[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]



 
                           FUTUREGEN AND THE
                         DEPARTMENT OF ENERGY'S
                         ADVANCED COAL PROGRAMS

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


                                HEARING

                               BEFORE THE

                       SUBCOMMITTEE ON ENERGY AND
                              ENVIRONMENT

                  COMMITTEE ON SCIENCE AND TECHNOLOGY
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 11, 2009

                               __________

                            Serial No. 111-9

                               __________

     Printed for the use of the Committee on Science and Technology


     Available via the World Wide Web: http://www.science.house.gov

                                 ______


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                  COMMITTEE ON SCIENCE AND TECHNOLOGY

                   HON. BART GORDON, Tennessee, Chair
JERRY F. COSTELLO, Illinois          RALPH M. HALL, Texas
EDDIE BERNICE JOHNSON, Texas         F. JAMES SENSENBRENNER JR., 
LYNN C. WOOLSEY, California              Wisconsin
DAVID WU, Oregon                     LAMAR S. SMITH, Texas
BRIAN BAIRD, Washington              DANA ROHRABACHER, California
BRAD MILLER, North Carolina          ROSCOE G. BARTLETT, Maryland
DANIEL LIPINSKI, Illinois            VERNON J. EHLERS, Michigan
GABRIELLE GIFFORDS, Arizona          FRANK D. LUCAS, Oklahoma
DONNA F. EDWARDS, Maryland           JUDY BIGGERT, Illinois
MARCIA L. FUDGE, Ohio                W. TODD AKIN, Missouri
BEN R. LUJAN, New Mexico             RANDY NEUGEBAUER, Texas
PAUL D. TONKO, New York              BOB INGLIS, South Carolina
PARKER GRIFFITH, Alabama             MICHAEL T. MCCAUL, Texas
STEVEN R. ROTHMAN, New Jersey        MARIO DIAZ-BALART, Florida
JIM MATHESON, Utah                   BRIAN P. BILBRAY, California
LINCOLN DAVIS, Tennessee             ADRIAN SMITH, Nebraska
BEN CHANDLER, Kentucky               PAUL C. BROUN, Georgia
RUSS CARNAHAN, Missouri              PETE OLSON, Texas
BARON P. HILL, Indiana
HARRY E. MITCHELL, Arizona
CHARLES A. WILSON, Ohio
KATHLEEN DAHLKEMPER, Pennsylvania
ALAN GRAYSON, Florida
SUZANNE M. KOSMAS, Florida
GARY C. PETERS, Michigan
VACANCY
                                 ------                                

                 Subcommittee on Energy and Environment

                  HON. BRIAN BAIRD, Washington, Chair
JERRY F. COSTELLO, Illinois          BOB INGLIS, South Carolina
EDDIE BERNICE JOHNSON, Texas         ROSCOE G. BARTLETT, Maryland
LYNN C. WOOLSEY, California          VERNON J. EHLERS, Michigan
DANIEL LIPINSKI, Illinois            JUDY BIGGERT, Illinois
GABRIELLE GIFFORDS, Arizona          W. TODD AKIN, Missouri
DONNA F. EDWARDS, Maryland           RANDY NEUGEBAUER, Texas
BEN R. LUJAN, New Mexico             MARIO DIAZ-BALART, Florida
PAUL D. TONKO, New York                  
JIM MATHESON, Utah                       
LINCOLN DAVIS, Tennessee                 
BEN CHANDLER, Kentucky                   
BART GORDON, Tennessee               RALPH M. HALL, Texas
                  JEAN FRUCI Democratic Staff Director
            CHRIS KING Democratic Professional Staff Member
        MICHELLE DALLAFIOR Democratic Professional Staff Member
         SHIMERE WILLIAMS Democratic Professional Staff Member
      ELAINE PAULIONIS PHELEN Democratic Professional Staff Member
          ADAM ROSENBERG Democratic Professional Staff Member
          ELIZABETH STACK Republican Professional Staff Member
          TARA ROTHSCHILD Republican Professional Staff Member
                    STACEY STEEP Research Assistant


                            C O N T E N T S

                             March 11, 2009

                                                                   Page
Witness List.....................................................     2

Hearing Charter..................................................     3

                           Opening Statements

Statement by Representative Brian Baird, Chair, Subcommittee on 
  Energy and Environment, Committee on Science and Technology, 
  U.S. House of Representatives..................................     8
    Written Statement............................................     9

Statement by Representative Bob Inglis, Ranking Minority Member, 
  Subcommittee on Energy and Environment, Committee on Science 
  and Technology, U.S. House of Representatives..................     9
    Written Statement............................................    10

Statement by Representative Jerry F. Costello, Member, 
  Subcommittee on Energy and Environment, Committee on Science 
  and Technology, U.S. House of Representatives..................    10
    Written Statement............................................    12

                               Witnesses:

Dr. Victor K. Der, Acting Assistant Secretary, Office of Fossil 
  Energy, U.S. Department of Energy
    Oral Statement...............................................    13
    Written Statement............................................    14
    Biography....................................................    18

Mr. Mark Gaffigan, Director, Natural Resources and Environment 
  Team, U.S. Government Accountability Office
    Oral Statement...............................................    19
    Written Statement............................................    20
    Biography....................................................    77

Dr. Robert J. Finley, Director, Energy and Earth Resources 
  Center, Illinois State Geological Survey
    Oral Statement...............................................    77
    Written Statement............................................    79
    Biography....................................................    80

Mr. Larry S. Monroe, Senior Research Consultant; Manager, 
  Engineering Science and Technology, Southern Company
    Oral Statement...............................................    80
    Written Statement............................................    82
    Biography....................................................    87

Ms. Sarah M. Forbes, Senior Associate, Climate and Energy 
  Program, World Resources Institute
    Oral Statement...............................................    87
    Written Statement............................................    89

Discussion
  Cost Escalations...............................................    93
  Lessons From Small-scale Projects..............................    95
  Justifying Research Funds......................................    95
  International Cooperation......................................    96
  Project Scale..................................................    97
  Public Service Commission Challenges...........................    98
  Promoting Sustainability.......................................    99
  On the Affordability of Clean Coal.............................   100
  Concerns and Skepticism About CCS..............................   101
  Original FutureGen Project Cancellations.......................   103
  Infrastructure and Resource Demands............................   104
  Innovative Technologies........................................   105
  Project Siting.................................................   107
  International Partnerships.....................................   108
  The Viability of CCS as an Investment..........................   110
  Urgency and the CCS Timeframe..................................   111
  Global Participation...........................................   112
  Investment Through 2025........................................   113
  Effects on the Consumer........................................   114
  Comparative Cost Benefit Analysis..............................   115
  Joining Entrepreneurs and Inventors............................   116

             Appendix 1: Answers to Post-Hearing Questions

Ms. Sarah M. Forbes, Senior Associate, Climate and Energy 
  Program, World Resources Institute.............................   122

             Appendix 2: Additional Material for the Record

The Passing of FutureGen: How the World's Premier Clean Coal 
  Technology Project Came to be Abandoned by the Department of 
  Energy, Report by the Majority Staff of the Subcommittee on 
  Investigations and Oversight, Committee on Science and 
  Technology, March 10, 2009.....................................   126


    FUTUREGEN AND THE DEPARTMENT OF ENERGY'S ADVANCED COAL PROGRAMS

                              ----------                              


                       WEDNESDAY, MARCH 11, 2009

                  House of Representatives,
            Subcommittee on Energy and Environment,
                       Committee on Science and Technology,
                                                    Washington, DC.

    The Subcommittee met, pursuant to call, at 10:00 a.m., in 
Room 2318 of the Rayburn House Office Building, Hon. Brian 
Baird [Chair of the Subcommittee] presiding.


                            hearing charter

                 SUBCOMMITTEE ON ENERGY AND ENVIRONMENT

                  COMMITTEE ON SCIENCE AND TECHNOLOGY

                     U.S. HOUSE OF REPRESENTATIVES

                           FutureGen and the

                         Department of Energy's

                         Advanced Coal Programs

                       wednesday, march 11, 2009
                         10:00 a.m.-12:00 p.m.
                   2318 rayburn house office building

Purpose

    On Wednesday, March 11th at 10:00 a.m. the House Committee on 
Science and Technology, Subcommittee on Energy and Environment will 
hold a hearing entitled ``FutureGen and the Department of Energy's 
Advanced Coal Programs.'' The purpose of the hearing is to receive 
testimony on near-term and long-term strategies to accelerate research, 
development and demonstration of advanced technologies to help reduce 
greenhouse gas emissions from new and existing coal-fired power plants.
    The Subcommittee will hear testimony from five witnesses who will 
speak about advanced coal technology projects ongoing in the United 
States as well as new initiatives under consideration here and around 
the globe. Witnesses will also address the technical challenges and 
policy hurdles confronting the wide scale deployment of carbon capture 
and storage systems.

Witnesses

        1.  Dr. Victor Der: Acting Assistant Secretary for the 
        Department of Energy's Office of Fossil Energy will discuss the 
        status and goals of the Department's advanced coal programs. He 
        also will describe the Department's plans for expenditure of 
        funds allocated under the American Recovery and Reinvestment 
        Act of 2009 and explain the Department's role to facilitate 
        international collaboration regarding CCS technologies.

        2.  Mr. Mark Gaffigan: Director, Natural Resources and 
        Environment Team at the U.S. Government Accountability Office 
        (GAO). Mr. Gaffigan will summarize the GAO's report on the 
        restructured FutureGen program and the conclusions to be drawn 
        for a path forward on CCS policy decisions.

        3.  Dr. Robert J. Finley: Director, Energy and Earth Resources 
        Center for Illinois State Geological Survey with specialization 
        in fossil energy resources. He is currently heading a regional 
        carbon sequestration partnership in the Illinois Basin aimed at 
        addressing concerns with geological carbon management. Dr. 
        Finley will provide an update on activities at the Midwest 
        Geological Sequestration Consortium and provide information 
        about the injection site selection process and strategies for 
        monitoring the site.

        4.  Mr. Larry Monroe: Senior Research Consultant at Southern 
        Company. Mr. Monroe will discuss carbon capture and storage 
        projects his company has underway and some of the technical 
        challenges and other barriers to the deployment of CCS systems 
        on a commercial scale.

        5.  Ms. Sarah Forbes: Senior Associate, Climate and Energy 
        Program at the World Resources Institute. Ms. Forbes will 
        discuss the World Resources Institute's ongoing activities to 
        establish guidelines and recommendations for the deployment of 
        carbon capture and storage technologies. She will describe 
        ongoing activities and new initiatives underway to facilitate 
        international collaboration on advanced coal technologies and 
        the benefits and challenges associated with widespread 
        demonstration and commercial application of CCS programs.

Background

    The Department of Energy (DOE) manages a number of different 
programs designed to research and develop technologies to meet the goal 
of reducing greenhouse gas emissions from our nation's coal-fired power 
plants and other industrial sources. The Department's programs include 
the Clean Coal Power Initiative, FutureGen, Innovations for Existing 
Plants Program, the Advanced Turbines Program, the Advanced Integrated 
Gasification Combined Cycle Program, and the Carbon Sequestration 
Regional Partnerships to name some of the specific programs that aim to 
improve power plant efficiencies, advance the development of carbon 
capture and storage technologies and reduce the costs of these 
technologies. In addition, the Department leads U.S. Government 
participation in the Carbon Sequestration Leadership Forum that was 
established in 2003 and is comprised of twenty-one countries and the 
European Commission. Its goal is to facilitate the development of cost-
effective technologies and strategies for CO2 separation, 
capture and long-term storage and to make these tools broadly available 
around the globe.
    It is well known that approximately 50 percent of the electricity 
generation in the United States comes from coal. On a global scale, 
approximately 41 percent of the electricity production is from coal.\1\ 
It is also well understood that the burning of fossil fuels contributes 
significantly to greenhouse gas emissions. The International Energy 
Agency (IEA) 2008 report states, ``The CO2 concentration in 
the atmosphere is 385 ppm, and is rising by about two ppm per year.'' 
\2\ The IEA further states that ``[S]tationary CO2 sources 
associated with fossil-fuel energy use produce the bulk of the world's 
CO2 emissions.'' Specifically, the IEA report finds that 
electricity and heat production produced 9.6 Gt of CO2 in 
2005 out of a total 26.3 Gt.\3\
---------------------------------------------------------------------------
    \1\ International Energy Agency, World Energy Outlook 2007: China 
and India Insights, p. 593.
    \2\ International Energy Agency, Energy Technology Perspectives 
2008: Scenarios & Strategies to 2050, p. 52.
    \3\ OECD/IEA, CO2 Capture and Storage: A Key Carbon 
Abatement Option, 2008, p. 46.
---------------------------------------------------------------------------
    As we move to adopt policies to reduce greenhouse gas emissions in 
the United States, the electricity generating sector of our economy 
certainly will be one target to achieve those emissions reductions. 
While the details of a national climate change program are unknown at 
this time, there is much discussion about the suite of practices we 
must adopt and the portfolio of technologies we must deploy to meet the 
daunting challenge of climate change. As part of that discussion there 
is growing interest in determining how significant a role carbon 
capture and storage systems can play in managing greenhouse gas 
emissions from coal-fired power plants.

Carbon Capture
    There are three main technology options for capturing CO2 
from power plants or other industrial facilities: 1) post-combustion 
capture, 2) pre-combustion capture, and 3) oxy-fuel combustion capture.
    Post-combustion processes captures the CO2 from the 
exhaust gas through the use of distillation, membranes, or absorption, 
which can be physical or chemical. These technologies may be used to 
retrofit existing plants or incorporated into the design of new 
industrial facilities and electricity generating plants. There are some 
outstanding issues with these technologies that need to be addressed. 
One issue is the loss of efficiency. Energy is required to operate 
these technologies, thus lowering the overall power plant efficiency 
and increasing power generation costs. A second issue is the energy 
loss associated with the compression of the CO2 after it is 
captured and prepared for pipeline transport. There are commercially 
available technologies that perform post-combustion capture, but 
generally, they have not been applied to large volumes of flue-gas 
streams such as those created by coal-fired power plants.
    Pre-combustion capture first reacts the fuel with oxygen in a 
gasifier to create a syngas consisting of carbon monoxide and 
hydrogen--an Integrated Gasification Combined Cycle (IGCC) plant is 
currently a requirement for the pre-combustion capture of CO2 
for electricity generation. The syngas is cleaned of conventional 
pollutants (SO2, particulates) and sent to a shift reactor 
which uses steam and a catalyst to produce CO2 and hydrogen. 
Then, a physical solvent can be used to separate out the 
CO2. After the capture process, the CO2 can be 
compressed for transportation and long-term storage in geologic 
formations. The hydrogen is directed through gas and steam cycles to 
produce electricity. While construction costs for an IGCC plant are 
higher than those for a pulverized coal plant, IGCC's operate at a 
higher efficiency and the penalty for the carbon capture technology is 
considered to be less. There are currently two commercial IGCC plants 
operating in the United States, and despite the potential for improved 
environmental performance and greater fuel efficiency of IGCC, higher 
costs have held back a major breakthrough in the U.S. market.
    The oxy-fuel process feeds pure oxygen into the combustion process 
of the conventional air-fired power plant. This type of technology aims 
to address CO2 during the combustion stage by increasing the 
CO2 concentration of the flue gas exiting the boiler so that 
less energy is required to prepare the gas for storage. A main 
advantage is that the lower the energy penalty, the lower the cost. 
However, the pure oxygen generally would be provided by an air-
separation unit which is energy intensive to operate and a primary 
source of reduced efficiency. There is ongoing work targeted at 
improving the efficiency of this air-separation process. There are 
initiatives in the United States to demonstrate this type of 
technology, but it has not yet been tested in a large-scale 
facility.\4\
---------------------------------------------------------------------------
    \4\ Department of Energy, Strategies for the Commercialization and 
Deployment of Greenhouse Gas Intensity-Reducing Technologies and 
Practices, January 2009.

Carbon Storage
    Following the compression and transportation (if needed) of the 
captured CO2, it would be injected into suitable geological 
formations for long-term storage. Currently, the most promising 
reservoirs for storing CO2 are oil and gas fields, deep 
saline reservoirs and unmineable coal seams. The geologic formations 
best suited to trap large volumes of CO2 and do so without 
leakage would have characteristics that include open spaces or 
porosity, sufficient interconnectivity between the open spaces so that 
CO2 can flow laterally or migrate within the formations 
(known as permeability) and a layer of cap rock that is impermeable to 
prevent the upward flow of CO2 keeping it underground.
    The Department of Energy has made an assessment of the potential 
sequestration capacity across the United States and parts of Canada and 
determined there exists sufficient volume to store approximately 600 
years of CO2 produced from total U.S. fossil fuel emissions 
at current rates. The accuracy of this CO2 storage capacity 
estimate will be tested and updated as the Department's seven regional 
sequestration partnerships continue to conduct injection tests and 
carry out large-scale injection experiments. For example, the tests 
conducted by the partnerships will help to confirm the efficiency of 
the available pore space and evaluate their assumptions about the 
properties of the geologic formations.
    Characterizing geologic reservoirs for the purposes of CO2 
sequestration is an ongoing research effort including the work done by 
the Department's sequestration partnerships. Information derived from 
ongoing research and demonstration efforts will provide information 
that would be used to guide site selection for full-scale CCS 
operations in the future. This is particularly important for non-oil 
and gas sites, such as deep saline reservoirs, which do not have the 
same level of engineering experience.
    It is expected that the reservoir characterization process will 
rule out geologic formations that are risky because they are too 
shallow, inadequate caprock exists, or they are intersected by 
permeable faults and fractures and therefore provide pathways for 
CO2 to escape. There are also concerns about the potential 
impacts of injected CO2 on aquifers used for drinking water 
or as supplies for agriculture.
    There are no federal regulations governing the injection and 
storage of CO2 for the purposes of carbon sequestration. 
However, in July 2008, the U.S. Environmental Protection Agency 
released a draft rule that would regulate CO2 injection for 
sequestration purposes under the authority of the Safe Drinking Water 
Act, Underground Injection Control (UIC) program. Final regulations are 
anticipated in the 2010/2011 timeframe.
    The terms measurement, monitoring and verification (MMV) are 
frequently used to describe the plan and tools for characterizing the 
subsurface reservoir and for detecting changes throughout the 
injection, closure, and long-term oversight of a geologic storage 
project. Because the geology varies from site to site, there is no 
universal agreement on the specific elements that should be included in 
MMV for all large-scale geologic sequestration projects.

FutureGen:
    In 2003, President Bush and the Department of Energy announced 
their FutureGen initiative. FutureGen was described as the first zero-
emission, coal-fired electricity-generating plant that would also 
produce hydrogen. FutureGen was a major technology initiative to 
address climate change and to support the Administration's hydrogen 
fuel initiative.
    Under the FutureGen program, DOE would oversee a consortium of 
industrial interests (the FutureGen Alliance) and international 
partners that would manage the construction of a $1 billion next-
generation integrated gasification combined cycle (IGCC) power plant to 
produce electricity and hydrogen. There were three main components to 
the original FutureGen program. It would be a state-of-the-art 
demonstration of a 275 megawatt IGCC power plant designed to capture, 
compress and store carbon dioxide, emit virtually no conventional air 
pollutants, and produce hydrogen fuel. FutureGen was also intended as 
the United State's major collaborative effort with international 
partners (India, Korea, etc.) to demonstrate an integrated CCS system 
using advanced gasification technology. Finally, FutureGen was to serve 
as a living laboratory to test advanced coal technologies in order to 
achieve operational efficiencies and speed deployment of CCS 
technologies. Between FY 2003 and FY 2008, Congress appropriated 
approximately $174 million for the FutureGen Initiative.
    On January 30, 2008, the Department of Energy announced a major 
restructuring of the FutureGen program. Rather than build a 275-
megawatt IGCC power plant to test CCS technologies and provide for the 
demonstration of an integrated carbon capture and sequestration system, 
the Department would support the private sector's investment in IGCC 
power plants by providing the additional funding needed to add CCS 
technologies to the construction of multiple commercial power plants 
being pursued by industry. Although, initially the restructured 
FutureGen focused on IGCC facilities, the final Funding Opportunity 
Announcement included other advanced coal power plants. It is important 
to note, that the restructured program eliminates the hydrogen 
production and the living laboratory components of the original 
program.
    Since the announcement to restructure FutureGen, DOE issued a 
Funding Opportunity Announcement for the restructured program in June 
2008. The Department has received a handful of proposals and those 
proposals are under review. In addition, the American Recovery and 
Reinvestment Act (ARRA) of 2009 includes $3.4 billion for fossil energy 
research and development and some of these funds could be used for 
FutureGen. Recently, Secretary Chu testified in the Senate Energy and 
Natural Resources Committee that he would support the plant with ``some 
modifications.'' \5\ In response to the ARRA, DOE is planning to issue 
four Funding Opportunity Announcements for improving techniques to 
clean or capture and store the emissions from coal-fired electric 
generating plants and other industrial sources. It is still unclear if 
those funds will be used for FutureGen and what, if any, modifications 
will be made to the FutureGen program going forward.
---------------------------------------------------------------------------
    \5\ Kindy, Kimberly, ``New Life for `Clean Coal' Project: Illinois 
Plant was Abandoned by Bush, Now Its Backers are in Power,'' Washington 
Post, Friday, March 6, 2009.

International Activities:
    China is the world's largest coal user, accounting for 63 percent 
of the country's total primary energy supply.\6\ India is the world's 
third-largest coal user accounting for 62 percent of the country's 
energy supply and its use is expected to grow rapidly.\7\ As stated 
above, the United States relies on coal for approximately 50 percent of 
its electricity production. Climate change is a global problem and 
major world economies see a growing need to work collaboratively to 
develop and deploy advanced coal technologies.
---------------------------------------------------------------------------
    \6\ OECD/International Energy Agency, CO2 Capture and 
Storage: A Key Carbon Abatement Option,'' 2008, p. 154.
    \7\ OECD/International Energy Agency, CO2 Capture and 
Storage: A Key Carbon Abatement Option,'' 2008, p. 162.
---------------------------------------------------------------------------
    This past summer at the G-8 Summit in Japan, the G-8 leaders asked 
the International Energy Agency (IEA) to develop an energy roadmap for 
CCS technologies. The IEA intends to build the roadmap based on 
workshops convened in 2006-2007 by the IEA and the Carbon Sequestration 
Leadership Forum (CSLF). The roadmap will make recommendations for the 
G-8 in policy areas including financial, legal and international 
cooperation endeavors to help expand the deployment of CCS strategies. 
The G-8 Ministers also issued a joint-statement supporting the IEA and 
CSLF's recommendation to launch 20 large-scale CCS projects globally. 
Australia has taken steps to create a Global Carbon Capture and Storage 
Institute to assess CCS and facilitate international research 
collaboration covering a range of technologies and geologies. The 
European Technology Platform for Zero Emission Fossil Fuel Power Plants 
(ZEP) was founded in 2005 to ensure CCS is commercialized by 2020. In 
2004, the China Huaneng Group led the development of the GreenGen 
project to build an IGCC plant with CCS. While pieces of an integrated 
CCS system are being demonstrated at various scales throughout the 
world, no large-scale integrated CCS project has been conducted on a 
coal-fired power plant to date. Knowledge transfer of these 
technologies and investment cooperation may be critical if 
international goals for greenhouse gas emissions reductions are to be 
achieved.
    Chair Baird. Good morning, everyone and thank you for being 
here. Our hearing will now come to order. I want to welcome 
everybody to the Energy and Environment Subcommittee's hearing 
on ``FutureGen and the Department of Energy's Advanced Coal 
Programs.'' I would like to thank our expert panel of witnesses 
for being here today, and I look forward to your testimony 
about the potential role advanced coal technologies, including 
carbon capture and storage, may play in helping to solve the 
daunting challenge of climate change and ocean acidification.
    We burn a lot of coal in this country and around the world. 
The United States is one of the largest consumers of coal, and 
this is one of the major reasons we are one of the largest 
emitters of ocean acidification and overheated gases. But we 
are not the only country with strong dependence on coal. China 
and India have both expanded their coal use. I was in China 
just a couple of years ago and was told they are putting on 
coal-powered plants every couple of weeks, gradually comes on 
line. It is astonishing, really. In 2007 China surpassed us to 
become the largest contributor to global CO2 
emissions. I do not say this to point fingers, but to point out 
that overheating and ocean acidification truly are a global 
problem, and we must work with other developed nations and 
developing economies to find solutions to those staggering 
challenges.
    I think the United States should take the lead in reducing 
energy consumption and particularly consumption of fossil 
fuels. We have a variety of tools at our disposal to accomplish 
that goal. We can develop and deploy advanced, green 
technologies, adopt better conservation practices and energy 
efficiency policies, and as individuals, we can behave more 
responsibly. Without bold policies and public and personal 
commitment, we run the risk of serious damage to our 
environment and our society. That outcome is simply 
unacceptable.
    If 41 percent of our global electricity supply comes from 
burning coal, then it is imperative that we curtail the gas 
emissions from this major source. We must act now to do so. I 
recognize that approximately 50 percent of the power supply in 
the United States comes from coal-fired plants, so we can't 
expect to tackle this challenge overnight. But it is my sincere 
hope and expectation that we can devise a strategy forward that 
achieves the remarkable reduction in greenhouse gaseous 
emissions in a safe, responsible and sustainable manner.
    Today's hearing provides us with an excellent opportunity 
to discuss our overall strategy to reduce emissions from large 
stationary sources, such as electric generation plants. I think 
there are some lessons we can learn from the decisions about 
the FutureGen program, and I am hopeful that we can have a very 
honest conversation today about the near-term and long-term 
objectives and challenges for the Department of Energy's 
advanced coal programs.
    Finally, I am pleased that this hearing will include an 
important dialogue about international collaboration on 
strategies for implementing carbon capture and sequestration. 
As I said, global overheating and ocean acidification is a 
global problem and it requires a global solution.
    Again, I thank the panel for being here this morning and I 
look forward to your testimony and an interesting discussion.
    With that, I recognize Mr. Inglis for an opening statement.
    [The prepared statement of Chair Baird follows:]
                Prepared Statement of Chair Brian Baird
    Good morning. I would like to welcome everybody to the Energy and 
Environment Subcommittee's hearing on ``FutureGen and the Department of 
Energy's Advanced Coal Programs.'' I would like to thank our expert 
panel of witnesses for being here today and I look forward to your 
testimony about the potential role advanced coal technologies, 
including carbon capture and storage, may play in helping to solve the 
daunting challenge of climate change and ocean acidification.
    We burn a lot of coal in this country and around the world. The 
United States is one of the largest consumers of coal and this is one 
of the major reasons we are one of the largest emitters of greenhouse 
gases. But we are not the only country with strong dependence on coal. 
China and India have both expanded their coal use, and in 2007 China 
surpassed us to become the largest contributor to global CO2 
emissions. I do not say this to point fingers, but to point out that 
climate change truly is a global problem, and we must work with other 
developed nations and developing economies to find solutions to this 
staggering problem.
    I think the United States should take the lead in reducing energy 
consumption and particularly consumption of fossil fuels. We have a 
variety of tools at our disposal to accomplish that goal. We can 
develop and deploy advanced, green technologies, adopt better 
conservation practices and energy efficiency policies, and as 
individuals, behave more responsibly. Without bold policies and public 
and personal commitment, we run the risk of serious damage to our 
environment and our society. That outcome is simply unacceptable.
    If 41 percent of our global electricity supply comes from burning 
coal, then it is imperative that we curtail the greenhouse gas 
emissions from this major source. And we must act now to do so. I 
recognize that approximately 50 percent of the power supply in the 
United States comes from coal-fired power plants, so we can't expect to 
tackle this challenge overnight. But, it is my sincere hope and 
expectation that we can devise a strategy forward that achieves 
remarkable reductions in greenhouse gas emissions in a safe, 
responsible and sustainable manner.
    Today's hearing provides us with an excellent opportunity to 
discuss our overall strategy to reduce emissions from large stationary 
sources, such as our electric generation plants. I think there are some 
lessons we can learn from the decisions made about the FutureGen 
program and I am hopeful that we can have a very honest conversation 
today about the near-term and long-term objectives for the Department 
of Energy's advanced coal programs.
    Finally, I am pleased that this hearing will include an important 
dialogue about international collaboration on strategies for 
implementing carbon capture and sequestration systems. As I said, 
climate change is a global problem and it requires a global solution.
    Again, I thank the panel for being here this morning and I look 
forward to your testimony and an interesting discussion.

    Mr. Inglis. Thank you, Mr. Chairman. Thank you for holding 
this hearing. You know, in South Carolina we have a case study 
of one of the cases with respect to coal, and that is that Duke 
Energy would like to build a nuclear power plant or two but the 
question is whether you can do that effectively or whether it 
is really just easier and cheaper to build coal plants. We are 
not so dependent on the jobs associated with coal. There are 
some parts of our country that are, but we are the users, we 
are the people that burn coal because it is a pretty cheap way 
to make electricity, especially if you have no accountability 
for what is coming out of the smokestack. And so the question, 
then, is whether something can be done to clean up that coal 
to--we have had a number of hearings in this committee about 
sequestration, that sort of thing, because we know we can burn 
it cleanly, and General Electric has a number of proven models 
that show that you can basically separate out the hydrogen and 
burn that, and that is pretty exciting. Still, you have still 
got the CO2 issue.
    So the question is whether we can figure out a way to 
really improve that process or have some sort of breakthrough 
that would make it possible to continue that employment in some 
places in the country that are dependent on coal and somehow 
control the CO2 problem.
    That is certainly our hope in this FutureGen program, and 
so we look forward to hearing from the witnesses about what the 
future may be. And it is interesting to note that folks like 
Duke Engineering are not alone. We use lots of coal, and 
figuring out ways to make it cleaner and to collect up the 
CO2 would be an incredible breakthrough.
    So we look forward to hearing from the witnesses, Mr. 
Chairman, and hope that there is some way to break through to 
truly clean coal. Thank you, Mr. Chairman.
    [The prepared statement of Mr. Inglis follows:]
            Prepared Statement of Representative Bob Inglis
    Thank you for holding this hearing, Mr. Chairman.
    Duke Energy faces a dilemma in South Carolina. They would like to 
produce energy free of CO2 emissions and help bring the 
energy solutions of tomorrow to their customers today. The licensing 
and cost hurdles of nuclear, wind, and solar power have forced Duke 
instead to meet increased energy demand by building coal-powered 
plants.
    Duke Energy is not alone. We're using lots of coal. We need to 
focus on ways to make that consumption cleaner and more efficient. 
Perhaps if we had clean coal and carbon capture technologies readily 
available and affordable, companies like Duke would be able to meet 
growing energy demand with coal and without emissions.
    We need these technologies to be affordable and attractive to U.S. 
and global industry alike. America can lead the way with technological 
innovation that can be easily integrated into existing coal plants 
worldwide.
    The Department of Energy's decision to restructure the FutureGen 
program in 2008 compromised some important components of clean coal 
research. We had hoped for the production and capture of hydrogen fuel. 
We had hoped for a laboratory to test new technologies. I'm interested 
in hearing how DOE plans to reevaluate the role of the FutureGen 
program in meeting our clean coal and carbon capture and sequestration 
objectives.
    But with or without FutureGen, Congress is aggressively seeking an 
answer to our carbon emissions problem. I believe the best way to do 
this is to attach a straightforward price to carbon emissions and 
reduce payroll taxes in an equal and offsetting amount. By forcing the 
market to internalize the externals associated with burning fossil 
fuels, we can encourage cutting edge innovation in energy technologies 
and help America be a leader in finding the energy solutions of 
tomorrow.
    Thank you again for holding this hearing, Mr. Chairman, and I look 
forward to hearing from our witnesses.

    Chair Baird. I would like to at this point recognize the 
gentleman, Mr. Costello, who has been a very, very influential 
and interested party on this issue, and Mr. Costello, we 
welcome your remarks.
    Mr. Costello. Mr. Chairman, thank you. And I have a 
statement that I will enter into the record and make some brief 
comments concerning the GAO report and the purpose of this 
hearing. But first, let me not only thank you for recognizing 
me but also for calling this hearing today, and thank you as 
well for joining Chairman Gordon and Mr. Lipinski and I in 
requesting this GAO report.
    As you noted, I guess it has been over five years now that 
I have been involved with this project, and in fact as I think 
everyone knows that over one half of our electricity is 
generated from coal. Coal is the cheapest form of electricity 
generation, and we have coal reserves just in my home State of 
Illinois alone that contains more BTU's than oil reserves in 
Saudi Arabia and Kuwait.
    Like everyone, I want our nation's energy policy to help 
reduce carbon emissions and to address the climate change issue 
that we are all facing, but in order to meet these goals, our 
dependence on coal requires significant investment in clean 
technologies to burn coal as efficiently and as cleanly as 
possible. The reality is that our dependence on coal as an 
energy source is not going away any time soon, and as you noted 
in your opening statement, we are not the only nation that is 
reliant on coal as an energy source. China, as you said, they 
are actually constructing one coal-fired plant every week now 
in China. When we develop clean-coal technology here in this 
country, countries like China, India and other countries will 
in fact hopefully use that technology to achieve our goal.
    I want to say that when the President announced in the 
State of the Union Address in 2003, President Bush, this was 
his initiative, the FutureGen project. I was excited about it 
to the extent that after listening to the State of the Union 
Address, the next morning I picked up the telephone and called 
the Secretary of Energy and said I am a supporter of this 
project. I want to move forward. We want to do everything we 
can to help move the project forward. So you can imagine how 
disappointed I was, not only disappointed but outraged, after 
five and a half years of research and spending literally tens 
of millions of dollars on this project, that the Department of 
Energy and the Administration decided to pull the plug on the 
project.
    We in this subcommittee heard testimony from the 
representatives from the Department of Energy as to why the 
decision was made. They said basically that the reason that the 
project was going to be pulled and reassessed and realigned was 
because of cost, the escalating cost. We questioned that at the 
time and, you know, obviously today, with the GAO findings and 
we will get into that and there are some quotes that I will put 
into the record very shortly, it was not cost. I said here 
sitting in this subcommittee room that I believed at the time 
that it was based on politics, that we had four sites that were 
the finalists, two in Texas and two in the State of Illinois, 
and when the alliance, the independent alliance that was 
appointed not only for their expertise on this issue but also 
to remove politics and to have independence from a political 
decision but to base decisions on the science and what was best 
for the country, they examined all four sites and came up with 
the site in Mattoon, Illinois, and said that the Mattoon site 
was the best site, and it was then that the Administration 
decided, well, we are going to pull back on the project and 
pull the plug. So we know today that the GAO report says that 
it was not based upon costs, and of course, they don't go into 
what the decision was based on, but I think that through the 
process of elimination, we know what it was based on.
    My goal is to get the project back on track. My goal is to 
not only move FutureGen and sequestration forward but also to 
look at other clean-coal technologies so that we in fact can 
begin to burn coal as cleanly and efficiently as possible.
    So Mr. Chairman, again, I thank you for calling the hearing 
today. I look forward to hearing the testimony of our witnesses 
and look forward to moving this project forward.
    [The prepared statement of Mr. Costello follows:]
         Prepared Statement of Representative Jerry F. Costello
    Thank you, Mr. Chairman, for calling today's hearing on the 
FutureGen project. The FutureGen project has been one that I have 
worked on very closely over the past five and a half years and I am 
interested in hearing from GAO and our other witnesses on this issue.
    Mr. Chairman, we generate over one-half of our electricity from 
coal and the coal reserves in my home State of Illinois contain more 
Btu's than the oil reserves of Saudi Arabia and Kuwait. Like many, I 
want our nation's energy policy to help reduce carbon emissions and 
adequately address the real concerns of climate change. In order to 
meet these goals, our dependence on coal requires a significant 
investment in clean technologies to reliably burn coal as efficiently 
and as cleanly as possible. The reality is that our dependence on coal 
as an energy source is not going away. We are not alone in our reliance 
on this energy source; to satisfy its rapidly growing population and 
economy, China is adding one new coal-fired plant to its power grid 
each week.
    For these reasons, the day after the President announced the 
FutureGen Clean Coal Initiative in his 2003 State of the Union address, 
I was on the phone with the Department of Energy (DOE), working to get 
the project off the ground. After five years of work with DOE, with the 
FutureGen Alliance, the State of Illinois and others, I was extremely 
disappointed that DOE decided to scrap the project in favor of a ``re-
scoped'' plan. I was pleased to join Chairman Gordon, Chairman Baird, 
and Mr. Lipinski in requesting GAO to further examine the reasoning 
behind the decision to abandon the original project.
    I have stated previously during Science Committee hearings that I 
did not find DOE's justifications for canceling FutureGen to be based 
on accurate information or factual analysis. GAO's final report affirms 
what we thought from the beginning: to quote directly from the report, 
``DOE did not base its decision to restructure FutureGen on a 
comprehensive analysis of factors, such as the associated costs, 
benefits and risks . . . [consequently] DOE has no assurance that the 
restructured FutureGen is the best option to advance CCS.''
    As a supporter of clean coal technology, I am focused on getting 
this project back on track. DOE's decision has already meant wasted 
time, and has delayed the project for over a year at a time when the 
need for public investment in clean, efficient energy technologies 
could not be more evident. Despite DOE's decision to back away from its 
agreement with the FutureGen Alliance, an international non-profit 
consortium of some of the largest coal producers and users in the 
world, the group did not dissolve, but in fact continued its commitment 
to the project by purchasing the land for the plant in Mattoon, 
Illinois. With the legal and environmental issues surrounding this 
project already resolved and its investors still committed, FutureGen 
is as shovel-ready as any other clean coal project in the country. It 
is my hope that with new leadership and new analysis, the FutureGen 
project can realize its full potential to become world's first coal-
fueled, near-zero emissions power plant.
    Thank you, Mr. Chairman, and I look forward to hearing from our 
distinguished panel of witnesses.

    Chair Baird. I thank you, Mr. Costello, and thanks for your 
leadership on this very issue for so many years now.
    If there are other Members who wish to submit opening 
statements, your statement will be added to the record at this 
point.
    And now I would like to introduce our witnesses. Our first 
witness is Dr. Victor Der. Dr. Der is the Acting Assistant 
Secretary for the Department of Energy's Office of Fossil 
Energy. I want to briefly note, Dr. Der, I appreciate very much 
your work with a company in Washington State that has developed 
leading-edge technology on compression of gases which will be 
absolutely essential to success at some point if we move 
forward with this, and it is always nice when you hear from 
local constituents who say they have worked well with a 
government entity that has been very, very helpful, and thank 
you for your work on that.
    Mr. Mark Gaffigan is the Director of the Natural Resources 
and Environment Team at the U.S. Government Accountability 
Office involved in preparing some of the reports that Mr. 
Costello alluded to. Dr. Robert Finley is the Director of the 
Energy and Earth Resources Center at the Illinois State 
Geological Survey. Dr. Finley, thank you for being here. Mr. 
Larry Monroe is the Senior Research Consultant at Southern 
Company, and Ms. Sarah Forbes is the Senior Associate of the 
Climate and Energy Program at the World Resource Institute.
    As our witnesses all know, you will have five minutes for 
your spoken testimony, then written testimony will be included 
in the record for the hearing. When each of you has concluded 
your combined testimony, we will have testimony from the panel. 
This is a bipartisan, friendly committee that asks tough 
questions, but in the way of trying to understand difficult and 
challenging issues. And with that, let us start with Dr. Der.

  STATEMENT OF DR. VICTOR K. DER, ACTING ASSISTANT SECRETARY, 
       OFFICE OF FOSSIL ENERGY, U.S. DEPARTMENT OF ENERGY

    Dr. Der. Thank you, Mr. Chairman. I appreciate this 
opportunity to discuss the Department of Energy's advanced coal 
program with the keen focus on safe, effective and affordable 
carbon capture and storage.
    Coal represents a tremendous and strategic national asset 
with enough supply to take us well into the next century based 
on the current rates of consumption, and as we explore energy 
alternatives, coal used in environmentally sustainable and 
responsible ways will continue to play a critical role in the 
Nation's energy strategy. Our focus must be, therefore, to 
develop deployable advanced technologies necessary to achieve 
near-zero emissions from coal use, including carbon capture and 
storage, or CCS, not just in the United States, but in 
developing economies such as China and India which will 
continue to rely on coal. Thus, CCS is an essential component 
of the global greenhouse gas mitigation strategy.
    DOE remains a leader in the development of advanced 
technologies that have helped reduce pollutant emissions and 
have increased power plan efficiency. These technological 
successes form a solid foundation upon which to build advances 
and innovations needed to meet the challenges of CO2 
reductions.
    The advanced coal program is geared toward developing a 
portfolio of revolutionary technologies for CCS. To that end, 
and in partnership with the private sector, the program is 
focused on three important areas: technologies for affordable 
CO2 capture, especially back-end stack capture; 
establishing the scientific and technical basis for safe and 
effective storage of CO2; and substantially 
improving the efficiency and reliability of fossil energy 
systems. All three of these areas are important as we work to 
make CCS technologies deployable and cost effective.
    We have a good start in this direction based on years of 
research and demonstration experience that have resulted in new 
concepts, including the conversion of coal into cleaner, 
versatile gases that can be used to generate power or produce 
fuels. Additionally, our research continues to explore emerging 
approaches to clean power generation that hold great promise 
for integration with coal-based or combined coal and biomass 
energy plants with CCS. To this end, we are working on CCS 
enabling and transformational technologies, including advanced 
integrated gasification combined cycle, advanced hydrogen 
turbines, advanced materials for ultra high-efficiency plants, 
supersonic compression, and revolutionary concepts for CO2 
capture.
    The success of our programs will ultimately be judged by 
the extent to which emerging and cost-effective technologies 
are deployed domestically and internationally. That is why DOE 
is implementing large large-scale CCS demonstration efforts 
under the sequestration partnerships and the clean coal power 
initiative programs. And that is why we have taken a lead role 
in global partnerships like the Carbon Sequestration Leadership 
Forum, the Asia Pacific Economic Cooperation, the International 
Energy Agency, and bilateral collaboration with countries such 
as Canada, India, and China and other international 
initiatives.
    Mr. Chairman, today nearly 75 percent of the coal power 
plants in the United States employ technologies with roots in 
DOE's program for advanced coal. With continued leadership and 
support from the Administration and Congress, we can accelerate 
the development of new technologies to meet the requirements of 
a safe and secure energy future while reducing our carbon 
footprint.
    Again, Mr. Chairman, thank you for the opportunity to 
testify here today, and with that, I will welcome any questions 
that the Committee may have.
    [The prepared statement of Dr. Der follows:]
                  Prepared Statement of Victor K. Der
    Thank you, Mr. Chairman and Members of the Committee. I appreciate 
this opportunity to provide testimony on the U.S. Department of 
Energy's (DOE's) advanced coal research, development, and demonstration 
program to develop low-carbon emission coal technologies.

INTRODUCTION

    Fossil fuel resources represent a tremendous national asset. An 
abundance of fossil fuels in North America has contributed to our 
nation's economic prosperity. Based upon current rates of consumption, 
the United States probably has sufficient coal to meet its need for the 
next century. Making use of this domestic asset in a responsible manner 
will help the United States to meet its energy requirements, minimize 
detrimental environmental impacts, positively contribute to national 
security, and compete in the global marketplace.
    Fossil fuels will play a critical role in our nation's future 
energy strategy. By developing technologies to mitigate the release of 
carbon dioxide (CO2) into the atmosphere, we can continue to 
use our extensive domestic coal resource while reducing the impacts on 
climate viable energy source for our nation. CCS is the primary pathway 
DOE is pursuing to allow continued use of fossil fuels in a carbon-
constrained future.
    Through fossil energy provisions in the American Recovery and 
Reinvestment Act and annual appropriations, DOE's advanced coal program 
is working to accelerate the development of CCS to meet future energy 
needs.
    The remainder of my testimony will highlight CCS activities that 
are underway in the advanced coal program.

