for 

the compression, to either put it into a pipeline, or to sequester. 

We need to evolve that integration and those systems, so that the 

electricity amount produced is contained and maintained, and not 

degraded. 

Senator KERRY. But that’s the challenge, but not the actual capture of the carbon itself? 

Mr. RENCHECK. On IGCC, it is ahead of pulverized coal units in 

that area. If you looked at the two technologies, PC combustion is 

further advanced than IGCC, there’s a lot to learn. In the capture 

piece, I would put IGCC ahead than pulverized coal, but the technology race is on for the two to see which one will ultimately be 

the winner. And, we believe that both, both have a place, and both 

have a role. 

Senator KERRY. But the key is not to degrade the power that you 

get out of it in the process? 

Mr. RENCHECK. That’s correct. 

Senator KERRY. OK. 

Mr. RENCHECK. You can see power prices as an example, using 

today’s state-of-the-art technology—— 

Senator KERRY. Because if you degrade it, then you’ve got to replace it. And then the question is cost for what you’re providing. 

Mr. RENCHECK. Fifty dollars a megawatt would go to $113 a 

megawatt, is an example on a pulverized coal unit—— 

Senator KERRY. I understand. 

Mr. RENCHECK.—in that range. 

Senator KERRY. What about on the sequestration, if you could 

all, somebody else raised their hand, but you wanted to add something? 

Dr. MCRAE. Just on the issue of technology, just to follow up on 

the comments that were made by Senator Dorgan—coming from 

MIT, I’m clearly very bullish on technology. 

One of the key themes in the MIT Coal Study is a sense of urgency, to really move very, very quickly. And, I think our time 

scales are somewhat shorter, to get the information that you need 

to solve this problem. 

I think that the discussion about capture, sequestration illustrates how people have thought about it in the past. We have to 

think about it as a system—all the way from the beginning of mining the coal, all the way through to the sequestration. 

50 

If you think about how we’ve dealt with conventional pollutants, 

like sulfur oxides, and nitrogen oxides, we took, basically, conventional combustion processes, and then added to them control technologies to remove those pollutants. If you, sort of, think about the 

CO2 capture problem in a slightly different way, there are some 

very, very interesting technologies coming along that could potentially cut the cost of both the capture—but without compromising 

the thermal efficiency of the plant. 

For example, if you burnt the coal at pressure, with oxygen, 

you—it’s much easier to take the carbon dioxide out of the gas 

stream, and you’ve already got a compressed gas stream which is 

partially ready for injection into the reservoir. And so our view is 

that, while FutureGen is focused on IGCC, it should not be to the 

exclusion of very different ways of thinking about the problem. 

I mean, I’m very optimistic about the opportunities—you know, 

a lot of the technologies that we’ve been talking about are 50 years 

old. There’s not a lot of investment that has been built into how 

to capture CO2 out of a gas stream. I mean, we’re still using technology that’s 50 years old. The problem is to turn it around—what 

molecule should you have to design to take the CO2 out of the gas 

stream? You know, pose it that way. 

So, our view is that if you step back a little bit from the problem, 

think of it as a systems perspective, it opens up a whole bunch of 

different ways of thinking about the problem. 

So, I think—two points. One, is that I think we have technology 

to deal with the problem today, at cost. I think there are lots of 

opportunities for dramatically lowering those costs, costs over time. 

The other issue is the issue of scale. In the United States, there’s 

very little activity that addresses this problem at scale. To be able 

to monitor it, to make sure that it actually stays in the ground—— 

Senator KERRY. That’s the 10 demo projects, so to speak, that 

we—— 

Dr. MCRAE. Most of the interesting work that’s going on is out 

of—outside of the United States. All of the big sequestration experiments are being done in Algeria, they’re being done in the 

North Sea, they’re being done in Canada, and I just had a workshop over the last couple of days at MIT, where we brought together all of the people that are doing the sequestration experiments from around the world, and one of the key themes that kept 

coming up over, and over, and over again, was the need to do these 

at scale, and the need to develop a monitoring program so that you 

could assure the public that the stuff is going to stay in the ground, 

where you put it. 

Senator KERRY. Great. 

Dr. MCRAE. And our view is that you can do that in less than 

10 years. 

Senator KERRY. Well, I’m going to come back to this, because I 

want to pursue it, I just don’t want to cut in on Senator Thune, 

so let me go to Senator Thune, and then we’ll come back. 

