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





              NEW TECHNOLOGIES: WHAT'S AROUND THE CORNER?

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

                                HEARING

                               before the
                          SELECT COMMITTEE ON
                          ENERGY INDEPENDENCE
                           AND GLOBAL WARMING
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 28, 2009

                               __________

                            Serial No. 111-7









             Printed for the use of the Select Committee on
                 Energy Independence and Global Warming

                        globalwarming.house.gov




                  U.S. GOVERNMENT PRINTING OFFICE
62-450                    WASHINGTON : 2010
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing 
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC 
area (202) 512-1800 Fax: (202) 512-2104  Mail: Stop IDCC, Washington, DC 
20402-0001










                SELECT COMMITTEE ON ENERGY INDEPENDENCE
                           AND GLOBAL WARMING

               EDWARD J. MARKEY, Massachusetts, Chairman
EARL BLUMENAUER, Oregon              F. JAMES SENSENBRENNER, Jr., 
JAY INSLEE, Washington                   Wisconsin, Ranking Member
JOHN B. LARSON, Connecticut          JOHN B. SHADEGG, Arizona
HILDA L. SOLIS, California           GREG WALDEN, Oregon
STEPHANIE HERSETH SANDLIN,           CANDICE S. MILLER, Michigan
  South Dakota                       JOHN SULLIVAN, Oklahoma
EMANUEL CLEAVER, Missouri            MARSHA BLACKBURN, Tennessee
JOHN J. HALL, New York
JERRY McNERNEY, California
                                 ------                                

                           Professional Staff

                   Gerard J. Waldron, Staff Director
                       Aliya Brodsky, Chief Clerk
                 Bart Forsyth, Minority Staff Director












                            C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Edward J. Markey, a Representative in Congress from the 
  Commonwealth of Massachusetts, opening statement...............     1
    Prepared Statement...........................................     3
Hon. F. James Sensenbrenner, Jr., a Representative in Congress 
  from the State of Wisconsin, opening statement.................     5
Hon. Earl Blumenauer, a Representative in Congress from the State 
  of Oregon, opening statement...................................     6
Hon. Shelley Capito, a Representative in Congress from the State 
  of West Virginia, opening statement............................     6
    Prepared Statement...........................................     8
Hon. Emanuel Cleaver II, a Representative in Congress from the 
  State of Missouri, opening statement...........................    11
Hon. John Hall, a Representative in Congress from the State of 
  New York, opening statement....................................    11
Hon. Marsha Blackburn, a Representative in Congress from the 
  State of Tennessee, opening statement..........................    12
Hon. John T. Salazar, a Representative in Congress from the State 
  of Colorado, opening statement.................................    12
    Prepared Statement...........................................    14

                               Witnesses

Dr. Gregory P. Kunkel, Ph.D., Vice President for Environmental 
  Affairs, Tenaska Inc...........................................    18
    Prepared Statement...........................................    20
Dr. Brent Constantz, Ph.D., Chief Executive Officer, Calera 
  Corporation....................................................    32
    Prepared Statement...........................................    34
Mr. Frank Smith, Chief Executive Officer, PURGeN One LLC.........    52
    Prepared Statement...........................................    54
Mr. Gary O. Spitznogle, Manager, IGCC and Gas Plant Engineering, 
  American Electric Power........................................    70
    Prepared Statement...........................................    72
Mr. Sean Gallagher, Vice President, Market Strategy and 
  Regulatory Affairs, Tessera Solar..............................    83
    Prepared Statement...........................................    85
    Answers to submitted questions...............................   115
Dr. Emanuel Sachs, Chief Technical Officer, 1366 Technologies 
  Inc............................................................    95
    Prepared Statement...........................................    97

 
           NEW ENERGY TECHNOLOGIES: WHAT'S AROUND THE CORNER?

                              ----------                              


                         TUESDAY, JULY 28, 2009

                  House of Representatives,
            Select Committee on Energy Independence
                                        and Global Warming,
                                                    Washington, DC.
    The committee met, pursuant to call, at 9:37 a.m. in room 
2172, Rayburn, Hon. Edward J. Markey (chairman of the 
committee) presiding.
    Present: Representatives Markey, Blumenauer, Cleaver, Hall, 
Salazar, Speier, Sensenbrenner, Blackburn and Capito.
    Staff present: Jonathan Phillips.
    The Chairman. Welcome, ladies and gentlemen, to the Select 
Committee on Energy Independence and Global Warming. Today's 
hearing is entitled, ``New Energy Technologies: What's Around 
the Corner?''
    Today we look to the future. We look to the future of how 
our country and our world will be powered. We do so by 
examining new ways to run our homes, vehicles, and businesses. 
We need to change because the status quo, sending billions of 
dollars to countries that don't like us much, and sending 
billions of tons of greenhouse gases into the atmosphere, is 
not sustainable. We need to develop technologies that will lead 
us to even greater prosperity and a cleaner and more secure 
world.
    We are at a watershed moment in the history of energy 
production, and the choices we make at this juncture will shape 
our national and economic security in the next several decades 
and determine the fate of our planet. Between now and 2030, 
over $20 trillion will be invested in new energy infrastructure 
worldwide, and an estimated $1.5 trillion will be invested in 
the U.S. power sector alone. This new infrastructure is long-
lived and costly, so we need to get it right.
    The decisions made in the next decade will set the course 
of the global and U.S. energy system, and of the global climate 
for the next century and beyond. This transition also presents 
an unprecedented opportunity for economic development and job 
creation in the clean energy technology sector. But the United 
States must act now if it is to be a leader in the rapidly 
developing global market.
    A few weeks ago, the House of Representatives took a giant 
legislative leap in America's historic effort to win the next 
great technological revolution, the clean energy race of the 
21st century. On June 26th, the House passed the first 
comprehensive clean energy and climate bill in our Nation's 
history, the Waxman-Markey American Clean Energy Security Act.
    The bill would, for the first time, put a cap on carbon 
pollution that causes global warming; and establish ambitious 
policies for the development and deployment of clean energy and 
efficiency; invest nearly $200 billion in the next 15 years to 
make America once again the leader in energy technology. We 
need to pass this bill because, for the past decade, we have 
fallen badly behind in the clean energy race.
    Of the top 30 clean energy companies in the world, only six 
are American. Portugal, Spain, and Denmark produce 9 percent, 
12 percent, and 21 percent of their electricity from wind 
respectively. America produces about 1 percent of its power 
from wind.
    But I am an optimist. I am a technological optimist, and I 
am an optimist about America's ingenuity and the American 
entrepreneurial spirit. I know that we can and that we will win 
this race.
    We have witnesses here before us that are engaged in 
developing the technologies that we need. We could have invited 
other technology companies, but today I wanted to focus on 
businesses that are forward-leaning on solar technologies and 
on ways to find a path forward on coal. Their solutions range 
from developing higher solar efficiency to manufacturing 
innovations that would reduce the cost of solar cell 
production, to capturing the CO2 from power plants 
and putting it under the sea bed or combining CO2 
with sea water to make cement.
    I have no idea whether these companies will succeed or 
fail, or whether other companies with better ideas or more 
inspired execution will win. That is not our job, to pick the 
winners and the losers, to know which technology will capture 
the day and which will fall by the wayside.
    But I do know if we put the right policies in place, we 
will unleash the greatest force for change on the planet: 
American entrepreneurialism and ingenuity. This was the lesson 
from the 1990s in the communications and information-technology 
revolution. I believe that the situation is no different with 
clean energy.
    I look forward to hearing from today's witnesses. We now 
turn and recognize the ranking member of the committee, the 
gentleman from the State of Wisconsin, Mr. Sensenbrenner.
    [The prepared statement of Mr. Markey follows:]
    





    
    Mr. Sensenbrenner. Thank you, Mr. Chairman.
    Today's hearing on clean energy asks, what is around the 
corner, and focuses on two types of energy production, clean 
coal technology and solar power. These power sources should 
compete with each other in an open market with other sources, 
like nuclear power, wind energy, hydro power, and other 
advanced technologies.
    Competition will drive technological advancement, and 
technology will improve our energy security and reduce our 
CO2 emissions. Congress cannot choose winners and 
losers in the competition. Experience in the market must 
dictate which of these technologies are viable and what mix of 
them can best power our economy.
    What is best for D.C. may not be what is best for my 
district in Wisconsin, which is why Republicans called their 
energy policy ``all of the above.'' ``All of the above'' means 
allowing all technologies a fair opportunity to compete. 
Competition between businesses drives economic growth.
    But if bureaucratic carbon emission schemes, like the cap 
and tax, become law, new technology will compete for government 
subsidies and emissions credits, and not for new consumers. GM 
and Chrysler are examples of what is to come. These companies 
accepted government bailout funds to stay in business and then 
invested it in lobbying the Federal Government on climate 
change legislation, not an example of what the people want 
their tax dollars to be working for.
    While perhaps lucrative in the short term, government 
subsidies cannot sustain our economy.
    Coal accounts for half of all electricity generated in the 
United States. We cannot keep the lights on throughout our 
lifetime without it. Finding a way to use it cleanly is 
therefore critical. Clean coal technology has some promising 
developments recently.
    In June, researchers in my State announced the successful 
carbon capture test at the We Energies' Pleasant Prairie 
facility. Their researchers were able to use chilled ammonia 
technology to capture nearly 90 percent of the target carbon 
dioxide emissions.
    I recognize Gary Spitznogle of American Electric Power, who 
is here to tell the Select Committee about his company's 20-
megawatt test project at the Mountaineer power plant in New 
Haven, West Virginia. This project is larger than the Pleasant 
Prairie test project and utilizes the same chilled ammonia 
technology. Hopefully, this is the next step forward in the 
development of carbon capture and storage technology.
    While this process could be the next step in development of 
this technology, it is not the final step. The Mountaineer 
power plant is a 1,300-megawatt plant. The 20-megawatt test 
project is capturing just a small fraction of the carbon 
emissions that could be stored. With its aggressive cap on 
carbon, policies like cap and tax could lead utilities and 
researchers to abandon carbon capture and storage technology 
before it advances. Many utilities will be tempted to move onto 
natural gas or other technologies that will help meet their 
carbon cap. This could end development of clean-coal technology 
and potentially leave America's most affordable and abundant 
source of energy out of the mix. Let us hope that that is not 
what lies around the corner.
    Clean coal is showing promising technological developments. 
Coal can and must remain a central part of a diverse energy 
portfolio that includes renewable technologies, like wind and 
solar, and other carbon-neutral technologies, like nuclear and 
hydro power. I look forward to learning more about these 
technologies and how government policy can encourage the 
development of a diverse portfolio of energy production that 
strengthens both U.S. security and the environment.
    I yield back the balance of my time.
    The Chairman. The gentleman's time has expired.
    The Chair recognizes the gentleman from Oregon, Mr. 
Blumenauer.
    Mr. Blumenauer. Thank you, Mr. Chairman.
    Most assuredly, Congress doesn't have to pick winners and 
losers, but it is important to provide a framework. That is 
what we have done historically with the development of energy 
resources. We have had government policies that have dealt with 
coal, oil, timber. Nuclear energy has received the most lavish 
of subsidy and has been part of a rather intense comprehensive 
government framework.
    What has happened with the enactment, at least in the 
House, of the landmark energy legislation is providing a 
framework for the future. I look forward to having the record 
develop here today about what the possibility is for innovation 
in our country moving forward. The innovation is going to be 
much accelerated if in fact we do have a framework that deals 
with carbon emissions, that deals with providing subsidies for 
energy supplies for the future rather than focusing on those in 
the past. Most important, this is where the world is going. And 
we have seen example after example. And you mentioned some of 
those, Mr. Chairman, in your opening statement. This is the 
economy of the future. Hopefully, we are able to get our 
priorities straight, our signals aligned so that we can tap the 
potential that is being described here by the witnesses today, 
and that we will be positioned to take advantage of it.
    Last but not least, this is what is going to drive down the 
prices in the future. The evidence suggests that there is 
actually minimal costs associated with the legislation that we 
just enacted. But more important, it didn't take into account 
the potential for innovation, which we will hear about today. 
Thank you very much.
    The Chairman. The gentleman's time has expired. The Chair 
recognizes the gentlelady from West Virginia, Ms. Capito.
    Mrs. Capito. Thank you, Mr. Chairman, and thank you for 
hosting today's very important hearing.
    Last month, the House passed the American Clean Energy and 
Security Act. While I did not support that legislation because 
I believe that it stood to push energy prices upward and 
threatened an economy that is already in trouble; I believe 
that instead of taxing West Virginia families and companies and 
picking winners and losers, which I believe the bill does, we 
need to do more to maintain global competitiveness of our U.S. 
industries and support and accelerate the development of 
advanced clean-coal technologies, including carbon capture and 
storage technologies.
    Here in the United States, we know coal is the our Nation's 
most abundant domestic resource, with recoverable resources 
sufficient to last approximately 250 years. Coal currently 
fuels more than 50 percent of all electric generation. In my 
home State of West Virginia, 98 percent of our electricity 
comes from coal. It supports hundreds of thousands of 
additional jobs throughout the supply chain.
    Additionally, West Virginia is the second largest coal-
producing State, so the economic implications of our energy 
policy to my State cannot be overstated. Carbon capture is 
important to West Virginians in ensuring our national energy 
independence. Without it, we deprive ourselves of the most 
effective tool for addressing CO2 emissions from 
coal. We need to continue to press CCS and other clean-coal 
technologies. We need to provide sufficient funding and 
incentives, which are included in the bill, to accelerate the 
development, demonstration, and broad commercial deployment of 
CCS.
    I am very happy to today to have Gary Spitznogle here from 
the AEP Mountaineer plant, which is engaged now in a CCS 
project. That plant is in my district. I know many of the fine 
folks who work at the Mountaineer plant. I have visited the 
facility, and also seen where the demonstration will take 
place. I look forward to hearing from him and the other 
witnesses on this important blueprint for commercial-scale 
facilities. I welcome him as well as a representative of AEP, 
constituents in my district.
    The implementation will not only benefit a State like mine 
with jobs and revenue, but it will also benefit our Nation by 
making clean coal a reality.
    I look forward to the testimony from the panel. Thank you.
    [The prepared statement of Mrs. Capito follows:]