NEAR-ZERO EMISSIONS PROGRAM

    DOE provides a national leadership role in the development of 
advanced coal technologies. DOE's advanced coal program has returned 
substantial benefits to consumers and taxpayers across a broad range of 
innovative technologies that are now in use throughout the world. For 
example, DOE and the private sector responded to the challenge of 
dramatically reducing the emissions of particulate, sulfur, nitrogen 
oxide, and mercury from coal-based energy systems with the development 
of technologies that enable coal-based power plants to meet 
environmental controls and limits placed on these pollutants. These 
technological innovations have resulted in significant environmental 
benefits: reducing pollutant emissions, reducing water use, minimizing 
wastewater discharge, and reducing solid wastes. DOE research and 
demonstration capabilities are well suited to address new challenges 
associated with the reduction of greenhouse gas emissions as a climate 
change mitigation strategy.
    The advanced coal program--administered by DOE's Office of Fossil 
Energy and implemented by the National Energy Technology Laboratory--is 
designed to address climate concerns of coal usage by developing a 
portfolio of revolutionary advanced carbon capture and efficiency and 
performance, while minimizing the costs of these new technologies. In 
recent years, the Program has been restructured to focus on CCS. The 
Program pursues the following two major strategies:

        1)  capturing carbon dioxide; and

        2)  storing it in geologic formations.

    Capturing and storing carbon dioxide and improving the fuel-to-
energy efficiency of CCS will help address pollutant emissions 
reduction, water usage, and carbon emissions on a per unit of 
electricity basis. These plans strive to achieve dramatic reductions in 
emissions and ensure that current and future fossil energy plants will 
meet all emerging requirements for a safe and secure energy future.
    Coal research has resulted in important insights regarding future 
innovations. New engineering concepts have been developed to convert 
coal into gases that can be cleaned and then used to generate power or 
produce fuels. New approaches to clean power generation are emerging 
that hold promise for integration with coal-based or combined coal and 
biomass energy plants. Technologies for achieving CCS are stretching 
beyond basic research, defining pathways in which greenhouse gas 
emissions can be permanently diverted from the atmosphere. With these 
building blocks, a new breed of coal plant can be created--one that 
generates power and produces high-value energy with much less 
environmental impact. DOE's work includes a focus on high priority CCS 
enabling technologies, such as advanced integrated gasification 
combined cycle, advanced hydrogen turbines, carbon capture, and fuel 
cells. These research areas provide the supporting technology base for 
all CCS development.
    As part of our advanced coal program, we are addressing the key 
technology challenges that confront the wide-scale deployment of CCS 
through research on cost-effective capture technologies; monitoring, 
verification, and accounting technologies to ensure permanent storage; 
permitting issues; liability issues; public outreach; and 
infrastructure needs. As an example, today's commercially available CCS 
technologies will add around 80 percent to the cost of electricity for 
a new pulverized coal plant, and around 35 percent to the cost of 
electricity for a new advanced gasification-based plant.\1\ The program 
is aggressively pursuing developments to reduce these costs to less 
than a 10 percent increase in the cost of electricity for new 
gasification-based energy plants, and less than a 30 percent increase 
in the cost of electricity for pulverized coal energy plants.\2\
---------------------------------------------------------------------------
    \1\ Cost and Performance Baseline for Fossil Energy Plants, Volume 
1: Bituminous Coal and Natural Gas to Electricity, U.S. Department of 
Energy/National Energy Technology Laboratory, DOE/NETL-2007/1281, Final 
Report, May 2007.
    \2\ The goal for pulverized coal is under development.
---------------------------------------------------------------------------
    The existing research program has been performing CCS field tests 
for many years, where the Regional Carbon Sequestration Partnerships 
are drilling wells in potential storage locations and injecting small 
quantities of CO2 to validate the potential of key storage 
locations throughout the country. Substantial progress has occurred in 
the area of monitoring, verification, and accounting of CO2 
storage with the development and refinement of technologies to better 
understand storage stability, permanence, and the characteristics of 
CO2 migration.
    Research is also focused on developing technology options that 
dramatically lower the cost of capturing CO2 from fossil 
fuel energy plants. This research can be categorized into three 
pathways: post-combustion, pre-combustion, and oxy-combustion. Post-
combustion refers to capturing CO2 from the stack gas after 
a fuel has been combusted in air. Pre-combustion refers to a process 
where a hydrocarbon fuel is gasified to form a synthetic mixture of 
hydrogen and carbon dioxide, and CO2 is captured from the 
synthesis gas before it is combusted. Oxy-combustion is an approach 
where a hydrocarbon fuel is combusted in pure or nearly pure oxygen 
rather than air, which produces a mixture of CO2 and water 
that can easily be separated to produce pure CO2. This 
research is exploring a wide range of approaches: membranes; oxy-
combustion concepts; solid sorbents; CO2 hydrates; and 
advanced gas/liquid scrubbing technologies. These efforts cover not 
only improvements to state-of-the-art technologies but also development 
of several revolutionary concepts, such as metal organic frameworks, 
ionic liquids, and enzyme-based systems, in conjunction with basic 
research in these areas now being conducted by the DOE's Office of 
Science.
    A central piece of our CCS research is DOE's field test program, 
which is being implemented through the Regional Carbon Sequestration 
Partnerships. DOE's 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. It encompasses approximately 97 percent of coal-fired and 
industrial CO2 emissions, about 96 percent of the total land 
mass, and essentially all the geologic storage sites in the country 
that can potentially be available for carbon sequestration. The field 
tests are conducted through partnerships comprised of State agencies, 
universities, and private companies, with the goal of developing the 
knowledge base and infrastructure for the wide-scale deployment of CCS 
technologies. The seven Regional Partnerships represent more than 350 
unique organizations in forty-two States, three Indian Nations, and 
four Canadian Provinces. 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 interest the country 
with similar characteristics relating to CCS opportunities.
    DOE is addressing key infrastructure issues related to permitting, 
pore space ownership, site access, liability, public outreach, and 
education. DOE works closely with the Environmental Protection Agency 
(EPA) and others in developing CCS regulation strategies, which will 
provide additional certainty for future CCS deployments.
    Over the course of these research initiatives, DOE will jointly 
develop Best Practice Manuals on topics such as site characterization, 
site construction, operations, monitoring, mitigation, closure, and 
long-term stewardship. These Manuals, which will be developed in 
conjunction with DOE's Office of Science and the U.S. Geological 
Survey, will serve as guidelines for a future geologic sequestration 
industry in their regions, and help transfer the lessons to all 
regional stakeholders.

LARGE-SCALE DEMONSTRATION AT COMMERCIAL SCALE

    The success of our research on CCS and advanced coal technologies 
will ultimately be judged by the extent to which emerging technologies 
are deployed in domestic and international marketplaces. Both technical 
and financial challenges associated with the deployment of new 
integrated CCS technologies must be overcome in order to be capable of 
achieving success in the marketplace. Commercial-scale demonstrations 
help the industry understand and overcome start-up issues, component 
integration issues, and gain the early learning commercial experience 
necessary to reduce risk and secure private financing and investment 
for future plants.
    DOE is implementing large-scale programs such as the geologic 
storage field tests and the Clean Coal Power Initiative (CCPI). Phase 
III of the geologic storage field test program is focused on large-
scale field tests of geologic carbon sequestration on the order of one 
million infrastructure needs of these projects. CCPI is primarily 
focused on component testing at commercial scale. The CCPI Round 3 
Funding Opportunity Announcement (FOA) specifically targets advanced 
coal-based systems and subsystems that capture or separate CO2 
for sequestration or for beneficial use.

THE AMERICAN RECOVERY AND REINVESTMENT ACT

    The American Recovery and Reinvestment Act (Recovery Act) 
appropriates $3,400,000,000 for ``Fossil Energy Research and 
Development.'' As reflected in the Joint Explanatory Statement of the 
Committee of Conference leading to the Act, these Recovery Act funds 
will help fund activities targeted at expanding and accelerating the 
commercial deployment of CCS technology to provide a key thrust to the 
advanced coal program to accelerate, by many years, the advances needed 
for future plants with CCS.
    The Joint Explanatory Statement of the Recovery Act identifies the 
following major initiatives that will complement and accelerate efforts 
in the advanced coal program:

    Maintain Fossil Energy R&D Program: $1 billion to be used to 
conduct fossil energy research and development.

    Additional Funds for the CCPI Round 3 FOA: $800 million to be used 
to augment funding for the CCPI Round 3 competition.

    New CCS Initiative for Industrial Applications: $1.52 billion to be 
used for a competitive solicitation for a range of industrial carbon 
capture and energy efficiency improvement projects, including a small 
allocation for innovative concepts for beneficial CO2 reuse.

    Expand Geologic Site Characterization: $50 million to be used for 
site characterization activities in geologic formations. DOE expects to 
require projects to complement and build upon the existing 
characterization base created by the Regional Partnerships, looking at 
broadening the range and extent of geologic basins that have been 
studied to date.

    Initiate a Geologic Sequestration Training and Research Grant 
Program: $20 million for geologic sequestration training and research 
grants. This program will emphasize advancing educational opportunities 
across a broad range of colleges and universities.

INTERNATIONAL COLLABORATIONS

    Recognizing that climate change is a global issue that requires a 
global response, the 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 
manmade carbon dioxide emissions. It is currently comprised of 22 
members, including 21 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, 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 
that will ensure safe, verifiable long-term storage.
    numerous countries through bilateral agreements and multilateral 
activities to identify areas of collaboration in promoting and 
developing clean fossil energy technologies internationally.
    These activities include:

    The U.S.-China Fossil Energy Protocol, a bilateral agreement on 
energy technology cooperation that has the goals of reducing the impact 
of China's growing demands on global hydrocarbon markets and improving 
environmental performance; providing commercial opportunities for U.S. 
business; and acquiring unique information of scientific or technical 
interest to DOE.

    U.S.-India Energy Dialogue: Coal Working Group: The Office of 
Fossil Energy and India's Ministry of Coal jointly chair the Coal 
Working Group initiative to exchange information on policies, programs, 
and technologies to promote the efficient and environmentally 
responsible production and use of coal.

    Global Gas Flaring Reduction Partnership: DOE is working with the 
World Bank and others to support national governments and the petroleum 
industry in their efforts to reduce flaring and venting of gas 
associated with the extraction of crude oil. Gas flaring wastes a 
valuable clean energy resource and emits carbon dioxide, a greenhouse 
gas.

    Asia Pacific Economic Cooperation: APEC's Energy Working Group 
seeks to maximize the energy sector's contribution to the region's 
economic and social well being, while mitigating the environmental 
effects of energy supply and use. The Office of Fossil Energy provides 
expertise in LNG and methane hydrate technologies to the Energy Working 
Group.

    The International Energy Agency (IEA): The Office of Fossil Energy 
is involved in many aspects of the IEA, including emergency 
preparedness and clean coal technology transfer. Increasingly, the IEA 
focuses on resolving energy and environmental challenges, particularly 
relating to climate change.
    The Office of Fossil Energy participates in the IEA Working Party 
on Fossil Fuels, a highly effective method to create international 
support for Fossil Energy programs and objectives such as IGCC and 
carbon sequestration. The primary objective for the next three years 
will be to develop and implement activities to promote clean fossil 
energy technologies internationally. The Office of Fossil Energy is 
currently working on the implementation of the recommendations to the 
G-8 on Near-Term Opportunities for Carbon Capture and Storage.

    IEA Clean Coal Center: The IEA Clean Coal Centre is a collaborative 
project established in 1975 involving member countries of the IEA. The 
service is governed by representatives of member countries, the 
European Commission, and industrial sponsors. The IEA Clean Coal Centre 
program of work contains studies of considerable significance for all 
countries involved in the use or supply of coal.

    IEA Greenhouse Gas Program (IEAGHG): The IEAGHG is a collaborative 
research program founded in 1991. The members include 17 countries, the 
European Commission and 17 multinational industrial sponsors. Its aim 
is to provide members with definitive information on the role that 
technology can play in reducing greenhouse gas emissions. It is 
principally focused on CCS; how mitigation options compare; how CCS can 
be done safely, legally, and cost-effectively; and what needs to be 
done to introduce CCS and be confident it will be successful.

    World Energy Council: World Energy Council (WEC) is an organization 
of more than 100 countries headquartered in London covering all aspects 
of energy including fossil, nuclear, hydro and renewables. DOE 
participates through the WEC Committee on Cleaner Fossil Fuel Systems 
Committee, chaired by the Fossil Energy's Office of Clean Energy 
Collaboration. Committee members include 26 countries and seven 
multilateral organizations striving to promote knowledge worldwide on 
the research, development, demonstration, and deployment of cleaner 
fossil fuels to meet global energy needs; promote the clean and 
efficient use of fossil fuels, with a concentration on carbon capture 
and storage.
    Additionally, numerous international projects are supported through 
DOE's core advanced coal program. U.S. technological advances and 
expertise in CCS are being shared in initiatives such as the Australian 
Otway Basin project; the European Union funded CO2SINK 
project in Germany; the Algerian In Salah industrial-scale CO2 
storage project; the Ordos Basin Assessment in China; the North Sea 
Sleipner Project; and the IEA GHG Weyburn-Midale CO2 
Monitoring and Storage Project, Zama Acid Gas Project, and the Fort 
Nelson Project, all in Canada.

CONCLUSIONS

    Today, nearly three out of every four coal-burning power plants in 
this country are equipped with technologies that can trace their roots 
back to the Department's advanced coal technology program. These 
efforts helped accelerate production of cost-effective compliance 
options to address legacy environmental issues associated with coal 
use. Advanced CCS technologies will undoubtedly play a key role in 
mitigating CO2 emissions under potential future carbon 
stabilization scenarios. DOE's Program is helping make the enabling 
technologies available. The United States must continue to show 
leadership in technology development and future deployment to bring 
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.

                      Biography for Victor K. Der
    Dr. Der is currently Principal Deputy Assistant Secretary for 
Fossil Energy with responsibilities for the office operations, and in 
support of the Assistant Secretary, he manages the oversight of Fossil 
Energy's Research and Development (encompassing coal, oil, and natural 
gas) program and the U.S. Petroleum Reserves. Prior that he was Deputy 
Assistant Secretary for Clean Coal within the Fossil Energy Program 
Office. In that capacity, he was responsible for directing research and 
development of clean coal research, development and demonstration, and 
implementation of energy policy initiatives and priorities relating to 
clean coal utilization and its role in climate change mitigation 
including carbon capture and sequestration.
    Prior to that position, he was Director, Office of Clean Energy 
Systems for central power systems technologies such as gasification, 
advanced combustion and hydrogen turbines; distributed generation 
technologies such as fuel cells, fuel cell/turbine hybrids, and novel 
heat engines and compressors; emissions controls technologies; advanced 
research, and high efficiency, zero-emissions fossil energy 
technologies. He was also responsible for directing the large scale 
demonstration programs such as the Clean Coal Technology Demonstration 
program; the Power Plant Improvement Initiative; Clean Coal Power 
Initiative; and FutureGen--a demonstration program for near-zero 
emissions coal, including carbon emissions.
    Dr. Der has worked at DOE for 35 years in various programs. He 
entered government service as a reactor intern in the predecessor 
agencies to DOE, starting with Atomic Energy Commission. He worked as a 
structural and materials engineer in nuclear reactor plant designs of 
the Fast Flux Test Facility and the Clinch River Breeder Reactor 
Demonstration during the Energy Research and Development 
Administration. Following this period he managed research in the 
civilian radioactive waste management program on geologic storage of 
high-level nuclear waste; superconductivity in the Office of Science's 
(formerly the Office of Energy Research) magnetic fusion energy 
program; and Fossil Energy's advanced coal and gas based power systems 
program.
    His prior work includes NASA's Apollo 15 moon mission project and 
the National Oceanic and Atmospheric Administration program on modeling 
the upper atmospheric density.
    His education includes a Bachelor of Science, Master of Science, 
and Ph.D. in Mechanical Engineering from the University of Maryland. He 
is married, has two daughters and resides in Gaithersburg, Maryland.

    Chair Baird. Thank you Dr. Der. Mr. Gaffigan.

STATEMENT OF MR. MARK GAFFIGAN, DIRECTOR, NATURAL RESOURCES AND 
    ENVIRONMENT TEAM, U.S. GOVERNMENT ACCOUNTABILITY OFFICE

    Mr. Gaffigan. Chairman Baird, Ranking Member Inglis, 
Members of the Subcommittee, good morning. I am pleased to be 
with you to discuss GAO's recent report on the Department of 
Energy's decision to restructure the FutureGen program. In 
2003, DOE initiated FutureGen, a program to design, build and 
operate a new coal-fired power plant that combined integrated 
gasification combined cycle or IGCC technology with carbon 
capture and storage.
    However, in 2008, DOE announced that it had decided to 
restructure FutureGen. GAO's report and the focus of my remarks 
address three questions regarding restructured FutureGen. One, 
how do the goals of the proposed restructured FutureGen program 
compare to the original program? Two, how does restructured 
FutureGen compare to DOE's other carbon capture in-storage 
programs? And three, to what extent did DOE use sufficient 
information in its decision to restructure FutureGen?
    First, restructured FutureGen is very different from the 
from the original FutureGen program. While Restructured 
FutureGen shares a common name and the overall goal of carbon 
capture and storage, it is fundamentally different from the 
original FutureGen program. Most significantly, the 
restructured program does not have an exclusive focus on the 
integration of integrated gasification combined cycle 
technology with carbon capture and storage. In addition, the 
restructured program does not have international partnerships 
that, in the original FutureGen program, were designed to 
improve the global advancing of carbon capture and storage.
    Finally, restructured FutureGen unlike the original 
FutureGen is not designed to serve as a living laboratory host 
facility for gaining broad industry acceptance of emerging 
technologies. It moves from a research and development focus to 
a commercial focus.
    In comparison to DOE's other carbon capture and storage 
programs, restructured FutureGen is most like round three of 
the Clean Coal-Powered Initiative. Most notably, both programs 
fund the commercial demonstration of carbon capture and storage 
at coal-fired power plants and require industry participants to 
bear at least 50 percent of the cost. Questions have been 
raised about how Restructured FutureGen is different and the 
basis for the decision to restructure.
    In short, DOE's decision to restructure FutureGen was not 
well-explained. DOE based its decision largely on its 
conclusion that cost for the original FutureGen had doubled and 
would escalate substantially. However, this conclusion is 
problematic because it was derived from a comparison of two 
cost estimates for the original FutureGen that were not 
comparable. It compared an initial estimate of approximately 
$950 million that was in constant dollars to a $1.8 billion 
that was inflated through the year 2017. The focus on the 
difference in these very preliminary cost estimates as the 
reason to restructure FutureGen did not provide a sound basis 
for the decision.
    In contrast, DOE's Office of Fossil Energy had identified 
and analyzed other options for incremental cost-saving changes 
to the original program such as reducing the CO2 
capture requirement. However, we could not identify any 
comparable analysis that supported the decision to restructure 
FutureGen.
    By integrating IGCC and carbon capture and storage 
technology, DOE's original FutureGen program was intended to 
address significant technological, cost, and regulatory issues 
associated with the implementation of carbon capture and 
storage at the new plant. Alternatively the restructured 
program leaves open the possibility of successfully applying 
carbon capture and storage technology to existing conventional 
pulverized coal-fired power plants, an important goal in its 
own right, since those plants account for almost all the coal-
fired generating capacity in the United States and abroad. 
However, these plants will age, and demand for new sources of 
electricity will continue throughout the world. If coal is to 
be a fuel source of the future and if CO2 emissions 
are to be controlled, developing new plants with improvements 
over today's conventional technology, such as that offered by 
IGCC, might also be an important goal.
    In weighing different goals to address the technological 
barriers that are associated with clean-coal technology, it is 
also important to recognize that technology must be considered 
in conjunction with other barriers, most notably legal and 
regulatory uncertainties over carbon capture and storage and 
the absence of a national strategy to control CO2 
emissions. That would provide the incentive for carbon capture 
and storage.
    As policy-makers consider a path forward for clean-coal 
technologies, including the original concept of FutureGen, a 
comprehensive analysis of the associated costs, benefits, and 
risks in this context is most important.
    Mr. Chairman, this completes my remarks. I have submitted a 
written statement and a copy of our report for your record.
    [The prepared statement of Mr. Gaffigan follows:]
                  Prepared Statement of Mark Gaffigan

Mr. Chairman and Members of the Subcommittee:

    Thank you for the opportunity to discuss our recent report on the 
Department of Energy's (DOE) decision to restructure the FutureGen 
program.\1\ As requested, my remarks will focus on that report, which 
examined (1) the goals of the original and restructured FutureGen 
programs, (2) the similarities and differences between the restructured 
FutureGen program and other DOE carbon capture and storage programs, 
and (3) the extent to which DOE used sufficient information to support 
its decision to restructure the FutureGen program.
---------------------------------------------------------------------------
    \1\ GAO, Clean Coal: DOE's Decision to Restructure FutureGen Should 
Be Based on a Comprehensive Analysis of Costs, Benefits, and Risks, 
GAO-09-248 (Washington, D.C.: Feb. 13, 2009).
---------------------------------------------------------------------------
    As you know, Mr. Chairman, coal is currently the world's leading 
source of electricity. Coal-fired power plants generate about one-half 
of the electricity used in the United States, as well as about one-
third of the Nation's carbon dioxide (CO2) emissions, which 
contribute to climate change. In 2003, DOE initiated FutureGen--a 
program to design, build, and operate a commercial-scale, coal-fired 
power plant that incorporated carbon capture and storage (CCS) with 
integrated gasification combined cycle (IGCC), an advanced technology 
for generating electricity that has been deployed on a commercial scale 
at only two coal-fired power plants in the United States.\2\ In IGCC 
power plants, coal is gasified to produce a synthesis gas, consisting 
primarily of hydrogen, carbon monoxide, and CO2. Then, in a 
process called precombustion CCS, the CO2 is removed and 
separated from the synthesis gas before the synthesis gas is burned in 
a combustion turbine to generate electricity. Through IGCC, electricity 
is generated more efficiently than through conventional pulverized 
coal-fired technology, the process most widely in use, because IGCC 
uses less coal to generate the same amount of electricity.
---------------------------------------------------------------------------
    \2\ Currently, only two IGCC plants operate at commercial scale in 
the United States. In service since 1997, the Polk Station, near 
Mulberry, Florida, can provide 250 megawatts to the electric grid. The 
Wabash River Coal Gasification Repowering Project is the first full-
size commercial gasification-combined cycle plant built in the United 
States, having begun operations in November 1995. The plant, located 
outside West Terre Haute, Indiana, can provide 262 megawatts to the 
electric grid.
---------------------------------------------------------------------------
    The original FutureGen plant was to capture and store underground 
about 90 percent of its CO2 emissions. DOE's cost share was 
to be 74 percent, and industry partners agreed to fund the rest. 
Concerned about escalating costs, DOE announced in January 2008 that it 
had decided to restructure FutureGen. In October 2008, DOE received a 
small number of applications for the restructured FutureGen; however, 
some of these applications were for proposals outside the restructured 
FutureGen's scope. As we reported, DOE is currently assessing proposals 
received and stated it expected to announce a selection of projects by 
December 2008; however, as of the beginning of March 2009, it had made 
no decision. DOE requested supplemental information from restructured 
FutureGen applicants, which will be reviewed before any selection 
decision.\3\ As you know, the recently enacted American Recovery and 
Reinvestment Act of 2009, known as the stimulus law, provides DOE an 
additional $3.4 billion for ``Fossil Energy Research and Development.'' 
\4\ Such a substantial amount of funding could significantly impact 
DOE's decisions about how to move forward with programs such as 
FutureGen.
---------------------------------------------------------------------------
    \3\ DOE has identified certain details regarding the negotiations 
for both the original and the restructured FutureGen as sensitive or 
proprietary information. Due to the ongoing nature of these 
negotiations for the restructured FutureGen and the fact that 
disclosure of sensitive/proprietary information could adversely affect 
negotiations of these projects and related future projects, our 
discussion of some aspects of these negotiations is necessarily 
general.
    \4\ Pub. L. No. 111-5, tit. IV, 123 Stat. 115, 139 (2009).
---------------------------------------------------------------------------
    Our report provides detailed information about our findings. In 
summary, we found the following:

  The overall goals of the original and restructured FutureGen 
programs are largely similar in that both programs seek to produce 
electricity from coal with near-zero emissions by using CCS, and to 
make that process economically viable for the electric power industry. 
However, the programs have different approaches for achieving their 
goals, which could have different impacts on the commercial advancement 
of CCS and, therefore, result in two largely distinct programs. First, 
the original program focused on researching and developing the 
integration of IGCC and CCS at a new, commercial-scale, coal-fired 
power plant, while the restructured FutureGen aims at demonstrating the 
use of CCS technology at one or more new or existing commercial coal-
fired power plants. As a result, the restructured program could provide 
opportunities to learn about CCS at different plants, including those 
that use IGCC and conventional ones that use pulverized coal generating 
technology. However, under the restructured program, learning about the 
integration of IGCC and CCS would be possible only if DOE received 
applications proposing IGCC and selected one for funding. Second, it is 
unclear which of the two programs would advance the broader roll out of 
CCS across industry more quickly. In particular, the original program 
was to be operated by a nonprofit consortium of some of the largest 
coal producers and electric power companies in the world at one plant, 
while the restructured program called for CCS projects at multiple 
commercial plants. DOE officials told us that the original program 
would likely have improved the global advancement of CCS more quickly 
than the restructured program because of its various international 
partnerships and that DOE is developing an approach to recoup the loss 
of international involvement that resulted from restructuring 
FutureGen. Finally, the original FutureGen would have served as an 
operating laboratory host facility for (1) emerging technologies aimed 
at the goal of near-zero emissions (such as hydrogen fuel cells and 
advanced gasification) and (2) gaining broad industry acceptance for 
these technologies. In contrast, the restructured FutureGen would not 
include a facility for testing these technologies, and its ability to 
advance them would, therefore, be limited.

  DOE manages a portfolio of clean coal programs that research 
and develop CCS technology or demonstrate its application. The 
restructured FutureGen differs in important ways from most of DOE's 
other CCS programs, with the exception of one program--Round III of the 
Clean Coal Power Initiative (CCPI). Both the restructured FutureGen and 
CCPI (1) fund the commercial demonstration of CCS at new or existing 
coal-fired power plants and (2) require industry participants to bear 
at least 50 percent of costs. We reported that the restructured 
FutureGen targets a higher amount of CO2 to be captured and 
stored (at least 1 million metric tons stored annually, per plant) than 
CCPI does (300,000 metric tons of CO2 stored or put to use 
annually, such as to enhance oil recovery, per plant). However, CCPI's 
goals may be more achievable for industry partners than those of the 
restructured FutureGen and, therefore, lead to more industry 
participation. Regarding the restructured program's differences from 
most of the other CCS programs, the restructured FutureGen would 
integrate key components of CCS at commercial coal-fired power plants, 
such as CO2 capture, compression, transport, storage, and 
monitoring of stored CO2. In contrast, most of DOE's other 
CCS programs concentrate on developing individual components of CCS, 
such as CO2 storage, and/or an individual component and a 
related one, such as capture and compression.

  Contrary to best practices, DOE did not base its decision to 
restructure FutureGen on a comprehensive analysis of factors such as 
the associated costs, benefits, and risks. DOE based its decision 
largely on its conclusion that costs for the original FutureGen had 
doubled and would escalate substantially. However, this conclusion was 
problematic because it was derived from a comparison of two cost 
estimates for the original FutureGen that were not comparable; DOE's 
$950 million estimate was in constant 2004 dollars, while the $1.8 
billion estimate of DOE's industry partners was inflated through 2017. 
As a result, DOE has no assurance that the restructured FutureGen is 
the best option to advance CCS. In contrast, DOE's Office of Fossil 
Energy had identified and analyzed 13 other options for incremental, 
cost-saving changes to the original program, such as reducing the 
CO2 capture requirement. While the Office of Fossil Energy 
did not consider all of these options to be viable, it either 
recommended or noted several of them for consideration, with potential 
savings ranging from $30 million to $55 million each.

Conclusions

    According to various energy experts, for the foreseeable future, 
because coal is abundant and relatively inexpensive, it will remain a 
significant fuel for the generation of electric power in the United 
States and the world. However, coal-fired power plants are a 
significant source of CO2 and other emissions responsible 
for climate change. Hence, for at least the near-term, any government 
policies that address climate change will need to have a goal of 
significantly reducing CO2 and other emissions from coal-
fired power plants. While CCS is still in its infancy, it may be a 
promising technology to achieve these purposes. By integrating IGCC and 
CCS technology at an operating laboratory host facility, DOE's original 
FutureGen program was intended to address significant technological, 
cost, and regulatory issues associated with the implementation of CCS 
at a new plant. Alternatively, the restructured FutureGen left open the 
possibility of successfully applying CCS technology to existing 
conventional, pulverized coal-fired power plants--an important goal in 
its own right, since those plants account for almost all of the coal-
fired generating capacity in the United States and abroad. However, 
DOE's decision to restructure FutureGen and remove the program's 
emphasis on integrating IGCC and CCS technology was not well documented 
or explained, in light of the fact that DOE already had existing 
programs to address CCS at existing coal-fired power plants.
    Given the magnitude of the current fiscal and economic challenges 
facing our nation, along with the urgent need to secure an adequate and 
sustainable energy supply that does not contribute to climate change, 
much rides on the success of clean coal programs, such as FutureGen. To 
ensure the best uses of billions of federal dollars, informed and 
thoughtful approaches should be taken when making decisions about these 
programs, including the restructuring of FutureGen. Such informed 
decision-making has become even more critical with the important 
opportunity that over $3 billion in additional funding for fossil 
energy research and development in the recently enacted stimulus law 
provides DOE for promoting cleaner forms of power generation.
    Along these lines, to help DOE make more fully informed decisions 
on how best to move forward with FutureGen, our February 2009 report 
recommended that DOE conduct a comprehensive analysis of different 
options. Specifically, to help ensure the widespread commercial 
advancement of CCS while protecting taxpayer interests, we recommended 
that, before implementing significant changes to FutureGen or 
obligating additional funds for such purposes, the Secretary of Energy 
direct DOE staff to prepare a comprehensive analysis comparing the 
relative costs, benefits, and risks of a range of options, including 
the original and restructured FutureGen programs and incremental 
options for modifying the original program. We also recommended that 
the Secretary consider the results of the comprehensive analysis and 
base any decisions that would alter the original FutureGen on the most 
advantageous mix of costs, benefits, and risks resulting from the 
options evaluated. In reviewing a draft of our report, DOE did not 
comment on the report's recommendations.
    In performing our work, we reviewed best practices for making 
programmatic decisions, FutureGen plans and budgets, and documents on 
the restructuring of FutureGen. We also contacted DOE, industry 
partners, and experts. We conducted this performance audit from June 
2008 to February 2009, in accordance with generally accepted government 
auditing standards. Those standards require that we plan and perform 
the audit to obtain sufficient, appropriate evidence to provide a 
reasonable basis for our findings and conclusions based on our audit 
objectives. We believe that the evidence obtained provides a reasonable 
basis for our findings and conclusions based on our audit objectives.
    Mr. Chairman, this completes my prepared statement. I would be 
happy to respond to any questions you or other Members of the 
Subcommittee may have at this time.

    Ernie Hazera (Assistant Director), Nancy Crothers, and Chad M. 
Gorman made key contributions to this testimony. Harold Brumm, Jr., 
Cindy Gilbert, Angela Miles, Timothy Persons, Karen Richey, Michael 
Sagalow, and Jeanette M. Soares also made important contributions.










































































































                      Biography for Mark Gaffigan
    Mark Gaffigan is a Director for the U.S. Government Accountability 
Office's (GAO) Natural Resources and Environment team in Washington, 
D.C. The GAO is an independent, nonpartisan agency that evaluates and 
audits the programs and expenditures of the Federal Government. Mr. 
Gaffigan's current responsibilities include leadership of GAO's work on 
energy-related issues. Mr. Gaffigan began his career with GAO in 1987 
and has worked on a variety of federal program reviews with an emphasis 
on budget and program reviews of the U.S. Department of Energy. Mr. 
Gaffigan has a BA in Economics and a MA in Public Administration, and 
he is also a Certified Public Accountant.

    Chair Baird. Mr. Gaffigan, thank you. I want to take this 
opportunity to acknowledge we have been joined by Chairman 
Gordon, Chairman of the Full Committee. Mr. Chairman, good to 
see you. Thanks for being here and for your request for this 
hearing as well.
    Also, Mr. Lujan, Dr. Lipinski, Ms. Edwards, Mr. Chandler, 
and Ms. Johnson are also here as well.
    Dr. Finley.

 STATEMENT OF DR. ROBERT J. FINLEY, DIRECTOR, ENERGY AND EARTH 
       RESOURCES CENTER, ILLINOIS STATE GEOLOGICAL SURVEY

    Dr. Finley. Mr. Chairman and Members of the Committee, I 
appreciate the opportunity to appear before you today and offer 
comments on carbon sequestration.
    Understanding the capacity to geologically sequester carbon 
dioxide produced as a byproduct of fossil fuel and biofuel use 
is an essential strategy to mitigate climate change related to 
the buildup of greenhouse gases in the atmosphere. In 2007, the 
Fourth Assessment Report of the Intergovernmental Panel on 
Climate Change stated that ``carbon capture and storage in 
underground geological formations is a new technology with the 
potential to make an important contribution to mitigation by 
2030. Technical, economic and regulatory developments will 
affect the actual contribution.'' At the Illinois State 
Geological Survey, a unit of the University of Illinois, we 
have been investigating carbon sequestration technology since 
2003 as part of a U.S. Department of Energy Regional Carbon 
Sequestration Partnership. Our Partnership, the Midwest 
Geological Sequestration Consortium covers the Illinois Basin, 
a 60,000 square-mile area that covers most of Illinois, 
southwestern Indiana, and western Kentucky. Our Phase I 
Characterization effort, from 2003 to 2005, focused on 
compiling existing information. Our Phase II validation effort 
currently underway involves multiple small-scale, field pilot 
injection projects. Most importantly, we are now engaged in a 
critical Phase III deployment effort, the Illinois Basin-
Decatur test site, that will offer significant advances in 
carbon sequestration technology.
    After two years of site-specific planning and development 
and planning at a site in Decatur, Illinois, we began on 
February 14 of this year the drilling of a 7,500 feet deep 
injection well that will receive 1,000 metric tons per day of 
CO2. As of this morning, we were drilling below 
3,546 feet. This is the first Phase III deployment well in the 
Nation drilled as part of the DOE regional carbon sequestration 
partnership program. We will be injecting over three years to 
meet an injection goal of one million metric tons. The permit 
is held by the Archer Daniels Midland Company, who has provided 
a half-square mile site, logistical and engineering support, 
and will provide the CO2 as a product of their fuel 
ethanol production operations.
    We are confident that our work over the preceding five 
years and a year-long permitting process has resulted in an 
exceptional site for deployment phase testing. We have 
evaluated subsurface rock formations to define the capability 
of a reservoir to hold carbon dioxide, and we have defined 
multiple thick and competent reservoir seals, and we have 
demonstrated that there are no detectable faults and fractures 
that could serve as leakage pathways back to the surface.
    As a climate change mitigation strategy, the CO2 
must remain in place and not leak back to the atmosphere, not 
contaminate potable ground water, not affect surface biota, and 
not present a risk to human health and safety. This implies 
that we must do an excellent job of investigating the site. We 
have been carrying out environmental site monitoring since mid-
2008. Before CO2 is ever injected, we will have more 
than a year of background data on groundwater chemistry, soil 
gas composition, plant stress assessed through color infrared 
aerial imagery, and atmospheric monitoring. We have 12 
groundwater wells over the projected area of the subsurface 
plume and beyond. We will conduct more geophysical studies that 
will show us in three dimensions where in the reservoir rock 
the CO2 is actually located. Most importantly, we 
will drill two additional 7,500 feet deep observation wells 
within the half-square mile area of the plume to calibrate 
these geophysical studies. These same wells will also serve as 
early warnings of any failure of our primary reservoir seal, an 
outcome with very low probability but one that we nevertheless 
must demonstrate is not taking place.
    In conclusion, well characterized sites with appropriate 
geology and careful monitoring can make a contribution and, in 
fact, must be part of a portfolio response to dealing with 
carbon dioxide emissions. In our regional partnership, we have 
a comprehensive research agenda that we believe will show that 
geological sequestration can be scaled up to be a safe and 
effective tool to combat climate change. Further, we are 
working to ensure that we share our results with research 
consortia around the world. A State Department-World Resources 
Institute delegation of university researchers and corporate 
officials from China visited the Illinois Basin-Decatur drill 
site two weeks ago, and we will make a reciprocal visit to 
China this coming June. Next week, I will present our 
partnership results at a meeting of the CO2Geonet 
European Research Network in Italy.
    While there is more yet to do in understanding the 
contributions that geological carbon sequestration can make at 
large scales in combating climate change, and more of these 
efforts will indeed take place as a result of the provisions of 
the Recovery and Reinvestment Act, I believe we are now moving 
at an accelerating pace to develop the technology and to share 
it around the world for our common benefit. Thank you.
    [The prepared statement of Dr. Finley follows:]
                 Prepared Statement of Robert J. Finley
    Mr. Chairman, Members of the Committee, I appreciate the 
opportunity to appear before you today to offer comments on carbon 
sequestration. Understanding the capacity to geologically sequester 
carbon dioxide (CO2) produced as a byproduct of fossil fuel 
use, including the use of advanced coal technologies, is an essential 
strategy to mitigate climate change related to the buildup of 
greenhouse gases in the atmosphere. In 2007, the Fourth Assessment 
Report of the Intergovernmental Panel on Climate Change (IPCC) stated 
that ``carbon capture and storage in underground geological formations 
is a new technology with the potential to make an important 
contribution to mitigation by 2030. Technical, economic and regulatory 
developments will affect the actual contribution.'' At the Illinois 
State Geological Survey, a unit of the University of Illinois, we have 
been investigating sequestration technology since 2003 as part of a 
U.S. Department of Energy (DOE) Regional Carbon Sequestration 
Partnership. Our Partnership, the Midwest Geological Sequestration 
Consortium (MGSC), covers the Illinois Basin, a 60,000 sq. mi., 
geological feature that extends beneath most of Illinois, southwestern 
Indiana, and western Kentucky. Our Phase I Characterization effort, 
2003-2005 focused on compiling existing information that, when 
evaluated, indicated the Illinois Basin has suitable geology for 
geological carbon sequestration. Our Phase II Validation effort, 
involving multiple small-scale, field pilot injection projects, began 
in late 2005 and will continue to be carried out through 2009. Most 
importantly, we are now engaged in a critical Phase III Deployment 
effort, the Illinois Basin-Decatur test site, that will offer 
significant advances in geological carbon sequestration technology.
    After two years of site-specific planning and development at a site 
in Decatur, Illinois we began, on February 14, 2009, the drilling of a 
7,500 feet deep injection well that will receive 1,000 metric tons per 
day of CO2, beginning about this time next year. This is the 
first Phase III deployment well in the Nation drilled as part of the 
DOE regional sequestration partnership program and the first well 
permitted for one million metric tons under existing Class I U.S. EPA 
Underground Injection Control regulations. We will be injecting over 
three years to meet our 1 million metric ton objective. The permit is 
held by the Archer Daniels Midland Company, who has provided a half-
square mile site, logistical and engineering support, and will provide 
the CO2 from their fuel ethanol production operation. We are 
confident that our work over the preceding five years and a year-long 
permitting process has resulted in an exceptional site for Deployment 
phase testing. We have evaluated subsurface rock formations to define a 
reservoir to hold the CO2, defined multiple thick and 
competent reservoir seals, and demonstrated that there are no 
detectable faults and fractures that could become leakage pathways. We 
believe we will be able to show that the sequestration process can be 
safe and effective.
    As a climate change mitigation strategy, the CO2 must 
remain in place and not leak back to the atmosphere, not contaminate 
potable ground water, not affect surface biota, and not present a risk 
to human health and safety. That implies that we must do an excellent 
job of investigating the properties of these rocks and the fluids now 
within them and of predicting their performance in the future. At our 
Illinois Basin-Decatur site, we have been carrying out environmental 
monitoring since mid-2008. Before CO2 is ever injected, we 
will have more than a year of background data on groundwater chemistry, 
soil gas composition, plant stress assessed through color infrared 
imagery, and atmospheric monitoring. We have 12 groundwater wells over 
the projected area of the subsurface CO2 plume and beyond. 
We will conduct more geophysical studies that will show us in three 
dimensions where within the reservoir rock the CO2 is 
actually located. Most importantly, we will drill two additional 7,500 
feet deep observation wells within the half-square mile area of the 
plume to calibrate the geophysical studies and ensure that our 
understanding of the fate of the CO2 is as complete as 
possible. These same wells will also serve as early warnings of any 
failure of our primary reservoir seal, an outcome with very low 
probability, but one that we nevertheless must demonstrate is not 
taking place. We have a comprehensive risk assessment process in place 
that defines our response to equipment failures, accidents, and 
geological problems.
    Let me conclude with some observations on the process to date. We 
sometimes read comments that geological carbon sequestration is an 
untested technology and therefore cannot be part of the global climate 
change response. I would suggest the opposite: that well characterized 
sites with appropriate geology and careful monitoring can make a 
contribution, and, in fact, must be part of a portfolio response to 
dealing with carbon dioxide emissions. In our regional partnership, the 
MGSC, we are addressing every element of a comprehensive research 
agenda that we believe will show that geological carbon sequestration 
can be scaled up to be a safe and effective tool to combat climate 
change. Further, we are working to ensure that we share our results 
with research consortia around the world. A State Department-World 
Resources Institute delegation of university researchers and corporate 
officials from China visited the Illinois Basin-Decatur site two weeks 
ago; we will make a reciprocal visit to China in June. Next week, I 
will present our partnership results at a meeting of the 
CO2Geonet European (research) Network in Italy. While there 
is more yet to do in understanding the contributions that geological 
carbon sequestration can make at larger scales in combating climate 
change, and more of these efforts will take place as a result of the 
provisions of the American Recovery and Reinvestment Act, I believe we 
are now moving at an accelerating pace to develop this technology and 
to share it around the world for our common benefit. Thank you for the 
opportunity to be here this morning.

                     Biography for Robert J. Finley
    Robert J. Finley is the Director of the Energy and Earth Resources 
Center at the Illinois State Geological Survey, Champaign, Illinois. He 
joined the Illinois Survey in February 2000 after serving as Associate 
Director at the Bureau of Economic Geology, The University of Texas at 
Austin. Rob's area of specialization is fossil energy resources and 
geological carbon sequestration. His work has ranged from large-scale 
resource assessment, addressing hydrocarbon resources at national and 
State scales, to evaluation of specific fields and reservoirs for coal, 
oil, natural gas, and carbon dioxide storage. He is currently heading 
the Midwest Geological Sequestration Consortium, a U.S. Department of 
Energy regional carbon sequestration partnership in the Illinois Basin 
aimed at addressing approaches to geological carbon management. Rob has 
served on committees of the National Petroleum Council, the American 
Association of Petroleum Geologists, the National Research Council, the 
Stanford Energy Modeling Forum, and the U.S. Potential Gas Committee. 
He has taught aspects of energy resource development since 1986 to 
numerous clients domestically and overseas in Venezuela, Brazil, South 
Africa, and Australia, among other countries. Rob holds a Ph.D. in 
geology from the University of South Carolina. He is currently also an 
Adjunct Professor in the Department of Geology, University of Illinois 
at Urbana-Champaign.

