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61–699 PDF 2010

S. HRG. 111–652 

CARBON CAPTURE AND SEQUESTRATION 

LEGISLATION 

HEARING 

BEFORE THE

COMMITTEE ON 

ENERGY AND NATURAL RESOURCES 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

TO

RECEIVE TESTIMONY ON CARBON CAPTURE AND SEQUESTRATION LEGISLATION, INCLUDING S. 1856, S. 1134, AND OTHER DRAFT LEGISLATIVE TEXT 

APRIL 20, 2010 

( 

Printed for the use of the 

Committee on Energy and Natural Resources 
(II) 

COMMITTEE ON ENERGY AND NATURAL RESOURCES 

JEFF BINGAMAN, New Mexico, Chairman 

BYRON L. DORGAN, North Dakota 

RON WYDEN, Oregon 

TIM JOHNSON, South Dakota 

MARY L. LANDRIEU, Louisiana 

MARIA CANTWELL, Washington 

ROBERT MENENDEZ, New Jersey 

BLANCHE L. LINCOLN, Arkansas 

BERNARD SANDERS, Vermont 

EVAN BAYH, Indiana 

DEBBIE STABENOW, Michigan 

MARK UDALL, Colorado 

JEANNE SHAHEEN, New Hampshire 

LISA MURKOWSKI, Alaska 

RICHARD BURR, North Carolina 

JOHN BARRASSO, Wyoming 

SAM BROWNBACK, Kansas 

JAMES E. RISCH, Idaho 

JOHN MCCAIN, Arizona 

ROBERT F. BENNETT, Utah 

JIM BUNNING, Kentucky 

JEFF SESSIONS, Alabama 

BOB CORKER, Tennessee 

ROBERT M. SIMON, Staff Director 

SAM E. FOWLER, Chief Counsel 

MCKIE CAMPBELL, Republican Staff Director 

KAREN K. BILLUPS, Republican Chief Counsel 
(III) 

C O N T E N T S 

STATEMENTS 

Page 

Barrasso, Hon. John, U.S. Senator From Wyoming ............................................. 5 

Bingaman, Hon. Jeff, U.S. Senator From New Mexico ........................................ 1 

Brownstein, Mark S., Deputy Director, Energy Program, Environmental Defense Fund ............................................................................................................ 40 

Casey, Hon. Robert P., Jr., U.S. Senator From Pennsylvania ............................. 2 

Castle, Anne, Assistant Secretary for Water and Science, Department of 

the Interior ........................................................................................................... 13 

Hilton, Robert, on Behalf of Ms. MacNaughton, CB, Senior Vice President, 

Power and Environmental Policies, Alstom Power ........................................... 29 

House, Kurt Zenz, Ph.D., President, C12 Energy Research Fellow, MIT ........... 43 

Markowsky, James, Assistant Secretary for Fossil Energy, Department of 

Energy ................................................................................................................... 6 

Murkowski, Hon. Lisa, U.S. Senator From Alaska ............................................... 4 

Vann, Adam S., Legislative Attorney, American Law Division, Congressional 

Research Service .................................................................................................. 47 

Yamagata, Ben, Executive Director, Coal Utilization Research Council ............ 33 

APPENDIX 

Responses to additional questions .......................................................................... 63 

(1) 

CARBON CAPTURE AND SEQUESTRATION 

LEGISLATION 

TUESDAY, APRIL 20, 2010 

U.S. SENATE, COMMITTEE ON ENERGY AND NATURAL RESOURCES, Washington, DC. 

The committee met, pursuant to notice, at 10:03 a.m. in room 

SD–366, Dirksen Senate Office Building, Hon. Jeff Bingaman, 

chairman, presiding. 

OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. 

SENATOR FROM NEW MEXICO 

The CHAIRMAN. OK, why don’t we go ahead? 

Welcome everyone today. I thank the witnesses who are testifying before the committee on these bills. This is a hearing on S. 

1856 and S. 1134, as well as a legislative discussion draft proposed 

by Senators Rockefeller and Voinovich. 

These bills each focus on important issues associated with the 

deployment of commercial carbon dioxide capture and storage, CCS 

technologies. S. 1856 focuses on the issue of pore space ownership 

in the subsurface below Federal lands. S. 1134 focuses more broadly on CCS research, development, and demonstration related generally to clean coal power generation. The draft legislation aims to 

accelerate the commercial viability of CCS technologies and methods by supporting commercial-scale demonstrations of integrated 

CCS technology projects. 

The topic of reducing greenhouse gases, particularly carbon dioxide emissions, remains of great concern to this committee and to 

myself. Carbon capture and storage holds promise as one means 

that can be used to mitigate global climate change, while still allowing the use of fossil fuels at electricity-generating plants and industrial facilities. 

With discussions centered on coal use in a carbon-constrained 

world, integrated carbon capture and storage systems may present 

the most immediate solution for continued use of coal and other 

carbon-intensive fuels while not contributing further to carbon dioxide emissions and global warming. 

Last May, I introduced S. 1013. That was legislation that focused 

on reducing some of the uncertainty for CCS project developers by 

providing an indemnity program for the first 10 early mover commercial-scale CCS projects. We had a hearing in this committee 

that received testimony not just on that bill, but also on the issues 

that are being discussed today, particularly on pore space ownership. 
2 

S. 1013 did make it through the committee process. It is now 

part of the larger energy bill that we have reported from this committee. However, much work still needs to be done to scale up CCS 

technologies to meet the level of carbon reductions that are needed 

to mitigate the effects of climate change. 

Earlier this year, President Obama announced he would begin 

charting a path toward a cleaner future for coal use by initiating 

the Interagency Task Force on Carbon Capture and Storage. The 

task force, which is co-chaired by one of our witnesses today—Dr. 

Markowsky from the Department of Energy—is working to develop 

a plan to overcome the barriers to widespread cost-effective deployment of CCS within 10 years. 

We look forward to hearing more about what that task force has 

identified as challenges for CCS deployment, also to how we, as 

members of this committee, can work with the administration to 

address and overcome some of those challenges. 

I would like to begin by welcoming the original bill sponsors who 

have come to speak to us today. Senator Casey is here to speak on 

the issue of S. 1134, and Senator Barrasso, who is, of course, a valued member of this committee, will introduce his and talk about 

his bill, S. 1856. 

So, Senator Casey, why don’t you go ahead and tell us anything 

we need to know about your proposed legislation? 

Senator CASEY. Thank you very much, Chairman Bingaman and 

Ranking Member—— 

The CHAIRMAN. Excuse me, I’m sorry. Senator Murkowski needs 

to give an opening statement here before we call on you. 

Senator MURKOWSKI. Mr. Chairman, I respect the fact that we 

have conflicting schedules. So if Senator Casey needs to move to 

another committee hearing this morning, I would certainly be 

happy to defer my opening to allow you to give yours, if you would 

like. 

STATEMENT OF HON. ROBERT P. CASEY JR., U.S. SENATOR 

FROM PENNSYLVANIA 

Senator CASEY. Thank you very much. Chairman and Ranking 

Member Murkowski, I appreciate the courtesy. 

Senators Barrasso, Bunning, and Burr as well, thank you for this 

opportunity. 

I wanted to talk briefly—and it will be brief, I know we have 

other witnesses here—about the bill that I introduced, S. 1134, the 

Responsible Use of Coal Act of 2009. 

The bill provides the Department of Energy’s National Energy 

Technology Laboratory with the funding needed to accelerate research, development, and demonstration and, ultimately, the deployment of carbon capture and storage technology and other critical advanced coal power generation technology needed to respond 

to climate change. Further, the bill would position the United 

States as the world leader in CCS technology development and export, creating the potential for thousands of new clean energy jobs. 

Climate change is one of the most complex and challenging imperatives that our Nation and even the world has ever faced. We 

need to move forward in crafting legislation that will reduce green-
3 

house gas emissions, encourage the use of renewable power, and 

create clean energy jobs. 

As we move forward, we must do so in a manner that will ensure 

our energy security and protect our industries from so-called ‘‘carbon leakage’’ and help get our economy back on track and enable 

us to continue to benefit from our most abundant, affordable energy resource, and that is coal. Today, coal provides over half of the 

Nation’s electricity. It helps keep American homes, businesses, factories, airports, schools, and hospitals humming and creates millions of good-paying jobs across all sectors of the economy. 

Further, much of the world depends upon coal. Large economies 

like China and India are increasingly relying upon coal to power 

them into the 21st century. 

While the use of coal in the United States has more than tripled 

since 1970, emissions of sulfur dioxide, nitrogen oxide, and particulate matter from power plants have been dramatically reduced, reduced, as the power industry deploys technologies for capturing 

these pollutants. This illustrates how advanced technology has allowed coal to remain a critical component of the Nation’s energy 

strategy in the face of ever-increasing environmental requirements. 

However, the continued use of coal in the United States and 

abroad is facing its toughest challenge ever. That is how to use this 

abundant resource without having a negative impact on our climate. 

Coal combustion is the largest source of CO2 emissions, both domestically and globally. Therefore, the technology needs to be developed that can cost effectively capture and store or reuse the CO2

emitted by the coal-fired plants and large industrial sources of 

greenhouse gases. My bill, S. 1134 supports the continued research, 

development, and demonstration of CCS technology being carried 

out by the Department of Energy’s National Energy Technology 

Laboratory. 

Just quick highlights of the bill. First of all, the bill would promote the continued large-scale commercial demonstration and, ultimately, the deployment of the most promising integrated CCS systems. 

Second, the bill would promote the continued research and development of advanced pre-combustion, oxy-combustion, and post combustion CO2 capture technology and geological storage concepts in 

order to drive down costs, increase performance, and foster innovation. It is critical that in addition to the commercial demonstration 

of current CCS technology, we continue to develop and advance 

new CCS ideas and concepts through a robust research and development program in order to continue to lower the cost of CO2 capture and storage. 

Next, the bill will promote the continued research and development of other coal power generation technologies, including gasification, combustion turbines, fuel cell, and hydrogen production. 

Next, the bill will promote the export of U.S. CCS technology to 

those countries such as China and India, which rely upon coal as 

their dominant energy source, ensuring that the United States is 

the leader in developing and exporting clean coal technologies and 

taking advantage of thousands of new clean energy jobs such as 

this industry would create. 
4 

I should point out that a critical outcome of the implementation 

of this bill will be the data necessary to support the creation of a 

framework to address the liability and long-term stewardship of 

commercial geological CO2 storage operations. Such a framework 

was introduced last year by Senator Enzi and I in the Carbon Storage Stewardship Trust Fund Act of 2009. 

Let me close by saying that I applaud the work of this committee 

and your committee’s efforts in particular to recognize the important role that coal plays in driving our economic engine every day. 

I look forward to working with you to move forward legislation that 

will accelerate the research, development, demonstration, and deployment of CCS and advanced coal technology. 

I appreciate this opportunity, and I appreciate the willingness of 

the ranking member to allow me to jump ahead of the line. It 

doesn’t happen very often in Washington, but we are grateful. 

Thank you, Mr. Chairman. 

The CHAIRMAN. All right. Thank you very much for your statement. Unless any member has a question, we will allow you to get 

on to your other responsibilities. 

Senator Murkowski, why don’t you go ahead with any statement 

you have? 

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

FROM ALASKA 

Senator MURKOWSKI. Thank you, Mr. Chairman. 

I am pleased to be able to provide that opportunity to Senator 

Casey, and I look forward to Senator Barrasso speaking to his legislation as well. 

Mr. Chairman, you mentioned in your opening comments our bipartisan energy bill that we moved through this committee sometime ago. I have stated before that I would like to see us take this 

up, debate it on the floor, and move it to the President. 

But hearings like this remind us that there is always more that 

we can do in this committee and to provide an opportunity to hear 

from agencies and stakeholders about the progress that we have 

made. I think we will be getting some of that this morning. 

I think CCS is a perfect example. Its applications are broad, including enhanced oil recovery, cement mixtures, or merely underground injections for the sake of climate. It can be applied to a 

number of fossil feedstocks, but of course, coal-fired projects appear 

to be the most promising to start with. 

Carbon sequestration is the newest entrant into how we mark 

the difference between regular coal and clean coal. Over the years 

I think that that definition of clean coal, how we define it, has 

shifted and perhaps dramatically. Where once it meant that particulate sulfur dioxide, mercury, and other emissions had been reduced, it now means we must separate and sequester the carbon 

building blocks of the fuel itself. It makes sense to ask more of a 

fuel that is already so cheap, so abundant, particularly in light of 

what we are seeing with our changing climate. 

Our recent experience has shown what a complicated endeavor 

carbon sequestration can be and the need for the responsible policies to promote it. Attempts to deploy this technology have raised 
5 

questions about everything from liability and infrastructure to 

chemical reactions and ownership of pore space. 

We have made strides in many of these areas, but hopefully, today’s hearings will help us advance just a little bit further. Ultimately, it is my hope that coal can be used not just more cleanly, 

but more broadly as well. We have some great opportunities 

through gasification for expanding the application of this abundant 

domestic resource to make America more secure from an energy 

standpoint. 

We know that Senator Dorgan is well aware of these opportunities, as his State hosts the only facility to convert coal into synthetic natural gas there in North Dakota. That project makes a 

number of valuable commodities and sequesters much of its carbon 

dioxide emissions through the enhanced oil recovery. 

In my State, we have a project that is being looked at by Cook 

Inlet Region, Inc. This is looking at avoiding the need to mine coal 

seams altogether with a technology called in situ gasification. This 

process could provide synthetic gas to power a 100-megawatt generating plant, bring a whole new supply of electricity to the region 

for economic development, and we are very intrigued about the 

prospects. 

So the goalposts are moving for coal, but I think that we can 

keep up with it. I am glad to see both the Interior and Energy Departments here this morning. These contributions from your departments are essential if we are going to succeed in making the 

best possible use of our domestic coal reserves. 

Whether it is coal and carbon sequestration, rare earths or green 

technologies, or nuclear power and a stable supply of uranium, it 

is essential that agencies coordinate so that their policies do not 

conflict with one another. So I am also glad that we are going to 

have a second panel this morning of experts and stakeholders 

about the progress that can be made in advancing carbon sequestration as quickly as possible. 

Again, I would like to thank the sponsors of the legislation that 

we will have here before us this morning, and I just appreciate 

their good work in moving this forward. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you. 

Senator Barrasso, do you want to give us a short introduction as 

to your legislation, and then we will go to the witnesses? 

STATEMENT OF HON. JOHN BARRASSO. U.S. SENATOR 

FROM WYOMING 

Senator BARRASSO. Thank you very much, Mr. Chairman. 

I welcome the witnesses. As we have heard from Senator Casey 

and Senator Murkowski, coal is an essential part of America’s energy future. Right now, half of the electricity in the United States 

comes from coal. 

Coal is affordable, abundant, and reliable. Most importantly, coal 

is an American energy resource, and America cannot afford to leave 

stranded its most abundant, commercially viable energy resource. 

Coal creates American jobs. It generates revenues for Federal, 

State, and local governments, and it enhances America’s energy security. 
6 

So to make commercial-scale carbon sequestration a reality, we 

must provide the legal and the regulatory framework to do so. We 

must address the long-term liability. I want to thank Chairman 

Bingaman for his leadership on the liability issue. I am an original 

co-sponsor of the chairman’s bill. 

I introduced legislation clarifying pore space ownership under 

the Federal surface estate. Determining pore space ownership is a 

key aspect of creating the legal framework that is needed for carbon sequestration. 

Addressing these questions is essential to ensuring the long-term 

viability of coal. That is why I have introduced S. 1856, the Federal 

pore space ownership legislation, which essentially defines pore 

space as the subsurface space of any size that can be used to store 

carbon dioxide or other substances. It clarifies that the Federal 

Government owns the pore space below Federal land. 

So, with that, Mr. Chairman, I want to thank the witnesses. I 

look forward to their testimony and have some questions after that. 

The CHAIRMAN. Thank you very much. 

Our first panel here, as I have mentioned, is made up of 2 officials—Jim Markowsky, who is the Assistant Secretary of Fossil Energy in the Department of Energy, and Ann Castle, who is the Assistant Secretary for Water and Science in the Department of the 

Interior. We appreciate both of them being here. 

Dr. Markowsky, why don’t you start, and we will hear from you. 

Then, Anne Castle, we will hear from you. 

STATEMENT OF JAMES MARKOWSKY, ASSISTANT SECRETARY 

FOR FOSSIL ENERGY, DEPARTMENT OF ENERGY 

Mr. MARKOWSKY. Thank you, and good morning, Mr. Chairman 

and members of the committee. 

I appreciate the opportunity to appear before you today. I will be 

addressing the congressional interest in CCS as demonstrated by 

bills introduced by Senators Casey, Barrasso, and the legislative 

action drafted by Senators Rockefeller and Voinovich. 

As you consider these proposals and the issues they seek to address, I believe it would be beneficial to update you on the Office 

of Fossil Energy’s program to advance CCS technology. Our CCS 

program is boosted by receiving $3.4 billion for CCS through the 

Recovery Act. This is complemented by $600 million from our CCPI 

program. 

Our CCS program primarily focuses on coal now, which provides 

nearly half of the U.S. electric generation. But CCS will be required for both coal- and gas-fired systems to meet long-term CO2

reduction goals. Our research is focused chiefly on the technical 

and economic challenges to commercially deploy CCS technologies 

for use in electric power generation and also industrial facilities. 

We have 4 key areas in our coal program, and that is developing 

technologies for global competitive CO2 capture; establish long-term 

basis for geological storage and CO2 reuse; improve efficiency of 

both existing and new coal-based power plants, which directly reduces the CO2 emissions and reduces the requirement for capture 

and storage and also reduces coal use; computer modeling and simulation from the molecular level to the integrated plant level, along 

with geological reservoir modeling. 
7 

Right now, we are pursuing large-scale demonstrations of the 

current first-generation CCS technologies. We are partnering with 

industry to build large-scale CCS demonstration facilities to gain 

invaluable experiences with integration of the CCS operations into 

power generation facilities and industrial plants by 2015. 

We have 3 major programs. The first is our Clean Coal Power 

Initiative 3, which is a coal-based power generation for CCS with 

CO2 storage and beneficial uses, such as EOR. 

The next is our FutureGen program, and we have been working 

with our FutureGen Alliance and currently reviewing the continuation application for moving this project forward. We also have solicitations that we are reviewing for our industrial CCS program, 

and we are currently reviewing those applications with the intent 

of making final selections in June of this year. 

From these programs, we anticipate having 8 to 10 large-scale 

CCS demonstration facilities operational in the 2015 timeframe. 

First-generation CCS costs are very high. Post combustion typically 

increases COE by—cost of electricity by 70 to 80 percent. Pre-combustion typically will increase that by 30 percent. 

To drive down the costs of CCS, we are pursuing in parallel with 

the first-generation technology demonstrations, research and development to increase the power plant efficiency and develop advanced second-generation technologies. These include advanced carbon capture on retrofit of coal power plants, which will increase the 

efficiency and reduce the cost penalty by approximately one-third 

that of noncapture configurations. 

Advanced gasification increases the efficiency advantage by 3 

percentage points and, again, reduces the cost penalty by a third. 

Ultra supercritical steam cycle, where we are looking at temperatures of upwards of 1,300 degrees where currently we have 1,100 

degrees, efficiency advantage of over 3 percentage points and, 

again, a cost reduction of approximately one-third of the penalty. 

Oxy-combustion, we are looking at that also, where you are burning pulverized coal in an atmosphere of oxygen where the combustion products are primarily CO2 with some water, and the cost penalty there is only a third to a quarter. 

We envision a new round of advanced CCS demonstrations in the 

2015 timeframe, which will position commercial deployment of advanced technologies in the post 2020 timeframe. 

We are getting to the cost-effective deployment that will require 

broad-based public and private collaboration on investment. With 

regard to storage, we are pursuing carbon storage with our seven 

regional partnerships. We have made great progress. These partnerships are involved in 43 States with basically 50 stakeholders. 

We have made great strides in capturing this, but there are some 

obstacles to commercial deployment. That is why the President in 

February this year initiated the Interagency Task Force on CCS, 

the first-ever Government-wide task force to develop a comprehensive Federal strategy to address the barriers to CCS and also 

achieve cost-effective deployment technologies within 10 years. 

As you mentioned, Mr. Chairman, I serve as the co-chair with 

EPA. We are holding our first public meeting this month, this coming month. 
8 

We have had excellent cooperation. We are making great strides, 

and we envision having a report to the President in August of this 

year to overcome the barriers. 

In conclusion, I would like to just say that we are moving forward with CCS, the critical aspect of this technology to ensure environmentally and commercial sound use of fossil fuels including 

coal. But a viable national CCS approach will be possible only with 

development of a national set of definitive policies and incentives 

that reward technology development and encourage investment in 

CCS. 

I applaud the efforts of this committee and members for taking 

a leadership role in addressing these issues in a timely fashion. I 

also look forward to working with Congress to forge a pathway to 

a viable and effective implementation of CCS and ensure a sound, 

secure energy future. 

With that, Mr. Chairman, I would be happy to answer any questions the committee might have. 

[The prepared statement of Mr. Markowsky follows:] 

STATEMENT OF JAMES MARKOWSKY, ASSISTANT SECRETARY FOR FOSSIL ENERGY, DEPARTMENT OF ENERGY

ON S. 1856 AND S. 1134

Thank you Mr. Chairman and members of the Committee. I appreciate this opportunity to meet with you this morning to discuss carbon capture and storage (CCS) 

legislation before the Committee. 

While this hearing is focused specifically on S. 1856, a bill to amend the Energy 

Policy Act of 2005 to clarify policies regarding ownership of pore space, introduced 

by Sen. John Barrasso (R-WY); S.1134, the Responsible Use of Coal Act of 2009, introduced by Senator Robert Casey (D-PA); and CCS legislative text drafted by Senators John D. Rockefeller (D-WV) and George V. Voinovich (D-OH), I would like to 

take this opportunity to provide an overview of the United States Department of Energy (DOE), Office of Fossil Energy’s Clean Coal Research Program and how our Research, Development and Demonstration Program is directly relevant to the legislation being discussed at this hearing. 

Interagency Task Force on Carbon Capture and Storage 

Before I discuss the Office of Fossil Energy’s Clean Coal Research Program, I 

would like to briefly mention the recently announced White House Task Force on 

Carbon Capture and Storage. On February 3, 2010, President Obama issued a Presidential Memorandum titled ‘‘A Comprehensive Federal Strategy on Carbon Capture 

and Storage.’’ This memorandum establishes an Interagency Task Force on Carbon 

Capture and Storage, consisting of fourteen Executive Departments and Federal 

Agencies, which are tasked with developing a comprehensive and coordinated Federal strategy to speed the commercial development and deployment of clean coal 

technologies. The co-chairs of the Task Force are DOE and the Environmental Protection Agency (EPA). 

The Task Force is charged with proposing a plan to overcome the barriers to the 

widespread, costeffective deployment of CCS within 10 years, with a goal of bringing 

5 to 10 commercial demonstration projects online by 2016. Ultimately comprehensive energy and climate legislation that puts a cap on carbon will provide the largest 

incentive for CCS because it will create stable, long-term, market-based incentives 

to channel private investment in low-carbon technologies. The Task Force plan will 

explore incentives for commercial CCS adoption and address any financial, economic, technological, legal, institutional, social, or other barriers to deployment. The 

Task Force will consider how best to coordinate existing administrative authorities 

and programs, including those that build international collaboration on CCS, as well 

as identify areas where additional administrative authority may be necessary. The 

co-chairs will report progress periodically to the President through the Chair of the 

Council on Environmental Quality. 

As the Department’s delegate and co-chair of this Task Force, I am diligently 

working with representatives of EPA to assemble the proposed plan within 180 days 

of the release of the Memorandum. 
9 

CLEAN COAL RESEARCH PROGRAM

The Office of Fossil Energy’s (FE) Fossil Energy Research and Development Program creates public benefits by enhancing U.S. economic, environmental, and energy security. The program carries out three primary activities: (1) managing and 

performing energy-related research that reduces market barriers to the environmentally sound use of fossil fuels; (2) partnering with industry and others to advance fossil energy technologies toward commercialization; and (3) supporting the 

development of information and policy options that benefit the public. 

The FE Clean Coal Research Program—administered by the Office of Clean Coal 

and implemented by the National Energy Technology Laboratory—supports DOE’s 

overall mission to achieve national energy security in an economic and environmentally sound manner. In the Coal Program, there are four key priorities: 1) developing technologies for globally competitive carbon dioxide (CO2) capture for power 

plants and industrial sources, 2) establishing the basis for long-term geologic storage and CO2 reuse, 3) improving the efficiency of both existing and new coal-fired 

power generation plants, and 4) implementing computer modeling and simulation 

to accelerate the Research and Development (R&D) path from discovery to commercialization and reduce costs. 

Currently, we are pursuing the demonstration of first generation carbon capture 

and storage technologies with existing and new power plants and industrial facilities using a range of capture technologies and storing CO2 in a variety of geologic 

formations. The goal is to have five to ten large-scale demonstrations in operation 

by 2016. In parallel, to drive down the costs of CCS as a potential climate change 

mitigation technology, the FE Coal Program is pursuing R&D to increase base 

power plant efficiency and thereby reduce the amount of carbon dioxide that has to 

be captured and stored per unit of electricity generated. FE is developing a spectrum of technologies to evolve coal into a low-carbon energy source that is economically competitive in 2020 and beyond. 

There are a number of technical and economic challenges that must be overcome 

before cost-effective CCS solutions can be implemented to address climate change. 

Funding from the American Recovery and Reinvestment Act (Recovery Act) is helping to address these challenges. The Recovery Act provided an additional $3.4 billion 

for FE R&D to expand and accelerate the commercial deployment of CCS technology. The experience gained from both the capture and storage demonstrations 

funded by the Recovery Act will be a critical step toward achieving widespread, costeffective deployment of CCS. In addition to the Recovery Act projects, the core research, development and demonstration activities that leverage public and private 

partnerships will support the goal of broad, cost-effective CCS deployment in the 

post-2020 timeframe. 

Core Research and Development Activities 

The Clean Coal Research Program is comprised of core research and development 

activities and major demonstration programs. The Program is further enhanced 

through the CCS activities authorized under the Recovery Act. 

DOE provides a worldwide leadership role in the development of advanced coal 

technologies. We are moving aggressively to address new challenges associated with 

the reduction of greenhouse gas emissions as a climate change mitigation strategy. 

In partnership with the private sector, efforts are focused on maximizing efficiency 

and performance, while minimizing the costs of new CCS technologies. Improving 

the efficiency of CCS systems will help address pollutant emissions reduction, water 

usage, and carbon emissions. The Program strives to enable dramatic reductions in 

emissions and to improve technologies applicable to current and future fossil energy 

plants and industrial facilities so they can cost effectively meet emerging requirements for an economically secure and environmentally sound energy future. 