STATEMENT OF HON. JOHN THUNE, 

U.S. SENATOR FROM SOUTH DAKOTA 

Senator THUNE. Thank you, Mr. Chairman. I want to express my 

appreciation for you holding this hearing on what is a very imporVerDate Nov 24 2008 12:54 Feb 14, 2013 Jkt 075679 PO 00000 Frm 00054 Fmt 6633 Sfmt 6601 S:\GPO\DOCS\78880.TXT JACKIE
51 

tant topic, clean coal technologies, and the important role that coal 

can play in securing our energy independence. And, as I know everybody on this Committee is probably aware, that we have an 

abundant supply of coal, in fact, coal-fired plants supply 22 percent 

of our U.S. energy demand, and over 50 percent of the energy used 

by the electric power sector. And, it is projected the U.S. has a 250- 

year domestic supply of coal. 

As the witnesses have testified, I think we are on the horizon of 

an exciting new generation of coal power, IGCC, and other advanced clean coal technologies are very much in their infancy 

stages, but considering the potential for carbon capture and sequestration, coal could provide a clean and reliable source of energy for 

generations to come. 

So, I too, appreciate the testimony that we’ve heard this morning, and your thoughts about where this is headed, and I am interested in knowing, as well, what we can do to facilitate the things 

that will get us to where we need to be, sooner rather than later. 

And I think the next step is to continue investing in these technologies, so that IGCC can be implemented on a wide-scale, and 

that’s going to require significant investment, research and development. So, we welcome your input and suggestions about how to 

do that and what we ought to be doing here to support the efforts 

that are underway. 

Let me, if I could, pose a couple of quick questions. 

Mr. Denis, in your testimony, you state that Sierra Pacific’s Ely 

Energy Center, which is a four-unit coal-powered complex, totaling 

2,500 megawatts in eastern Nevada, will pave the way for additional renewable energy sources in eastern Nevada. I’d be interested to know what is the relationship between coal facilities and 

future development of renewable energy projects, such as wind 

power? And how much of the new transmission capacity could be 

available for other types of energy, and energy generation, such as 

wind? 

Mr. DENIS. Certainly. Certainly, Senator. 

The relationship between the Ely Energy Center and the additional development of renewables is, the Center is being built in a 

very sparsely populated portion of our State. Essentially, there are 

no transmission facilities, there are no wires, but yet, there’s a lot 

of wind. So, you can put up all the windmills you want, but there’s 

nowhere for the electricity to go. 

This $600 million transmission line is just economically 

unfeasible to build just for several hundred megawatts of wind and 

resources that exist in the area. We’ve identified up to about 500 

megawatts of proposals from wind farms that are in the area that 

could develop, and could use this transmission line, then, to get the 

power to the market, primarily to the Las Vegas region. This is 250 

miles north of Las Vegas, is where this plant is. 

So, without the ability of the Ely Energy Center being there, and 

economically justifying the construction of this facility, we basically 

have some locked-in geotherm—wind resources. 

In addition, the northern part of the state of Nevada, as it’s closer to California, is really blessed with geothermal resources. We’re 

the leaders in geothermal production. Yet, there’s going to be more 

geothermal energy than there are people to consume the electricity. 

52 

We need to get that electricity to the South, where the big load centers are. 

So, we have now, a combination where we have a marriage 

where this coal unit is a catalyst to provide for additional, and fostering additional development of renewable energy. So, that’s the 

nexus that exists between the two. 

Senator THUNE. Well, we’ve got the same problem in South Dakota, a lot of wide-open space, a lot of wind—in fact, I saw a study 

the other day that South Dakota could provide 52 percent of the 

entire electrical demand in this country, just from the wind we generate in our State alone. But, we have the same problem—we’re 

not close to population centers, and transmission is prohibitively 

expensive. 

And, so, I was interested in what you’re doing there, in 

leveraging with an investment in another facility, but being able to 

use that capacity for renewables. We also have a lot of wide-open 

space, and, wind turbines. Things that in some parts of the country, people don’t want to have in their back yard, are things that 

my state would welcome. 

South Dakota, obviously, is close to Western sub-bituminous coal 

from Wyoming and Montana—you mentioned how it’s more economical to use Eastern bituminous coal—do you know of any research that’s taking place in either the public or private sector, 

working to make Western sub-bituminous coal more economical for 

IGCC? And in your view, would such research warrant a Federal 

investment? 

Mr. DENIS. Well the—the issue of sub-bituminous coal, the studies that have been performed, particularly by Electric Power Research Institute is that when you add the carbon—the estimated 

costs of the carbon capture systems, and you’re talking about IGCC 

with Western Powder River Basin coal, sub-bituminous coal, that 

the economics are that it is less costly to add the carbon capture 

to a supercritical coal unit. 

The answer here, I think, the takeaway from that—in other 

words, IGCC is more costly with Western coals, with carbon capture than it is on Eastern bituminous coal without—with carbon 

capture, relative to a supercritical coal. 