    Chair Baird. Thank you, Dr. Finley. Mr. Monroe.

 STATEMENT OF MR. LARRY S. MONROE, SENIOR RESEARCH CONSULTANT; 
MANAGER, ENGINEERING SCIENCE AND TECHNOLOGY, SOUTHERN COMPANY, 
                      BIRMINGHAM, ALABAMA

    Mr. Monroe. Mr. Chairman, Members of the Subcommittee, 
thank you for the opportunity to speak to you today about 
Southern Company's activities and plans for advanced coal 
technologies.
    Southern Company is a vertically integrated utility serving 
over four million customers in the southeast. We are one of the 
largest electricity generators in the United States, with some 
70 percent of our energy coming from coal.
    I am a manager of engineering science and technology for 
Southern Company. I have been researching emissions control for 
coal-powered plants for over 25 years. Southern Company has a 
long history of cooperative work for the U.S. Department of 
Energy in development of technologies for the utility industry, 
including work on selective catalytic reduction for NOX 
emissions from gas scrubbers for sulfur oxide emission and 
mercury-control technologies.
    As we face a future with policies that would limit 
emissions of carbon dioxide, we believe that coal must continue 
to play a role. Further, we believe that coal can and must play 
a role going forward with constraints on carbon emissions. To 
achieve this goal, technologies are currently being developed 
and adapted from other industries to capture and store 
emissions of CO2. However, the technologies are not 
yet ready for utilities to use commercially. They are not yet 
proven in power plant service, and as of today, they are too 
costly. This is the issue going forward. How can these 
technologies be proven and the cost reduced to make them 
commercially viable in the future?
    Southern Company is active in developing and demonstrating 
advanced coal technology to meet this large challenge. First I 
will talk about our sequestration efforts.
    As a charter member of the Southeast Regional Carbon 
Sequestration Partnership or SECARB, Southern Company has co-
funded its activities and served as a host for a Phase II 
project injecting 3,000 tons of CO2 under one of our 
power plants in southeast Mississippi. Working further with 
SECARB, we have a goal to scale up to a Phase III sequestration 
project of 100,000 tons of CO2 per year in similar 
geology at another one of our Gulf Coast power plants. This 
proposed project would feature a 25-megawatt scale CO2 
capture plant that would be built to supply the CO2 
for the sequestration demonstration. We have a further goal of 
developing an even larger scale-up of the sequestration project 
that would feature injection of one million tons of CO2 
per year for five years into the saline reservoirs of the Gulf 
Coast Region. This project would include the 170-megawatt 
capture plant to supply the CO2. We submitted this 
proposed project in response to both the restructured FutureGen 
solicitation as well as CCPI Round III.
    Now you will notice that both of these two steps in 
sequestration scale-up are planned to also demonstrate CO2 
capture at increasing scale on conventional coal power plants.
    For IGCC, we have asked the Mississippi Public Service 
Commission for approval to build a 600-megawatt IGCC power 
plant in eastern Mississippi using local lignite coal and 
design for 50 percent CO2 capture. The CO2 
would be sequestered and enhanced oil recovery operations in 
Mississippi oil fields. This new power plant would be partially 
funded with DOE funds from CCPI round two and with investment 
tax credits authorized by the Energy Policy Act of 2005. Also 
in partnership with the DOE, Southern Company operates a 
research station in Wilsonville, Alabama, focused on developing 
advanced power generating technologies, including fundamental 
R&D for coal gasification. It is now moving its focus toward 
basic R&D and scale-up of technologies to capture CO2 
from both conventional and IGCC coal plants.
    You can see the Southern Company is working on four areas 
we believe to be important: large-scale sequestration tests, 
CO2 capture from conventional coal plants, IGCC 
plants with carbon capture, and fundamental R&D for next 
generation technologies. The issues to be overcome for 
widespread commercial deployment of carbon capture and 
sequestration are cost and timing. Both the pilot and 
industrial-scale trials of CO2 capture systems are 
much more expensive to build and operate than technologies for 
NOX, SO2, or mercury. The same high-cost penalties 
apply to full-scale power plants. To address high cost, we 
strongly think that a robust program of both technology 
development and a program of basic R&D are needed. Many of the 
Nation's scientists are only now turning their attention to 
this field, and breakthroughs are possible. As for timing, the 
issue is the need to demonstrate to various stakeholders the 
effectiveness and safety of geological sequestration. As MIT 
recommends, we think it is necessary for the Nation to have 
multiple, large-scale sequestration demonstrations of over one 
million tons of CO2 per year for at least five 
years. In order to have these results in adequate time, these 
demonstrations need to be started as soon as possible.
    Working in partnership with the U.S. DOE and others, 
Southern Company looks forward to working on the challenge of 
capturing CO2 from coal plants and demonstrating 
geological sequestration of CO2.
    [The prepared statement of Mr. Monroe follows:]
                 Prepared Statement of Larry S. Monroe

Summary

    Southern Company is active in developing and demonstrating advanced 
coal technologies. As a charter member of the Southeast Regional Carbon 
Sequestration Partnership (SECARB), Southern has co-funded SECARB's 
activities, as well as serving as a host site for a Phase II 
sequestration project injecting 3,000 tons into a saline reservoir at 
one of our power plants in southeast Mississippi. With SECARB, we have 
a goal to scale up to a sequestration project of 100,000 to 150,000 
tons CO2 per year into similar geology at another of our 
Gulf Coast power plants. This project would feature a 25 MWe scale 
CO2 capture plant built by Southern Company and research 
partners to supply the CO2 for the sequestration project.
    Southern Company has a further goal of developing a larger scale up 
of this sequestration project that would feature one million tons 
CO2 per year for at least five years into the saline 
reservoirs of the Gulf Coast region. Building on the results of the 
smaller demonstration, this project would include a 170 MWe CO2 
capture plant to supply the CO2 for the sequestration 
project. This proposed project was submitted by Southern Company in 
response to both the Restructured FutureGen solicitation as well as the 
CCPI Round 3 solicitation. Southern Company will likely resubmit this 
project to CCPI 3 when it is reopened later this year.
    Southern Company's Mississippi Power affiliate has asked the 
Mississippi Public Service Commission for approval to build a 600 MWe 
(net) IGCC power plant using native lignite and designed for 50 percent 
CO2 capture from startup. The captured CO2 would 
be sequestered in EOR operations in Mississippi oil fields. This new 
power plant is partially funded with DOE funds from CCPI Round 2 and 
with investment tax credits authorized by the Energy Policy Act of 
2005.
    In partnership with the DOE, Southern Company operates a research 
station in Wilsonville, Alabama, that has focused on advanced power 
generating technologies, including fundamental R&D for coal 
gasification, and is now moving its focus towards fundamental R&D and 
scale up for technologies to capture CO2 from both 
conventional combustion coal plants and IGCC plants.
    The barriers to widespread commercial deployment for CCS are mostly 
cost and timing. Both the pilot and industrial scale trials of CO2 
capture systems are much more expensive to build and operate than the 
technologies that have been tested and developed for control of other 
emissions like NO, SO2, or mercury. The same high cost 
penalties apply to current CO2 capture and sequestration 
approaches for full scale power plants. Therefore, both a robust 
program of technology development and a program of fundamental R&D are 
needed. Many of the Nation's scientists are only just now turning their 
attention to this field and breakthroughs are possible. New science, 
teamed with scale up and demonstration programs will help bring forward 
affordable and effective CCS technologies.
    A parallel barrier to widespread deployment of CCS is the need to 
demonstrate to various stakeholders the effectiveness and safety of 
geological sequestration. To get to that point, it is necessary for the 
Nation to have multiple concurrent large scale sequestration 
demonstrations of over one million tons CO2 per year for at 
least five years in duration. In order to have these results in 
adequate time, these demonstrations need to be started as soon as 
possible.
    Working in partnership with the U.S. DOE, vendors, and other 
utilities, Southern Company looks forward to the challenge of 
developing, demonstrating, and improving technologies to capture 
CO2 from coal-based power plants and towards demonstrating 
the effectiveness of geological sequestration of CO2.

Introduction

    Chairman Baird, Ranking Member Inglis, and Members of the 
Subcommittee, thank you for the opportunity to speak with you today 
about Southern Company's activities and plans for developing and 
demonstrating advanced coal technologies.
    Southern Company is a super regional energy company serving 
customers in Alabama, Florida, Georgia, and Mississippi. Southern 
Company is the one of the largest generators of electricity in the 
United States with 42,000 megawatts of generating capacity and over 
21,000 megawatts of it is coal-fired. I hold a Ph.D. in Chemical 
Engineering from MIT, and have been involved in research on pollution 
control for coal-based power plants for over 25 years in university, 
not-for-profit research institute, and corporate settings. At Southern 
Company, I have two roles: I support our technology research 
organization as a senior research consultant and I also support our 
gasification and carbon capture research station as the Manager of 
Engineering Science and Technology. With these efforts, I am deeply 
involved with the development and demonstration of advanced ways of 
using coal to generate electricity.
    Southern Company has a long history of cooperative work with the 
U.S. Department of Energy in development of technologies for the 
utility industry, including work on low NO burners and selective 
catalytic reduction (SCR) systems for NO emissions reductions, flue 
gas de-sulfurization (FGD) systems for sulfur oxides reductions, 
mercury control technologies to reduce mercury emissions, and various 
others.
    As we face a future with possible legislation and/or regulations 
that would limit emissions of greenhouse gases, including carbon 
dioxide (CO2), we believe that coal must continue to play a 
role in the energy future of the country. It currently represents 50 
percent of the electricity generated in the Nation today and it's ample 
and relatively low cost domestic supply means it must continue to power 
our homes, businesses, and industries in the future. We believe however 
that coal can and must play a role in a future with constraints on 
carbon emissions. Technologies are currently being developed and 
adapted from other industries to capture and store emissions of 
CO2 from coal power plants to achieve this goal. However, 
the technologies are not yet ready for the utility sector to use in a 
commercial way - they are not yet proven in utility service and as of 
today, they are too costly in both capital and operating expenses. This 
is the issue going forward, how can these technologies (or new ones not 
yet invented) be proven and the costs reduced to make them commercially 
viable in the future for which they will be needed?

1.0 Development of Technology for the Utility Industry for Carbon 
                    Capture and Storage (CCS)

    The lack of large scale storage of electricity means that 
technologies for generating electricity must be proven and robust in 
order to maintain the reliability and stability of the electric grid. 
Generation must meet demand and the industry cannot test new 
technologies at full scale without assurance that it will not threaten 
operations and reliability. For this reason, the utility industry has 
learned that new technologies and processes must be developed and 
proven in a series of tests that start at small sizes and move to 
progressively larger sizes before they can be relied upon at a full 
scale generating plant. It is typical for new utility technologies to 
take four or five demonstration steps and between seven to fifteen 
years of development time to prove that they are adequate, robust, 
affordable, and reliable.
    The development path of technologies to capture and store carbon 
dioxide (CO2) emissions from coal-based power plants will 
follow a similar path. Given that regulatory or legislative efforts to 
limit CO2 emissions from power plants are active, there is a 
pressing need to develop technologies that can be used in coal-based 
electricity generation and simultaneously achieve the environmental, 
economic, and operational requirements. Carbon capture and 
sequestration (CCS) for coal-based power plants is really a series of 
four steps: (1) capturing the CO2 from the power plant, (2) 
compressing the CO2 to the pressure required for pipeline 
transport, (3) transporting the CO2 through a pipeline to 
the sequestration field, and (4) injecting the CO2 deep 
underground into stable geological structures (sequestration).
    CO2 capture is a technology and cost challenge; 
processes in the chemical and petroleum industries have been developed 
to capture CO2 from similar streams, although not with some 
of the particular difficulties nor the scale facing large central 
station power plants. Additionally, the costs of these capture 
processes at the scale of utility power plants is very high. Current 
capture technologies can add 30 to 85 percent to the cost of 
electricity from the plant. The main issue is the amount of heat 
required to operate the capture plant which can mean a loss of 20 to 25 
percent of the electrical output from a plant where this technology is 
added. Integrated Gasification Combined Cycle (IGCC) plants, where coal 
is gasified and burned in a combustion turbine--steam turbine 
combination, offer some promise that the CO2 can be captured 
from the synthetic gas (syngas) before combustion. This presents 
advantages because the CO2 is at higher concentrations in 
the syngas and it is already at pressure and therefore may require less 
of the compression energy described next. However, the vast majority of 
existing plants are conventional coal combustion units, with only two 
operational IGCC plants in the entire U.S.
    Compression of the CO2 can be accomplished with 
available technologies, although the compression costs can amount to 10 
percent of the power plant electrical output. (For the steam 
requirements for capture and the energy for compression of the 
CO2, this could total some 30-35 percent of the energy 
output of the plant to operate with 90 percent CO2 capture.) 
For new conventional coal plants with CCS, it is possible to integrate 
the compression into the steam cycle of the plant and some efficiency 
improvements can be made.
    Pipeline transport of CO2 to sequestration sites is a 
conventional technology available today--the U.S. has over 3,600 miles 
of CO2 pipelines to move the gas from natural and industrial 
sources to oil fields for enhanced oil recovery (EOR). CO2 
is used to pressurize oil fields and the CO2 dissolves into 
the crude oil making it easier to flow out of the underground 
reservoir. Pipeline issues for large scale CCS are mainly associated 
with the expected difficulty in siting and acquiring property for 
pipeline routes. It has been estimated that a pipeline network equal to 
one-third of the size of the existing natural gas pipeline network 
would be needed to capture CO2 from the existing coal fired 
fleet in the U.S. (MIT's ``The Future of Coal'' states that if all of 
the coal power plant carbon emissions are captured and transported by 
pipeline, the CO2 moved would be equal to three times the 
weight of the annual natural gas delivered by the U.S. pipeline system, 
but only one-third of its volume.)
    The most challenging aspect of developing CCS for the utility 
industry is sequestration. The technology for injecting CO2 
underground for EOR is well-developed and the history of EOR operations 
indicates that sequestration can be accomplished in a safe and secure 
manner. However, the scale and potential widespread location of 
sequestration sites for utility capture of CO2 will require 
that sequestration tests be made at sufficient scale for multi-year 
periods to demonstrate to stakeholders including the general public, 
regulators, utilities, insurance companies, and financial entities, 
that it is safe and effective. MIT, in their ``The Future of Coal'' 
report, states that ``we believe high priority should be given to a 
program that will demonstrate CO2 sequestration at a scale 
of one million tons CO2 per year in several geologies.'' 
They further recommend ``a minimum of three projects . . . of the order 
of one million tons CO2/year for a minimum of five years.'' 
Unfortunately, it is not possible to accelerate the timescales for 
sequestration tests, so it is necessary to start these projects as soon 
as possible. Because we need to study the movement of CO2 in 
the underground structure, there are no good technical ways to make it 
move faster without disrupting the test. In other words, the spread of 
the CO2 will be predicted with models at the beginning of 
injection, and the goal of these sequestration tests is to see if the 
spread of injected CO2 matches the model predictions in both 
distance and time to get there.

2.0 Accelerated Technology Development for Utility CCS

    As described above, the normal technology path for new technology 
development in the utility industry is to proceed from an invention or 
development in the laboratory, to a small pilot-scale test, to a larger 
pilot-scale test for a longer time period, to industrial scale 
(normally five to ten percent of large full-scale utility plants), and 
finally to the first operational utility plant. Each of these steps 
would normally take on the order of one to three years, with the whole 
process, assuming success at every step, taking a total time of 
anywhere from seven to fifteen years. It is also typical that several 
different technology approaches proceed through these steps 
simultaneously as competitive solutions to a given problem. For 
Southern Company, the time from our initial pilot-scale work on SCR in 
a DOE Clean Coal project to our first commercial unit was over six 
years, and it took 11 years before our first large scale power plant 
SCR retrofit was operational. A similar timeline for Southern Company's 
FGD installations, and is holding true for mercury control technology. 
Our first test of an activated carbon injection into a baghouse for 
mercury control occurred around 1998 at a pilot scale unit of one MW, 
followed by a DOE sponsored test at 135 MW starting in 2001, and 
finally to our first full scale project (880 MW) which started at the 
end of 2008, a period of 10 years.
    We believe that the timeline for the development and demonstration 
of technologies for the capture of CO2 and the demonstration 
of sequestration must be compressed to the maximum extent practicable. 
A combination of parallel development steps (as compared to the normal 
sequential steps described above) for CO2 capture will have 
to be undertaken to accelerate the technology development. Larger 
demonstrations will need to be initiated before the smaller scale tests 
have been completed.
    It is also necessary to start large scale sequestration injection 
tests as soon as possible to be able to demonstrate the ability of this 
approach to sequester large amounts of CO2 in a safe, 
effective, and cost effective manner. Ironically, a current 
complication of attempting to perform large sequestration projects is 
the relative scarcity of CO2 for these tests. There are 
currently no large scale capture plants in the utility industry to 
supply the needed CO2, and most natural and industrial 
sources are already in use for the food industry and EOR. Therefore, it 
becomes necessary to build CO2 capture plants in order to 
obtain the gas to start these sequestration tests.

3.0 Southern Company's Activities on CCS Technology

    Southern Company is active in all of these areas of technology 
development for CCS advancement. We are a charter member of the 
Department of Energy's regional partnership for our service territory, 
the Southeast Regional Carbon Sequestration Partnership (SECARB). The 
SECARB partnership covers an eleven-state region including the States 
of Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, North 
Carolina, South Carolina, Tennessee, Texas, and Virginia. Southern 
Company has been a funding member of SECARB, and has participated as a 
host site for a Phase II injection project, and a potential host site 
for a Phase III injection project. (The seven Regional Partnerships for 
carbon sequestration were established with funding by DOE to help 
develop and demonstrate the technology, equipment, and regulations to 
implement large-scale CO2 sequestration in various regions 
and geologies across the U.S.)
    Through SECARB, Southern Company's Plant Daniel in southern 
Mississippi served as the site for injection of 3,000 tons of CO2 
into a saline formation at a depth of about 8,500 feet below ground 
level. The purpose of this project was simply to test the deep saline 
reservoirs located near the large coal power plants along the Gulf 
Coast for geological sequestration of CO2. This very 
successful test has led to SECARB being awarded DOE funding for a 
larger Phase III project to inject 100,000 to 150,000 tons CO2 
per year into similar geological formations at a Southern Company plant 
located elsewhere on the Gulf Coast. As mentioned above, a real 
difficulty in performing these sequestration tests is the availability 
(and cost) of CO2 for the injection. For the smaller 
injection of 3,000 tons, the CO2 was contributed by Denbury 
Resources who use naturally occurring CO2 for EOR 
activities. However, for the larger SECARB Phase III injection program, 
that amount of CO2 is not available.
    To advance this larger scale sequestration project and to obtain 
the needed CO2, Southern Company has established a goal to 
design, construct, and operate an industrial scale CO2 
capture process at the generating plant site integrated with a 
sequestration test. (Southern Company has not determined the actual 
plant site for such a test, but it would be on the Gulf Coast). Through 
partnerships with EPRI and other utilities, Southern Company's goal is 
to work towards retrofitting this capture plant for partial capture 
with one of the leading technologies for CO2 capture from 
conventional coal plants. The costs of this capture plant would be 
borne by these private entities. As indicated above, the estimated 
costs of CO2 capture for projected full-scale installations 
are high in capital and operating costs, and therefore, it is not 
surprising that pilot and industrial scale test plants are expensive as 
well. The total project costs for the 25 MWe capture plant to supply 
the CO2 for the Phase III sequestration project of 100,000 
to 150,000 tons CO2 per year are estimated to be $140M. In 
the current economic downturn, it has become a difficult challenge to 
raise the capital for such a large scale demonstration project, and its 
prospects are currently being evaluated. We are hopeful that these 
types of large scale advancement projects can proceed, but economic 
challenges stand to threaten our ability to pay for such capture 
demonstrations--which would of course limit our ability to test larger 
scale sequestration such as the SECARB Phase III project.
    If this 25 MW demonstration plant can be constructed, then we have 
a further goal to expand upon this capture and sequestration 
demonstration with a larger version, designed to reach the MIT goal of 
one million tons CO2 per year for at least five years. This 
proposal would involve building a CO2 capture plant of about 
170 MWe size to capture the needed one million tons per year. Southern 
Company has applied for federal assistance on this combined project in 
response to both the Restructured FutureGen solicitation and the Clean 
Coal Power Initiative Round 3 (CCPI 3). DOE has recently announced the 
intent to reopen CCPI 3 with additional funding and Southern Company 
will likely resubmit an updated proposal in response. The total 
estimated cost of this 170 MW program would be $750M.
    Southern Company has also been actively involved in the development 
of Integrated Gasification Combined Cycle (IGCC) technology. Southern's 
subsidiary, Mississippi Power is developing a full-scale IGCC power 
plant of about 600 MWe (net) on native lignite in east central 
Mississippi, located in Kemper County. Mississippi Power has submitted 
an application to the Mississippi Public Service Commission for 
approval and is in the environmental permitting process. This project 
has received funding from DOE as an award from CCPI Round 2, as well as 
having qualified for investment tax credits from Section 48A of the 
Energy Policy Act of 2005. This new IGCC will also feature 50 percent 
CO2 capture from the startup of the plant, with the captured 
CO2 being supplied to the oil fields of Mississippi for EOR. 
(In addition to EOR recovering more oil from the field, EOR is also a 
sequestration technology as the CO2 replaces the oil in the 
pores of the sandstone, with about half of the CO2 flood of 
the oil field remaining underground and therefore being sequestered. 
The CO2 remainder is captured and sent underground again for 
further EOR operations.) The Kemper County project has a projected 
capital cost estimate of approximately $2.2 billion. The project is 
expected to utilize DOE CCPI 2 funding of about $270M and investment 
tax credits up to $133M. Pending approval by the Mississippi Public 
Service Commission, it is scheduled to come online in late 2013.
    Finally, Southern Company has been working in partnership with the 
U.S. DOE at the Power Systems Development Facility in Wilsonville, 
Alabama. Originally dedicated to improving technology to advance the 
efficiency of particulate removal from high pressure, high temperature 
gases, the facility has been instrumental in developing and proving the 
IGCC technology that will be used at Kemper County, one that is well-
suited to low rank coals which are economically important to the U.S. 
economy. Continuing this partnership with DOE, the facility will be 
exploring fundamental technologies that will improve or completely 
replace the current technologies for capturing CO2 from both 
conventional combustion coal power plants as well as IGCC plants. The 
particular role for the PSDF in carbon capture will be to assist in 
transitioning promising technologies from their research laboratory 
size to the power plant size and environment. Southern Company believes 
strongly that a robust fundamental research and development program and 
the associated means to scale up promising technologies is vital to 
success in commercial CCS development and commercial deployment--and 
the ability to use the U.S. coal reserves as an energy source for the 
future.

4.0 Challenges Going Forward for CCS

    The challenges for CCS going forward are basically cost and 
timeframes. The costs of pilot and larger scale research programs for 
CO2 capture are much higher than the similar research 
programs for control of other emissions such as nitrogen oxides (NO), 
sulfur oxides (SO2 and SO3), and mercury--in fact 
they appear to be over 10 times the capital and operating costs of 
these previous efforts. Given current economic conditions, the utility 
industry has limited ability to self-fund these projects and advance 
these technologies to get them ready for commercial use.
    Commercial CO2 capture systems using today's technology 
are very costly, so much so that the future of coal as a base energy 
source in the utility sector is threatened. The capital costs of a new 
conventional coal plant with CCS may be as much as 50 percent to 100 
percent higher than the same coal power plant without CCS. Operating 
costs for the energy required for the capture process and CO2 
compression make the plant much less efficient than today's coal 
plants. For a CO2 capture plant added to an existing coal 
power plant, somewhere between 30 and 35 percent of the plant's 
electrical output would be lost to operate a 90 percent CO2 
capture system. In other words, a large 900 MWe power plant when 
equipped with a CCS system would become a 650 MWe plant. Other 
generation--from coal, natural gas, or some other source--would have to 
be built to make up for this lost generation.
    The timeframe issue is mostly centered on sequestration and the 
need to perform large scale sequestration projects for multiple years 
to demonstrate the methods, measurements, stability, and safety of this 
approach. In order to gain acceptance from multiple stakeholders that 
geological sequestration is commercially viable, it is essential that 
these large scale sequestration projects be started as soon as 
possible. Assuming MIT's recommendation of a minimum of five years of 
testing, a start today would mean it would be mid-2013 at the earliest 
before long-term decisions on sequestration could be made.

5.0 Next Steps for CCS Technology Development

    The steps needed to advance CCS technology and improve its cost and 
performance are straightforward: (1) a continuation of the historically 
successful public-private partnerships between the U.S. Department of 
Energy and the utility industry in demonstrating and improving CCS; (2) 
a strong focus on performing large scale capture and sequestration 
projects as soon as possible; and (3) continued focus and funding for 
fundamental research and development based on cutting-edge science to 
develop new technologies and improve the costs and performances of 
existing CCS technologies.
    Southern Company looks forward to working with the Department of 
Energy, vendors, and the domestic and international utility industry to 
improve and advance CCS.

                     Biography for Larry S. Monroe
    Larry Monroe is a senior research consultant with Research and 
Environmental Affairs for Southern Company, a leading U.S. producer of 
electricity. In this position, he is responsible for special projects 
related to environmental control technologies, technology assessments, 
carbon capture technologies, and wastewater treatment processes.
    Monroe was named Senior Research Consultant in 2007. He also serves 
as the Manager of the Engineering Science and Technology group at the 
Power Systems Development Facility in Wilsonville, Alabama. Previously, 
he served as Program Manager for Research of Technologies to control 
emissions from Southern's fossil-fired generation fleet. Monroe joined 
Southern Company in 1998. Prior to that, he held management positions 
in environmental and energy research at Southern Research Institute, a 
not-for-profit research organization based in Birmingham, Alabama.
    Monroe serves as Co-Chair of the Utility Air Regulatory Group's 
Control Technology Committee, and he also serves as a Co-Chair of the 
Integrated Emissions Control research program of the Electric Power 
Research Institute.
    Monroe serves on the Auburn University Chemical Engineering 
Advisory Council and on the board of directors of the Western Research 
Institute, based in Laramie, WY.
    A native of Pennsylvania, Monroe received a Bachelor's degree in 
Chemical Engineering from Auburn University and a doctor of philosophy 
degree in chemical engineering from the Massachusetts Institute of 
Technology.
    Monroe owns a 55-acre farm, on which he currently resides in 
Blountsville, AL.

    Mr. Costello. [Presiding] Does that conclude your 
testimony, Mr. Monroe?
    Mr. Monroe. Yes, I am sorry. Thank you.
    Mr. Costello. Ms. Forbes, you are recognized.

STATEMENT OF MS. SARAH M. FORBES, SENIOR ASSOCIATE, CLIMATE AND 
           ENERGY PROGRAM, WORLD RESOURCES INSTITUTE

    Ms. Forbes. Good morning and thank you for inviting me to 
testify today. I am Sarah Forbes, and I lead the CO2 
Capture and Storage work at the World Resources Institute. The 
World Resources Institute is a non-profit, non-partisan 
environmental think tank that goes beyond research to provide 
practical solutions to the world's most urgent environment and 
development challenges. The World Resources Institute has taken 
the lead in exploring the challenges, opportunities and state 
of technical knowledge in the field of carbon capture and 
storage.
    We convened a two year stakeholder process which resulted 
in the Guidelines for Carbon Dioxide Capture, Transport, and 
Storage. This report can serve as a benchmark for decision-
makers to use in evaluating potential projects.
    The key finding of these WRI guidelines was that even 
though additional research is needed in some areas, there is 
adequate technical understanding to safely conduct large-scale 
demonstrations. In fact, many of the remaining questions about 
CCS technology can only be answered by additional experience 
with the technology or policy interventions.
    Last July, the G8 set a goal of 20 demonstrations globally 
by 2010. The U.S. Climate Action Partnership, of which WRI is a 
member, further recommends building at least five CCS projects 
in the United States by 2015. Achieving these goals in the 
right time frame is critical to deal with the looming climate 
challenge but at the same time will require significant 
investment. There is a need for establishing a clear and robust 
international financing mechanism to fund these projects 
globally. To address this need, Congress should consider 
committing funding for public/private partnership 
demonstrations in the United States and formally participate in 
international demonstration efforts. CCS demonstrations will 
require billions in research funding with estimates at about 
$1-1.5 billion per project. Funding allocated in the American 
Recovery and Reinvestment Act of 2009 is significant but 
unfortunately still falls short of what will be needed to 
commercialize CCS technology. A robust funding mechanism and 
clear plan for collaboration among demonstration projects 
internationally is critical. It is time to evaluate existing 
programs for international collaboration in the context of this 
emerging suite of global demonstration projects and to form 
formal partnerships with others pursing demonstrations, the 
U.K., the E.U., China, Canada, and Australia. We also must 
enhance capacity for CCS demonstrations in China. China's coal-
related carbon dioxide emissions are projected to be 51 percent 
of the world's total by 2030. Although China is actively 
developing its non-carbon power sources, even rapid growth will 
not be enough to replace coal. Deployment of CCS in China may 
be the only way to globally make the needed reductions in 
carbon dioxide emissions.
    China is itself conducting research and quickly moving 
towards developing and demonstrating CCS technologies. In fact, 
the Chinese government was among the foreign governments who 
had pledged to commit funding for the original FutureGen 
project. Chinese companies and government institutions are also 
undertaking a CCS research. For example GreenGen, sponsored by 
China's five largest power companies, will soon build a 200-
megawatt integrated gasification combined cycle power plant 
with CCS in nearby depleted oil fields before 2020. Both 
PetroChina, China's largest oil company, and Shenhua, its 
largest coal company, have pilot CCS programs with planned 
injections.
    It would be to the benefit of both the U.S. and China if 
there were more direct collaboration on CCS demonstrations. To 
address this need, Congress can commit funding for public-
private partnership demonstration projects in the United States 
and China that would be jointly funded and operated. This will 
require a serious funding commitment as well as programs that 
facilitate information sharing on regulatory and policy issues 
and support for U.S. businesses working internationally.
    Examples of programs that would help build increased 
capacity for CCS in China or other emerging economies include 
research exchange programs to bring students and faculty from 
China to see the projects operating in the United States and to 
study with leading researchers. An effective near-term approach 
would be to establish a research exchange program for visits to 
ongoing demonstrations in the United States including the 
Department of Energy's Regional Carbon Sequestration 
Partnership Phase III projects. Exchange programs for 
environmental regulators and policy experts may also prove 
useful in resolving the legal, regulatory, and social 
challenges of deploying CCS technology. The Department of State 
in collaboration with the Department of Energy have implemented 
successful exchange programs in the past which could be 
replicated with a focus on CCS technology and policy.
    Recently, as Dr. Finley mentioned, with support from the 
Department of State's Asia Pacific Partnership, Tsinghua 
University in China has partnered with WRI on an effort to 
draft a set of guidelines for safe and effective CCS in China, 
like the report we did for the United States. This work will be 
influential in developing Chinese CCS regulation and policy.
    In conclusion, globally, CCS has progressed to the point of 
demonstration-readiness, and there is a race under way to see 
who will build the world's first large-scale integrated 
demonstration. Increased coordinated international 
collaborations are essential. We need to specifically partner 
with emerging economics like China in demonstrating CCS 
technology through joint public-private partnerships. In these 
international collaborations, we must seek ways to build 
capacity and support efforts to develop global policies and 
environmental regulations that protect human health and 
ecosystems. This will include coordination and collaboration on 
demonstration that beings in the planning stages together with 
projects that build capacity on regulatory and policy issues. 
Thank you.
    [The prepared statement of Ms. Forbes follows:]
                 Prepared Statement of Sarah M. Forbes
    Good morning and thank you for inviting me to testify today. I am 
Sarah Forbes and I lead the CO2 Capture and Storage (CCS) 
work at the World Resources Institute. The World Resources Institute is 
a non-profit, non-partisan environmental think tank that goes beyond 
research to provide practical solutions to the world's most urgent 
environment and development challenges. We work in partnership with 
scientists, businesses, governments, and non-governmental organizations 
in more than seventy countries to provide information, tools and 
analysis to address problems like climate change, and the degradation 
of ecosystems and their capacity to provide for human well-being.
    The World Resources Institute (WRI) has taken a lead in exploring 
the challenges, opportunities and state of technical knowledge in the 
field of carbon capture and storage. We convened a two year stakeholder 
process which resulted in the Guidelines for Carbon Dioxide Capture, 
Transport, and Storage (http://www.wri.org/publication/ccs-guidelines) 
published in November 2008 which can serve as a benchmark for decision-
makers to use in evaluating potential projects. In developing the 
Guidelines, WRI brought together a diverse group of more than 80 
technical experts including government officials, NGOs, academics and 
businesses.
    Coal use is responsible for over 40 percent of global carbon 
dioxide emissions.\1\ Without significant, deliberate action to reduce 
these emissions we cannot address climate change. Carbon capture and 
storage is one of a number of critical technologies coal-burning 
nations will need to consider and deploy in the coming decades. 
International collaboration will be essential to moving CCS technology 
to scale--reducing costs and securing a global response to the climate 
challenge. In the next five years, we must move from demonstration to 
deployment.
---------------------------------------------------------------------------
    \1\ Energy Information Administration. International Energy 
Outlook, 2008. Figure 76. http://www.eia.doe.gov/oiaf/ieo/
emissions.html
---------------------------------------------------------------------------
    In this testimony, I will provide an update on some of the key 
international collaborations on CCS already underway, and offer some 
ideas for future direction. I would like to make three key points, each 
of which I will expand on below.
    First, I will describe the urgent need for a global network of CCS 
demonstrations that includes joint technology development along with 
collaboration on resolving investment, regulatory, legal and social 
barriers to CCS deployment.
    Second, I will talk specifically about collaboration on CCS with 
one country--China. I will describe the efforts many countries and 
businesses are taking to ensure that at least one of the global CCS 
demonstrations is in China.
    Third, I will describe a few of the major international CCS 
collaborations that are underway and offer suggestions for how these 
efforts may best complement each other as the technology is 
demonstrated worldwide.
    I will conclude by providing some concrete suggestions for near-
term actions that can be taken to enhance collaborations with China and 
facilitate global deployment of CCS technology.

1. Develop a Global Network of CCS Demonstrations

    In technology development there is a period known as the ``Valley 
of Death'' where a technology has been proven in the laboratory and at 
a small scale but has yet to move from a research effort to 
commercialization. CCS technology has progressed quickly from an idea 
to a key part in proposed climate change mitigation plans. This 
progression is partly thanks to the early successes seen in the pilot 
capture demonstrations and research and commercial projects where 
CO2 has been injected at rates up to a million tons per 
year. Moving the technology forward into commercialization will require 
integrated capture and storage demonstration at power plant scale. A 
key finding of the Guidelines for Carbon Dioxide Capture, Transport, 
and Storage (http://www.wri.org/publication/ccs-guidelines) was that 
even though additional research is needed in some areas, there is 
adequate technical understanding to safely conduct large-scale 
demonstrations. In fact, many of the remaining questions about CCS 
technology can only be answered by additional experience with the 
technology or policy interventions.
    Most experts agree that we need between 15 and 20 demonstrations of 
differing capture and storage configurations globally. Last July, the 
G8 set a goal of 20 demonstrations announced by 2010.\2\ The U.S. 
Climate Action Partnership, of which WRI is a member, (USCAP)\3\ 
further recommends building at least five projects of CCS enabled coal 
fueled facilities in the United States by 2015 (see www.US-CAP.org).
---------------------------------------------------------------------------
    \2\ http://www.enecho.meti.go.jp/topics/g8/g8sta-eng.pdf
    \3\ http://www.us-cap.org/blueprint/index.asp
---------------------------------------------------------------------------
    Achieving these goals in the right time frame is critical to deal 
with the looming climate challenge but at the same time will require 
significant investment. There is a need for establishing a clear and 
robust international financing mechanism to fund these projects 
globally. It will also require substantial (but not insurmountable) 
progress on addressing lingering regulatory, investment, legal, and 
social issues. The global development of environmental regulatory 
frameworks for CCS, is testament to our readiness to demonstrate the 
technology. In 2008, regulatory frameworks for CCS were released at the 
State and federal level in the U.S.\4\,\5\ and Australia\6\ 
and a Directive for CCS, which included environmental regulations, was 
passed at the European Union\7\ level. Global progression towards a 
common understanding of how to safely implement the technology seems 
within reach.
---------------------------------------------------------------------------
    \4\ Washington State finalized their regulations in June 2008. 
http://www.ecy.wa.gov/news/2008news/2008180.html
    \5\ U.S. EPA's proposed rule was released in July 2008 http://
www.epa.gov/safewater/uic/pdfs/
prefr-uic-co2rule.pdf
    \6\ http://www.environment.gov.au/settlements/industry/ccs/
publications/environmental-guidelines.html and http://
www.environment.gov.au/settlements/industry/ccs/publications/ccs-
propertyrights.html
    \7\ http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//
TEXT+TA+P6-TA-20080612+0+DOC+XML+V0//EN&language=EN and http://
europa.eu/rapid/pressReleases Action.do?reference=MEMO/08/
798&format=HTML&aged=0&language=EN&guiLanguage=en
---------------------------------------------------------------------------
    This effort of building a global network of CCS demonstrations will 
require a significant investment and commitment of resources, along 
with coordination and support from senior government representatives. 
However, through strong international collaboration each country need 
not demonstrate the full suite of capture and storage options. For 
example, when the UK first announced their plans to move forward with a 
post-combustion CCS demonstration, it was described as being 
complimentary to the U.S. FutureGen project which was at that time 
planning to demonstrate at-scale capture with an Integrated 
Gasification Combined Cycle (IGCC) plant.\8\ The collective group of 
global demonstrations should include the full suite of different 
capture configurations and test storage in a variety of geologic 
settings.
---------------------------------------------------------------------------
    \8\ Presentation given at the 2007 Regional Carbon Sequestration 
Partnerships Annual Review Meeting http://www.netl.doe.gov/
publications/proceedings/07/rcsp/pdfs/Graves%20UK%20 
CCS%20Activity%20December%202007%20-%20IRG.pdf
---------------------------------------------------------------------------
    To address this need, Congress can commit funding for public-
private partnership demonstration projects in the U.S. and formally 
participate in international demonstration efforts. CCS demonstrations 
will require billions in research funding with estimates at about $1-
1.5 billion per project. Funding allocated in the American Recovery and 
Reinvestment Act of 2009 is important, but still falls short of what 
will be needed to commercialize CCS technology. A robust funding 
mechanism and clear plan for collaboration among demonstration projects 
is critical. One example of such a plan was recently approved by the 
European Union with funding for demonstrations coming from the proceeds 
the European Trading Scheme (ETS) and coordination among projects 
required.\9\ The global CCS demonstration network should include 
collaborative work on not only technology development, but also 
information-sharing on legal, social and regulatory issues.
---------------------------------------------------------------------------
    \9\ The EU recently adopted a legal framework for CCS and also 
provided funding mechanisms through auction allowances and the EU 
stimulus recovery package http://www.scotland.gov.uk/Resource/Doc/917/
0077923.ppt#303,8,EU Emission Trading System

2. Enhance Capacity for CCS Demonstration in China

    According to the Energy Information Administration, China's coal-
related carbon dioxide emissions may grow to 51 percent of the world's 
total by 2030.\10\ With 20 percent of the world's population, China has 
14 percent of the world's coal reserves, but less than one percent of 
the world's oil and gas reserves. While China is actively developing 
its non-carbon power sources--hydropower, nuclear, and newer 
alternative energies--rapid growth will still not be enough to replace 
coal as a core part of its expanding electricity infrastructure. 
Deployment of CCS in China may be the only way to globally make the 
needed reductions in carbon dioxide emissions.
---------------------------------------------------------------------------
    \10\ Energy Information Administration. International Energy 
Outlook 2008. http://www.eia.doe.gov/oiaf/ieo/emissions.html
---------------------------------------------------------------------------
    China is conducting research and quickly moving towards developing 
and demonstrating CCS technologies. In fact, the Chinese government was 
among the foreign governments who had pledged to commit funding for the 
original FutureGen project.\11\ Chinese companies and government 
institutions are undertaking a CCS research themselves and with a 
number of international partners. For example:
---------------------------------------------------------------------------
    \11\ China, India, Australia, Japan and South Korea pledged funding 
for FutureGen http://www.futuregenalliance.org/costs.stm

          The Chinese power industry has several projects 
        focusing on coal gasification. The largest, GreenGen, sponsored 
        by China's five largest power companies, will build a 200 MW 
        integrated gasification combined cycle power plant in the city 
        of Tianjin. Phases two and three of this project plan for CCS 
        in nearby depleted oil fields, with injection planned before 
        2020. U.S. Peabody Energy is the one international equity 
---------------------------------------------------------------------------
        partner in this effort.

          China has two major efforts with European 
        collaborators, the UK-China Near-Zero Emissions Coal 
        Project\12\ (NZEC) and the COoperation Action within CCS CHina-
        EU\13\ (COACH) Project. Both have done a great deal of 
        preparatory and conceptual work on CCS.
---------------------------------------------------------------------------
    \12\ http://www.nzec.info/en/
    \13\ http://www.co2-coach.com/

          China's Huaneng group built a small carbon capture 
        demonstration plant at Gaobeidian in Beijing with assistance 
        from Australia's Commonwealth Scientific and Industrial 
        Research Organization (CSIRO). Discussions about a second phase 
---------------------------------------------------------------------------
        are in process.

          Both PetroChina, China's largest oil company, and 
        Shenhua, its largest coal company, have pilot CCS programs.

    There is also a realization in China that robust policies and 
regulations will be needed to ensure that CCS projects are done 
responsibly. Tsinghua University has partnered with WRI to draft a set 
of Guidelines for Safe and Effective CCS in China. The effort is 
modeled after the stakeholder process led by WRI in the U.S. where a 
diverse set of stakeholders together developed a comprehensive set of 
guidelines for CCS projects (http://www.wri.org/publication/ccs-
guidelines). Development of a Guidelines document that is available in 
Chinese for potential project operators, financiers, insurers, and 
legal experts to as a tool in understanding how to conduct CCS projects 
responsibly will facilitate demonstration of the technology in China. 
To enable this effort, Tsinghua University and WRI have assembled a 
steering committee that includes leading CCS experts from China and the 
United States. The Chinese members of the steering committee recently 
traveled to the United States and toured some of the leading CCS 
research institutions (including the injection well being drilled in 
Illinois). This effort is being funded with support from the U.S. 
Department of State under the Asia Pacific Partnership.\14\
---------------------------------------------------------------------------
    \14\ http://www.asiapacificpartnership.org/
---------------------------------------------------------------------------
    It would be to the benefit of both the U.S. and China if there were 
more direct collaboration on CCS demonstrations. Not only would working 
together solve technical problems faster, but given the rate at which 
Chinese companies are moving, the learning would hardly be one way. 
Jointly-funded and operated demonstrations, that include government 
funding combined with private-sector investment is an essential next 
step. This will require a serious funding commitment as well as 
programs that facilitate information sharing on regulatory and policy 
issues and support for U.S. businesses working internationally.
    Examples of programs that would help build increased capacity for 
CCS in China or other emerging economies include research exchange 
programs to bring students and faculty from China to see projects 
operating in the U.S. and study with leading researchers. An effective 
near-term approach would be to establish a research exchange program 
for visits to ongoing demonstrations in the U.S. including the 
Department of Energy's Regional Sequestration Partnership Phase III 
projects. Exchange programs for environmental regulators and policy 
experts may also prove useful in resolving the legal, regulatory, and 
social challenges of deploying CCS technology. The Department of State 
in collaboration with the Department of Energy has implemented 
successful exchange programs in the past which could be replicated with 
a focus on CCS technology and policy.