The following CCS-enabling R&D activities support the development of technologies that can then be tested for commercial readiness in our demonstration programs. These R&D activities provide the supporting technology basis for all CCS development. 

Carbon Sequestration—The Department’s Sequestration program focuses on the 

key technology challenges that confront the wide-scale industrial deployment of 

CCS. These challenges are being addressed through industry/government cooperative research on cost-effective capture technologies; monitoring, verification, and accounting technologies to assess permanence of storage; permitting issues; liability 

issues; public outreach; and infrastructure needs. Developing low-cost pre-combustion capture technologies and establishing the technical basis for carbon sequestration will lead to a decrease in the atmospheric release of CO2, thus allowing us to 
10 

use our domestic fossil fuel resources responsibly by reducing their impacts on global climate change. 

Essential to these objectives are the Regional Carbon Sequestration Partnerships 

(RCSP). The Partnerships are a central piece of our CCS research efforts that develop the knowledge base and infrastructure for the wide-scale deployment of geologic storage technologies. The Partnerships address key infrastructure issues related to permitting, pore space (underground reservoir) ownership, site access, liability, public outreach, and education. The Partnerships also conduct field tests across 

the United States to characterize the geographic differences in fossil fuel use, potential storage sites, and different regional approaches to addressing CCS. The Partnerships encompass all of the geologic storage sites in the country that are potentially 

available for carbon sequestration. The Regional Partnerships represent more than 

350 unique organizations in 43 States, three Native American Indian Nations, and 

four Canadian Provinces. 

Innovations for Existing Plants (IEP)—The IEP program develops low cost, efficient technologies to reduce CO2 emissions from new and existing pulverized coalfired power plants. The program focuses on advanced post-combustion ultra-supercritical steam cycle, oxy-combustion, and CO2 compression technologies in direct response to the priority placed on addressing the existing and new coal-fired power 

plants. Dramatic cost and energy penalty reductions for carbon capture are essential 

for broad deployment of existing plant CCS retrofits, both domestically and in developing economies. 

Advanced Integrated Gasification Combined Cycle (IGCC)—Advanced IGCC technology utilizes a pre-combustion pathway to convert coal or other carbon-containing 

feedstocks into synthesis gas, a mixture composed primarily of carbon monoxide and 

hydrogen used as fuel for power generation. We are developing advanced gasification technologies to meet the most stringent environmental regulations and to facilitate the efficient capture of CO2 for subsequent sequestration. Gasification plants 

are complex systems that rely on a large number of interconnected processes and 

technologies. Advances in the current state-of-the-art, as well as development of 

novel approaches, are required to make these systems affordable and reliable for 

commercial deployment. The program continues to focus on developing the next generation technology in gasification systems related to fuel flexible gasifiers, coal feed 

systems, high temperature contaminant removal, revolutionary oxygen supply technology, and CO2 capture technologies. Specifically, we are targeting improvement in 

IGCC that could yield up to a 5 percentage point efficiency gain while reducing the 

system cost. These added improvements are targeted toward allowing IGCC to be 

deployed as a competitive option in the post-2020 time frame by reducing the cost 

of future systems and improving their reliability. 

Fuels—The Fuels program is focused on reducing technology barriers for the reliable, efficient and environmentally friendly conversion of coal to hydrogen for utilization in advanced IGCC systems. Efforts for hydrogen production focus on generation at the plant for large-scale, central power applications and exclude transportation. Activities include support for the bench-scale development of hydrogen separation technologies and components. 

Fuel Cells—Fuel cell systems when coupled with coal gasification for large scale 

power generation hold great potential for leapfrog advances in efficiency. Fuel cells 

also produce very low emissions, are modular in nature, and can be scaled to almost 

any deployment size. The ultimate goal of the program is to develop large (>100 

MW) fuel cell power systems that produce electric power from coal using integrated 

coal gasification and CO2 separation processes that capture at least 90 percent of 

the CO2 emissions. The program is driving to reduce the cost of fuel cell technology 

by an order of magnitude compared to current technology and enable low-cost fuel 

cells scalable to MW class ultra-clean systems with potential for up to 60 percent 

electrical efficiency for central power generation. 

Advanced Turbines—The Advanced Turbine program consists of a portfolio of laboratory and field R&D projects focused on performance-improvement technologies 

with great potential for increasing efficiency and reducing emissions and costs in 

coal-based applications. Future gasification based power systems outfitted with CCS 

will require high efficiency hydrogen turbines. Hence, the current focus of the Advanced Turbine program is the combustion of pure hydrogen fuels in greater than 

100 MW size gas turbines and the compression of large volumes of CO2. The Advanced Turbines program aims to improve the firing temperature and throughput 

of the next generation of combustion turbines for coal-based integrated gasification 

combined cycle power systems that capture and sequester CO2. 

Advanced Research—The Advanced Research Program is a bridge between basic 

research and the development and deployment of innovative systems capable of creating highly efficient and environmentally benign electricity and power. The objec-
11 

tive of the program is to support development of critical enabling components that 

provide cross cutting benefits across the entire coal research program. Example developments that are being pursued include high temperature materials for ultrasupercritical plants, enabling efficiency increases up to 3 percentage points for coalfired plants, revolutionary sensors and controls, and advanced computing/visualization techniques. The Advanced Research Program will continue to push revolutionary advances in efficiency improvements, computational analyses and projects 

aimed at a greater understanding of the physical, chemical, and thermo-dynamic 

barriers that currently limit the use of coal and other fossil fuels. 

Additionally in FY 2011, a multi-lab partnership will be initiated to develop a 

comprehensive, integrated suite of computational models for accelerating the development of carbon capture technologies. The scientific underpinnings of the suite of 

models will ensure that learning from successive generations of a technology or 

learning from even competing technologies is maximized. The simulation-based confidence will reduce the risk in incorporating multiple innovative technologies into 

a new plant design, thereby significantly reducing the development cycle required 

to move novel technologies to commercialization. 

Demonstrations at Commercial-Scale 

Program success will ultimately be judged by the deployment of emerging technologies into the marketplace. Both technical and financial challenges associated 

with the deployment of new advanced coal technologies must be overcome in order 

to achieve success in the marketplace. Commercial-scale demonstrations help the industry understand and overcome component integration and start-up performance 

issues, and by reducing technology and economic risk, improve the opportunity for 

private financing and investment for subsequent plants. 

The Department is implementing large-scale CCS projects through the LargeScale Sequestration Field Tests being performed by the Regional Partnerships; the 

Clean Coal Power Initiative (CCPI); and FutureGen. 

Large-Scale Sequestration Field Tests—A central piece of our CCS research is 

DOE’s field test program, which is being implemented through the Regional Carbon 

Sequestration Partnerships. This field test program reflects the geographic differences in fossil fuel use and potential storage sites across the United States and 

targets the use of regional approaches in addressing CCS. The Partnerships encompass essentially all the geologic storage sites in the country that can potentially be 

available for carbon sequestration. It is important to note that the non-Federal cost 

share for the field test program is greater than 35 percent, which is a key indicator 

of industry and other partner interests leading to the success of this program. Each 

partnership is focused on a specific region of the country with similar characteristics 

relating to CCS opportunities and needs. 

The Development Phase (Phase III) of the Regional Partnerships is focused on 

large-scale field tests of geologic carbon sequestration up to 1 million metric tons 

of CO2 per year, and addresses the liability, regulatory, permitting, and infrastructure needs of these projects. The Partnerships have brought an enormous amount 

of capability and experience together to work on the challenge of infrastructure development. 

In FY 2011, several of the nine large-scale RCSP CO2 injection projects are scheduled to begin injecting CO2 for large volume (1 million tons/year) geologic storage 

tests. Most of the large-scale field tests will have completed the first stage of the 

projects consisting of site selection and characterization, National Environmental 

Policy Act (NEPA) review, pre-injection monitoring, and permitting. One project will 

have concluded its injection of about 2 million tons of CO2 and will be conducting 

post injection monitoring at the site. These large-volume injections are needed to 

demonstrate that the formations selected for storage have the capability and capacity to store CO2 from coal-based energy systems and industrial facilities. 

Clean Coal Power Initiative—The mission of the Clean Coal Power Initiative 

(CCPI) is to enable and accelerate the deployment of advanced carbon capture and 

storage (CCS) technologies to ensure clean, reliable, and affordable electricity for the 

United States. The CCPI is a cost-shared partnership between the government and 

industry to develop and demonstrate advanced coal-based power generation technologies at the commercial scale. 

CCPI demonstrations address the reliability and affordability of the Nation’s electricity supply from coalbased generation. CCPI demonstrations will meet technical 

requirements set forth in the Energy Policy Act of 2005. By enabling advanced technologies to overcome technical risks involved with scale-up and bringing them to the 

point of commercial readiness, CCPI accelerates the development of both advanced 

coal generation technologies and the integration of CCS with both new and existing 

generation technologies. The CCPI also facilitates the movement of technologies into 
12 

the market place that are emerging from the core research and development activities. 

FutureGen—The FutureGen Project intends to conduct novel large-scale testing to 

accelerate the deployment of a set of integrated advanced coal gasification-based 

electric power production technologies linked with CCS. This project would be the 

first of its kind to store CO2 in a deep saline geologic formation. The Department 

is currently reviewing the renewal application submitted by the FutureGen Alliance 

on March 19, 2010. 

THE AMERICAN RECOVERY AND REINVESTMENT ACT

(RECOVERY ACT)

The primary goals of the FE Recovery Act Program are to: 

• Demonstrate CCS technology to reduce greenhouse gas emissions from the electric power and industrial sectors of our economy. 

• Become the world’s leader in CCS science and technology. 

• Implement projects to support economic recovery by creating new jobs in pursuit of a secure energy future. 

Recovery Act projects will leverage federal funding, stimulate private sector investment, accelerate delivery of CCS technology, and demonstrate the integration of 

coal-based energy systems and industrial processes with capture and permanent 

storage of CO2 in geologic formations. Recovery Act projects are logical extensions 

of several important, ongoing Clean Coal Research Program baseline activities. 

The FE Recovery Act R&D Program is comprised of five components, with the following specific objectives: 

• Expand and Extend Clean Coal Power Initiative Round 3 (Expand CCPI-3)— 

Accelerate integrated CCS demonstrations by expanding and extending the opportunity for several additional CCS electricity generation demonstrations for 

both new and existing plants under DOE’s ongoing CCPI-3 competition. 

• Industrial Carbon Capture and Storage—Expand DOE’s focus of CCS on advanced coal power systems to industrial CCS applications. 

• Geologic Sequestration Site Characterization—Accelerate the comprehensive 

characterization of large-volume geologic reservoirs, thus augmenting existing 

data under the Regional Carbon Sequestration Partnerships. 

• Geologic Sequestration Training and Research—Develop the next generation of 

scientists and engineers by expanding ongoing training and research efforts conducted primarily through the University Coal Research and Historically Black 

Colleges and Universities programs. 

• Carbon Capture and Storage—Provide a fully integrated, advanced coal gasification-based power plant with utility-scale CCS technology capable of safely and 

permanently storing 1million metric tons of CO2 per year. 

To date, there have been over 90 projects awarded, including the following most 

recent announcements: 

• On October 2, 2009, Secretary Chu announced the first round of funding from 

$1.4 billion from the Recovery Act for the selection of projects that will capture 

CO2 from industrial sources for storage or beneficial use. The first phase of 

these projects will include approximately $21.6 million in Recovery Act funding 

and $22.5 million in private funding for a total initial investment of about $44.1 

million. The remaining Recovery Act funding will be awarded to the most promising projects during a competitive phase two selection process. 

• On November 6, 2009, DOE issued a cooperative agreement with Hydrogen Energy California LLC to build and demonstrate a hydrogen-powered electric generating facility, complete with CCS, in Kern County, California. 

• On March 9, 2010, U.S. Secretary of Energy Steven Chu announced that a 

project with NRG Energy has been selected to receive up to $154 million, including funding from the Recovery Act. The post-combustion capture and sequestration project will demonstrate advanced technology to reduce CO2 emissions and will assist with enhanced oil recovery efforts from a nearby oil field. 

• On March 12, 2010, DOE announced the award of a cooperative agreement to 

Summit Texas Clean Energy, LLC, for the Texas Clean Energy Project to design, build, and demonstrate an integrated gasification combined cycle electric 

generating facility, complete with co-production of high-value products and carbon capture and storage. 

• On March 12, 2010, DOE announced the award of a cooperative agreement to 

American Electric Power for the Mountaineer Commercial-Scale CCS Project to 
13 

design, construct, and operate a system that will capture and store CO2 at an 

existing coal-fired power plant. 

INTERNATIONAL COLLABORATIONS

Recognizing that climate change is a global issue that requires a global response, 

DOE plays an active leadership role in an international initiative known as the Carbon Sequestration Leadership Forum (CSLF). The CSLF is a voluntary climate initiative of developed and developing nations that, collectively, account for 75 percent 

of all anthropogenic carbon dioxide emissions. It is currently comprised of 24 members, including 23 countries and the European Commission. 

Formed in 2003, the CSLF marshals intellectual, technical, and financial resources from all parts of the world to support atmospheric stabilization of carbon 

dioxide concentrations, the long-term goal of the United Nations Framework Convention on Climate Change. Members are dedicated to collaboration and information 

sharing in developing, demonstrating, and fostering the worldwide deployment of 

multiple technologies for the capture and long-term geologic storage of carbon dioxide at low costs. Additionally, the CSLF is committed to establishing a companion 

foundation promoting legislative, regulatory, administrative, and institutional practices for safe, verifiable long-term storage. 

In addition to the CSLF, the Department is currently cooperating with numerous 

countries through bilateral agreements and multilateral activities to identify areas 

of collaboration in promoting and developing clean fossil energy technologies internationally. 

CONCLUSIONS

CCS technologies can play a key role as we transition to the clean energy economy 

of the future. However, cost-effective commercial deployment of CCS can only occur 

in parallel with the development of a national set of definitive policies that encourage technology development and reward investments in and capital formation 

around improved carbon performance. Passing comprehensive energy and climate 

legislation that puts a price on carbon will provide the long-term, market-based incentives to channel private investment into CCS and other low-carbon technologies. 

Time is of the essence. The Administration wants to see comprehensive legislation 

sent to the President this year. 

Addressing the barriers to CCS deployment requires a systems-based approach 

that includes not only site evaluation, characterization and selection, but also rules 

for short-, medium-, and long-term liability. Market driven CCS deployment will 

also require infrastructure for CO2 transportation and storage and the development 

of a uniform set of measurement, validation and accounting standards, practices, 

and procedures. Finally, whatever structure is created must encompass the input 

of a broad range of stakeholders. 

CCS and other clean coal technologies can play a critical role in mitigating CO2

emissions under many potential future carbon stabilization scenarios. The DOE program has put us on a path toward ensuring that the enabling technologies will be 

available to effect broad CCS deployment within a decade. Continued U.S. leadership in technology development and future deployment is important to the cultivation of economic rewards and new business opportunities both here and abroad. 

I applaud the efforts of this Committee and its Members for taking a leadership 

role in addressing these timely and significant issues. I would be happy to respond 

to any questions from members of the Committee. 

The CHAIRMAN. Thank you very much. 

Ms. Castle, why don’t you go right ahead, please? 

STATEMENT OF ANNE CASTLE, ASSISTANT SECRETARY FOR 

WATER AND SCIENCE, DEPARTMENT OF THE INTERIOR 

Ms. CASTLE. Mr. Chairman, Senator Murkowski, members of the 

committee, thank you for asking me to be here today to address S. 

1856. 

As you mentioned, Mr. Chairman, I am the Assistant Secretary 

for Water and Science at the Department of the Interior. With me 

is Tim Spisak from the Bureau of Land Management. Tim is the 

Deputy Assistant Director for Minerals and Realty Management. 
14 

Interior will defer to the Department of Energy on S. 1134, as 

that bill addresses activities within DOE’s purview. 

Under Secretary Salazar’s leadership, the Department of the Interior has made addressing global climate change one of its highest 

priorities, and a key component of working on climate change is 

mitigating the impact of carbon dioxide through measures like geologic carbon sequestration in permeable rock pore spaces. 

S. 1856 would ensure that the ownership of any subsurface pore 

space located below a Federal surface estate would be vested in the 

Federal Government. Interior supports the goal of this bill to clarify policies regarding ownership of pore space. We support having 

clear rules in place before, not after, disputes arise. 

But we would like to discuss with the committee some concerns 

that we have related to pore space ownership, including what we 

think are very important liability concerns, where the Federal Government manages the subsurface mineral estate but does not own 

the surface, the split estate situation. 

At the Department of the Interior, our land and water managers 

are already confronting the impact of climate change. Reduced 

snowpack is leading to decreased recharge of groundwater aquifers. 

We are seeing increased stress on surface water systems and public 

water supplies. We are seeing reduced river flows that impact temperature and depth and spawning environment for fish. Our scientists are also noting changes in the abundance and distribution 

of species, including changes to migration patterns. 

Interior’s land managers and scientists have on-the-ground expertise in areas that are critical to developing and managing carbon capture and storage. The department is sharing its expertise 

with our partner agencies as a contributor to the President’s Task 

Force on Carbon Capture and Storage, and the task force, as Mr. 

Markowsky explained, is working on a coordinated Federal strategy to speed the commercial development of clean coal technology. 

The Bureau of Land Management is entrusted with the multipleuse management of 253 million acres of surface land. But BLM 

also manages 700 million acres of subsurface mineral estate where 

the surface owners could be BLM, could be other Federal agencies 

like the Forest Service, sometimes the States, and sometimes the 

surface is in private ownership. That Federal mineral estate includes 57 million acres where the Feds own the minerals and the 

surface estate is privately owned. 

BLM worked with other Federal agencies to submit a report to 

Congress last May that was required by the Energy Independence 

and Security Act, and it addressed a wide variety of issues related 

to geologic carbon sequestration. In addition to experience administering large-scale mineral leasing programs, BLM has the real estate expertise and an existing framework for issuing rights-of-way 

that could serve future needs for carbon dioxide pipelines on public 

lands. 

We believe that BLM’s existing authorities could facilitate future 

carbon sequestration demonstration projects, but we also think 

that a more explicit statutory authority would be desirable. Again, 

we would like to discuss this further with the committee. 

The United States Geological Survey contributes to better scientific understanding of our natural resources, and as part of its 
15 

mission, USGS also conducts assessments of energy resources like 

oil and natural gas both in the U.S. and around the world. USGS 

is currently finalizing the methodology for a national assessment of 

carbon dioxide storage capacity in oil and gas reservoirs and saline 

formations. USGS is also going to play an important role in recommending geologic criteria that could be incorporated into a set of 

best practices for geologic site selection. 

The Department of the Interior supports the goal of S. 1856 to 

provide certainty regarding the ownership of pore space. Connecting pore space to surface ownership is a codification of what 

has been called the ‘‘American rule.’’ 

We do have concerns about the split estate situations that are 

not explicitly addressed in the bill. There are long-term liability 

questions that could arise if the private entity holding the surface 

rights sequesters carbon dioxide in the pore space but then is unable to manage the CO2 properly. 

CO2 is a leasable mineral. The bill addresses the ownership of 

the storage space, but not necessarily what is in the storage space, 

what is stored there. So the department would like to work with 

this committee to address those issues. 

Interior believes that carbon capture and sequestration can play 

a significant role in reducing the long-term effects of carbon emissions, and we would like to work with the committee on these critical efforts to mitigate the impact of climate change. 

Thank you for asking for the department’s views, and I am available to answer your questions at the appropriate time. 

[The prepared statement of Ms. Castle follows:] 

PREPARED STATEMENT OF ANNE CASTLE, ASSISTANT SECRETARY FOR WATER AND

SCIENCE, DEPARTMENT OF THE INTERIOR

ON S. 1856 AND S. 1134

Introduction 

Mr. Chairman and Members of the Committee, thank you for the opportunity to 

discuss S. 1856, a bill to amend the Energy Policy Act of 2005 to clarify policies regarding the ownership of pore space, and S. 1134, the Responsible Use of Coal Act. 

The Department of the Interior defers to the Department of Energy on S. 1134 as 

the scope of the bill is limited to activities within the Department of Energy. 

I am Anne Castle, the Department of the Interior’s Assistant Secretary for Water 

and Science. I am accompanied by Tim Spisak, the Bureau of Land Management 

(BLM) Deputy Assistant Director for Minerals and Realty Management. Under Secretary Salazar’s leadership, the Department of the Interior has made addressing 

global climate change among its highest priorities. A key component to addressing 

climate change is mitigating the impact of carbon dioxide through energy conservation, clean renewable energy, and measures such as geologic carbon sequestration 

into permeable rock pore spaces. 

S. 1856 would ensure that the ownership of any subsurface pore space located 

below a Federal surface estate would be vested in the Federal Government. The Department of the Interior supports the goal of S. 1856 to clarify policies regarding 

ownership of pore space. We support having clear rules in place before, not after, 

disputes over property rights arise. However, we would like to discuss with the 

Committee concerns related to pore space ownership on split estate lands—including 

important liability concerns—where the Federal government manages the subsurface mineral estate but not the surface. 

Background 

Climate Change Impacts & the Department of the Interior 

At the Department of the Interior, our land and water and wildlife managers are 

already confronting the impacts of climate change. Reduced snowpack is leading to 

decreased recharge of groundwater systems, increasing stress on surface water sup-
16 

plies and public water systems, and reducing river flows that impact temperature, 

depth, and other characteristics of spawning environments for fish. Our Arctic parks 

and refuges are seeing some of the earliest impacts of climate change. Melting sea 

ice threatens marine mammals as well as coastal communities, and thawing permafrost can destabilize buildings, roads, and facilities—disrupting the structural basis 

of large regions of Interior-managed lands. 

Our scientists are also noting changes in the abundance and distribution of species, including changes to migration patterns; the expansion of pests and invasive 

species; increased vulnerability to wildland fire and erosion; and an overall reduction in carrying capacity. Many of the iconic wildlife species that the Department 

manages from the Arctic to the Everglades will see their habitat threatened by global climate change. 

To assure that our climate change adaptation strategies are grounded in sound 

science, Secretary Salazar has created a new climate change strategy for the Department through Secretarial Order #3289 (September 14, 2009): ‘‘Addressing the 

Impacts of Climate Change on America’s Water, Land and Other Natural and Cultural Resources.’’ This Order establishes a new Department-wide strategy to address 

climate change, with an emphasis on climate change science, adaptation, and mitigation. 

This Order identifies geologic carbon sequestration as a key component in the Department’s climate change mitigation program—the Carbon Storage Project. The 

Order identifies the U.S. Geological Survey (USGS) as the lead agency in administering the Department’s Carbon Storage Project, and the USGS will work closely 

with the BLM and external partners to enhance carbon storage in geologic formations consistent with the Department’s responsibility to provide comprehensive, 

long-term stewardship of its resources. 

The Role of the Bureau of Land Management & the U.S. Geological Survey 

As the Nation’s largest land manager, the BLM is entrusted with the multipleuse management of 253 million acres of surface land. The agency also administers 

700 million acres of sub-surface mineral estate of which the surface owners are Federal agencies, states, or private entities. This Federal mineral estate includes 57.2 

million acres underlying a privately-owned surface (split estate). The USGS collects, 

monitors, analyzes, and provides scientific understanding about natural resource 

conditions, issues, and problems. As part of its mission, the USGS also conducts assessments of energy resources such as oil and natural gas of the United States and 

the world. Because of this expertise and experience, the USGS is conducting a national assessment of the carbon dioxide storage capacity in oil and gas reservoirs 

and saline formations. The USGS is currently finalizing the methodology for this national assessment. 

The Department diligently executes its responsibilities to make our Nation’s energy resources available in an environmentally-sound manner. Within the framework of a transparent public process, we carefully consider habitat, groundwater, air 

and other resources; mitigate impacts through best management practices, stipulations and conditions of approval; and balance development with other uses across 

the landscape. All of these considerations remain consistent as the Department contemplates its role in the use of the public lands to sequester carbon dioxide. Additionally, the Department’s bureaus have the expertise and experience needed to effectively implement carbon sequestration programs, from the identification of areas 

appropriate for storage to the deployment of leasing programs. 

The BLM’s existing administrative and regulatory framework could facilitate future carbon sequestration demonstration projects. However, clearer statutory authority specific to carbon sequestration may be desirable in some areas in order to 

move more effectively in implementing commercial-scale storage on Federal lands. 

The Administration is currently reviewing these issues, including whether additional legislation is desirable, as part of the White House Task Force on Carbon 

Capture and Storage. Issues that we are currently discussing include the most appropriate mechanism for longer term storage of carbon dioxide (leasing, rights-ofway, or other methods), the nature and term of the agreements, and how other uses 

such as future energy and mineral extraction, other subsurface resources, and other 

surface uses that the BLM may authorize could affect longer term storage, and liability. We look forward to reporting back to the Committee on the results of the 

Task Force’s work in the near future. 

In addition to experience in administering large-scale mineral leasing programs, 

the BLM has the realty expertise and an existing framework for issuing rights-ofway on public land that could serve future needs for carbon dioxide pipelines across 

public lands. Other programmatic and land management expertise, such as the 

BLM’s experience in evaluation of potential environmental impacts of projects, will 
17 

facilitate this effort. In addition, the USGS will play an important role in recommending geologic criteria that could be incorporated into a set of ‘‘best practices’’ for 

geologic site selection. 

A number of challenges will need to be addressed moving forward, and we must 

make use of current information to inform future discussions. For example, the Department has the results of research at international non-Enhanced Oil Recovery 

(EOR) sites at which large quantities of carbon dioxide have been injected for as 

long as 12 years. These sites have operated safely and shown no sign of leakage. 

However, the carbon storage contemplated for the primary purposes of sequestration 

may be for longer terms and larger quantities. We believe that the DOI land managers and scientists who are on-the-ground have expertise to offer on monitoring 

carbon dioxide sequestration, and we are working with our partner agencies to 

share their expertise. 

Carbon Capture & Sequestration (CCS) 

Geological storage of carbon dioxide in subsurface rocks involves injection of carbon dioxide into the pore space of permeable rock units. This principle operates in 

all types of potential geological storage formations such as oil and gas fields, deep 

saline water-bearing formations, or coal beds. Most of the potential carbon dioxide 

storage capacity in the United States is in deep saline formations. 

The current atmospheric carbon dioxide concentration is approximately 380 parts 

per million and rising at a rate of approximately 2 parts per million annually, according to data collected since 1959 by NOAA at the Mauna Loa observatory in Hawaii and the most recent information from the Intergovernmental Panel on Climate 

Change (IPCC). The 2005 IPCC Special Report on Carbon Dioxide Capture and 

Storage concluded that in emissions reductions scenarios striving to stabilize global 

atmospheric carbon dioxide concentrations at targets ranging from 450 to 750 parts 

per million, the global storage capacity of geologic formations may be able to accommodate most of the captured carbon dioxide. However, the extent to which this storage capacity is economically viable depends on the price of carbon. Also, geologic 

storage capacity may vary widely on a regional and national scale. A more refined 

scientific and operational understanding of geologic storage capacity is needed to address these knowledge gaps. 