I think the takeaway from this is that there is no silver bullet 

with regards to what is the answer to the CO2. We really must be 

investing in multiple initiatives—not just in FutureGen, and not 

just in the experiment that we are conducting with EPRI at Wisconsin Energy, WE Energies, or the answer that AEP has for their 

Ohio plant—we really must be looking, rather than placing the bet 

on just a single technology, we must be looking across a series of 

technologies at present, so that we’re not disappointed in the future 

that we picked the wrong technology going forward. 

Senator THUNE. Well—— 

Mr. DENIS. I’m not sure if I answered your question, but—— 

Senator THUNE. I think you did, I was just, specifically homing 

in on Eastern sub-bituminous, versus Western. 

Mr. Chaisson? 

Mr. CHAISSON. Senator Thune, I guess I’d like to sort of add a 

slightly different perspective. The EPRI work has been based solely 

53 

on the Shell gasifier, which is the sort of, best gasifier for lowranked coals, of sort of the traditional gasifiers. 

There are two new gasifiers that are probably going to be excellent for low-ranked coals, the new Siemens gasifier, and 

Mitsubishi’s gasifier, which simply are too new to have been incorporated in these studies. And, I know NRG—a large independent 

power developer that’s very active in Texas—is been very bullish 

on using the Mitsubishi gasifier on Texas lignite coals. 

So, I think the availability of gasification for low-ranked coals is 

probably a more complicated picture than has been presented by 

some of these earlier studies. 

Senator THUNE. OK. 

Mr. RENCHECK. I would concur. The issue with the Western coal 

being less efficient is with the moisture in the coal. In the gasifier, 

you’re required to dry the coal before you can partially combust it 

within the gasifier. That drying takes energy, which makes it less 

efficient than a pulverized coal plant. 

Those processes, for example, we’ve signed a Memorandum of Cooperation with Siemens to help develop that technology, but those 

processes need funding for development, and with the proper funding, would advance over time. 

Senator THUNE. I, yes, Mr. Denis? 

Mr. DENIS. Just to add to my prior statement that there’s no silver bullet, and we really must look at a menu of technologies to 

prove out which one works best—in the sense that there’s no onesize-fits-all, there should not be a one-size-fits-all attitude. 

Also, the—in my opening statements, one of the issues that we 

have in the West is also the altitude. Our Ely site is at 6,200 feet 

of altitude, and yet, there is to be proven whether some of the technologies, in particular, IGCC, how they perform at those higher levels where the air is less dense. 

That’s not to say it’s not a good technology, in fact our company 

was one of the few companies that participated in the DOE Clean 

Coal Program of the 1990s, we built an IGCC. It never worked. It 

sits idle, and it was abandoned, ultimately. 

Senator KERRY. Who built it? 

Mr. DENIS. It was a combination, I believe, it was a Kellog gasifier—— 

Senator KERRY. When was it built? 

Mr. DENIS. I’m sorry? 

Senator KERRY. When was it built? 

Mr. DENIS. It was built, it was started in—the negotiations with 

DOE started in 1991, it started construction in 1995, was completed in 2001. 

Senator KERRY. And why did it not work? 

Mr. DENIS. It was first of a kind technology. We were experimenting—this was when DOE and their Clean Coal Program of the 

1990s was experimenting with different IGCCs to determine which 

technologies worked. We eventually abandoned the facility, it sits 

outside of Reno, idle. The consumers of the State and the Federal 

taxpayers lost $335 million on that. 

But, it taught us some important lessons in the need to move forward—— 

54 

Senator KERRY. Is it not retrofit? Is it not retrofittable to the 

technology that General Electric or Siemens, or others have developed? 

Mr. DENIS. No, it’s not. It’d be more—it’d be less costly to, probably, start from scratch than to try and modify what is there. 

Senator THUNE. Well, I thank you—those aren’t exactly the answers I wanted to hear, Mr. Chairman, but I appreciate them, 

nonetheless. So, thank you for your input. 

Senator KERRY. Well, don’t go away for a minute, because I want 

to explore something that may be of interest to you. 

The difficulty that Senator Thune mentioned with respect to the 

wind power that could be produced is the transmission. And, I 

know that, there’s an issue always about the length, the distance 

from the wind turbine to the grid, but I assume transformers can 

have a profound impact on that, correct? If you can come into— 

sorry, go ahead, Mr. Rencheck? 

Mr. RENCHECK. It’s, it really is the voltage level of the transmission lines. AEP is proposing across our system, and in other 

places, to construct a 765 kV line, 765 kilovolt that would be able 

to transport power more efficiently. 

Part of the discussion around CO2 is also the efficiency of energy 

transmission. Those high-voltage lines are very difficult to get permitted, as we all know. In West Virginia, we permitted an extension that took us upwards of what, 12 years? 