3. Key International CCS Collaborations Underway

    There are several high-level international CCS efforts underway, 
along with numerous individual projects like the WRI-Tsinghua 
University effort I just described. Each of these efforts can play an 
important role in the development of the technology. Key to successful 
integration of these efforts will be clarifying the niche each effort 
is designed to fill, eliminating redundancies, and designing a path for 
collaboration.
    I would like to highlight three key CCS-specific initiatives 
already underway:

        1.  The Carbon Sequestration Leadership Forum\15\ (CSLF) is a 
        Ministerial-level effort initiated by the U.S. Department of 
        Energy. It has been in place since 2003 and has been 
        influential in collaborations among governments.
---------------------------------------------------------------------------
    \15\ http://www.cslforum.org/

        2.  Australia has recently initiated a Global CCS 
        Institute,\16\ for which the Prime Minister has allocated $100M 
        per year for the next 10 years. This institute is designed to 
        focus specifically on collaboration surrounding demonstration 
        projects.
---------------------------------------------------------------------------
    \16\ http://www.pm.gov.au/media/Release/2008/
media-release-0484.cfm

        3.  The International Energy Agency\17\ (IEA) coordinates 
        international research through the IEA GHG Program. IEA 
        Secretariat is also developing an international roadmap for CCS 
        at the request of the G-8. This roadmap is designed to answer 
        the question of whether and how we can achieve the goal of 20 
        CCS demonstrations announced globally by 2010 and will provide 
        recommendations for better coordination among international 
        collaborations.
---------------------------------------------------------------------------
    \17\ http://www.iea.org/Textbase/subjectqueries/cdcs.asp

    As the technology progresses from R&D towards demonstration, these 
international efforts can provide an avenue for information-sharing at 
various levels: the CSLF at the ministerial-level, the IEA among 
government energy departments, and the Global Institute among those 
running demonstration projects. It is time to evaluate the existing 
programs in the context of an emerging suite of global demonstration 
projects and to form formal partnerships with others perusing 
demonstrations (UK, EU, China, Canada, Australia). Congress might 
consider commissioning a formal report on international CCS efforts and 
use the results of it along with the IEA's International CCS Roadmap 
(expected publication date October 2009)\18\ to clarify and formalize 
the role of the various international CCS organizations that have 
emerged. Additionally, although the U.S. Department of Energy's 
Regional Partnership Program has been acknowledged as the ``world's 
most ambitious program'' \19\ the work is largely unknown in the 
international community, in part because it is difficult for 
researchers to receive approval to travel internationally on their 
government grants. A scholarship program for U.S. researchers working 
on government-funded projects to attend international CCS meetings and 
present the results of their research may be useful in better 
communicating the results of leading U.S. research in this area. Such a 
merit-based program could be managed through the Department of Energy. 
Formal arrangements to partner with other countries on demonstrations 
must be established soon.
---------------------------------------------------------------------------
    \18\ http://www.iea.org/textbase/subjectqueries/ccs/
ccs-roadmap.asp
    \19\ http://www.netl.doe.gov/publications/press/2008/08019-
IEA-Finds-US-CCS-Plans-
Ambitious.html

Conclusions

    Unless we act now to aggressively begin to implement a global CCS 
demonstration program, we will lock in untold additional quantities of 
CO2 emissions from non-CCS, coal-fired power plants around 
the world. Globally, CCS R&D has progressed to the point of 
demonstration-readiness and there is a race underway to see who will 
build the world's first large-scale integrated demonstration of 
capture, transport, and storage along with power production. The global 
nature of climate change and the urgent need to act now to avoid 
locking in a high emissions trajectory for the future necessitates 
increased and coordinated international collaborations. We need to 
specifically partner with emerging economies on demonstrating CCS 
technology, through joint public-private partnerships. In these 
international collaborations we must seek ways to build capacity and 
support efforts to develop global policies and environmental 
regulations that protect human health and ecosystems. This will include 
coordination and collaboration on demonstrations that begins in the 
planning stages along with projects that build capacity on regulatory 
and policy issues (like the WRI-Tsinghua APP project).
    In my testimony, I have mentioned five specific actions to consider 
that will help facilitate international collaboration on CCS, which are 
summarized here:

        1.  Commit funding for demonstration projects in the U.S. and 
        in China that are geared towards joint technology development; 
        such projects should be public-private partnerships. The global 
        network of demonstrations should include the full suite of 
        capture technology approaches and test storage in a variety of 
        geologic settings.

        2.  Develop a framework and funding for research exchange 
        programs to bring researchers from other countries to see 
        projects operating in the U.S. and study with leading 
        researchers. The Department of State in collaboration with the 
        Department of Energy has implemented successful exchange 
        programs in the past which could be replicated with a focus on 
        CCS technology and policy.

        3.  Increase bilateral efforts to facilitate capacity building 
        and information sharing on regulatory and policy issues.

        4.  Establish formal partnerships with other countries 
        developing CCS demonstration projects (UK, EU, China, and 
        Australia) to facilitate information-sharing and avoid 
        duplication among demonstration efforts. Also, commission a 
        formal report on international CCS efforts and use the results 
        of it and the IEA CCS Roadmap to clarify and formalize the role 
        of the various international CCS organizations that have 
        emerged.

        5.  Develop a scholarship program for U.S. researchers working 
        on government-funded projects to attend international CCS 
        meetings and present the results of their research. Such a 
        merit-based program could be managed through the Department of 
        Energy.

                               Discussion

                            Cost Escalations

    Mr. Costello. The Chairman thanks you, Ms. Forbes. Let me 
begin questioning. I think the Chairman of the Full Committee, 
Chairman Gordon, stepped out. When he returns, he has questions 
I know, but let me begin, Mr. Gaffigan, with your testimony, 
and I think you touched on this but I would like you to 
elaborate. In your analysis of the restructured FutureGen, did 
you find that the cost escalation used by the Department of 
Energy to justify the restructuring and scrapping the initial 
FutureGen plan to go with a restructured program valid?
    Mr. Gaffigan. We asked over and over for analysis behind 
the cost estimate. We found it was pretty much a 
straightforward 5.2 percent escalation factor. We pointed out 
that there are others that point out that you're not going to 
see that sustained growth in escalation factors. And in fact, 
EIA had pointed that out, that even at the time we were looking 
at a lot of cost escalations, look at us today in terms of the 
concerns about whether there is going to be that cost 
escalation and whether there was going to be jobs for people 
because the economy was slowing down. So that is the point 
made. And that in looking at the total number, you know, very 
well you could see cost escalation, but we did not see any in-
depth analysis and we didn't see a good explanation for why 
they talked about doubling of costs when, in fact, it was 
comparing some constant dollars to escalated dollars.
    Mr. Costello. And that is a very important point in one of 
our Subcommittee hearings concerning this issue and the cost 
escalation, the reason used by the Department of Energy to 
scrap the project. Without question, the cost did increase, but 
when you look at other projects around the country and look at 
the cost of building materials, look at the cost of labor, the 
increases from the time the project was planned and the 
projected costs were arrived at, they were no different than 
any other project of that size. Would that be something that 
you would agree with?
    Mr. Gaffigan. I would agree with that, and the other thing 
I would point out is that the Alliance was working on a revised 
cost estimate based on a specific site. It is important to 
point out these estimates were very preliminary, but they had 
targeted to do a cost estimate in June of '08. The question we 
raised is what was the cost and sort of not waiting to see what 
that cost estimate would have been. A newer estimate would have 
reflected the site-specific type activities, and it seemed like 
it was never considered.
    Mr. Costello. And of course, since the decision was made to 
pull the plug on the initial project as planned, the fact that 
we have lost time now, that has increased the cost of whatever 
project that we move forward with. If it is a scaled-back 
version or if we would go back to the original proposal, we 
have increased cost because we have lost time and would you 
agree with that?
    Mr. Gaffigan. Well, you know, we didn't look at a specific 
cost estimate relative to that, but I would say there is 
definitely an opportunity cost of not going forward. That being 
said, I think it is important to recognize that cost escalation 
does happen. In the Department of Energy, there is a history of 
cost escalation. In fact, if cost escalation was the criteria 
for going forward with projects at the Department of Energy, 
FutureGen wouldn't be the only one that would have been 
canceled.
    Mr. Costello. I thank you. Dr. Der, let me ask, at the time 
when the Administration back then made the decision to pull the 
plug, one of the things that they were attempting to do was to 
negotiate with the Alliance on cost share, that they wanted the 
private sector in the Alliance to come up with a higher 
percentage of the cost of the project than originally proposed. 
We were told by the Alliance that that was negotiable, that 
they in fact would sit down and discuss with the Department of 
Energy a higher cost share. Is that your understanding?
    Dr. Der. My understanding was that such discussions were 
taking place, and it is my understanding also that the 
Department did not feel that at that time that these were 
moving forward in a fruitful, sustainable manner as I was told.
    Mr. Costello. Just for the record, the Alliance told us 
just the opposite, that they in fact were willing to negotiate, 
were willing to increase their cost share, but the 
Administration and the Department of Energy at the time had 
basically made the decision that they were going to scrap, pull 
the plug on their initial concept and were not earnest in 
trying to negotiate a higher cost share. But the Alliance was 
willing to increase their cost share.

                   Lessons From Small-scale Projects

    One other question and then I will ask Chairman Gordon if 
he has questions. Dr. Finley, what important lessons have been 
learned from the small-scale field project that the injection 
project initiated by the consortium and the validation of its 
efforts?
    Dr. Finley. Well, I believe what we have been able to show 
is that the study that was based on existing data from 2003 to 
2005 during our Phase I effort, that data were largely 
validated in the sense that the thickness of the receiving 
reservoir over a wide area of the Illinois basin is over 1,000 
feet thick. That both includes our test sites and it includes 
the FutureGen site at Decatur, and at the reservoir seal, the 
geology of that seal looks competent over a wide area of 
literally thousands of square miles. So what we basically have 
validated in our efforts is that the geological characteristics 
of the area of our regional sequestration partnership and 
because that is coincident with the Mattoon FutureGen site, 
that geology is very favorable for geological carbon 
sequestration.
    Mr. Costello. Thank you. The Chairman now recognizes the 
Chairman of the Full Committee, Chairman Gordon.
    Chair Gordon. Thank you, Mr. Costello. I know this is an 
issue that is close to your heart, and this is a very important 
issue and a very good panel, and I thank you all for being 
here.

                       Justifying Research Funds

    Mr. Gaffigan, your report clearly points out that the DOE 
was comparing two cost estimates that were just not comparable. 
You know, unfortunately, we have run into this in other types 
of R&D projects which makes it difficult to go back to the 
public and say we need more money when these things aren't 
clear. What should the Department do and what should Congress 
require them to do to improve this situation?
    Mr. Gaffigan. Well, you know, contracting in the government 
and DOE in particular has been an area that we have focused on. 
In fact, contracting at DOE is considered a high risk for us 
and particularly in the weapons side of the house, and I think 
we have identified certain things that are important in terms 
of controlling costs and managing projects. And it sort of 
starts at the top, a commitment to schedule, having the right 
people involved there and contracting the resources, and the 
commitment to measure progress along the way for these 
projects.
    We have found, for example, in the Office of Science that 
they have made great progress in this area and overcome some of 
these issues associated with the major projects.
    Chair Gordon. So you are trying to make me feel better when 
we do this again?
    Mr. Gaffigan. Well, I mean, look. These things are high 
risk. I mean, even FutureGen is a high-risk issue, and that is 
why the government is sort of stepping in to try to help in 
partnership with the private sector to share that risk.
    Chair Gordon. Well, that is the next point I want to get 
to. Is this type of project being done anywhere else now?
    Mr. Gaffigan. Not that I am aware of.
    Chair Gordon. And as we see climate change legislation 
looming over us, would this not be an important tool in our box 
to move forward if we are going to continue, which I think we 
have to, with coal-fired plants?
    Mr. Gaffigan. I think absolutely. I think it is one of the 
issues addressing the technology barriers. I would also point 
out that there are other issues that need to be considered in 
concert with that, including the regulatory and legal framework 
with carbon capture and storage as well as what are we going to 
do about carbon? Are we going to be able to send a signal to 
the market? Because ultimately, we could put all the money we 
want into these projects, and we testified last year that the 
government has spent over $60 billion, or close to $60 billion 
over the last 30 years in advanced energy technologies, yet we 
are still heavily reliant on conventional fossil fuels. And it 
can't just be the government spending money, it has got to 
consider the context of the private market.

                       International Cooperation

    Chair Gordon. Ms. Forbes, if I could pontificate a little 
bit on a pet project of mine. These are going to be very 
expensive programs, carbon capture and sequestration, and these 
are times of limited resources. It seems to me that we should 
follow up on a proposal that was made at the G-8, I guess it 
was last year, to do an international type of cooperation with 
this. Particularly in this area and energy in general, I sort 
of see it as ``them that have it and them that don't,'' and we 
are in the don't category and that particularly with coal, 
where we have so much coal in contrast to oil and gas, that we 
should look at some type of international cooperation in terms 
of sharing both the intellectual part of it as well as the 
financial part, maybe take different geological formations that 
one country might have, we would take a couple here, someplace 
else there. Is that reasonable and could you elaborate on that 
some for me, pros and cons?
    Ms. Forbes. Yes. I think that we have some existing 
frameworks for international collaboration on this subject. One 
of the things that is happening right now is that at the 
request of the G8, the International Energy Agency is 
developing an international roadmap for CCS. I think that 
document is set to be released in October. It will be 
significant, and it will outline the global suite of 
demonstrations that are in various stages of planning, but yes, 
I agree with you. We need to work globally.
    Chair Gordon. Yes. Will it help lead to any kind of a 
contract or treaty where there will be coordination and 
cooperation in this effort, or is it just give a new menu of 
what is going on now?
    Ms. Forbes. The roadmap will be a document. It will outline 
how to get to the 20 demonstrations by 2020. I think that 
beyond the roadmap, we need to revisit some of the existing 
bilateral agreements with individual countries and form new 
partnerships where warranted to collaborate specifically on 
demonstration.
    Chair Gordon. And is G8 the best vehicle for that or is 
there any other vehicle that you would recommend?
    Ms. Forbes. I am not sure, but I would be happy to get back 
to you on that.
    Chair Gordon. It seems to me that at the end of the day, 
and again this will be expensive, it is going to have to be 
head of state to head of state making the agreement and the 
commitment because it will have budgetary impacts. Then you are 
going to have to have again some vehicle to coordinate that. So 
I would appreciate if you would give me any of your thoughts.
    Ms. Forbes. Thank you. We will do that analysis.
    Chair Gordon. And thank you, Mr. Chairman.
    Mr. Costello. Thank you, Chairman Gordon. Just for the 
record, let me state that Ms. Forbes has indicated that the 
original concept and project that was proposed had a lot of 
international interest from China, India, Australia, and a 
number of other countries who pledged money and were willing to 
cooperate and work with us. When it comes back to my turn for a 
second round of questioning, I want to talk a little bit about 
that and how the fact that the previous Administration, when 
they pulled the plug on this, how our international partners 
were notified and if in fact we can bring them back to the 
table and have them work with the Alliance.
    The Chairman now recognizes the Ranking Member of the 
Subcommittee, Mr. Inglis.

                             Project Scale

    Mr. Inglis. Thank you, Mr. Chairman. Mr. Monroe, I think 
you had the key word here that I have heard, and that is 
scalability. So I am wondering, the projects that Southern 
Company is doing which are very exciting, what percentage of 
the CO2 emissions are involved there? Do you have 
any idea? They are big numbers in terms of sequestration there, 
but in terms of the percentage of the outflow, what would it 
be? Do you have any idea?
    Mr. Monroe. They are fairly modest. With the exception of 
the new integrated gasification combined cycle plant I 
mentioned in Mississippi which would be 50 percent of 600 
megawatts, so that is significant. The other projects are 
really taking a stair step approach. In the utility business 
and with our cooperation with the Department of Energy, we 
found that if we try to take too big of a step, we make too 
many mistakes. We tried to sort of step in a factor of 10 
almost, so we are talking sequestration or size. So the two 
projects I mentioned, the first one a 25-megawatt, the second 
one, 170 megawatts are fairly small by power plant standards. 
So our largest power plant is 3,600 megawatts. So that roughly 
is only about five percent at the largest scale we are talking 
there. Some of the actual plants that we would be looking at 
would be anywhere from 30 percent to say 10 percent of the 
total plant output at the largest scale that I mentioned on the 
existing plants.
    Mr. Inglis. I am also excited for parochial reasons to hear 
that you are interested in the IGCC because General Electric is 
in Greenville, South Carolina, and that may help business there 
and other places. I am very excited about that, and it is very 
exciting technology. And so now I am going to ask a question 
against my own interest. Why would Southern Company be 
interested in doing that? It is more expensive than sort of a 
conventional coal-fired plant, right? Are you just good 
citizens?
    Mr. Monroe. We really see the future as being one that we 
expect limitations on carbon emissions, particularly for our 
sector. So to try to sort of smooth that transition, to try to 
service our customers as reliably as possible, we are spending 
more money for that generation than it would be for the 
alternative.

                  Public Service Commission Challenges

    Mr. Inglis. Do you have any trouble with the PSC, Public 
Service Commission, getting that approval? I hope not, but 
something tells me you might, and this is one of the issues 
that Duke is encountering in South Carolina. You know, you deal 
with nuclear, it is a great way to make electricity, but 
getting it through the PSC can be really difficult because it 
sure is cheap to make coal-fired electricity.
    Mr. Monroe. Yes. On the project in Mississippi, we have 
asked. In mid-January we had submitted the request for their 
consideration for their approval of that. We do have a little 
bit of help there in the fact that our CO2 will 
actually be--we can sell that to oil producers in Mississippi 
so that we are not paying to do a geological sequestration test 
but actually selling it. It will eventually be sequestered in 
those enhanced oil recovery operation, but that is a benefit 
there.
    Mr. Inglis. It makes economics work a little bit better for 
you there.
    Mr. Monroe. But still not compelling, so that the Public 
Service Commission is still one that is very much up in the air 
for that plant.
    Mr. Inglis. Got you. Interesting. Of course, those 
economics would change, I take it, if there was a price 
attached to carbon, either through what I would like to see as 
a revenue neutral carbon tax or cap-and-trade. Either one would 
cause those economics to change, I suppose, and the Public 
Service Commission would be more easily convinced I suppose?
    Mr. Monroe. Yes, we do see that changing. Our fear and the 
reason we are pushing so strongly now for technology is that we 
are afraid of a dash-to-gas so to speak. So if you run the 
numbers right now, we need more electricity generation, natural 
gas is the one that falls out when you put all the numbers down 
on the paper. So we think that we have to do this sort of work 
both sort of at scale and go back to universities, national 
labs, in cooperation with utility companies, to see if we can 
find new technologies to make that cost differential so that 
coal becomes one choice that is still valid in the future.
    Mr. Inglis. And I am very excited to hear about Southern 
Company's commitment to this kind of research. I had an 
unfortunate meeting one time with a utility that will go 
nameless that told me that they didn't have an R&D department, 
and they seemed sort of proud of it that they didn't have one. 
And I guess it is because they didn't want to say to the PSC 
that we got all this in our cost structure, but hats off to you 
all for wanting to pursue the answer and somehow getting the 
PSCs in various places to agree that it is okay to pay all 
those people.
    Mr. Monroe. It is part of our personality, and we take a 
lot of pride in the fact that we have a very active, very 
aggressive--some of the international cooperation that was 
mentioned earlier, on some of these projects we have talked to 
people in Sweden, in Denmark, in Germany, Japan, and England 
about participating in our project and sharing information 
there. So the benefit of having a research staff and active 
organization is you can reach out and find these technologies.
    Mr. Inglis. Great. Thank you.
    Mr. Costello. The Chairman thanks the gentleman and now 
recognizes the gentleman from New Mexico, Mr. Lujan.

                        Promoting Sustainability

    Mr. Lujan. Mr. Chairman, thank you very much, and thank you 
for putting this hearing together. Doctor, you opened up your 
remarks and you made a reference to being responsible and 
sustainable. Can you refresh my memory on what you said in that 
context?
    Dr. Der. I think the context was in the use of coal being 
environmentally sustainable and responsible in terms of its 
use, and that relates to the emissions and the carbon aspects 
of it.
    Mr. Lujan. And Dr. Der, would you agree that as we are 
talking about the future generation of energy in the United 
States as well as around the world, that that is really a 
concept that we should adopt and embrace as we are moving 
forward with the generation?
    Dr. Der. I believe so.
    Mr. Lujan. Is there anyone on the panel that doesn't agree 
that that is where we need to move energy generation when we 
are talking about being responsible and sustainable with the 
way we are going to be generating power today and tomorrow? 
That is great to hear.
    As we are discussing the future of generation and some of 
the improvements that are being invested in and made by 
utilities across the country and some of the awareness that is 
being generated around the world, Mr. Monroe, what is one of 
the biggest reasons that your company has moved forward with 
commitment in research and development? Is it to be more 
responsible the way that we are generating power today, to do 
things better than the way we have been doing them in the past, 
maybe?
    Mr. Monroe. It is sort of a balanced view, is to--we have 
always tried to balance sort of the cost of electricity we 
supply to our customers with the environmental footprint that 
our generating plants have. And so as we become more aware of 
how our emissions may effect the climate, we have become much 
more worried about that and so have moved forward with research 
trying to anticipate. What we don't like is to suddenly have 
very steep changes in the way we would generate electricity, 
and so we view through research a way to sort of smooth out 
that path so that when we see a future transition coming, we 
start actively working on it.
    Mr. Lujan. So with that being said, would you agree that we 
can do things better than the way that we are doing them today 
when it comes to the way that we are generating power from the 
various resources that we have, renewables included?
    Mr. Monroe. Yes, we can, but again, in this concept of 
balance between affordability of electricity and what we do, 
environmental footprint, that is our main concern, is sort of 
doing a good job for our customers to bring them affordable 
electricity. In your area of the country, renewables are much 
more accessible than they are in the southeast, so we have been 
working quite hard to try to find out how to do significant 
renewables. We don't have much wind in the southeast. The solar 
energy appears to be there, but because of haze and humidity, 
it is not that effective in the deep south. So the one area 
that we look at the closest is biomass. And so we are in the 
process as we speak of converting one of our older coal plants, 
taking the fuel away as coal and adding it as wood from the 
forests of Georgia. This is in Albany, Georgia, a small plant, 
about 100-megawatts. So we are moving in that renewable 
direction as well. We are also investigating nuclear power as a 
way to minimize that environmental footprint.
    But as I mentioned in my testimony, we are still a very 
large, coal-based sort of system, so we have started to put 
lots of resources into looking at, is there a way to lessen the 
footprint of these coal plants?

                   On the Affordability of Clean Coal

    Mr. Lujan. Thank you. Dr. Der, when we are talking about 
the future of generation of electricity, the way that it is 
moving forward, when you talk about pulverized coal and the way 
that it has been generated in the past and the concern about 
moving forward and the support, even though the project didn't 
move forward under the previous Administration with this whole 
concept of clean coal, I noticed that in your testimony that 
you talk about advanced coal but the only mention of clean coal 
is in the description of some of the agencies that are working 
with you. Is there a reason that you chose to use the word 
advanced as opposed to clean?
    Dr. Der. Yes. I think advanced coal implies that we are 
working on technologies that make it clean which would include 
the capture, the carbon associated with it. In advanced coal, 
we are trying to move that yardstick forward to looking at 
technologies that are affordable that allow us to reach those 
goals of reducing those emissions including carbon.
    Mr. Lujan. And one last question, Mr. Chairman, Dr. Der, as 
we are moving forward with the way that we are looking at 
generation today, should future proposed coal-generating 
facilities be really maybe put on hold or considered to scale 
back until we are able to move forward and develop these 
important technologies there have been such a serious 
investment in?
    Dr. Der. I think because of the projections and the 
increase in the electricity demand and the needs for this 
country and around the world, I think we still have to retain 
that option to move forward while we work on the research to 
reduce that cost and its performance. We need to move forward 
in a parallel approach for the same reasons that Mr. Monroe 
advocated, that we need experience in looking at some of these 
coal plants that we can put carbon capture and storage onto, 
even though they are expensive now, and the experience that we 
have from doing that are lessons learned that allow us to do 
things a little more efficiently while we bring down those 
costs and wait for these new technologies to be put on and 
replace these technologies here. So I think the overall future 
demand would probably not allow us to maybe put a hold on coal. 
We should do it as we say in an advanced, clean manner, 
including the carbon capture.
    Mr. Lujan. Thank you, Mr. Chairman.
    Mr. Costello. The Chairman thanks the gentleman and now 
recognizes the gentleman from Florida, Mr. Diaz-Balart. Thank 
you. The Chairman now recognizes the gentlelady, Ms. Edwards.

                   Concerns and Skepticism About CCS

    Ms. Edwards. Thank you, Mr. Chairman, and thank you to the 
panel. I am just curious. I just want to be really clear about 
that. Can you just raise your hand if you are at all skeptical 
about CCS as a future technology? Can you please describe your 
skepticism, and especially as it relates to reaching peak 
greenhouse gas emissions in 2015?
    Ms. Forbes. We have to demonstrate it. I think the reach is 
really promising, but we haven't done it at scale and I think 
one of the things that we learned in developing the guidelines, 
we have to balance our confidence about the fact that we think 
this technology is going to work and it is an important part of 
a portfolio solutions for climate change with the fact that 
there are still questions that we don't know, questions that 
can't be answered until we move forward with the 
demonstrations.
    Ms. Edwards. Can I just ask, just in terms of the amount of 
the expenditure over the lifetime of this particular 
investigatory stage that could be spent not just in renewables 
but in existing coal plants and making those more efficient 
because they exist? It seems to me a lot of the discussion is 
about building new plants, and in this country and around the 
globe, we have old plants that are in existence that are 
inefficient, that are producing CO2 emissions at 
tremendous scale and yet we are investing in a technology that 
may or may not work in 20 or 30 years.
    Ms. Forbes. Technology for carbon capture and storage must 
include approaches that apply to the existing fleet to post-
combustion capture. The original FutureGen was an integrated 
gasification combined cycle would be a new plant, but CCS 
broadly should explore opportunities to deal with the existing 
fleet as well as the plants that they are building in China and 
India right now.
    Ms. Edwards. And is it your view that the current plan, the 
evolved plan from the canceled FutureGen project, focuses on 
existing plants?
    Ms. Forbes. I would defer that question to Mr. Gaffigan. I 
believe it allows for existing plants for post-combustion, and 
I think that is one of the pros of the new approach, but I also 
think there was a substantial investment in the original 
FutureGen that shouldn't be ignored. I think there are 
advantages to both approaches.
    Ms. Edwards. Mr. Gaffigan.
    Mr. Gaffigan. It allowed for both.
    Ms. Edwards. Is that what is happening?
    Mr. Gaffigan. We don't know. DOE has gotten a small number 
of proposals from the restructured FutureGen. They have asked 
for more information from some of the proposals--right now it 
is in the negotiation phase. I don't know if Dr. Der has an 
update, but right now the main difference to think about is, 
you know, the original FutureGen was an exclusive focus on 
IGCC, and whether that is good or bad, I will allow the policy-
makers to decide. It was an exclusive focus. It was considered 
one of the tools going forward. And the difference now, even in 
the initial proposal for restructured FutureGen, it talked 
about an IGCC focus, but when the actual bid went out for 
proposals, they had also allowed for others to include 
existing.
    Ms. Edwards. And how many existing coal plants do we have 
in the country? Anybody know?
    Mr. Gaffigan. Somewhere over 600 in this country I guess, 
according to Dr. Der. It depends on the size of some of these 
plants. Some are very small. We have heard figures of about 
1,100 but that might include some really small plants.
    Ms. Edwards. Okay. And then Mr. Gaffigan again, in terms of 
the cost, I mean, I understand you know, the math error which 
is unbelievable. I mean, we should send everybody to second 
grade. But I wonder, even in the best circumstances, would a 39 
percent overrun have been acceptable over the life of a 
project?
    Mr. Gaffigan. Potentially again, as these are very 
preliminary cost estimates, and you are going to see some cost 
escalations, especially with state-of-the-art and new R&D type 
things. Whether 39 percent is tolerable or not, that depends on 
how it is managed throughout. What I would point out again is 
that there was a new cost estimate being prepared that probably 
would have given better information and was more site specific.
    Ms. Edwards. But I mean, in fact though, if GAO were 
evaluating a project, whether it is in this department or 
another department with a 39 percent cost overrun, you would 
have raised some questions about that, wouldn't you have?
    Mr. Gaffigan. Well, we have, sure, depending on how it was 
handled. I mean, they could have decided that they wanted to 
pursue a different scope, and it was agreed upon that that 
would cause the cost increase. It is whether it is managed or 
not that I think is key. I mean, there are some projects in DOE 
we just recently tested more on the weapons side. I think we 
looked at eight out of ten projects, and combined, there was 
over $14 billion in cost overruns.
    Ms. Edwards. Yes, I know, and I think a lot of us have some 
concerns about that. And then just out of curiosity, Dr. Der, I 
wonder if you could talk to me about the ability to rely on a 
projected operation or commercialization say in 20 years with 
investments, even in the revamped FutureGen and how that 
relates to what we might take that same money and spend on 
other kinds of technology that would serve to reduce carbon 
emissions in the 20 to 30 years?
    Dr. Der. I think given the magnitude and the reliance that 
not only the United States has on coal for power generation but 
the rest of the world, I think it is important for us to work 
on solving that problem. You are right in saying that we have 
an existing fleet and Mr. Gaffigan was talking about the fact 
that the FutureGen project looked at new construction. Our 
program is more comprehensive than just looking at the 
gasification. It addresses the capture, the stack capture of 
carbon emissions from existing fleet. It is a challenging and 
daunting task. The Secretary is committed to focusing on that 
as an additional area of emphasis as well. So I think the 
problems should be worked on now.
    Ms. Edwards. Thank you, Mr. Chairman.
    Mr. Costello. The Chairman thanks the gentlelady and now 
recognizes the gentlelady from Texas, Ms. Johnson.

                Original FutureGen Project Cancellations

    Ms. Johnson. Thank you very much. I know that this was a 
different Administration, but why was the project canceled last 
year or in the last two years?
    Mr. Gaffigan. We were asked that question, and we asked 
over and over again, and we were told that it was because of 
the cost doubling. And we were pointed to the Secretary. It was 
his decision, and we were pointed to his testimony on the 
matter. So the bottom line for the most part the answer was 
because the cost had doubled.
    Ms. Johnson. And you are ready now to look at it again for 
less cost?
    Mr. Gaffigan. Well, I guess that would be up to the current 
Administration, whether they want to look at it. Our point was 
that there were very preliminary cost estimates, and to throw 
out this doubling was really not accurate in terms of the 
potential cost increase. I don't know if Dr. Der wants to add 
to that.
    Dr. Der. It is my understanding that the Secretary is 
planning to meet with the FutureGen Alliance to restart 
discussions on this particular project.
    Mr. Costello. If the gentlelady will yield to the Chairman?
    Ms. Johnson. Yes.
    Mr. Costello. The reason as you will recall given by the 
Administration for canceling the project was the escalating 
cost, and the Administration indicated they didn't anticipate 
the increase in costs. They were using, as Mr. Gaffigan--I 
won't put words in your mouth. If you will explain the numbers 
that they were using in terms of real dollars versus----
    Ms. Johnson. Imaginary.
    Mr. Gaffigan. Well, roughly, and this is ballpark, they 
were talking originally about a billion dollar project. They 
compared that to an escalated cost through 2017 of $1.8 
billion. If you took those dollars and took them back to the 
same year's dollars, you would be talking about roughly $1.3 
billion. So the actual increase that the Alliance brought 
forward was about $300 million. And I also point out that that 
was discussed in March of '07 when they signed the latest 
cooperative agreement or the next part of it, the continuation. 
It was only after that then that we started questioning this 
cost and then the concerns about the doubling of costs started 
to be talked about.
    Mr. Costello. And I would point out to the gentlelady that 
Chairman Gordon, Chairman Baird and myself and Mr. Lipinski 
asked the GAO to do a report and to look at the reason. You 
know, was it in fact cost, and I think the GAO report which is 
being released today will indicate that it was not cost and was 
not justified stopping the project because of cost. And they 
looked and analyzed the numbers and said that the 
Administration was not using accurate figures.
    I pointed out earlier, too, in an earlier Subcommittee 
hearing as you will recall, if you look at other projects in 
the same timeframe that increased in cost, it was as a result 
of the increase in cost of building materials, concrete, other 
materials, as well as labor. So I thank the gentlelady for 
yielding.
    Ms. Johnson. Thank you very much. That is the end of my 
question.
    Mr. Costello. The Chairman now recognizes Mr. Tonko.

                  Infrastructure and Resource Demands

    Mr. Tonko. Thank you, Chairman. Thank you for this 
important hearing, and I thank the panel also. Dr. Der, the 
issue of infrastructure for carbon capture and storage is one 
that comes up often, and I am wondering where the Department 
might be in terms of analyses that are done or any efforts 
being done on a process to address pipelines that might be 
required to deal with the point of emission onto the storage 
area and if there is a plan to do that in a national framework.
    Dr. Der. The pipeline infrastructure that would be 
associated with carbon cap and storage, depending on how far 
the transport of the CO2 goes, could be 
considerable. The jurisdiction as I understand it relative to 
pipeline infrastructure and regulations does not rest with the 
Department of Energy; it rests, I believe, with the Federal 
Energy Regulatory Commission and to a large degree with the 
states.
    Mr. Tonko. Is anyone else on the panel able to offer any 
thoughts on that as to how that infrastructure may be addressed 
in your particular cases?
    Mr. Gaffigan. I would just offer one thought, and I think 
it goes to Ms. Edwards' earlier comment about, you know, are 
you skeptical about CCS? I don't know if I am skeptical. What I 
would say is there are a great deal of uncertainties, and this 
is definitely one of them, the infrastructure to move the 
CO2 around at the scale that Ms. Forbes is referring 
to. I mean, I think we know we can do carbon capture and 
storage. Can we do it at this huge scale and put all this 
stuff, move it around, put it in the ground and hope that it 
stays there?
    Mr. Tonko. And in terms of another bit of infrastructure, 
with water demands that may be increased and enhanced, are 
there efforts being made to review just what the water issue 
might be for some of these facilities?
    Dr. Der. Yes, I think there was a panel yesterday that 
talked about water and energy nexus and the discussion that 
centered around carbon capture and storage did indicate that 
there would be an increase in water usage given the current 
capture technology that exists today, and one of the things 
that the Department of Energy is looking at are advanced 
capture systems that would reduce the consumption of the water 
as well as the energy penalties associated with it as well as 
the cost of the components.
    Mr. Tonko. Thank you very much. Now, as in my last station 
before coming here, I was at NYCERTA in New York with the 
Energy, Research and Development Authority. I know there are 
those who are looking for sequestration facilities, and there 
are a lot of concerns about the price obviously and a number of 
the dynamics that need to be addressed in order to provide for 
a safe and effective outcome. But I thank you all for your 
input.
    Mr. Costello. The Chairman thanks the gentleman and now 
recognizes the Ranking Member for another round of questioning.
    Mr. Inglis. Thank you, Mr. Chairman. You mentioned 
breakthroughs earlier and the hope for breakthroughs. Help me 
figure out where is it likely to come from. Anybody want to 
take a shot at what kind of technologies, what kind of 
processes might give us these breakthroughs?
    Mr. Monroe. I will start. The technologies we would use 
today, and it really doesn't matter whether it is IGCC or a 
conventional coal plant really, are adapted from chemical and 
petroleum industries. They use a water-based chemical, a basic 
chemical to capture the acidic CO2. Part of the 
energy penalty is, and you mentioned the water usage, that is 
part of the water usage. So we capture the CO2 with 
this water mixture, we have to take it somewhere else to get 
the CO2 to turn loose, we reuse the chemical and it 
is really the heat to make that CO2 turn loose that 
makes it so expensive on the capture side. It is the energy to 
do that. That is the biggest piece we looked at for benefits 
there. We still have to compress the CO2, so there 
is still a significant sort of energy to make it a high enough 
pressure to put down a pipeline or even push underground. So we 
are really looking at how to take CO2 out of the 
stream.
    So I will mention some that are interesting to us. Some are 
solid chemicals that could capture the CO2. Then we 
wouldn't have to heat up this 70 percent water and waste all of 
that heat. Membranes to sort of on a molecular level filter the 
CO2 and get the CO2 to come through this 
filter, but the rest of the gas not come through, are some of 
the most promising ones right now.
    Mr. Inglis. Anybody else want to----

                        Innovative Technologies

    Mr. Gaffigan. I just want to weigh one thing in terms of 
the technology. Obviously, GAO doesn't bring the technology to 
the table. We were really impressed with the wide range of 
expertise that is out there, both in the private sector and at 
DOE. But what I would say is going to sort of bring the 
breakthroughs is the incentive to do so and to let that private 
sector get out there and do those things. And I think one of 
the signals could be some regulatory certainty about what we 
are going to do about carbon. That would bring that private 
sector to achieve some of these breakthroughs.
    Mr. Inglis. Interesting.
    Dr. Der. The Department of Energy and its national 
laboratories and universities are actually working very hard on 
this particular issue about the energy penalty and the costs 
associated with these revolutionary ideas, and as the Secretary 
mentioned, these transformational, game-changing technologies. 
Some of the ideas out there right now include the clafate 
capture of the CO2, which basically is, it locks it 
into a structure and you can re-release it. There are ideas 
know as ionic liquids where it is basically a filter where the 
CO2 goes into these spaces and again, with just a 
very small amount of energy and pressure differentials, you can 
re-release that as well. So the key here is capital costs, 
energy penalty reduction, and making sure those technologies 
integrate well with the power plant or any other type of 
industrial source.
    Dr. Finley. I would like to add one more comment. I think 
it is very important if we look at some of the soft ideas, 
though not hard technologies, we need to relate to. We need to 
understand who owns the pour space. We need to understand a 
regulatory framework in which this will take place. We need to 
understand, how do we go about leasing the subsurface rights in 
the land areas for large-scale demonstrations? And not only 
that, we need to look beyond--we are now at the deployment 
phase for testing. What happens for example in a given 
geological region if, for example, you have 20 of these 
projects putting away five million tons a year per project in 
the subsurface? What does that do on a large regional scale to 
aquifers, the subsurface environment, and so forth because 
ultimately the scale of this to be totally effective could 
become quite large, and the issue of public acceptance and the 
framework in which this takes place legally and from a 
regulatory framework must also be looked at.
    Mr. Inglis. Any idea whether China has favorable geological 
formations for sequestration? Anybody know that?
    Ms. Forbes. There have been some preliminary studies. It 
looks like there are some willing gas fields in China that are 
promising that would be potential opportunities and also some 
of the U.S. geologists have been going over to China and 
working with the Chinese, specifically with Shenhua to look and 
see--that is the biggest coal company in China--to see, 
associated with one of their big coal-to-liquid plants. They 
are doing a test injection, and they have been doing real 
characterization of the geology to determine how it is going to 
work. It is potentially promising.
    Mr. Inglis. Very helpful. Mr. Gaffigan I think has a key 
thing there that is so exciting to hear, the concept of the 
private sector having an incentive to do this because you know, 
what Microsoft and Apple did for the PC and the Internet, the 
private sector properly incentivized by a price signal being 
attached to this negative externality and have that attached to 
the product would drive innovation faster than anything we 
could do from this Science Committee or anything we could do in 
Congress.
    Mr. Gaffigan. Absolutely. It goes to your point about your 
PSC's. They are not going to approve things until they see it 
is in their best interest. Most of the folks out there are in a 
wait-and-see.
    Mr. Inglis. Right.
    Mr. Gaffigan. They are wait and see.
    Mr. Inglis. Thank you. Thank you, Mr. Chairman.

                             Project Siting

    Mr. Costello. The Chairman thanks you. Dr. Finley, in your 
testimony you talk about the importance of characterization, 
and I wonder if you would talk about how long it takes to 
conduct robust site characterization and also the cost 
associated as well?
    Dr. Finley. I think if you were to start at ground zero, 
let us say in a region where you know such a project currently 
existed, you would probably need at least a year to put 
together a full-scale geologic framework based on existing 
data. At that point in time, I think you would be ready to run 
geophysics and to perhaps drill a preliminary well, a 
stratigraphic test. Carrying that out and aligning that data 
would take you at least another year or so I would think, a 
two-year process at a minimum from the get-go to at least to 
have an understanding of whether a site would be suitable. I 
think the cost of doing that at a minimal framework could be in 
the range of let us say $15 to $20 million.
    Mr. Costello. And do you know how much the State of 
Illinois spent on looking at the sites in the State of Illinois 
in order to make their case to the alliance?
    Dr. Finley. I believe State funds, certainly several 
million. I don't know the exact number, but I know that almost 
$1 million was spent in the State of Illinois funds since the 
project was canceled alone to demonstrate the continued 
suitability of the site and the contribution that the State 
made to the Alliance purchase of the 400-plus acres for the 
site.
    Mr. Costello. And I think that is one of the points that I 
made earlier about being outraged in pulling the plug. This was 
a competitive process, and the State of Illinois and other 
states as well spent millions of dollars in the competition. So 
I wanted to point that out. If you start from ground zero, you 
are talking about a minimum of a two-year process and at least 
in Illinois, my knowledge of the site that the Alliance 
selected, the State of Illinois spent well over $10 million and 
probably closer to $20 million in this competition.
    Dr. Der, let me ask you, and I don't know if you are in a 
position to tell us, but to your knowledge, how is the 
Department planning on spending the funds available under the 
Recovery and Reinvestment Act?
    Dr. Der. The guidelines that were put into the legislation 
put monies into certain pots of that $3.4 billion. There is 
$800 million that is going to go to augmenting the CCPI round 
three which includes carbon capture. There was another $1.52 
billion in there for looking at industrial carbon capture and 
storage projects, $50 million associated with the 
characterizing additional sites, $20 million for some research 
and training on the geological sequestration. The remaining $1 
billion is something that the Secretary and the Department is 
still making decisions on and will probably come to that 
shortly.
    Mr. Costello. Would you in your opinion being involved in 
the FutureGen program in the Department for the last five-plus 
years, would you classify the FutureGen project as a shovel-
ready or near shovel-ready project as far as sequestration is 
concerned?
    Dr. Der. I would probably characterize it as something that 
would be near shovel-ready. We have to probably finish up some 
work that was not finished up in the preliminary design phase 
that was specific to that particular site, do some more of the 
characterization that Dr. Finley talked about specific to that 
and finish up the design. And after doing something like that, 
it would be pretty much ready to go forward.
    Mr. Costello. Is there any sequestration project that you 
are aware of that is more advanced or ready more so than 
FutureGen?
    Dr. Der. Not to my knowledge at the current time, sir.
    Mr. Costello. Last question, Dr. Der, can you share with us 
some of your thoughts or concerns about the restructured 
FutureGen program?
    Dr. Der. I think when you look at it on balance, the 
restructured FutureGen program sort of addresses a different 
issue than the original FutureGen. The original FutureGen as an 
advanced platform for testing these new technologies was to 
push the stick forward, if you will, on the technology for 
gasification. In the restructured FutureGen, it focuses on 
putting technologies that we have today onto existing 
commercial platforms and to gain that kind of experience early 
on, and that in itself also has value. So it is a judgment call 
as to, you know, which way do we go on something like that.