Energy Security & Independence Act of 2007(EISA)/Pore Space Ownership 

Section 714 of the EISA directed the Secretary of the Interior to submit a report 

to Congress containing a recommended framework for geological sequestration on 

public lands. Through the BLM, and in coordination with the USGS, the EPA, the 

DOE, and other appropriate agencies, the Department fulfilled this mandate with 

its May 13, 2009, report, Regulatory Framework for Geologic Carbon Sequestration 

on Public Land. This report addressed a wide variety of issues related to geologic 

carbon sequestration and helps inform our response to the legislation before the 

committee. 

The report also included a discussion of pore space ownership. Section (6) of the 

report notes that Interior Board of Land Appeals (IBLA) rulings have recognized the 

‘‘American Rule,’’ which holds that subsurface pore space is the property of the surface owner. Various state governments are considering legislation that would establish the ‘‘American Rule’’ as state law. Wyoming enacted such a law in 2008; Montana and North Dakota enacted similar legislation in 2009. 

S. 1856 

The Department supports the concepts of S. 1856, which consists of two key provisions. The first, Section (1)(b), clarifies that the subsurface pore space is the property of the Federal Government in cases where the Federal Government is the surface landowner (codification of the ‘‘American Rule’’). The second key provision, Section (1)(d), establishes the mineral estate as the dominant interest when in competition for priority with a pore space interest. Section 1(d) presents questions related 

to how mineral interests and those with interests in storing carbon dioxide in the 

pore space would intersect. 

In following the American Rule, S. 1856 provides that the Federal government 

would own the pore space when it owns the surface interests. While not addressed 

in the bill, the American Rule would also hold that a private surface owner would 

own the pore space if the surface/subsurface estate is split between the private surface owner and the Federal mineral estate. In the case of approximately 57 million 

acres of land where the estate is split between a private surface owner and the Federal mineral estate, the private surface owner’s pore space interest could present 

long-term liability questions. We can foresee a situation where a private entity holding split estate surface rights sequesters carbon dioxide in the pore space but then 

finds itself in a position of not being able to manage the carbon dioxide or bear its 
18 

liability in perpetuity. It remains unclear who would be liable for the carbon dioxide 

in these situations. Questions also remain as to whether carbon dioxide, which is 

a leasable mineral when naturally occurring on Federal lands, could be considered 

part of the mineral estate when transported onsite, injected, and stored long-term. 

The Department would like to engage in discussions with the Committee concerning 

these issues. 

Conclusion 

The Department of the Interior believes that carbon capture and sequestration 

can play a significant role in reducing the long-term effects of carbon emissions. The 

Department of the Interior looks forward to continuing to work with the Committee 

on the critical work of mitigating the effects of climate change. 

The CHAIRMAN. Thank you both very much. 

Let me start. We will just do 5-minute rounds here. Let me just 

start with you on the issue you have been talking about, Ms. Castle. I gather from your testimony, you say that the bill provides the 

Federal Government would own the pore space when it owns the 

surface interest. I think that is pretty clear. 

Then you go on to state that the fact that the bill does not make 

the Federal Government the owner of the pore space when it owns 

the mineral estate, as distinct from the surface estate. So I am not 

clear. Does the department have a position as to whether it wants 

to own the pore space in circumstances where it owns the mineral 

estate, but not the surface? 

Ms. CASTLE. No, sir. I am sorry if our testimony was not clear 

on that point. 

We do support the codification of the American rule, that connects the ownership of the pore space to the ownership of the surface estate. What we have concerns about is the situation where 

the Federal Government owns the mineral interest, but somebody 

else owns the surface and, therefore, owns the pore space. 

The CHAIRMAN. Right. 

Ms. CASTLE. Because of the concerns about long-term liability, if 

the surface owner isn’t able to manage properly that sequestered 

CO2. So that is the issue we would like to address. We are not suggesting that the pore space ownership should be associated with 

the mineral estate. 

The CHAIRMAN. I guess I am just a little unclear. If I am a surface owner, and the Federal Government has retained the mineral 

estate, and I am being told now that I own the pore space below 

the surface, what legal right do I have with regard to that pore 

space if the Federal Government has retained the mineral estate 

and perhaps leased that out to someone else? 

Ms. CASTLE. As I understand it, Senator, the bill would make the 

mineral estate dominant over the ownership of the pore space. But 

I think that you are raising good questions about the interaction 

between the owner of the surface, who is utilizing the pore space 

for sequestration, and the owner of the mineral interest. 

As I mentioned, CO2 is a leasable mineral. So once you put it in 

the ground, it is not clear who has the ownership to it, whether it 

is the surface owner or the mineral rights owner. So those are the 

kinds of things that we think could benefit from a dialog with the 

committee, with the benefit of the experience that BLM has had in 

these split estate situations. 
19 

The CHAIRMAN. So your view is we don’t yet know whether we 

ought to codify the American rule, or we do know that we ought 

to codify the American rule? That is the part I am not clear on. 

Ms. CASTLE. The department does support the codification of the 

American rule. The legislation, S. 1856, could benefit from additional clarification of those interactions in a split estate situation. 

The CHAIRMAN. OK. I am not sure that I am still very clear on 

this. But let me ask you, Dr. Markowsky, one issue is these largescale projects that you are standing up. I think you said you will 

have 8 to 10 of those by 2015—— 

Mr. MARKOWSKY. That is correct. 

The CHAIRMAN [continuing]. In operation. That is one of the 

things that is a priority. You also, I gather here, have basic research going on with regard to carbon capture and storage. Could 

you just elaborate a little on what the Office of Science is doing in 

that area with regard to this basic research? 

Mr. MARKOWSKY. Yes, thank you. 

We are working closely with the Office of Science. What we identified actually last year, when we knew that we were going to have 

a high cost for the first-generation post combustion capture using 

the mean systems that are available now and chilled ammonia and 

the various types of means, we got together with the Office of Basic 

Science and started looking at advanced capture techniques. 

This is advanced sorbents, solvents, and ionic type of fluids that 

could capture the CO2 with very little energy and then be regenerated again with very little energy needed, which is the key thing. 

Because what you want to do is capture the CO2, and then you are 

going to take that CO2 outside the flow stream, and you are going 

to release it with either a pulse of energy or something and then 

recirculate the solution that is capturing the CO2. 

So we are working closely with them. They are doing research on 

various types of sorbents and solvents along with us, and the tie 

is that they know what our needs are, and we have a very tight 

timeframe. We are also working with ARPA–E, the other organization we have. They have solicitations out for advanced capture. 

So, actually, we have got 3 entities within DOE that are focusing 

very heavily on advanced capture and post combustion treatment. 

The CHAIRMAN. Thank you very much. 

Senator Murkowski. 

Senator MURKOWSKI. Thank you, Mr. Chairman. 

Dr. Markowsky, I would like to ask you about the 2009 stimulus 

funds that DOE received. It is my understanding that there was 

$3.4 billion that went for CCS, and it included funding for industrial applications, for R&D, a third round of Clean Coal Power Initiative selections. According to DOE’s Web site, we have just less 

than a third of the money that has been awarded over the last 15 

months, it is my understanding that just $16 million, or about 0.5 

percent, has actually been spent. 

So my question to you this morning is what exactly is happening 

with these fossil energy accounts? What are the hold-ups? Is DOE 

on track to be spending these stimulus dollars? We, of course, had 

all hoped that these would be targeted, timely, and temporary. I 

mean, it doesn’t look like anything is getting out the door. 
20 

Mr. MARKOWSKY. Thank you for that question, Senator Murkowski. 

What we have is really large-scale demonstration projects in 3 

areas with the CCPI program we have, with the industrial CCS, 

and also FutureGen. Initially, we sent out solicitations, and then 

we reviewed them, and we selected 4 programs under CCPI–3. We 

are right now down-selecting the programs under the industrial 

CCS solicitation, and we are also working with the FutureGen Alliance. 

So we are positioned to make these awards and begin detailed 

engineering. The earlier work was very preliminary engineering, 

which we call ‘‘feed,’’ which is a very, very low level of expenditures. But we are on track to obligate moneys in all 3 of those programs by September of this year. Then after we make the awards 

for detailed design and construction, we will have a ramp-up of expenditures, and then we are on target for the 2 major programs to 

have those expenditures completed when they come online in 2015. 

Senator MURKOWSKI. Can you give me some parameters? You 

say that you will have these expenditures out there. How much are 

you looking to get out the door? 

We said wanted shovel-ready projects, don’t get me wrong, we 

want to encourage the advancement in the CCS. But it doesn’t 

sound to me like you are able to expedite much of this in a manner 

as which we had intended. 

Mr. MARKOWSKY. Yes. The shovel-ready projects, when you come 

with a large-scale CCS program, and many times these are new facilities, and it typically takes about a year to get all the preliminary work done and 3 years for construction and begin operation. 

There is a ramp-up of expenditures during that period of time, 

and that is what you are seeing now. This first year is a slow 

ramp-up and where just very, very small amount of money is being 

expended. But in the next quarter, we are going to be starting to 

ramp up with detailed engineering. Then next year, in the spring 

and summer, we are going to be breaking ground on these projects, 

and that is when the large expenditures will begin, when you order 

and pay for the large equipment. 

Senator MURKOWSKI. I mentioned in my opening comments about 

a project that is being considered in Alaska with utilizing the in 

situ gasification, where we can extract from the coal seams without 

digging a mine. Does the Department of Energy anticipate providing any assistance, financial or otherwise, to project developers 

in this area? 

I would ask you, Ms. Castle, whether from a scientific perspective, do you have the information that you need to take a position 

on in situ gasification? If you can indicate whether we have financial assistance coming and then from the science perspective? 

Mr. MARKOWSKY. Thank you again, Senator. 

We have not received any requests for participation in the programs. The in situ and underground gasification concept, we had 

been exploring that in DOE early on in the 1980s. We have had 

some misfortunes because it wasn’t understood exactly how that 

process works. Now there is a number of programs being pursued 

in China, Australia, India, and as you mentioned, in Cook Inlet. 
21 

It is a technology that has applications in a particular type of 

seam that typically is unmineable, and there is attractive benefits 

in those kind of seams. But we have not been approached for participation in that particular project or any project. 

Senator MURKOWSKI. Ms. Castle, on the science? 

Ms. CASTLE. Senator, I don’t know that we have enough information currently in order to be able to take a position on the feasibility of the in situ gasification. 

Senator MURKOWSKI. Will you let me—— 

Ms. CASTLE. I think—— 

Senator MURKOWSKI. Let me just make sure that—this is a process that has been around for a considerable period of time. Are you 

suggesting that we just haven’t looked at it from a U.S. perspective, or when you say you don’t have the information, what specifically are you lacking? 

Ms. CASTLE. I think that you were asking for—I was thinking 

that you were asking for our position on the specific project in 

Alaska? 

Senator MURKOWSKI. No. Just whether or not from a scientific 

perspective you think that the in situ process for gasification is one 

that is sound and we should be pursuing, whether through incentives or just allowing for facilitation? 

Ms. CASTLE. Let me just say that I don’t have sufficient information to answer that question, and if I could answer it for the record, 

I would be happy to do that. 

Senator MURKOWSKI. Thank you. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Senator Dorgan. 

Senator DORGAN. Mr. Chairman, thank you very much. 

I apologize for being late, but I have read your testimony and appreciate both of you being with us today. 

The American Recovery and Reinvestment Act, that was passed 

by Congress last year, included $100 million in funding that I secured for projects for the beneficial use of carbon. I mean, there are 

a couple of different ways to deal with carbon. One is carbon capture and sequestration through geologic means, which is a way to 

address it as a bridge to continuing to use coal in the future. 

Another way is to find beneficial uses for carbon, and we had a 

witness at one point before the Senate Energy and Water Appropriation Subcommittee that said to think of carbon as a product 

and that we should find beneficial uses for carbon. There are beneficial uses, such as enhanced oil recovery, which is a beneficial use 

that also sequesters the carbon. 

But I want to ask you, let me hold just for a moment. It is—— 

The CHAIRMAN. Why don’t—I know. Yes. Did someone send for 

a doctor? 

Senator DORGAN. Dr. Barrasso is—— 

The CHAIRMAN. Oh, Dr. Barrasso has gone. 

[Paused.] 

The CHAIRMAN. OK, I think we are OK to go ahead. Why don’t 

you continue with your question, Senator Dorgan? 

Senator DORGAN. All right. Thank you. 

I was talking about carbon capture and sequestration and also 

beneficial uses for carbon. It seems to me that in order to provide 
22 

the funding for the full potential of these technologies and to be 

able to use coal in the future in a different way, it is going to require a substantial amount of money. The question is how do we 

raise money for carbon capture and sequestration and beneficial 

use technologies in appropriation cycles? My guess is probably not 

very easily in the regular appropriation cycle in the future. 

So it has been supported that there be a small wires charge universally applied that would raise the kind of funding necessary. I 

would like to ask for the department’s assessment of a wires charge 

approach. 

Mr. MARKOWSKY. Thank you for that question, Senator. 

I think when you look at large-scale demonstrations, the one 

thing that you would like to have is the predictability of funding 

for them. As I mentioned before, these programs typically take a 

number of years. Besides a solicitation, you are going to take 4 to 

5 years to go through the engineering, permitting, engineering design, and construction. So it is good to have a basis that you will 

be able to fund those on a multiyear basis. 

So the department would support any program that provides a 

certainty of funding for large-scale demonstration programs. 

Senator DORGAN. My sense is that we are not going to have an 

energy future without the use of coal, but the use of coal has to 

be substantially different than the way we have used coal in the 

past. I understand that reducing carbon emissions in a very significant way is important, but my concern is that we make sure that 

we have targets and timetables as well as the funding for the scientific inquiry that occurs from now until then so that we can continue to use coal in a very different way. 

I do think that the science and technology are going to unlock 

many, many opportunities. I think probably all of us on this committee could describe a half a dozen proposals out there that people 

are working on that they insist represent ‘‘the answer.’’ 

Now, not all of them will be the answer, but there are some approaches out there that if we can scale up and demonstrate at commercial scale are going to allow us to use coal in a very different 

way. This committee spends a lot of time working on other energy 

policy issues, such as renewable energy, which I strongly support, 

among other issues, but the question is with 50 percent of the electricity coming from coal, how do we manage to continue to use coal 

in the future? 

Now I think Senator Murkowski mentioned the Dakota Gasification plants in North Dakota, we have one of the only applications 

where we take coal and turn it into synthetic natural gas. They 

were going to build a good number of those plants many decades 

ago, and now it sits on the northern prairies. 

They turn coal into synthetic natural gas, put it in a pipeline, 

and move it around the rest of the country. They capture 50 percent of the CO2 and put that in a pipeline and move it to the oil 

fields of Alberta, Canada, where they use the CO2 to enhance oil 

recovery. 

So it is a project from which we can learn a lot, it seems to me. 

You can have beneficial uses for CO2. But I just come back to the 

pointthat we really do need to have an adequate stream of funding 

over a number of years, perhaps 10 and 20 years, to unlock the 
23 

science and the technology which will allow us to understand how 

to capture and sequester carbon and to use it for beneficial uses. That is why we put $3.4 billion in the economic Recovery Act to 

invest in a range of CCS projects. But that is just a start because 

it is going to cost much more than that. Do you have estimates of 

what you expect is needed over the next 20 years, either of you, 

in terms of the funding requirements? 

Mr. MARKOWSKY. We have not developed those estimates at this 

point. 

Senator DORGAN. But if there is a proposal—I happen to favor 

a proposal for a wires charge in order to raise that funding. Senator Rockefeller has a proposal. Senator Voinovich, I believe they 

have a joint proposal. I happen to think it makes some sense to do 

that. 

You are saying the department and the administration would 

look favorably upon any reasonable approach that begins to accumulate the funding necessary for these investments? 

Mr. MARKOWSKY. No, I think that is correct. I think we know 

that if we are going to continue with the second-generation technologies I mentioned and demonstrate those, and of course, after 

you do that, you are probably going to be doing advanced research 

to keep pushing that envelope. 

It is going to require a certainty when you talk about large-scale 

demonstration and to entice investors to participate in that, a certainty of funding. So any kind of mechanism that gives you a certainty of funding certainly would be very positive. 

Senator DORGAN. If I might just ask one quick question, are you 

as excited about beneficial use as I am? I think the potential of 

beneficial use is very substantial. 

Mr. MARKOWSKY. I am. Matter of fact, you mentioned the $100 

million. We have 12 proposals, and we are going to be looking at 

those, and we are going to down-select those to maybe 6 or 8, and 

we have got some exciting prospects in it—algae with various 

chemicals, actually making a fuel from it, making a cement product 

from it. So there is a lot of potential besides EOR. It is a shame 

to store that product because you spend a lot of money capturing 

it, and you have got to find a way to really use that beneficially. 

Senator DORGAN. Thank you very much. 

The CHAIRMAN. Senator Bunning. 

Senator BUNNING. Thank you, Mr. Chairman. 

First of all, I would like to thank both you and Senator Murkowski for holding this hearing. Several weeks ago, I, along with 

Senators Barrasso and Bayh, sent a letter to the committee outlining the importance of having a hearing on clean coal and the 

technologies surrounding carbon capture. That was a letter we sent 

to you. 

While the focus of this hearing is not coal, carbon capture and 

sequestration will play an enormous role in reducing CO2 emissions 

from coal. So while this is not specifically a coal hearing, I am approaching it from the perspective of how this technology can help 

us with the use of this critical resource. 

Coal is incredibly important to my State, Kentucky. The industry 

provides over 60,000 jobs, including about 15,000 coal miners. 

Those numbers show just how vital coal is to the State of Ken-
24 

tucky. If I did not keep that in mind, I would not be doing a very 

good job representing the people of Kentucky. 

However, besides just jobs in my State, coal is essential to the 

American energy needs. As it has been stated before, it provides 

about 50 percent of the country’s electricity. No matter what some 

might say or try to do, coal will not just go away. It is a clean, 

abundant, and domestic source of energy. 

In fact, coal makes up about 94 percent of the known energy reserves found in the United States of America, 94 percent, compared 

to 4 percent of natural gas and 2 percent for crude oil. Thus, we 

have to live with coal and find a way to use it that meets our longterm environmental standards. 

Carbon capture and sequestration can help us do that. That is why in the stimulus package, we put $3.4 billion and $600 million 

to be used to discover ways to capture carbon, CCS technology that 

you are supposed to be figuring out a way to spend. Sixteen million 

dollars in over a year and 4 months, in my opinion, is not acceptable. 

We all know how difficult it is to build out, but if you don’t get 

the people to build out with in hand, you never accomplish the goal 

that you set out to do. Certainly, the Congress put $4 billion in 

that stimulus package. I think there is a bright future for CCS, but 

if we don’t—Dr. Markowsky, if we don’t do it and do it quickly and 

do it right, it isn’t going to happen. 

I have dealt with the Energy Department now for 12 years here 

in the Senate and 12 years in the House of Representatives. If 

there is one thing I have found out, they don’t do things very fast. 

So I am asking you, begging you, to get underway and get this 

technology perfected. We have got people spending billions of dollars in the private sector to do what the Department of Energy has 

been given $4 billion to do. 

Just in 2 places—one in Owensboro, Kentucky, one in Paducah, 

Kentucky—we are trying to do exactly what Ms. Castle has said. 

We have a dispute. The Government doesn’t own the surface, but 

they want to sequester the carbon underneath, and we have a dispute whether they can do it or whether they can’t do it. 

It is in the Illinois basin in southern Illinois, and the Paducah 

plant wants to liquefy coal and also bring natural gas and aviation 

fuel out of that same coal. But they have to capture, and we guaranteed them to capture over 90 percent of the CO2. I am asking 

you, please get those projects underway because we are not going 

to be able to diverse quickly enough from coal to produce enough 

energy for this country to run on and stay competitive with those 

that are not using sequestration of CO2. 

In China and India, they are laughing at us as a country. They 

are laughing at us because they told us they are not going to do 

any carbon capture and sequestration. They are going to continue 

to burn coal as we used to. 

So, please, I am asking you to speed up and do it properly. 

The CHAIRMAN. Did you want to make any comment in response? 

Mr. MARKOWSKY. Yes, if I may? Yes, I can appreciate the frustration of both Senator Murkowski and yourself, Senator Bunning. 

But I can assure you I have spent 30 years of my life engineering, 

designing, and building power plants and the other 10 of the 40 
25 

years pursuing power plants. So I am a fellow who likes to build 

power plants. I am pushing that. 

In parallel with that, we are advancing the technology because 

I don’t think we should sit on a technology. We are advancing that. 

We are looking at advanced technologies, the 4 that I identified, because I think beside demonstrating these technologies, which are 

critical to integrate CCS into 2 types of concepts—electric power 

production and the various industrial facilities—we need to get 

that culture going. 

But we need to accelerate that technology and develop the next 

round of technologies. We are looking at computer simulation to basically help us push that even faster. We have got a major effort 

in simulating power plant components and systems to accelerate 

the deployment of CCS. 

We are pushing it, sir, and I will continue doing that. 

Senator BUNNING. We are going to keep your feet to the fire. I 

know this committee will. 

The CHAIRMAN. All right. Senator Barrasso. 

Senator BARRASSO. Thank you very much, Mr. Chairman. 

Ms. Castle, thanks so much for your comments and for your support of what I am trying to accomplish with S. 1856. I completely 

understand the concerns that you have raised when the surface 

area is not owned by the Federal Government, what the mineral 

rights are and some of the additional issues that you have raised. 

I would say I am committed to working with you to take that 

next step, and I would hope that you would work with my office, 

as well as the committee and the chair and the minority side as 

well, in coming to solutions because some of the key points that 

you have raised are not addressed by this legislation. 

Specifically now, looking at carbon capture and sequestration on 

public lands right now, I think you are receiving applications for 

projects. Could you tell me how you are handling those applications 

to move ahead with projects for carbon capture and sequestration? 

Ms. CASTLE. We are receiving applications for site characterization. That is the first step to ensure that geologically the sites are 

suitable for this kind of effort. Those applications are currently 

being processed by the Bureau of Land Management, pursuant to 

their authority for rights-of-way under the Federal Land Policy and 

Management Act. 

Senator BARRASSO. Do you think Title V of the Federal Land Policy and Management Act provides you the necessary authority to 

issue permits then for long-term commercial-scale carbon storage 

facilities? 

Ms. CASTLE. Senator Barrasso, as I mentioned, we have some 

concerns that it would be—because of the scale and the financial 

investment required for a commercial long-term sequestration 

project, we think that it would be beneficial to have more explicit 

authority. We are operating under the authority of the Mineral 

Leasing Act and FLPMA. Those are from 1920 and 1976, respectively. 

Carbon sequestration was not contemplated when those laws 

were enacted. So we think that to deal with the issues that we can 

see arising in connection with long-term CCS, that it would be desirable to have more explicit authority. 
26 

Senator BARRASSO. Thank you. 

As this goes forward, I don’t know what kind of public participation you are expecting then in the permitting process, guidelines 

that the department would follow when it comes to the project’s notification of adjacent property owners and things like that. Have 

you given some thought as to what would be needed as this goes 

on? 

Ms. CASTLE. That has been discussed, and there is a process for 

dealing with public notification and comment within the Bureau of 

Land Management. I can’t provide you with the details. I would be 

happy, though, to answer that question in writing for the record. 

Senator BARRASSO. I have some additional questions for you to 

answer in writing. I don’t want to go through all of them and take 

your time. We have a second panel as well. 

Is the process of permitting these projects on Federal land consistent not just across your department, but also with, say, other 

land management agencies? Not just the Department of Interior, 

but also with the Forest Service and the Department of Agriculture, are you working with others? 

Ms. CASTLE. Yes, sir. Certainly, in connection with Carbon Capture and Storage Task Force, those are issues that are being considered by all of the 14 agencies that are involved there. The BLM 

is the agency charged with responsibility for management of the 

entire Federal mineral estate. So that encompasses a mineral estate owned by the Forest Service and various other Federal agencies. 

Senator BARRASSO. So then I can look forward to working with 

you and with the committee as we go forward to address some of 

the additional concerns that you have raised today? 

Ms. CASTLE. Yes, sir. 

Senator BARRASSO. Thank you. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you very much. 

Let me switch subjects and take the occasion of you being here, 

Dr. Markowsky, to ask about another subject that is in your jurisdiction there. That relates to the Strategic Petroleum Reserve and 

the product reserve that we have proposed as part of the bill that 

we have reported out of our committee. 

I think we have got another hurricane season on the horizon, and 

I would just be interested in your thoughts as to whether we are 

doing what we need to do to prepare for that as far as maintaining 

supplies of refined product in areas that might be affected by hurricanes? 

Mr. MARKOWSKY. Thank you for that question, Senator. 

Last year, we embarked on a study to scope out the desirability 

of a refined product reserve similar to SPRO. That was somewhat 

inconclusive. We looked at just 2 events this year. We embarked on 

a more definitive study looking at the probabilistic nature of hurricanes to try to come up with a cost benefit. We hope to have a 

study completed by June. 

But what we are doing, essentially, last year we looked at the 

consequences of the prior hurricanes, and we saw that we needed 

to harden the systems, the refineries, and the pipelines. What the 
27 

refineries have done is they have elevated their electrical switch 

gear to ensure that they will not be damaged by water intrusion. 

We have worked with the local utilities to set up a priority to restore refineries and also pipeline pumping stations and tank farms 

along the 2 continental and plantation pipelines. They have dieselpowered generators to help the pumping facility. So we feel that we 

are in good shape. 

We looked again this year to look at possible options to procure 

what we call ‘‘tickets,’’ options for refined products. We looked at 

all the commercial tankage. It is full. There is just no available excess tankage. They are maintaining their refined products of gasoline and diesel at a maximum capacity. 

So the way we would take a look at it, we have got the refined 

products there. We have got to make sure that we get electric 

power to it when we have a disruption. At SPRO, we are mobilizing. We have diesel generators at Bayou Choctaw. In case refineries need crude and we are out of power, we have got diesel-powered pumps that will be able to pump water into our caverns to extrude the oil to move in the pipeline. 

So I think we are as prepared as we can at this point, Senator. 

The CHAIRMAN. Thank you very much. 

Let me just see if Senator Murkowski had additional questions 

for this panel. 

Senator MURKOWSKI. Just one last question, Mr. Chairman. This 

relates to the level of coordination between the Department of Energy and the Department of the Interior. 

I mentioned in my opening statement that it is important that 

we work together to move these policies. When we talk about the 

location of energy infrastructure and how we are going to move this 

CO2 through pipeline to the storage points, the question would be 

to both of you how your agencies are dealing with this as an issue, 

how you are coordinating with other Federal agencies to clarify the 

roles so the project developers know? Then further, whether or not 

the current state of the CO2 pipeline regulation is sufficient? Does 

it need further clarification? Do we need to endorse any pending 

legislation that is out there? Can you give me a little bit of status 

on how we move the CO2? 