    
    The Chairman. The gentlelady's time has expired.
    The Chair recognizes the gentleman from Missouri, Mr. 
Cleaver.
    Mr. Cleaver. Thank you, Mr. Chairman. Serving on the 
Financial Services Committee and listening each week multiple 
times to economists, along with the Fed Chairman Ben Bernanke 
and a host of other experts, it does not take much to convince 
me that we are in the most difficult economic time in half a 
century. Not since the Great Depression has the United States 
been in such an economic condition.
    But I am also excited about the fact that during tough 
times, it appears as if the U.S. does its best work. Microsoft 
was developed during a recession. FedEx was developed during a 
recession. And I am absolutely convinced that we will be able 
to depend on the scientific ingenuity of Americans to come up 
with new technologies that will not only help rebuild the 
economy but will help save the planet.
    One of the greatest tragedies of our little moment on this 
ball that revolves around the sun is if the United States does 
not provide the leadership in developing the new technologies 
that will in fact help save this planet. In Kansas City, we 
have created what we call a green impact zone. And we will be 
announcing on the 1st a smart grid for a 150-block area in the 
urban core. We are going to try to develop a whole new 
neighborhood using the very latest technologies.
    Tom Carnahan, the brother of Russ Carnahan, one of our 
colleagues, has a wind farm not far from Kansas City, where I 
live. That is also proving to be one of the great moves 
economically in our community. So I am excited about the 
possibility of coming up with new technologies that will allow 
us to do things we have only thought about and looked at in 
science fiction movies. That day is rapidly upon us, and I look 
forward to interacting with our panel to find out their view of 
what we can do and what we must do. I yield back the balance of 
my time.
    The Chairman. The gentleman's time has expired. The Chair 
recognizes the gentleman from New York State, Mr. Hall.
    Mr. Hall. Thank you, Mr. Chairman, for holding this 
important hearing. And just regarding picking winners and 
losers, I would assume that my colleague, the gentlelady on the 
other side of the dais, is in favor of the billion dollars plus 
a year for research into carbon capture and sequestration that 
is in the bill that we passed; that is in fact trying to pick 
coal as a winner. And this country, as Mr. Blumenauer referred 
to, has been subsidizing nuclear power for 50-years through the 
insurance, making the taxpayer of this country the insurer, in 
fact the only industry I am aware of that has been wholly 
backed against catastrophic accident by public insurance.
    Nonetheless, I am particularly interested in hearing about 
the potential for large scale solar power development. I have 
long been a supporter of solar power in the Hudson Valley and 
the entire country. Most recently, we have been creating a 
market for solar and wind technology in my district. Companies 
like SpectraWatt and BQ Energy have been creating new 
production lines, hiring more workers, creating jobs, taking 
advantage of R&D money that the Federal Government is providing 
to do this cutting-edge research. Mercury Solar in my district 
started 3 years ago with 5 employees; now employs 60 people, 
and hopes to be at 80 people by year's end.
    SpectraWatt is starting with 150, hiring back IBM workers 
and NXP workers who were just laid off, and using 70,000 square 
feet of empty IBM facilities, which are a really good match for 
producing these kind of products, clean room, positive air 
pressure to keep dust out, used to handling thin wafers of 
fragile materials and putting micro circuits on them. It is the 
kind of thing that matches up the skill set of the workforce 
with the work space. And I think I have reason to be optimistic 
that my district and the Hudson Valley will join the rest of 
the country in leading in this direction as we go forward into 
the new energy economy of the 21st century, and I yield back 
the balance of my time.
    The Chairman. The gentleman's time has expired.
    The Chair recognizes the gentlelady from Tennessee, Mrs. 
Blackburn.
    Mrs. Blackburn. Thank you, Mr. Chairman. I thank you for 
that and want to welcome our witnesses. We are glad that you 
all are here. I think it is important that we look at new 
technologies. I think it is important that we hear from you. Of 
course where I come from in Tennessee, coal is going to play an 
important part in our look forward, as is nuclear and 
hydroelectric power, and making certain that the innovation and 
the usage is there. Knowing what is going to be coming at us is 
an important component of what we deal with.
    We do have a great new company in Clarksville, Tennessee, 
that is working on some new technologies and--Hemlock, which is 
a part of Dow Corning. We are grateful that they are being an 
innovator in this, looking at how we move forward with carbon 
sequestration, and continue to build our energy infrastructure. 
And so I look forward to the questions, and appreciate your 
time being here today.
    I yield back.
    The Chairman. The gentlelady's time has expired. The Chair 
recognizes the gentleman from Colorado, Mr. Salazar.
    Mr. Salazar. Thank you, Mr. Chairman, and good morning. I 
am a strong supporter of the renewable energy technologies, and 
I am looking forward to hearing the testimony today. We have 
many challenges before us and a wealth of technologies to 
explore.
    Colorado and the Third Congressional District has great 
potential for solar. The Bureau of Land Management has 
identified southern Colorado as one of its solar energy study 
areas for the concentrated solar energy production. We 
currently have an 8.2-megawatt photovoltaic plant in the San 
Luis Valley, with another 17-megawatt plant planned and an 
additional 6,400-acre, 10 square miles of solar panels to be 
installed later in a few years.
    The potential for solar power across the West is great. 
There are also many challenges associated with solar. As you 
know, water is a scarce resource in many western States, so we 
must be thoughtful of how we address the water needs for solar 
power. Clean coal and carbon sequestration is another 
technology that I am looking forward to hearing about today. 
Coal-burning power plants provide half of the electricity 
generated in the United States. Colorado depends upon coal for 
the majority of its electricity.
    The current plan for cap-and-trade in my opinion places an 
undue economic burden upon Colorado energy users due to the 
amount of coal that we currently use in Colorado. If we could 
develop clean-coal burning technology as a viable and economic 
alternative, this will help Coloradans and the rest of the 
country become energy independent, while addressing climate 
challenges.
    I am glad to see that two witnesses today are testifying 
about coal capture technology and discussing economically 
feasible ways to capture CO2, as well as utilizing 
byproducts. I am also intrigued by the other uses that we can 
develop for CO2 that put it in use rather than store 
it away in geological formations.
    I want to thank you, Mr. Chairman, and I look forward to 
hearing the testimony today.
    [The prepared statement of Mr. Salazar follows:]





    
    The Chairman. Great. The gentleman's time has expired.
    The Chair recognizes the gentleman from Washington State, 
Mr. Inslee.
    Mr. Inslee. I will reserve, Mr. Chair. Thank you.
    The Chairman. Great. Then we will turn to our panel, our 
very distinguished panel of innovators.

  STATEMENTS OF GREGORY P. KUNKEL, PH.D., VICE PRESIDENT FOR 
  ENVIRONMENTAL AFFAIRS, TENASKA INC., OMAHA, NEBRASKA; BRENT 
CONSTANTZ, PH.D., CHIEF EXECUTIVE OFFICER, CALERA CORPORATION, 
 LOS GATOS, CALIFORNIA; FRANK SMITH, CHIEF EXECUTIVE OFFICER, 
  PURGeN One LLC, CONCORD, MASSACHUSETTS; GARY O. SPITZNOGLE, 
 MANAGER OF IGCC AND GAS PLANT ENGINEERING, AMERICAN ELECTRIC 
 POWER, COLUMBUS, OHIO; SEAN GALLAGHER, VICE PRESIDENT, MARKET 
   STRATEGY AND REGULATORY AFFAIRS, TESSERA SOLAR, BERKELEY, 
 CALIFORNIA; AND EMANUEL SACHS, CHIEF TECHNICAL OFFICER, 1366 
        TECHNOLOGIES INC, NORTH LEXINGTON, MASSACHUSETTS

    The Chairman. And we will begin with Dr. Gregory Kunkel, 
who is vice president for environmental affairs at Tenaska, 
Incorporated. He helps to develop Tenaska's strategic responses 
to climate change, and is in charge of development and 
environmental permitting for clean energy projects.
    Thank you for joining us today, Dr. Kunkel. Whenever you 
are ready, please begin.