                       International Partnerships

    Mr. Costello. My final question of you, Dr. Der, and I 
would ask Ms. Forbes or any of the other witnesses to comment, 
we talked about international partners that were very 
interested and committed actually to participating in the 
FutureGen project, China, India, a number of other countries. 
One, my understanding is the way that some of these countries 
found out that we were pulling the plug is they read it in 
media reports. They were not given advanced notice. Two, do you 
feel that the interest will still be there that we can still 
bring these other countries and international interest into 
this project?
    Dr. Der. I think the Secretary Chu has indicated that it 
makes sense for countries to collaborate and coordinate its 
portfolio projects, and I know that he has been taking a very 
proactive position in contacting his counterparts around the 
world. And I have all the confidence in the world that he will 
be successful in doing that.
    Mr. Costello. Ms. Forbes, would you want to comment?
    Ms. Forbes. Yeah. Based on our experience in working with 
some of China's leading CCS experts, I would say there is 
definitely interest in collaboration on demonstrations and also 
on issues that are associated with policy and regulatory and 
really building capacity. They like to work together.
    Mr. Costello. Any other comments from----
    Mr. Gaffigan. Just a quick note, you know, I think the 
international partners were putting out money toward this, up 
to eight percent, and one of the considerations in looking at 
options for cost escalation was to look for whether they were 
going to contribute more. And as I understand it, we still have 
the money from India, so we need to make a decision there one 
way or the other.
    Mr. Costello. Dr. Finley.
    Dr. Finley. I think your point is very well taken. It is 
all one atmosphere, and I think to the extent that we provide 
technology in a collaborative manner with international 
partners around the world, I think it is absolutely essential. 
I think in some cases these partners for example are not even 
totally aware of the level of effort that the United States is 
making, and I think in part the case when the Chinese 
delegation visited our site in Decatur, they were very excited 
to see an actual well going down into which we would put a 
million tons of CO2.
    Mr. Costello. The Chairman thanks you and now recognizes 
the gentleman from Florida, Mr. Diaz-Balart.
    Mr. Diaz-Balart. Thank you, Mr. Chairman. I will be brief. 
GAO had said that incentives would really come from regulatory 
certainty and that a price on carbon would spur technological 
innovation in effect. Are we seeing those technological 
innovations coming from Europe as far as CCS is concerned? How 
much and how dramatic and how aggressive?
    Mr. Gaffigan. The international expertise is not my 
bailiwick, but I will say from what we have seen, you know, 
they are struggling with their system to figure out, is it 
working? And I think we will probably go through some of the 
same things.
    My point in general is that in this country, folks are 
looking for that regular certainty. Some folks like Mr. 
Monroe's company are trying to hedge a little bit and 
anticipate what might happen. I am not as familiar with the 
international activities in Europe. I don't know if Ms. Forbes 
might be.
    Ms. Forbes. Three things that I would like to mention going 
on in Europe. First, the European Union has finalized a 
directive for geologic sequestration which includes the 
environmental regulatory structure for how to do CCS 
responsibly. There has also been an effort, and this is in my 
written testimony as well, to commit funding for CCS 
demonstrations, a network of 10 to 12 throughout Europe through 
proceeds from the European trading scheme. Additionally, some 
of the European utilities have been really proactive. It is my 
understanding that one of the European utilities actually has 
pilot-scale tests of each of the commercial capture options 
that are out there today, and they are currently operating and 
basically testing all of them to see which one operates the 
best.
    Mr. Diaz-Balart. Again, we are not--I am sorry. Yes, sir?
    Mr. Monroe. We see lots of ideas coming to the table now, 
so people are engaged in the subject. We see the beginning of 
sort of basic R&D sort of really kicking off now. We do worry 
about too much regulation too quick and that sort of we would 
be forced into building gas generation, then, to meet that. So 
we see the sort of ingenuity of the American people in the 
university system and national labs already engaged on this 
issue. They are not waiting for anything further.
    Mr. Diaz-Balart. I am not saying that you should know 
obviously, but do any of you have any real idea as to what we 
have seen with these technological breakthroughs coming from 
Europe? Because they do seem to have some I guess certainty. 
Has Europe become the bastion of CCS technological innovation?
    Ms. Forbes. I think U.S. R&D program for CCS is among the 
best in the world. The Europeans are also doing a lot of work. 
They have gone further on the policy and regulatory side than 
we have here in the States. But our research program is--the 
IEA did a study, and it called the Regional Partnership Program 
specifically the world's most ambitious program. Unfortunately, 
that program is not very well known internationally, and I 
think we could do some programs to offer exchanges to get more 
experts like Dr. Finley in the international community and get 
some exchange happening.
    Mr. Diaz-Balart. Thank you. Thank you, Mr. Chairman.

                 The Viability of CCS as an Investment

    Chair Baird. Thank you. I'm sorry I had to step away. We 
had action on the Floor and a bill I had worked on, ironically 
on ocean acidification, so maybe appropriately so. As I look at 
this capture and sequestration, I have a couple of questions 
that come to mind. I will put those out there, and maybe you 
can address them. One has to do with just estimated net 
capacity. In other words, what is the width of likely amount of 
carbon that we can capture, and timeframe. The best climate 
change/acidification scientists I know of say that we should 
shoot for nothing higher than 350 parts per million as a goal, 
and we already exceed that in terms of atmospheric loading of 
CO2. We already exceed that, and so my question is, 
how long is it going to take us to get some meaningful 
reduction in CO2 output, and what is the likely 
capacity we can. And my hunch is it is going to take a long 
time and we are not going to be able to ultimately get that 
much out. And then the question for me is should we not then 
focus on other modalities as a priority for our financial 
investment? I will just put that out there, and whoever wants 
to take a swing at it I am happy to hear from.
    Dr. Der. You are all looking at me. From what I have read 
in the literature, including the IEA reports, if we are going 
to come down to some kind of a stabilization in the atmospheric 
concentrations or whatever level that is key, it shows that 
carbon capture and storage, along with the other mitigation 
measures, constitutes somewhere around 20 percent. Other 
reports say a little bit higher. That tells me that it needs to 
be an essential part of the portfolio of mitigation measures, 
along with efficiency, in-use efficiencies, nuclear, wind, 
solar, and natural gas. So it is very difficult to get to 
stabilization without looking at carbon capture and storage 
because of the existing inventory that we have out there that 
relies on fossil fuels.
    The other thing is that the storage capacity at least in 
the United States. Dr. Finley could probably answer the 
question better than I. We have done a national atlas of the 
storage capacity in North America, primarily Canada and the 
United States, and it shows that we have considerable storage 
capacity, several hundred years' worth. And looking at the 
point sources where the power plants are and where the 
potential storage sites might be, and what are the reasons for 
looking at saline reservoirs is because that type of formation 
in the wet sands represents the majority of that storage 
capacity. And I defer to Dr. Finley to augment my statement on 
that.
    Dr. Finley. Yeah, I can quote you the numbers from memory 
for the Illinois basin, just to give you a representative 
example. That region of Illinois, Indiana, and western Kentucky 
emits about 304 million metric tons of CO2 per year 
from stationary sources. 90 percent of those sources are coal-
fired power plants. So we have got say a third of a billion 
tons. The storage capacity in the saline reservoir as Dr. Der 
mentioned is roughly between 27 and 109 billion metric tons. So 
we have at least probably in the order of at least 100 years of 
storage, possibly 400 years of storage in saline reservoirs in 
this region.
    The second version of the second edition of the atlas that 
DOE has put forth has refined some of those earlier estimated 
numbers. The reality is that certainly 200 years' worth of 
storage, if we could capture virtually all of the emissions 
from the known current stationary sources.
    Chair Baird. What about the timeframe? When do we think we 
will be able to do this?
    Ms. Forbes. I will be happy to take that question. I think 
that the question of the timeframe is really about what--we 
haven't demonstrated it yet. We don't know if can play. Right 
out analyses, as Dr. Der mentioned, of how we are going to get 
to global goals for climate change rely heavily on CCS. The IEA 
study says to cut 50 percent of the projected emission 
projections that we need to cut by 2050, CCS is for 20 percent. 
So unless we demonstrate the technology, it is not going to 
play. So ultimately, I think the urgency is on demonstrating it 
and how those demonstrations are going to go will depend on 
when we decide to do it.
    Mr. Monroe. And I would agree with that. I work with the 
Coal Utilization Research Council, and they are probably the 
most active at looking at least for coal plants what is the 
ramp to get from where we are now to what we would call 
commercially ready carbon capture and sequestration. So it is 
different than commercial availability. Commercial availability 
is when someone will sell you something. Commercially available 
to us means when do the banks accept it for financing, the 
regulations are set. We can build a strong business case with 
Public Service Commissions' signing on for that for it to be 
ready. So in answer to your question specifically, we are 
looking at a timeframe of 2020 to 2025 if we are doing this 
demonstration sort of up-ramp between then and now so that we 
think at that point the utility industry would be ready to sort 
of start installing those as a normal matter of course. So when 
we look at that, between now and then, we are looking at maybe 
15 gigawatts which might be as many as 30 plants sort of as 
part of this demonstration and development and sort of 
different options. So in this route, we like a lot of 
duplication. That is not great to hear, but we like different 
technologies. We think we need sequestration in different 
regions of the country for public acceptance regulatory sort of 
thing. So in this case, it sounds like a lot, but we do need 
those parallel paths to get there.

                     Urgency and the CCS Timeframe

    Chair Baird. I appreciate that. I will close with just this 
concern, 2025 sounds like a long time away to me given the 
urgency of the situation. Already off our coast in the 
northwest we are seeing acidification rates that are presumably 
harming shellfish and other creatures, and 2025 is a long way 
away, and that is to start the installation of this and that is 
at substantial additional cost per ton of coal burned. So the 
question for me becomes economics, environmental impact, and 
practicality. It feels a little bit like having followed the 
debates on fusion energy for 20, 30 years now myself, it is 
always 20 or 30 years away. It feels a little bit like that, 
but the urgency is greater and maybe your technology is more 
promising. I would hope it is. But I just want to put that 
concern, and I would hope we would not see capture and 
sequestration as the deus ex machina that saves us. I think 
there may be other machinas if not other deuses. I am not sure. 
Dr. Ehlers?
    Mr. Ehlers. Thank you, Mr. Chairman. As far as fusion is 
concerned, it used to be 20 to 30 years away. Now it is 30 to 
40, so we are making progress. Just call me the Bernie Madoff 
of physics.

                          Global Participation

    I am sorry I missed most of the hearing. I had four 
committee meetings going on simultaneously this morning, but 
just a quick question. In the brief time I have been here, I 
heard a lot of different nations mentioned, but I haven't heard 
Russia mentioned, which I believe has tremendous coal reserves, 
and are they an active player here? The second is along the 
lines of the Chairman's question about when this is going to 
happen. I worry less about the science. We can do the science 
if we are willing to put the money in. I worry much more about 
getting acceptance throughout the international community, that 
this is something that is fiscally and environmentally worth 
doing. And is there any indication that all the other nations 
are willing to join in doing this if we do? Because otherwise, 
we are, given the use of coal throughout the world, even if we 
do a marvelous job in this country, it doesn't really solve the 
problem. So I would appreciate comments on those two questions.
    Ms. Forbes. With respect to Russia, in the international 
CCS meetings that I have attended, I haven't seen Russia 
participating. I don't know that they have a demonstration 
planned, but there are a number of other countries worldwide 
who have plans for demonstrations similar to the FutureGen 
project. Australia has a project, China has a project, Europe 
is planning 12, Canada has a project. So we do have quite a 
global commitment towards demonstrations of technology.
    Mr. Ehlers. And do we have the commitment toward 
implementation? That is the real key.
    Ms. Forbes. I don't think we have commitment toward 
implementation yet. I think we have commitment toward 
demonstrating the technology. I think we are moving toward a 
global sweep of demonstration projects. I think implementation 
is the next step, and in some ways we have to talk about 
implementation now because of urgency of the climate challenge. 
But in other ways you can't talk about it until you have at 
least one demonstration in the ground.
    Mr. Ehlers. I agree, but that is the part that I am very 
nervous about and that was, as far as I was concerned, the 
failure of Kyoto from the start. I thought the general idea of 
Kyoto was good, but I had trouble supporting it because it was 
made universal and it doesn't make sense that we spend billions 
of dollars in this country and many other countries to try to 
stop something when other countries are not going to do it. 
What we gain through our efforts, we lose through their 
efforts. So I think it is absolutely essential that there be 
strong international agreements if we are actually going to 
proceed with this. Thank you. I yield back.
    Chair Baird. Ms. Edwards.

                        Investment Through 2025

    Ms. Edwards. Thank you, Mr. Chairman, and just an 
observation that again, 2015 peak emissions if we are right 
about our models, 2025, a demonstration project at some point 
of commercialization that may or may not be successful. And so 
we are actually relying at this time knowing that we are 
approaching peak CO2 emissions on a technology that 
may or may not deliver in 2025. I mean, so we are banking on 
success here, and I want to ask you actually, I want you to 
think about failure because the cost for failure is really 
tremendous.
    Dr. Der, I wonder if you could talk to me for a moment 
about, you know, if you think about the investment between now 
and 2025, what that investment would be? Does the Department 
have any projections for that and how much of a burden do 
taxpayers have to meet and what is the relative risk then for 
private entities and other international partners?
    Dr. Der. That is a difficult question to answer at the 
moment. I think we have plans in terms of the projections of 
the research work and the demonstrations that are necessary. We 
engage with the private sector to get their views on what is 
necessary to move things forward in terms of demonstrations and 
incentives for deployment. It is very important that we do the 
science correctly in the sequestration area. I am not an expert 
in it, but I do have a higher degree of confidence that it will 
work based on the work that is going on around the world and 
the experts that are being put to this particular topic, people 
like Dr. Finley, people from the regional partnerships. The 
Secretary is also committed to working on the back-end capture 
costs and the energy penalties associated with that, as well as 
the science in terms of simulations and looking at the risk 
assessments associated with that. All these things need to be 
done as part of the research and development and demonstration 
program. Relative to how these things get deployed and what the 
private sector investment is going to be is something that I 
don't have an answer to at the moment.
    Ms. Edwards. And just out of curiosity, are you confident 
about your model for projecting the cost?
    Dr. Der. We have a research program that sets targets in 
terms of bringing down those costs from where they are now. We 
look at the research and the options that we have been 
pursuing, taking a look at what is its potential. And with 
those potentials we have to change that and convert that into 
reality as we scale things up. And those are one of the 
challenges that one of the Committee Members had also 
identified.
    But we really have to be able to engage the science and 
technology to bring down the cost and also to do the modeling 
and the field work and all those things associated with field 
demonstrations, drawing on experiences that we have had in the 
past from the oil and gas industry and looking at the natural 
analogs of CO2 that have been in the ground for 
millions and millions of years so that we can make these models 
and risk assessment in going forward in time.
    Ms. Edwards. Okay. And then finally, just one question 
going back to Mr. Tonka's earlier question about water and the 
amount of water that you project that it will take to operate 
these plants, I am curious about electricity and the amount of 
heat that is required and electricity required to operate the 
plants and to function and their estimates. I think Mr. Monroe, 
in your testimony estimates that 20 to 25 percent of the 
electrical output is required for operation. There are some 
estimates I have seen that are as high as 40 percent. And so if 
that is true, it is just really getting difficult to see where 
the bargain is.
    Mr. Monroe. Well, your earlier question talked about 
existing plants and why so much conversation about new plants, 
and your current question has something to do with that also. 
So if I go to an existing power plant today, let us say a 
medium-sized plant of 500 megawatts, I may lose a third of that 
generating capacity to add 90 percent CO2 capture to 
that. So there is two large pieces of that. One is the heat 
required in the capture process. That is about 20 percent in 
round numbers. The question of the CO2 is around 10 
percent. Right now we would buy a large electric motor to 
compress the CO2 to get rid of it. We would actually 
take steam away from the process for this heat.
    We think in a new plant, again, talking conventional coal, 
that we may be able to integrate that and drop those numbers 
down. Right now we are looking at numbers possibly as only 20 
percent. So the new plant would be built that way. IGCC is 
actually much less than that, and that is why it is a favorite 
technology for new plants. We are building a new plant with 
that. The FutureGen is proposed for that. Duke is building one 
that may or may not have CO2 capture with it, and 
those are all sort of pioneer plants to try to develop that 
technology, just because we think the energy and therefore the 
costs for CO2 capture with that technology, as we 
sit here looking today, is superior.

                        Effects on the Consumer

    Ms. Edwards. Of course, we have a lot of old plants, and 
just lastly, Mr. Chairman, do we have any idea what that will 
do to the consumer? Like how much is my electric bill going to 
go up because we have made the choice to make an investment in 
something that is sucking out a lot of energy to produce, you 
know, the carbon capture?
    Mr. Monroe. There is a lot of people estimating that, so I 
will talk about a specific, let us build a new plant. How much 
would the cost of electricity from that plant increase with 
carbon capture and sequestration? Based on some of the good 
work that the Department of Energy has done, that ranges from a 
35 percent increase to as much as an 80 percent increase, 
depending on the technology, the high end or conventional coal 
plants like we are using today, the lower end is with the 
gasification plants. So it is significant, and that is really 
the reason for demonstrations but also for the basic R&D is to 
really attack that.
    Ms. Edwards. Thank you, Mr. Chairman.
    Chair Baird. Thank you, Ms. Edwards. We are going to have a 
vote in just a couple of minutes. I want to follow up with this 
line of questions of Ms. Edwards and a bit on the line that I 
was asking before.

                   Comparative Cost Benefit Analysis

    If we look at the net expense of carbon capture 
sequestration over some timeframe, and that would include the 
additional cost passed on to consumers, et cetera, the total 
net cost, and we considered how that money--you know, it is an 
opportunity cost kind of question. If we consider how that 
money might be spent elsewhere, for example, instead of a 
concentrated power network going out across the grid, a 
distributed power network kind of thing Amory Lovins and his 
folks have talked about, how does that pencil out? Has anybody 
thought about this? Pencil out not only in terms of net 
economic cost benefit but also in terms of timeframe and carbon 
reduction. If we were to spend X amount of dollars today, we 
could start reducing carbon today versus waiting this long and 
presumably that investment today would stimulate alternative 
investments in that technology be it solar, small-scale wind, 
geothermal, et cetera. How does that pencil out? I mean, the 
people at the end of the day, they don't care whether the 
lights turn on because somewhere down the road there is a coal 
plant, a nuclear plant, on the roof a solar plant, they want 
the lights to turn on and their house to be warm.
    Mr. Gaffigan. I am holding a pencil, so I will try to 
answer that. I think you are going to hear on this committee 
over and over again, don't pick a winner, don't pick a winner 
as far as technologies. In our view, there is a winner. It is 
fossil fuels, and it ended up being picked for a reason because 
it is relatively cheap and gives the most power, whether you 
are talking about powering your automobile or through 
electricity. And I think there is so much uncertainty 
associated with alternatives or making a change. But the bottom 
line is, it is going to cost more to do so. And I think the 
Federal Government has to consider what its role is going to be 
in all that, and we have talked about the private marketplace. 
But some would argue that, you know, let us send some signals 
to the market saying there is a rule about carbon, it is 
constrained or it is priced, and let the market try to sort 
that out, so we can move from a pencil to maybe some more ink. 
And I do think there is so much uncertainty and there are so 
many tradeoffs with all these alternatives, whether you go with 
coal in the future or you look for wind or solar. Folks in 
Germany, for example, made a commitment to solar but they are 
paying more because of it. They have guaranteed a price for it, 
but that is a choice they have made. And you are right, I don't 
know if this will be acceptable to people. If the PSC today 
says, you know, we are going to approve a rate increase for 
carbon capture and storage, how is that going to go over with 
the rate-payers?
    Chair Baird. I want to just follow up, Mr. Gaffigan. You 
said in our view. Does that mean GAO has an official position 
that--I want to ask two questions.
    Mr. Gaffigan. Sure.
    Chair Baird. I am not really trying to put you on the spot, 
I am just curious about this. When you talk about it relatively 
cheap, my colleague, Mr. Inglis, talked about the externalized 
cost.
    Mr. Gaffigan. Right. Right.
    Chair Baird. It is relatively cheap if you externalize the 
cost. If you factor in the total cost of ocean acidification 
and lethal overheating of the planet, it is not so relatively 
cheap.
    Mr. Gaffigan. No, it is what we are actually charging for 
it, and that is the question whether we want to try to put a 
cost on some of those externalities. If we do so, then the 
rate-payers or somebody is going to have to pay for it.
    Chair Baird. Right. Somebody has to pay for it one way or 
the other. You don't get to not pay for an acidified ocean. You 
don't get to not pay for a two or three degree Centigrade 
climate change. You don't get to not pay for that. That is 
going to happen. The question is who is paying for it and who 
is responsible for it, and that is not something we can pretend 
we don't pay for.
    Mr. Gaffigan. And we can spend all the money we want on 
technologies, but that is not going to make the difference.
    Chair Baird. Well, I am not sure of that. Doctor?
    Dr. Der. I just wanted to follow up on the statement here. 
The climate change and greenhouse gas and CO2 
emissions is a global issue, and price signals that happen in 
the United States or Europe probably put certain technology out 
there at a certain cost. But in the developing economies who 
may not have certain price signals but continue to use coal, 
such as in China and India, they may not do that. They may, but 
at these additional costs today it is very expensive for us. It 
is overwhelmingly expensive for them. Therefore, I think the 
solution out of the box, if you will, really is these game-
changing technologies that we need to work on to bring that 
cost down so that it is affordable not only by us, whether we 
have certain levels of the carbon valuation or not, but also in 
the developing countries and economies that are going to be 
growing and looking for a better standard of living.
    Chair Baird. Mr. Inglis.

                  Joining Entrepreneurs and Inventors

    Mr. Inglis. Thank you, Mr. Chairman. This has been very 
helpful hearing particularly this last exchange about how do 
you get from here to there because, you know, what I think we 
should be aware of is until we do what we have just been 
talking about, which is attach a price, there would be no 
reason to go forward. We have great science projects, and we on 
the Science Committee love science projects. But until 
entrepreneurs and inventors are marrying each other because a 
price signal has been sent that now something is going to 
happen and you can make money doing it, you can make money 
solving this problem. Until that happens, nothing happens and 
we have hope but hope is not a strategy. And so what I 
particularly offer to Dr. Der to take back to the 
Administration is let us come up with something that works. As 
a conservative, I can tell you that there is very little chance 
that conservatives are going to vote for a cap-and-trade 
system. It is a massive tax increase, by itself is a massive 
tax increase. Also, in the aftermath of this financial 
downturn, do we really want to hand over to Wall Street traders 
some credits that they can trade? Maybe they can turn them into 
derivatives, and maybe we can do a bubble out of the 
derivatives and maybe we can see what a wild ride we get out of 
that.
    So, not going to happen. There were 48 votes for cloture in 
the Senate this summer when it got tagged as a tax increase. In 
the midst of a downturn and with Wall Street looking like it 
looks, what is the chance of that number going north of 48? 
Answer? Not very much. So even if the House decides to run it 
through the House just on a cap-and-trade system, it is dead on 
arrival in the Senate. So if you really want to take action, 
you have got to find something better, and the collaborative 
opportunity that I think we have got is a revenue-neutral 
carbon tax if I may be so bold to suggest it, where you reduce 
payroll taxes and you apply a tax to carbon, a transparent, 
very clear price signal, very definitive price signal. You know 
exactly where we are going. Entrepreneurs and inventors know 
when to get married and when their technology can take out the 
incumbent technology, and it is an exciting opportunity, 
really, to bring the best of Republican thought, conservative 
thought, which is how markets work when they are properly 
adjusted. In other words, you have externalities recognized and 
attached to products, and the best of Democratic thought which 
has for a long time been, ``we have got to do something.''
    So we put those two together and we got a solution that 
works, that actually can get through the House and maybe even 
through the Senate and it could get by and then we could get 
this energy revolution to happen like it happened, as I 
mentioned earlier, with the PC and the Internet.
    So I am excited about the opportunity available to us if we 
would be able to collaborate. If we try to run this thing up 
the middle, up the middle punt series of plays, that is what we 
will end up with, a punt.
    Chair Baird. That is called the Seattle Seahawks.
    Mr. Inglis. I went to Duke for college, and when we got 
frustrated in the stands, that is what we would cheer about the 
football team, up the middle, up the middle, up the middle, 
punt. And so you know, that is what we are facing if we try it 
just that sort of way. But if we think outside the box and we 
hear something that we can actually come together on and find a 
solution, I have been talking to the new Secretary about that. 
I think there is a real opportunity here, and I hope that this 
hearing helps speed it on. I went to making a speech there, Mr. 
Chairman, rather than asking a question.
    Chair Baird. Let us ask the question. Can we ask our 
witnesses if they have some comments on Mr. Inglis' thoughts 
here?
    Mr. Gaffigan. I would just wrap up and say that I think 
they are both important. I mean, I think technology plays a 
role, I think whatever signal we are going to send about carbon 
is important, and GAO recently did a study on the whole issue 
of climate change and talked to a lot of experts. They both 
agreed that both play a role, the R&D role and the sending the 
right signals or a signal of some kind that gives some 
certainty to folks. And they can't exist without each other.
    Dr. Finley. I would just add one comment. I think the 
portfolio approach is important. Every aspect of efficiency, 
renewables, and carbon sequestration is necessary to get where 
we want to go, and I would note that Congress has passed some 
very significant mandates with respect to alternative fuels, 
biofuels, ethanol, and so forth. And from that fermentation 
process, you get a 99 percent pure stream of CO2 and 
you avoid some of the costs that Mr. Monroe referred to. So let 
us do it incrementally. We can take pure CO2 from a 
biofuel facility, and we can put it in the ground now and let 
us do that sooner rather than later while we reduce the cost of 
the parasitic load and the energy load on the power plants that 
Mr. Monroe referred to.
    Mr. Inglis. You know, it is very important, Dr. Finley, you 
just mentioned the mandates. That is one way to go. The 
challenge with that is it is not as elegant and efficient as a 
pure price signal because then competing technologies are out 
there in the private sector, and some of them will win and some 
of them will lose. If we from up here do a mandate, and I have 
voted for mandates, higher CAFE standards for example, but you 
don't get the innovation, the rapid innovation that you could 
get if you did it more elegantly by price signaling.
    Dr. Finley. I would certainly agree with your point on 
that. The mandates are there and particularly as we move 
forward with, say, cellulosic or waste product ethanol type 
fuels rather than corn-to-ethanol or food-to-ethanol and avoid 
that fuel versus food debate, I think there is something to be 
gained there and given that those mandates were in place and 
presumably there are people out there making an effort to meet 
them.
    Mr. Monroe. We would agree. We like flexibility there, so 
on one end is sort of the mandate to cap-and-trade somewhere in 
the middle. We get some flexibility under the cap, but where to 
do that? We like a pure price signal so that new innovations 
can come in. We don't have to go back to the regulatory sort of 
arena to sort of incorporate those and sort of like the way 
that spurs it so the company has a large research staff, and so 
we like really thinking out of the box, and that encourages it.
    Chair Baird. Dr. Ehlers.
    Mr. Ehlers. Thank you, Mr. Chairman. First of all, let me 
say I will be happy to match our zero to 16 Detroit Lions 
against the Seattle Seahawks any day. We don't even go up the 
middle, we just throw interceptions. It is much more efficient.
    Chair Baird. Let us hope our energy policy can exceed both 
of those records.
    Mr. Ehlers. Absolutely. I also want to thank Mr. Inglis' 
comments. He is always very thoughtful on these issues, and he 
has thought deeply about them and what he says makes a lot of 
sense. I would say that part of the problem with the proposed 
cap-and-trade program, it is not even a cap-and-trade program, 
it is a simple tax, it is an energy tax, and that is why it is 
never going to fly. Cap-and-trade in a pure form might work 
once you get the markets going, but it is not going to be easy, 
but if you started out as a straight tax, I agree with you, it 
is destined to failure. But I think much of what you said is 
valid. I think, you know, the energy situation overall, over a 
20-year period is so desperate that we really have to try every 
option possible and develop the best approach we can. And I 
think the marketplace is a good place to try many of the 
experiments. It gives you a fairly direct, fairly quick answer. 
So with that, I will yield back. Thank you.
    Chair Baird. I will just observe that I think one of the 
ironies of the cap-and-trade debate has been that I think the 
cap-and-trade model was put forward as a way of trying to use 
conservative capitalistic values to justify investment in 
environmental protection and CO2 reduction. So the 
incentive was there, and yet I think opponents of it are coming 
from the same side that it was designed to appeal to. And my 
own leaning is much more toward the line of Mr. Inglis. The 
only thing I would observe on that is it is easy to denigrate 
any form of tax because the indirect form, externalized form of 
tax government doesn't impose, nature imposes on it, and nature 
may actually impose a much higher rate of taxation in the form 
of consequences if we don't tax ourselves to try to reduce 
CO2 and other gas emissions.
    This has been a very, very informative discussion. We are 
very grateful for all of your time, and I thank very much my 
colleagues for their thoughtful input as well. And with that 
then, with the buzzing going off, the hearing will stand 
adjourned again with the gratitude of the Committee. Thank you 
very much.
    [Whereupon, at 12:08 p.m., the Subcommittee was adjourned.]
                              Appendix 1:

                              ----------                              


                   Answers to Post-Hearing Questions




                   Answers to Post-Hearing Questions
Responses by Ms. Sarah M. Forbes, Senior Associate, Climate and Energy 
        Program, World Resources Institute

Questions submitted by Chair Bart Gordon

Q1.  Building a network of carbon capture and storage (CCS) 
demonstrations will require international collaboration. This makes 
sense to ensure that CCS demonstrations around the globe are diverse 
and demonstrate the full suite of capture and storage options. In your 
view, how do we best accomplish this? Is there a specific federal 
agency best equipped to take the lead on international collaboration on 
CCS demonstrations?

A1. The U.S. Department of Energy's Carbon Sequestration Leadership 
Forum (CSLF) includes the right structure for a global network of 
carbon dioxide capture and storage (CCS) demonstrations. It benefits 
from ministerial-level support and includes key coal-consuming 
countries; however, global interest and action on CCS has quickly 
advanced and the existing framework must be updated and formally 
endorsed by Congress. The following actions are needed to leverage the 
past activities of the CSLF and move toward new mechanisms that 
facilitate successful international collaboration:

          Establish a CCS demonstration technology alliance for 
        countries working on demonstrations, whereby a formal network 
        is established to share information among projects and ensure 
        that information is publicly available. This should be a new 
        initiative, led by the Energy Department, building on the 
        success of CSLF activities and including the CSLF member 
        countries. It should be launched in collaboration with the 
        Australian-led Global Carbon Capture and Storage Institute and 
        possibly the International Energy Agency.

          Increase the number of full time technical staff 
        devoted to international CCS collaboration within the 
        Department of Energy's Office of Fossil Energy. This allocation 
        can ensure that existing bilateral agreements result in 
        concrete actions and that activities are scientifically and 
        technically robust. This technical group should be adequately 
        funded and given a high priority.

          Establish a multi-agency task force to steer 
        international CCS collaborations and advise the CCS Technology 
        Demonstration Alliance. The task force should be led by the 
        Energy Department, but also include participation from the 
        Department of State, the Environmental Protection Agency, and 
        Treasury Department. The task force should meet quarterly.

Q2.  In your testimony, you mention that moving forward with CCS 
worldwide will require significant investment. What actions would you 
recommend the Federal Government should take to ensure that a clear and 
robust international financing mechanism exists for large-scale CCS 
demonstration projects?

A2. Governments worldwide are moving toward CCS demonstration by 
committing funding to demonstrations. Within the past month, requests 
for proposals for CCS demonstrations have been made by the European 
Commission\1\ and the U.S. Department of Energy\2\ as part of the 
recently passed stimulus packages at EUR 1.05B and USD 2.4B, 
respectively. Australia's budget discussions\3\ have also included 
discussion of allocating AUD 2B toward 2-4 CCS demonstrations, and the 
UK's Energy Secretary announced a plan to subsidize four 
demonstrations.\4\ Although this funding is significant, there is (1) a 
lack of funding dedicated to demonstrations of CCS at commercial scales 
in the U.S., (2) insufficient funding globally to achieve the goal of 
20 demonstrations worldwide, and (3) barriers to obtaining public and 
private sector investment in the technology that must be overcome to 
achieve demonstrations and supplement government subsidies.
---------------------------------------------------------------------------
    \1\ http://ec.europa.eu/energy/grants/
2009-07-15-en.htm
    \2\ http://www.energy.gov/news2009/7405.htm
    \3\ http://www.news.com.au/business/story/0,23636,25470205-
31037,00.html?from=public-rss
    \4\ http://www.cnplus.co.uk/sectors/energy/miliband-no-new-coal-
power-stations-without-carboncapture/5200978.article
---------------------------------------------------------------------------
    Specific actions this committee could take to provide clarity 
toward public and private sector investment and international 
collaboration on demonstrations include:

          Develop a multi-agency task force to study and 
        formally recommend international CCS financing mechanisms. The 
        task force should include participation from the State 
        Department, Department of Energy, the Environmental Protection 
        Agency, and Treasury Department.

          Request that this task force prepare (within 120 
        days) a report to Congress on international financing 
        mechanisms for CCS that provide clear recommendations on 
        international government funding (consider pairing/twinning or 
        co-funding demonstration projects with other countries), 
        outlines the role of multilateral banks, and presents solutions 
        to the obstacles to private-sector investment in CCS.
                              Appendix 2:

                              ----------                              


                   Additional Material for the Record




                       The Passing of FutureGen:

                   How the World's Premier Clean Coal

                Technology Project Came to be Abandoned

                      by the Department of Energy

                  Report by the Majority Staff of the
              Subcommittee on Investigations and Oversight
             of the Committee on Science and Technology to
                        Chairman Bart Gordon and
                   Subcommittee Chairman Brad Miller
                             March 10, 2009

Executive Summary

    When President George W. Bush announced the FutureGen initiative in 
February of 2003, he described it as a 10-year, $1 billion, government/
private partnership to build a coal-based, zero-emissions electricity 
and hydrogen producing power plant. It would provide the American 
people and the world with advanced technologies that would help meet 
the world's energy needs, and would improve the global environment for 
future generations. Spencer Abraham, then-Secretary of the Department 
of Energy (DOE), went even further. This ``bold step'' would turn coal 
from an ``environmentally challenging energy resource into an 
environmentally benign one'' and demonstrate the best technologies the 
world had to offer.
    The plant would not use traditional coal technology, but would be 
an integrated gasification combined cycle/carbon capture and storage 
(IGCC/CCS) facility built at the commercial scale of 275 megawatts. It 
would sequester one million metric tons of carbon dioxide per year, 
produce both electricity and hydrogen as energy sources and demonstrate 
the integration of commercial and untested technologies. Its results 
would be shared with all participants, including international parties, 
industry, the environmental community and the public. International 
participation was a core component of the project as acceptance of the 
project's results were deemed necessary by the Administration for 
building an international consensus on the role of coal and carbon 
sequestration in addressing global climate change and energy security.
    But in December of 2007, after a site in Illinois was selected by 
FutureGen's private industrial partners, the environmental impact 
statement required by the National Environmental Policy Act was 
completed, and the State of Illinois had accepted liability for the 
sequestration aspect of the project, then-DOE Secretary Samuel Bodman 
announced that he intended to restructure FutureGen. He would 
``maximize'' the private sector role and prevent further cost 
escalation. The restructured FutureGen was rolled out at the end of 
January of 2008, but it was widely viewed as the death of the Bush 
initiative. Subsequent events have verified that view, as the four 
applications--two of which have been deemed ineligible--responding to 
the new competition bear no resemblance to the original FutureGen and 
have no capability to meet the original goals.
    How did such a highly publicized Presidential initiative fail, and 
what were its consequences? Committee staff review of thousands of 
documents produced by the Department of Energy over the past several 
months\1\ has resulted in the following conclusions:
---------------------------------------------------------------------------
    \1\ DOE was extremely reluctant to produce documents to the 
Committee so that it could determine exactly how decisions were made 
concerning FutureGen. Despite numerous requests from the Committee 
since April 2, 2008, and the threat of a subpoena, the Department has 
still not yet provided a full response. Many of the withheld documents 
involve communications with the White House and this situation has 
required repeated meetings to examine those materials. We should add 
that Undersecretary Albright routinely destroyed his e-mail records, 
further complicating the ability of the staff to reconstruct the full 
history on decision-making regarding FutureGen.

    1. Based on how easily the Department of Energy abandoned the 
FutureGen project, it appears that President Bush, Secretary Bodman and 
the Office of Management and Budget were never fully committed to the 
FutureGen project or its goal of developing technology to allow the use 
of coal without massive emissions of carbon dioxide and other 
greenhouse gases and pollutants. In retrospect, FutureGen appears to 
have been nothing more than a public relations ploy for Bush 
Administration officials to make it appear to the public and the world 
that the United States was doing something to address global warming 
despite its refusal to ratify the Kyoto Protocol.\2\ When worldwide 
construction costs went up across the board, neither the White House 
nor DOE was willing to make the additional financial commitment 
necessary to keep the project going. Secretary Bodman, in particular, 
strongly disliked FutureGen, and neither President Bush nor any of his 
White House staff did anything to stop Bodman from killing the original 
project or restructuring it in a way that was guaranteed to fail. As an 
assistant to Under Secretary Bud Albright put it during a discussion of 
restructuring FutureGen:
---------------------------------------------------------------------------
    \2\ FutureGen was touted as a key climate change inspired action to 
the Committee on Science in a hearing on September 20, 2006, 
``Department of Energy's Plan for Climate Change Technology Programs.'' 
The Departmental witness stated that ``CCTP's portfolio includes 
realigned activities as well as new initiatives, such as the 
President's Advanced Energy and Hydrogen Fuel Initiatives, carbon 
sequestration, and FutureGen,'' p. 21.

         ``[E]veryone is conveniently forgetting that we're here b/c 
        [because] S-1 [Secretary Bodman] wants to kill FG as its [sic] 
        currently contemplated with or without a Plan B.'' \3\
---------------------------------------------------------------------------
    \3\ E-mail from Doug Schwartz to Julie Ruggiero, December 10, 2007.

    2. Bodman's primary stated reason for killing the original 
FutureGen plan was that the cost had doubled to $1.8 billion. That was 
false, and an inexcusable error for the head of a federal agency. 
Bodman and his staff obtained that number by comparing the cost 
estimate of $952 million in constant FY 2004 dollars with the ``as 
spent'' dollars--which is always higher because it includes normal 
inflation and other cost increases--that all federal agencies use when 
estimating the actual cost of multi-year projects such as FutureGen. 
The Office of Fossil Energy attempted numerous times to explain to 
DOE's policy staff the difference between these two numbers, but as 
Under Secretary Bud Albright's Chief of Staff cavalierly explained 
while preparing talking points for Bodman, ``this is not a legal 
document, it is a communications document. As for whether the 
escalation costs after 2004 were expected or not, why does that even 
matter?'' \4\
---------------------------------------------------------------------------
    \4\ E-mail entitled ``Fw: Updated FuturrGen Talking Points'' from 
Doug Schwartz to Andrew Patterson, Dec. 15, 2007.
---------------------------------------------------------------------------
    It is difficult to believe that anyone working at the top levels of 
DOE or the White House, both of which deal with many multi-year clean-
up, research and defense projects--particularly someone with Bodman's 
business background--did not know the difference between ``constant'' 
and ``as spent'' dollars or even ask how the $1.8 billion figure was 
obtained. But there is no evidence that anyone asked that basic 
question.

    3. Secretary Bodman should have known that his claims that the 
restructured FutureGen would accomplish all of the goals of the 
original plan and would speed the use of CCS technology were false 
Bodman and his senior deputies--Deputy Secretary Clay Sell and Under 
Secretary Albright--demanded that DOE staff create documents for the 
White House saying the new plan would cost less taxpayer money and do 
more to validate new carbon capture and sequestration technologies in a 
shorter time frame than the original FutureGen. This work was largely 
overseen by political appointees working under Sell and Albright. These 
claims were concocted without consulting the industry that was expected 
to take up the FutureGen mantle and despite the repeated warnings of 
career DOE staff to the political leadership of the Department that the 
project would fail to meet the original goals. Career staff produced a 
summary analysis by December 2007 that was entitled, ``What ``Plan B'' 
would NOT accomplish'' (emphasis in original). The concluding 
paragraphs are so compelling that they are worth quoting at length:

         Given the above delays [following analysis of how Plan B would 
        slow technology development and deployment], it is reasonable 
        to assume that proceeding with ``Plan B'' and without 
        FutureGen, the availability of affordable coal fueled CCS 
        plants would be delayed at least 10 years and will not allow 
        widespread deployment of CCS until near 2040. Affordable CCS 
        technologies will not be available in time to meet the expected 
        turnover of the existing fleet of coal power plants in the 
        U.S., nor for incorporation into the development of the world's 
        massive coal resources in countries such as China and India.

         Based on the DOE Climate Change Task Force analysis, which was 
        the basis for the FY09 DOE budget request, a delay of ten years 
        in the deployment of fossil technology with CCS would result in 
        a cumulative loss of emission reductions of about 22 billion 
        tons CO2 through 2100 in the U.S. To put this into 
        perspective, current U.S. total annual CO2 emissions 
        are six billion tons; U.S. annual CO2 emissions from 
        coal are two billion tons. The DOE Task Force further estimated 
        that CCS benefits from the proposed initiative for the rest of 
        the world were about six times the U.S. benefits, or on the 
        order of 150 billion tons CO2 through 2100 worldwide 
        that would not be avoided if ``Plan B'' were chosen.\5\
---------------------------------------------------------------------------
    \5\ Analysis from a one page document drawn from e-mails 
circulating in the Department dated December 11, 2007. These findings 
were also quoted by Victor Der in an e-mail that went to James Slutz 
and others in this same time frame, but similar points had been raised 
by DOE staff throughout the discussion of whether there was a viable 
option to the President's FutureGen program.

    4. The anemic response by industry to the competition to 
participate in the new FutureGen proved in a real world demonstration 
how wrong Bodman and his deputies were. There were four responses of 
which two were ineligible and two were incomplete. None proposed to 
construct the IGCC/CCS, coal-based, zero-emission electricity and 
hydrogen producing power plant that had been promised by Secretary 
Bodman in January of 2008. The industry response to a Request for 
Information and the draft FOA had reduced the restructured program to a 
competition for technology that would attempt to sequester a smaller 
amount of carbon dioxide, either as part of a newly constructed plant 
or as a ``bolt on'' to an existing plant.
    But by the time the career staff were proven right, Bodman and 
President Bush were at the end of their tenure, the scheduled project 
selection date had passed, and the United States had lost a year, at 
minimum, in developing and deploying carbon capture and sequestration 
technologies.