Mr. MARKOWSKY. Thank you for that question, Senator Murkowski. 

We have those 2 issues on our table with the CCS task force, 

both the pipeline issue and also who regulates the pipeline. Right 

now, we have got just under 4,000 miles of CO2 pipelines, extensive 

network now, and there are projections of tens of thousands of 

miles of pipeline. So the issue of who is going to regulate that, 

which now is not clear. It is an issue that is being studied. 

Also the issue of basically putting in pipeline, the safety and acquisition. We hope to have that—we will have that report ready 

when the task force submits a report to the President in August. 

Senator MURKOWSKI. In August? 

Mr.. MARKOWSKY. Yes. 

Senator MURKOWSKI. OK. 

A final question then is whether or not, and Senator Dorgan 

mentioned the beneficial uses of CO2, should CO2 that is clearly a 

valued commodity for enhanced oil recovery, should that be treated 
28 

the same way as CO2 that would be sequestered? Is there any reason to treat them differently? 

I mean, one is used to enhance the oil product. The other, we are 

basically just storing. Do we look at them differently from a regulatory perspective? 

Mr. MARKOWSKY. We are looking at that issue in terms of the 

regulations with respect to storage. There is an issue in terms of 

there has been extensive amount of CO2 injected for enhanced oil 

recovery, and there are need for regulations for geological sequestration. That is an issue that is being worked on with EPA—— 

Senator MURKOWSKI. Is the task force also looking at this as 

well? 

Mr. MARKOWSKY. The task force is working on that, but EPA is 

also looking at that with respect to injection and monitoring. They 

hope to have a rule—they are going to have a rule out by the end 

of this year. 

Senator MURKOWSKI. Ms. Castle. 

Ms. CASTLE. As I understand it, Senator, I mean, CO2 is a fungible commodity, but the difference with sequestration is the injection at pressure, and that generates different impacts, different 

issues. So the regulatory structure may be different as a result. 

But as Dr. Markowsky says, that is one of the issues that is being 

addressed by the task force. 

Senator MURKOWSKI. Thank you, Mr. Chairman. 

Thank you. 

The CHAIRMAN. Senator Dorgan. 

Senator DORGAN. Let me just make one final point, and it relates 

to something that Senator Bunning said. I think many share the 

urgency that he feels about moving ahead. 

Yet I think it is also important to understand this is not formula 

funding that you have been given. The $3.4 billion is funding for 

which you are going to select some very large projects that will be 

consequential, and it is very important that these projects be carefully selected so that they are able to accomplish what we want to 

accomplish. So I want you to do it as quickly as we can, but I want 

you to do it right. I know Senator Bunning would want the same 

thing. 

But it is easier to get formula funding out the door. I understand 

that. When we provide formula funding, we would expect that to 

move out the door. But this $3.4 billion is designed to support some 

very significant, new, cutting-edge, large projects. I understand the 

concern from the Senator from Wyoming, that a small percent has 

gone out the door at this point. But having said all that, all of us 

want you to not only do it well and do it quickly, but to do it right. 

Mr. MARKOWSKY. If I could just mention some of the things we 

are doing? In CCPI–3, we selected 2 gasification projects, somewhat different. One produces hydrogen for electric power generation and also a product, and the second one basically will be co-production of urea, again using state-of-the-art gasification technology, 

which I still call ‘‘first generation.’’ 

We also have selected 3 post combustion projects, which have different post combustion technologies. That is critical that we operate those in an integrated fashion. However, I feel that we need to 
29 

accelerate the development of that to go to the next generation, 

which is going to have significant cost reduction. 

On the industrial sector, we are looking at cement kilns. We are 

looking refineries. So we are looking at the spectrum of post capture-type of technology. 

Senator, I believe, given the technology we have, we are covering 

the nature of the industry that we need to cover to get the integrated information to take the next step. 

Senator DORGAN. Each of these necessarily will be fairly large 

projects? 

Mr. MARKOWSKY. Yes. 

Senator DORGAN. That is why making a mistake on one could be 

very costly for the American taxpayer. So you have a great opportunity with this money that comes from the Recovery Act, and all 

of us want you to use this in a very significant way to develop the 

answers that we need as we move forward to determine what is the 

bridge to be able to use coal in the future. 

Mr. MARKOWSKY. That is our objective, sir. 

The CHAIRMAN. Thank you both very much for your excellent testimony. 

Why don’t we go ahead and go to the second panel at this point? 

Let me introduce the second panel as they are coming forward 

to the witness table. Robert Hilton is vice president of power technologies. He is at Alstom Power here in Washington. Mark 

Brownstein is Deputy Director of Energy Programs with the Environmental Defense Fund. Adam Vann, who is legislative attorney 

with the American Law Division of CRS, Congressional Research 

Service. Ben Yamagata, who is the executive director of the Coal 

Utilization Research Council. Kurt House, who is the chief executive officer with C12 Energy in Cambridge, Massachusetts. 

So we very much appreciate all of you being here. Why don’t we 

start with you, Mr. Hilton, and just go right across the table hear, 

and each of you take about 5 minutes. We will include your full 

statements in the record as if read. But if you could make the main 

points that you think we need to understand, that would be very 

helpful. 

Mr. Hilton. 

STATEMENT OF ROBERT HILTON, ON BEHALF OF MS. 

MACNAUGHTON, CB, SENIOR VICE PRESIDENT, POWER AND 

ENVIRONMENTAL POLICIES, ALSTOM POWER 

Mr. HILTON. Thank you. Good morning. 

I would like to thank Chairman Bingaman and Ranking Member 

Murkowski, as well as the entire committee, for this opportunity to 

address these issues on CCS. 

Alstom is a global leader in the world of power generation and 

transportation infrastructure. We employ more than 81,000 people 

in 70 countries, including 6,000 full-time permanent employees in 

47 States in the United States That number virtually doubles when 

you include workers hired for specific projects. 

We are proud of our growth in the U.S., highlighted by our near- ly $300 million investment in a new turbine manufacturing facility 

in Chattanooga, Tennessee, and a new wind manufacturing facility 

in Amarillo, Texas. 
30 

Alstom is a leader in the field of CCS with 12 pilots, demonstrations, and commercial-scale plants in operation or design and construction. We are proud to be partnering with AEP in operating 

what is thought to be the only real project capturing and storing 

significant quantities of CO2 from an existing power plant, namely 

the Mountaineer plant. 

Alstom is commercializing 3 capture technologies, and these will 

be available commercially by 2015 is the target. All of these technologies can be retrofitted to the existing fleet. 

We are here to talk specifically about 3 bills under your consideration. The first of these is the draft bill by Senators Rockefeller and 

Voinovich. Alstom strongly supports this bill. We believe the funding structure and mechanism proposed in the draft will achieve the 

targeted number of plants which the industry, the administration, 

and Congress have deemed necessary for successful implementation of commercial-scale technology. 

Alstom suggests a revision to the restrictions on funding. Alstom 

has been a leader in technology development and commercialization throughout its history. We have brought many technologies to 

the marketplace. The experience has led us to be wary of upfront 

prescriptive sizing definitions for funding. 

For instance, with over 50 years experience in the air pollution 

control area, we know that plants validated at the 200 to 300 

megawatt level for post combustion CCS are fully adequate for unlimited deployment on full industry-wide application. Other technologies like oxy-fired boilers will take larger demonstrations. 

We need to allow for demonstrations at the 100 to 300 megawatt 

level on key applications such as CCS applied to gas turbines, an 

application that will be critical under any scenario if we are to 

reach our goals in 2030 and 2050. Too much attention has been focused on identifying CCS with coal. The application of CCS to all 

fossil fuels, particularly natural gas, will be absolutely critical to 

meet these reduction targets. 

We reiterate that Alstom sees the Rockefeller-Voinovich draft as 

a critical and comprehensive bill to support the commercialization 

of CCS. The Responsible Use of Coal Act provides a necessary additional dimension to the Rockefeller and Voinovich draft. Our commitment to innovation means that the technology we are commercializing today may well not be the ultimate and optimal solutions 

in the future. 

The Rockefeller-Voinovich bill is valuable for addressing the 

near-term commercialization opportunities. But the Casey bill is 

also valuable in providing support for several levels of the nextgeneration technology, which our country’s power system will need. 

Alstom urges that consideration be given also to broadening the 

bill to include all fossil fuels, not just coal. As we stated earlier, we 

need CCS to be applied to all fossil fuels, gas as well as coal, as 

well as other industrial processes. 

Finally, Alstom also S. 1856, sponsored by Senator Barrasso, as 

addressing an important prerequisite for making CCS a commercial reality. We will have accomplished nothing if we commercialize 

the capture technology and have not addressed the ultimate disposition of the CO2. 
31 

Alstom would also take this opportunity to urge the committee 

to consider measures in energy legislation to incentivize the industry to upgrade and improve the efficiency of the existing fleet on 

the supply side. The fact is we will need to continue to rely on coal 

and gas plants for a large part of our generation well into the future. We need these plants to continue to run as optimally as possible. 

Upgrading the efficiency of the existing fleet will prolong its life, 

provide us breathing space to make the needed investments in replacement plants, compensate for load growth and load loss resulting from additional controls, and finally, reduce carbon emissions 

on a massive scale. One estimate has upgrading the existing fleet 

reducing CO2 by as much as 12 percent, a huge step toward our 

goal, and all this technology is now available. 

Last, I would reiterate a call made by Alstom and a broad section 

of business, labor, environmental, and other organizations for Congress to pass climate legislation that preserves and creates jobs, 

enhances energy security, and enables the U.S. to contribute the 

clean technology leadership that the world needs. To those who 

would question how soon CCS will be available, Alstom is on record 

as saying 2015. 

All of these bills are important steps in that direction and deserve support on their own merit. However, absent the certainty 

that can only come from a broad legislative and regulatory framework making clear a price for CO2, businesses will not make the 

substantial investments needed to support CCS and other innovative technology options. 

We thank the committee for the opportunity to comment. 

[The prepared statement of Ms. MacNaughton follows:] 

STATEMENT OF JOAN MACNAUGHTON, SENIOR VICE PRESIDENT, ENVIRONMENTAL

POLICIES, ALSTOM POWER

Good morning. My name is Joan MacNaughton. I hold the position of Senior Vice 

President responsible for Power and Environmental Policies for Alstom Power. I 

would like to thank Chairman Bingaman and Ranking Member Murkowski as well 

as the entire Committee for this opportunity to address these key issues on Carbon 

Capture and Sequestration (CCS). 

Alstom is a global leader in the world of power generation and transportation infrastructure that sets the benchwork for innovative and environmentally friendly 

technologies. More than 50% of the power plants in the United States have Alstom 

equipment, and 25% of the world’s electricity is generated on Alstom equipment. 

Alstom has the world’s largest service business devoted to the maintenance of power 

generation equipment and is the world’s largest air pollution control company. 

Alstom employs more than 81,000 people in 70 countries, and had sales of $26.7 

billion in 2008-2009. In the U.S., Alstom employs approximately 6,000 full time permanent employees in 47 states. That number virtually doubles when you include 

workers hired for specific projects. We are very proud of our growth in the U.S., 

highlighted by our nearly $300 million investment in a new steam turbine manufacturing facility in Chattanooga, TN that will open in a few months; and our proposed 

new factory for wind manufacturing facility at Amarillo, Texas. 

Alstom has a broad portfolio of power generation technology options: including 

coal, oil, natural gas, wind, hydro, and nuclear. Based on this diversity of offerings, 

Alstom has been promoting its strategy of ‘‘Clean Power Today’’. We are clear we 

will need a balance of all these technologies to reach our goals for carbon, both on 

technical and economical grounds. Significant pillars of our program are rapid and 

successful deployment of non-CO2 sources of generation, namely nuclear and renewables; reduced CO2 emissions through more efficient generation; and the capture of 

CO2 from fossil fuel powered generation (CCS). 
32 

Alstom is a leader in the field of CCS with 12 pilots, demonstrations, and commercial scale plants in operation or design and construction worldwide. We are proud 

to be partnering with AEP in operating what is thought to be the only real project 

capturing and storing significant quantities of CO2 from an existing power plant, 

namely the Mountaineer Plant in West Virginia. 

Alstom is commercializing three capture related technologies: chilled ammonia, 

advanced amine, and oxy-firing, with the focus on having the first of these technologies commercially available in 2015. All of these technologies can be retrofitted 

to existing power plants. 

We are here today to specifically address three bills under consideration by the 

Committee on the subject of CCS. 

The first of these is the draft bill by Senators Rockefeller and Voinovich. Alstom 

strongly supports this bill. We believe the funding structure and mechanism proposed in the draft will achieve the targeted number of plants which the industry, 

the Administration, and Congress have deemed necessary for successful implementation of commercial scale capture technology. 

Alstom would offer the following comments as an enhancement to the draft bill. 

We recommend that industry groups representing carbon capture technology suppliers be added to either the Partnership Council or the Technical Advisory Committee or both. Including these key voices would provide important expertise as an 

input to the decision process. 

Alstom also suggests a revision to the Restrictions on funding. Alstom has been 

a leader in technology development and commercialization throughout its history. 

We have brought many technologies to the market place. This experience has led 

us to be wary of upfront prescriptive size definitions for funding. The size of demonstration required will vary according to technology type. For instance, with over 

50 years experience in the air pollution control area, we know that plants validated 

at the 200-300 MW level for post-combustion CCS are fully adequate for unlimited 

deployment on full industry wide application. But other technologies such as oxyfired boilers will require larger demonstrations because of technical factors related 

to boiler design. On the other hand, we need to allow for demonstrations at the 

100MW—300MW level on key applications such as CCS applied to gas turbines-an 

application that will be critical under any scenario if the world is to reach the levels 

of reduction proposed for 2030 and 2050. Too much attention has been focused on 

identifying CCS with coal. The application of CCS to all fossil fuels, particularly 

natural gas, will be absolutely critical to meet the ultimate future emission reduction goals of 50% and 80%. We therefore suggest that the restriction of funding for 

the size range 100MW—300MW be removed. If the goal is to ensure adequate funding for larger scale demonstrations needed across the broad range of technologies, 

perhaps the Bill should stipulate the attainment of that goal in the remit given to 

the Partnership Council and the Technical Advisory Committee. 

We reiterate that Alstom sees the Rockefeller/Voinovich draft as a critical and 

comprehensive bill to support the commercialization of CCS. We strongly welcome 

it and urge the committee to move forward with such legislation, and to do so without delay if we are to build a whole new industry and roll out CCS on the scale 

required by 2030. 

Senate Bill 1134, ‘‘The Responsible Use of Coal Act of 2009’’ sponsored by Senator 

Casey, provides a necessary additional dimension to the Rockefeller/Voinovich draft. 

Our commitment to innovation means that the technology we are commercializing 

today may well not be the ultimate or optimal solution in the future. Alstom has 

extensive experience with technology development across different fuels. We are 

clear that technology and cost reduction in power generation in any field will only 

be achieved by innovation and the continued funding of research, development and 

demonstration at a significant scale. The Rockefeller/Voinovich bill is valuable for 

addressing the near term commercialization opportunities. But the Casey bill is also 

valuable in providing support for several levels of the next generation technology 

which our country’s power system will need. Like many technology developers, 

Alstom is already exploring several additional revolutionary technologies for CCS in 

addition to those which are nearer to market. Again, however, Alstom urges that 

consideration be given to broadening the bill, to include all fossil fuels and not just 

coal. As we stated earlier, we will need CCS to be applied to all fossil fuel power 

generation, gas and coal, as well as to other industrial processes. Technical breakthroughs in one fuel may well be applicable to others in the case of CCS. This bill 

would provide support for those future technologies and accordingly Alstom sees this 

portion of the bill, widened to include other fuels as well as coal, as an essential 

component of the wider strategy for meeting the goals of emission reduction through 

CCS. 
33 

Finally, Alstom also sees Senate Bill 1856 sponsored by Senator Barrosso as addressing an important prerequisite for making CCS a commercial reality. We will 

have accomplished nothing if we commercialize the capture technologies and have 

not addressed the ultimate disposition of the CO2 captured. The approach to pore 

ownership on Federal lands in the Barrosso bill is an important step towards dealing with storage issues, and Alstom welcomes inclusion of such legislation in the 

developing CCS strategy and legislative portfolio. We would also point out that 

there are other excellent examples both from individual States and from the European Union which could be considered within this context. 

Alstom would also take this opportunity to urge the Committee to consider measures in energy legislation to incentivise the industry to upgrade and improve the 

efficiency of the existing fleet on the supply side. Our electricity needs are set to 

grow—even if we attain the ambitious levels of improvement in efficiency on the demand side which we and many experts believe are necessary. Nor can we meet 

these growing needs just from increased use of renewables and nuclear, valuable 

though both these sources will be for meeting emission reduction targets. The fact 

is we will need to continue to rely on coal and gas plants for a large part of our 

generation. And we need these plants to continue to run as optimally as possible. 

Upgrading the efficiency of the existing fleet will prolong its life; provide us breathing space to make the needed investments in replacement with new plant; compensate for load growth and load loss resulting from additional controls; and finally, 

reduce carbon emissions on a massive scale. Improving efficiency means more 

megawatts from each ton of fossil fuel, thus contributing to improving our security 

of fuel supply as well as ensuring better continuity of electricity supply. One estimate has the upgrading of the existing fleet to reduce carbon emissions potentially 

by as much as 12% from the reported current baseline—a huge step towards our 

goals. More importantly, implementing efficiency upgrades now actually significantly reduces the levels of CO2 reduction needed in future years. And, best of all, 

the technology already exists today, at proven commercial scale. 

Lastly, I would reiterate previous calls made by Alstom and a broad cross section 

of business, labor, environmental, and other organizations for Congress to pass climate legislation that preserves and creates jobs, enhances energy security, and enables the US to contribute the clean technology leadership that the world needs. The 

technologies exist to make such policies achievable. To those who question how soon 

CCS will be available, we say, drawing on experience from our extensive demonstration program,that Alstom is on record as having the capture process commercially 

available in 2015. All of these bills are important steps in that direction and deserve 

support on their own merit. However, absent the certainty that can only come from 

a broad legislative and regulatory framework making clear a price for CO2, businesses will not make the substantial investments needed to support CCS and other 

innovative technology options. 

Such investments risk being held back by current uncertainties over the policy 

framework. By passing practical and well targeted measures such as are contained 

in these three Bills, the Congress will kick start the creation of a whole new industry, creating hundreds of thousands of high quality jobs and preserving many others 

in the coal mining industry. As the rest of the world increasingly puts these policies 

in place, with huge investments in low carbon technologies, for America not to do 

so would put American competitiveness and prosperity at risk. It cannot be right 

to let current uncertainties persist, and that is why we at Alstom support these 

pieces of legislation which we hope will move the country and the industry closer 

to the goal of a competitive and thriving low carbon economy. 

We thank the Committee for this opportunity to comment. 

The CHAIRMAN. Thank you very much. 

Mr. Yamagata, go right ahead. 

STATEMENT OF BEN YAMAGATA, EXECUTIVE DIRECTOR, COAL 

UTILIZATION RESEARCH COUNCIL 

Mr. YAMAGATA. Mr. Chairman, Ranking Member Murkowski, 

and members of the committee, my name is Ben Yamagata. I am 

the executive director of the Coal Utilization Research Council. A 

list of our membership is included with my written statement. 

I thank you for the opportunity to discuss Title II of draft legislation offered for comment by Senators Rockefeller and Voinovich. At 

the outset, let me express our support for the 5-title draft legisla-
34 

tion that Senators Voinovich and Rockefeller have distributed for 

comment. 

While CURC members differ with specific elements of the draft, 

I want to emphasize that this proposal, in its entirety, is the most 

comprehensive and far-reaching initiative yet proposed to address 

the variety of issues related to the successful widespread introduction of CCS technology. 

With my allotted time, let me make 4 points. First, coal will be 

used around the world in the foreseeable future. Let me give you 

some metrics. We emit about 2 billion tons of CO2 annually from 

the U.S. power sector and some 6-plus billion from the entire U.S. 

economy. 

China emits 5.6 billion tons annually just from the energy sector 

alone. Left unabated, that number is projected to rise to 16.2 billion by 2050. China is building the equivalent of one new commercial power plant every week. China is both the largest user of coal 

in the world, as well as the larger emitter of CO2. 

To achieve a greater than 80 percent reduction in CO2 emissions 

by 2050, given the projected use of coal globally, CCS is imperative. 

We can’t be successful with the climate issue without successfully 

using CCS. 

If we are forced to do so, that is without using CCS, according 

to the International Energy Agency, it will cost at least 90 percent 

more, nearly doubling the cost to achieve the level of reductions 

proposed by mid century. 

Second, the pieces of CCS are available, but we have yet to integrate all of those pieces into a demonstrated operating whole, at 

least in the utility sector. Moreover, with our current technology 

and with the lack of economies of scale, CCS is expensive. 

We estimate, as does DOE and others, that the CO2 capture systems can add a third more cost to a power plant when installed, 

retrofits even more, including parasitic use of the power from those 

plants. That is why financial incentives right now are so important. 

President Obama recently reiterated a commitment to make sure 

that 5 to 10 CCS projects are demonstrated and operational by 

2016. While welcomed, this is also not enough, especially with respect to the storage of carbon dioxide in deep saline formations. 

The National Research Council, an arm of the National Academy 

of Sciences, the Secretary of Energy’s National Coal Council, and 

many others have concluded that many more CCS projects beyond 

the numbers cited by the President will be required. It is important 

to note that in order to ensure completed demonstrations by 2016, 

projects must be underway. We must act now. 

Most significant, in our judgment, we are nowhere near the level 

of financial commitment needed to get a sufficient number of 

projects underway and completed before 2025 or 2030, let alone 

2020. This leads me to the third point. That is general comments 

about the provisions of Title II of the draft proposal set forth by 

Senators Rockefeller and Voinovich. 

While we have significant concerns about several features of the 

Title II proposal, again, we are grateful for this important initiative. I outlined in my written statement and attachments some of 

our principal areas of concern. In the interest of time, let me simply state the wires charge by which industry and its customers 
35 

would self-finance CCS demonstrations would—excuse me, is an 

important element of the proposal. We prefer the provisions that 

were included in the House-passed H.R. 2454 program to the program that has been detailed in the Senators’ draft. 

We are further concerned that several CURC members that have 

CCS projects underway or under consideration will not be eligible 

for the incentives in the proposed bill as a result of the recommended size of the project criteria. Also, there is a need to clarify eligibility to ensure that both regulated and unregulated electric 

utilities will qualify. 

We believe that funding incentives for public power utilities 

needs to be added. Finally, we need assurances that the funds collected from ratepayers will be available. Realistically, that cannot 

be assured through the annual appropriations process. 

All of these issues, in my judgment, are eminently fixable. We 

look forward to working with the Senators and this committee to 

address these concerns. 

Fourth and finally, the other 4 titles of the draft legislation presented by Senators Rockefeller and Voinovich must also be addressed. CURC has recommended a 5-point program similar in 

many respects to that proposed by the Senators. 

We believe that each element of the program must be acted 

upon. No single element alone is enough. We ask for the consideration by this committee and other committees with pertinent jurisdiction that you consider and act upon all the elements of the Senators that they are proposing. 

To effectively address CO2 emissions while continuing use of this 

country’s most abundant fossil fuel, CCS is imperative. It will be 

expensive. Patience must be exercised. We cannot succeed without 

Government assistance, but also we cannot succeed without CCS. 

Thank you, and I look forward to your questions. 

[The prepared statement of Mr. Yamagata follows:] 

PREPARED STATEMENT OF BEN YAMAGATA, EXECUTIVE DIRECTOR, COAL UTILIZATION

RESEARCH COUNCIL (CURC) 

Introduction 

On behalf of the membership of the Coal Utilization Research Council (CURC) I 

thank the Committee for this opportunity to testify on Title II of draft legislation 

distributed by Senator Jay Rockefeller and Senator George Voinovich on March 20. 

The CURC is an organization of major U.S. coal producers, electric utilities that 

rely upon coal to generate electricity, major equipment manufacturers, state governments and academic institutions. A membership list is attached (See: Attachment 

1). 

Title II of the Senators’ draft would authorize the establishment of a twenty 

gigawatt demonstration and early commercial deployment program focused upon 

carbon capture and sequestration (CCS) technology. CURC supports the concepts in 

this proposed legislation and we look forward to working with the Senators and also 

with this Committee and others to refine this draft proposal prior to introduction. 

As requested by Committee staff, this testimony focuses specifically upon title II 

of the draft legislation related to incentives for a 20 gigawatts CCS ‘‘pioneer plants’’ 

program. 

II. Summary of the important points in this written statement: 

• Four key elements of CURC’s testimony: 

1. To insure that CCS technology is effective and affordable and to achieve 

these goals within the mid-century timeframe being discussed for CO2 reductions we must begin the Rockefeller/Voinovich title II program NOW. 
36 

2. The scope of the proposed title II program is broad (20 GWs) and will 

be expensive (as much as $40 billion over a 20+ year period). The National 

Academy of Sciences, the Senator Byron Dorgan ‘‘Pathways’’ initiative comprised of a large and diverse cross-section of interests, including NGOs, industry, academia, as well as the International Energy Agency and many others 

have concluded that a large-scale CCS demonstration-deployment program is 

essential to the rapid commercialization of CCS. More importantly the IEA has 

concluded that the successful deployment of CCS could reduce overall costs of 

reductions by up to 97%! 

3. CURC supports the concepts of title II of the draft legislation and recommends several modifications to the draft including: 

• Consideration of an electric utility industry-led accelerated CCS demonstration program similar in scope and administration to the ‘‘wires 

charge’’ authorization included as section 114 of H.R. 2454 in lieu of the 10 

GW special funding program proposed in the Senators’ draft. While the approaches to a fee on electricity consumption to finance a CCS demonstration 

program differ and CURC’s electric utility members, in particular, have 

agreed upon the program included in H.R. 2454, the CURC fully endorses 

the concept of such a fee-based program to support the demonstration of 

CCS particularly if the program insures that there will be a diversity of 

CCS technologies demonstrated. This diversity of options will provide industry with the ability to choose which option is most favorable to a particular circumstance. 

• The draft legislation sets forth eligibility criteria based, in part, upon 

the size of demonstration projects. As currently drafted this criterion would 

eliminate from eligibility certain CCS projects now under consideration. 

The size limitation must be adjusted. CURC has offered a different size of 

project criteria which we believe retains the objectives of the proposed program while still insuring that large-scale demonstration projects will qualify. We urge the substitution of this modified size standard. 

• Clarification of language in the draft proposal to insure that all of the 

proposed financial incentives are available to a specific project (e.g. project 

should be eligible for investment as well as production tax credits) and also 

to include subsidized bond financing and or tax grant options for not-forprofit public power and electric cooperative utilities not otherwise eligible 

for the proposed tax incentives. 

