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




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


                             SECOND SESSION


                             APRIL 14, 2010


                           Serial No. 111-16

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


62-589                    WASHINGTON : 2010
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                           AND GLOBAL WARMING

               EDWARD J. MARKEY, Massachusetts, Chairman
JAY INSLEE, Washington                   Wisconsin, Ranking Member
JOHN B. LARSON, Connecticut          JOHN B. SHADEGG, Arizona
HILDA L. SOLIS, California           GREG WALDEN, Oregon
  South Dakota                       JOHN SULLIVAN, Oklahoma
EMANUEL CLEAVER, Missouri            MARSHA BLACKBURN, Tennessee
JOHN J. HALL, New York
JERRY McNERNEY, California

                           Professional Staff

                      Michael Goo, Staff Director
              Sarah Butler and Aliya Brodsky, Chief Clerk
                 Bart Forsyth, Minority Staff Director

                            C O N T E N T S

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. Jay Inslee, a Representative in Congress from the State of 
  Washington, opening statement..................................     6
Hon. Marsha Blackburn, a Representative in Congress from the 
  State of Tennessee, opening statement..........................     7
Hon. Emanuel Cleaver II, a Representative in Congress from the 
  State of Missouri, prepared statement..........................     7
Hon. Shelley Capito, a Representative in Congress from the State 
  of West Virginia, opening statement............................     8
Hon. John T. Salazar, a Representative in Congress from the State 
  of Colorado, opening statement.................................    10
Hon. John Shadegg, a Representative in Congress from the State of 
  Arizona, opening statement.....................................    10
    Prepared Statement...........................................    12
Hon. John Sullivan, a Representative in Congress from the state 
  of Oklahoma
    Prepared Statement...........................................    14


Mr. Gregory Boyce, Chairman and Chief Executive Officer, Peabody 
  Energy.........................................................    16
    Prepared Statement...........................................    19
    Answers to Submitted Questions...............................   119
Mr. Steven F. Leer, Chairman and Chief Executive Officer, Arch 
  Coal, Inc......................................................    53
    Prepared Statement...........................................    55
    Answers to Submitted Questions...............................   123
Michael Carey, President, Ohio Coal Association..................    65
    Prepared Statement...........................................    67
Preston Chiaro, Chief Executive for Energy and Minerals, Rio 
  Tinto..........................................................    93
    Prepared Statement...........................................    95
    Answers to Submitted Questions, Mr. Jeff Hopkins.............   126