    5. The Bush Administration's abrupt cancellation of the original 
FutureGen without bothering to consult or even warn the four countries 
(India, Australia, South Korea, and China) which had signed on as 
project partners severely damaged the United States' reputation as an 
international science partner. The South Korean Minister for Commerce, 
Industry and Energy wrote on February 4, 2008 (three days after 
receiving a cancellation notice from Secretary Bodman):

         ``I am really surprised that I had no prior explanation of 
        that restructuring intention from DOE . . .. If you have 
        recognized all Korea's endeavor regarding the project, it is 
        not the appropriate way to deliver U.S. DOE's intention to 
        restructure FutureGen by sending me an e-mail.'' \6\
---------------------------------------------------------------------------
    \6\ E-mail entitled ``Re: DOE Announces Restructured FutureGen'' 
from Kijune Kim to James Slutz, Feb. 4, 2008.

    Foreign partners weren't the only ones surprised by DOE's change of 
direction. Cancellation of the project, and the abandonment of the 
growing coalition of countries supporting the project, also allowed the 
technology lead in this important endeavor to move to other countries. 
Carbon capture and sequestration projects are now going forward in 
Australia, China (former partners) and Europe. Other countries no 
longer look to the United States for leadership in this area, and, as 
senior DOE officials acknowledged to one another, the restructured 
program had no international component built into it.\7\
---------------------------------------------------------------------------
    \7\ E-mail entitled ``RE: Int'l aspect of the new futuregen 
construct'' from James Slutz to Karen Harbert, Dec. 12, 2007.

    6. Creating ``clean coal'' is an extremely complex task involving 
not only the development of reliable and economical technology to 
capture carbon dioxide and other pollutants, and integrating it into 
electricity-producing coal plants, but also the acceptance of higher 
electricity prices and unknown liability for carbon dioxide 
sequestration sites by the public and their elected officials 
worldwide. Without a carbon regulation structure in place, it is almost 
impossible to expect power generators and utilities to take on this 
``public benefit'' task without expecting a return on investment, 
something that the Bush Administration refused to acknowledge, much 
less address. This guaranteed that Secretary Bodman's efforts during 
the summer and autumn of 2007 to convince industry to sign up for more 
risk in the original FutureGen project would be a non-starter. 
FutureGen was a high-risk effort to develop and demonstrate innovative 
technologies for carbon capture and sequestration. Without a regulatory 
environment requiring firms to use such technologies, there was little 
reason--beyond calculations of public relations--for private companies 
to commit any more than they already had on FutureGen.
    When the Department of Energy's top managers were attempting to 
restructure FutureGen, a senior career official from the Office of 
Fossil Energy described the new project as a Frankenstein.\8\ The 
analogy to the creation of a monster which could not be controlled by 
its creator was not quite accurate. But the idea that ``Plan B'' was a 
cobbled together mess of left-over parts was not far off the mark. 
However, what DOE really created was more of a Humpty Dumpty. Just like 
Humpty Dumpty, when FutureGen fell off the wall in its ``restructured'' 
form, it broke apart, and all of DOE's press releases and PowerPoint 
presentations couldn't put it back together again.\9\
---------------------------------------------------------------------------
    \8\ E-mail from Victor Der to Jay Hoffman and Jarad Daniels, 
January 2, 2008 forwarding the Plan B Program Plan. Der writes in full: 
``Here's the Frankenstein. I'll be calling NETL [National Energy 
Technology Laboratory] to see where they are in the electrodes 
development to make it walk.''
    \9\ Humpty Dumpty's ability to create new meanings for words in 
Lewis Carroll's Through the Looking Glass also bears some relationship 
to Secretary Bodman's attempt to create something new while still 
calling it ``FutureGen'' so that, technically, he could say the 
President's initiative was alive. ``When I use a word,'' Humpty Dumpty 
said in a rather a scornful tone, ``it means just what I choose it to 
mean--neither more nor less.'' ``The question is,'' said Alice, 
``whether you can make words mean different things.'' ``The question 
is,'' replied Humpty Dumpty, ``which is to be master--that's all.''a

The Origins of FutureGen

    In his State of the Union address in January of 2003, President 
George W. Bush unveiled his ``Hydrogen Fuels Initiative,'' otherwise 
known as a hydrogen-powered, noxious emissions-free car called the 
``Freedom Car.'' He committed $1.7 billion over the next 10 years for 
research on car technology and fuel distribution. But where would the 
hydrogen fuel come from? In the volume required by the transportation 
sector, it could only come from coal or natural gas.\10\ And thus was 
born FutureGen.
---------------------------------------------------------------------------
    \10\ ``A Car for the Distant Future,'' The Washington Post, March 
9, 2003, B2.
---------------------------------------------------------------------------
    A month later, on February 27, 2003, the President announced with 
great fanfare the Integrated Sequestration and Hydrogen Research 
Initiative, a 10-year, $1 billion, government/private partnership to 
build a coal-based, zero-emissions electricity and hydrogen producing 
power plant. ``This demonstration project and the Carbon Sequestration 
Leadership Forum will build on these initiatives to provide the 
American people and the world with advanced technologies to meet the 
world's energy needs, while improving our global environment for future 
generations,'' he promised.\11\ ``It will be the cleanest fossil fuel-
fired power plant in the world,'' a contemporaneous Department of 
Energy (DOE) publication claimed and was a ``direct response to the 
President's Climate Change and Hydrogen Fuels Initiatives.'' \12\ 
According to then-DOE Secretary Spencer Abraham, the project would 
``help turn coal from an environmentally challenging energy resource 
into an environmentally benign one.'' \13\ It would be ``one of the 
boldest steps our nation has taken toward a pollution-free energy 
future . . .. The prototype power plant will serve as the test bed for 
demonstrating the best technologies the world has to offer,'' Abraham 
promised.\14\
---------------------------------------------------------------------------
    \11\ ``Bush Administration Announces $1 Billion Coal Plant 
Project,'' Platts Coal Outlook, March 3, 2003, p. 1.
    \12\ ``A Vision for Tomorrow's Clean Energy,'' U.S. Department of 
Energy, Office of Fossil Energy, February 2003, p. 1.
    \13\ ``U.S. Seeking Cleaner Model of Coal Plant,'' New York Times, 
Feb. 28, 2003, A22.
    \14\ ``DOE Aims for `pollution-free' Plant,'' Inside Energy/Federal 
Lands, March 3, 2003, p. 1.
---------------------------------------------------------------------------
    The announcement was made jointly by the Department of Energy (DOE) 
and the Department of State to emphasize the core objective of 
international cooperation. At the same time, the two agencies announced 
the creation of the Carbon Sequestration Leadership Forum (CSLF), an 
international panel which would focus on carbon capture and 
sequestration.\15\ All these initiatives were in large part a response 
to President Bush's desire to show that the United States was engaged 
in efforts to reduce global warming even though it had refused to 
ratify the Kyoto Protocol because of the generous greenhouse gas 
emission limits for developing countries. They were hailed by the 
business press as a ``viable alternative to Kyoto.'' \16\
---------------------------------------------------------------------------
    \15\ DOE, ``Concept Paper on International Participation in 
FutureGen,'' June 2008.
    \16\ ``The Post-Kyoto Initiatives,'' http://www.allbusiness.com/
mining/oil-gas-extraction-crude-petroleum-natural/718535-1.html, Dec. 
22, 2003.
---------------------------------------------------------------------------
    The 275-megawatt, prototype zero emissions plant subsequently known 
as ``FutureGen'' would be a ``living laboratory'' to test new clean 
power, carbon capture and coal-to-hydrogen technologies. The DOE 
release went on to say that President Bush had already emphasized the 
importance of technology in stabilizing greenhouse gas concentrations 
in the atmosphere with two major previous policy announcements: the 
National Climate Change Technology Initiative on June 11, 2001, and the 
Global Climate Change Initiative on February 13, 2002. ``Carbon capture 
and sequestration technologies likely will be essential to meeting the 
President's goals. Without them, it will be virtually impossible to 
limit global carbon emissions,'' DOE stated.
    Moreover, the President's Hydrogen Fuels Initiative envisioned 
``the ultimate transformation of the Nation's transportation fleet from 
a reliance on petroleum to the use of clean-burning hydrogen,'' DOE 
said. Although most hydrogen in the United States and about half of the 
world's hydrogen supply were currently produced from natural gas, ``The 
new technologies to be integrated into the prototype plant will expand 
the options for producing hydrogen from coal, providing a more 
diversified and secure source of feedstocks for the President's 
initiative'' (emphasis added).\17\
---------------------------------------------------------------------------
    \17\ All discussion of ``DOE Release'' is from ``A Vision for 
Tomorrow's Clean Energy,'' U.S. Department of Energy, supra. p 1. 
President Bush reiterated his support for FutureGen in fact sheets and 
statements related to his administration's environmental and energy 
accomplishments in October 2003, April 2004, March and June 2005, 
February and March of 2006, and January, April, May and September of 
2007. New foreign partners were welcomed at the White House. 
``Statements about FutureGEN,'' undated DOE document.
---------------------------------------------------------------------------
    Virtually every aspect of the prototype plant would employ cutting-
edge technology. It would not use ``traditional coal technology,'' but 
be based on a coal gasification system to produce hydrogen and carbon 
dioxide. The hydrogen would be used for electric power generation or as 
a feedstock for refineries. ``In the future, as hydrogen-power 
automobiles and trucks are developed as part of President Bush's 
Hydrogen Fuels Initiative, the plant could be a source of 
transportation-grade hydrogen fuel.'' New technologies would be used to 
capture the carbon dioxide, and it would be sequestered in a geologic 
formation that would be intensively monitored to verify the permanence 
of the storage.\18\
---------------------------------------------------------------------------
    \18\ Ibid.
---------------------------------------------------------------------------
    The goals of the project were extremely ambitious. DOE and its 
partners were to:

    1. Design, construct and operate a 275-megawatt prototype plant 
that produced electricity and hydrogen with near-zero emissions. The 
size of the plant was driven by a need to provide commercially relevant 
data and produce one million tons of carbon dioxide (CO2) 
necessary to validate the ``integrated operation of the gasification 
plant and the receiving geologic formation.''

    2. Sequester at least 90 percent of the CO2 emissions, 
prove the effectiveness, safety and permanence of the sequestration and 
establish standardized technologies and protocols for CO2 
measuring, monitoring and verification.

    3. Validate the engineering, economic and environmental viability 
of ``advanced coal-based, near-zero emission technologies'' that by 
2020 would produce electricity with less than a 10 percent increase in 
cost; and produce hydrogen at $4 per million Btus or less than the 
wholesale price of gasoline.\19\
---------------------------------------------------------------------------
    \19\ ``A Vision for Tomorrow's Clean Energy,'' supra, p. 2.
---------------------------------------------------------------------------
    The industry and the environmental community expressed skepticism 
from the outset. Coal gasification to produce electricity is ``still an 
edgy technology,'' one expert said, and extracting hydrogen from coal 
wasted 30 percent of the fuel's latent energy. The budget and schedule 
were viewed as tight ``even for a conventional coal-fired power 
plant.'' One environmentalist said until the administration supported a 
``binding program'' to limit carbon emissions, the private sector would 
not commit ``real money'' to solving the problem.\20\ But if the 
project reduced the cost of carbon dioxide sequestration from $100 to 
$300 per ton to $10 or less, it would save the U.S. ``trillions of 
dollars'' to meet the inevitable carbon regulations.\21\
---------------------------------------------------------------------------
    \20\ Ibid.
    \21\ ``A Pollution-free Coal Plant?'' Power Magazine, May 2003.
---------------------------------------------------------------------------
    By the end of 2003, DOE's Office of Fossil Energy (FE), which had 
the lead on the project, had prepared the mission need statement 
required for the acquisition of a capital asset. It focused on the 
necessity to integrate the operation of a coal-based hydrogen/power 
facility with carbon dioxide sequestration, something that the existing 
clean coal research program--which addressed the development of 
components and subsystems--did not do. To sufficiently consider the 
feasibility of the zero-emissions concept, DOE had to address the 
integration gap ``to prove technical operational viability to the 
conservative coal and utility industry.'' \22\ The expectation was that 
FutureGen would be sufficiently successful that when the aging fleet of 
coal plants was retired in the 2020-2040 time frame, there would be a 
viable zero emissions coal option.\23\
---------------------------------------------------------------------------
    \22\ ``Mission Need Statement: FutureGen Sequestration and Hydrogen 
Research Plant,'' DOE Office of Fossil Energy, Nov. 6, 2003, pp. 1-2.
    \23\ Ibid., p. 4.
---------------------------------------------------------------------------
    In the need statement, FE evaluated and rejected six alternative 
approaches to achieve President Bush's goal. In particular, it rejected 
the option of a large-scale demonstration of commercial technology by 
the power industry. ``This alternative would require the immediate 
integration of a number of complex commercial-scale power plant 
component technologies, and operation and integration will be 
technically challenging and risky from an industry perspective.'' 
Moreover, the sequestration had not yet been demonstrated. Such an 
approach would not be cost-effective and without legislated carbon 
constraints, ``the industry has no incentive to invest its limited 
capital in this demonstration and pursue this high-risk course of 
action.'' \24\
---------------------------------------------------------------------------
    \24\ Ibid., pp. 12-13.
---------------------------------------------------------------------------
    The acquisition strategy for a research and development project was 
conditionally approved by DOE's deputy and undersecretaries in November 
of 2003 and fully approved in April of 2004. Congress provided $9 
million to initiate FutureGen, but also asked for a report on funding 
and cost sharing.\25\ The goals and the Administration's plans for 
achieving them were more fully outlined in the program plan submitted 
to Congress in March of 2004 as required in the Department of Interior 
and Related Agencies Appropriation Act of 2004 (P.L. 108-108). The cost 
share would be 74 percent government and 26 percent private--well above 
the 20 percent commitment from the private sector normally required for 
research and development projects.\26\
---------------------------------------------------------------------------
    \25\ E-mail entitled ``RE: FW: FutureGen Acq Strategy'' from Keith 
Miles to Patrick Ferraro, Feb. 27, 2007.
    \26\ DOE, Office of Fossil Energy, ``FutureGen: Integrated 
Hydrogen, Electric Power Production and Carbon Sequestration Research 
Initiative: Energy Independence through Carbon Sequestration and 
Hydrogen from Coal,'' March 2004; Conf. Rep. 108-330, 149 Cong. Rec. 
9898, 9936, Oct. 28, 2003.
---------------------------------------------------------------------------
    In the plan, DOE told Congress that FutureGen ``directly'' 
addresses one of the four strategic goals in its 2003 Strategic Plan: 
to protect national and economic security by ``promoting a diverse 
supply and delivery of reliable, affordable, and environmentally sound 
energy.'' Through use of efficient generation technologies and carbon 
sequestration, FutureGen would eliminate environmental barriers and 
enable the continued use of domestic coal. It would also produce 
hydrogen for transportation to support President Bush's hydrogen fuel 
initiative and provide a ``unique real-world opportunity to prove the 
feasibility of large-scale carbon sequestration, a key potential 
strategy to reduce the risks of climate change.'' Absent this ``zero-
emission option . . ., coal's contribution to the Nation's energy mix 
could be severely curtailed, thus limiting the fuel diversity of our 
electricity supply portfolio, and increasing our dependence on more 
expensive and less secure sources of energy.'' \27\
---------------------------------------------------------------------------
    \27\ DOE, ``FutureGen: Integrated Hydrogen, Electric Power Product 
ion and Carbon Sequestration Research Initiative,'' supra, p. 2.
---------------------------------------------------------------------------
    Defined as a ``public benefits-driven'' investment in ``high-risk, 
high-return technology that private companies alone cannot undertake'' 
FutureGen's integration of concepts and components would be the

         key to proving technical and operational viability to the 
        generally conservative, risk-adverse coal and utility 
        industries. Integration issues such as the dynamics between 
        upstream and downstream subsystems . . . can only be addressed 
        by a large-scale integrated facility operation. Unless the 
        production of hydrogen and electricity from coal integrated 
        with sequestering carbon dioxide can be shown to be feasible 
        and cost competitive, the coal industry will not make the 
        investments necessary to fully realize the potential energy 
        security and economic benefits of this plentiful, domestic 
        energy resource (emphasis added).

    FutureGen would combine high-risk research activities, advanced 
generation coal gasification technology integrated with combined cycle 
electricity generation, hydrogen production, and carbon capture and 
sequestration. It would take at least 10 years to accomplish its goals, 
and the results would be shared with participants, industry, the 
environmental community, international partners and the public. ``Broad 
engagement of stakeholders early on in FutureGen is critical to 
achieving an understanding and acceptance of sequestration and zero-
emission coal utilization,'' DOE stated.\28\
---------------------------------------------------------------------------
    \28\ Ibid., p. 3
---------------------------------------------------------------------------
    While its goals and schedule were recognized as aggressive and 
high-risk, they were judged achievable and would prove ``the basis for 
a potentially huge long-term public benefit.'' And DOE determined that 
it was not possible ``to reach FutureGen's stretch goals using off-the-
shelf commercial technology.'' Critical components needed to be 
designed, and their efficiencies, environmental performance reliability 
and economics needed to be advanced and tested. More importantly, ``[a] 
key piece of FutureGen is proving the viability of sequestration and 
its integration with a power facility.'' \29\ Full-scale operation with 
continuous power generation was projected by FY 2012.\30\
---------------------------------------------------------------------------
    \29\ Ibid., p. 6.
    \30\ Ibid., p. 13.
---------------------------------------------------------------------------
    Furthermore, according to White House officials, the hydrogen 
transportation initiative and FutureGen were investments that would 
achieve ``both goals of addressing climate change and protecting our 
economy.'' \31\
---------------------------------------------------------------------------
    \31\ Statement of James Connaughton at Oct. 22, 2004, ``Ask the 
White House,'' http://georgewbush-whitehouse.archives.gov/ask/
20041022.html
---------------------------------------------------------------------------
    In 2005, after The New York Times alleged that industry would not 
spend money to reduce emissions under a voluntary system that gave a 
competitive advantage to those companies that did nothing, Samuel 
Bodman, the new DOE Secretary, reiterated the Department's support for 
FutureGen.\32\ President Bush also featured it prominently in a 2005 
``fact sheet'' concerning how he was addressing climate change. In 
December of 2005, Bodman announced an agreement with an industry 
consortium called the FutureGen Industrial Alliance, to build 
FutureGen, ``a prototype of the fossil-fueled power plant of the 
future.'' He described it as a direct response to President Bush's 
directive to develop a hydrogen economy by ``drawing on the best 
scientific research to address the issue of global climate change.'' 
Bodman lavishly praised the Alliance members, who would contribute $250 
million to the project, as among ``the world's most responsible and 
forward thinking coal and energy companies.'' At the heart of the 
project--described as a ``stepping-stone toward future coal-fired power 
plants''--would be coal-gasification technologies that could eliminate 
air pollutants and mercury. Carbon sequestration would be a key feature 
with the goal of capturing 90 percent of the plant's carbon dioxide 
emissions. The ``ultimate goal for the FutureGen plant is to show how 
new technology can eliminate environmental concerns over the future use 
of coal and allow the Nation to tape the full potential of its coal 
reserves,'' Bodman said.\33\
---------------------------------------------------------------------------
    \32\ ``Climate Change and the President,'' letter from Secretary 
Bodman, The New York Times, May 26, 2005, responding to ``Dirty Secret: 
Coal Plants Could Be Much Cleaner,'' May 22, 2005. That article 
referred to the recommendation of the National Commission on Energy 
Policy, an independent, bipartisan advisory body that the government 
spend an additional $4 billion on IGCC technology over 10 years to 
speed up the industry's acceptance of the technology.
    \33\ ``FutureGen Project Launched: Government, Industry Agree to 
Build Zero-Emissions Power Plant of the Future,'' DOE press release, 
Dec. 6, 2005. There were ultimately 13 industrial partners of which 
four were foreign-based: American Electric Power Service Corp., Anglo 
American Services Ltd., BHP Billiton Energy Coal, Inc., China Huaneng 
Group, Consol Energy, Inc., E.ON U.S. LLC, Foundation Coal Corp., 
Luminant, Peabody Energy Corp., PPL Energy Services Group, Rio Tinto 
Energy America Services, Southern Company Services, Inc., and Xstrata 
Coal Pty Ltd.
---------------------------------------------------------------------------
    By January of 2006, the project now known as FutureGen was no 
longer being promoted as a source of transportation-grade fuels, 
perhaps because the Administration had realized that commercially 
viable hydrogen-powered cars were some decades away.\34\ FutureGen was 
now to integrate advanced coal gasification technology, hydrogen from 
coal, power generation, and carbon dioxide (CO2) capture and 
geologic storage. ``The success of FutureGen will assure that coal, a 
low-cost, abundant, and geographically diverse energy resource, 
continues to globally supply exceptionally clean energy.'' \35\
---------------------------------------------------------------------------
    \34\ ``When Presidents Talk Fuel, the Nation Listens, Sort Of,'' 
Detroit Free Press, Feb. 13, 2006, B2.
    \35\ DOE, ``FutureGen--A Sequestration and Hydrogen Research 
Initiative,'' Project Update: January 2006.''
---------------------------------------------------------------------------
    The project appeared to be going well in this time frame--at least 
publicly. A preliminary agreement with the Alliance was signed on 
December 2, 2005.\36\ President Bush referred to it in his 2006 State 
of the Union address as part of his Advanced Energy Initiative.\37\ 
Participation by foreign governments was expected.\38\ Its cost in FY 
2005 constant dollars was $952 million.\39\ According to DOE's 
Assistant Secretary for fossil energy, ``the FutureGen project is being 
pursued aggressively and is on schedule.'' \40\ It was a ``high 
priority,'' James Connaughton, Chairman of the White House Council on 
Environmental Quality and the President's senior environmental and 
natural resources adviser, stated in late 2006.\41\ By April of 2007, a 
first phase cooperative agreement had been signed which would include 
work on siting, scoping, conceptual design and National Environmental 
Policy Act (NEPA) compliance. The Alliance had selected four sites as 
finalists, and the winning site was expected to be announced in mid- to 
late 2007.\42\
---------------------------------------------------------------------------
    \36\ DOE, ``FutureGen Status,'' PowerPoint presentation for 7th 
annual SECA Workshop and Peer Review, Sept. 12-14, 2006.
    \37\ In a press release providing a more detailed description of 
the initiative, the Administration noted that the 2007 budget included 
$54 million for FutureGen as part of the clean coal technology program. 
The White House, ``State of the Union: The Advanced Energy 
Initiative,'' Jan. 31, 2006, p. 1.
    \38\ British, Australian and Chinese companies were already 
Alliance members. http://www.futuregenalliance.org/alliance/members.stm 
Four countries (India, Korea, Japan and China) also joined.
    \39\ Constant dollars are not an accurate reflection of the actual 
cost of a 10-year, lifetime project over the life of the project 
because they do not include cost increases that result from inflation 
and changes in construction, materials and other costs during the out-
years. In its 2004 report to Congress, DOE did not point out that it 
was using constant year dollars when projecting the total cost of the 
project. DOE, ``FutureGen: Integrated Hydrogen, Electric Power 
Production and Carbon Sequestration Research Initiative, supra, p. 9, 
Figure 3.
    \40\ ``Clean Energy Project,'' letter from Jeffrey Jarrett, The New 
York Times, June 5, 2006.
    \41\ ``Budgets Falling in Race to Fight Global Warming,'' The New 
York Times, Oct. 30, 2006, A1.
    \42\ Ibid., p. 2.
---------------------------------------------------------------------------
    The significance of the FutureGen project on the international 
stage could not be underestimated. After his refusal to submit the 
Kyoto Protocol to the Senate for ratification, President Bush and his 
advisers touted the highly visible project as a way to attack the 
problem of global warming in the voluntary, cooperative international 
manner that was a hallmark of the Bush approach to environmental 
problems. CEQ Chairman Connaughton, who had the task of defending the 
Bush Administration, did so by promoting international partnerships for 
sustainable growth, of which FutureGen was one.\43\ It was particularly 
important in U.S. relationships with India and China, both of which 
signed on as partners in the FutureGen project even before the 
cooperative agreement with the Alliance was completed. A ``U.S.-India 
Energy Dialogue'' was established by Secretary Bodman and Montek Singh 
Ahluwalia, Deputy Chairman of India's Planning Commission, in 2005. By 
May of 2006, India had become the first foreign country to sign on as a 
FutureGen partner. According to Senate testimony in 2007 by David 
Pumphrey, then DOE Deputy Assistant Secretary for international energy 
cooperation, ``successfully demonstrating and adopting this technology 
will allow India to reduce the intensity of future greenhouse gas 
emissions from the burning of their abundant coal resources.'' \44\
---------------------------------------------------------------------------
    \43\ ``Bush Aide Says Myths about U.S.' Green Policy Remain,'' The 
Economic Times, Aug. 30, 2006.
    \44\ Statement of David Pumphrey before the U.S. Senate Committee 
on Energy and Natural Resources, July 18, 2006, p. 4.
---------------------------------------------------------------------------
    In September of 2006, President Bush and President Hu Jintao of 
China agreed to create a ``Strategic Economic Dialogue'' (SED) between 
the two countries which would be convened semi-annually. Treasury 
Secretary Henry Paulson would lead the U.S. side of the dialogue, and 
the Energy Department would dialogue with China's National Development 
and Reform Commission on energy policy.\45\ In December of 2006, 
China--the second largest producer of CO2 after the U.S.--
became the third foreign country (South Korea was the second) to join 
the FutureGen Government Steering Committee. China Huaneng Group, the 
country's largest coal-fueled power generator, had already joined the 
Alliance. According to Pumphrey, the U.S. ``assigned a high priority to 
maintaining long-term technical cooperation with China on fossil energy 
issues,'' including FutureGen. The FutureGen concept could demonstrate 
technologies that would reduce carbon emissions worldwide.\46\
---------------------------------------------------------------------------
    \45\ ``Fact Sheet Creation of the U.S.-China Strategic Economic 
Dialogue,'' Treasury Department press release, Sept. 20, 2006.
    \46\ ``U.S.-China Relationship: Economics and Security in 
Perspective,'' Statement by David L. Pumphrey before the U.S.-China 
Economic and Security Review Commission, Feb. 1, 2007, p. 7.

The Cost Issue

    By early 2007, however, DOE management internally was raising 
questions about the cost of FutureGen. Even before the Full Scope 
Cooperative Agreement was signed, DOE headquarters was expressing its 
discontent to the Alliance. FutureGen's as-spent cost projection, which 
included inflation and the increasing cost of construction and 
materials, was $1.8 billion and global construction costs were rising. 
In light of those anticipated cost increases, DOE was balking at paying 
74 percent of any additional costs even though an increase in as-spent 
costs would normally be expected. Michael Mudd, the Alliance's Chief 
Executive Officer, expressed his concern about DOE's delay in signing 
the cooperative agreement, saying it would cause schedule and 
engineering delays and a loss of credibility. ``We do not understand 
why issues, such as the cost-share fraction, continue to be revisited. 
This specific issue was settled nearly two years ago during discussions 
between the White House, OMB, DOE, and the Alliance.'' The Alliance 
would like to report ``positive progress'' on all fronts to Congress 
``rather than concerns that the Administration is having second 
thoughts about supporting the FutureGen project.'' \47\
---------------------------------------------------------------------------
    \47\ E-mail entitled ``FutureGen delays,'' from Michael Mudd to 
George Rudins (cc: Carl Bauer, Keith Miles, Thomas Russial, Thomas 
Sarkus) March 20, 2007.
---------------------------------------------------------------------------
    In a discussion over a draft press release announcing the 
agreement, Victor Der, then-Director of DOE's Office of Clean Coal 
Systems,\48\ complained to George Rudins, former Deputy Assistant 
Secretary for coal and power systems, that the release emphasized a 
cost increase, not the fact that ``notwithstanding rising inflation in 
the heavy construction sector, both the Alliance and DOE believe that 
FutureGen is vitally important to coal and climate change, and have 
committed to continuing as cost shared partners in this initiative.'' 
\49\ FE also reminded the Department that it was a ``key Presidential 
Initiative and a major Government/Industry Partnership'' for producing 
electricity and hydrogen from coal while eliminating emissions and 
sequestering carbon dioxide at a low cost.\50\ The final press release 
did, however, refer specifically to the cost increases, but said a 
review of ``progress and expenses'' would not be concluded until the 
end of the first phase of the project in June of 2008.\51\
---------------------------------------------------------------------------
    \48\ Dr. Der has held various positions at DOE related to fossil 
energy and clean coal. He is currently Acting Assistant Secretary for 
fossil energy.
    \49\ E-mail entitled ``Fw: FutureGen release: FE first draft'' from 
Victor Der to George Rudins, March 25, 2007.
    \50\ E-mail entitled ``RE: FG @ Revised Congressional'' from Thomas 
Shope to Dirk Bartlett, William Purvis and Raj Luhar, March 23, 2007.
    \51\ ``DOE Signs FutureGen Cooperative Agreement,'' States News 
Services, April 10, 2007; ``Rising Costs of FutureGen Plant Heighten 
Concerns among Legislators,'' Platts Coal Outlook, April 16, 2007.
---------------------------------------------------------------------------
    The Alliance was so upset by DOE's concerns as expressed in a call 
from Deputy Secretary Clay Sell on the day the press release was issued 
that Mudd said it was ``putting the project on hold until we have the 
chance to meet with Clay and Secretary Bodman to address issues and 
concerns raised by Clay during his call.'' \52\ When asked later in a 
press call why DOE signed the agreement if it already had these 
concerns, Sell said it was the signing of the agreement that brought 
the financial issues to his and Secretary Bodman's attention.\53\
---------------------------------------------------------------------------
    \52\ E-mail entitled ``Re: FutureGen Agreement'' from Michael Mudd 
to John Grasser, April 11, 2007.
    \53\ Transcript of Department of Energy conference call, Jan. 30, 
2008. The speakers were Sell and Secretary Bodman.
---------------------------------------------------------------------------
    Sell and Bodman did not waste any time bringing their hesitation to 
the White House. In April, Sell briefed staff of the National Economic 
Council, OMB, the National Security Council and the Office of the Vice 
President on their cost concerns, and it was agreed that the costs had 
to be capped.\54\ Thomas Shope, DOE's principal Deputy Assistant 
Secretary for fossil energy, communicated to the Alliance that ``the 
project will not move forward as currently structured.'' Within days, 
DOE's lawyers were asked to determine if the agreement made clear that 
DOE could ``just decide not to fund it if it got too expensive'' or how 
to cap its contribution.\55\
---------------------------------------------------------------------------
    \54\ E-mail entitled ``Re: Futuregen . . . problems'' from Jeff 
Kupfer to Clay Sell, Sept. 9, 2007.
    \55\ E-mail from Thomas Shope to Clay Sell and Dennis Spurgeon, 
April 19, 2007; e-mail from Mary Egger to Gene Cadieux, April 16, 2007.
---------------------------------------------------------------------------
    At a May 11, 2007, meeting with NEC and OMB staff, Shope recorded 
the following:

         DECISIONS: The significance of the project in the 
        Administration's global climate change strategy was recognized. 
        However, additional cost containment measures must be part of 
        the project going forward and must be negotiated before the 
        commencement of BP-2. The principal cost containment measure 
        employed will be a cap on DOE's expenditures.\56\
---------------------------------------------------------------------------
    \56\ ``Meeting Notes `To Discuss The Revised Cost Estimates For The 
Futuregen Project,' '' attached to e-mail entitled ``FutureGen Meeting 
Followup'' from Thomas Shope to Jeffrey Kupfer, Dennis Spurgeon, Karen 
Harbert, Eric Nicoll and David Hill, May 11, 2007.

    The $1.8 billion as-spent figure had been obtained by adding a 
straight-line 5.2 percent annual escalation factor during the 
construction of the contract to the FY 2004 estimate of $950 million, a 
normal process for all large projects built over a number of years. The 
Alliance then subtracted $301 million in estimated income from the sale 
of electricity to come up with a net cost of $1.46 billion. FE staff 
accepted that as a reasonable escalation, but construction costs in 
early 2007 were growing at a much higher rate because of worldwide 
demand for construction services and materials.\57\
---------------------------------------------------------------------------
    \57\ E-mail entitled ``Table of RTC Escalated Outlays,'' from 
Thomas Sarkus to Victor Der and Jeffrey Hoffman, April 2, 2007.
---------------------------------------------------------------------------
    In an April presentation on the project's status to DOE, Mudd and 
his team pointedly noted that they ``trusted'' that DOE still shared 
the vision the administration had put forward ``and planned to provide 
the political, technical and financial support required.'' He reminded 
DOE that the FutureGen Alliance was formed in ``direct response'' to 
President Bush's initiative, and that the industry was contributing 
nearly $400 million with ``no expectation of financial return,'' but 
believed that FutureGen was central to reducing the cost of addressing 
climate change by ``trillions of dollars.'' FutureGen was unique as no 
other fully integrated power plant combined gasification and carbon 
capture and sequestration in a deep geologic formation. It provided ``a 
clear mechanism to assess the cost, performance, and public acceptance 
of integrated near-zero emissions power plant, which is an essential 
precursor to commercial deployment.'' Mudd also pointed to the global 
significance of such a project as a catalyst for new projects in other 
countries and its ability to position the U.S. as a leader on climate 
change solutions.\58\
---------------------------------------------------------------------------
    \58\ FutureGen Alliance, ``FutureGen: Project Status,'' April 18, 
2007, pp. 3-5 and 15.
---------------------------------------------------------------------------
    Mudd reminded DOE that the Alliance members ``came to the table'' 
with certain understandings: the government would pay 74 percent of the 
cost; it would maintain its support of FutureGen; and that the $950 
million cost was in FY 2004 dollars and subject to adjustment for 
inflation which would be shared. For their contribution, Alliance 
members would get no financial return or intellectual property rights. 
At that time, every milestone had been met. Construction would begin in 
2009, but Mudd pointed out that heavy construction costs were up by 30 
percent and well drilling costs by 250 percent.\59\ Work continued 
through the summer on the design and the environmental impact 
statement, and DOE continued to solicit foreign partners.\60\
---------------------------------------------------------------------------
    \59\ Ibid., pp. 8, 10, and 14.
    \60\ See, e.g., e-mail entitled ``FW: Revised TOC'' from Joseph 
Giove to Carol Loman attaching IEA Ministerial 2007 Briefing Book 
Tasks, April 17, 2007.
---------------------------------------------------------------------------
    These exchanges marked the beginning of a dual track on FutureGen. 
The administration continued to unequivocally support FutureGen in 
public. For example, at the end of the April 2007 U.S.--EU summit on 
energy security, efficiency and climate change, the White House issued 
a joint statement pledging its support for FutureGen without 
reservation. ``The United States, in partnership with its government 
steering group member countries and the private sector, will build 
FutureGen, the United States' first near-zero emissions fossil fuel 
plant, by 2012,'' the statement read. The first priority was deploying 
``near zero emissions coal technologies'' which were critical in 
tackling global CO2 emissions because of coal's importance 
in meeting energy needs.\61\ FE pushed the general counsel's office to 
``move out on the EIS [Environmental Impact Statement]'' so that final 
site selection could be completed by the end of 2007 because the states 
had purchase options on sites that expired at the end of the year.\62\
---------------------------------------------------------------------------
    \61\ ``2007 U.S.-EU Summit Statement: Energy Security, Efficiency, 
and Climate Change,'' The White House Press Office, April 30, 2007, pp. 
1-2.
    \62\ E-mail entitled ``Fw: FutureGen Meeting Followup'' from Thomas 
Shope to David Hill, May 13, 2007.
---------------------------------------------------------------------------
    But inside the DOE leadership, it was a different story. In 
addition to meeting with White House staff, Deputy Secretary Sell was 
beginning to discuss the ``path forward'' with senior DOE officials, 
specifically on how to deal with the project's cost escalation. At the 
same time, the agency was preparing its FY 2009 budget. Funds for 
FutureGen--which did not have a specific line item in the budget--had 
to compete annually with other coal research projects such as the Clean 
Coal Power Initiative (CCPI) and regional carbon sequestration 
partnerships.
    The Alliance did not want to negotiate a new cost agreement until 
it had completed more reliable cost estimates at the end of the first 
phase of the project in June 2008--as anticipated in the cooperative 
agreement--when it would have a more definitive design.\63\ It 
responded to the pressure from DOE by appealing directly to President 
Bush in a letter on June 18, 2007. Describing FutureGen as a ``premiere 
global project'' with international partners, Mudd wrote that the 
Alliance members.
---------------------------------------------------------------------------
    \63\ E-mail entitled ``Re: FutureGen Mtg,'' from Victor Der to Raj 
Luhar, Mr. Giove, George Rudins and Jarad Daniels, May 7, 2007; e-mail 
entitled ``FutureGen Path Forward,'' from Thomas Shope to Clay Sell, 
May 7, 2007.

         have dedicated to FutureGen staff with global expertise in 
        major design and construction projects, and the venture is 
        operated with the clear objectives and management discipline of 
        any major commercials endeavor. Costs are up for every major 
        energy infrastructure project, but the FutureGen Alliance is 
---------------------------------------------------------------------------
        watching costs closely as we share in the cost increases.

    Mudd reminded the President that ``To date, your Administration has 
supported this important global effort'' and referred to Bush's May 31, 
2007, call for ``expanding global cooperation on research and 
development to bring to market technology based solutions to climate 
change concerns.'' Continued government support of FutureGen was 
critical as staff had to be hired, land agreements made and major plant 
components with long manufacturing lead times needed to be ordered.\64\
---------------------------------------------------------------------------
    \64\ Letter to President Bush from Michael J. Mudd, June 18, 2007. 
No response to this letter was found in the DOE files provided to the 
Committee.
---------------------------------------------------------------------------
    DOE management was not deterred. By July of 2007, Shope had sent a 
memo to Secretary Bodman asking for the Secretary's approval of an 
immediate renegotiation of the final cost structure instead of waiting 
until June 2008.\65\ The Alliance's initial response was that the cost 
increases were not the fault of anything the Alliance had done or 
failed to do, and reiterated the commitments the members had made 
through a non-profit consortium. According to the Alliance, there were 
already rumors from the foreign Alliance members that the U.S. might 
not be that committed to FutureGen. Nonetheless, Secretary Bodman 
approved Shope's proposal on July 27 without addressing the commitment 
issue.\66\
---------------------------------------------------------------------------
    \65\ ``Memorandum for the Secretary'' from Thomas D. Shope, July 
27, 2007.
    \66\ ``Memorandum for the Deputy Secretary'' from Thomas D. Shope, 
Attachment A to ``Memorandum for the Secretary, supra, July 27, 2007.
---------------------------------------------------------------------------
    In an accompanying memo to Sell listing various options, however, 
Shope said that FutureGen was configured to ``precisely'' achieve the 
cost and performance goals for the zero emissions coal program and to 
gain industry acceptance and commercial deployment of the technology on 
a domestic and global scale. It also had strong international support 
as the ``premier international, collaborative project'' addressing 
greenhouse gases and climate change. Shope noted that the Alliance had 
been generally willing to work with the Department on cost overruns 
attributable to design errors, mismanagement, delays from accidents, 
etc. But the increases projected did not fall into any of those 
categories, and Shope was very skeptical that the industry would take 
on additional risk because there was no direct or immediate return on 
its investment, and it was risk-averse.\67\
---------------------------------------------------------------------------
    \67\ Ibid.
---------------------------------------------------------------------------
    Despite the recognition by DOE of these significant factors 
pointing to FutureGen as the only way to obtain the cooperation of the 
coal and power industry , DOE had already determined that it was not 
``financially sustainable.'' In an August memorandum to Bud Albright, 
DOE's undersecretary, Shope also said that the Administration was 
expressing concerns about the cost, although no documents have been 
provided to the Committee to verify that statement. However, it was 
clear that the Secretary's single goal was to limit the Federal 
Government's cost.\68\
---------------------------------------------------------------------------
    \68\ ``Memorandum for the Deputy Secretary'' from Thomas D. Shope, 
Aug. 31, 2007.
---------------------------------------------------------------------------
    DOE's plan to renegotiate was discussed with the Alliance staff, 
who told Sell they would work to resolve the issue before the final 
site selection at the end of the year, but whose nervousness about 
DOE's commitment to the project was evident. ``The talk on the street 
that the project is in trouble is affecting [the Alliance's] ability to 
secure good vendors and competitive bids . . .. The Alliance has been 
told that some vendors are not interested in chasing after the 
FutureGen project if it just going to fall apart [sic].'' \69\ But in 
late August DOE told the Alliance board that a negotiation team needed 
to be formed.\70\ According to talking points prepared for the meeting, 
Shope told the Alliance that ``an `open checkbook' approach is 
unsustainable and sets an unrealistic expectation which needs to be 
addressed. Simply put, we cannot commit to funding the project 
regardless of cost.'' For the Department to continue in the 
partnership, ``the FutureGen financial plan must properly incentivize 
all parties to control costs and to account for those costs that are 
not directly controllable.'' \71\
---------------------------------------------------------------------------
    \69\ Undated memo to Clay Sell. Because of the size of the 
components for an IGCC plant, the Alliance needed to order parts long 
before they were actually needed.
    \70\ ``Appendix 2: DOE and FutureGen Alliance Communication 
Timeline,'' attached to undated FutureGen strategic plan.
    \71\ ``Talking Points--Meeting with Futuregen Alliance Board of 
Directors,'' Aug. 29, 2007.
---------------------------------------------------------------------------
    It was a strange message to the partners that DOE had solicited to 
join in its risky project--and which everyone at DOE knew did not have 
much of an incentive to join. DOE was now threatening to pull out of 
its own project and appeared to be shifting the burden of the project 
momentum to the Alliance. It was now up to the Alliance to keep 
FutureGen alive.
    In early September, staff at DOE's National Energy Technology 
Laboratory (NETL)--the managers of the FutureGen project--were told 
that ``SE-1 [Secretary Samuel Bodman] and SE-2 [Deputy Secretary Sell] 
are directing DOE to `renegotiate' the FG award, based upon their 
assessment that it is a `bad deal.''' NETL was to identify areas for 
cost reduction.\72\ In a preliminary meeting that Sell had with the 
Alliance, he was told that the Alliance was ``potentially interested'' 
in reducing its scope so that option was now on the table.\73\ NETL 
quickly responded. ``Anything but minor scope changes now could really 
screw things up.'' It could mean another site ``best and final offer'' 
process, a supplemental draft environment impact statement and perhaps 
the loss of some foreign contributors. NETL's counsel added, ``I would 
be willing to bet the Alliance wants to reduce the CO2 
capture level and eliminate the co-sequestration test. The latter might 
not be such a big deal. The former could open a pandora's box.'' \74\
---------------------------------------------------------------------------
    \72\ E-mail entitled ``Fwd: Pre-Meeting Tuesday morning on 
FutureGen negotiations'' from Keith Miles to Edward Simpson and 
Ferraro, Sept. 4, 2007. Miles asked the recipients not to ``shoot the 
messenger'' and said he was being ``asked to identify a `soldier' from 
your shop to participate.''
    \73\ E-mail entitled ``FG'' from Adam Ingols to Thomas Shope and 
Andrew Patterson, Sept. 6, 2007.
    \74\ E-mail entitled ``Re: Fw: FG'' from Thomas Russial to Jarad 
Daniels, Victor Der and Thomas Sarkus, Sept. 7, 2007.
---------------------------------------------------------------------------
    Sell also wrote to CEQ Chairman Connaughton, Barry Jackson, who had 
replaced Karl Rove, and Keith Hennessey, President Bush's chief 
economic adviser, at the White House, and Stephen McMillin, the Office 
of Management and Budget's (OMB) Deputy Director in charge of the 
federal budget, telling them that FutureGen was heading in a ``bad 
direction.'' It was experiencing significant cost increases, and DOE 
might be forced to cancel. Sell said that neither the Secretary nor the 
OMB had contemplated these expenditures and expressed his belief that 
FutureGen was becoming a bad deal for the government and politically 
unsustainable in Congress. Sell said other priorities in coal research 
were being threatened by FutureGen.\75\
---------------------------------------------------------------------------
    \75\ E-mail entitled ``Futuregen . . . problems'' from Clay Sell to 
James Connaughton et al., Sept. 7, 2007.
---------------------------------------------------------------------------
    Connaughton, who was the Administration's representative at 
international meetings on climate change, asked that a ``tiger team'' 
be put together on the problem. Pointing out that FutureGen was an 
important part of the administration's climate change response, 
Connaughton emphasized, ``This project is very important . . .. If 
there is a rational option, it should be considered.'' \76\ There is no 
indication that this was done.
---------------------------------------------------------------------------
    \76\ E-mail from James Connaughton to Clay Sell, Barry Jackson, 
Keith Hennessey and Stephen McMillin.