             STATEMENT OF GREGORY P. KUNKEL, PH.D.

    Mr. Kunkel. Thank you, Chairman Markey, Ranking Member 
Sensenbrenner, members of the Select Committee, for inviting me 
to speak to you about Tenaska's two pioneering carbon capture 
and storage projects: Trailblazer in Texas, and Taylorville 
Energy Center in Illinois.
    These projects represent a new paradigm in the energy 
industry in a carbon-constrained world, linking electricity, 
carbon capture, and oil and gas production. Using distinct 
technologies, each project will demonstrate carbon capture at 
commercial scale, provide clean energy 24 hours a day, and 
promote rapid expansion of known domestic petroleum reserves 
through carbon dioxide-enhanced oil recovery.
    My name is Greg Kunkel. I am vice president of 
environmental affairs for Tenaska, an energy company based in 
Omaha. Trailblazer in Texas is a 600-megawatt coal-fired boiler 
with scrubbers to capture 85 to 90 percent of its carbon 
dioxide emissions. Recent developments in the Trailblazer 
project are that Tenaska has selected Fluor Corporation as the 
EPC contractor. And the Texas legislature has enacted helpful 
tax incentives and their framework for regulating permanent 
geologic storage of carbon dioxide.
    The great promise of post-combustion capture technologies 
like Trailblazer is that it can be applied to retrofit existing 
coal-fired power plants. In the United States, we have the 
additional opportunity to use the carbon-capture enhanced oil 
recovery paradigm to significantly expand our recoverable 
domestic oil reserves and production capacity, while 
eliminating emissions of carbon dioxide.
    There is growing interest in this idea worldwide. 
Trailblazer and other post-combustion capture pioneers in Asia, 
North America, and Europe will open the door to retrofit some 
of the 5,000 power plants worldwide, and begin to eliminate the 
10 billion tons of carbon dioxide emitted from such facilities 
each year. The remaining key to advancement of Trailblazer and 
its great promise is Federal emission reduction incentives. 
When such legislation is passed, our aim as the Trailblazer 
will be ready.
    The Taylorville Energy Center in Illinois is a 500-megawatt 
coal gasification facility that converts coal to methane and 
then electricity. In the process, the project will capture 
about 60 percent of the carbon dioxide for use in oil 
production. Taylorville is the initial clean-coal facility 
under the Illinois Clean Coal Portfolio Standard. The Illinois 
law sets standards we must meet, including carbon capture; 
provides a mechanism for sale of electricity; and limits 
allowable rate impact. Construction will begin in 2011, after 
completion of current design work, final legislative review, 
and close of financing.
    I am pleased to report that the Department of Energy has 
selected Taylorville for the negotiation phase of its loan 
guarantee program. Loan guarantees are now critical to capital-
intensive energy projects, and will significantly reduce 
financing costs. Those reduced costs, as well as carbon dioxide 
sales revenues, will accrue to the benefit of ratepayers under 
the Illinois law.
    What additional government policies are needed? Perhaps the 
most important thing Congress could do is to provide regulatory 
certainty within a climate policy framework that promotes 
energy independence and emissions reductions. The emergence of 
the carbon-capture enhanced oil recovery paradigm, among other 
ideas such as efficiency, renewable energy and electrification 
of transportation, suggests that energy independence and 
emission reductions can be achieved simultaneously and 
economically.
    To put the American energy industry to work on these goals, 
we need a financial incentive for emission reductions that 
enables the carbon-capture EOR paradigm and other good ideas. 
The Waxman-Markey bill does much to advance the necessary 
policy and regulatory framework and supports the carbon-capture 
EOR paradigm specifically.
    The written testimony I provide to you includes our 
suggestions on the bill, including optimization of the bonus 
allowance program to leverage private capital.
    Thank you again for the opportunity to provide this 
overview of Trailblazer and Taylorville. I would be pleased to 
respond to any questions you have at the earliest opportunity.
    [The statement of Mr. Kunkel follows:]






    
    The Chairman. Thank you, Dr. Kunkel, very much.
    Our next witness is Dr. Brent Constantz, who is the chief 
executive officer of Calera Corporation. He is a consulting 
professor at Stanford University, researching and teaching 
carbon and mineral formation and global carbon balance.
    We welcome you, Doctor. Whenever you are ready, please 
begin.

              STATEMENT OF BRENT CONSTANTZ, PH.D.

    Mr. Constantz. Thank you, Chairman Markey.
    I would like to say how much we admire the committee for 
their foresight in looking at these future technologies for 
carbon management. I am going to tell you this morning about a 
technology which takes CO2 and transforms it into 
saleable building materials, including concrete in aggregate, 
and is currently in practice on Monterey Bay in California.
    We have funded and are building, scaling up to a 10-
megawatt equivalent plant next to the largest power plant on 
the West Coast right now. Just to frame things, fundamentally 
there are two approaches to removing carbon from raw flue gas 
as opposed to just taking carbon out of the air.
    One is separation, and the other is conversion of 
CO2. So, in separation and purification of 
CO2, it is a chemical process which involves a high 
amount of energy, and typically takes about 30 to 40 percent of 
the power generated at say a coal-fired power plant just to do 
that separation step. And despite any amount of development, 
the theoretical maximum from the Harvard study shows that the 
best it could ever do is to take 25 percent of the power from 
the plant just to separate it. And when you are done, you are 
just left with liquid CO2, which then has to be 
transported, compressed, and injected.
    The other approach is to simply convert it to carbonate. 
This has been done for over a century to produce calcium 
carbonate, which is in the paper here. It is in the paint. It 
is in our morning calcium supplement. It is in your milk shake. 
Millions and millions, trillions of tons of calcium carbonate 
are produced every day. And it is a very well known, proven 
technology.
    What Calera Corporation has done is develop a way to 
formulate the polymorphs of the calcium carbonate into useful 
cementitious materials. To understand the magnitude of the 
problem, the Kyoto Protocol is calling for 5 billion tons of 
CO2 to be mitigated. Every year, there are 30 
billion tons of aggregate sold worldwide. And here in the 
United States there are 3 billion tons of aggregate sold 
worldwide. Calera has the ability to sequester over 15 billion 
tons of CO2 on an annual ongoing basis in aggregate, 
which can be sold into the concrete and the aggregate markets 
as well as Portland Cement Substitutes; 99 percent of all the 
carbon on the planet is in the form of limestone today. In 
fact, there are 70 million to 100 million billion tons of 
CO2 in the form of limestone today. That is where 
most of the carbon in the planet; the hydrosphere the biosphere 
and the atmosphere have just a few hundred billion tons, a very 
small amount.
    Calera's process involves driving raw flue gas through sea 
water in the case of Monterey Bay. In most cases, we are 
working inland, though, with the same geologic brines from 
saline reservoirs which are pumped up.
    That forms a carbonate by adding base. Then we have a 
revolutionary low-energy base manufacturing process. We turn it 
to carbonate and calcium carbonates and magnesium carbonates. 
The products are what are called supplementary cementitious 
materials that are substituted for Portland Cement. And 
Portland Cement itself has a large carbon footprint in its 
production. So we are both trapping the CO2 and 
avoiding the CO2 from the Portland Cement.
    We also make aggregate, as I mentioned, which is used in 
concrete and asphalt. And we are doing this every day. We are 
producing up to 5 tons a day in Monterey today. It is tested 
against ASTM standards and ACI standards. So this is a proven 
technology that is in practice today.
    I guess the important thing to realize, though, is we are 
talking about the largest material mass movement in the history 
of the planet. Humans are producing 20 to 30 billion tons of 
CO2 a year. And you need a reservoir that can take 
that sustainably. And the built environment is the ideal 
reservoir for the CO2. Concrete is the most 
transferred material, other than water, in the whole world.
    The infrastructure is already in place. Redi-Mix plants are 
pulling up to coal-fired power plants every day and picking up 
their fly ash and taking it to their Redi-Mix plants for mixing 
in concrete. There is no new infrastructure to develop here. We 
are doing it today. It is ready to move forward.
    But going from our 10-megawatt plant, which we have funded 
in Silicon Valley and are building today, to the 1,000- and 
1,500-megawatt plants that are necessary, it is going to take 
hundreds of millions of dollars of government funding to cross 
that chasm. Thank you.
    [The statement of Mr. Constantz follows:]





    
    The Chairman. Thank you, Doctor, very much.
    Our next witness is Mr. Frank Smith. He is a founder and 
principal of SCS Energy and PURGeN One. There he oversees the 
development of energy facilities that, according to their 
company, lead the industry in environmental stewardship and 
climate change mitigation.
    We welcome you, sir. Whenever you are ready, please begin.

                    STATEMENT OF FRANK SMITH

    Mr. Smith. Thank you. Mr. Chairman and----
    The Chairman. Could you move it over just a little bit 
closer?
    Mr. Smith. All right. Mr. Chairman and members of the 
committee, it is my pleasure to testify this morning about new 
technologies and business initiatives that address our Nation's 
energy and climate challenges.
    At the outset, Mr. Chairman, I want to thank you and your 
colleagues for your leadership in this area. By using a market 
mechanism to put a value on CO2, your bill and 
supporting energy policies will transform energy production in 
the same way that the Telecommunications Act of 1996 spurred a 
revolution in information technology.
    SCS develops electric-generating plants. We do complicated, 
large capital projects, and we have been very successful. The 
PURGeN One project, located in Linden, New Jersey, promises to 
be even more so.
    I want to make sure that the committee hears three core 
messages about carbon constraints and the state of technology. 
Using proven technologies available today, we can produce 
electricity, along with other basic commodities, at market 
prices while sequestering 90 percent of our CO2. We 
can accomplish that with profitable commercial ventures that 
meet real market needs. And we can do all of that using 
domestic resources, resources that include not only coal and 
rail and capital, but the uniqueness of our offshore geology 
and the resourcefulness that 1,500 skilled union craftsmen will 
bring to building our plant.
    The PURGeN One facility, which we are developing right now, 
is one example. The facility operates a hydrogen plant. That 
plant produces hydrogen gas from coal. Hydrogen is then used to 
make electricity and urea. In the process, the plant will 
capture 90 percent of the CO2 it produces, over 4 
and a half million tons per year. That CO2 will be 
transported and permanently stored in sandstone formations deep 
under the ocean floor. PURGeN One does all of this in a dense 
urban setting, where it meets a real and growing market need 
for generating capacity.
    This project is a price taker in both the electricity 
market and the urea market. The consumer will pay nothing extra 
for the commodities produced from this facility. You see, 
traditional single-purpose power plants operate for large 
periods of time and break even or worse. PURGeN is a 
manufacturing platform that shifts easily from producing 
electricity to producing urea. This both optimizes the 
revenues, and it uses the plant's capital stock more 
effectively. With the hydrogen plant as its base, this is 
relatively easy to do.
    So we set out to solve sequestration, and along the way, we 
solved the fundamental problem in electricity generation. The 
new technology here is in the business model. Everything else 
is off-the-shelf, proven technology. Even the sub-seabed 
sequestration of CO2 has been proven safe and 
effective. The oldest and largest ongoing sequestration project 
in the world is the Sleipner field in the North Sea. We will 
sequester in formations, well explored formations that are 
approximately twice as deep and under a much thicker cap rock 
than those at Sleipner. So PURGeN will be more reliable than 
the most proven large-scale sequestration field in the world.
    One last point. We do not look at CO2 
sequestration as a cost; we look at it as a business. With the 
$20 per ton tax credit in the TARP bill and some cross-
subsidization from the hydrogen plant, the bill operates at 
about break even. But the pipe has capacity for--what is this? 
Have I run out of time, sir?
    The Chairman. No, you have not run out of time. It is just 
notifying us that the Members are being notified that the House 
is now in session. So it will not come off your time. So you 
have an additional minute to go.
    Mr. Smith. Okay. Thank you. One last point. We don't look 
at carbon dioxide sequestration as a cost. We look at it as a 
business. With the $20 per ton tax credit in the TARP bill and 
some cross-subsidization from the hydrogen plant, the business 
operates at about break even. But the pipe has capacity for an 
additional 5 million tons per year from other facilities. 
Operating at full capacity, we have a very successful business 
with a $20 tax credit and $5 to $10 per ton value to the 
CO2.
    PURGeN One has started the permitting process for an early 
2011 construction start, but there are some challenges. First, 
big power plants are hard to finance in the best of times, but 
in the current financial crisis, Congress will need to expand 
DOE loan guarantee authority for first movers. The $20 tax 
credit provided by the TARP legislation is capped at 75 million 
tons. PURGeN could sequester upwards of 200 million tons in its 
first 20 years. Congress will need to raise this cap and 
provide assurance to investors that the credit will be there 
for the life of the financing.
    Finally, Congress needs to make clear that offshore leasing 
of lands for sub-seabed carbon storage is not merely 
permissible but a national priority. We look forward to working 
with the Select Committee to address these issues and for final 
passage of H.R. 2454. Thank you, sir.
    [The statement of Mr. Smith follows:]