4. Finally, Congress is encouraged to adopt the ‘‘comprehensive’’ carbon 

management program for coal as reflected in the Rockefeller/Voinovich discussion draft. Each title of the Senators’ discussion draft is vitally important, in 

the judgment of CURC members, to successful widespread commercial deployment of CCS. 

III. Why Coal and CCS technology? 

Coal is an important contributor to the U.S. and global energy mixes. In the U.S., 

coal provided 23% of total energy consumption in 2008, according to the DOE Energy Information Administration. About 90% of coal in the U.S. goes to electric 

power generation, and that coal generates about half of our electricity. Globally, coal 

is about 27% of total energy consumption and 40% of electricity generation. Coal use 

in the U.S. has been relatively constant for several years, and is expected to remain 

so in the future, but globally coal has been the fastest growing fuel form for the 

past decade, in total Btu’s. EIA projects that 94% of growth in global coal use between 2006 and 2030 will be in non-OECD countries. Much of that growth will be 

in China, which currently uses about three times as much coal as the U.S. and is 

building approximately one new coal-based power station every week of the year. 

Coal provides, and will continue to provide, reliable and low cost energy and 

power to billions of people around the world. But, to address the continued and 

growing need for coal we must address the carbon dioxide emissions that result 

from coal use. CURC is absolutely confident that given sufficient time and financial 

assistance technology will be available to address the CO2 emissions resulting from 

the use of all carbon-based fuels, including coal and natural gas. 

In the U.S., coal contributes about 31% of total emissions of greenhouse gases, according to EPA’s latest inventory. That figure is exceeded only by petroleum (35%). 

Without a significant reduction in emissions from all fossil fuels, including coal, we 

have no chance of meeting those legislative goals demanded by some like an 83% 

reduction in GHG emissions by 2050. For coal, the only practical ways of achieving 

such results are to either not use it, or to apply CCS technology. Given the economic 

and energy security contributions of using coal, and the clear certainty that the de-
37 

1 Energy Technology Perspectives, 2008, International Energy Agency, OECD, 2008. 

* Figure has been retained in committee files. 

veloping nations will continue and expand their use of coal, CCS appears to be the 

more realistic choice. Others have reached this same conclusion. You may recall the 

oft-quoted statement by former U.K. Prime Minister Tony Blair: ‘‘The vast majority 

of new power stations in China and India will be coal-fired. Not ‘may be coal-fired’; 

will be. So developing carbon capture and storage technology is not optional, it is 

literally of the essence.’’ In the International Energy Agency’s analysis of GHG mitigation options (Energy Technology Perspectives, 2008) the IEA concluded that a scenario including the assumption that CCS was available and effective was 97% 

cheaper than a scenario without CCS. IEA has concluded that: ‘‘CO2 capture and 

storage for power generation and industry is the most important single new 

technology . . . ’’ 

The importance of CCS might best be explained when described in the context of 

the various paths that must be pursued to achieve what the Intergovernmental 

Panel on Climate Change (the IPCC) has concluded as necessary reductions in global greenhouse gas (GHG) emissions of 50-85% below current rates by 2050 in order 

to limit warming to 2-2.4 °C. In 2008, the International Energy Agency published 

its analysis of measures needed to achieve a 50% decrease below current GHG emission rates by 2050.1 *Figure ES.2 (below), taken from that report, summarizes the 

report’s findings. 

IV. What is the Current Status of CCS? 

Most of the major components needed for CCS have been used commercially. They 

have not, however, ever been combined on a commercial scale power plant anywhere 

in the world. With respect to storage technology, we have extensive experience in 

the U.S. with enhanced oil recovery, which retains a large portion of the CO2 injected to produce additional crude oil, but there are only a handful of projects globally that are injecting large quantities of CO2 into the largest potential ‘‘sink’’ for 

CO2: deep saline geological formations (essentially porous rocks saturated with 

brackish water, a mile below the earth’s surface). The USDOE has two relevant 

demonstration programs underway—the Regional CO2 Sequestration Partnerships 

program, focused on storage of CO2; and, the Clean Coal Power Initiative (CCPI), 

focused on integrated power plant capture and storage projects. In addition, the 

FutureGen project, an integrated gasification combined cycle (IGCC) equipped with 

carbon capture and storage technologies, hopefully, will be fully underway with completion of construction and initial operation by 2015. This first-of-a-kind project will 

capture and sequester one and one-half million tons of CO2 annually. 

It is important to note that if all the ongoing projects go forward, and that is always an uncertainty, in 2016 we will have experience with two saline storage 

projects and four, or more other power plant and industrial projects that have the 

goal of CO2 capture and storage in EOR formations, and they are important, especially for deploying CCS in the near-term—but they will not give us needed experience with saline storage which is necessary for unlocking the greater potential of 

CO2 storage in deep geologic formations. 

My point is not one of complaint about the current demonstration program—it is 

the most advanced and aggressive in the world.My point is that this is not enough 

to launch a program critical to the world’s future in the time frames discussed by 

the President and in proposed legislation. This level of undertaking is further explained and amplified by others including the following: 

1. America’s Energy Future, a recent report by the National Research Council, concluded that 15-20 CCS projects totaling 10 gigawatts (GW) of capacity 

were needed in the next decade, in order to accommodate broad deployment of 

CCS in the time thereafter. The NRC report said, ‘‘A failure to demonstrate the 

viability of these technologies [both CCS and advanced nuclear systems] during 

the next decade would greatly restrict options to reduce the electricity sector’s 

CO2 emissions over succeeding decades. The urgency of getting started on these 

demonstrations to clarify future deployment options cannot be overstated.’’ [emphasis added] 

2. The total number of projects and scope of demonstrations recommended by 

the National Research Council study is generally consistent with the conclusions drawn by CURC. Our members have carefully examined the need for a 

variety of CCS demonstrations to address both technical and financial issues of 

uncertainty and concluded that it will be necessary to support as much as 15 

gigawatts of CCS-related capacity. Importantly, this does not need to be electricity generation only. Indeed, many of the early, commercial-scale projects uti-
38 

* Attachment has been retained in committee files. 

lizing coal or petroleum coke will convert those fossil fuels to a useful energy 

product like substitute natural gas (SNG). And, these projects will also capture 

CO2 emissions. However, at least five gigawatts-equivalent of the CCS projects 

must have as a part of the demonstration the storage of captured CO2 into deep 

geologic formations. We cannot emphasize enough the importance of gaining the 

handling, storage, verification and monitoring experience that will come with 

this type of permanent storage. 

3. Finally, over the period of several months last year a group of environmental organizations, industry organizations, experts from academia and technology providers convened under the auspices of Senator Byron Dorgan (known 

as the Dorgan ‘‘Pathways’’ initiative) to determine if they could agree upon the 

need for and amounts of financial support required to encourage the rapid development and deployment of CCS technology. That diverse group of interests 

was able to achieve some agreement over the need to support CCS deployment 

and most important, agreed that large amounts of government assistance was 

essential to early success of CCS (a brief description of the ‘‘Pathways’’ project 

and conclusions are attached to this written statement* as Attachment 2). Much 

of the financial requirements and timing for CCS development contemplated by 

the ‘‘Pathways’’ participants are reflected in two titles of the draft proposal of 

Senators Rockefeller and Voinovich. 

These analyses suggest a much more aggressive target than that set by the 

Obama Administration, and greatly exceeds activity now underway. It is important 

to recognize that time is of the essence on moving forward with this work. 

V. What is our Analysis of the Draft Rockefeller and Voinovich Legislation? 

Committee staff suggested that I focus my remarks on Title II of draft legislation 

released for comment by Senators Rockefeller and Voinovich on March 20, 2010. The 

primary obstacle to more activity demonstrating CCS technology is money. Title II 

of the Senators’ draft proposes to address this issue by taking the money from two 

sources. Under Subtitle A of Title II, the first 10 gigawatts of CCS-equipped capacity would be funded by utilities which use fossil energy to produce electricity. A 

small fee placed on those utilities, and based on their total generation by each fossil 

fuel, would provide a pool of about $2 billion per year for 10 years, or $20 billion 

altogether. The second 10 gigawatts of CCS-equipped capacity are governed by Subtitle B and would be eligible for a production tax credit for captured and stored CO2, 

loan guarantees, and an investment tax credit funded from general tax revenues. 

Hence, Title II proposes a practical solution to the greatest problem in getting more 

demonstration units built in the near term. It has identified a source of funds. In 

CURC’s activities in this area, it has become clear that industry will support the 

general concept of a ‘‘wires charge’’ to pay for the initial demonstration program, 

and to pay the private sector share of both that program and the taxpayer-assisted 

program. Finally, if the IEA’s cost projections are even close to correct, electricity 

consumer and taxpayer support of these Pioneer projects will be rewarded with electric power which is much less expensive than it would otherwise be, if and when 

a climate program reaches its more aggressive stages. 

The Subtitle A funds would be administered by DOE and used to pay a production 

subsidy, in dollars per ton of CO2 captured and stored (or converted). Projects with 

higher %-capture, or earlier in time, would get a higher rate per ton. The details 

of how much the subsidy would be for specific projects or overall are not prescribed 

in the draft. The goal of the program is to provide incentives for at least 10 GW 

of CCS-equipped capacity. 

Subtitle B of Title II provides for amendment of the internal revenue code to: 

• Extend the current Section 45Q production tax credit to any eligible unit placed 

in service prior to January 1, 2017. The credit amounts to either $10/ton or $20/ 

ton of CO2 captured and stored, with the amount depending on whether the 

storage in associated with EOR or saline formations, for the first 10 years of 

unit operation with CCS. 

• Provide $20 billion in loan guarantees for up to 10 gigawatts of new and retrofit 

units with CCS is authorized by an amendment to Section 1704 of EPACT-2005. 

• Provide that units eligible under Section 1704 may also elect to receive a 30% 

Investment Tax Credit for the incremental cost of the CCS systems (but not for 

the basic power plant or industrial process unit). 
39 

2 A structural issue which has been raised regarding the Draft Discussion is the exclusion of 

residential electricity users from the lines charge assessment. These customers constitute about 

one-third of electricity use, so their exclusion raises the fee significantly for the remaining customers (commercial and residential electricity users). Under this construction, the fee could 

reach burdensome levels, particularly for the manufacturing sector, which is struggling to survive in the current recession. The basic principle of minimizing the fee per payer by having a 

large base of inclusion is defeated if a large segment of the potential payers are excused from 

the assessment. I would urge the authors of the draft proposal and this Committee carefully 

reconsider the issue of ‘‘who pays’’ in order the spread the cost impacts across all electricity ratepayers. 

Key Issues of Concern to CURC 

We applaud Senators Rockefeller and Voinovich for taking a leadership position 

on the advancement of this critical technology. In my view, this is the most constructive legislative package supporting CCS yet offered, in terms of its ability to 

generate additional demonstration facilities NOW. However, there are several issues 

that require modifications prior to introduction (See: attachment 3 for a comparison 

of the provisions proposed in the draft legislation by Senators Rockefeller and Voinovich and recommendations, very similar to section 114 of H.R. 2454, that CURC has 

previously provided). 

The first, and foremost, is the structure of the section 201 program, the ‘‘Carbon 

Capture and Sequestration Early and Effective Deployment Fund Act of 2010’’ 

which includes the assessment of a fee on electricity consumption by certain customers.2 Simply stated, we believe that the program initially considered and adopted in the House-passed climate bill related to an industry-funded demonstration 

program, the so-called ‘‘Boucher wires charge’’ more clearly reflects a suitable structure. I have taken the liberty of attaching a CURC-prepared document that compares the provisions of the draft legislation to provisions that CURC supports. There 

are immense possibilities in the Senators’ draft legislation to address our concerns 

and CURC and our members stand ready to offer further, detailed views in this regard. 

It is significant that electric utilities, both regulated and non-regulated, as well 

as the association of state utility regulators (NARUC) have agreed upon the level 

of fees to be assessed on all utility customers as well as the administration of the 

demonstration program. That agreement was reflected in the CCS demonstration 

program included in H.R. 2454, section 114. The Rockefeller-Voinovich discussion 

draft substantially alters critical elements of section 114. In addition to conforming 

the amount of fees to be levied and the customer base that would be asked to provide funds for the demonstration program to H.R. 2454, the Committee and Senators Rockefeller and Voinovich must retain a mechanism that will ensure that the 

funds collected for the program be available only to the program and that they not 

be subject to an annual appropriations process that immediately draws into question whether funds will be available from one appropriations cycle to the next. 

Second, we are very concerned that the eligibility requirements to participate in 

either the 10 gigawatt demonstration program, funded by the assessments on electricity consumption, or the 10 gigawatt pioneer plant or ‘‘first mover’’ program that 

provides a variety of tax and other financial incentives to early commercial scale 

projects, are overly restrictive. Indeed, several of our members currently engaged in 

first of a kind CCS-related projects have reported that their project will not qualify 

for the proposed programs. We assume that is not the intent of the senators to exclude these projects that will pioneer the needed experience with CCS technology. 

Specifically, section 205 (i) and section 252 (c) of the draft set forth two different 

size criteria for CCS projects to be eligible for the Title II programs. We urge that 

these criteria be identical and that qualifying criteria be premised upon the assumption that the size of the project, once successfully completed, will enable that technology to thereafter be replicated at commercial scale in some instances or scaledup in other instances to thereafter operate at full commercial scale. This size standard will be different based upon the technology involved but industry and the Department of Energy, we believe, could easily determine standards to define commercial scale and also determine if a given project will demonstrate a technology that 

can be subsequently constructed at full commercial scale. To account for a variety 

of circumstances and technologies CURC has recommended that the size standard 

include an absolute size of at least 200 MWs or equivalent of nameplate capacity 

to account for CCS retrofits for a portion of very large power plants or at least 20 

percent of the total nameplate generating capacity to encompass smaller projects. 

Again, the goal of the Title II program should be to focus on the pioneer plants that 

constitute the first generation of CCS projects that will operate in commercial settings. Also with respect to eligibility it is important that all electric utilities, those 
40 

that are regulated and those operating in deregulated markets, have opportunities 

to access the variety of financial incentives. Equally true, CURC supports changes 

to Title II that will insure that public power entities are also eligible for funding 

under the programs. 

In addition, subtitle III of the draft bill provides a tax credit under new section 

45R of the Internal Revenue Code for 62 GWs of capacity that are installed with 

CCS systems. Although very supportive of this provision, we have one major concern 

with an ambiguity with the eligibility requirement. Specifically, the requirement can 

be read to require the capture and sequestration of at least 65% of the total CO2

emissions from the entire unit. For the same reasons already noted above, the application of capture levels to the entire will be infeasible at the larger-sized existing 

coal-fired units and, in such cases, only a portion of the flue gas will be treated by 

CCS technology. For this reason, CURC recommends that the 65% capture level be 

measured based on the capture levels achieved by the treated portion of the flue 

gas, instead of all of the flue gas from the unit. This approach is consistent with 

how the CCS bonus allowance program is administered under the Kerry-Boxer bill. 

VI. The Need for a Comprehensive Carbon Management Program for Coal 

The CURC strongly supports the comprehensive nature of the draft legislation 

proposed by Senator Rockefeller and Senator Voinovich. While we have not commented upon other elements of their proposal we note the importance of their initiative in seeking to address the issues that our membership considers of upmost importance to the successful development and, thereafter, widespread commercial deployment of CCS. 

Finally, while we have not commented, in this written statement upon the other 

titles of the draft legislation proposed by Senator Rockefeller and Senator Voinovich, 

CURC wishes to state its support for these important titles, as well. There are modifications that we would recommend and we look forward to working with those senators, as well as this and other jurisdictional committees of the Congress to modify 

this important proposal. We thank you for the opportunity to provide this statement. 

The CHAIRMAN. Thank you very much. 

Mr. Brownstein. 

STATEMENT OF MARK S. BROWNSTEIN, DEPUTY DIRECTOR, 

ENERGY PROGRAM, ENVIRONMENTAL DEFENSE FUND 

Mr. BROWNSTEIN. Thank you, Mr. Chairman, Ranking Member 

Murkowski, members of the committee. 

I am pleased to testify on behalf of the 700,000 members of the 

Environmental Defense Fund. Since 1967, EDF has linked science, 

economics, and law to create practical solutions to society’s most 

urgent environmental problems. 

There is no more urgent environmental problem facing our world 

today than global climate change. A changing climate will have significant disruptive effects on our economy and the environment. 

Current methods of energy production are a major source of the 

pollution causing climate change. They have brought us great prosperity, but that prosperity is not sustainable. 

Fortunately, there is a bright economic future for the United 

States in a low-carbon, clean energy technologies. EDF’s energy 

program is singularly focused on accelerating our Nation’s transition to this bright future. The work of this committee is critically 

important to achieving that bright future, and we are happy to do 

all that we can to work with you to achieve it. 

EDF strongly believes that the most important thing we can do 

to accelerate our Nation’s transition to a low-carbon, clean energy 

economy is to put a price on carbon. Unless and until there is an 

economic reason to avoid dumping greenhouse gas pollution into 

the environment, advanced new technologies that excel at deliv-
41 

ering clean, low-carbon energy will sit on the shelf. There simply 

will be no market for them. 

A price on carbon, however, by itself, will not achieve everything 

that we would like to achieve in the timeframe we would like to 

achieve it. Limited efforts to remove economic stumbling blocks or 

clarify legal or regulatory relationships are, in fact, required. 

We also need to chart a new course for coal. Coal-fired power 

plants are the single largest source of carbon dioxide pollution in 

our Nation today, and current methods of coal production and use 

place a heavy and unacceptable burden on public health and the 

environment. 

However, while we might wish it were otherwise, coal will likely 

play an important role in our economy—and the economy of many 

other industrial nations—for many years to come. Therefore, the 

challenge is to develop and deploy technologies and strategies that 

can substantially reduce or prevent the worst consequences of coal 

production and use. Carbon capture and storage is critical to the 

future of coal. 

As a technical matter, CCS is ready to begin commercial deployment today. All of the necessary technologies exist. What is missing 

is the market driver to cause companies put the pieces together 

and invest in deploying them. 

Beyond this, what is needed is a clear legal framework for securing subsurface rights for geologic storage of CO2, a well-defined liability regime, and judicious use of subsidies to accelerate the 

learning curve on CCS deployment and development. On this point, 

we are encouraged by the work of Senators Rockefeller and Voinovich, as well as the proposal made today by Senator Casey. 

When taken in context with the work that the House of Representatives has already done on this matter, we see a real consensus forming on how to move forward with CCS. Based on the 

history of other technologies, we fully expect that the costs of CCS 

deployment will come down, and project development will become 

routine. 

But we caution as CCS develops, specific attention needs to be 

paid to the importance of proper site selection and proper site operations. Geologic sequestration is not something that can be done 

just anywhere, casually, or with limited skill. It requires sophisticated preparation, execution, and oversight by both the companies 

and regulators involved. 

Government’s work with industry should be specifically targeted 

at helping to further develop the appropriate analytical and monitoring tools and rigorous procedures for achieving this objective. 

Finally, as to Senator Barrasso’s bill, we understand it to be 

clarifying basic principles of common law as it pertains to Federal 

property, and we support that. 

EDF appreciates the opportunity to provide testimony on carbon 

capture and storage, looks forward to working with the committee 

on CCS in the context of comprehensive climate and energy legislation targeted at accelerating our Nation’s transition to a clean, lowcarbon energy economy. 

Thank you. 

[The prepared statement of Mr. Brownstein follows:] 
42 

PREPARED STATEMENT OF MARK S. BROWNSTEIN, DEPUTY DIRECTOR, ENERGY

PROGRAM, ENVIRONMENTAL DEFENSE FUND

Mr. Chairman, I am pleased to testify before the Senate Energy and Natural Resources Committee on behalf of the 700,000 members of the Environmental Defense 

Fund. Since 1967, EDF has linked science, economics and law to create practical solutions to society’s most urgent environmental problems. 

There is no more urgent environmental problem facing our world today than global climate change. A changing climate will have significant disruptive effects on our 

economy and our environment. Current methods of energy production are a major 

source of the pollution causing climate change. They have brought us great prosperity, but this prosperity is not sustainable. Fortunately, there is a bright economic 

future for the United States in a low carbon, clean energy economy. EDF’s Energy 

Program is singularly focused on accelerating our nation’s transition to this bright 

future. The work of this committee is critically important to achieving this bright 

future, and we are happy to do all we can to assist you in your work. 

EDF strongly believes that the most important thing we can do to accelerate our 

nation’s transition to a low carbon, clean energy economy is to put a price on carbon 

through federal climate and energy legislation. Unless and until there is an economic reason to avoid dumping greenhouse gas pollution into the environment, advanced new technologies that excel at delivering clean, low carbon energy will sit 

on the shelf. There simply will be no market for them. A price on carbon creates 

that market, and will stimulate innovation and investment in a wide array of new 

clean energy technologies and clean energy services, at a scale and pace that only 

the private sector can deliver. 

At the same time, we know that a price on carbon, by itself, will not achieve everything we would like to achieve in the timeframe we need to achieve it. Sometimes limited efforts to remove economic stumbling blocks, or clarify legal or regulatory relationships are required. The bills that are the topic of this hearing today 

highlight this point. 

The bills before this Committee today deal with largely with the challenge of 

charting a new course for coal. We will not get to where we need to go in terms 

of dramatically reducing greenhouse gas pollution and substantially reducing the 

current environmental foot print of our energy economy by continuing on a business 

as usual path with coal. Coal fired power plants are the single largest source of carbon dioxide pollution in our nation today, and current methods of coal production 

and use place too often place a heavy and unacceptable burden on public health and 

the environment. 

At EDF, we recognize that coal will likely play an important role in our economy—and the economy of many other industrial nations—for many years to come. 

Therefore, the challenge is to develop and deploy technologies and strategies that 

can substantially reduce or prevent the worst consequences of coal production and 

use. Carbon capture and storage is critical to the future of coal, and indeed, over 

the long term, natural gas as well. 

Geologic sequestration of carbon dioxide is feasible under the right conditions. It 

has been successfully demonstrated in a number of field projects, including several 

large, ‘‘commercial’’ scale projects. In 2005, the IPCC Special Report on Carbon Capture and Storage concluded that the fraction of carbon dioxide (CO2) retained in ‘‘appropriately selected and managed geologic reservoirs’’ is likely to exceed 99 percent 

over 1000 years. 

The IPCC also concluded that the local health, safety, and environmental risks 

of CCS are comparable to the risk of current common activities such as natural gas 

storage, enhanced oil recovery, and deep underground storage for acid gas, if there 

is ‘‘appropriate site selection based on available subsurface information, a monitoring programme to detect problems, a regulatory system and the appropriate use 

of remediation methods to stop or control CO2 releases if they arise.’’ The IPCC and 

others with geology expertise have also noted that the risk of leakage will tend to 

decrease with time. 

As a technical matter, CCS is ready to begin commercial deployment today. All 

of the necessary technologies exist. What is missing is the market driver to cause 

companies put the pieces together. As stated earlier, this comes with a price on carbon. 

But beyond this, what can help accelerate the development and deployment of 

CCS technologies is a clear legal framework for securing subsurface rights for geologic storage of CO2, and judicious use of federal dollars to accelerate the learning 

curve on CCS development and deployment. The bills proposed by Senator Barraso 

and Senator Casey make important contributions in this regard. 
43 

* Attachment has been retained in committee files. 

Based on the history of other technologies, we fully expect that the costs of CCS 

deployment will come down and project development will become routine. As we understand it, the intent of Senator Casey’s bill is that the federal government, 

through the Department of Energy’s National Energy Technology Lab (NETL) in 

Pittsburgh, should be a full partner with industry in identifying those strategies and 

practices that will yield the best results in terms of safe, effective, and efficient capture and storage of CO2 pollution from coal. We support this objective. 

As government and industry do this work, we strongly advise that specific attention needs to be paid to the importance of proper site selection and proper site operations. Geologic sequestration is not something that can be done just anywhere, casually, or with limited skill. It requires sophisticated preparation, execution, and 

oversight by both the companies and regulators involved. 

In particular, one of the most important objectives in assuring the safe, successful 

geologic sequestration of CO2 is assuring that formation fluids—the brines pre-existing in the sandstone formations where the CO2 is to be stored ? are not driven out 

of the underground storage area and into an underground source of drinking water. 

NETL, in its partnerships with industry, will want to make sure that projects are 

identified and engineered in such a way that: 

1) there are confining zones of sufficient quality and lateral extent to confine 

both displaced formation fluids and injected CO2; 

2) there is a definition of ‘‘zone of elevated pressure’’ that is designated to 

guard against either CO2 or formation fluids being driven into a drinking water 

supply; 

3) there is high quality modeling of both the injected CO2 plume and the displaced formation fluids; 

4) where necessary, there is monitoring of ground water quality and any geochemical changes above the confining zone; and. 

5) there are remedial response plans in the event problems appear to be developing. 

We would add that NETL’s work with industry should be specifically targeted at 

helping to further develop the appropriate analytical and monitoring tools and rigorous procedures for achieving the objectives outlined above. 

As to Senator Barraso’s bill, it is essential that any federal legislation attempting 

to clarify pore space ownership on federal property not disrupt long-standing rules 

of property. Clear and predictable property rules are the cornerstones of free and 

functioning markets. It is our understanding that Senator Barrasso’s bill is modeled 

after pore space legislation enacted by the Wyoming Legislature for Wyoming, and 

that the purpose of Wyoming’s legislation was to clarify Wyoming’s rules in relation 

to past deeds and future transactions, without fundamentally changing the longstanding relationship between surface and subsurface rights in the state. Assuming 

this is the case, we support Senator Barraso’s efforts to accomplish a similar purpose for federally owned pore space on federal land. 

For further consideration of the pore space ownership issue, I recommend to the 

committee a paper* authored by Ian Duncan and Jean Philipe Nicot, of the Bureau 

of Economic Geology, Jackson School of GeoSciences, University of Texas, Austin, 

and my colleague, Scott Anderson of EDF’s Austin, Texas office, a copy of which is 

attached to this testimony. 

EDF appreciates the opportunity to provide testimony on these two important 

pieces of legislation, and we look forward to working with Senator Casey, Senator 

Barrasso, Chairman Bingaman and the rest of the Committee to advance CCS in 

the context of comprehensive climate and energy legislation targeted at accelerating 

our nation’s transition to a clean, low carbon energy economy. 

The CHAIRMAN. Thank you very much. 

Dr. House. 

STATEMENT OF KURT ZEN HOUSE, PH.D., PRESIDENT, C12 

ENERGY RESEARCH FELLOW, MIT 

Mr. HOUSE. Chairman Bingaman, Ranking Member Murkowski, 

and members of the committee, thank you for the opportunity to 

appear before you today to discuss the science, the economics, and 

the industrial development of carbon dioxide capture and storage. 
44 

It is a great honor to be able to provide this committee with my 

perspective as a scientist and as an entrepreneur working in this 

field. 