Mr. KAVANAGH. Sixteen. 

Mr. RENCHECK. Sixteen years to get permitted. So, that can have 

a very, very large effect on being able to move power across the 

Country. 

Senator KERRY. We obviously don’t have 16 years to fool around 

with, here. But, that’s why I think we ought to consider thinking 

out of the box a little bit, and thinking, as you’ve said, sort of systemically, and differently. 

But, with respect to that, you know, the 1930s, when electricity 

first came around, Roosevelt decided that it was important to get 

this out to the whole Country. And so, the Government invested in 

making certain that within a certain period of time, every home 

was going to be wired. Now, I don’t think this is unlike that. 

If South Dakota has the ability to be able to provide 52 percent 

of the electricity, and we’re looking at this emissions challenge we 

have over these next years, what is the value of our investing in 

that line, and providing an ability for them to do it, and you joint 

venture this with the urgency that we have to provide that. 

Mr. DENIS. Ultimately, it boils down to the cost of electricity. If 

you look at the cost of that investment, plus the cost of the electricity produced by the wind—— 

Senator KERRY. But, I’m not talking about this being private sector-driven, I’m talking about the Federal Government investing as 

we did in the TVA, and otherwise, in order to provide the connection, and help make this happen at a cost that then doesn’t kill the 

consumer, and makes a return on investment viable. Until you get 

going, until you get up and running and you’ve pushed these other 

technologies. Is that viable? 

Mr. WILSON. Siemens provides transmission and distribution 

products and services; essentially, this is one of our major busiVerDate Nov 24 2008 12:54 Feb 14, 2013 Jkt 075679 PO 00000 Frm 00058 Fmt 6633 Sfmt 6601 S:\GPO\DOCS\78880.TXT JACKIE
55 

nesses, both in the U.S. and globally. And, your point is well-taken; 

the U.S. is not a highly well-interconnected system compared to 

Europe or other highly interconnected systems. 

There’s a great deal of value that could be gained by increasing 

the transmission and distribution capacities of the U.S., to basically balance the loads. This would enable us to make use of the 

best most efficient plants and decrease the emissions. It also would 

provide improved access for and wider distribution of, of our renewable sources. This is another of the key challenges that we’re going 

to face. 

Senator KERRY. Mr. Rencheck? 

Mr. RENCHECK. Yes, the 765 kV line is just that—it will open up 

a highway for electric transmission. And you will find private industry willing to invest in that, as well, with Government funding, 

it could be expanded. The point will be in the permitting process. 

If we wanted to expand those lines, we couldn’t wait 16 years to 

address that. 

Senator KERRY. I agree. We have to have an expedited process, 

we’ve got to put on in place. We’ve got to behave like this is urgent. 

It is urgent, so we’ve got to behave that way. And I think we’ve 

got to take a look at these kinds of options. 

I’d be happy to work with you, Senator Thune, to see if there’s 

some way to go at that. 

Dr. MCRAE. Senator? 

Senator KERRY. Yes. 

Dr. MCRAE. The issue about the infrastructure, which is, you’re 

touching on with power lines, is very, very important, it’s an often 

critically missing part of the debate. I mean, we’re dealing with, 

not just with transmission lines, for moving electricity, we’re also 

beginning to be looking at—— 

Senator KERRY. We’re going to have to move carbon dioxide. 

Dr. MCRAE.—carbon dioxide, and getting the regulatory structures in place—— 

Senator KERRY. Right. 

Dr. MCRAE.—to be able to do that, I think, is very crucial. 

Senator KERRY. I completely agree with you, I understand that. 

If that’s the avenue we go down. Now, you know, if we push the R&D, in 2004, I talked about putting $2 billion up front on the 

table immediately for clean coal technology R&D. Because, I think 

the minute you start to push this, who knows whether you guys 

are going to come up with some other technology, or someone at 

MIT, or Cal Tech, or Carnegie Mellon or somewhere, is going to sit 

there and say, ‘‘Hey, there may be a better way to do this.’’ Once 

the marketplace is beckoning, I’ll bet you there are 10 new Googles 

out there, waiting to be created—— 

Yes, go ahead. 

Dr. MCRAE. Perhaps a small anecdote might illustrate this point. 

I teach the Senior Design Course in Chemical Engineering at MIT, 

and this semester we had 72 students who were interested in how 

to burn coal in a clean way. We broke the class up into 18 teams 

of four students, and each team was assigned a different piece of 

the problem. And this is the first time in my whole academic career, that after the class finished, teams of students have come 

back to me and said, ‘‘We want to continue to working on this 

56 

project, because we’ve got this neat new idea for how to capture 

CO2,’’ or a neat new idea to think about how to build a fertilizer 

market. 