    The Chairman. Thank you, Mr. Smith, very much.
    Our next witness is Mr. Gary Spitznogle, who is manager of 
Integrated Gasification Combined Cycle and carbon capture and 
storage engineering at American Electric Power. He represents 
AEP in the Midwest Regional Carbon Sequestration Partnership, a 
regional partnership of research and industry entities arranged 
by the United States Department of Energy to study carbon 
sequestration.
    We welcome you, sir. Whenever you are ready, please begin.

                STATEMENT OF GARY O. SPITZNOGLE

    Mr. Spitznogle. Mr. Chairman and distinguished members of 
the Select Committee, thank you for having me here, and I 
appreciate you offering me this opportunity to share the views 
of AEP on power generation and technologies for the reduction 
of CO2 emissions. We applaud your efforts to explore 
new technologies that can help achieve energy independence 
while reducing or eliminating emissions of greenhouse gases.
    In my testimony, I have described AEP's leadership on 
technology development over the past 100 years, including new 
generation. Arguably even more urgent than new generation 
technologies, substantial effort must be placed on retrofit 
technologies for the reduction of CO2 from existing 
power plants. The U.S. currently obtains about half of its 
electricity from a large fleet of baseload coal generation 
plants. And most of these will be in operation for decades to 
come. In recognition of this fact, the Secretary of Energy, Dr. 
Steven Chu, has recently directed the DOE to invest 
significantly in the area of post-combustion CO2 
capture.
    The recent changes made to the Clean Coal Power Initiative 
Program and the DOE-funded National Carbon Capture Center 
reflect the support needed to commercialize CCS technologies. 
AEP has teamed up with Alstom to demonstrate its chilled 
ammonia CO2 capture technology at the 20-megawatt 
scale at our Mountaineer power plant in West Virginia. With 
start-up planned for just a few weeks away in early September, 
we will begin to inject 100,000 tons per year of captured 
CO2 into deep saline reservoirs approximately 8,000 
feet below the surface. This project represents the Nation's 
first integrated CO2 capture and storage project at 
a coal-fired power plant. After successful validation, our plan 
is to move the technology to commercial scale, demonstrating 
the entire process at a rate of 1.5-million tons of 
CO2 per year.
    Now, if currently available CO2 capture 
technologies were to be deployed, the resulting energy 
consumption of these systems would lead to the loss of one-
third of the power plant's output. That means a typical 600-
megawatt power plant would be reduced to 400-megawatts, and the 
cost of electricity would be increased by roughly 60 to 70-
percent.
    New technologies, such as the chilled ammonia process, 
offer the promise of reducing this parasitic power loss. 
However, these technologies are not yet ready for commercial 
deployment. They must be advanced in a systematic and step-wise 
manner. AEP's current CCS project represents this next step in 
the evolutionary progress of technology development. Commercial 
scale demonstrations of technologies like chilled ammonia will 
not be in service before 2015. And even when it is, it must be 
understood that these first projects will not be installed with 
commercial guarantees from vendors, and they run the risk of 
not continuously meeting high CO2 capture levels. 
This is why we believe that 2020 is approximately the earliest 
date when commercially reliable carbon-capture systems will be 
deployable across the industry.
    A few other technical hurdles must be also be considered. 
At CO2 capture levels exceeding 50 percent, the 
steam consumption required by conventional capture technologies 
may jeopardize the unit's ability to continue to produce 
electricity. In addition to energy demand, CO2 
systems require vast amounts of land. And as a rule of thumb, a 
full-scale system would double the footprint of a typical power 
plant. Some plants can accommodate this requirement, but many 
cannot. Consequently, companies may be forced to deploy 
CO2 capture systems on only a portion of the plant's 
output.
    One more significant challenge is the permanent storage of 
CO2 after it is captured. The extent of available 
saline reservoirs, injection pressure limitations, and ultimate 
capacity are all factors that currently are the subject of 
intense study. AEP's CCS program demonstrates the prudence of 
taking technology in a safe and step-wise fashion to 
commercialization. The timeline for this work again points 
towards 2020 as a reasonable date for wide-scale availability 
of the technology.
    In summary, continued research, development, and 
demonstration must be supported, and is essential to make CCS 
technologies a reality. We must do more than just simply call 
for it. Our Nation must prepare, inspire, guide, and support 
our citizens and the very best and brightest of our engineers 
and scientists. Private industry must step up and start to 
construct the first commercial plants, and our country must 
devote adequate financial and technological resources to this 
enormous challenge.
    AEP is committed to being part of this important process 
and to help achieve the best outcome at the most reasonable 
cost and timelines possible. Thank you again for this 
opportunity to share our views. I will be happy to answer 
questions.
    [The statement of Mr. Spitznogle follows:]





    
    The Chairman. All right. Thank you very much.
    And our next witness is Mr. Sean Gallagher. He is the vice 
president of marketing and regulatory affairs for Tessera 
Solar, the solar development company of Stirling Energy 
Systems.
    We welcome you, sir.

                  STATEMENT OF SEAN GALLAGHER

    Mr. Gallagher. Well, thank you very much, Chairman Markey, 
Ranking Member Sensenbrenner, and members of the committee.
    I am Sean Gallagher, vice president of market strategy and 
regulatory affairs for both Tessera Solar and Stirling Energy 
Systems. Tessera Solar is based in Houston, Texas, and Stirling 
based in Scottsdale, Arizona. We very much appreciate the 
leadership that you and your colleagues have shone on renewable 
energy this year. And we will work with you to see that that 
continues.
    It is a great pleasure to have an opportunity to address 
you today about solar power and our concentrating solar power 
technology in particular.
    My companies, Tessera Solar and Stirling Energy Systems, 
are within the NTR family of companies. NTR is an Irish 
renewable energy development company which owns a portfolio of 
primarily U.S.-based businesses, including an ethanol company 
based in Omaha, Nebraska, called Great Plains Renewable Energy; 
the wind energy company mentioned earlier, called Wind Capital 
Group, that is based in St. Louis, Missouri; and a recycling 
business with operations in Ireland, the U.K., and the U.S.
    In May 2008, NTR invested $100 million in solar power 
manufacturer Stirling Energies Systems and created Tessera 
Solar as the project development arm of the business. So the 
two companies that I represent, Tessera Solar and Stirling 
Energy, are sister companies. Stirling Energy manufactures the 
sun-power solar-powered generated--SunCatcher solar power 
generating system that I will describe in a moment, and Tessera 
Solar will build, own, and operate the solar farms that are 
powered by the SunCatcher.
    Solar power comes in two basic flavors. Many people are 
familiar with photovoltaic panels, which use an electrochemical 
process to convert sunlight into electricity. And that is not 
what we do.
    Concentrating solar power, which is sometimes called solar 
thermal electric, uses the heat from the sun to create 
mechanical energy that is then converted into electrical energy 
or electricity. And there are a number of CSP technologies 
which are coming onto the U.S. market now. The SunCatcher, 
which is our product, is one of those, and it is a form of 
concentrating solar power.
    The system, which you can see both on the screens on the 
sides of the room and on the board over here is essentially a 
large parabolic mirrored dish. It is about 38 feet across. The 
sun's rays are reflected off the dish and focused onto the heat 
engine that sits out at the end of the boom that you see there. 
That collected heat from the sun gets up to about 1,300 degrees 
when it the enters the front of that heat engine. And that is 
called a Stirling engine.
    A Stirling engine is essentially an external heat engine. 
Any form of external heat can be used to operate the engine. In 
this case, it is the heat from the sun that is collected by the 
parabolic mirror dish that heats a hydrogen gas and pushes a 
four cylinder engine about the size of a motorcycle engine that 
is housed on the top of that boom. That four cylinder engine 
turns a crank shaft which turns a generator which generates 25 
kilowatts of electricity right on top of each dish. So, in 
California, that is about 15 to 20 average homes on a peak 
summer afternoon that can be run from the power that is 
generated by each of these dishes.
    There are a number of advantages to this technology. It has 
the highest solar-to-grid electric efficiency, which means that 
fewer raw materials are used. Its modular design allows greater 
flexibility in project size, less land disturbance, and higher 
on-sun availability because there is no single point of 
failure. Third, this technology uses far less water than any 
other concentrating solar power system. Up to a thousand times 
less than some comparable systems. And of course, it does not 
emit any greenhouse gas emissions or other hazardous 
byproducts. And because we are building at utility scales of 
hundreds of thousands of megawatts, many tons of greenhouse 
gases are avoided.
    The supply chain for this technology is automotive. Our 
supply chain partners are primarily based in the upper Midwest. 
And they will be converting existing automotive capacity to 
produce solar power components at a commercial scale, putting 
auto workers back to work. When we get into commercial volume 
production, we will be creating up to 4,000 jobs across the 
supply chain.
    Beginning next year, in 2010, Tessera Solar plans to break 
ground on two of the world's largest solar farms in southern 
California. These projects will produce up to 1,750 megawatts 
of clean power. They will create 300 to 700 construction jobs 
as they are being built, and on the order of a hundred 
permanent jobs, operations and maintenance jobs. We will also 
be building the first concentrating solar power plant in Texas. 
And we are developing a supply chain--I am sorry, a project 
pipeline both domestically and internationally. So we will be 
creating jobs in the U.S. for export.
    There are a few things that the Congress can do to help 
bring this technology to fruition. First of all, the Department 
of Energy has got to get the loan guarantee rules out. It has 
been 6 months already since the stimulus package was passed, 
and we still don't have the loan guarantee materials. Congress 
should consider extending the commenced construction deadline 
for receiving the grant in lieu of ITC by a year in recognition 
of the fact that the loan guarantee has been delayed thus far. 
The two programs really work together. If you can't get the 
loan guarantee, you can't get into construction to get the 
grant.
    We will also need transmission to bring this power that is 
produced primarily in the U.S. Southwest to the rest of the 
western United States and across the country.
    It is a great pleasure to have an opportunity to address 
you here today, and I will be happy to answer any questions. 
Thank you.
    [The statement of Mr. Gallagher follows:]





    
    The Chairman. Thank you, Mr. Gallagher, very much.
    And our final witness is Dr. Emanuel Sachs. He is the chief 
technical officer and co-founder of 1366 Technologies. Dr. 
Sachs is a professor of mechanical engineering at the 
Massachusetts Institute of Technology and holds over 40 patents 
as inventor or co-inventor of technologies for manufacturing 
processes and solar cells.
    We welcome you, Dr. Sachs.