For context, I will provide you with a brief description of my activities in this area. In 2008, I received my Ph.D. in geoscience 

from Harvard University, where my doctoral research focused on 

the physics and chemistry of CO2 in the subsurface, as well as on 

chemical processes designed to convert CO2 into stable carbonate 

minerals. Since then, I have been a research fellow at MIT, and I 

have started a company to do CCS that is backed by some of the 

most well-respected venture capitalists in the world. 

In my testimony, I will make 4 points related to CCS. My first 

and most important point is that CCS is an essential for addressing greenhouse gas emissions, while simultaneously maintaining a 

robust and affordable energy supply for the Nation. America’s coal 

and natural gas reserves contain nearly 4 times the energy content 

of Saudi Arabian oil. But without the large-scale deployment of 

CCS, it is arithmetically impossible for us to use those reserves 

while simultaneously making significant cuts in our greenhouse 

gas emissions. 

Furthermore, the existing industrial infrastructure of CO2-emitting facilities represents well over $1 trillion of invested capital. 

But again, it is impossible to make meaningful cuts in our CO2

emissions without either dismantling the majority of that invested 

capital or by doing CCS. 

My second point is that geology matters. The importance of getting the geology right is an issue that I actually think has not received proper attention to date. The geologic and geophysical communities have developed tremendous expertise in understanding 

the behavior of buoyant fluids in the subsurface. From this expertise, we can make rigorous assessments of the sequestration capability of specific geologic formations. 

Long-term storage reliability is a concern of CCS, and indeed, 

there are many places in which trying to do CCS would, in fact, 

be a bad idea. But there are also many locations where CO2 can 

be permanently stored. 

It is important for the viability of the industry that regulatory 

agencies establish processes to certify specific formations as actual 

sequestration fields. Wyoming and Montana have addressed this 

well by developing in-State processes by which the boards of oil 

and gas conservation can certify candidate storage sites. 

My third point is that the CCS industry will only advance if the 

relevant stakeholders are appropriately included in each project. 

Strong stakeholder opposition can kill any energy project. 

For example, it is crucial that existing mineral rights owners, as 

well as land owners who we believe own the surface—own the pore 

space by precedent, be appropriately communicated with and, if 

necessary, compensated for by developers at an early development 

stage of CCS storage projects. 

I have significant experience working with such stakeholders on 

early stage projects, and with the appropriate ground work, it is 

my that CCS has been welcomed in these communities as an industry similar to that of oil and gas that is both safe as well as compatible with multiple uses of the land. 
45 

My final point is that the major hurdle for moving CCS forward 

is the difficulty associated with securing finance in an uncertain 

regulatory environment. This committee can accelerate the CCS industry by addressing CCS legal issues to minimize unnecessary 

risk and, importantly, by providing financial incentives for early 

stage CCS projects. Senator Barrasso’s bill reduces one item of risk 

by explicitly reinforcing on public lands the common-law precedent 

that a storage space belongs to surface estate, and we support this 

bill strongly. 

The key to jump-starting the CCS industry, however, is the passage of incentives for first mover projects. The wind industry, for 

example, installed just 1 megawatt of wind power in 1996, but it 

installed over 10,000 megawatts last year, and that growth has 

been driven almost entirely by State-level renewable portfolio 

standards and Federal-level production tax credits. 

So a similar set of incentives for CCS, such as the CO2 storage 

tax credit discussed by Senator Rockefeller and others, would accelerate the rate of CCS and result in meaningful cuts in CO2 emissions. 

So, in conclusion, I would just reiterate that given the appropriate geology, we have the technology as well as the industrial 

know-how to do CCS today. If, however, we fail to provide the appropriate financial incentives for doing CCS or if we fail to bring 

stakeholders onboard with early stage CCS projects, then the industry will not grow. If the CCS industry does not grow, then we 

will be unable to make meaningful cuts in our CO2 emissions, or 

we will be forced to dismantle our country’s significant base of CO2- emitting industrial facilities. 

As such, I urge the committee to move forward with the relevant 

legislation, and I look forward to your questions. 

[The prepared statement of Mr. House follows:] 

PREPARED STATEMENT OF KURT ZENZ HOUSE, PH.D., PRESIDENT, C12 ENERGY

RESEARCH FELLOW, MIT 

Chairman Bingaman, Ranking Member Murkowski, and Members of the Committee, thank you for the opportunity to appear before you today to discuss the 

science, the economics, and the industrial development of carbon dioxide (CO2) capture and storage, (commonly abbreviated to CCS). I consider it a great honor to be 

able to provide this committee with my perspective as a scientist and as an entrepreneur working in this field. 

For context, I will provide you with a brief description of my activities related to 

this area. In 2008, I received my Ph.D. in Geoscience from Harvard University, 

where my doctoral research focused on the physics and chemistry of CO2 in the subsurface as well as on a variety of chemical processes designed to convert CO2 into 

stable carbonate minerals. Since then, I have been a research fellow at MIT, where 

I have continued to study the behavior of CO2 that has been injected into the subsurface, and I have started a venture capital backed company that is working on 

several early stage CCS projects. 

In my testimony, I will make five points regarding CCS. These five points support 

the central conclusion that without CCS, it will be extremely difficult make significant and affordable cuts in greenhouse gas emissions, while maintaining a secure 

and reliable supply of energy for the nation. 

The first and most important point that I wish to make is that CCS is essential 

for addressing greenhouse gas emissions, while simultaneously maintaining a robust 

and affordable energy supply. America’s coal and natural gas reserves contain nearly 4 times the energy content of Saudi Arabian oil; but, without the large-scale deployment of CCS, it is arithmetically impossible for us to use those reserves-neither 

the coal nor the natural gas, and certainly not both-for productive purposes, while 

simultaneously making significant cuts in our greenhouse gas emissions. Further-
46 

1 American Wind Energy Association, 2010. 

more, the existing industrial infrastructure of CO2 emitting facilities (e.g., power 

stations, refiners, chemical plants, etc.) represents well over $1Trillion of invested 

capital; but again, it is arithmetically impossible to make stated cuts in our CO2

emissions without either dismantling the majority of that installed capital or by 

doing CCS. 

Let me give an example to illustrate. The wind industry-which is doubtless a success story in the energy sector over the past decade-currently displaces approximately 50MT of CO2 per year.1 Retrofitting just six large coal power stations to capture 90% of their CO2 would have the same impact. In short, CCS can enable both 

the productive use of America’s prodigious energy reserves and the continued use 

of its CO2 emitting infrastructure, while simultaneously decreasing our greenhouse 

gas emissions. 

The second point is that the technology to do CCS is here today. There is a persistent notion that the technology for doing CCS is still years away. That notion is 

false. Thanks to the portability of the technology from the multi-trillion dollar oil, 

gas, and chemical industries, we know how to separate CO2 from mixed gas 

streams; we know how to move CO2 in pipelines; and we know how to inject and 

store CO2 safely in the proper geologic structures. Indeed, essentially every aspect 

of the CCS process is currently being performed at scale in some industrial process. 

That is not to say that CCS will be easy; but it is to say that the project risks 

are not fundamentally technological. Rather, the primary project risks involve getting complicated systems integration correct and importantly, being able to secure 

finance for large scale CCS investments in an uncertain regulatory environment. 

Systems integration and complex engineering are great strengths of American industry; while coping with uncertain regulations can be done-but only at unnecessarily increased expense. 

My third point is that geology matters. The importance of getting the geology 

right is an issue that I believe has not received proper attention to date. The geologic and geophysical communities-including oil & gas operators-have developed tremendous expertise in understanding the behavior of buoyant fluids in the subsurface. From this expertise, we can make rigorous assessments of the sequestration 

capability of specific geologic formations. The sequestration capability of a given geologic formation depends on (1) the rate at which CO2 can be safely injected into the 

formation and (2) the ability of the formation to safely confine the injected CO2 to 

a well defined zone. 

Safety remains a major concern of the American public with respect to CCS, and 

there are many places in which trying to store CO2 would be a very bad idea; but 

there are also many locations where CO2 can be safely and permanently stored. It 

is important for the viability of the industry that regulatory agencies establish processes to certify specific formations as sequestration fields. The Montana State legislature has done this very well by developing a unitization process by which the 

state’s Board of Oil & Gas Conservation will certify candidate sequestration sites. 

In my opinion, state agencies such as that are well-equipped to handle this process 

and should be encouraged to do so. 

My fourth point is that the CCS industry will only advance if all the relevant 

stakeholders are appropriately included in each project. Strong stakeholder opposition can and will kill any energy project. As such, it is crucial that existing owners 

of mineral rights as well as land owners be appropriately communicated with and 

compensated at an early development stage of any CO2 storage project. I have significant experience working with such stakeholders on early stage CCS projects in 

several different communities. Through this experience, I have found that face-toface discussion and honest negotiation have been very effective in getting the relevant stakeholders onboard. Indeed, with the appropriate groundwork, CCS has 

been broadly welcomed in these communities as an industry similar to oil & gas production or natural gas storage that is both safe as well as compatible with multiple 

land uses such as ranching, farming, and recreation. Furthermore, the geologic 

structures being targeted for CO2 sequestration are often in the vicinity of existing 

oil & gas activities, but if managed properly, the CCS project can occur symbiotically with these activities. 

My final point is that the major hurdle for moving CCS projects forward is the 

difficulty associated with financing large industrial projects in an uncertain regulatory environment. This committee can significantly accelerate the CCS industry 

by addressing CCS-specific legal items to minimize unnecessary risk, and-more importantly-by providing a set of financial incentives for early stage CCS projects. Senator Barrasso’s bill reduces one item of risk by explicitly reinforcing, on public 
47 

lands, the common-law precedent that storage space belongs to surface owners; and 

Senator Rockefeller’s bill provides valuable startup funds for RD&D. 

The key to jump starting the CCS industry, however, is the passage of a set of 

financial incentives for first mover projects. The US wind industry, for example, installed 1 MW in 1996 and over 10,000MW last year, and that growth has been driven almost entirely by a combination of state-level renewable portfolio standards and 

federal-level production tax credits. A similar set of incentives, such as the CO2 storage tax credit proposed by Senator Rockefeller and others, would dramatically accelerate the rate of CCS adoption in the United States. 

In conclusion, I would like to reiterate that given the appropriate geology, we 

have the technology as well as the industrial know how to do CCS today at powerplant scale. If, however, we fail to either provide the appropriate financial incentives 

for doing CCS, or if we fail to bring stakeholders on board with each CCS project, 

then the industry will not grow in the US. And, if the US CCS industry does not 

grow rapidly, then we will either be unable to make meaningful cuts in our CO2

emissions, or we will be forced to dismantle our country’s significant installed base 

of CO2 emitting industrial facilities. Furthermore, we will be constrained from responsibly harnessing America’s prodigious fossil fuel reserves. 

Thank you, and I look forward to your questions. 

The CHAIRMAN. Thank you very much. 

Mr. Vann. 

STATEMENT OF ADAM S. VANN, LEGISLATIVE ATTORNEY, 

AMERICAN LAW DIVISION, CONGRESSIONAL RESEARCH 

SERVICE 

Mr. VANN. Mr. Chairman, members of the committee. My name 

is Adam Vann, legislative attorney for the Congressional Research 

Service. 

CRS is pleased to be afforded the opportunity to discuss the committee’s consideration of legislation related to carbon capture and 

sequestration or, if you prefer, carbon capture and storage. 

In testimony today, CRS is addressing a legal issue associated 

with CCS projects—who owns or controls the subsurface pore space 

where carbon dioxide would be sequestered or stored? 

Of particular concern is whether the property rights to this subsurface pore space are conveyed any time mineral rights are conveyed. Mineral rights, of course, are an interest in something that 

is generally subsurface. 

As you know, S. 1856 addresses this very issue with respect to 

Federal lands. It is important to do so because of the many instances in which the mineral rights on Federal lands are leased to 

private entities. 

Most existing legal instruments related to subsurface property 

rights, including mineral right leases, do not specifically address 

ownership and control of pore space. So in order to determine who 

holds the relevant property rights, one must interpret the language 

found in such legal instruments and ascertain how it might apply 

to subsurface pore space to be used for CCS. 

Traditionally, property law issues are addressed by State law. So 

CRS has analyzed relevant State common law precedent in similar 

or analogous situations involving subsurface property rights. 

Based on this analysis, a detailed review of which can be found 

in CRS’s written testimony submitted to this committee, it is the 

opinion of CRS that the vast majority of relevant case law suggests 

that subsurface pore space is not conveyed in typical mineral rights 

agreements—and that would include mineral rights leases on Fed-
48 

eral lands—but instead would remain with the grantor or holder of 

the surface rights in most cases. 

CRS believes it is likely that even absent any legislation, a court 

would find that the holder of the surface rights, the Federal Government in the case of Federal lands, rather than the holder of the 

minerals rights, would have the relevant property interest in pore 

space for purposes of any CCS project. 

S. 1856 declares in part that ‘‘the ownership of any subsurface 

pore space located below a Federal surface estate shall be vested 

in the Federal Government.’’ Thus, it is the opinion of CRS that S. 

1856 is in line with the current understanding of the law of the 

United States regarding subsurface pore space. 

This rule of property law, stating that pore space is not conveyed 

along with mineral rights, has been referred to as the ‘‘American 

rule.’’ Other legal commenters have stated that this American rule 

would likely be the majority rule in the States. It is, indeed, the 

opinion of CRS that this rule would likely be adopted in virtually 

every American jurisdiction. 

Indeed, 3 States have enacted legislation declaring that in the 

absence of specific conveyance to the contrary, subsurface pore 

space is vested with the owner of the surface estate, and reportedly 

there are similar bills being considered in 2 other States as well. 

Now a vesting ownership of subsurface pore space in Federal 

lands in the Federal Government should not prove controversial 

vis-a-vis mineral rights lease holders. There is language in S. 1856 

that CRS wishes to flag as a potential ambiguity. 

S. 1856 declares that ownership of the subsurface pore space is 

‘‘vested in the Federal Government.’’ However, that ownership is 

not limited by the bill to cases in which the Federal Government 

has conveyed mineral rights, but covers subsurface pore space in 

all Federal surface estates. 

This could prove problematic where the Federal Government 

may have conveyed a subsurface property of interest other than 

mineral rights such that the recipient might be able to claim that 

the conveyance did transfer an interest in the subsurface pore 

space. In such cases, S. 1856 could be considered a taking of the 

property of the grantee who had previously held this particular 

subsurface property interest such that the grantee would need to 

be justly compensated, pursuant to the takings clause of the Fifth 

Amendment. 

Another potential ambiguity is the provision in S. 1856 concerning the applicable law in construing conveyances that have occurred or will occur prior to the enactment date of the bill. This is 

the phrase that begins, ‘‘All conveyances of Federal land executed 

before the date of enactment of the section shall be construed in 

accordance with the provisions of this section.’’ 

This provision may not apply to a claim seeking compensation for 

a taking of a subsurface property right. The reason for that is that 

this type of claim would depend on the applicable law at the time 

of the conveyance, not at the time the claim was brought. Also, this 

language concerning the applicable law might not have the intended effect because it applies only to ‘‘ownership interests.’’ 

Mineral rights and other subsurface interests can be and often 

are conveyed as leases or other property interests that may poten-
49 

1For further discussion of several legal issues related to CCS technology, see CRS Report 

R41130, Legal Issues Associated with the Development of Carbon Dioxide Sequestration Technology, by Adam Vann, James E. Nichols, and Paul W. Parfomak. See also Philip M. Marston 

and Patricia A. Moore, From EOR to CCS: The Evolving Legal and Regulatory Framework for 

Carbon Capture and Storage, 29 Energy L.J. 421, 475 (2008). 2For further information on geologic aspects of emerging CCS technology, see CRS Report 

RL33801, Carbon Capture and Sequestration (CCS), by Peter Folger. 

tially not be considered ‘‘ownership interests.’’ The applicability of 

the specified language in S. 1856 to these interests may be unclear. 

Mr. Chairman, that concludes my prepared statement, and I 

would be happy to answer any question that you or other members 

of the committee might have. CRS looks forward to working with 

the members and staff on this issue in the future. 

[The prepared statement of Mr. Vann follows:] 

PREPARED STATEMENT OF ADAM S. VANN, LEGISLATIVE ATTORNEY, AMERICAN LAW

DIVISION, CONGRESSIONAL RESEARCH SERVICE

Mr. Chairman and Members of the Committee: My name is Adam Vann. I am a 

Legislative Attorney with the American Law Division of the Congressional Research 

Service at the Library of Congress, and I thank you for inviting me to testify today 

regarding the Committee’s consideration of legislation related to emerging carbon 

capture and sequestration (or, as it is sometimes called, carbon capture and storage) 

technology. For purposes of this testimony, I will refer to it as ‘‘CCS.’’ My testimony 

will focus on legal issues related to CCS technology; specifically, concerns over who 

maintains ownership and control over the ‘‘pore space’’ in which the carbon dioxide 

would be stored or sequestered under most of the emerging CCS models. 

At the outset, I should note that as an attorney, my testimony will be limited to 

legal issues related to CCS, including pore space ownership and control. I cannot 

speak to technological, economic, or other policy concerns related to CCS. I am certain that my colleagues at this hearing or my fellow Congressional Research Service 

analysts can ably field any such inquiries. Furthermore, my testimony will not cover 

other legal issues commonly discussed in the context of CCS technology, including, 

among others, problems related to potential difficulty obtaining liability coverage 

and concerns related to trespass of adjacent property.1 My testimony will be confined to pending legislation and issues associated with ownership of subsurface pore 

space. 

Background 

CCS technology is among the many proposals to address concerns over the impact 

of carbon dioxide emissions from man-made sources on the environment. Unlike 

most other proposals, CCS technology is not intended to reduce the quantities of 

these emissions; rather, it would capture these emissions at their source and ‘‘sequester’’ or ‘‘store’’ them at sites with the appropriate geologic characteristics.2 Any 

entity wishing to operate a CCS facility must therefore own or control the pore 

space in which the carbon dioxide would be sequestered or stored. However, since 

CCS technology is not yet in existence and was not even considered until recently, 

most existing legal instruments related to property rights do not address ownership 

and control of pore space, and to the best of my knowledge, none of them refer to 

ownership and control of pore space for purposes of sequestration or storage of carbon dioxide. Therefore, in order to determine who holds the relevant property rights, 

we must interpret the language found in such legal instruments and ascertain how 

it might apply to pore space to be used for CCS. In doing so, we can look to interpretations of courts who have reviewed similar or analogous property rights disputes. 

Traditionally, property law issues are handled at the state level. Indeed, most of 

the analogous disputes regarding subsurface ‘‘pore space’’ to date have been handled 

under state law, and presumably would be handled under state law going forward. 

These disputes, and subsequent actions by some state legislatures, have produced 

what I will refer to as the ‘‘majority rule’’ that holders of mineral rights do not, 

merely by virtue of these rights, have ownership or control of subsurface pore space. 

However, to the extent that CCS projects might take place on lands owned or controlled by the United States, determinations of pore space ownership and control become an issue for the federal government. S. 1856 recognizes this federal role and, 

as I understand it, attempts to resolve the issue going forward by declaring that 

‘‘[t]he ownership of any subsurface pore space located below a Federal surface estate 
50 

3S. 1856. 

4The Fifth Amendment to the U.S. Constitution provides in part that ‘‘private property [shall 

not] be taken for public use, without just compensation.’’ 5See, e.g., Owen L. Anderson, Geologic CO2 Sequestration: Who Owns the Pore Space? 9 Wyoming L. Rev. 97 (2009); Ian J. Duncan, Scott Anderson and Jean-Philippe Nicot, Pore Space 

Ownership Issues for CO2 Sequestration in the U.S., GHGT-9 Energy Procedia, Elsevier V.1 p. 

4427–4430 (2009); Philip M. Marston and Patricia A. Moore, From EOR to CCS: The Evolving 

Legal and Regulatory Framework for Carbon Capture and Storage, 29 Energy L.J. 421, 475 

(2008). 6 412 F.2d 1319 (1969) (Emeny). 

7The U.S. Court of Claims was the original court in which claims against the United States 

were tried. The U.S. Court of Claims was abolished in 1982. The court’s trial-level jurisdiction 

was transferred to the U.S. Court of Federal Claims and its appellate jurisdiction to the U.S. 

Court of Appeals for the Federal Circuit. 8 Emeny at 1321. According to the court’s opinion, the Bush Dome ‘‘is a closed geological structure, or underground dome, in which gaseous substances can be stored ... The potential storage 

capacity of the Bush Dome is in excess of 52 billion standard cubic feet of gas.’’ Id. at 1321. 9 Id. at 1321–1322. 

10 Id. at 1323. 

shall be vested in the Federal Government,’’ unless conveyed along with the surface 

estate or previously severed from the surface ownership.3

S. 1856, if enacted, would govern subsurface pore space rights on Federal lands 

going forward. However, if any aspect of the bill or similar language results in a 

transfer of existing subsurface rights of a private entity to the Federal government, 

that private entity would be entitled to just compensation under the Fifth Amendment of the United States Constitution.4 Therefore, it is worthwhile to consider 

whether any private entity aside from the owner of surface rights might be able to 

claim ownership of, or control over, the relevant subsurface rights. The most obvious 

candidate would be the owner of ‘‘mineral rights’’ on/under the Federal land in question, as mineral rights are, generally speaking, rights to something that is subsurface. 

The Majority Rule: Pore Space Control Does Not Transfer with Mineral Rights 

In order to determine: (1) the extent to which S.1856 would deviate from the current understanding of subsurface property interests under state and federal law; 

and (2) whether holders of mineral rights or other property interests might be entitled to just compensation for loss of their interest in the pore spacepursuant to S. 

1856, we must look at both state and federal common law and currently existing 

statutes and regulations. 

It is the opinion of CRS that the vast majority of relevant case law suggests that 

a reviewing court would likely find that the pore space that would be used in CCS 

is not conveyed with mineral rights, but rather in most cases would remain with 

the holder of the surface rights. The vast majority of legal precedent suggests that 

the property owner, not the holder of mineral rights, would have the relevant property interest in pore space for purposes of any CCS project. Indeed, most legal experts who have studied this issue have reached a similar conclusion.5 In the case 

of Federal land on which the mineral rights are leased, this means that, although 

the holder of the mineral rights would of course have certain rights that must be 

considered in using the property, the Federal government would have ownership of, 

and control over, the pore space that would be used for CCS. Experts have cited 

to a number of common law decisions in support of this conclusion. 

An instructive precedent to consider from the federal court jurisprudence is 

Emeny v. United States.6 In Emeny, the United States Court of Claims7 was tasked 

with deciding whether the United States had acquired the right to store helium gas 

within a pore space formation on a certain property when the terms of the government’s lease with the owner of the pore space were limited to the sole purpose of 

mining and operating for oil and gas. 

The plaintiffs in Emeny owned a tract of land in Texas which contained significant deposits of helium gas. The plaintiffs granted to a private gas company ‘‘oil and 

gas leases covering a total of approximately 217,000 acres of land, including the 

area which contains the Bush Dome.’’8 The United States eventually obtained these 

oil and gas leases from the private oil company, along with the remaining mineral 

rights that had been reserved by the plaintiffs, and compensated the respective parties accordingly.9 However, in the lease with the United States, the plaintiffs expressly reserved for themselves the surface of the leased lands, ‘‘including any such 

structure that might be suitable for the underground storage of ‘foreign’ or ‘extraneous’ gas produced elsewhere.’’10

Pursuant to the lease agreement, the United States commenced operations to extract the helium contained within the Bush Dome, and continued to do so for ap-
51 

11 Id. at 1322. 12 Emeny at 1323. 13 71 S.E.2d 65 (1952) (Tate). 14The pertinent language of the deed stated that ‘‘[t]he oil, gas and all 

minerals... underlying the surface of the land hereby conveyed are expressly excepted and 

reserved from the operation of this deed . . . it being under-stood [sic] that the term ‘mineral’ 

as used herein does not include clay, sand, stone, or surface minerals except such as may be 

necessary for the operation for the oil and gas and other minerals.’’ Tate at 67–68. 15 Id. at 72. 16Some legal writings have referred to this rule as the ‘‘American rule.’’ This terminology is 

used in contrast with the ‘‘English rule’’ that the mineral rights owner retains the right to the 

subsurface space even after the minerals have been extracted. 17 520 F. Supp. 1042 (1981) (Acres). 18 In his opinion, Judge Veron writes, ‘‘Simply stated, the issue to be decided by this court 

is: who is entitled to be compensated for the value of the hole in the ground to be created by 

construction of the underground storage cavern[:] the land owners or the mineral owners?’’ Acres 

at 1043. 

proximately three decades until the Bush Dome was empty. After the Bush Dome 

was emptied, the United States sought to store helium gas produced elsewhere inside of the now empty pore space.11 The plaintiffs argued that they were entitled 

to just compensation for the government’s use of the Bush Dome as a helium storage 

facility because pursuant to the language of the lease agreement, the government 

only had a right to extract the gas contained within the pore space and no right 

to use the pore space for storage of helium gas produced elsewhere. 

After a consideration of Texas common law, the court in Emeny agreed with the 

plaintiffs that the government’s property interest did not include the right to use 

the pore space for gas storage, and ordered the United States to pay the plaintiffs 

just compensation for its use of the Bush Dome as a helium storage facility. According to the court, ‘‘[t]here is no reasonable basis on which the rights granted to the 

[United States] in the... oil and gas leases could be construed as including the 

right to bring to the premises and store there gas produced elsewhere.’’12

The West Virginia courts reached a similar conclusion in Tate v. United Fuel Gas 

Company.13 In Tate, the highest court in West Virginia addressed the question of 

pore space ownership once the minerals contained therein had been extracted. The 

owner of the land deeded the land to another man, but expressly reserved to himself 

the ‘‘oil, gas... and all minerals... underlying the surface of the land.’’.14 The 

new owner then deeded the surface estate to Virgil Tate, subject to the same exceptions in the original deed, including the reservation of the mineral estate for the 

original owner. After extracting all of the oil from the pore space, the original owner 

eventually leased his remaining mineral rights to the defendant, United Fuel Gas 

Company. United Fuel Gas Company then used this mineral rights property interest to store gas produced elsewhere in the empty pore space. 