                       WEDNESDAY, APRIL 14, 2010

                  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 
210, Cannon House Office Building, Hon. Edward J. Markey 
(chairman of the committee) presiding.
    Present: Representatives Markey, Inslee, Cleaver, Salazar, 
Speier, Sensenbrenner, Shadegg, Sullivan, Blackburn, and 
    Staff present: Ana Unruh Cohen, Morgan Gray, and Jonah 
    The Chairman. Good morning and welcome to the Select 
Committee on Energy Independence and Global Warming. This 
morning the Select Committee is meeting to assess the present 
state of the coal industry and to explore how coal can continue 
to play a role in a new energy age.
    Coal was mined in this country before it even was a 
country. The first 13 States appeared on a United States flag 
after coal mines appeared on our maps. Coal has helped power 
America for nearly 300 years. And just like millions of other 
American families over the years, the Markeys had a close 
personal relationship with coal. After my grandfather got off 
the boat from Ireland in 1902, he got a job hauling coal for 
the Locke Coal Company in Malden, Massachusetts for the next 30 
years. And when I was a boy I spent many cold winter mornings 
shoveling coal into our furnace at home.
    Much has changed since those days. We are entering a new 
energy age, an age in which technology is making it possible to 
harness energy from the wind, the sun, the atom, shale gases 
and efficiency measures. Today many Americans are asking if 
coal is safe enough, if coal is healthy enough, and if coal is 
innovative enough to be part of our shared clean energy future.
    Nine days ago in the Upper Big Branch Mine in West 
Virginia, 29 miners lost their lives. The incident reminds us 
that mining coal is a dangerous job performed by courageous 
people. We owe it to the fallen miners and their families to 
take a harder look at the entire structure of mining safety, 
and today our prayers go out to the families of those who lost 
their lives and to all coal miners.
    The public is also concerned about how safe the mining and 
burning of coal is for our environment and for our health. From 
the effects of mountaintop removal to air pollution that causes 
asthma and other health effects to mercury levels that spike 
near coal fired power plants and catastrophic releases of fly 
ash, coal faces a myriad of environmental challenges.
    And finally, the burning of coal also releases carbon 
dioxide, which traps heat and is causing the Earth's 
temperature to rise. Climate change is a serious problem, and 
yet some in the coal industry deny that the problem of global 
warming even exists and have contributed to organizations that 
spread doubts about science and policy. That has led many to 
believe the industry is not committed to finding a solution to 
our pollution problems.
    Meanwhile, the challenges from coal's competition are 
growing. Last year coal's share of America's electricity 
generation dropped from 49 percent to 44 percent due to 
increased competition and decreased demand. In 2009, 40 percent 
of all new electricity capacity built was from wind, roughly 
the same as natural gas. Meanwhile no new coal plants broke 
    While the rest of the energy world is already moving to a 
lower carbon future, people wonder whether the coal industry is 
stuck in another time.
    When Henry Waxman and I were crafting the Waxman-Markey 
bill that passed the House last June, we worked with several 
members from coal States to better understand the challenges 
faced by the coal industry and how to respond to those 
challenges. That is why we dedicated $60 billion in assistance 
to the coal industry to help design and build the carbon 
capture and sequestration plants the industry so desperately 
needs. And so the question on the future of the coal industry 
is whether the coal industry and coal burning utilities will 
embrace innovation, or stand pat and fight change. We have seen 
this before. The American automotive manufacturers successfully 
resisted new fuel economy standards, claiming that the 
technology to turn gas guzzlers into fuel sippers was neither 
available, affordable, nor preferable. And eventually the folly 
of their strategy of delay became clear. Consumers abandoned 
their products and two of the three major American automotive 
companies received a U.S. Government bailout in order to 
    Today, with the future of the coal industry in your hands, 
I challenge you to join us in charting a new path forward to 
prevent a perilous outcome for your industry and for the 
planet, and I ask that you cease efforts to deny the science, 
the global warming, and to stop spending millions of dollars in 
misleading the public as to the true science behind climate 
change. I ask that you embrace the provisions of the Waxman-
Markey bill that light the way for your industry in the years 
ahead and that provide your industry with the billions of 
dollars of financial assistance to help transition to a low 
carbon economy.
    I believe that there is a successful future ahead for the 
coal industry centered on safer and cleaner practices for your 
fuel, for your workers, and for the Earth. I look forward to 
your testimony, and I thank you for coming.
    Let me now turn and recognize the ranking member of the 
committee, the gentleman from Wisconsin, Mr. Sensenbrenner, for 
an opening statement.
    [The prepared statement of Mr. Markey follows:]