                   STATEMENT OF EMANUEL SACHS

    Mr. Sachs. Thank you, Mr. Chairman.
    The challenges of global warming and energy security 
present extraordinary opportunities to grow new industries and 
to remake our industrial society in a sustainable form. Not 
since JFK marshaled us to go to the moon have we had such a 
clarion call to our young people to do well while doing good. 
And they have heard this call on their own.
    The opportunity to energize generations of engineers, 
scientists, business leaders, builders, and policymakers is 
precious. As an engineering graduate in 1976, I was motivated 
to work in solar energy by the oil embargoes of the early 
1970s. Fortunately, the opportunity was there. I was hired onto 
a DOE-funded program at a photovoltaics company, and within 2 
years, I knew what I wanted to do with my career.
    The term photovoltaics refers to the direct conversion of 
sunlight to electricity using semiconductor devices. That is 
with no moving parts. I will use the acronym PV for short. I 
returned to MIT for a Ph.D. in engineering and invented a new 
technology for making PV wafers called String Ribbon. String 
Ribbon is now the core technology of two companies. Evergreen 
Solar, a Nasdaq-listed U.S. company that employs approximately 
1,000 people at its R`D facilities and manufacturing plant in 
Massachusetts, is one of them. But along the way, from lab to 
public company, much time was lost due to a lack of resources. 
In fact, String Ribbon lay fallow for 8 years, beginning in 
1986, when oil prices dropped precipitously and PV funding 
essentially dried up.
    On September 12th, 2001, I turned my MIT research program 
fully to renewable energy. This was my personal response to the 
events of 9/11. My students, staff, and I created three new 
technologies in PV. In 2007, I co-founded 1366 Technologies to 
take these inventions from the lab at MIT into industry. We are 
now 25 people working to change the energy landscape, and we 
are one of 150 solar startups in the U.S.
    This chart captures some of the history of PV and the 
rationale behind our company. It is centered on wafer-based 
silicon PV, which accounts for approximately 90 percent of 
products sold. The chart shows the cost of electricity from PV 
graphed against the cumulative production of PV modules. It 
covers the period from 1978, when solar cells were used in 
space, through today, and then projects forward to 2020. What 
we see is a steady decline in manufacturing costs with 
production. This is a classic learning curve of the type that 
characterizes most manufacturing enterprises. The cost 
reductions are achieved in part by economy of scale. But in PV, 
the major contribution is a succession of technological 
advances which act cumulatively to reduce costs dramatically. 
This situation is similar to the sequence of developments that 
has kept silicon the dominant material in microelectronics for 
over 30 years.
    While PV is already economical in some markets without 
subsidy, in a few years unsubsidized costs will drop 
sufficiently below the price of electricity from natural gas so 
that we will enter the region of grid parity, while still 
allowing for sufficient profit to sustain growth. Continuation 
of the current 35 percent annual growth rate through 2020 will 
get us to parity with coal. At that time, PV will satisfy 7 
percent of the global demand for electricity. Storage 
technology to compensate for intermittency will become 
necessary by 2025. Once this storage problem is solved, PV will 
become the largest manufacturing industry in history.
    PV modules are simple, attractive products with proven 
field reliability, and they are made mostly from sand. The 
challenge is to bring the costs down. Our aim at 1366 is to 
contribute key innovations in the march of PV to grid parity. 
For example, today the highest cost step is manufacturing the 
silicon wafers that solar cells are built on. Cast blocks of 
silicon 6 inches wide and 12 inches long are sawn into the 
wafers that cells are made of. The sawing is a slow and 
expensive process. The worst part is that only half the brick 
ends up as usable wafers, and the other half of the brick is 
turned into dust by the sawing process. And it is unreclaimable 
dust because it is thoroughly contaminated.
    At 1366, we have a new process for directly producing high-
quality silicon wafers with no sawing and no surface treatment 
required. This single step can save 30 percent of making the 
costs of a PV module.
    From my experience, the biggest issue facing the rise of PV 
as a global energy source is consistency in funding and in the 
economic landscape. For example, after a few strong years, the 
venture capital community has drastically cut back on funding 
for PV. The current credit crunch makes it difficult to finance 
the multi-megawatt installations that are central to the future 
of PV. Federal funding for R`D has been up one decade, down for 
two, and is now beginning to recover. If you will pardon me, 
what I can say is that the up-and-down Federal funding cycle 
has enjoyed strong bipartisan support.
    Finally, Mr. Chairman, you asked for thoughts on policy. I 
am not a policy expert or even amateur, but I note that changes 
in energy infrastructure take decades, and I can suppose that a 
primary goal of effective policy should be to smooth out the 
wild fluctuations which have plagued the development of PV. It 
would be helpful to provide more support when fossil fuel 
prices are relatively low and allow the private sector to carry 
more of the weight when they are high. This proposal is the 
exact opposite of the natural tendency. Thank you for your 
attention.
    [The statement of Mr. Sachs follows:]