Plaintiff Tate, the owner of the land subject to the underground property interest 

leased to United Fuel Gas Company, asserted that the lease between the original 

owner and United Fuel Gas Company which gave United Fuel the ‘‘remaining’’ mineral rights was invalid, since the original owner/holder of the mineral rights only 

had a right to extract the contents of the subsurface estate, not the right to use the 

pore space for other purposes. The Supreme Court of West Virginia agreed with 

Tate and held that the express reservation of mineral rights only granted to the 

original owner/mineral rights holder (and his lessee, United Fuel Gas Company) a 

right to exploit the gas and minerals contained within the pore space, not a right 

to use the pore space itself for the storage of gas produced elsewhere.15

According to Tate, the owner of the mineral rights likely would not have the right 

to the use or lease the pore space for carbon dioxide capture and sequestration, unless the owner of the surface estate expressly allows the owner of mineral rights 

to use the pore space. This conforms with what is referred to here as the ‘‘majority 

rule’’ (and others have called the ‘‘American rule’’) that pore space is not conveyed 

with a standard conveyance of mineral rights.16

Another case that reached a similar conclusion is U.S. v. 43.42 Acres of Land.17

In this case, a federal district court had to determine whether the surface owners, 

mineral owners, or both should receive compensation from the government for land 

acquired for the construction of an underground crude oil storage tank.18 One defendant owned the land under which a crude oil storage tank was to be constructed. 

The other defendant owned the rights to the minerals that needed to be extracted 

to construct the underground storage tank. The United States intended to construct 

this storage tank by extracting the salt contained inside of the subterranean geological structure and then using the evacuated underground formation as a storage 
52 

19The process by which crude oil reservoirs are created was described in Acres: 20 42 U.S.C. § 6249(a)-(f). 21 Acres at 1045. 22 ‘‘[Owners of a mineral servitude] have no right to claim compensation for the value of the 

cavern to be created by removal of the salt. They should be compensated only for the value of 

the right to explore for and reduce to possession the minerals on the land in question. [The] 

land owners . . . own all remaining rights in the land, and they are entitled to be compensated 

for the underground storage value of the land.’’ Id. at 1046. 23 Id. at 1045. 24 See, e.g., Elizabeth J. Wilson and Mark A. Figueiredo, Geologic Carbon Dioxide Sequestration: An Analysis of Subsurface Property Law, 36 Environmental L. Rev. 10114 (2006). 25 808 S.W.2d 262 (Tex. 1991) (Mapco). 26 252 S.W.2d 866 (Ky. 1952) (Smallwood). 27Mapco at 267. 28 Id. at 268–269. 29 Id. at 278–279. 30 Id. at 274–75. 

area.19 Both defendants claimed an exclusive right to be compensated by the United 

States for its taking of the property pursuant to the Energy Policy and Conservation 

Act.20

Toutilize the subsurface for the extraction of brine and the creation of storage 

facilities[,] a well is drilled so as to penetrate the salt formation. Water is forced 

into the formation through the well, the salt is withdrawn as brine, and a cavity 

is left in the salt mass because of gradual dissolving of the salt and a resulting erosion by the leaching process. The jug shaped cavity, or ‘jug[,]’ formed by this leaching is used for the storage of hydrocarbons. A jug is 100 feet or more in depth, with 

capacity for storing over a million barrels of one of the various hydrocarbons. A 

thick barrier of salt must be retained around each jug to form a satisfactory wall 

for the containment of the stored product. 

Acres at 1043. 

Since Acres was a case of first impression under Louisiana law, the court considered common law authority from other jurisdictions to inform its opinion, and concluded that ‘‘ . . . the general rule in common law... provides that, after the 

removal of minerals, the opening left by the mining operations belongs to the land 

owner by operation of law.’’21 Since the minerals had not yet been removed from 

the pore space by the United States and since the resulting pore space needed to 

be used by the United States for crude oil storage, the court ordered the United 

States to compensate both the landowner and the mineral rights owner.22

Although the question of compensation was the primary focus of the court in 

Acres, the determination that both the surface and mineral estate owners should 

be compensated by the government was based on the rationale that the mineral estate owner has an interest in the minerals contained within a pore space, while the 

surface estate owner retains an interest in the pore space itself.23 While virtually 

all authors and scholars have concluded that the case law clearly favors a rule attaching pore space ownership and control to the surface estate or remaining estate 

over the holder of mineral rights, some have noted that the precedent is far from 

unanimous.24 Two cases commonly cited in support of the argument that a mineral 

rights conveyance also conveys ownership and control of pore space are Mapco v 

Carter25 and Central Kentucky Natural Gas Co. v. Smallwood.26

In Mapco, multiple parties had interests in the surface and mineral rights of a 

parcel of land in Texas. As a result of a previous court-ordered partition, the surface 

and mineral rights were divided among the various co-owners. Despite the fact that 

the co-owner Mapco only possessed a minority interest in the mineral rights in addition to the surface rights, Mapco decided to extract and sell the salt contained beneath its portion of the partitioned land without the consent of the other co-owners.27 When the salt was completely extracted, Mapco ‘‘plugged’’ the empty cavern 

with concrete and abandoned it, thereby rendering it unusable as storage space for 

gas or petroleum products.28

Ultimately, the Court of Appeals of Texas ordered Mapco to compensate the coowners of the mineral rights because, as mineral rights co-owners, they were also 

entitled to an amount of the proceeds from Mapco’s sale of the salt equal to their 

respective interests in the partitioned land.29 The court held that under Texas law, 

‘‘this interest in minerals is an interest in real property. Thus, the fee mineral owners retain a property ownership, right and interest after the underground storage 

facility... had been created.’’30

This result suggests that mineral rights are not merely a right to extract the minerals in question and an ownership right in said minerals, but also grant an ownership right in the subsurface formation left behind. However, in the opinion of CRS, 
53 

31%2 S.W.2d 866 (Ken. 1952) (Smallwood). 32 Id. 33 33 Id. at 867. 34 Id. 35 Id. at 867–868. 36 Id. at 868. 37 Id. 38Mont. Code Ann. § 82-11-181(3); N.D. Cent. Code § 47-31-03; Wyo. Stat. Ann. § 34-1-152(a). 39Southern States Energy Board, ‘‘Carbon Capture and Sequestration Legislation in the 

United States of America,’’ March 2010, available at http://www.sseb.org/documents/ 

CCSLegMatrixshort.pdf . 40See, e.g., Davis v. Peavy-Moore Lumber Co., 144 S.W.2d 878, 880 (Tex. 1940). 41 U.S. Department of the Interior, Bureau of Land Management, Form 3100-11 (October 

2008): Offer to Lease and Lease for Oil and Gas. CRS has also reviewed several other lease 

forms dating back to 1984, and all of them contain substantially similar language. 

this fact pattern may be distinguished from any hypothetical claim that mineral 

rights include an interest in subsurface pore space. In Mapco, the subsurface storage area was created by the excavation of the mineral. In contrast, pore space contemplated for use in CCS technology is naturally occurring, not created by the mineral extraction. Furthermore, the storage area in Mapco was actually comprised of 

the mineral in question (salt). Again, this would presumably not be the case with 

respect to pore space used for CCS. 

In Central Kentucky Natural Gas v. Smallwood,31 the property owner executed 

an ‘‘oil and gas production and storage lease’’ conferring the right to drill for oil and 

gas and to store gas of any kind regardless of source in the subsurface.32 The lessee 

did not produce any gas, but gas that was removed from wells on adjacent lands 

in the area was stored under the surface and rentals were paid. The lessee paid the 

lessor only half of the rental fees, under the assumption that the rentals should be 

paid to the holder of the mineral rights, not the surface rights (the lessor had retained a 50% interest in the minerals).33 The lessor claimed that the rent should 

be paid solely to him, as the owner of the surface estate and thus the subsurface 

formations in which the gas was stored.34 The court ruled in favor of the lessee, 

finding that the stored gas was equivalent to ‘‘native’’ gas and that therefore revenue therefrom was attributable to the owner of that gas, i.e. the holder of the mineral rights.35

However, the court’s decision was based solely on the classification of the stored 

gas as equivalent to the native gas. In fact, the court clarified that ‘‘[i]n reaching 

the conclusion that we reach, it is not necessary to determine whether the cavern 

or strata from which a mineral has been removed becomes the property of the mineral or surface owner.’’36 Indeed, the court references the ‘‘English rule’’ that subsurface spaces are owned by the mineral rights holder and then notes that ‘‘[t]he 

general rule in the United States seems to be otherwise.’’37 Thus, Smallwood does 

little to establish precedent contrary to the ‘‘majority rule’’ or the ‘‘American rule.’’ 

Finally, it should be noted that some states have enacted legislation establishing 

default rules for pore space ownership and control. Three states have enacted relevant legislation: Montana, North Dakota, and Wyoming. In each of these states, 

the state legislature decreed that the surface owner, not the mineral rights owner, 

is the owner of the pore space to be employed in CCS technology.38 Further, in the 

two states that are currently considering relevant legislation (Michigan and New 

York), the pending legislation reportedly would also declare that pore space does not 

belong to the mineral rights holder but remains with the surface estate.39

It is worth pausing briefly to consider why this ‘‘majority rule’’ or ‘‘American rule’’ 

has been so widely adopted. There is a general principle in property law that any 

property right not expressly conveyed is retained by the owner or grantor.40 Accordingly, courts have tended to interpret limited property grants (like mineral rights) 

from a fee simple owner narrowly, with the fee simple owner retaining all property 

rights not explicitly granted in the document. Thus, a grant of mineral rights would 

grant only what is explicitly granted in the ‘‘four corners’’ of the document. In the 

case of federal mineral rights leases, the conveying language usually is something 

similar to this: ‘‘This lease is issued granting the exclusive right to drill for, mine, 

extract, remove and dispose of all the oil and gas (except helium) in the lands 

described... together with the right to build and maintain necessary improvements thereupon.’’41

Courts would thus likely be inclined to find that anything not explicitly mentioned, e.g. subsurface pore space or similar formations, would not be transferred, 

but would remain with the grantor, as the cases described above illustrate. 
54 

42S. 1856 43For a more detailed discussion of the Takings Clause, the various types of Takings claims, 

and the applicable legal standards, see CRS Report RS20741, The Constitutional Law of Property Rights ‘‘Takings’’. An Introduction, by Robert Meltz. 44Lingle v. Chevron USA, Inc., 544 U.S. 528, 537 (2005). 

S. 1856 

Given the aforementioned, S.1856 probably would not disrupt the current understanding of the ownership rights of the Federal government and mineral rights 

leaseholders in subsurface pore space, at least in the context of mineral leases. The 

latest draft of the bill that CRS has seen would establish that, as a rule, subsurface 

pore space below a surface estate owned by the Federal government would be owned 

by the Federal government. With respect to mineral leases, this is clearly in line 

with the ‘‘majority rule’’ or ‘‘American rule’’ that appears to have been adopted by 

virtually every court (and every state legislature) that has considered the question, 

as described in detail above; although, of course, no court has yet ruled on this issue 

with respect to use of subsurface pore space for CCS. Similarly, by establishing that 

‘‘a conveyance of the surface ownership shall include the conveyance of the Federal 

pore space in all strata below the surface of the Federal land’’ unless previously reserved,42 the bill effectively clarifies that the application of the ‘‘majority rule’’ or 

‘‘American rule’’ extends not just to exclude subsurface pore space from mineral 

rights conveyances, but in fact to attach such rights to the surface estate. 

However, aspects of S. 1856 could prove controversial in other respects. First, the 

declaration that ownership of the subsurface pore space is ‘‘vested in the Federal 

Government’’ is not limited to cases in which the Federal Government has conveyed 

mineral rights, but in fact covers all Federal surface estates. This could prove problematic where the conveyances are for a property interest other than mineral rights, 

in which the grantee might be able to claim that the subsurface pore space was conveyed. In such cases S. 1856 might trigger a requirement that the grantee be justly 

compensated, as discussed in more detail below. Indeed, the testimony to this point 

should only be considered applicable to the extent that the property interests in 

question are mineral rights on the one hand, and the remaining estate on the other. 

The rights and obligations of any other conveyances would need to be considered 

on a case by case basis. 

Another concern is the statement concerning the ‘‘applicable law’’ in construing 

conveyances prior to the enactment date of S. 1856. The provision would likely not 

be applicable to a claim seeking compensation for the ‘‘taking’’ of a subsurface property right under the terms of S. 1856, as such a claim would depend on the applicable law at the time of the conveyance, as discussed in more detail below. Also, the 

language might prove troubling because it applies only to ‘‘ownership’’ interests. 

Mineral rights and other subsurface interests can be, and often are, conveyed as 

leases or other property interests that may not be considered ‘‘ownership’’ interests. 

The applicability of this language to those interests may be a concern. 

Takings Concerns 

If S. 1856 is enacted, and subsequently it is determined that a private party previously had a property interest in the subsurface pore space located below a Federal 

surface estate, such a finding would not likely invalidate the enacted law. Instead, 

the party would likely be entitled to just compensation pursuant to the ‘‘Takings 

Clause’’ of the Fifth Amendment to the U.S. Constitution. 

A takings claim resulting from S. 1856 or similar legislation would likely be in 

the form of a ‘‘physical/appropriations’’ takings claim.43 Indeed, ‘‘[t]he paradigmatic 

taking requiring just compensation is a direct government appropriation or physical 

invasion of private property.’’44 Thus, in the case of a hypothetical loss of a real 

property interest in subsurface pore space, there is little question that the interest 

represents ‘‘property’’ that would require just compensation. The main question, 

therefore, would be whether S. 1856 or similar legislation would in fact divest a real 

property interest from any potential party. 

As explained in detail above, a mineral rights holder on Federal lands would have 

difficulty arguing that the mineral rights interest included a property interest in the 

subsurface pore space. Therefore, it is unlikely that a party that holds only a mineral rights lease on Federal lands would have a compensable Takings claim as a 

direct result of S. 1856 or similar legislation. However, the expansive language in 

S. 1856, which preempts any claim to subsurface pore space property rights located 

below a Federal surface estate, is more likely to create a compensable taking. The 

Federal government grants leases, easements and rights of way, and other real 

property interests on (and under) Federal lands in many forms and for many purposes. It is not possible to conduct a comprehensive review of all such property in-
55 

terests. However, the possibility exists that some of these may encompass an interest in subsurface pore space (in whole or in part). If such a property interest does 

exist, the party holding the interest may well be entitled to Takings compensation 

upon the passage of S. 1856 or similarly worded legislation. 

Also, it should be noted that this taking analysis addresses only potential physical/appropriations takings claims; that is, a claim that the legislation results in the 

loss of a real property interest in the subsurface pore space. Consideration of ‘‘regulatory’’ or other takings claims, in which the aggrieved party would argue that the 

law or regulation results not in a total loss of a property interest but rather in the 

reduction of the value of a property interest that the party continues to hold, are 

outside the scope of this testimony. However, the language in S. 1856 does provide 

that ‘‘[n]othing in this section alters any laws or case law in existence on the date 

of enactment of this section relating to the rights belonging to, or the dominance 

of, the mineral estate.’’ This language may provide additional assurance to those 

concerned that mineral rights on Federal lands might be taken. Also, S. 1856 does 

not authorize CCS projects or any other activity. It simply attempts to classify ownership interests in real property. Because it does not authorize new activity, it likely 

would not, by itself, give rise to any regulatory or other partial takings claim. 

Conclusion 

As described above, S. 1856 likely would not represent a significant deviation from 

the current understanding of the real property rights associated with ownership and 

control of the subsurface pore space that would likely be employed in CCS technology. Common law, legal scholars, and state legislatures have, for the most part, 

agreed that subsurface pore space is owned and controlled by the holders of surface 

rights, not mineral rights. As a result, this legislation, or similar legislation, would 

likely not result in a compensable takings claim from a holder of mineral rights on 

Federal lands. However, there are some concerns about the breadth of the language 

in S. 1856 and potential takings of property interests other than mineral rights. 

Mister Chairman, that concludes my prepared statement. I would be happy to answer any questions that you or other Members of the Committee might have, and 

I look forward to working with all Members and staff of the Committee on this issue 

in the future. 

The CHAIRMAN. Thank you all for your excellent testimony. 

Let me ask a few questions. Dr. House, let me start with you. 

I guess I would just be interested in any thoughts you could give 

us as to the challenges involved in acquiring access to lands for 

CCS projects when the lands are public versus when the lands are 

private. 

I mean, what is the current circumstance that exists in that regard? Is it possible to acquire or to pursue projects where you have 

public ownership of the land as well as private ownership today, 

or is one easier than the other? 

Mr. HOUSE. That is an excellent question, Senator. 

The best way to think about it, I guess, from our experience is 

private transactions are very effective, very efficient. Sort of independent negotiations between private entities can occur quickly 

and fast, and all the interests are clear. So, in many cases, that is 

the best way to go to identify sequestration potential that is owned 

for which the surface right and, if possible, the mineral right is 

well understood, and you can sign leases and move forward. 

There is a geologic and geographic complexity that comes into account when you go specifically in the Mountain West regions, 

where the Federal Government owns tremendous amounts of land, 

and that land tends to be checkerboarded. It literally looks like a 

checkerboard if you look at sections and townships on maps. 

So you can go and sign all the appropriate legal documents with 

all the appropriate private entities, but if you were to inject CO2

in wells drilled even on the private lands, the CO2 would flow in 
56 

the subsurface as it does in the appropriate geologic structure underneath, in some cases, some of the checkerboarded public lands. 

So the public lands, if the surface is State public ownership, then 

they own the pore space there. So, you would need public—you 

would need a lease from the Government to complete that sequestration project. 

So, for that reason, I think there is, unfortunately, in the basically west of the Mississippi, it would be very, very difficult to do 

projects without some degree of sort of public lands involvement, 

although, in many cases, a majority of the ownership can be private. 

Now the situation changes when you get into the Midwest regions where there is very little Federal lands, and most of the 

lands are State lands, as well as private lands, in which case there 

are many projects in which you could go forward with entirely private leases. 

The CHAIRMAN. Let me ask, and I haven’t really studied this. But 

if the Federal Government owns the surface and the subsurface of 

land, why wouldn’t the Federal Government want to retain the 

ability to lease the surface, lease the minerals, and lease the pore 

space in 3 separate transactions? Wouldn’t that be the most beneficial thing from the point of view of the taxpayer or the Federal 

Government? 

Mr. HOUSE. Yes, absolutely. Excellent point. So in the case where 

the Federal Government has what we call ‘‘fee simple’’ land, which 

means they own everything, which does occur in many places, then 

they would own the surface lands. They own the mineral estates, 

and then they own the pore space. So they could sign both mineral 

extraction leases, as well as CO2 storage leases. 

There are geologic situations in which that could be incredibly 

beneficial. So let me give you an example. If there are, say, there 

is oil deposits in shallow stratigraphic layers. So say 500 meters 

deep you have oil. Then maybe at 800 meters deep or 1,000 meters 

deep you have natural gas. Then maybe at 2,000 meters deep you 

have what we call a basal sandstone, or a reservoir layer that 

doesn’t involve any hydrocarbon deposits. 

In that case, you could actually have 3 different leases. You could 

have an oil operator removing the oil. These would be stacked 

vertically. You could have a gas operator removing the gas. You 

could have a sequestration operator injecting CO2 beneath both of 

those operations all in a very symbiotic way. That would be a tremendously efficient use of sort of space, if you think about it. 

The CHAIRMAN. Let me just ask one other question. Then my 

time is up. I am just concerned if we adopt or codify the so-called 

American rule, are we, on behalf of the Federal Government, giving 

up the ability to separately lease the pore space in land where we 

have already leased the surface? 

Mr. HOUSE. If the Federal Government—yes, that is true. I 

mean, if the American rule is sort of considered the law of the land 

through the courts or through the legislature, then, indeed, in a 

case where the Federal Government would own the mineral rights, 

but not the surface rights, they would not have the right to lease 

the pore space. The private owner of the surface would, in fact, 

have that right. 
57 

It is important to note 2 things, though. First, from the point of 

view of the sequestration industry, that is not necessarily a bad 

thing. I mean, the lease can be signed with the Government, and 

the lease can be signed with private entities. In many cases, it is 

faster to sign them with private entities. 

Then the second point is that, and this is extremely important, 

is that if it appears pretty strong that the mineral estate, in precedent, the mineral estate has sort of a superiority, which means 

that a sequestration operator could not develop a site, even if they 

got a lease from a private owner, that would damage a mineral estate property. 

So you couldn’t, in other words, inject CO2 into a natural gas reservoir if the physical activity of doing it would sort of weaken the 

value or diminish the value of the natural gas. So you can only go 

forward with the operation if you could show in a scientific way 

that the operations of the sequestration occurs in a separate geologic stratum and would not negatively impact the natural gas reserve. 

The CHAIRMAN. Senator Murkowski. 

Senator MURKOWSKI. Thank you, Mr. Chairman. 

I am pleased that all of you on the panel this morning have indicated that you believe that CCS is essential. If we are going to get 

to that low-carbon future, clean energy future, we have to figure 

out how we make CCS a reality. 

So there were at least 3 of us here this morning who expressed 

a level of frustration with the stimulus funds, $3.4 billion, that is 

directed to help facilitate it and just about 0.5 percent that has 

moved forward at this point in time. So we are frustrated, but I 

would have to imagine that you all are doubly frustrated that it is 

not moving quicker. But hopefully, we will see something on that. 

Dr. House, you mentioned that we have to get the geology right, 

and I would think that this is something that, again, we need to 

know and understand with a little bit more certainty. 

There was an issue over in Germany, I guess this was last summer, where there was some local opposition to a demonstration 

project there. Apparently, instead of sequestering underground due 

to opposition from the local residents, they apparently wound up 

venting the carbon dioxide into the atmosphere rather than storing 

it beneath the ground. Instead of ‘‘not in my backyard,’’ it is ‘‘not 

under my backyard.’’ 

I don’t know whether we have seen any opposition rising to even 

the concept of CCS and the concerns. Senator Barrasso, from Wyoming, has been dealing with this for years. But I think this is one 

of the instances where when we do our homework correctly and we 

identify where those appropriate geologic deposits are, then the 

concerns that some may have, that would be unfounded because 

you have repositories that allow for a level of safety and security. 

This is a general question, and I will throw it out to all of you 

on the panel. Are we seeing or do you foresee any resistance to 

CCS here in the United States? What kind of educational effort do 

we need to give people a level of security or comfort that this is 

a process that we know and understand? 

Mr. Hilton, if you want begin? 
58 

Mr. HILTON. Senator Murkowski, if I could clarify one thing? On 

that project in Germany, the resistance wasn’t to the sequestration. 

Senator MURKOWSKI. OK. 

Mr. HILTON. The resistance was actually to a bad plan by the 

utility who elected to truck the CO2 through the small villages, and 

that is what the people objected to. 

Senator MURKOWSKI. Okay. 

Mr. HILTON. It wasn’t the pipeline. It was trucking. So they were 

OK with putting it in the ground. They were OK with it being captured, but the method of transportation wasn’t well thought out. 

Senator MURKOWSKI. That is an important aspect of it. I appreciate you pointing it out. 

Mr. HILTON. What we have been doing is, for instance, at Lacq, 

where we take a pipeline and go to depleted gas fields, the people 

of Lacq are extremely encouraged. Part of that is putting the deal 

together, if you will. 

Senator MURKOWSKI. Right. 

Mr. HILTON. Basically, TOTAL offered them back the royalties 

that they got when they used to have gas in the field, and this 

made the town extremely happy. Everybody is very happy with 

pipelines and that. 

So your point is very well taken. It is education. It is understanding that this is not a risky proposition, that we understand 

sequestration. We understand pipelines, and we understand capture and getting the public to accept that. It is an educational process because this is something they don’t know a great deal about. 

So I think we as an industry have to do that and get the proper 

I will say information in front of people, to have their confidence 

in what we are doing. But as I said, so far, we haven’t run into, 

at least in any of the projects Alstom has been involved with, any 

opposition. We do know there was opposition in Rotterdam, but 

that was directly under the town and you know—— 

Senator MURKOWSKI. Mr. Yamagata, on behalf of the Coal Utilization Research Council, is this an issue that you consider? 

Mr. YAMAGATA. It is. It is, Senator. It is an issue that we have 

spent a great deal of time trying to deal with other than to echo 

the points that Mr. Hilton has made, and that is that it is very 

much an education process. The flip side of that being a numbylike reaction, and that comes mostly, I think, with not understanding what the technology is or what we are capable of doing. 

Another point worth mentioning I think is just the enormous potential for deep storage even in the North American continent. Let 

me just give you a couple of examples. This comes from Battelle 

and DOE. Between 2050 and 2100, you would project about 330 

gigatons of CO2 that would otherwise be emitted. If you think 

about, that is 6 gigatons per year now. 

The repositories, if you will, in the North American continent 

just in saline formations alone is something on the order of 3,600 

gigatons. So, number 1, we have plenty—we believe we have plenty 

of storage capability. So that is probably not the issue if we do it 

right. 

I do think, in sum, that the real issue here is education. Don’t 

be flip about this because you will get the other side, the numby 

side of it. It will take the efforts of industry and Government to 
59 

educate land holders and others on the safety of what we are trying to do here. 

Senator MURKOWSKI. Let me ask you, Mr. Brownstein, because 

within the environmental community, I think EDF has taken a position that is somewhat different than some of the other organizations. You have stated that you believe CCS is critical. 

Is this an issue where we need to ensure that there is sufficient 

education and understanding about the process and the safety and 

security? 

Mr. BROWNSTEIN. There is no question, Senator, that education 

is critically important. This is an issue that members of the committee, those of us on the panel are very used to discussing. 

We have become very conversant with the technology and how it 

works. To the average American, this is something very new. So, 

there is a lot of work that needs to be done to educate the public 

about what the technology is and what the process is for doing this 

correctly. 

But let me also say 2 other things. First of all, it becomes incredibly important that, in fact, we do do it correctly. That requires 

good rules to be in place so it is very clear to operators what is expected of them. It becomes incredibly important to have good regulatory oversight. 

Both on the industry and the regulator side, we need to make 

sure that we have well-trained people. Investment in good education for geologists and engineers and making sure that they are 

part of this becomes incredibly important. We need to have qualified people. 

The last thing that I would suggest is that I personally believe 

that some of the resistance to CCS goes to the larger question of 

the role of coal. In that regard, I believe that the coal industry and 

the utilities that depend on coal have a particular responsibility to 

make sure that if we are to move forward with continuing to use 

coal as part of our energy economy that we really are looking at 

the entire value chain and that we are doing everything that we 

can not only with regard to CO2, but also how we mine it, how we 

deal with the waste and so on, to do it as environmentally responsible as absolutely possible. 

Senator MURKOWSKI. I thank the members of the panel. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you all very much. I think it has been 

good testimony and a good hearing. We appreciate your input. 

Oh, I am sorry. Senator Barrasso, I didn’t see you come back in. 

Go ahead if you have any questions. 

Senator BARRASSO. Thank you, Mr. Chairman. 

I had some constituents from Wyoming who were visiting, and I 

went to the library to visit with them. But I was trying to listen 

to some of the answers. 

Mr. Hilton, if I could, your company, Dr. House’s company, I 

mean, you are at the forefront of carbon sequestration. You are 

going to make this a reality. You will be on the ground doing that. 

Obviously providing legal certainty is critical, and you are addressing that. 