    Mr. Sensenbrenner. Thank you very much, Mr. Chairman. Like 
most Americans, I believe that there can and should be a proper 
balance between economic prosperity and environmental 
sustainability. Everyone wants clean air and clean water and no 
one wants a sky high electric and tax bill. But cap-and-tax 
programs don't come close to striking this balance. The huge 
reliance on offset means that emissions will merely shift 
overseas, and every study has shown that cap-and-tax will cause 
increases in utility rates, gas prices, and other economically 
essential activities.
    One statistic from the National Association of 
Manufacturers demonstrates the greatest danger of cap-and-tax, 
3 to 4 million lost jobs. This is not the balance the American 
people are demanding, especially when nearly 15 million 
Americans are unemployed.
    Coal is the most abundant energy resource in the United 
States and it generates nearly half of our country's 
electricity. Coal power plants built today emit 90 percent 
fewer pollutants like sulfur dioxide, nitrogen oxide, and 
mercury than plants built in the seventies. Emissions from coal 
power plants has dropped 40 percent since the seventies, 
despite the fact that coal use has tripled and the United 
States has nearly one-third of the world's total coal.
    Last week the World Bank approved funding for a new coal 
fired power plant in South Africa. There was heavy criticism 
from some environmentalists about this project, but the World 
Bank officials said that the benefits clearly outweighed the 
concerns. Faced with frequent blackouts and an aging 
infrastructure, the South African Government said that the 
energy reliability of the plant would lift the economy and the 
standard of living for South Africans.
    The U.S. Treasury Department also noticed that there were 
no near-term viable low carbon energy alternatives for South 
Africa. Coal is the only resource that could possibly keep this 
Nation's economy on track. Despite this realization the United 
States abstained from the World Bank vote.
    China is the world's biggest user of coal, burning nearly 
three times more than the U.S. China is also the world's 
largest emitter of carbon dioxide, but China is not willing to 
commit to an international agreement to cut CO2 
    The administration is trying to sell cap-and-tax on the 
false premise that it will create so-called green jobs. The 
President is correct when he says that his proposal to impose 
higher energy prices on American manufacturers will create 
jobs, but those jobs won't be green. However, they will be red. 
As China's reliance on coal continues to grow with the surging 
economy, cap-and-tax will kill United States manufacturing and 
ship even more of our precious jobs to China.
    It is neither advantageous nor possible to abandon coal, 
but that is precisely what cap-and-tax proposes to do. The 
policy is proof that President Obama intends to make good on 
his campaign promise when he said, ``If someone wants to build 
a coal-fired power plant they can, it is just going to bankrupt 
them because they are going to be charged a huge sum for all 
that greenhouse gas that is being emitted.''
    At least for the foreseeable future the world cannot meet 
its energy demands without coal, but the new technology can 
help lessen the environmental impacts of coal use. Researchers 
continue to advance carbon capture and storage technology, 
which holds the potential to drastically cut CO2 
emissions from coal use. The test project at the We Energies 
power plant in Pleasant Prairie, Wisconsin, last year 
successfully captured 90 percent of carbon dioxide emissions. 
As we speak, groundbreaking will begin on another test project 
in Bucks, Alabama. The 25 megawatt Barry power plant is 
expected to capture between 100,000 and 150,000 metric tons of 
carbon dioxide per year. The CO2 will be transported 
by pipeline to a site about 10 miles away where it will be 
injected for permanent underground storage in a deep saline 
geologic formation. This project will attempt to demonstrate 
start to finish carbon capture and storage and is one of the 
most important test projects underway that will advance 
development of this critical technology.
    While carbon capture is part of the energy balance that 
Americans demand, so are proven technologies like nuclear power 
and renewable technologies like wind and solar. Americans want 
a healthy mix of energy technologies that keep the environment 
clean and the economy humming, and that is why Republicans have 
always supported an all of the above approach to energy.
    I would like to welcome our witnesses today, and I look 
forward to the testimony of Ohio Coal Association President, 
Mike Carey, who will tell us more about the importance of coal 
in his State and for our country and about President Obama's 
war against coal.
    I have to apologize for leaving this hearing, but the 
Constitution Subcommittee, which I am also the ranking member 
of, starts at 10 o'clock. So I will read the testimony and I 
will help defend the Constitution in the meanwhile. So thank 
    The Chairman. I thank the gentleman very much.
    The chair recognizes the gentleman from Washington State, 
Mr. Inslee.
    Mr. Inslee. Thank you. I really appreciate the leadership 
being here in this industry. I just want to note three 
headlines that are in the papers in the last week. One 2 days 
ago a glacier collapsed in Peru, crashed into a lake, caused a 
tsunami, destroyed 20 homes, and injured 50 people. A third of 
the glaciers in Peru in the Andes have now disappeared because 
of climate change.
    Second headline, two more glaciers disappeared in Glacier 
National Park. Glacier National Park will be glacier free 
within a century if climate change continues unabated.