    
    The Chairman. Thank you, Dr. Sachs, very much.
    Now we will turn to our questions from the Select Committee 
members.
    And the Chair will recognize himself.
    Mr. Spitznogle, you said I think that you did not believe 
that there would be a commercially viable carbon capture and 
sequestration technology until at least 2020. Is that correct?
    Mr. Spitznogle. Mr. Chairman, I believe that is the case 
when we will be able to have wide deployment of these 
technologies with commercial guarantees. In my opening 
statement, I mentioned that 2015 would be the first time we 
start to see deployment at commercial scale with technologies 
that do not necessarily come with guarantees. So from that time 
period to 2020 is the time we see that those first 
installations are proven and process changes are made to make 
them reliable and they can be deployed widely.
    The Chairman. Thank you.
    Mr. Smith, do you agree with that, that we will have to 
wait until 2020 to have a truly commercially viable technology?
    Mr. Smith. Well, our plant is scheduled to go into 
production in 2014, 2015. The technologies are known and 
proven. They are not--it is not a retrofit. And perhaps my 
colleague to the right is talking about retrofit technologies. 
So maybe those have some different problems. But our plant is 
scheduled to go into production in 2014, 2015. It is 
commercially viable. It is ready to go.
    The Chairman. Do you agree with that, Dr. Kunkel? Where are 
you in the Spitznogle-Smith spectrum?
    Mr. Kunkel. Well, I think there is--we, obviously, have a 
couple of projects that are commercial scale that we are 
advancing. And those are among, you know, a small group of 
pioneering projects. And those projects, we will learn a lot 
from those. I think that is the first step, is to get that 
group of projects on the ground. And then there will be 
significant improvements.
    So, after 2015, there will be significant improvements all 
the way down the value chain, from engineering to the equipment 
manufacturers and so on. So we do need--I think that the 
pioneering plants, the pioneering efforts are the object in 
front of us now. But we can build commercial-scale facilities 
now, both gasification and post-combustion.
    The Chairman. Now, let me come back to you, Dr. Sachs. You 
I think said that the manufacture of solar technologies will 
become the largest single manufacturing sector, I think you 
said, in the history of the world.
    Mr. Sachs. Yes.
    The Chairman. Can you expand upon that?
    Mr. Sachs. Sure.
    So what the production level that we will reach in 2020 is 
roughly a terawatt a year. And we will have to get to quite a 
larger production level of several terawatts a year in order to 
satisfy global demand. The price of photovoltaics at that point 
fully installed will be on the order roughly of $1.50 a watt. 
So we are talking about trillions of dollars in total revenue.
    The Chairman. And the year that you picked for the point at 
which solar reaches equivalency with coal in the cost to 
generate electricity is 2020 on your chart?
    Mr. Sachs. Yes, and that is a continuation of the 18 
percent learning curve that photovoltaics has been on since the 
mid-1970s. So the part of the curve that you saw from 1978 to 
today is real data. And then the dotted line is a projection 
with the same slope, the same learning curve.
    The Chairman. So you are saying that the same rule that 
exists, Moore's law that exists in terms of the power of 
computer processing, exists over here as well?
    Mr. Sachs. It is not exactly Moore's law, but it is 
somewhat, somewhat analogous. So technologically that powers 
Moore's law is the accumulation of innovations in a processing 
of microelectronics. So no one company has to invent the entire 
processing sequence, but rather they build on the shoulders of 
people who came before them. And that is exactly what is 
happening in photovoltaics.
    The Chairman. Do you agree with that, Mr. Gallagher?
    Mr. Gallagher. Mr. Markey, in principle, I do. In the 
concentrating solar power industry, we think we have a similar 
cost-down curve that will enable us--actually, for the 
concentrating solar power technologies, the efficiency of solar 
radiation to good quality electricity is quite a bit higher 
than PV. And so we think that we are pretty close to the point 
where we are competitive with, for example, retail power prices 
in California already; and we think that as we get into volume 
production, we will see costs continue to come down through 
economies of scale, through exercising the supply chain to find 
the right supply chain partners, and through improvements in 
the technology as we go forward.
    The Chairman. Thank you, Mr. Gallagher.
    The Chair recognizes the gentlelady from West Virginia, 
Mrs. Capito.
    Mrs. Capito. Thank you. I thank the witnesses as well.
    Let me just make sure. I am little--not confused; I am 
looking for clarity here. Because I see some of the stumbling 
blocks to CCS cost, but some witnesses have testified, I think 
that--well, somebody said we need to have the loan guarantees, 
that is absolutely critical. We need to have the DOE come in 
with specialized project money. I am assuming that all the 
technologies still need this kind of financial impetus to get 
us to the--let's say, 2020 or 2015 where it will be 
commercially viable.
    Across the witnesses who talked about the coal, would that 
be pretty accurate in your--is there going to be a point where 
you don't need loan guarantees and other financial impetus to 
move this technology and make it, I don't know, revenue neutral 
to the government?
    Mr. Smith. From my point of view, if it weren't for the 
financial crisis, I think that would get less emphasis. 
Essentially, when you do a large power plant, you know, you are 
talking about billions of dollars. And the problem is that you 
are going to--when you talk about a first mover, you run into 
the problem of bankers and their sense of risk and things like 
that.
    If--in a more robust economy, prior to the problems we had 
last fall, their fear of loss is compensated by their greed, 
and you can get these things done. But fear is more a dominant 
emotionality in the financial communities, and so it becomes 
more difficult. It is particularly true with first movers. Even 
if all the technologies are proven and you are bolting pieces 
together, if they haven't seen it before, there is a concern.
    So in terms of funding this long term, absolutely. The U.S. 
economy will fund this. We are talking about how-to-get-started 
problems from my point of view.
    Mrs. Capito. Anybody else?
    Mr. Kunkel. I would just say that removing carbon dioxide 
from power plants costs money, and we know that. You know, 
using the oil industry, we can get paid for the carbon dioxide 
so that helps, obviously, and that is pretty much undeniable.
    The initial projects are probably going to be more 
expensive than later projects because we will learn a lot. And 
so we hope to bring down the costs. But, still, if society 
doesn't value emissions reductions, then this probably doesn't 
make sense.
    If society does value remission reductions, then it does 
make sense.
    Mrs. Capito. Thank you.
    Mr. Spitznogle. I guess what I can add to the comments on 
the concern about risk is, put in perspective the fact that AEP 
has obligations to its rate payers and its shareholders to make 
good decisions and mitigate that risk as much as possible.
    So when you look at these technologies, the first movers 
are truly the ones stepping forward and taking that initial 
risk. That is the case even with what we are doing down at our 
Mountaineer plant at 20 megawatts. We have asked the rate 
payers and shareholders to understand the need to do this, and 
they do. But there, again, it is a fairly small-scale step-out.
    Mrs. Capito. Well, understanding that a lot of times the 
rate changes go through the State, in our case, public service 
commission, those are tough things to get through. I know you 
have been through a couple here most recently.
    Let me ask--another question that is kind of a thread I 
heard through the CCS is the amount of energy it costs to 
reduce the carbon emission, like, I think one of them was 25 
percent of the power used in the separation from--I guess 
separating the carbon. I guess, as we are looking at we are 
going to have more energy appetite as we move towards this--I 
mean, I am thinking to myself, how are we going to do this? We 
are going to increase our solar, which is going to help fill in 
some of the gaps because we are going to lose energy as we try 
to cut down our emissions from the coal power plant.
    Do you think this is something that is scientifically or 
technologically that we can keep squeezing down how much energy 
it takes to capture and sequester the carbon?
    Mr. Spitznogle. That would be AEP's engineering judgment, 
that we are starting at fairly high levels, like you said, 25, 
30 percent at the parasitic--25, 30 percent of the output of 
the plant to run these technologies. And we believe, just like 
the evolution of what FGDs, through the 1970s, 1980s, and 
1990s, and SGRs maybe a little bit more compressed, but there 
is going to be a little bit of a growth period there where we 
will be under tight constraints for energy, and that developers 
with these types incentives will come up with technologies that 
are more efficient.
    So we are optimistic that that can happen, and that chilled 
ammonia is one of those examples that we see a step-wise 
improvement.
    Mrs. Capito. Thank you. My time is up. Thank you.
    The Chairman. The Chair recognizes the gentleman from New 
York, Mr. Hall.
    Mr. Hall. Thank you, Mr. Chairman. And thank you to our 
witnesses.
    Mr. Gallagher, I was struck by your testimony about your 
supply chain specifically, and I would quote, ``Because this 
technology uses steel, glass, and engines, the supply chain is 
automotive. We are partnering with Tier 1 automotive suppliers 
to manufacture SunCatcher components, the company that will 
make the engine manufacturers engines for the U.S. car makers. 
The company that will make the mirror facets makes windshields, 
doors, and car hoods. The American automobile industry has the 
skills and expertise to build this. The industry has existing 
manufacturing capacity that will be converted for manufacturing 
of solar power components. ``Deploying this technology on a 
commercial scale in the United States and across the world will 
create jobs in precisely those sectors and regions of the 
country in which America has been falling behind. As we get 
into volume production in 2010, we will be putting auto workers 
back to work, eventually creating up to 4,000 jobs across the 
supply chain.''
    Very exciting news, particularly given the current state of 
the auto industry. Can you elaborate on this, more details 
about it?
    Mr. Gallagher. Certainly. Thank you, Mr. Hall.
    This technology--this technology essentially is--it is 
engines, and the U.S. automotive industry certainly knows how 
to make engines.
    In fact, in 2007, the U.S. auto industry manufactured about 
17 million cars; this year, it is going to manufacture about 9 
million cars. There is a lot of slack capacity in the U.S. auto 
industry at this time, and so it is a good time for a company 
like ours to be going to the auto industry and bringing them 
new business.
    Our supply chain partners are very excited to diversify 
their businesses away from auto parts and into energy. The auto 
industry knows how to make products at high volumes with high 
reliability, and to drive down costs with continuous 
improvements in the manufacturing process. So we are excited 
about using that industry and that supply chain to produce 
solar power at a continuously decreasing cost.
    Mr. Hall. Thank you.
    You also noticed that your technology was developed in 
collaboration with Sandia National Laboratories. Some critics 
of Federal policy have said that investments in R&D do not 
create jobs. I assume you would disagree with that?
    Mr. Gallagher. We think we are a pretty good model of the 
public-private partnership. We have had a long relationship 
with Sandia. We have received some funding from the Department 
of Energy to commercialize this technology. In fact, the 
pictures that you saw earlier of new SunCatcher systems are at 
Sandia National Labs. That is where the technology has been 
refined and much of the commercialization process has taken 
place.
    So we are very appreciative of the support we have gotten 
from the government, and will be bringing that into commercial 
production next year.
    Mr. Hall. Thank you. And I assume that we are talking about 
CCS, for instance, we are talking about pilot projects on 
various scales in various locations with your different 
companies.
    But all of you on this panel have stressed the need for 
loan guarantees for stable requirements for carbon emissions 
levels, and for Federal investment to continue.
    I would assume that none disagree that there are jobs 
created by those investments?
    Mr. Gallagher. We certainly think so.
    Mr. Hall. If there is somebody that disagrees, please raise 
your hand or speak up. It may not be on the scale that you will 
be at once you get into pilot stage and into building a full-
scale sequestration project that can match a 1,000 megawatt or 
greater power plant. I am sure that is obvious; but 
nonetheless, there are jobs created.
    Mr. Smith, I am curious, if you are generating hydrogen, 
why not burn it and spin the turbine and put power back into 
the grid and have water be the effluent?
    Mr. Smith. We do, actually. The trick is--the question is 
this; and it goes to this earlier question of what is the cost 
of carbon capture:
    When you make hydrogen, there are some costs of making it. 
You have to use electricity to create in the chemical process. 
And that is sometimes referred to as the parasitic.
    Mr. Hall. Unless the energy comes from a removal that is 
free.
    Mr. Smith. Well, yes. But from someplace it comes, wherever 
it is.
    The issue is this: If you try to assign all of those costs 
of making this hydrogen to the electricity generation, you end 
up with parasitics that look like 25 or 30 percent. If you say, 
no, no, I have to spend some of that energy to make hydrogen, 
then what you can do is say, oh, I can do these other things 
with hydrogen.
    What our plant does is make electricity when electricity 
demand is high, and it makes--and prices are good. And it makes 
urea when prices are low. As it turns out, that is a good thing 
from a carbon footprint point of view and from a national 
policy point of view. The urea comes from--presently is largely 
manufactured from natural gas. In this case, it will be 
manufactured from coal.
    Mr. Hall. And you get paid for it?
    Mr. Smith. And we get paid--I get paid for it, yes. And you 
are talking prices which are better than the prices for 