I think—two things here. One is, that there’s a group of very talented young people who want to work on this problem, but more 

importantly, by thinking out of the box, they can come up with 

many different ideas about how to tackle the problem. 

I mean, just one example, just following up on your discussion 

about Wyoming, if you think about it as a systems problem, you 

can—in addition to taking CO2 and putting it in the ground, you 

can also use it as a basis for a C1 chemical industry. And, if you 

have electricity, but you can’t move it, you can make hydrogen, if 

you had the CO2, then you can make methanol, you’ve got a transportation fuel. That’s—you’d have to work through this in a lot 

more detail. 

But the idea here is that we need, in my view, to start to think 

about this problem much more broadly than just pure generation 

of power, because I think that opens up a very different way of 

thinking about the technology. And it’s what I see when I look at 

all of these technologies, is a crucial thing about beginning to think 

about them in a life cycle sense. 

You hear a lot about, for example, solid photovoltaic cells as 

clean power sources. But what’s often missing is the debate that 

you probably have to run them for at least 3 years before you get 

more power out than was used to actually produce it in the first 

place, and there are all kinds of other environmental impacts associated with the production of silicone. 

So, I think, in addition to sort of thinking about infrastructure 

issues, I think we need to couple that with sort of a life cycle view 

of what these technologies might be, because, on the surface, some 

of them look very good. But, when you look at the co-effects of 

them, you often get a very different picture. 

Senator KERRY. Yes, Mr. Denis? 

Mr. DENIS. Mr. Chairman, I think you’ve touched on something 

that is very important, and this is that the—if we, as we agree in 

the science, there has to be a comprehensive solution, the solution 

is not only the carbon capture and sequestration. We really must 

focus on the development of renewables, we must focus on the conservation of energy. I know you have a proposal in a bill to make 

the Capitol carbon-neutral, I observe that we don’t have compact 

fluorescent lights in this room. Things that we could be doing to 

reduce our energy use in this Country, that really have the effect 

of reducing the carbon dioxide. 

So, it’s not a simple answer, it—I think it’s a portfolio of initiatives that we need—really need to pursue to solve this quandary, 

this problem that we have in front of us. 

Senator KERRY. Oh, I couldn’t agree more. That’s why I introduced the bill. We can’t talk about this with legitimacy, if we don’t 

take steps here in the Capitol and elsewhere to become carbon neutral and energy efficient. 

The book that my wife and I have just written has a chapter 

about energy efficiency and the three biggies, clean coal being one 

of them. 

57 

I mean, there are only three ways we’re going to grab this thing 

fast enough. And one is clean coal technology, two is alternative 

and renewables, and three is energy efficiency. You can do your 

other things at the margins, but those are the big three. And the 

energy efficiency piece happens to be the cheapest, fastest, most efficient and effective way of grabbing it fast. And a lot of companies 

have understood that. 

You know Texas Instruments built a new plant down in Texas 

that saved 88,000 jobs. It’s going to provide $14 billion to the economy over its lifetime, and they’re burning 25 percent more effective 

on their energy use, 35 percent less water, I mean, these are the 

things we can do all over the country, we’ve got to, and there’s a 

lot of money to be made, incidentally, in the companies that wind 

up doing these things, it’ll be more effective. 

Let me come back, if I can, for the clean coal piece of this for a 

second, I just want to make sure my own understanding, as well 

as the record, is complete on it. 

The IGCC, Integrated Gasification Combined Cycle, in layman’s 

terms, can you just tell people what that does, how it does it? 

Mr. Rencheck? 

Mr. RENCHECK. It partially combusts coal to produce a syngas, 

synthetic gas, and that synthetic gas has sulfur, methane in it. You 

clean out the sulfur, and what you essentially do, then, is combust 

the gas, it’s a clean gas at that point. 

Senator KERRY. And it requires no flue component at that point? 

Mr. RENCHECK. You get an exhaust emission out of the HRSG of 

basically the combined cycle plant, the heat regenerative, heat exchanger. You get the combustion flue from the gas turbines. 

Senator KERRY. And how complicated is it to attach the carbon 

capture to that? 

Mr. RENCHECK. It would require, basically, a new type of combustion turbine that would burn hydrogen. And that is one of the 

emphases of FutureGen to develop. The DOE is also working on 

that, both with Siemens and General Electric, but you would, essentially, at that point, move the gas stream from a methane-based 

type gas stream to a higher, if not purer, hydrogen-based gas 

stream. And its combustion profiles are a lot different than with 

the syngas. And, to understand that, and be able to get the delivered horsepower from that engine so that you could maintain electrical output is what the quest is all about. 