In Wyoming, over half of the land is owned by the Federal Government. As I think Dr. House mentioned, we have some of the 
60 

work done on the geology. I believe we have some of the best geologic structures and the best geology for long-term carbon sequestration. 

When you are out there selecting potential sites for long-term 

carbon storage, can you give us a little bit of your thought process 

on Federal land versus private land and how you make some of 

those decisions? 

Mr. HILTON. Normally, Alstom does not do sequestration. We basically do the capture portion. But I think the key issue is going 

to be where the plan is, obviously. I mean, you are east of the Mississippi, you are on private property. 

It is going to be a question of transportation. What is it going 

to cost us, and how difficult is it going to be to put pipeline to get 

to places where you really have choice? I think that is really going 

to be the core issue, the ease of that. 

I do think, just to comment on something that was said earlier, 

private—sequestration on private land will be quite complicated. If 

you look at the facility that we are involved with at Mountaineer, 

there are 2,000 private land owners immediately around the plant. 

To get mineral rights or to get pore space from all, if necessary, 

2,000, it is going to be a very complicated issue, and it is going to 

be a very difficult issue. 

That is why we are encouraged by seeing some States start to 

alter their view of ownership of pore space. I think it is absolutely 

critical, and it is something that has to happen to make this happen. 

Senator BARRASSO. Dr. House, did you want to comment on that 

in terms of your making financial decisions and commitments? 

Mr. HOUSE. Yes, absolutely. Certainly, we look at geology, ‘‘geology geology,’’ so to speak. Because the geology really does matter 

in terms of the reliability and the permanency of the storage. So 

that is critical. Obviously, proximity to sources is important, and 

then who owns—the complexity of the sort of legal access required 

is also important. 

I would add, and this also goes to something Senator Murkowski 

asked earlier about sort of public acceptance. In our experience, 

people view these as oil and gas transactions, as things they are 

familiar with, as things they understand. 

It is an industrial operation. It happens in the subsurface. It 

doesn’t have a great surface impact. So it is compatible with ranching or farming, et cetera. These leases are happening in very big, 

large ways, and so I actually think it is a very tractable thing and 

something that we are addressing actively. 

I think there has been some discussion of police action around 

pore space, and I actually would—that really scares me, to be honest with you. I think if there was a broad attempt at sort of national eminent domain, that would create a million enemies immediately, whereas if it is their resource and if it is an arm’s length 

negotiation between private entities, then they become associated 

with the project. They are invested in the project. They want it to 

go forward. 

They can benefit from it, as opposed to some sense that their assets are being stolen and that their homes are being put at risk. 
61 

So I think maintaining, as your bill does, that the pore space goes 

to surface estate I think is the right approach. 

Senator BARRASSO. Mr. Vann, following up on Senator Bingaman’s question earlier, would S. 1856 preclude the Federal Government from leasing the surface and leasing the subsurface? 

Mr. VANN. I don’t think so, no. 

Senator BARRASSO. Yes, I agree. 

Mr. VANN. In the case in which it owns both? No, I don’t see anything. 

Senator BARRASSO. OK. So it wouldn’t. Then in instances of private surface ownership and Federal mineral ownership, to me, S. 

1856 does not apply. So there would be no impact? 

Mr. VANN. I agree. It is not relevant. 

Senator BARRASSO. Thank you. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Again, thank you all very much. I think it has 

been a useful hearing. 

That will conclude our hearing. 

[Whereupon, at 12:01 p.m., the hearing was adjourned.] 

(63) 

APPENDIX 

RESPONSES TO ADDITIONAL QUESTIONS

RESPONSES OF MARK S. BROWNSTEIN TO QUESTIONS FROM SENATOR BINGAMAN

Question 1. Your written testimony discusses some important issues with adequate site characterization and maintenance of geological sequestration sites. Do 

you feel that the current direction of the DOE CCS regional partnership’s research 

projects adequately address the sequestration component of CCS? 

Answer. DOE’s CCS regional partnerships are providing a useful forum for developing and implementing pilot projects that will help commercialize carbon capture 

and storage (CCS) processes and technologies. Of particular importance is that partnerships are taking place in several regions across a wide variety of geologies. This 

is important because the viability of CCS will vary across geologies, with some geologic formations being more suitable for sequestration than others, and some proving unsuitable at all. Going forward, increased priority should be given to characterizing the geology of various regions, particularly where the costs and technical challenges of sequestration are likely to be relatively higher. In addition, there is an ongoing need for public outreach and education, with a particular focus on environmental regulators and public utility commissioners, both of whom will require current and complete information to be able to assess the environmental and economic 

viability of CCS projects, respectively. 

Question 2. Your testimony did not discuss the draft legislation proposed by Senators Rockefeller and Voinovich that would provide substantial funding for commercial deployment efforts of CCS technologies. Does EDF have an opinion on this draft 

legislation? We would appreciate your thoughts and/or comments on that legislative 

draft. 

Question 3. Can you provide a brief comparison of coal/CCS incentives in ACELA, 

ACES and Rockefeller/Voinovich and indicate the preferred approach from EDF’s 

perspective? 

Answer. Questions 2 and 3 are interrelated; and so, below, we combine our answers to those questions. 

The most important difference between the approaches to CCS commercialization 

taken in the Rockefeller/ Voinovich discussion draft and those taken in HR2454, the 

American Clean Energy and Security Act, is that the Rockefeller/Voinovich provisions are designed to operate independently of an energy policy that places a cap 

on greenhouse gas pollution. 

It should be recognized at the outset that, without a mechanism that places a 

price on CO2 emissions and that creates a market for avoiding those emissions, even 

the bestdesigned policies and programs are unlikely to result in broad deployment 

of CCS technologies. Without a price on carbon, there is simply no economic reason 

to do CCS. 

That critical point aside, the Rockefeller/Voinovich draft in many ways reflects an 

emerging consensus on the key policy pathways that are needed in order to support 

development, commercialization and broad-scale deployment of carbon capture and 

sequestration technologies at coal-fired facilities. 

Early Deployment 

Both Rockefeller/Voinovich and HR2454 create early deployment programs that 

would operate for 10 years and fund CCS projects with revenue collected from utility ‘‘wires charges.’’ Utility assessments would be based on the fossil-fuel generation 

mix of each utility, with the assessments under Rockefeller/Voinovich set at levels 

to bring in a total of approximately $2 billion annually and assessments under 

HR2454 set to generate approximately $1 billion annually. The Rockefeller/Voinovich draft states that the program should, to the maximum extent practicable, deploy projects capturing emissions from at least 10 GW of generating capacity. 
64 

This is in contrast to a more limited approach established under S.1462, the 

American Clean Energy Leadership Act. Under S.1462, DOE would provide technical and financial support to no more than 10 CCS demonstration projects, with 

the key support mechanism being the indemnification of the 10 project operators 

from liabilities that may arise from the projects. The question of how to best address 

risk management is addressed below in our response to question #4. So, here we 

will focus on the major differences between Rockefeller/ Voinovich and HR2454, neither of which address the liability question. 

The Rockefeller/Voinovich draft builds off the CCS early deployment program established in HR2454 (which in turn was taken from Rep. Boucher’s HR1689). Under 

both versions, new entities are established to administer the program—including 

the approval of projects and disbursement of funds. Under HR2454 this entity, the 

Carbon Storage Research Corporation, is made up of utility associations and public 

interest groups and operates as an arm of EPRI. 

This structure raises governance questions, in that private entities are given full 

authority over the management and use of funds raised from electricity consumers 

for a public purpose. Rockefeller/Voinovich deftly resolves this issue by creating an 

entity, the CCS Program Partnership Council, made up of largely the same industry 

and public-interest actors but over which DOE maintains an important oversight 

role. The Council would review and recommend projects for financial assistance, but 

awards would ultimately be made by the Program Manager, who is appointed by 

the Secretary of Energy. In this way, the Rockefeller/Voinovich draft strikes a balance by relying on industry expertise to provide direction over the investments 

while making public officials accountable for final funding decisions. 

The other key difference between the two approaches is the size of the programs. 

As mentioned, Rockefeller/Voinovich would raise $2 billion annually for 10 years; 

and HR2454 would raise half that amount. The question of whether it makes sense 

to double the size of the early deployment program, as originally negotiated with 

industry, rests largely on two issues: 1) concerns over consumer impacts, and 2) the 

efficacy of the commercial deployment programs contemplated in both Rockefeller/ 

Voinovich and HR2454. 

Clearly, doubling the costs imposed on electricity consumers—relatively minor 

though those costs may be for any given ratepayer—is a proposition that will be 

given close scrutiny. Under both Rockefeller/Voinovich and HR2454, 60% of state 

public utility commissions must approve the early deployment program before it can 

be established and utility assessments can commence. Ever conscious of consumer 

rate impacts, it’s conceivable that the difference between a $1 billion and $2 billion 

annual program may be enough to cause a significant number of PUCs to balk. 

However, because Rockefeller/Voinovich is appears to be designed to operate in 

the absence of a price on carbon pollution, the success of the overall CCS deployment program becomes all the more dependent on funds generated from mandatory 

charges placed on consumers in the early deployment program—as opposed to the 

incentivebased mechanisms used to promote CCS development under the subsequent commercial deployment program. So, in this sense, doubling the size of the 

early deployment program almost becomes a necessity under Rockefeller/Voinovich. 

Commercial Deployment Program 

Both Rockefeller/Voinovich and HR2454 establish commercial deployment programs that take effect as the early deployment programs wind down. HR2454 

incentivizes broad deployment of CCS by providing emission allowances for tons of 

CO2 captured and sequestered, with bonus amounts given on a sliding scale for 

higher rates of capture and sequestration. The program is broken into two tranches, 

with the first 6 GW of capacity using CCS being guaranteed the bonus allowances 

and the next 66 GW of CCS being eligible for allowances under a reverse auction 

or other method. 

Rockefeller/Voinovich mimics this structure, incentivizing the first 10 GW of CCS 

through loan guarantees and a 30% tax credit on the incremental costs associated 

with adding CCS technology to a project. For the next 62 GW of capacity, Rockefeller/Voinovich provides slide-scaling tax credit for tons sequestered, with higher 

amounts given for higher rates of capture. The Rockefeller/Voinovich approach can 

be seen as an elegant way of devising a similar structure to achieve similar ends 

as those contemplated in the HR2454 commercial deployment program—and doing 

so without the having the benefit of emission allowances as a resource to fund incentives. However, we are mindful of the difficult budgetary environment in which 

Congress currently operates and have concerns about whether the program would 

be fully funded to achieve its optimal ends. 

In contrast, done within the context climate/energy legislation that caps and 

places a price on carbon, the CCS commercial deployment program could go forward 
65 

under a revenueneutral approach that has both the benefit of being able to use 

emission allowance values to subsidize CCS deployment and a long-term price signal 

that will broadly incentivize industry to invest in CCS deployment. 

Standards for New Coal-Fired Power Plants 

Both Rockefeller/Voinovich and HR2454 set CO2 emission limits for new-coal fired 

power plants. Rockefeller/Voinovich requires plants that are initially permitted before 2020 to achieve a CO2 emission limit that reflects a 50% reduction from the 

carbon content of the fuel by the time there is 10 GW of CCS capacity in operation 

or by 2030 at the latest (or possibly later if a DOE report required under the legislation determines that CCS won’t be commercially available until later). 

Rockefeller/Voinovich is silent on what happens with plants that are initially permitted from 2020 onward. Presumably this question will be addressed as the bill 

authors further refine their discussion draft. 

HR2454 requires plants that are initially permitted by 2020 to achieve a 50% reduction in CO2 emissions by the time there is 4 GW of CCS capacity in operation 

or by 2025 at the latest (with EPA being given authority to extend the deadline). 

Plants initially permitted from 2020 onward must achieve a 65% emission reduction 

upon commencing operation. 

EDF prefers the approach taken under HR2454, as it is more reflective of the 

standards recommended by the U.S. Climate Action Partnership in its ‘‘Blueprint 

for Legislative Action.’’ The blueprint presents consensus recommendations that 

were negotiated among a broad group of industry and environmental stakeholders 

and, as such, is provides a solid representation of what is both technically and economically achievable. 

National Strategy 

Finally, we would note that Rockefeller/Voinovich could benefit from the addition 

of language directing relevant federal agencies to develop a national strategy, including the promulgation of necessary rules, to address legal and regulatory barriers 

to CCS deployment and to ensure that CCS activities are held to standards that will 

be fully protective of public health and the environment. In particular, we would 

highlight the importance of developing strong standards for assessment and selection of geologic sequestration sites. 

Language to this effect is included in HR2454. The coal working group lead by 

Senator Carper also produced national strategy language, which was included in 

S.1733, the Clean Energy Jobs and American Power Act, by Senators Kerry and 

Boxer. 

Question 4. There have been many proposals introduced recently by various stakeholder groups concerning CCS liability and indemnity programs, what is EDF’s 

opinion on how liability and indemnity should be addressed? Is there any one preferred approach? 

Answer. For the past several months, EDF has been in a dialogue with Southern 

Company, Duke Energy, Zurich and a variety of other environmental and business 

stakeholders on the question of CCS liability and indemnity. From the start, the 

working assumptions of this dialogue have been: 

1) that the best legal liability regime for CCS is one that ultimately place the 

full cost of CCS liability insurance and remediation costs firmly in the private 

sector and assures that individual developers will remain responsible for their 

actions; 

2) at the outset of CCS commercialization, when there is a lack of operational 

experience and data upon which the private sector risk management services 

(e.g., insurance markets) can develop accurate actuarial data, a certain amount 

of limited government support will be necessary to facilitate CCS commercialization; and, 

3) whatever federal government support is offered, it should be structured in 

a way that facilitates development of a commercial market for liability and risk 

management services. 

We believe the first two assumptions are broadly reflected in S. 1462, and our 

ideas are intended to build on this work. Our goal is to develop a risk management 

program for early deployment of CCS, and an infrastructure maintenance program 

for CCS site post closure. In summary fashion the ideas we have developed to date 

would attempt to achieve the following: 

1) Limited relief provided to CCS sites. Site operators take on ‘‘first dollar’’ 

liability on a per site, per-occurrence basis up to a certain amount. Then each 

site must contribute to an industry pool, also on a-per site, per-incident basis. 

Then the government assumes a portion of liability beyond the industry pool up 
66 

to a fixed amount for each site. Any remaining liability beyond the government’s share reverts back to the site operator. The earlier a CCS site commences operation (i.e., in which tranche it is located), the more assistance it receives. 

2) To be eligible for this program, the project developer of a proposed CCS 

sites apply to the Secretary of Energy to enter into a cooperative agreement. 

The Secretary is not compelled to enter into any cooperative agreements, thus 

placing the burden on the applicant to justify its project to the Secretary. Eligibility will depend in part on meeting underwriting criteria that are established 

for other sites participating in the program. 

3) The program is limited. The Secretary can enter into cooperative agreements until a maximum of 40 GW of generating capacity in the United States 

is equipped with CCS. This equates to 12% of today’s coal capacity. The Secretary is required to halt entering into new cooperative agreements, after 15 

GWs of capacity (roughly 5% of current coal capacity) have been enrolled in the 

program, and at that point must undertake a review and determine that that 

the program is working and still needed to support commercialization of CCS. 

4) Participants in the program, as a condition of receiving a cooperative 

agreement, to agree to pay into a trust fund to cover post-closure infrastructure 

maintenance and monitoring, measurement and verification costs associated 

with sites in the program. The trust fund will be funded through a fee per ton 

of carbon dioxide injected at a site participating in the risk management program. The draft authorizes the Secretary of Energy to recognize a Carbon Sequestration Management Authority (CSMA) to collect and manage the funds. 

The CSMA will not be a government entity, nor will the funds be government 

funds. 

5) Establish a mechanism to deal with ‘orphan’ sites. Collect a 5-10 cent per 

ton fee from all CCS sites, regardless of whether they are participating in the 

risk management program, to cover remediation, infrastructure maintenance, 

and monitoring, measurement, and verification for sites where no responsible 

entity remains with the obligation and financial ability to perform such activities. Our ideas stand in contrast to other proposals that would relieve CCS site 

owners of all liability once closure of a site is achieved. We believe proposals 

that contain such blanket liability relief create the risk of moral hazard by offering the promise that at some point in the future, the site would become the 

sole responsibility of a third party. 

EDF, and its partners welcome the opportunity to discuss these ideas with the 

committee. 

RESPONSE OF ROBERT HILTON TO QUESTION FROM SENATOR BINGAMAN

Question 1. In your written testimony, you mentioned the need to broaden the 

scope of CCS deployment to other fossil fuels and industrial processes. Is Alstom 

partnering with any non-coal types of CCS projects at present? If so, could you 

please elaborate? 

Answer. To achieve the targets for GHG CO2 emissions set forth in draft legislation (e.g. Waxman Markey) of 50% in 2030 and 83% in 2050, we will need to place 

CCS on power generation from all types of fuel, particularly natural gas plants. Depending on the evolution in the next months and years with plant permitting, all 

studies show CCS on gas as critical. So far, this need for demonstration has been 

substantially ignored in decisions on public funding. 

Alstom has seen the need and has a series of demonstrations aimed at fuels and 

applications other than coal. We are currently operating a 5Mw Chilled Ammonia 

Process demonstration pilot at E.On’s Karlshamn Plant in Sweden. This unit is running on oil as the fuel for the boilers. We developed the program on the concept that 

the unit would later be moved to a combined cycle natural gas power plant located 

nearby. 

We currently have under construction a 40MW Chilled Ammonia Process demonstration plant at the Mongstad refinery in Norway. This project is funded by the 

TCM Consortium made up of Statoil (refinery owner), Gassnova and Shell. The CCS 

plant will initially operate on a combined cycle natural gas plant and then on flue 

gas from a refinery catalytic cracker unit. The Norwegian Parliament is expected 

to take an investment decision on the plant in 2014. 

Alstom also had a contract with ADM under the Industrial ARRA work from the 

Department of Energy at its plant in Decatur, IL for our advanced amine technology. However, we have completed the phase I study and, due to uncertainty of 
67 

legislation, ADM has elected not to proceed with the phase II implementation of the 

CCS. 

We continue to look for additional non-coal opportunities but uncertainty of the 

regulatory/legislative process for CO2 control combined with no available government funding for the foreseeable future has essentially frozen the demonstration opportunities. 

As we all know, the presumed goals mentioned above can only be achieved by application of CCS on all fuels, and with a wide deployment in the early 2020’s. For 

that to be feasible requires a significant level of projects built and operational by 

2015 or 2016 at the latest. This would provide the demonstration experience necessary to give industry the confidence to deploy and the suppliers of technology the 

confidence to make commercial offers. Without government subsidies this will not 

happen and under the current budgets for DOE there will be no more than the 5- 

6 commercial scale demonstration projects currently in design. Congress needs to 

act based on the legislation under the purview of the Energy and Natural Resources 

Committee review to fund a broad spectrum of demonstrations now. 

RESPONSE OF KURT ZENZ HOUSE TO QUESTION FROM SENATOR BINGAMAN

Question 1. Can you elaborate on how you have been working to acquire private 

lands? Has that process of securing legal access to lands for CCS projects been any 

more or less challenging for public lands than for private lands? If so, could you 

please highlight any potential issues or challenges that you may have encountered? 

Answer. It was an honor to testify to your committee, and I would like to request 

that you and your committee encourage the Secretary of the Interior to issue an interim CO2 capture and storage (CCS) policy to help clear the path for industrious 

American entrepreneurs to invest in site characterization and eventually sequestration site construction. By expeditiously issuing such a policy, through which the 

study and commercial development of carbon sequestration sites involving federal 

lands can happen, the Department of Interior (DOI) will help to realize President 

Obama’s stated goal of having CCS commercially deployed within 10 years. 

I have been studying the physics, chemistry, and geology of CCS for nearly 7 

years as an academic and as an entrepreneur. From this experience, I am confident 

that public lands will be part of many of the best carbon sequestration sites in the 

country, and as such there is a need for land management policy which balances 

the benefits of moving quickly to characterize those lands against the risks of making inadequately informed public commitments regarding new commercial activity 

on the land. 

Fortunately, existing federal policy under the Federal Land Policy Management 

Act (FLPMA) provides the DOI with the necessary authority to act promptly and 

appropriately. Specifically, FLPMA authorizes DOI and other relevant agencies to 

expeditiously grant site characterization rights to private developers, while the 

granting agency withholds full authorization of any development rights until costs, 

benefits, and local impacts are fully evaluated. This type of two-step protocol has 

been applied to wind power development as well as to other emerging natural resource. 

The use of such a process will enable carbon sequestration site developers to invest the tens of millions of dollars necessary for site testing and environmental analysis, and it will give those developers the confidence that if the resource is provenand the public benefits justify the inclusion of public land in further developmentthen, the developers will have the opportunity to recoup their substantial investment. By advancing this process, the DOI will enable rapid investment in the early 

stage development work as well as public confidence that the appropriate care will 

be taken such that the public interests to be comprehended and evaluated. 

In all CCS projects, acquiring the legal access to the geologic reservoir is an essential first step. As I mentioned previously, my company is dedicated to making 

CCS an integral part of our nation’s low-carbon, affordable, and reliable energy future. We are working in more than half a dozen different states, and our development work is financed 100% by private investors. 

As I said in my testimony, private transactions are often the preferred route for 

resource development projects because they can be executed quickly and because the 

interests of relevant parties can be addressed through direct and private negotiation. In addition to private lands, federal and state lands are essential to the development of CCS projects in the United States because significant portions of private 

land in the Mountain West region are checker-boarded with federal land. Although 

regulatory clarity regarding development rights on public lands would speed up de-
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velopment, the type of uncertainty involved in the usual FLPMA two-step grant is 

manageable. 

For the past year, the Bureau of Land Management (BLM) has been conducting 

an internal policy review. Recently, this policy review appears to have been slowed 

down by two legal questions that, in the opinion of experienced legal experts, are 

settled law. 

The first question involves the BLM’s authority under the FLPMA to lease lands 

for CO2 sequestration. Indeed, the Department of Interior (DOI) does have the authority to allow a broad range of energy development activities on Federal lands, 

including carbon sequestration, under the FLPMA (See the first attached legal opinion). The Congressional Research Service testimony to your Committee on April 

20th agrees significantly with this conclusion. 

The second legal question that BLM appears to be considering is whether or not 

CO2 that is sequestered on public lands becomes a natural mineral that the BLM 

can then lease for extraction. This question is not as central to the development of 

the industry as the first question, but again, it appears to be a settled question. The 

majority rule codified by statute in many states and previously recognized by BLM 

for natural gas storage, provides that the storage operator retains title to injected 

gas (See the second attached legal opinion). Because ownership of injected gas remains with the storage operator, BLM would not have authority to grant third parties the right to produce injected carbon dioxide. Although this rule was developed 

with ownership of valuable minerals such as natural gas in mind, in the context 

of CO2 it guarantees that responsibility continues to reside with the storage operator. That is that liability-and the asset-belongs to the operator. 

I believe strongly that (1) CCS is an essential element of any strategy that has 

the goal of simultaneously making significant cuts in greenhouse gas emissions, 

while maintaining a robust and affordable energy supply, and (2) the CCS industry 

can only grow if land and mineral owners are appropriately brought into all 

projects. As the largest landowner in the country, the Federal government should 

move quickly to ensure that it does not become an obstacle to the creation of carbon 

sequestration projects ready to serve the public good. 

RESPONSES OF JAMES MARKOWSKY TO QUESTIONS FROM SENATOR BINGAMAN

Question 1. Just last week, as I understand, the U.S. government, led by our 

Trade and Development Agency, signed an agreement to help design the first largescale IGCC power plant in China. With U.S. government assistance, General Electric Energy will work in cooperation with the Chinese to develop the configuration 

and design parameters for this cutting-edge CCS-ready facility. Is the Department 

of Energy involved in that project, or others like it, in China and other rapidly 

emerging economies? 

Answer. The Department of Energy is not involved in the IGCC project or any 

others like it in any rapidly emerging economies. 

In 2007, NEIL provided technical oversight for a $2 million IGCC feasibility 

study, without CCS, in India funded by the U.S. Agency for International Development (USAID). This study resulted in a recommended gasification technology as 

being the most commercially ready for a large-scale (100-MW) demo project using 

typical high-ash coals. Subsequently, during the U.S.-Indo Energy Dialogue in 2007 

in New Delhi, DOE committed to participating on an IGCC Task Force with India’s 

Ministry of Power, NTPC Ltd., and Bharat Heavy Electricals, Ltd. (BHEL). The 

IGCC Task Force will be discussed during a meeting of the Power & Energy Efficiency Working Group in New Delhi, in early May 2010. 

Question 2. Please describe the efforts being taken to ensure that water rights and 

water quality will be protected in connection with development of policies and technology relating to carbon capture and sequestration. 

Answer. The DOE is working through the Regional Carbon Sequestration Partnerships and its 30 field projects to demonstrate that underground sources of drinking water (USDWs) will not be adversely impacted by CO2 injection operations and 

long term storage. Sixteen of these projects have completed their injections, and 

three are currently injecting CO2 in deep saline formations, depleted oil fields, and 

deep unmineable coal seams. All of these projects are permitted under the U.S. 

EPA’s underground injection control (UIC) permitting process which is designed to 

protect USDWs. To date, all of these projects have demonstrated that CO2 injection 

into geologic formations is a secure and safe technology to mitigate greenhouse gas 

emissions. The DOE is also working through the Partnerships’ field projects and 

several NGOs to address water rights and pore space issues. These field projects are 

all required to obtain leases for mineral, water, and/or pore space rights prior to 
69 

project operations. The DOE is also working to address these issues through the 

interagency task force on CCS and engaging with stakeholders from industry and 

the states to better understand issues regarding water rights and water quality. 

[Responses to the following questions were not received at the 

time the hearing went to press:] 

QUESTIONS FOR ANNE CASTLE FROM SENATOR BARRASSO

NOTIFICATION

Question 1. Public participation is a key part of the permitting process. What 

guidelines does the Department follow when it comes to carbon storage projects on 

public land? 

Question 2. Is notice given to adjacent property owners, mineral leaseholders, and 

people with surface use permits? 

AGENCY COOPERATION

Question 3. Federal lands are managed by various agencies within the federal government. There are different statutory chapters that apply to each agency and that 

cover different aspects of federal land management. Are the processes for reviewing, 

permitting, and overseeing carbon storage projects on federal land consistent across 

the various land management agencies within the Department of the Interior? 

MINERAL RIGHTS

Question 4. S. 1856 makes clear that the mineral estate is dominant. Under existing law and regulations, how does the Department ensure carbon storage on public 

lands does not impact existing mineral leasing rights? 

Question 5. Concerns have been raised regarding carbon sequestration’s impact on 

ongoing mining activities. Mining lease holders use underground mining spaces as 

part of the ventilation system as mining continues. Does the Department recognize 

that these underground cavities are part of the mineral lease as long as mining operations continue? 

Question 6. Would S. 1856 impact the Department’s rules in this regard? 

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