Options: Strip Down the Project or Change the Cost Share

    As requested, FE had put together the pros and cons for various 
options. It did not favor any major change in the project scope because 
that would change the basic goals of the project, reduce international 
involvement and delay clean coal technology development. Specifically, 
it found scaling down the plant size from 275 MW to 120 MW, a 60 
percent reduction which would reduce the cost by only 33 percent, would 
not meet industry's needs. It would be inefficient, delay the NEPA 
process, not meet the goal of sequestering one million tons of 
CO2, and still require a subsequent demonstration in a 
larger plant. FutureGen's goals would be delayed by five years, and the 
total cost of the program would increase.\77\
---------------------------------------------------------------------------
    \77\ DOE, ``FutureGen Options & Recommendations by DOE FE,'' 
October 2007, p. 4.
---------------------------------------------------------------------------
    Later in the negotiations, a NETL staffer worried: ``It occurred to 
me that we are beating the process `integration' drum pretty hard in 
our justification for FutureGen, but I don't think Jim Slutz and most 
of DOE top management (or anyone at OMB) have an intuitive feel for 
what these integration issues are and why dealing with them at large 
scale is so important . . .. The goal is to drive home the point that 
these integration issues are real and challenging, and are not going to 
be solved at smaller-scale.'' \78\ Adding CCS to the back end of the 
system and making certain that all the pieces work in tandem would be a 
significant challenge.\79\
---------------------------------------------------------------------------
    \78\ E-mail entitled ``Re: IGCC/CCS Process Integration Made 
Simple'' from Jay Braitsch to Thomas Sarkus, Nov. 7, 2007.
    \79\ E-mail entitled ``Re: IGCC/CCS Process Integration Made 
Simple'' from Thomas Sarkus to Jay Braitsch, Nov. 7, 2007.
---------------------------------------------------------------------------
    Another option was to break the project into three separate 
projects for 1) sequestration, 2) the turbine, and 3) the gasifier. FE 
described its previous negative experience with such a system and said 
it would be difficult to find companies to do the individual pieces 
because there was no economic reason to do so. For example, no one 
would take over the sequestration piece because there was no revenue 
resulting from sequestering, burying and monitoring CO2.\80\
---------------------------------------------------------------------------
    \80\ Ibid., pp. 5-6.
---------------------------------------------------------------------------
    Reducing the research and development components of FutureGen, 
which had been sold as a ``living laboratory'' to test out new 
technologies was also rejected. The research was needed to prove that 
there would be no more than a 10 percent increase in the cost of 
electricity by adding CCS. Without testing in FutureGen, ``advanced R&D 
components would first need to be proven independently and then proven 
in an integrated fashion at a commercially relevant scale'' which 
``would significantly delay the availability of the technology for 
commercial deployment and would increase overall cost to the program.'' 
\81\
---------------------------------------------------------------------------
    \81\ Ibid., p. 7.
---------------------------------------------------------------------------
    FE also rejected reducing the carbon capture system efficiency from 
90 to 50 percent, reducing fuel flexibility or removing the coal-to-
hydrogen component. The only viable option for a successful FutureGen 
was to renegotiate the cost share and have a firm DOE cap as Secretary 
Bodman had made it clear that he would not sign on to a $3-$4 billion 
deal.\82\
---------------------------------------------------------------------------
    \82\ E-mail entitled ``Fw: FG'' from Victor Der to Thomas Russial, 
Thomas Sarkus and Keith Miles, Sept. 10, 2007; e-mail entitled 
``FutureGen'' from Bradley Poston to Thomas Brown, Oct. 30, 2007.
---------------------------------------------------------------------------
    In September of 2007, FE made its presentation to DOE Deputy 
Secretary Sell. Citing once again the benefits of FutureGen in proving 
advances in power generation in an integrated fashion with a variety of 
coal types, furthering international cooperation with coal giants China 
and India and proving the viability of widespread CCS, FE recommended 
that the project scope remain the same, but that further cost increases 
be shared 50/50 with the Alliance and title to the plant be given to 
the Alliance to be used for loan collateral.\83\ DOE Under Secretary 
Albright, the agency's lead on the negotiating team, apparently agreed 
with FE's analysis.\84\
---------------------------------------------------------------------------
    \83\ DOE, ``FutureGen Renegotiation Issues and Recommendations,'' 
Sept. 14, 2007. FE's guidance for that meeting was to concentrate on 
scope reduction costs and benefits, not a change in cost sharing. E-
mail entitled ``FG Guidance'' from Andrew Patterson to Jarad Daniels, 
Sept. 12, 2007.
    \84\ E-mail entitled ``RE: FG Update & Data Call'' from Jarad 
Daniels to Samuel Biondo, Victor Der and Joseph Giove, Sept. 21, 2007.
---------------------------------------------------------------------------
    President Bush seemed unaware of the concerns of DOE management. He 
continued to tout the original program. On September 4, 2007, he issued 
a joint statement with then-prime minister John Howard of Australia 
welcoming Australia to the FutureGen International Partnership, which 
President Bush described as

         a major United States-led international project aimed at 
        building a prototype plant that integrates coal gasification 
        and carbon capture and storage to produce electricity with 
        near-zero emissions. This demonstrates and underscores the 
        commitment of both countries to the development and deployment 
        of clean coal technologies.\85\
---------------------------------------------------------------------------
    \85\ ``Statements about FutureGEN,'' undated document from DOE, p. 
1. President Bush also told foreign media in late May of 2007 that he 
believed FutureGen would be developed as a coal-fired plant with zero 
emissions. ``And when that technology comes to fruition, if you can get 
yourself some coal, you've got your ability to diversify away from 
sole-source supplier of energy.'' Remarks by President Bush in 
Roundtable Interview with Foreign Media, http://fpc.state.gov/fpc/
85918.htm, May 31, 2007. International participation was not that easy 
to obtain. Prospective contributors weren't sure what they were getting 
for their $10 million. Because of proprietary concerns, visiting 
researchers would not be able to fully view certain project areas. If 
too much information was shared, vendors might not be attracted to the 
project, DOE worried. Some kind of licensing arrangements might be 
possible, but they were never worked out. E-mail entitled ``Re: 
FutureGen Renegotiation process update'' from Thomas Russial to Jarad 
Daniels, Sept. 19, 2007.

Negotiations

    The initial negotiation session was held in the first week of 
October. In that meeting, the Alliance agreed to a 50/50 cost split 
after the first $1.8 billion, but said it had ``cost flow 
constraints.'' It was considering financing options to help ``smooth'' 
the costs to its members during the construction phase. The Alliance 
proposed that it receive 100 percent of the program income, and that 
DOE vest title to the plant in the Alliance at the beginning of the 
project, instead of the end. DOE found this unacceptable, but said 
internally that the next round of negotiations would focus on ``ways to 
adjust revenue and cost share with the hope of finding a `win-win' 
position.'' \86\
---------------------------------------------------------------------------
    \86\ DOE, ``Brief Summary: First Round of Negotiation between 
FutureGen Alliance & DOE,'' Oct. 4, 2007, pp. 1-2.
---------------------------------------------------------------------------
    The financing issue continued, however, to be the critical sticking 
point. The Alliance wanted to fund the project through a leveraging 
plan; DOE refused.\87\ By the end of October, DOE proposed that the 
individual Alliance members each give a guarantee ``for a significant 
portion of the financing. If the Alliance defaults or withdraws, the 
members must pay over the guaranteed amount to the lender to reduce the 
outstanding debt thereby making it more economically practical for DOE 
to take over and complete the project.'' \88\
---------------------------------------------------------------------------
    \87\ Attachment to e-mail entitled ``FutureGen Timeline.doc'' from 
Doug Schwartz to Kasdin Miller, Jan. 24, 2008.
    \88\ E-mail entitled ``FutureGen Renegotiation'' from Thomas Rusial 
to David Hill and Mary Egger, Oct. 19, 2007.
---------------------------------------------------------------------------
    By early November, DOE told the White House that it had begun work 
on a ``parallel strategy'' if no agreement could be reached. It would 
seek to maintain the goals and objectives of FutureGen by ``(a) 
adopting a different partnership construct that makes more sense for 
the Federal Government, or (b) separating the project's core 
technologies and accelerating our ongoing R&D efforts in these areas, 
testing at smaller scale with limited integration, and expediting 
deployment to the marketplace.'' \89\ It was the beginning of what 
would be known as Plan B, an idea first mentioned by Bradley Poston in 
DOE's Office of Contract Management. Poston had asked if costs could be 
reduced by using an existing power plant to test out the carbon capture 
and sequestration products still in the research and development stage. 
Poston concluded that without carbon sequestration, there was no reason 
to proceed ``so either the costs are reduced significantly or we revise 
our goals and focus on getting most of the technologies developed now 
so that in the future we can design and build with greater knowledge 
and confidence in our success and cost control.'' \90\
---------------------------------------------------------------------------
    \89\ E-mail entitled ``New final paragraph for futuregen'' from 
Adam Ingols to Sarah Magruder, Nov. 1, 2007.
    \90\ E-mail entitled ``FutureGen'' from Bradley Poston to Thomas 
Brown, Oct. 30, 2007.

Plan B

    Top DOE officials soon proposed a new FutureGen structure under 
which private companies would fund the IGCC plant, and DOE would pay 
only for the CCS component. In an e-mail exchange with a White House 
staffer, Albright described FutureGen's current structure as not only 
fostering cost overruns but actually threatening the ``success of the 
underlying goals of FutureGen.'' \91\ DOE's clean coal research team 
did not agree. According to FE, the national and global costs of not 
going forward with the original plan would be enormous. Private 
industry would not take on this challenge without significant 
incentives and the passage of carbon reduction legislation that gave a 
value to carbon. ``Given the above delays, and assuming a reluctance to 
pursue high-cost alternative pathways, it is reasonable to assume that 
without FutureGen, the availability of moderate-cost, coal fueled CCS 
plants would be delayed by 10-15 years.'' (Emphasis in the 
original)\92\
---------------------------------------------------------------------------
    \91\ E-mail entitled ``Re: FutureGen Funding'' from Bud Albright to 
Charles Blahous and Clay Sell, Nov. 6, 2007.
    \92\ ``Discussion of Alternative FE Clean Coal Program without 
FutureGen,'' p. 2, attached to an e-mail entitled ``Re: Alternative 
FutureGen Plan C'' from Thomas Sarkus to Doug Schwartz and Victor Der, 
Nov. 9, 2007. It appears that DOE briefly considering eliminating 
FutureGen altogether, but discarded that option.
---------------------------------------------------------------------------
    The 10-year delay would result in a loss of U.S. emission 
reductions of about 22 billion tons of CO2; a 15-year delay 
would result in a loss of 33 billion tons. For the rest of the world, 
however, the loss of this technological research would be six times the 
U.S. losses, or about 150 billion tons. Having a stream of commercially 
available, increasingly cost-effective coal/CCS technology options 
beginning in 2020 would also reduce electricity and natural gas costs. 
``Integration of concepts and components in a full scale test facility 
like FutureGen is the key to proving the technical and operational 
viability as well as gaining acceptance of the near-zero emission coal 
concept,'' staff wrote.\93\ In undated notes of an internal discussion, 
Karen Harbert, the Assistant Secretary for policy and international 
affairs, also reminded the group that DOE had gotten a ``plus up'' in 
the FE budget by claiming that it would significantly accelerate CCS 
development by 2030, and that there would be a ``big problem'' if there 
was a delay.\94\
---------------------------------------------------------------------------
    \93\ Ibid., pp. 2-3. DOE, ``What `Plan B' would NOT accomplish,'' 
undated.
    \94\ Undated notes of meeting on Plan B. Participants: Karen 
Harbert, Victor Der, Scott Klara and Jim Slutz.
---------------------------------------------------------------------------
    These warnings were pushed aside as Albright, Sell and the DOE 
policy staff moved forward with Plan B. This structure would scrap the 
cooperative agreement, the Alliance and the international partners for 
a new competitive procurement under which individual U.S. companies 
would take on the responsibility of building IGCC plants, and DOE would 
pay only the additional cost of the CCS component. At the same time, 
however, DOE continued to negotiate with the Alliance on the cost share 
and financial component and continued working on the EIS for the four 
sites which were the finalists.\95\ FE raised again the problems with 
IGCC plants. Only two had been built, and both ran on natural gas, not 
synthetic gas or hydrogen from coal. ``Some of us tekkies worry that 
hydrogen will pose an even greater challenge than syngas did. Add-in a 
water-gas shift reactor, which no IGCC plant now has. Then tack CCS 
onto the back end and make certain that all of the pieces work in 
tandem. You get the drift,'' a NETL engineer wrote.\96\
---------------------------------------------------------------------------
    \95\ E-mail entitled ``New final paragraph for futuregen'' from 
Adam Ingols to Sarah Magruder, Nov. 1, 2007.
    \96\ E-mail entitled ``Re: OGCC/CCS Process Integration Made 
Simple'' from Thomas Sarkus to Jay Braitsch, Nov. 7, 2007.
---------------------------------------------------------------------------
    Other people started to raise questions, and the scramble was on to 
justify Plan B. A debate between Doug Schwartz, Albright's Chief of 
Staff, and Poston revealed the difficulties of making the new plan 
viable--even on paper. Poston said a new competition would delay the 
schedule, and he could see no industry self-interest. ``We may give a 
party no one comes to,'' he wrote. Schwartz answered that DOE would 
just have to create more self-interest.

         [T]here may be a new model(s) we come up--in theory--that may 
        alter our prior determination there is no return on investment 
        for partners, whether resulting from changing the IP approach, 
        permitting vendors to participate, an impending prospect of 
        carbon regulation that did not exist so acutely in 2003, or 
        other variables. In other words, there may be compelling 
        reasons beyond corporate philanthropy for outside parties that 
        would encourage their interest. Perhaps that is hopelessly 
        naive on my part, but this is what we must fully explore and 
        hopefully unlock.

    Poston responded that he hadn't seen those compelling reasons. 
Although the potential return on investment was great in social terms, 
it was ``non-existent in economic terms.'' Schwartz agreed with that 
conclusion, but argued that to come up with a viable Plan B, they 
needed to

         fundamentally alter our assumptions as we strive to come up 
        with a new approach. So if we start the process with the goal 
        of creating more self interest from the private sector (by 
        granting more IP exclusivity, allowing vendors to compete, 
        etc.), would that not change our thinking on how we might 
        structure things? In other words, do veheicles [sic] like TIAs, 
        loan guarantees, etc. become more viable tools if, at the 
        outset, we seek to avoid a construct which is as 
        ``philanthropically'' focused as the current deal seems to be?

    Poston responded, ``I am not certain how we can fundamentally alter 
the economics.'' He continued:

         The economics of our power production require other sources of 
        revenue to offset the additional costs associated with carbon 
        sequestration . . .. I have not heard of other revenue streams 
        being identified except looking for participation from 
        philanthropic organizations . . . but how would that play in 
        the press? ``DOE unable to support its own priorities; competes 
        with the needy for funding?''

    Schwartz admitted that ``absent a basic change in some of the 
underlying assumptions, this is a circular exercise in which we will 
always arrive at the rightful conclusion that the current arrangement 
is the best mechanism for achieving our goals'' (emphasis added).\97\
---------------------------------------------------------------------------
    \97\ Series of e-mails entitled ``RE: FutureGen Plan B'' between 
Bradley Poston and Doug Schwartz, Nov. 6-9 and 15-19, 2007; undated 
memorandum entitled ``Subject: FutureGen Option B'' from Poston's 
files. Exactly what this change would be was unclear. In March of 2007, 
Thomas Shope testified before the House Energy and Commerce Committee 
that CCS technology would not be reliably available for commercial 
deployment until 2045 at the current level of funding for CCS and 
advanced power generation technology. George Rudins, then-Deputy 
Assistant Secretary for coal power systems, stated that the schedule 
could be accelerated by 20 years, but required annual federal funding 
of $1 billion plus deployment incentives. ``It assumes a greatly 
expanded CCPI program and R and D. It also assumes a greatly expanded 
FutureGen program.'' E-mail entitled ``Re: Date for CCS 
commercialization'' from George Rudins to Frank Burke, March 7, 2007.
---------------------------------------------------------------------------
    While this discussion was going on, Poston also wrote of his strong 
misgivings to Thomas Brown, the Director of the Office of Contract 
Management.

         Yesterday's meeting on what to do if an agreement on a revised 
        Cooperative Agreement could not be reached included new 
        participants but not new insights or conclusions.

         A very optimistic perspective was being offered on the 
        possibilities of what we could do differently. I did try an 
        [sic] add . . . an element of reality in that we took our best 
        approach with the initial award and that unless we have changed 
        our program needs (which we have not), have reduced our cost 
        drivers (which we have not), or can introduce new money (which 
        we might be able to but on a such a small scale that it is 
        immaterial) I could not see much choice except to step back and 
        focus the Department's efforts on R&D . . ..

         There are NO differences from 2003 so my response will sound 
        like a broken record--if the current deal can not be 
        satisfactorily restructured take our money and focus on 
        R&D.\98\
---------------------------------------------------------------------------
    \98\ E-mail entitled ``FutureGen'' from Bradley Poston to Thomas 
Brown, Nov. 7, 2007.

    But as Der told his staff: ``Doug [Schwartz] wants new ideas . . .. 
Doug is driving this with other hot shot project finance guys . . .. 
Have fun in this dump.''\99\ (Emphasis added)
---------------------------------------------------------------------------
    \99\ E-mail entitled ``This Coming Week'' from Victor Der to Jarad 
Daniels, Nov. 9, 2007.

Operating on Dual Tracks

    By the end of November, Sell was making daily requests for a 
detailed Plan B draft.\100\ There is no indication that this option was 
ever shared with the Alliance until DOE made the announcement on 
December 18 that it was going to restructure FutureGen.
---------------------------------------------------------------------------
    \100\ E-mail entitled ``RE: Fg'' from Doug Schwartz to Andrew 
Patterson, Nov. 30, 2007.
---------------------------------------------------------------------------
    DOE's work on the Environmental Impact Statement required under the 
National Environmental Policy Act (NEPA) for the four finalist 
FutureGen sites was going forward as scheduled. DOE's October fact 
sheet on FutureGen mentioned that there were cost increases, but that 
they were ``consistent with the increases seen in similar power plant 
projects and construction projects.'' \101\ On October 30, a DOE 
employee said DOE was ``diligently working'' to complete the NEPA 
process and issue a Record of Decision (ROD) by the end of 2007.\102\ 
The final EIS was issued on November 9.\103\ On November 15, Albright 
and Slutz recommended that Secretary Bodman sign a letter to the 
Illinois Congressional delegation responding to an October 25 letter 
expressing concern about meeting the year-end deadline for a site 
selection. In that letter--which he later said was a mistake--Secretary 
Bodman repeated the commitment to complete the NEPA process and issue 
the ROD in a timeframe that supported FutureGen site selection by the 
end of December. Albright and Slutz also reminded the Secretary that 
the Texas legislature had passed incentives for a site in its state 
which would expire at the end of the year.\104\ In late November, NETL 
staff was discussing a ``big event'' with DOE participation when the 
Alliance announced its final site selection.\105\ By mid-December, 
sign-offs were being obtained on the ROD. The ``potential'' ROD signing 
was set for December 17 or 18, and a letter was drafted to the Alliance 
to that effect for Secretary Bodman.\106\
---------------------------------------------------------------------------
    \101\ DOE, ``FutureGen, FC26-06NT42073, October 2007, p. 3.
    \102\ E-mail entitled ``Re: latest version'' from Joseph Giove to 
Jarad Daniels, Oct. 30, 2007. A Record of Decision accepting the EIS 
must be signed by the agency before any federal funds can be expended.
    \103\ The final EIS was published in the Federal Register on Nov. 
16. EIS No. 20070489, 72 Fed. Reg. 64619, Nov. 16, 2007.
    \104\ Letter from Michael Mudd to Secretary Bodman, Oct. 25, 2007; 
memorandum for the Secretary entitled ``ACTION; RESPONSE TO LETTER FROM 
Illinois Congressional Delegation.'' At least two of the letters were 
signed, but not until Nov. 30. In a hearing before the Energy and 
Commerce Committee on Feb. 7, 2008, Secretary Bodman said it was a 
mistake. Letter dated Feb. 12, 2008, from Sen. Dick Durbin and Rep. Tim 
Johnson to Secretary Bodman.
    \105\ E-mail entitled ``RE: SENSITIVE: FG Site Selection 
coordination????'' from Thomas Sarkus to Victor Der, Carl Bauer and 
Miles Keith, Nov. 20, 2007.
    \106\ E-mail entitled ``Cover Memo for FutureGen ROD,'' from Mark 
Matarrese to James Slutz, Victor Der, Jarad Daniels, Andrew Patterson, 
Kevin Graney, Raj Luhar, John Grasser and Robert Tuttle, Dec. 12, 2007; 
e-mail entitled ``FG Draft Bodman Reply 11-15-07.doc'' from Thomas 
Sarkus to Joseph Giove and Thomas Russial, Nov. 15, 2007.
---------------------------------------------------------------------------
    At the same time, the Alliance also was pushing forward. In early 
December, it issued Secretary Bodman an invitation to the site 
selection announcement on December 17.
    But the negotiations were not going well. On December 6, the 
Alliance sent a letter to Albright stating that it wanted to proceed 
under the existing cooperative agreement until ``costs and risks can be 
properly assessed with input from the upcoming preliminary design 
report and cost estimate.'' The Alliance members did not want to accept 
considerably more financial risk without this information which ``both 
parties previously agreed would be a precursor to these discussions.'' 
The Alliance also accused DOE of taking away the legal and financial 
options that would help it manage risk even though they had been 
available under other cooperative agreements, but assured DOE that its 
members would honor their obligations. The Alliance said both parties 
should ``convey positive messages about the project'' and not suggest 
that the current agreement was ``anything less than a `good deal.' '' 
Assuming release by DOE of the ROD by December 17, the Alliance would 
make the site announcement on December 18.\107\
---------------------------------------------------------------------------
    \107\ Letter from Michael Mudd to Bud Albright, Dec. 6, 2007.
---------------------------------------------------------------------------
    In a detailed attachment, Alliance CEO Mudd laid out the basis upon 
which the Alliance was originally formed:

        1.  20 percent cost-sharing;

        2.  no repayment requirement from industry partner;

        3.  ability to vest ownership of plant with industry partners;

        4.  potential for program income to be shared among project 
        participants;

        5.  100 percent of post-project revenues to industry partners; 
        and

        6.  advanced appropriation of $300 million by DOE.

    But the Alliance members had given up many benefits by forming as a 
501(3)(c) non-profit corporation, which meant that no income or 
proceeds could go back to the original members, but must be reinvested 
in public benefit research and development. They got no intellectual 
property rights. The cost share increased to 26 percent. There was an 
agreement to negotiate limits to the federal investment subject to 
escalation after there was a more detailed site-specific design and 
cost estimate. Mudd also pointed to the offers made by the Alliance to 
share revenues and to share proceeds from the sale with DOE.\108\
---------------------------------------------------------------------------
    \108\ Ibid.
---------------------------------------------------------------------------
    Slutz responded in a short letter stating that DOE was evaluating 
its ``next actions'' with respect to the Alliance and the FutureGen 
project. He further said that the Alliance had scheduled its final site 
selection announcement without consulting with DOE--although DOE had 
been aware for months of the plan to make the announcement by the end 
of the year--and that DOE would consider it ``inadvisable'' for the 
Alliance to do so because DOE did not anticipate issuing the ROD.\109\
---------------------------------------------------------------------------
    \109\ Letter from James Slutz to Michael Mudd, Dec. 11, 2007.

``Sanity Check''

    In early December, Brad Poston was asked for a last ``sanity 
check'' on Plan B. In a meeting with Andrew Patterson, a senior policy 
adviser, Poston said that the most critical question was whether 
industry would want to participate and reminded Patterson that four 
years ago, industry had shown little interest in FutureGen. ``[W]e 
would be asking a utility stereotyped as risk averse [sic] 
organization, to use our unproven design on their $2.5B investment.'' 
\110\
---------------------------------------------------------------------------
    \110\ E-mail entitled ``RE: FutureGen'' from Bradley Poston to 
Thomas Brown, Dec. 5, 2007.
---------------------------------------------------------------------------
    DOE top officials weren't having any of it. On December 7, Albright 
told Jeff Kupfer, Secretary Bodman's Chief of Staff, that further 
negotiations with the Alliance were ``at best fruitless and likely 
counter-productive.'' Albright had a new overall plan, but needed the 
approval of Sell, the Secretary and the White House.\111\
---------------------------------------------------------------------------
    \111\ E-mail entitled ``RE: FutureGen'' from Bud Albright to 
Jeffrey Kupfer, Dec. 7, 2007.
---------------------------------------------------------------------------
    On December 11, DOE briefed the National Economic Council deputies 
on the new plan. Secretary Bodman briefed the NEC ``principals'' on 
December 14 on DOE's intent to restructure.\112\ The ``new strategy'' 
was laid out in a briefing memorandum. He would cap the government's 
financial exposure and pointed to developments, such as tax credits and 
loan guarantees for clean coal projects, that had occurred since 
FutureGen was conceived in 2003. DOE would issue a competitive 
solicitation ``aimed at accelerating near-term commercial deployment of 
integrated IGCC commercial power plants with cutting-edge CCS 
technology.'' DOE would fund only the CCS component of multiple IGCC 
plants, which it estimated would cost $350-$500 million per plant. 
DOE's unnamed ``experts'' believed there would be ``significant'' 
private sector interest, although it had not discussed this with the 
private sector.\113\
---------------------------------------------------------------------------
    \112\ Attachment to e-mail entitled ``FutureGen Timeline.doc: from 
Doug Schwartz to Kasdin Miller, Jan. 24, 2008.
    \113\ Ibid.

Good Faith?

    Whether DOE was operating in good faith during these negotiations 
with the Alliance is highly questionable. Secretary Bodman's intense 
dislike for the project was well-known by his staff. Undated notes 
recording a meeting about the legal obligations of the Department 
related to FutureGen read as follows: ``S-1 [Bodman] aggravated by this 
project. Bob Card [former DOE Under Secretary] deal. Trying to do 
everything in one project get smart on alternative options. Can we turn 
this off/redirect?'' \114\ At the end of September, Albright told FE 
``to work under the assumption that a threshold at the 1.8B figure with 
a 50/50 split afterwards, with some adjustment for increasing Alliance 
membership, would be sufficient.'' \115\ But on October 25, an FE 
employee walked into a meeting with several high-level DOE officials, 
including Albright, Alexander (Andy) Karsner, the Assistant Secretary 
for energy efficiency and renewable energy, and Karen Harbert, the 
Assistant Secretary for policy and international affairs.
---------------------------------------------------------------------------
    \114\ Undated, handwritten notes from the Department of Energy. 
Author not identified.
    \115\ E-mail entitled ``FG--update'' from Jarad Daniels to Thomas 
Russial, Sept. 26, 2007.

         The topic of discussion seemed to be how best to kill 
        FutureGen. It was great fun, with Karsner leading the charge by 
        suggesting that we just compete FutureGen under the loan 
        guarantee program and let industry fight over who gets the 
        federal cost share, and touting how they make industry eat all 
        the cost escalation in their biomass contracts.\116\
---------------------------------------------------------------------------
    \116\ Untitled e-mail from Jarad Daniels to Victor Der, Oct. 25, 
2007.

    Interestingly, earlier in the year, Albright had been quoted as 
saying that any action on climate change had to involve the rest of the 
world. ``Unless China and India are acting with us, it's pointless. 
They emit more carbon dioxide than we do.'' \117\ Even though DOE and 
the Alliance had accomplished that goal and had both China and India as 
FutureGen partners, Albright was now in the lead to dismantle it.
---------------------------------------------------------------------------
    \117\ Biography of C.H. Albright Jr., The Almanac of the Unelected, 
2007, Bernan Press, Lanham, MD, p. 140.
---------------------------------------------------------------------------
    Secretary Bodman appears to have made it clear to DOE staff that he 
did not care about the overarching goals of FutureGen, but only its 
cost. As Bradley Poston wrote in the midst of his efforts to contribute 
to a new plan, ``I have an imperfect . . . understanding of the 
program; the current market conditions; and the changes in operating 
parameters from four years ago when the original acquisition strategy 
was developed. I see the true issue to be money and our ability to cap 
our financial exposure.'' \118\
---------------------------------------------------------------------------
    \118\ E-mail entitled ``RE: FutureGen Plan B'' from Bradley Poston 
to Doug Schwartz, Nov. 9, 2007.
---------------------------------------------------------------------------
    Bodman's letter to Alliance CEO Mudd at the end of October stating 
that the ROD would be completed in time for a site announcement at the 
end of December appeared to be a commitment to the original FutureGen. 
But in December, Doug Schwartz, Albright's Chief of Staff, said 
everyone was ``conveniently forgetting'' one thing: ``[W]e're here b/c 
S-1 [Bodman] wants to kill FG as its [sic] currently contemplated, with 
or without a Plan B.'' \119\ It was also clear that everyone knew that 
Plan B had a very good chance of failing to meet the original goals. It 
would be cheaper, but it might not work, and carbon capture would then 
be delayed. ``We discussed the additional risk to the company building 
the plant and if they would actually be willing to take on this risk. I 
don't think we will know that until we put out a RFI and see what 
industry says,'' Sarah Magruder Lyle, DOE's White House liaison, wrote. 
The ``message'' focus would be on fiscal responsibility. There would be 
no fully funded advance appropriations for Plan B. Research would 
continue under the Clean Coal R&D program as in the past.\120\
---------------------------------------------------------------------------
    \119\ Untitled e-mail from Doug Schwartz to Julie Ruggiero, Dec. 
10, 2007.
    \120\ E-mail entitled ``Future Gen B Dec 12 2007 Final.doc'' from 
Sarah Magruder to Karen Harbert, Dec. 12, 2007.
---------------------------------------------------------------------------
    It is also clear that the Alliance did not know the details of Plan 
B during the negotiations, although Albright may have discussed it 
generally with some of the member companies.\121\
---------------------------------------------------------------------------
    \121\ E-mail entitled ``RE: FutureGen Timeline.doc'' from Mary 
Egger to David Hill, Jan. 24, 2009.

The Decision

    White House staff was expressing ``much angst'' over what Plan B 
would mean for commercial deployment of CCS technology.\122\ DOE 
officials asked for a clear deployment timeline of ``educated guesses 
and assumptions.'' The response was lukewarm at best even from the 
policy shop.
---------------------------------------------------------------------------
    \122\ E-mail entitled ``timeline'' from Jeffrey Kupfer to Bud 
Albright, Doug Schwartz and James Slutz, Dec. 13, 2007.

         Schedule for plan B is commercial scale operation of two or 
        three plants by 2015 with the demo lasting until 2018. One 
        could argue that you would have commercially deployed plants in 
        2015 and at a minimum you can argue that you would have them at 
        2018 assuming that they are still doing CCS after the demo 
---------------------------------------------------------------------------
        (emphasis added).

    On the other hand, FutureGen would operate from 2012-15. But if one 
``aggressively'' assumed it would take three to five years before a 
commercial plant was built, you could claim the 2018-20 timeframe for 
the first commercial deployment--not exactly an acceleration from the 
original FutureGen.\123\
---------------------------------------------------------------------------
    \123\ E-mail entitled ``timeline'' from Jeffrey Kupfer to Bud 
Albright, Doug Schwartz and Jim Slutz, Dec. 13, 2007; e-mail entitled 
``RE: timeline'' from Andrew Patterson to Mr. Schwartz and Mr. Slutz, 
Dec. 13, 2007.
---------------------------------------------------------------------------
    Nonetheless, the DOE higher ups had made their decision: Plan B 
would be rolled out with the promise that it would be better, faster 
and cheaper than the original FutureGen, regardless of the economics, 
industry interest, and the predictions of their own staff. Secretary 
Bodman communicated that to Senator Durbin in a phone call that 
apparently occurred on December 13.\124\ On that same day, the NEC 
principals met and approved a restructuring of FutureGen if the 
Alliance didn't agree with all of DOE's demands.\125\
---------------------------------------------------------------------------
    \124\ ``Meeting Memorandum'' to Secretary Bodman from Lisa Epifani 
regarding phone call to Senator Richard Durbin scheduled for December 
13, 2007. Other reports put the call on December 14 and we know that it 
was postponed at least once from December 12. However, the call did 
occur.
    \125\ Attachment entitled ``Purpose of Meeting'' to e-mail entitled 
``FG principals mtg statement.doc: from Mary Egger to Mary Egger, Jan. 
24, 2008.
---------------------------------------------------------------------------
    Victor Der, DOE's Deputy Assistant Secretary for clean coal, was 
blunt in his opposition. Plan B was only a demonstration which ``will 
likely use more conservative, more costly and substantially less 
efficient IGCC-CCS technologies rather than the more aggressive 
technologies being developed in our R&D program aimed at potential cost 
and energy penalty reductions . . .. Under Plan B we would still have 
to follow up with sequential CCPI type demos which would incrementally 
add one or two advanced technologies at a time. This serial approach 
costs us time to fully deploy CCS globally.'' Der went on to say that 
his group's estimate that Plan B could delay by at least 10 years full 
commercial deployment of low-cost, low energy advanced CCS technology 
that could be transferred to developing countries wasn't included in 
the final analysis. A follow-up e-mail stated that affordable CCS 
technologies also would not be available in time for the expected 
turnover of the existing fleet of coal power plants in the U.S.\126\ 
DOE officials responded by saying they were continuing to work ``on a 
scenario that allows us to reduce/eliminate the 10 year deployment 
delay.'' \127\
---------------------------------------------------------------------------
    \126\ E-mail entitled ``Re: timeline'' from Vic Der to Mr. Slutz, 
Carl Bauer and Scott Klara, Dec. 13, 2007; ``What `Plan B' would NOT 
accomplish,'' attachment to e-mail entitled ``FW'' FG Plan B'' from 
Jarad Daniels to James Slutz, Dec. 13, 2007.
    \127\ E-mail entitled ``FW: FutureGen/CCPI funding (With brackets) 
from Darren Mollot to Jay Hoffman, Dec, 17, 2007.

Impact of OMB Budget Cuts

    Secretary Bodman wasn't the only high-level government official not 
on board with the President's initiative. In September, DOE's budget 
shop told FE that the President's budget had additional funding that 
enabled FutureGen to stay on track and supported the baseline schedule. 
It reflected the ramp-up of activities as the program moved toward 
full-scale operation in 2012. FY 2009 activities included the complete 
detailed design of a prototype plant, money to initiate construction 
and the continued procurement of long-lead equipment.\128\ But in 
November, the Office of Management and Budget (OMB), which was well 
aware of Bodman's opposition, eliminated all of the climate change 
funds from FE's budget.\129\
---------------------------------------------------------------------------
    \128\ E-mail entitled ``Proposed Change for FutureGen'' from Karen 
Brown to Patty Graham, Robert Pafe, Jarad Daniels and Jordan Kislear, 
Sept. 28, 2007.
    \129\ E-mail entitled ``Re'' FY 2009 Budget intelligence'' from 
Jeffrey Kupfer to Steve Isakowitz and Clay Sell, Nov. 15, 2007.
---------------------------------------------------------------------------
    In early December, James Connaughton, the Chairmanaman of the 
President's Council on Environmental Quality (CEQ), met with 
representatives from Fossil Energy to discuss clean coal research in 
preparation for his attendance at the United Nations Framework 
Convention on Climate Change in Bali. Connaughton--who may not have 
been fully aware of the unrelenting drive toward Plan B--said that the 
U.S. had two options: either invest billions of dollars to develop the 
technologies to address climate change; or face a new regulatory 
environment that would not advance the technology. He also said that 
the U.S. needed to elicit more parallel activity in China and 
India.\130\
---------------------------------------------------------------------------
    \130\ E-mail entitled ``Recap of CEQ meeting on FY09 Passback'' 
from Jarad Daniels to Victor Der, Nov. 30, 2007. CEQ did host a meeting 
on FutureGen in early October to which representatives from the White 
House, the Office of Science and Technology Policy and DOE were 
invited. E-mail entitled ``CES mtg. re. FutureGen'' from Doug Schwartz 
to Nell Kinsey, Oct. 2, 2007.
---------------------------------------------------------------------------
    Connaughton's concerns were to no avail. On December 11, while he 
was in Bali, he received an e-mail from Karen Harbert at DOE. ``I know 
how busy you are in Bali, but without significant interest by WH 
offices, we will not have a serious effort in climate,'' she wrote--and 
there was no such interest. Harbert went on to says that in the FY08 
budget request, DOE had shifted over $500 million toward high-priority 
programs, including Futuregen, in clean coal and nuclear research and 
development, but OMB had eliminated all of the additions. Harbert 
acknowledged that the heavy emphasis on CCS would also help reduce 
emissions in China and India, but that OMB had eliminated ``all funded 
increase for clean coal, greatly undermining plans for critical 
demonstrations as well as FutureGen.'' \131\ In a related e-mail, 
Connaughton was portrayed as being
---------------------------------------------------------------------------
    \131\ E-mail from Karen Harbert to John Herrmann, NSC, Dec. 11, 
2007, enclosing e-mail entitled ``DOE Appeal Status'' from Ms. Harbert 
to James Connaughton, Dec. 11, 2007. Harbert said DOE had appealed $380 
million but recovered only $24 million.

         very apprehensive about the international piece--and how we 
        deal. What happens to other countries, etc. Bottom line is that 
        he likes his international talking point and wants to keep it. 
        CEQ is going to try to set up a call for you [Harbert] and him 
        sometime later today--so that you can convince him that this is 
        meangeale [sic]. Hopefully you can do that.\132\
---------------------------------------------------------------------------
    \132\ E-mail from Jeff Kupfer to Karen Harbert, undated.

    These budget cuts made it extremely difficult, if not impossible, 
to build the original FutureGen under any circumstances, as the DOE 
expenditures were front-loaded in the project schedule, even with a 50/
---------------------------------------------------------------------------
50 cost share after the initial $1.8 billion was spent.

Announcement by Alliance of Final Site Selection

    The Alliance's time line established the end of 2007 for the 
announcement of the final site decision. As DOE had completed the final 
EIS, the Alliance scheduled the announcement for December 18. The 
winner was the State of Illinois with a site near the city of Mattoon. 
But within hours, DOE, in a statement made by James Slutz, said that 
``the public interest mandates that FutureGen deliver the greatest 
possible technological benefits in the most cost-efficient manner. This 
will require restructuring FutureGen to maximize the role of private 
sector innovation, facilitate the most productive public-private 
partnership, and prevent further cost escalation.'' \133\ DOE also 
stated that it would not sign the Record of Decision on the EIS which 
was required before any federal project construction funds could be 
expended.\134\
---------------------------------------------------------------------------
    \133\ ``Statement from U.S. Department of Energy Acting Principal 
Deputy Assistant Secretary for Fossil Energy,'' Dec. 18, 2007.
    \134\ AP, ``Mattoon, Ill. picked for FutureGen pollution-free coal 
plant,'' Dec. 18, 2007; e-mail entitled ``Backlash draft'' from Julie 
Ruggiero to Megan Barnett, Dec. 18, 2007.

Plan B Goes Forward

    During January, there were some continued negotiations with the 
Alliance as the White House had not yet officially signed off on Plan 
B. On January 10, the Alliance sent a letter proposing a ``new approach 
to financing FutureGen.'' It would increase its cost share if overall 
costs went up, make post-project repayments and do partial bank 
construction financing. Under this approach, the Alliance claimed the 
final taxpayer investment would be no greater than it was on the day 
President Bush announced the project.\135\ But DOE internally remained 
focused on Plan B. Albright told DOE and White House staff that 
``[r]egardless of the value of their proposal, we need to continue to 
move expeditiously with the new direction rollout.'' The Alliance, for 
its part, refused to share the details of its proposal unless there was 
an ``in person'' meeting.\136\ DOE's clean coal staff had one job left: 
make the fantasy that was Plan B look good on paper.
---------------------------------------------------------------------------
    \135\ Letter dated Jan. 10, 2008, from Michael Mudd to C.H. 
Albright, p. 1.
    \136\ E-mail entitled ``RE: FutureGen'' from Bud Albright to 
Cynthia Bergman, Charles Blahous, Jeffrey Kupfer, Andrew Beck and Lisa 
Epifani, Jan 16, 2008.
---------------------------------------------------------------------------
    Putting together a seemingly logical story around Plan B to sell to 
the White House, Congress, the press and the public was not an easy 
job. After reviewing a rough outline of the program plan, Victor Der 
forwarded it to Jay Hoffman, DOE's Director of program analysis and 
evaluation with this message: ``Here's the Frankenstein. I'll be 
calling NETL to see where they are in the electrodes development to 
make it walk.'' \137\ Hoffman responded with a new ``FutureGen Plan B 
Storyline.'' The main rationale, according to Hoffman, was ``a more 
appropriate public/private cost allocation between DOE and industry. 
Secondary benefits may include accelerated commercial demonstration and 
more carbon-free power, but these are not driving reasons for why Plan 
B is being developed'' (emphasis added), Hoffman wrote. IGCC technology 
was ``a largely commercially proven technology'' and didn't need 
government assistance. CCS, on the other hand, was ``largely 
unproven,'' and DOE would pay for the resulting research and 
development, operating and maintenance and parasitic energy losses that 
the private company would incur.\138\
---------------------------------------------------------------------------
    \137\ E-mail entitled ``Plan B Program Plan 
12-20-2007.doc'' from Victor Der to Jay Hoffman, 
Jan. 2, 2008.
    \138\ E-mail entitled ``FY09 FutureGen Program Plan Storyline'' 
from Jay Hoffman to Victor Der, Jan. 4, 2008.
---------------------------------------------------------------------------
    After looking at the ``story line,'' Der wasn't convinced. ``[T]he 
FrankenGen document, I mean, New FutureGen, needs to be taught to walk 
first, before it can hop on a Harley.'' \139\
---------------------------------------------------------------------------
    \139\ E-mail entitled ``FW: A Program Plan for Demonstration of 
Integrated Electric Power Production and Carbon Sequestration'' from 
Victor Der to Jay Hoffman, Jan. 2, 2008; e-mail entitled ``RE: FY09 
FutureGen Program Plan Storyline'' from Victor Der to Jay Hoffman, Jan. 
4, 2008.
---------------------------------------------------------------------------
    A few days later, Secretary Bodman was briefed by Albright on DOE's 
``new focus.'' The possible ``secondary benefits'' became real benefits 
in this presentation. Because of construction costs, ``growing near-
term interest in carbon dioxide regulations and states beginning to 
require CCS or the flexibility to add CCS for siting/permitting of coal 
plants,'' DOE was now going to focus on ``first-of-a kind full utility-
scale demonstrations and developing data on commercial cost, integrated 
IGCC-CCS performance and reliability to reduce risk, confirm economics 
and facilitate industry-wide private capital offerings.'' This would 
allow for early deployment of ``nearer-term IGCC-CCS technologies'' at 
commercial plants and would also address the ``very critical technical 
feasibility question'' of a near-zero emission coal plant. There would 
be a minimum of two 600 MW plants, each of which would capture and 
store at least one million metric tons of CO2 per year. 
Staff did note, however, that cost reductions and competitive 
technology were still needed for full deployment, and that those 
technologies would still have to be demonstrated later. There was no 
explanation about why industry would test technology that was not yet 
cost-effective.\140\
---------------------------------------------------------------------------
    \140\ ``New FutureGen: Briefing to Secretary of Energy.'' Jan. 9, 
2008, pp. 2-3.
---------------------------------------------------------------------------
    The Department also struggled to put together an internal 
``strategic plan'' for the White House that would incorporate--with 
some facial credibility--the new FutureGen structure while claiming to 
maintain the original goals of an IGCC, near-zero emission plant. DOE 
postulated that because of the challenges of getting coal-fired plants 
licensed, this ``change in the market landscape'' had ``catalyzed the 
need'' to demonstrate the commercial viability of an IGCC/CCS plant. 
However, because of the uncertainty about the cost and performance of 
such plants, plans for them were being abandoned or postponed. ``Unless 
the production of electricity from coal integrated with sequestering 
carbon dioxide can be shown to be commercially feasible and cost 
competitive, the coal industry will not make the investments necessary 
to fully realize the potential energy security and economic benefits of 
this plentiful, domestic energy.'' \141\ Reducing that uncertainty of 
course, was exactly what the original FutureGen was supposed to 
demonstrate. But in an inexplicable shift in reasoning, DOE then said 
that it would achieve its goals more quickly if it could attach a CCS 
technology to a commercially built IGCC plant. It would speed up 
commercialization, help drive the regulatory framework and address the 
``very critical technical feasibility question of advanced technology 
clean coal plants.'' \142\
---------------------------------------------------------------------------
    \141\ ``Draft Strategic Planning Document for Revised FutureGen: 
Demonstration of Integrated Electric Power Production and Carbon 
Capture and Sequestration,'' December 2007, p. 4.
    \142\ Ibid., p. 2.
---------------------------------------------------------------------------
    FE did not go down without a fight. On January 10, Jay Hoffman, 
Director of the Office of Program Analysis and Evaluation, who was 
working on the FY 2009 budget, laid down the law to Victor Der and 
Jarad Daniels.