Senator KERRY. But, prototype-wise, the basics work, the key 

now is to take it to scale. 

Mr. RENCHECK. For the conventional combined cycle, that’s correct. For the hydrogen turbine—it’s still in the laboratory. 

Senator KERRY. What—sorry. 

Mr. WILSON. Siemens is actually heavily involved, in the DOE 

programs for development of hydrogen fuel combustion. And your 

point is well-taken in terms of, it’s a different combustion phenomena, it’s a much hotter flame, and thus a, higher performance 

standard is required of the gas turbine. So, we’re working in order 

to make the turbine parts more robust, to be able to maintain the 

turbine and maintain the cooling technology, so they don’t degrade 

quickly. 

58 

So, the hydrogen turbine, the next step in advancement, in terms 

of gas turbine technologies. Gas turbines originally operated very 

very inefficiently and at very low temperature. They’re now very efficient, very high temperature with methane-type gasses. The next 

step in turbine technology is the hydrogen capable gas turbine and 

Siemens is heavily involved in the development of this technology. 

Senator KERRY. And, is that the key to the carbon capture itself? 

Mr. WILSON. Yes. 

Senator KERRY. Now, what kind of a threat is thermal solar? 

Solar thermal? 

Mr. WILSON. Threat, it’s actually a very promising technology. 

Senator KERRY. But if you can do solar thermal, and drive a 

steam turbine as a consequence of that and produce electricity, 

what does that say to the coal industry in the long-term? 

Mr. WILSON. Well,—we actually are suppliers of steam turbines 

for virtually almost all of the solar-thermal plants in the world. 

Siemens has a steam turbine that actually is well-suited for solar 

industry application. 

The challenge is, it’s a fraction of a percent of the contribution 

of thermal electricity to the overall electrical demand. The scale of 

these projects is relatively small. These are all multi-megawatt 

plants, compared to the utility-scale project, which is 500, 1,000, 

2,500 megawatts. 

Senator KERRY. Yes, but isn’t that, because they’re new and they 

are sort of coming online, can’t they be taken to scale? 

Mr. DENIS. Mr. Chairman, if I may—— 

Senator KERRY. Yes. 

Mr. DENIS.—next month, we will put in El Dorado Valley, just 

south of Las Vegas, into service, the largest solar thermal facility 

built in the United States in the last 15 years. It’s a 64 megawatt 

facility, using the sun, the strong sun that we have in southern Nevada, to generate the 64 megawatts of electricity. The—as you 

come into Las Vegas, if you land, you will look to one side—— 

Senator KERRY. Well, you hope you land. 

Mr. DENIS.—you will see half a square mile covered with mirrors. 

Senator KERRY. Yes, I’ve seen that. 

Mr. DENIS. That will generate the 64 megawatts. We’re very excited about this. There are similar facilities that exist in California 

that were built in the 1980s, late 1980s, but this one is the first 

one built in the last 15 years. And we’re very excited about that, 

and it will provide—— 

Senator KERRY. Who built it? 

Mr. DENIS. The company that started—it has changed hands several times, it was initially Duke Solar, then they sold it to a company called Solargenics, which is now the majority of, the 

Solargenics is owned by a Spanish company called Axiona. 

Senator KERRY. Very interesting. 

Mr. DENIS. But it is a promising technology for the deserts of the 

Southwest. 

Senator KERRY. What other, besides the IGCC and this current 

concept, the hydrogen separation, are there other possibilities for 

clean coal? 

Mr. WILSON. Clearly, there are. 

59 

Dr. MCRAE. There’s actually quite a broad spectrum of possibilities. One, for example, is to—instead of using air, you use oxygen 

to burn the fuel, and if you use oxygen to burn the fuel, then the 

primary combustion products are just water and CO2, and that separation problem is much, much easier than it is with the conventional technologies. The downside is, that you actually then have 

to supply the oxygen. 

But, what’s interesting is that there has been a very slow and 

measurable downward trend in the price of oxygen. So, oxy-firing 

is a system that I think is a very interesting alternative to IGCC. 

It also is an interesting possibility for retrofitting. So, that’s one 

technology. 

Senator KERRY. How many viable, how many different technologies, are being seriously explored at this point? 

Dr. MCRAE. In our Coal Study we did an initial sieving, and we 

had about, I think 10 or 20 of them, and then we brought them 

down to four, which are the ones—— 

Senator KERRY. Right. 

Dr. MCRAE.—which we think could be brought to bear very, very 

quickly. 

Senator KERRY. We’re going to be doing an incentive bill, in the 

Finance Committee, sometime in June. As we think about those incentives, should we be narrowing it down to the four? Or should 

we frame it in a way that allows people to make their own choice 

within the 20, let’s say, or more. 