electricity at 2 in the morning. We have more capacity for 
generating electricity at 2 in the morning than we need, so you 
turn my plant to making urea. And in that case, if you looked 
at the parasitic, we think that the amount of energy required 
to capture and compress the CO2 is 10 percent, not 
30.
    Mr. Hall. Thank you, Mr. Chairman.
    The Chairman. The gentleman's time has expired.
    The Chair recognizes the gentlelady from Tennessee, Mrs. 
Blackburn.
    Mrs. Blackburn. Thank you, Mr. Chairman. And, again, thank 
you to our witnesses.
    Mr. Smith, I appreciated your statement in your testimony 
where you said the new technology was the business model and 
the way you all approached your situation, and that that is why 
we shouldn't choose winners and losers. And I agree. I think 
that that is something that is important for us, to allow you 
all to be innovators, and for us not to sit here and try to 
choose winners and losers and decide what is and is not going 
to--to have the opportunity to see if something actually works.
    Dr. Sachs' chart about how long he has worked on the cell 
is a great example of this. I guess what we have to do is 
figure out what we are going to do with all that dust that you 
have left over in those bottles.
    Mr. Smith, a couple of questions for you about PurGen and 
your technology.
    Do you have any long-term liability concerns about 
sequestering the CO2 under water? And the reason I 
ask this is because, part of my district is Memphis, and we 
have the New Madrid Falls in the Mississippi River. And we have 
read some studies that sequestering the CO2 
underground may lead to some tremors. And that is something we 
are very sensitive to in our region of the country, so I would 
just like to know if you had any long-term liability concerns 
on sequestration.
    Mr. Smith. Well, as it turns out, if you tried to describe 
a perfect geology for storing carbon dioxide, you would 
describe the site that we are proposing. It is--and I have to 
be a little careful because I am on the edge of starting to 
speak geological speak, and I am not that good on it.
    But it is on a passive margin. It is tectonically inactive.
    Mrs. Blackburn. So you feel that is something manageable?
    Mr. Smith. I think it is something that has proven to be 
manageable.
    Mrs. Blackburn. All right. I appreciate that. Let me move 
on with a reminder of the time that I have.
    Dr. Kunkel, who owns the patents for the CCS technology 
that you are currently using? Do you all own them? Or 
individuals?
    Mr. Kunkel. No. Actually--well, there is a whole variety of 
companies involved in this space. As the developer of projects, 
we are really open to a whole variety of technologies, and in 
fact, we have looked at most of the technologies being 
discussed here today for different projects.
    And we have solar going in on rooftops in development. So 
we are developers. We will use any technology that is out 
there. We do have a small investment in a company called 
Powerspan that has new technology for carbon capture that we 
think is very favorable in terms of reducing the energy 
requirement, but generally we look at a wide variety.
    Mrs. Blackburn. Thank you for that.
    And I have got a couple of questions on rate payer bills, 
but I am so close on time, I will probably submit those to you. 
Because, as Mrs. Capito said, I think we are all sensitive to 
what would happen with the rates and how this would affect the 
rate payer. So I will submit those to you.
    Mrs. Blackburn. Mr. Gallagher, I do have a question for 
you. Your SunCatcher project you said is in California and 
Texas, and I wanted to know if you had any plans for solar 
plants in the Southeast, and if you see this as a technology 
that would be viable for our area of the country.
    It sounds like you work off of heat units, not off of rays. 
And of course, this year, I was reading an article when you 
were talking about that, and it looks like our west Tennessee 
cotton, it needs 28 heat units a day to germinate properly, but 
it only got 16 to 17 units per day this month.
    So is SunCatcher looking at anything in the Southeast?
    Mr. Gallagher. Well, the form of solar energy that 
concentrating solar power uses is called direct normal 
insulation, and that form of insulation is the best in the U.S. 
Southwest. So I think in the next several years what you will 
see are projects built by our company, and others like ours, in 
the U.S. Southwest.
    The sun, or the insulation, in the Southeast is 
significantly less than in the Southwest, or the form of 
radiation that this technology needs. I think there is some 
potential if we move down the cost curve the way we think that 
we can to think about doing projects in the Southeast.
    But I think the other way to bring solar power to the 
Southeast is to expand our transmission system, our national 
transmission system.
    Mrs. Blackburn. So, basically what you have works for one 
region of the country, but not the whole country?
    Mr. Gallagher. At this time, that is accurate.
    Mrs. Blackburn. That is a fair statement. Thank you, sir.
    I yield back.
    The Chairman. The gentlelady's time has expired.
    The Chair recognizes the gentleman from Missouri, Mr. 
Cleaver.
    Mr. Cleaver. Thank you, Mr. Chairman.
    The algae-based biofuels are getting a lot of attention 
from some of the major companies like Exxon. And in Kansas 
City, Missouri, in the district that I serve, Midwest Research 
Institute has a pilot scale algae production facility.
    And I am just wondering whether or not any of you see a 
commercial potential for algae biofuels. And, if so, what are 
the obstacles that are in the way? What can we do to make it 
more possible?
    Anyone?
    Mr. Sachs. I am not an expert on algae biofuels, but I will 
observe that that is another way to collect solar energy. So 
that is essentially what that is doing. Algae is attracted 
because it is 3 to 5 percent efficient in photosynthesis versus 
a 0.5 percent efficient for green plants.
    And the point I want to make is that there are a number of 
ways of collecting solar energy that are under investigation, 
that are at different points in their development. You have 
heard about two: concentrating solar power and flat panels, 
flat-panel photovoltaics.
    There is also solar thermal electric, where solar energy is 
turned into heat, which is then turned into electricity, or the 
heat is stored to turn into electricity a few hours later. And 
algae is in that class.
    So as someone who works in renewable energy, I foresee a 
portfolio of solutions, even though I am here to represent 
photovoltaics.
    Mr. Cleaver. Mr. Gallagher.
    Mr. Gallagher. Well, I would say only that my company, as I 
mentioned, is owned by the Irish infrastructure company, NTR. 
They also own an ethanol company in Omaha called Great Plains 
Renewable Energy.
    Great Plains has recently made an investment in algae. So 
there is a lot of interest in algae as a form of renewable 
energy production; most of it is in the R&D stage at this 
point. And, frankly, I can't speak intelligently as to the time 
frame for bringing it into commercial production.
    Mr. Cleaver. Anyone.
    Dr. Kunkel. 
    Mr. Kunkel. It is not something we are invested in, 
although we have been approached from CO2. We are 
going to be a carbon dioxide producer and capture that for 
people, and the algae people are interested in that. So there 
could be an interesting synergy between these capture 
technologies and the algae industry.
    Of course, the brilliant thing that algae do is, they make 
a liquid that could be used as a liquid fuel, which is what we 
are short on.
    Mr. Cleaver. So it is too new to even have a good picture 
of what it might become. Is that kind of where everybody's 
coming from?
    Mr. Sachs. Well, just to make the comparison between 
capturing solar energy through algae and photovoltaics; 
photovoltaics has a long history of deployment in the field and 
algae does not.
    Mr. Cleaver. Well, since you are at the microphone, 
Professor, you mentioned in your testimony that some of the 
hurdles to large-scale use of solar technology are storage and 
transmission lines to get the newly generated power to the 
grid.
    What are the possibilities that are currently being 
explored to do this?
    Mr. Sachs. Well, first of all, I think the most important 
thing is to point out that those issues don't come into play 
for almost two decades, because what happens now is, for 
example, photovoltaics--the power from photovoltaics overlaps 
very well with air conditioning loads, and so it displaces the 
natural gas peakers, the plants that are fired up to deal with 
that peak; and those are very high-cost plants. And so that is 
one of the reasons that photovoltaics is so close to entering 
that zone of grid parity. So that can accommodate up to about 
15 percent, by most estimates, of electricity demand in the 
U.S. without storing. And that--we are nowhere near that. So 
there is a lot of growth potential, but we need to start work 
on storage technologies because it is a difficult proposition.
    One of the attractive ones solves a few problems at the 
same time, and that is plug-in hybrid vehicles which are 
charged during the day when photovoltaics are working. And so 
it is a kind of distributed storage, and it also obviously 
displaces some part of our consumption of oil.
    The other point is that photovoltaics has the merit of 
being very well distributed. So it can be done in large power 
plants, but it can also be done in amounts as small as home 
rooftops. And it can be deployed anywhere in the country. Of 
course, the yield will be less in the Northeast than in the 
Southwest, but you don't need the collimated light. You can 
have cloud scatter and still get response from flat panels.
    Mr. Cleaver. Thank you.
    My time has concluded. Thank you, Mr. Chairman.
    The Chairman. The Chair recognizes the gentleman from 
Washington State, Mr. Inslee.
    Mr. Inslee. Thank you. First I thank you for being here; 
you are the angels descended from heaven just at the right 
moment. So thanks for you and your whole team's work on this.
    Dr. Sachs, I missed something you said about the relative 
efficiency of photovoltaics or concentrated solar and 
photosynthetic processes. And I think there is an interesting 
competition between in our transportation policy having 
electricity run our cars or a photosynthetic process through 
biofuels.
    Is there any sort of master way to look at these two 
approaches? Does one have any intrinsic ultimate greater 
efficiency?
    Mr. Sachs. Well, the thermodynamic limit of efficiency for 
photovoltaics is actually over 80 percent; that is, conversion 
of sunlight to electricity. The type of multijunction cells 
that are used on--up to now up, to recently, primarily on 
satellites but also now on concentrated ground-based 
applications have demonstrated 40 percent efficiencies. Those 
are quite expensive, and the majority of product is in the 15 
to 20 percent range.
    So whether there is a thermodynamic limit to the efficiency 
of a biological process, I am sure there is, but I don't know 
what it is. I know that the most efficient green plants are 
about a half percent efficient. And, as I mentioned, algae is 
three to five. So photovoltaics is, even at 15 percent, very 
considerably ahead.
    And the other aspect is that photovoltaics actually works 
as well or better in the winter. So cold weather, the 
efficiency of the cells actually goes up slightly. Of course, 
you have less sunlight. But it would be hard to grow green 
plants during that same season.
    Mr. Inslee. Thank you. One of you made reference to the 
need to extend the construction deadline, and I missed what 
that reference was to. Was that Mr. Gallagher? Can you tell me 
what you were referring to?
    Mr. Gallagher. Certainly. In the Recovery Act that was 
passed this year, in order to obtain the grant in lieu of the 
investment tax credit for renewable energy, the project must 
get into construction by the end of 2010. Right now, as some of 
the witnesses have mentioned, the financing environment is 
quite challenging for projects, generally for renewable 
projects in particular, and for technologies that are first 
being commercialized even more so.
    So when our finance guys are talking to the banks right 
now, they are finding that the banks are not prepared to loan 
us money for the period of time that we need or at the interest 
rates that we need.
    So I think you will see over the next year or two the 
renewable energy in general and the solar industry in 
particular placing quite a lot of reliance on the Department of 
Energy's loan guarantee program. But that loan guarantee 
program takes some time to work through, and we are now almost 
six months into the Recovery Act period and the Department of 
Energy hasn't managed to get out the solicitations for the next 
round of loan guarantees.
    So we can't get into construction by the end of next year 
and, thus, be eligible for the grant unless we can get through 
the Department of Energy's loan guarantee process, which we 
haven't been able to start yet. So that was my point.
    Mr. Inslee. By the way, is your technology different? Or 
how is it different from the Infinia approach using sterling 
engines?
    Mr. Gallagher. It is very similar to Infinia's, uses a 
somewhat different sterling engine. They use what is called a 
free piston engine; we use what is called a reciprocating 
sterling engine. But the principles are quite similar. Our dish 
is larger; it is a 25 kilowatt dish versus a 3 kilowatt dish. 
But it is, in principle, a very similar system.
    Mr. Inslee. Do any of you have any suggestions about how to 
accelerate our loan guarantee program? We will be talking to 
DOE. We do that. And I think they are making strides and I know 
they are focused, but do you have any suggestions on how any of 
us can help, how you would suggest the Department should go 
about this? I am looking for free input here.
    Mr. Gallagher. Well, I can say that--we think we have been 
hearing all the right things from the Department of Energy, 
also. What we haven't seen is the regulations being issued. 
They have to come out with the rules that are consistent with 
commercial banking practices so that we can use them.
    There were some problems with the 1703 program passed in 
the 2005 Energy Policy Act that has hard conditions that have 
made it hard for companies to use. We think that DOE is going 
in the right direction, and probably it would be useful without 
a conversation with OMB, which we understand has to approve the 
DOE's rules before they can be issued.
    Mr. Inslee. Thank you.
    Dr. Constantz, could you tell us about what you consider 
your major challenges? This is an amazingly exciting field to 
those of us on the outside of it. What do you consider your 
biggest challenges? Are they technological or are they 
financial?