         Let me get right to the point. As written, the CFO's [Chief 
        Financial Officer] office will not concur on the project plan. 
        It is sorely lacking in detail and analysis, and provides 
        little defense or answer to the difficult questions we will 
        field from the WH, the alliance, and ultimately the public/
        Congress . . .. My expectation was for your office to develop a 
        solid, analytically supported plan that at a minimum included 
        the suggested analysis, with the caveat that you could 
        determine how best to frame the story around that analysis.

    Hoffman said he expected a revised project plan for the decision 
makers that would be ``bullet proof and ready for the WH.'' It needed 
to describe what went wrong with the original FutureGen and why Plan B 
would be successful, including why industry would buy into it.\143\
---------------------------------------------------------------------------
    \143\ E-mail entitled ``FW: FY09 FutureGen Program Plan Storyline'' 
from Jay Hoffman to Victor Der and Jarad Daniels, Jan. 10, 2008.
---------------------------------------------------------------------------
    The goals listed in the new FutureGen in the final drafts read like 
DOE's ultimate coal dream: it would validate CCS at multiple sites, it 
would inject and monitor CO2 at multiple geologic 
formations, integrate CCS with multiple gasification-based power 
production technologies; develop a regulatory and permitting system; 
provide the possibility of international participation at more than one 
project; produce a more comprehensive and reliable set of operating 
data, and promote early widespread deployment of IGCC-CCS technology. 
In addition, it would capture at least 90 percent of CO2 and 
mercury, 99 percent of sulfur, and reduce NOX and particulate 
emissions. And all this came with a lower federal price tag.\144\
---------------------------------------------------------------------------
    \144\ ``Draft Strategic Planning Document, December 2007, supra, 
pp. 3-4.
---------------------------------------------------------------------------
    There, of course, was one big problem: Plan B would cost the power 
generator a great deal of money in capital, operating and maintenance 
and parasitic energy loss costs. DOE's program and budget people 
struggled for a month to put together a cost estimate that would be 
lower than the original FutureGen. Initially, DOE was going to pay for 
the parasitic energy loss, but that became too expensive so it was 
deleted. The government would only pay capital costs for the CCS 
addition to an IGCC plant. Questions raised about the readiness and 
costs of the CCS technology were ignored. ``Biggest area of concern 
remain `new technology' and the insertion of this new technology into a 
`generic' plant; not sure of the true impact and cost implications,'' 
the Director of the Office of Engineering and Construction Management 
wrote.\145\ ``Taking these concerns in totality, and looking at it from 
industry's perspective, how does this uncertainty impact the profit 
potential of the project? At the end of the day, this will determine 
participation by industry,'' other DOE officials warned.\146\
---------------------------------------------------------------------------
    \145\ E-mail entitled ``RE: Cost estimates for FutureGen Plan B'' 
from Paul Bosco to Jay Hoffman and Melvin Frank, Dec. 19, 2007.
    \146\ Attachment to e-mail entitled ``plan b observations.doc'' 
from Jay Hoffman to Andrew Patterson and James Slutz, Dec. 13, 2007. 
Also, the Director of DOE's Office of NEPA Policy and Compliance didn't 
think that DOE had a credible NEPA strategy for Plan B since only one 
of two units at a site would capture 90 percent of the CO2, 
and there were other pollutants. FutureGen was a ``major source'' under 
the Clean Air Act, she reminded the general counsel's office. E-mail 
entitled ``re:: fg DOCUMENTS'' FROM Carol Borgstrom to Mary Egger, Jan. 
16, 2008.
---------------------------------------------------------------------------
    There was another concern: the White House hadn't yet signed off on 
DOE's plan.\147\ The final White House meeting was on January 25. DOE 
presented a strategic plan, complete with proposed press release and 
request for information (RFI), for Plan B to go out on January 31. DOE 
would contact the Alliance and make a final offer: the Alliance had 
until January 29 to accept the terms, which had a ``50/50 cost share 
after the 1.8, and stating that the Alliance contribution may not 
include project financed debt.'' If the Alliance did not accept those 
terms, DOE would announce its new approach and put out the RFI on Jan 
31.\148\
---------------------------------------------------------------------------
    \147\ E-mail entitled ``draft talking points for S-2 tomorrow with 
Texas Railroad Commission'' from Jarad Daniels to Kevin Graney, Jan. 
17, 2008; e-mail entitled ``Re: FutureGen--Ltr to Alliance (jan 
18).doc'' from Adam Ingols to Doug Schwartz, Mary Egger, James Slutz 
and Eric Nicoll, Jan. 18, 2008.
    \148\ E-mail entitled ``Re: FutureGen issues and actions'' from 
Scott Klara to Jarad Daniels, Jan. 24, 2008.
---------------------------------------------------------------------------
    The White House meeting was to be hosted by Keith Hennessey, NEC's 
Director and economic adviser to President Bush. Invited participants 
included OMB Director Jim Nussle; David Addington, Vice President 
Cheney's counsel; Press Secretary Dana Perino; Joel Kaplan, White House 
Deputy Chief of Staff; CEQ Chairman Connaughton; Presidential Counselor 
Ed Gillespie; Charles Blahous, NEC Deputy Director; and Dr. John 
Marburger, Director of the Office of Science and Technology 
Policy.\149\ Sell and Albright were to ``tell WH details of going 
forward and get blessing.'' \150\
---------------------------------------------------------------------------
    \149\ E-mail entitled ``1/24 FutureGen Principals Meeting--TIME 
CHANGE'' from Kristin Marshall to Ann Merchant et al., Jan. 23, 2008.
    \150\ E-mail entitled ``Re: FutureGen issues and action'' from 
Scott Klara to Jarad Daniels, Jan. 24, 2008.
---------------------------------------------------------------------------
    Albright and Sell told the NEC principals everything they needed to 
hear to believe that the Bush initiative would remain intact. The 
restructured FutureGen would achieve all of the primary technical goals 
of the original project which was ``no longer optimal to achieve the 
goal of accelerating the commercial demonstration and deployment of 
advanced, integrated coal-based power systems including CCS.'' But the 
government's financial exposure would be limited to mitigating the 
``incremental risk of the addition of CCS'' while its investment would 
be leveraged ``across a wider range of nearer-term coal based IGCC-CCS 
projects.'' \151\ Not only would it accelerate deployment of CCS 
technology, restructured FutureGen would establish the technical 
feasibility and economic viability of producing electricity and 
hydrogen from coal with near-zero emissions. It would verify the 
sustained, integrated operation and effectiveness, safety and 
permanence of a coal conversion system with carbon sequestration, it 
would establish standardized technologies and protocols for CO2 
monitoring, mitigation and verification, it would sequester at least 
one million tons of CO2 in saline formations; it would 
capture at least 90 percent of the CO2 emitted; 90 percent 
of the mercury emitted; 99 percent of the sulfur and high levels of NOX 
and particulate emissions. There would be a more rapid investment by 
industry in multiple demonstrations of ``near-commercially available 
technologies'' for CCS.\152\
---------------------------------------------------------------------------
    \151\ ``Draft Strategic Planning Document for Revised FutureGen: 
Demonstration of Integrated Electric Power Production and Carbon 
Capture and Sequestration,'' Jan. 30, 2008, pp. 2-3 and 8.
    \152\ Ibid., p. 3.
---------------------------------------------------------------------------
    Additionally, because of the loss of the ``living laboratory'' 
element of FutureGen, there would be a ``fresh look at the 
commercialization profile of key FE technologies.'' This was a 
particularly puzzling statement because the table of technologies that 
followed made it clear that most of them were still at the bench or 
laboratory stage of development, and FE would have to find alternative 
host sites. There were other confusing statements. While admitting that 
Plan B would delay the cost-reduction improvements that were ultimately 
needed for coal/CCS plants to be an attractive commercial option in 
both the U.S. and internationally,\153\ Sell and Albright claimed that 
it would demonstrate ``commercial feasibility.'' Private companies 
apparently were now expected to quantify the technical and economic 
risk associated with near-zero emissions coal plants, thus ``enabling 
private financing decisions of future plants of this type'' and 
facilitating ``industry-wide private capital offerings.'' \154\
---------------------------------------------------------------------------
    \153\ ``Under Revised FutureGen commercial deployment of cost-
reduction improvements could be delayed unless other test approaches 
are found, such as designing limited test capability . . . into Revised 
FutureGen and CCPI demonstrations.'' Ibid., p. 7.
    \154\ Ibid., pp. 3 and 7-8.
---------------------------------------------------------------------------
    But deep in the strategic plan was the recognition that 
incorporating CCS on a commercial-scale IGCC plant added capital and 
operating costs and ``is still perceived by the electricity generation 
industry as an emerging technology. Concerns remain over the 
integration and scale-up risks associated with IGCC, and a cost gap 
still remains when compared to conventional coal power plants.'' 
Industry's reaction to the new program would depend on the ``magnitude 
of the government's commitment to the project'' and its ability to 
``reasonably satisfy'' those concerns and allow the plants to function 
competitively. And, of course, there was that troubling issue of 
liability for the sequestration of CO2.\155\
---------------------------------------------------------------------------
    \155\ Ibid., pp. 16-17.
---------------------------------------------------------------------------
    DOE also claimed that its international partners would favorably 
respond, even though they no longer could share in the technology 
development or work at the new sites. Inexplicably, DOE found that the 
new approach would actually ``raise the efficiency of information 
sharing.'' \156\
---------------------------------------------------------------------------
    \156\ Ibid., p. 17.
---------------------------------------------------------------------------
    Albright and Sell were successful. By January 28, everyone in the 
White House was ``on board'' with the announcement for a restructured 
FutureGen.\157\
---------------------------------------------------------------------------
    \157\ E-mail entitled ``FutureGen'' from Cynthia Bergman to Megan 
Barnett, Jan. 28, 2008.
---------------------------------------------------------------------------
    In the final strategic plan, DOE ignored every concern of its own 
staff. ``Today, more than ever, the concept of FutureGen is a 
centerpiece for the future of coal utilization,'' the plan trumpeted.
    FutureGen directly addresses a primary goal of the Department of 
Energy's (DOE) 2006 Strategic Plan under the Theme for Energy Security 
to promote America's energy security through reliable, clean, and 
affordable energy: Environmental Impact of Energy: ``Improve the 
quality of the environment by reducing greenhouse gas emissions and 
environmental impacts to land, water and air from energy production and 
use.''\158\
---------------------------------------------------------------------------
    \158\ DOE, ``Draft Strategic Planning Document for Revised 
FutureGen: Demonstration of Integrated Electric Power Production and 
Carbon Capture and Sequestration,'' Jan. 31, 2008.

January 30, 2008 announcement

    Secretary Bodman met with the Illinois delegation on January 29 to 
forewarn them of the announcement. His plan was very poorly received by 
both Republicans and Democrats, who called it ``unfair,'' ``cruel'' and 
``incompetent management.'' They asked how DOE could throw away 
Illinois' five years of work.\159\ Just before the announcement, 
Illinois Republican Congressmen Tim Johnson and John Shimkus made an 
appeal directly to President Bush to save the project. The President 
said he stood by Bodman's decision.\160\
---------------------------------------------------------------------------
    \159\ E-mail entitled ``re: FG REDLIGHT--S-1 agreed to wait one 
day'' from Jeffrey Kupfer to Eric Nicoll et al., Jan. 29, 2008.
    \160\ ``Durbin sees `uphill struggle' to save FutureGen; Energy 
Dept. confirms it is pulling its back for the coal-fueled experimental 
power plant in Mattoon, Ill.,'' St. Louis Post-Dispatch, Jan. 31, 2008, 
D2.
---------------------------------------------------------------------------
    DOE then announced that it would ``join industry'' in its efforts 
to build IGCC plants by providing funding for the addition of CCS 
technology to multiple plants that would be operational by 2015. 
According to DOE, this would double the amount of CO2 
sequestered compared to the original FutureGen.\161\ The restructured 
approach allowed DOE to ``maximize the role of private sector 
innovation, provide a ceiling on federal contributions, and accelerate 
the Administration's goal of increasing the use of clean energy 
technology to help meet the steadily growing demand for energy while 
also mitigating greenhouse gas emissions.'' \162\ Secretary Bodman also 
claimed that engagement with the international community would remain 
``an integral part'' of DOE's efforts, although he had already been 
told that private companies would not be interested in freely sharing 
their technology with other parties, foreign or domestic.\163\
---------------------------------------------------------------------------
    \161\ FE staff had told the policy and press staff that if they 
were going to maintain the 90 percent carbon capture goal, IGCC was the 
only credible approach. E-mail entitled ``RE: FOR YOUR REVIEW--updated 
fact sheet and press release'' from Jarad Daniels to Megan Barnett, 
Jan. 22, 2008.
    \162\ ``DOE Announces Restructured FutureGen Approach to 
Demonstrate CCS Technology at Multiple Clean Coal Plants,'' press 
release, Jan. 30, 2008.
    \163\ Ibid.
---------------------------------------------------------------------------
    The mysterious ``technology advance'' that Secretary Bodman and 
others kept referring to was that, unlike in 2003, there were now over 
33 IGCC plants that have been proposed, even though a number of them 
had already been cancelled. In a follow-up conference call with 
reporters, Sell claimed that ``[t]his fact, this changing underlying 
market dynamic, underpins why we believe our new approach is 
fundamentally better to advance the state of carbon capture and 
sequestration.'' He expressed his confidence that restructured 
FutureGen was a better way to go. ``We are making this project better 
and we are increasing substantially the likelihood of success.'' \164\ 
Sell even claimed that the National Energy and Technology Lab's (NETL) 
work gave him that confidence, despite the fact that NETL, FE and 
others had been protesting for months that the new approach would not 
work.\165\
---------------------------------------------------------------------------
    \164\ Transcript of Department of Energy conference call,'' Jan. 
30, 2008. The speakers were Clay Sell and Secretary Bodman.
    \165\ Ibid.
---------------------------------------------------------------------------
    There was no discussion of who would take on the liability for 
sequestration or who was going to pay for the energy loss associated 
with CCS or how the technology had suddenly advanced to viable 
commercialization. DOE would issue a Request for Information to the 
industry to determine its views (which had not been sought before the 
announcement). It would be followed by a competitive Funding 
Opportunity Announcement.\166\ Any loss of the research and development 
aspects of FutureGen would be made up in a significant increase in the 
FY 2009 clean coal budget.\167\
---------------------------------------------------------------------------
    \166\ DOE press release, ``DOE Announces Restructure FutureGen 
Aproach to Demonstrate CCS Technology at Multiple Clean Coal Plants,'' 
Jan. 30, 2008.
    \167\ ``FutureGen Talking Points,'' undated.
---------------------------------------------------------------------------
    The RFI asked for input and public comment on the restructured 
FutureGen and expressions of interest from power producers who would 
consider participating in the revised initiative. These responses would 
help shape a competitive funding opportunity announcement expected to 
be released in June of 2008. DOE stated it was interested in funding 
multiple demonstrations of CCS technology at a commercial scale of at 
least 300 gross MW per unit plant power train per demonstration. It 
would contribute no more than the incremental cost of the CCS for one 
train. At least 1 million metric tons of CO2 would be stored 
in a saline storage formation, and all emissions levels for other 
pollutants would meet the original FutureGen goals. Commercial 
operations were expected to begin in 2015.\168\
---------------------------------------------------------------------------
    \168\ DOE, ``Request for Information (RFI) on the Department of 
Energy's Plan to Restructure FutureGen,'' Jan. 31, 2008.

Response to Restructured FutureGen and Request for Information

    The response was quick and skeptical with most of the media viewing 
FutureGen as dead. ``The Administration has long trumpeted technology, 
not regulation, as the answer [to global warming]. There was no 
trumpeting last week when it unexpectedly canceled FutureGen--its much-
touted, $1.8 billion attempt to develop a cutting edge coal plant that 
would turn coal to gas, strip out and store underground the carbon 
dioxide that contributes to climate change, and then burn the remaining 
gas to produce hydrogen and electricity,'' The New York Times wrote. 
``And what of Mr. Bush's hydrogen-powered Freedom Car? That, too, has 
receded from view.'' The newspaper described the decision as ending a 
four-year-old program that had been described as ``one of the boldest 
steps our nation has taken toward a pollution-free energy future.'' 
\169\ The St. Louis Post-Dispatch opined that Secretary Bodman 
apparently missed the part of Bush's 2008 State of the Union address on 
the previous day where the President urged Congress to ``fund new 
technologies that can generate coal power while capturing carbon 
emissions.'' IEEE Spectrum described the decision as bringing FutureGen 
to a ``screeching end.'' \170\
---------------------------------------------------------------------------
    \169\ ``Higher Costs Cited as U.S. Shuts Down Coal Project,'' The 
New York Times, Jan. 31, 2008, C5; ``Late and Lame on Warming,'' The 
New York Times, editorial, Feb. 4, 2008.
    \170\ ``Back to the FutureGen,'' St. Louis Post-Dispatch, Jan. 31, 
2008, C8; ``U.S. Government Terminates Its Major Clean Coal Project,'' 
IEEE Spectrum OnLine, http://blogs.spectrum.ieee.org/tech--talk/2008/
02/us-govt-terminates-its-m.
html
---------------------------------------------------------------------------
    The responses received in March from industry to the Request for 
Information were more damning. There were 49 responses, almost all of 
which took major ``exceptions to the RFI specifications and near zero 
emissions objectives,'' a DOE summary document reported. Industry 
wanted the solicitation expanded to non-IGCC technology; a 
``substantial relaxation'' of the 90 percent carbon capture 
requirement; government liability protection of the CCS aspects of the 
projects; elimination of the mandate to sequester one million tons of 
CO2 in a saline aquifer and permission to sell CO2 
for enhanced oil recovery; guaranteed funding up front; an expedited 
NEPA process; a sharing of the additional operating and parasitic 
energy costs; and reductions in the performance targets of sulfur, 
nitrogen oxide, particulate matter and mercury. The comments also 
suggested that the schedule was unrealistic.\171\
---------------------------------------------------------------------------
    \171\ DOE, ``Expanded Summary of Comments Received Under DOE's 
Request for Information (RFI) on Plan to Restructure FutureGen,'' March 
20, 2008.
---------------------------------------------------------------------------
    The comments from the Coal Utilization Research Council (CURC), an 
industry advocacy group that focuses on the technology development 
steps necessary to achieve near zero emissions from coal power 
generation (and which opposed the termination of FutureGen), were 
particularly negative. There wasn't enough money for ``multiple'' CCS 
projects (CURC estimated at least $600 million needed for each 
project), nor was there any assurance that Congress would provide 
funding; 90 percent CO2 capture was not realistic for a 
commercial project; and non-IGCC projects should be considered.

         Given the immature state of experience in using capture 
        technology integrated with an IGCC, for example, CURC believes 
        it is much more prudent to simply encourage the installation of 
        CCS technology on a unit that will be commercially-operated 
        rather than dictate the level of capture. Industry should be 
        free to determine what level of capture of CO2 makes 
        the greatest sense from both a cost and acceptable risk 
        exposure perspective.

    CURC also estimated that installing CCS systems on to commercial 
projects would cost hundreds of millions, if not billions, of dollars, 
and the owners ``should not be restricted to the 90 percent capture 
requirement that is otherwise germane to a technology demonstration 
project (i.e., FutureGen).'' Additionally, a much larger initiative was 
necessary to continue a large-scale, industry-supported CCS 
implementation partnership.\172\
---------------------------------------------------------------------------
    \172\ ``Comments Submitted to the Department of Energy by the Coal 
Utilization Research Council (CURC) in Response to a Request for 
Information (RFI) Issued by the DOE,'' March 3, 2008, pp. 1-3 and 4.
---------------------------------------------------------------------------
    These were the same points DOE staff had raised earlier. In an 
issues document based on the comments, DOE staff wrote: ``In the 
current environment, utilities planning new base load power capacity 
have compelling incentives to adopt a `wait and see' approach while 
issues related to retail competition and carbon management are 
resolved. Moving forward with CCS at this time, absent legislation or 
other incentives, would be imprudent.'' Industry also was expressing 
skepticism about government support for the new program because of the 
change in direction and the change in administrations.\173\
---------------------------------------------------------------------------
    \173\ DOE, ``Revised FutureGen Project--Outstanding Legal, 
Contractual and Policy Issues,'' March 25, 2008, Rev. 1, p. 1. DOE also 
expressed the fear that if the CCS technology failed, because of the 
numerous plant modifications necessary in an IGCC plant to capture and 
sequester CO2, ``the entire plant could be considered a 
stranded asset.'' Therefore, the entire cost of the plant could be 
included in the base for cost-sharing, as it had been in other projects 
were novel technology is being tested. Ibid.
---------------------------------------------------------------------------
    DOE plowed forward, reiterating once again to Illinois 
Congressional members that its approach would help permit new 
commercial coal plants.\174\ However, it hid the supposedly ``public'' 
comments from the public and the press by refusing all requests to 
release them.\175\
---------------------------------------------------------------------------
    \174\ Letter to Rep. Tim Johnson et al. from Secretary Bodman, 
attached to ``Memorandum for the Secretary'' from C.H. Albright, Jr., 
to James Slutz, April 9, 2008.
    \175\ Despite requests under the Freedom of Information Act, DOE 
refused to release these comments or those submitted on the draft 
Funding Opportunity Announcement until this committee requested them. 
It provided no legitimate reason for withholding the comments beyond a 
claim that there was proprietary information in some of the responses. 
See, e.g., e-mail entitled ``FG docs'' from Andrew Patterson to Scott 
Shiller, Victor Der and James Slutz, March 31, 2008.
---------------------------------------------------------------------------
    But there were other public forums which clearly exposed the 
problem DOE was going to have in getting responsive proposals. In May 
of 2008, the greenhouse gas research and development program and the 
clean coal center of the International Energy Agency held a workshop on 
financing CCS. The workshop participants' view was that private 
investment in CCS in North America was an ``unattractive financial 
option without Government incentives and a legal framework in place.'' 
As a representative of JP Morgan Chase said, CCS has no positive 
purpose. It only has a negative purpose to avoid the cost of putting 
CO2 into the atmosphere, and that has no cost in the United 
States. The investment banks wanted a ``secure return on their 
investment, such as loan guarantees or tax credits.'' Legal and 
environmental liability was an issue, and insurance companies were not 
ready to take on this risk. Until there was greater regulatory and cost 
recovery certainty, the private sector would not invest. And, 
``ultimately, the willingness of ratepayers to pay higher electricity 
bills to pay for CCS, as reflected in decisions by local public 
utilities, will be critical to the financing of such projects,'' the 
participants agreed. ``It is clear that CCS is not economic and 
subsidies will be needed for the first plants . . .. [F]inancing is the 
key and ultimately without financing there will be no CCS deployment.'' 
\176\
---------------------------------------------------------------------------
    \176\ IEA Greenhouse Gas R&D Programme, World Coal Institute and 
IEA Clean Coal Centre, ``Summary Report on Expert Workshop on Financing 
Carbon Capture and Storage (CCS): Barriers and Solutions,'' May 28-29, 
2008, pp. 2-3 and 8.

Funding Opportunity Announcement (FOA)

    The Draft Funding Opportunity Announcement was issued on May 7, 
2008. Despite the RFI comments, it remained focused on a gasifier 
technology. As CURC stated in its comments, the FOA described a 
commercial-scale project which included the goals and objectives of the 
original FutureGen, which was a publicly co-funded demonstration-scale 
project, and that was not viable.

         Included among our suggested modifications are changes to FOA 
        requirements related to emission controls of criteria 
        pollutants, beyond that which is required for permitting plants 
        today, a level of CO2 capture percentage that has 
        not been previously achieved in power plants at a commercial 
        scale, dates for operation that may be difficult to achieve and 
        other criteria that also may not be realistic or prudent when 
        measured against the business requirements of a facility, or 
        facilities, planned and constructed to operate successfully in 
        commerce.

    CURC reminded DOE of its earlier comment that there was not enough 
money for multiple projects, and, since future funding was not 
guaranteed, ``there are not clear reasons why an owner or operator can 
have confidence that the bulk of the funding for a selected project 
will be forthcoming at a later date.'' CURC recommended a reduction 
below the 81 percent CO2 capture level, which it described 
as ``not a reasonable approach'' at this stage of technology 
development or integration. ``Industry needs to obtain baseline data, 
demonstrated reliability and widespread confidence in CCS systems and 
these goals can be achieved more cost-effectively by requiring less 
aggressive percentages of capture.'' \177\
---------------------------------------------------------------------------
    \177\ CURC, ``Comments related to the Department of Energy draft 
announcement #DE-PS26-08T00496 related to ``RESTRUCTURED FUTUREGEN,'' 
May 21, 2008, pp. 2-3.
---------------------------------------------------------------------------
    CURC also wanted more flexibility in the CO2 storage 
site, a regulatory structure for CO2 transport, a resolution 
of long-term liability issues, more favorable cost-sharing 
arrangements, including recognizing the parasitic energy loss as a 
cost, and modifications that made it clear that non-IGCC plants were 
eligible.\178\ In a summary of the unreleased ``public'' FOA comments, 
DOE indicated that they were similar to those submitted by CURC.\179\
---------------------------------------------------------------------------
    \178\ Ibid., pp. 6-7
    \179\ ``DIFFERENCES BETWEEN RESTRUCTURED FUTUREGEN ``DRAFT'' AND 
``FINAL'' FUNDING OPPORTUNITY ANNOUNCEMENT (FOA),'' attached to e-mail 
entitled ``FG Q&As for Final FOA.6-23-08.v4.doc'' from Jarad Daniels to 
Keith Miles and Thomas Sarkus, June 23, 3008.
---------------------------------------------------------------------------
    The final FOA made some of those changes. A non-gasification 
project did not have to produce at least 250 MW net electricity output 
but could be at a ``commercially viable size.'' There was no mandatory 
ceiling on the project cost. The applicants must ``propose'' start-up 
by Dec. 31, 2015, but apparently had no obligation to meet that date. 
The demonstrations were ``expected'' to operate for three to five years 
and capture one million metric tons of CO2 per year that 
would be put in a saline ``formation,'' not an aquifer as originally 
required. There was no obligation to operate after the demonstration 
period, and monitoring of the sequestration site would continue for 
only two years after the demonstration was completed. DOE would 
contribute the lesser of (1) the incremental cost of implementing CCS 
on the demonstration unit; or (2) 50 percent of the total allowable 
project cost. DOE's maximum cost would be negotiated prior to the 
award. Applications were due on October 8, 2008, with selections made 
by the end of the year.\180\
---------------------------------------------------------------------------
    \180\ DOE, ``Funding Assistance Funding Opportunity Announcement,'' 
June 24, 2008.
---------------------------------------------------------------------------
    In the final FOA, DOE bragged again that ``[t]oday, more than ever, 
the FutureGen concept holds great promise for sustaining near-term coal 
utilization.'' \181\ Internally, staff saw it quite differently. The 
goals that Secretary Bodman had promised when he rolled out the 
restructured FutureGen were no longer mandatory. ``The reality of 
Financial Assistance awards is that they should be viewed as ``best 
effort,'' Keith Miles wrote.
---------------------------------------------------------------------------
    \181\ Ibid., p. 6.

         DOE asks for the Applicant to address all of the requirements 
        (goals and objectives), provide a Statement of Project 
        Objectives (SOPO) as well as the evaluation criteria in the 
        FOA, which will ultimately be reviewed by DOE with selections 
        made. Unfortunately there are no ``consequences'' if they don't 
        achieve the goals and objectives contained in their SOPO. DOE's 
        only recourse is when an issue of ``noncompliance'' arises, or 
        research misconduct.\182\
---------------------------------------------------------------------------
    \182\ E-mail entitled ``RE: Restructured FutureGen @ REMINDER 
COMMENTS DUE BY 10:30 AM'' from Keith Miles to Jay Hoffman and David 
Pepson. June 23, 2008.

    No one--except those who may have drunk the Kool-Aid at DOE--was 
surprised at the anemic response to the FOA. In the end, almost no one 
came to DOE's party, and it wasn't the party that had been advertised 
in the invitation. There were four applications, two of which did not 
come close to meeting the criteria. Neither of the survivors proposed 
an IGCC/CCS plant, but hoped to test out experimental carbon capture 
technology on existing facilities. It was reported that even those 
applications were incomplete.\183\ In January of 2009, Secretary Bodman 
and his deputies slipped out of town minus viable projects or even 
press releases claiming success.
---------------------------------------------------------------------------
    \183\ ``New Life for Clean Coal Project,'' The Washington Post, 
March 6, 2009, A1.

Relationship with International Partners

    Despite the years-long push to get other countries involved in 
FutureGen and the emphasis by high-level Bush officials on 
international participation in FutureGen, DOE did not discuss its 
change in plans with its international partners. Nor did it take any 
steps to inform the State Department's and its own international staff, 
which were continuing to solicit foreign partners. In a presentation to 
Brazil in October, FutureGen was described as a ``unique opportunity to 
prove carbon sequestration . . . [and] to advance IGCC technology.'' 
International participation would facilitate implementation of CCS in 
emerging economies.\184\ In November, Secretary Bodman, who had met 
previously with Polish officials, sent a letter encouraging Poland to 
join the initiative.\185\
---------------------------------------------------------------------------
    \184\ DOE, ``FutureGen: A Path to Success: The Right Project at the 
Right Time,'' Oct. 17, 2007.
    \185\ Letter from Samuel Bodman to Piotr Naimski.
---------------------------------------------------------------------------
    In December, Treasury Secretary Paulson in a speech before the Asia 
Society prior to another SED meeting with China stated that the 
FutureGen clean coal development partnership with China represented one 
``of the best areas of on-going cooperation.'' \186\
---------------------------------------------------------------------------
    \186\ Remarks by Secretary Henry M. Paulson, Jr. on ``Maintaining 
Forward Momentum in U.S.-China Economic Relations,'' Treasury 
Department press release, Dec. 5, 2007, p. 2.
---------------------------------------------------------------------------
    When Karen Harbert, DOE's Assistant Secretary for policy and 
international affairs, asked how international partners could be 
incorporated into the new FutureGen, she was bluntly told that it had 
no international component.\187\ But when Japanese officials sent a 
draft of a ``framework'' for a FutureGen agreement between the U.S. and 
Japan and a $10 million contribution on January 18, Harbert told them 
to ``hold tight.'' Japan had hoped to have it signed in the next week 
at the World Economic Forum and had already put $700,000 in its budget 
for the project.\188\ In the final draft of the supporting 
documentation for the restructured FutureGen, DOE removed all 
references to foreign governments' having access to test demonstration 
results because ``they wouldn't have access to any of the `good' 
proprietary information, but rather only the non-proprietary 
information which DOE always makes publicly available for any of 
projects anyhow.'' \189\
---------------------------------------------------------------------------
    \187\ E-mail entitled ``RE: Int'l aspects of new futuregen 
construct'' from James Slutz to Karen Harbert, Dec. 12, 2007.
    \188\ E-mail entitled ``FW: Signature for the Framework on FG 
Project between DOE and METI etc.'' from Jarad Daniels to Joseph Giove, 
Jan. 18, 2008; e-mail entitled ``Re: FutureGen Framework Agreement'' 
from Talashi Naruse to Joseph Giove, Jan. 21, 2008.
    \189\ E-mail entitled ``RE: restructured futuregen international 
draft--comments requested'' from Jarad Daniels to Bud Albright, James 
Slutz, Doug Schwartz, Adams Ingols, Kathy Fredriksen, Diana Clark and 
Raj Luhar, Jan. 25, 2008. At this point, India had contributed $4 
million and South Korea had contributed $2 million. China and Australia 
had made formal commitments; Norway was ready to contribute funds; and 
Italy and Poland had stated interest. Ibid.
---------------------------------------------------------------------------
    In a draft memo prepared for James Slutz to issue after the January 
30 announcement, the partners were to be told, ``The commercial market 
place will be the mechanism to deploy new technology such as Integrated 
Gasification Combined Cycle (IGCC) with CCS.'' DOE was, however, 
``committed to an international outreach component'' which was 
``critical to garnering broad acceptance of the new technology and 
fostering the replication of the near zero-emissions on a broad 
scale.'' In other words, ``thanks, but no thanks.'' \190\
---------------------------------------------------------------------------
    \190\ ``Draft Email from Jim Slutz to Staff Contacts in seven FG 
partner countries,'' undated.
---------------------------------------------------------------------------
    On Feb. 1, 2008, Secretary Bodman sent out letters to all the 
current and potential foreign partners telling them that FutureGen was 
being restructured to emphasize commercial demonstration of CCS with 
IGCC plants, and that he looked forward to ``continued outreach'' to 
the interested countries.\191\ The first--and most angry--response came 
from Korea. Kijune Kim of the Ministry of Commerce, Industry and 
Energy, wrote,
---------------------------------------------------------------------------
    \191\ Letter from Secretary Bodman to the Honorable Akira Amari, 
Feb. 1, 2008.

         I am really surprised that I had no prior explanation of that 
        restructuring intention from DOE before . . . Korea really 
        tried our best to cooperate with US to develop FutureGen 
        project since early 2006 . . .. We contributed $2 million in 
        March 2007 . . .. actively participated in four meetings . . . 
        even hosted the third negotiating meeting for the FutureGen 
        project agreement last October in Seoul to make the project 
        move on. If you have recognized all Korea's endeavor regarding 
        the project, it is not the appropriate way to deliver U.S. 
        DOE's intention to restructure FutureGen project by sending me 
        an e-mail . . . without any prior consultation or explanation 
---------------------------------------------------------------------------
        to Korea.

Mr. Kim concluded by pointedly noting ``that there were better ways 
(both procedure and timing) to inform Korea US DOE's intention to 
restructure FutureGen project.'' \192\
---------------------------------------------------------------------------
    \192\ E-mail entitled ``Re: DOE Announces Restructured FutureGen'' 
from Kijune Kim to James Slutz, Feb. 4, 2008.
---------------------------------------------------------------------------
    After the announcement, the State Department asked if DOE had 
talking points to use with foreign audiences. Norway and Russia had 
expressed interest in FutureGen; other embassies had pro-FutureGen 
points in their standard talks on energy and climate.\193\ On February 
1, 2008, David Mulford, the U.S. ambassador to India, wrote Secretary 
Bodman expressing concern about the FutureGen project based on his 
reading of media reports. ``Since I will have to address the issue soon 
with the Government of India (GOI) and the Indian media, I would 
appreciate some clarification . . .. This would include the specific 
issue of the status of India's pledged monetary commitment.'' The 
ambassador reiterated India's ambitious plans to expand its all coal-
fired thermal capacity and asked the Secretary for his views ``on how 
to continue cooperation with India in clean-coal power generation 
technology and mitigation of related carbon emissions.'' \194\ 
Australia also wondered what was up. ``The restructuring of FutureGen 
has been a hot topic for our media,'' Australia's clean coal manager in 
the Department of Resources Energy and Tourism wrote. We have also been 
fielding representations from our own industry including companies 
involved in the FutureGen Alliance . . .. [W]e need to get a better 
understanding of what this means in terms of the International 
Partnership and the associated agreement being negotiated with other 
Governments.'' \195\
---------------------------------------------------------------------------
    \193\ E-mail entitled ``FutureGen Talking Points'' from Peter 
Haymond to Giulia Bisconti, Jan. 31, 2008.
    \194\ Letter from Mr. Mulford to Secretary Bodman, Feb. 1, 2008.
    \195\ E-mail entitled ``Re: FutureGen [SEC=UNCLASSIFIED]'' from 
John Karas to Victor Der, Feb. 8, 2008.
---------------------------------------------------------------------------
    In February, Secretary Bodman received a letter from the Australian 
minister for resources, energy and tourism, who--based on the September 
4, 2007, joint statement by Prime Minister Howard and President Bush--
was looking forward to ``a program of consultation at both the 
government and industry level including the means by which information 
on technological advances will be shared.'' \196\ Secretary Bodman 
responded with a letter stating that DOE ``will continue to keep you 
informed of significant developments in the FutureGen program and look 
forward to future collaborations with Australia.'' \197\ That appears 
to have been the end of any real effort for international cooperation 
on FutureGen, once a ``core objective'' of the project, although FE 
attempted through the spring to gin up interest. Its staff made 
presentations to various embassies claiming that the international 
component was a ``key priority'' in the restructured FutureGen with a 
focus on a ``non-proprietary information exchange.'' \198\ Their 
objective was to convey ``the clear message that the U.S. commitment to 
clean coal remains stronger than ever under the restructured 
FutureGen.'' \199\
---------------------------------------------------------------------------
    \196\ Letter from Martin Ferguson to Secretary Bodman, Feb. 22, 
2008.
    \197\ Letter from Secretary Bodman to Mr. Ferguson, March 26, 2008.
    \198\ ``FutureGen--International Component,'' attached to e-mail 
entitled ``FW: FutureGen: International'' from Victor Der to Jarad 
Daniels, Joseph Giove and Samuel Biondo, May 20, 2008.
    \199\ Ibid.
---------------------------------------------------------------------------
    By the end of June, 2008 DOE claimed that it was still ``exploring 
ways to engage governments in deploying Near-Zero Emission Coal plants 
with CCS for deployment around the world.'' It proposed workshops and 
symposia to share non-proprietary information and the development of 
global outreach strategies for acceptance of the technology and gamely 
claimed that all of the previously interested countries would ``likely 
have continued interest'' in the outcome of FutureGen.\200\ Jim 
Connaughton, CEQ Chief and loyal Bush soldier, was quoted in the Indian 
press as saying that there would be three to four zero emission coal-
fired power plants and even greater international participation in the 
restructured FutureGen, although there was no evidence that either one 
of those statements was accurate.\201\
---------------------------------------------------------------------------
    \200\ DOE Office of Fossil Energy, ``U.S. Carbon Capture and 
Storage Program: Where We Are and Where We're Going: Clean Coal, 
FutureGen, and CCS'' and attachments, June 2008. This presentation was 
created by FE as part of a FutureGen ``outreach and communications'' 
strategy after a New York Times article said the entire clean coal 
effort was stalled. ``Mounting Costs Slow the Push for Clean Coal,'' 
The New York Times, May 30, 2008, A1. ``We will tout our investment and 
accomplishments as Connaughton has delineated and work them into the FE 
Clean Coal Exhibit,'' FE staff wrote. They would also visit the science 
attaches at the embassies in Washington and tell them about the 
restructured FutureGen. E-mail from Samuel Biondo to Joseph Giove, May 
30, 2008.
    \201\ ``Commercial viability of FutureGen to be known only in 
2020,'' The Hindu Business Line, http://www.thehindubusinessline.com/
2008/06/18/stories/2008061851582100.htm June 18, 2008.
---------------------------------------------------------------------------
    Australia, however, went ahead on its own. After the fall of the 
Howard government, it ratified the Kyoto Protocol and established its 
own fund to pursue CCS demonstration projects in Australia.\202\
---------------------------------------------------------------------------
    \202\ ``Remember FutureGen?'' Columbia Journalism Review, April 4, 
2008; ``Investment in Victoria's Clean Coal Industry,'' http://
www.investvictoria.com/300408VicCleanCoalIndustry, April 30, 2008.
---------------------------------------------------------------------------
    Peabody Energy, one of the FutureGen partners which already had a 
presence in China, signed an agreement in December of 2007 with China 
Huaneng Group to invest in an integrated gasification combined cycle 
power plant near Tianjin, southeast of Beijing called GreenGen, 
although there will be no CCS until its ``later phases.''
    Abu Dhabi is designing an IGCC plant with BP and Rio Tinto that is 
supposed to produce hydrogen for energy and CO2 to be 
sequestered.\203\
---------------------------------------------------------------------------
    \203\ ``BP Says Abu Dhabi Hydrogen-Fueled Plant to Start 2013,'' 
Bloomberg.com, Jan 19, 2009. http://www.bloomberg.com/apps/
news?pid=20601130&sid=azs2rxpX-Sk&refer=environment

Conclusion

    FutureGen began life as the centerpiece of the Bush 
Administration's climate change technologies. This initiative held out 
the promise of reducing greenhouse gas emissions without the pain of 
signing up to the Kyoto Protocols. In abandoning the original concept, 
the Department of Energy left the country with no coherent strategy for 
carbon capture and sequestration-despite having fingers in many pots. 
Whether the new Administration and Congress should revive the original 
program, which was ready to begin work when the Department of Energy 
killed it, or move to some other initiative, is an open question. It is 
absolutely clear that the ``Plan B'' initiative sold to the public and 
the Congress by Secretary Bodman will not provide the kind of long-term 
benefits to the United States and the world needed to deal with global 
climate change. The end result of this trail of mismanagement? Progress 
on the great challenges to harness technology to build a greener energy 
future was stalled, and the United States abandoned its global 
leadership role.
    This is a disappointing legacy for the Department of Energy.

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