Dr. MCRAE. My sense is that you need to engage the community 

with lots of different ideas about how to deal with this problem. I 

think the history of sort of mandating technology has not been very 

good. If you open it up to the marketplace and provide the appropriate incentives to deliver, then I think, in fact, you’ll get very different and very innovative ways of dealing with the technology. 

And there’s enough out there to suggest to me that there are real 

possibilities, and real alternatives to IGCC. 

We can use IGCC now, there are some problems with the hydrogen turbines, and there are also some capture issues, but I think 

they’re relatively small time-scale problems to solve, compared to 

bringing some of these other technologies. But they are there. 

And I think just to build on a point that Mr. Denis made is that, 

what we need is a portfolio of approaches, so that we’re bringing 

on technologies that are evolving over time. And, more importantly, 

that we put in place mechanisms to learn from these technologies. 

One of the, the big problems that we had in carrying out the 

Coal Study, is that it’s very difficult to extract the lessons learned 

from some of these demonstration projects. And, one of the things 

that I would argue, that if we do open this process up, that, in fact, 

we pay attention to how we can more efficiently learn about these 

technologies. 

Mr. Chaisson mentioned about some of these gasifiers—it’s very 

difficult to get your hands on what the chemistry that is going on 

inside those, what really is new and different. And my sense is that 

this, this kind of information—— 

Senator KERRY. Why is it so difficult to get your hands on—? 

Dr. MCRAE. I think, in part, because it’s, the way it’s viewed 

commercially, you know, they view it as a—— 

60 

Senator KERRY. You mean, because it’s proprietary. 

Dr. MCRAE.—proprietary, yes. 

Senator KERRY. So, people hold it close to the vest. 

Dr. MCRAE. But, I think there are things after the technologies 

being tried, if you’re going to provide large amounts of government 

support to invest in these technologies, that you should, in fact, 

have the ability to—— 

Senator KERRY. Guarantee that there is some sort of review capacity for methodology and so forth? 

Mr. DENIS. Mr. Chairman, I—— 

Senator KERRY. Well, that makes sense, yes, Mr. Rencheck? I’m 

sorry, who—? 

Mr. DENIS. Mr. Chairman, I hope that in that June package of 

incentives that you were talking about crafting, that you don’t forget the incentives for renewables. We believe that the investment 

tax credit and the production tax credit, the extension of those for 

at least 8 years is important to make sure that we have continuity 

in the program. 

Senator KERRY. Those will be, absolutely. 

Mr. DENIS. Also the, there’s a disallowance, utilities cannot avail 

themselves of those investment tax credits presently, and the electric utility industry can be a key catalyst in making sure that we 

bring this country, and that we, in fact, bring a lot more renewables, which may do away with a lot of coal plants, may do away 

with a lot of gas plants. 

Senator KERRY. Good advice. 

Mr. DENIS. Thank you. 

Senator KERRY. And we will do that. 

Mr. Rencheck, then Mr. Chaisson. 

Mr. RENCHECK. We are working with Babcock & Wilcox to pilot 

an oxy-coal plant in Barberton, Ohio. It will be a 10 megawatt electric demonstration plant, or scale plant, and from that, we’ll use 

that to study and learn, so that we can scale it up to a commercialsize plant. 

As we talk about funding, it is, it was imperative that we were 

able to fund demonstration plants. It takes a lot to get it from the 

drawing board to a commercial scale that we’re talking about that 

can be economically applied to the grid, and hold down electric 

rates. 

Senator KERRY. Understood, absolutely. I can see that. 

Mr. Chaisson? 

Mr. CHAISSON. Just two points, Senator. One is, we would certainly support having a very broad approach to incentives, so that 

any potentially viable technology gets a shot at the incentive funding. But, I would point out that our organization’s perspective is 

much broader than CO2, and while we agree that there are a lot 

of promising options for, for capturing CO2 from coal to electricity, 

the processes, the other environmental aspects of those processes 

may vary significantly. 

And, at the moment, one reason why we are primarily only supportive of coal gasification, is because of all of the other environmental aspects. I think our view is that, in the long run, for coal 

to be sustainable, it must deal with CO2, but it ultimately has to 

61 

deal with all of the other environmental aspects. And those should 

not be forgotten. 

Senator KERRY. I couldn’t agree more. Obviously, as we go down 

the road here, the marketplace is going to decide some of this, but 

probably some public policy needs to look at, the downstream water 

use, land use, and overall cost impacts. Because, if you look at liquefied coal, for instance, I don’t know if anybody here is advocating 

it but, there’s more and more evidence that that is just a huge mistake. I know there’s some momentum here, by some, to sort of 

move in that direction, but it’s more energy exploitative in the end, 

more costly, and threatens an even greater degree of CO2. I think we have to think in the, again, the larger piece here, of 

the consequences. 