    Mr. Constantz. At this point, they are mainly just 
financial. You know, as I said, we have already financed our 
demonstration plant at Moss Landing where we have had a pilot 
plant operating for about 8 months now. But there we will be 
capturing, I believe, about 100,000 tons of CO2 a 
year. That makes about 200,000 tons of building material. So 
you can almost get profitable, you know, the SCM sells for $100 
a ton. We are finding a lot of venues.
    You know, we really need to build, say, a 50-megawatt 
demonstration plant, is about $120 million. And to go from--we 
are a venture capital-backed startup, and there is just no way 
we can sell equity to raise that kind of money. So we really 
need a significant amount. Following the first larger-scale 
plant, though, it has become apparent that we will be able to 
receive financing fairly readily.
    The problem in this chasm now is, venues not only in the 
United States but around the world are looking back to the last 
8 years and the concept--are very fixated on geologic 
sequestration, rather than a profitable use for the 
CO2.
    Mr. Inslee. A quick question: I know the building industry 
can be conservative about adopting new technologies. They want 
to make sure things last 100 years. What are the best things 
you can do to achieve that confidence?
    Mr. Constantz. We are in pretty good shape. We gave an AEA-
accredited course at the World of Concrete, which is the 
largest--you know, 80,000-person meeting. My Vice President of 
Materials Development is the Past President of the American 
Concrete Institute. We have a 40,000-square-foot lab in Los 
Gatos doing all the tests. We are in discussions with all the 
major cement companies. We are doing very well on that front.
    I personally hold over 70 issued patents on cement, and we 
are very confident about the technology. We are very confident 
about the carbon capture. We are achieving over 90-percent 
carbon capture in Moss Landing.
    Mr. Inslee. It is very exciting. I think I am the only 
former cement truck driver on this panel, so I really 
appreciate your expertise on this. Thank you very much.
    The Chairman. The Chair recognizes the gentleman from New 
York.
    Mr. Hall. Thank you, Mr. Chairman. I just had a couple of 
quick questions. One to----
    The Chairman. I haven't recognized the gentlelady from 
California yet.
    Ms. Speier. Thank you, Mr. Chairman. And thank you to the 
learned witnesses that we have before us today.
    A couple of questions to Mr. Gallagher and Dr. Sachs. You 
mentioned the difficult policy framework solar energy has had 
to contend with over the years and the fluctuating support for 
funding.
    What, in your mind, would represent a more permanent and 
longer lasting solution to these fluctuations that Congress has 
not yet seen fit to provide?
    Mr. Sachs. If you look, I think there should be two 
components to the guidance for such policy. One is the one that 
I mentioned in my testimony. That is, to take into account what 
the externalities are--externalities to, say, photovoltaic 
development. And that is principally the price of fossil fuels.
    As I mentioned, in my own experience I have seen it go from 
a hot field to cold field to a hot field to cold field, and 
these changes can take place over as little as a 1-month period 
of time, depending on the price of oil. So somehow policy has 
to compensate for that.
    The other element is already in place, in policy, in some 
countries. For example, Germany has a feed-in tariff which has 
helped renewable energy greatly, not just photovoltaics but 
wind as well. And that feed-in tariff--that is, you get paid 
for every kilowatt hour of electricity fed into that grid. That 
feed-in tariff declines in a programmed way over time; and that 
lets people know--gives some stability for what is likely to 
happen--of course, it may be subject to change, but is likely 
to happen; and people can make plans accordingly.
    And I think it is important for that rate of decline to 
take its cue from the learning curve for that industry, not to 
be motivated by other factors, but to recognize that industries 
have their own rate of decline of cost, and that learning curve 
has a different slope for different industries, and the 
preprogrammed rate of decline should be keyed to that learning 
curve.
    Mr. Gallagher. I would say three quick things:
    One, Congress took one terrific step last fall with the 
extension of the investment tax credit for 8 years, which 
provides some durability;
    Second, Congress could enact a meaningful renewable energy 
standard this year as part of the bill that the House has 
already passed; and
    Third, Congress could create a permanent clean energy bank 
to provide source of funding going forward.
    Ms. Speier. Thank you.
    Dr. Constantz, I was struck by your statement in which you 
chastised us, and probably rightfully so, for kind of picking 
winners and losers, which is a bugaboo of mine, where there 
have been tax incentives legislated exclusively for geologic 
sequestration, but not for alternative forms of capture and 
conversion.
    Could you expand upon that for us?
    Mr. Constantz. Yes. Actually, if you read the legislation, 
it is written prescriptively for a specific method of geologic 
sequestration. And also, you know, in discussions with DOE and 
the bodies, it is made very clear that the funds are already 
directed for geologic projects and geologic sequestration 
projects which, of course, are going to benefit people that 
build separation equipment and people that build pipelines and 
people that drill wells. You know, it has been very crafted, 
specifically. I have an analyst report that shows a $1 trillion 
market opportunity for the builders of carbon separation 
equipment, and the people that, you know, own rights to the 
reservoirs and are going to be pumping.
    The legislation is very, very prescriptive. I can't say it 
more strongly.
    Ms. Speier. So it is almost rigged, is what you are saying.
    Mr. Constantz. It absolutely is. You can talk to anybody at 
DOE. In fact, even in the industrial use program which was 
recently brought out, after a lot of talking to people on 
Capitol Hill, they took a $1.4 billion program and said, okay, 
we will just take $1.3 billion and target it specifically for 
geologic sequestration; and then we will have this other $100 
million that we will put for every other project out there, and 
we will call that useful.
    And part of the inaccuracy is that--for example, my 
technology, we are making product every day, tons and tons of 
product. You know, as the gentleman from AEP said, they are 
going to be the very first people to take a single molecule 
from CO2, take it through the whole process and get 
it into the ground. They are the leaders in that. So they are 5 
years behind us, but from DOE's point of view, that is a proven 
technology. And we are still in the R&D stage, even though we 
are making product that can be used every day.
    It is like the world's gone mad.
    Ms. Speier. Dr. Constantz, could you provide me with a 
document that would spell that out specifically? And I would 
like to share it with the chairman of the committee.
    Mr. Constantz. Absolutely.
    Ms. Speier. The bill, as you know, is still working its way 
through the Senate; and we can fix mistakes if, in fact, this 
would be classified as one. But certainly having the 
opportunity for more institutions and companies to participate 
is to all of our interests. And I don't like the idea that this 
has been so constrained.
    So I would appreciate that. Thank you.
    I yield back.
    Mr. Cleaver [presiding]. Thank you. The mistake we made 
is--the Founders did, in creating the Senate.
    I recognize the gentleman from New York.
    Mr. Hall. Thank you, Mr. Chairman.
    And quickly, Dr. Sachs and Mr. Gallagher, you both talked 
about storage issues having to do with renewables that are not 
around the clock or weather reliable.
    And so what do you see as the leading three or what is your 
favorite horse in the race in terms of storing electricity from 
solar, wind?
    Mr. Gallagher. Well, of course, the best storage technology 
that is in operation today is pumped hydro, where you have a 
two-pond system and you store water in the lake below and you 
pump it uphill at night when there is a lower power demand, and 
you run it downhill to create energy during the day when you 
need the power.
    A couple of other promising technologies. A number of the 
concentrating solar power technologies are using molten salt 
for storage to store heat and generate power later in the day.
    There is also a lot of interest in compressed air energy 
storage. Our parent company is taking a small interest in an 
R&D company that is working on compressed air energy storage as 
well.
    I think storage is a very promising area. One thing that I 
would encourage you to think about is that storage can do 
basically two things for a renewable energy system or for a 
grid operator. It can either help reduce the costs of producing 
energy for the developer by allowing it to produce more energy 
over more hours, or it can essentially help the grid operator 
by providing some grid integration services, grid stability 
kinds of services.
    Today, storage is too expensive to make it worthwhile for 
the developer to do it, from an economic perspective. So we 
should really think about the grid stability and grid 
integration value of storage, and think about where the storage 
obligation, if it is to be placed, should be placed.
    Mr. Hall. Thank you.
    Dr. Sachs.
    Mr. Sachs. I think Dr. Gallagher had a very good list of 
technologies. I would add the very attractive proposition of--
as I mentioned earlier, of coupling storage to a reduction in 
need for oil for transportation that could be by plug-in 
hybrids run on batteries.
    There are also efforts at taking the electricity from 
renewables and turning them into other forms of chemical 
storage--batteries being electrochemical, these would be 
chemical forms--and then running transportation vehicles on 
that form.
    I will also point out that a portfolio of renewables helps 
greatly to mitigate the swings in the availability. For 
example, on a seasonal basis, wind complements solar being more 
available in the winter, solar more available in the summer. 
Geothermal is particularly interesting because it has the 
possibility of providing some of the base load and being 
dispatchable power.
    Mr. Hall. Thank you.
    I just want to get my second question for the CCS folks on 
the panel, which is, are any of you now or do you know of 
anybody who is working on carbon capture and sequestration from 
gas-fired power plants?
    They, too, emit carbon dioxide. They don't have anywhere 
near the particulate emissions of coal, and I understand that 
is where most of our work is going right now, because of the 
need to bring coal from the more polluting source of power into 
a cleaner realm. But right down the road from my street is a 
1,000-megawatt gas-fired power plant that sits on the Iroquois 
pipeline in Dover Plains, New York, that is most likely going 
to be built.
    And I am curious, what is available? And is there a 
discussion going on about capturing carbon from gas-fired 
plants as well?
    Mr. Kunkel. There is an interesting project in Mitsubishi, 
in Vietnam of all places, where they are looking at a 1,200-
megawatt natural-gas-fired power plant and capturing the 
CO2 from it and using that CO2 in 
enhanced oil recovery offshore, which kind of combines a whole 
bunch of ideas we are talking about here.
    But don't underestimate things going on in Asia.
    But people are looking at that. And I think there are 
various issues. The biggest one, in my mind, is that the 
capacity factors of gas-fired plants tend to be lower than coal 
units; and so they are not operating all the time and so your 
investment is sitting idle. But as we move to a carbon-
constrained world, those gas units will run more and those 
economics will begin to favor capture from gas units.
    Mr. Smith. I would say that the first problem in capture 
from gas plants is, having captured it, what do you do with it? 
And in your district, which--one of our plants, we built in 
Astoria, somewhat close to Westchester. The problem is, having 
captured it--there aren't any oil wells in Westchester that I 
know of--what do you do with carbon dioxide?
    And that is a significant element in the costs.
    Mr. Hall. We are building a lot of roads, though.
    Mr. Smith. That is true.
    But the answer, I think, is that as you develop 
sequestration sites, you can then think about, oh, I have a 
place to put the carbon dioxide. Our plant will be next to a 
natural gas plant, Linden. It is Linden Station, and it sends 
power to Staten Island.
    And that is a perfectly reasonable place to employ the same 
technologies that Gary was talking about in chilled ammonia 
capture. You capture the CO2, and now that plant 
will have a way to get rid of it. Having captured it, you can 
do something with it. If the value of the carbon emissions is 
sufficiently high, it will find an economic incentive to do 
that. And that is the point of a cap-and-trade bill.
    Mr. Spitznogle. It is an interesting question you ask. I 
don't hear it asked very often, and I think it needs to be 
looked at more closely.
    If you look at requiring a 90 percent capture, say, on a 
coal unit, that translates to about 80 percent capture needed 
on a combined cycle gas plant. So, yes, if you are going to 
require at those levels, you need significant controls on gas 
as well.
    One of the technical challenges with capturing 
CO2 from gas turbines is the amount of oxygen that 
flows through the system is much higher in the combustion gas 
from a gas-fired plant. And oxygen is an enemy of some of the 
capture technologies for a post-combustion. So I think there 
are some problems, some challenges, to be overcome in 
implementing capture technologies with gas. But at deep levels 
of required reduction on coal, you have to start looking at gas 
as well.
    Mr. Hall. Thank you.
    Thank you, Mr. Chairman.
    Mr. Cleaver. Thank you.
    As we end this hearing, let me just say--make sure that you 
all understand that the members leaving and coming in had 
absolutely nothing with your testimony. The way this place 
operates is, there are multiple committees going on, and some 
are doing markups, which means voting to get something out of 
committee. So people are running between committees.
    We appreciate your testimony. And as we consider new 
technologies and the role that Congress will play, I think you 
will find that your testimony will be quoted--sometimes out of 
context, but it will be quoted.
    And so we appreciate very much the time that you have taken 
to provide us with the benefit of your august thinking.
    Thank you very much. This hearing has adjourned.
    [Whereupon, at 11:28 a.m., the committee was adjourned.]