Is there anything with respect to the clean coal piece that we 

should know, that you haven’t had a chance to share with us as 

we think about this? Yes. 

Mr. CHAISSON. I’d just make one final comment. I think we see 

underground coal gasification as an extremely promising technology, Lawrence Livermore lab is doing a lot of work in that area, 

it’s really not on the radar, except, perhaps the Governor of Wyoming, who you might want to have come in and talk about that— 

but that technology, if it proves out anything like its promise appears, it may be a very cost-effective way to use coal, with full capture of carbon, and at the same time, to really minimize most of 

the adverse impacts of using coal. And it’s, it’s just not in the studies, it’s not kind of, on the radar, but there’s actually a surprising 

amount of commercial activity moving forward in North America. 

Senator KERRY. Well, that’s terrific, thank you for calling that to 

our attention, and we will dig into it, get a handle on it, take a 

look at it, and understand it better. 

Yes, Mr. Wilson? 

Mr. WILSON. I just wanted to make one last point in terms of, 

we’re looking at a lot of promising technologies for the next generation. We want to make sure that we address the fact that we have 

a very large fleet out there now. Whatever options you put in place 

need to also address the existing fleet, and essentially incentivize 

industry to address that existing fleet at the same time you invest 

in new projects. You’ve got to level the playing field, and not necessarily grandfather everything out there. 

Senator KERRY. I couldn’t agree more. I’m very opposed, personally, to a lot of grandfathering, which is why I got involved in TXU, 

and I think we have a serious issue there, and obviously we’ve got 

a fight here on the new source performance standards issued over 

the last few years which I think was just a terrible mistake, and 

will be one of those big contributions to the problem we have. 

Yes, Dr. McRae? 

Dr. MCRAE. Just one comment I would make, this morning was 

spoken mostly about what’s going on in the United States, but we 

shouldn’t lose sight of the fact that there’s an enormous amount of 

activity going on in Europe, and in China and I think there’s a crucial need to figure out how to—— 

Senator KERRY. Are we sharing any of that? 

Mr. WILSON. I work in a global organization, and everything we 

do is basically on a global basis. 

62 

Dr. MCRAE. But, my general sense is, that there is sharing, individually, amongst companies, but there is an opportunity to learn 

a lot from some of the technology demonstrations that other—that 

are being done in other parts of the world. This meeting that we 

had on Monday about sequestration, I think, just getting all of 

these countries together to talk about how to do it—— 

Senator KERRY. Who brought them together? 

Dr. MCRAE. This was MIT and Chamboucher, excuse me. 

Senator KERRY. That’s a very good thought. We need to think 

about how to augment the global effort. Previously, if I may say, 

when Senator Worth was serving as the Policy Director at the 

State Department, that position was essentially created to empower us to be engaged in these kind of talks. Obviously, for the 

last few years, given the Administration’s attitude about Kyoto, 

there has been zero exchange in that regard. I think there’s a very, 

you know, there’s a huge pent-up demand for us to get involved in 

that kind of a dialogue, and I think we will, very shortly. Yes? 

Mr. RENCHECK. We sponsored an Asian-Pacific partnership meeting, where we had members from India and China attend in very 

large numbers. It went over quite well, in discussions of energy efficiency, and also new generations of combustion and IGCC plants. 

So that, that sharing of technology is starting to occur. 

There was recently a sponsored meeting in Japan that also went 

along those lines. 

Senator KERRY. I can’t thank you enough. I think it’s been a very 

helpful, very interesting exchange, and we’re all learning up here, 

trying to get up to speed. 

I don’t think there’s any disagreement about the urgency, and it’s 

interesting to hear you all accept that, readily accept the challenge, 

and understand that if you had greater resources, you believe you 

could move this thing an awful lot faster. I have complete confidence in that, incidentally. 

Again, referencing back to the Clean Air Act experience, and the 

Clean Water Act experience of the 1970s, there is no doubt in my 

mind that once we get a standard in place, create a market, get 

this moving, American ingenuity—global ingenuity—but American 

ingenuity will contribute significantly, and we can get this done. 

But, we’ve got to treat it as the emergency and urgent effort that 

it is. 

Thank you for contributing to that dialogue and we will certainly 

follow up with you. 

I’m going to leave the record open for 2 weeks in the event that 

any colleagues want to submit any questions in writing, and the 

full text of all of your testimonies will be placed in the record. 

Thank you very much, we stand adjourned. 

[Whereupon, at 11:54 a.m., the hearing was adjourned.] 

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