    Third headline, 29 miners lost their lives in the Upper Big 
Branch Mine in West Virginia. And I think those three stories 
have something in common, which are the cost of coal without 
sequestering carbon dioxide.
    I appreciate these leaders being here because I want to 
note another person in the coal industry, Mr. Don Blankenship, 
who I understood said something to the effect that safety 
regulators intent to think they are going to protect the safety 
of miners is ``as silly as global warming.'' A lot of people 
have lampooned that statement, but it is actually very true. 
Mining safety is as silly as global warming; they are both 
deadly serious and they are not silly at all. And we have some 
leaders here if you decide to join with us to try to find a way 
to have a policy that will allow coal to be burned in a way 
that does not put massive amounts of CO2, does not 
treat the atmosphere as a garbage dump, it in fact buries it 
underground if you will support those efforts. If you will take 
this lifeline that we have now sent the industry in this bill 
by sending you billions of dollars to support that research and 
development, coal can have a future. If you don't, it won't. 
And we are hopeful that we can have a discussion today about 
the way you can help us find a way to see if there is a way to 
sequester CO2 safely. If not, we are going to go the 
way these glaciers are and we are going to see more of those 
    Thank you.
    The Chairman. The gentleman's time has expired. The chair 
recognizes the gentlelady from Tennessee, Ms. Blackburn.
    Mrs. Blackburn. Thank you, Mr. Chairman. I want to join 
with others who are extending our sympathies and our thoughts 
to the families that have been affected by the mining disaster 
in West Virginia. I know my colleague and others are very 
concerned and are closely working with those affected families.
    I also want to thank you for the hearing that we have today 
and thank the witnesses for being here to testify about the 
future of coal. We have heard some of the innovative clean coal 
technologies, the carbon sequestration that is there. These are 
important to those of us who support the use of coal and are 
concerned about having the ability to continue to use this 
natural resource as we look at our Nation's energy supply. We 
have to realize that domestically produced coal directly 
employs over 70,000 Americans and it does contribute hundreds 
of billions of dollars to our national economy each and every 
year. With vast coal resources, the U.S. has a secure source of 
energy not subject to foreign embargoes or cartel driven 
pricing. It is enough for the next 200 years. And Mr. Markey 
has already highlighted 300 years of use with this product that 
is right here on American land.
    As a chief source of energy coal power contributes 
significantly to our high standard of living, quality of life, 
by producing abundant inexpensive heat and power. Certainly 
those of us in Tennessee are appreciative for the use of coal 
and realize that we are receiving electricity that is generated 
by TVA; 40 percent of their capacity is generated by coal.
    Since the founding of our republic coal has played a 
critical importance in our economic and our technological 
processes, and we are looking forward to how that is going to 
continue and move forward.
    We welcome you and I yield back.
    The Chairman. Great. We thank the gentlelady. The gentleman 
from the State of Missouri, Mr. Cleaver, is recognized.
    Mr. Cleaver. Thank you, Mr. Chairman. Let me first of all 
welcome Gregory Boyce and Steven Leer, both of whom are from 
the State of Missouri. We welcome you to the committee hearing, 
and then I will also associate myself with the comments of the 
gentlewoman from Tennessee, Ms. Blackburn, in expressing 
sympathy with and concern about the people in West Virginia, 
Mrs. Capito's district. And while I know that there is a great 
deal of push on what is referred to now as Climategate, that 
there were those who were hiding data. And then when you add to 
it the unusual winter we had even here in Washington, there are 
those, the climate change sceptics who say, you know, this is a 
big hoax. Although it is counterintuitive, the truth of the 
matter is that we have more snowstorms when it is warmer. And 
we also, I think, should be aware of the fact that the Center 
for American Progress says that in spite of what happened here 
in Washington and in areas here on the East Coast, January was 
the coldest January we have had since records have been kept 
    And so I think we do have an issue that we need to deal 
with, and China has 80 percent of its energy supply coming from 
coal, 40 percent of the U.S. energy comes from coal. It is 
going to be around for a while, there is no question about it. 
But just as we look at the tragedy in West Virginia, I think 
there are some exciting things happening in West Virginia as 
well that I hope others can look at, particularly even in my 
own State the American Electric Power's Mountaineer coal plant 
in West Virginia is doing some remarkable research in terms of 
being able to direct the CO2 underground and they 
hope to have a commercial scale demonstration by 2015. It would 
be interesting and productive and positive I think for us to 
discuss the possibility of whether that is exclusively a West 
Virginia deal that can't be reproduced elsewhere or whether it 
in fact is something that we can export from West Virginia 
across the country.
    We have some unique problems in the Midwest, but we are a 
heavily coal using area of the country, and I think that if we 
all work together facing the reality that the planet is getting 
warmer, that we do have an increase in the greenhouse gases in 
our atmosphere, and we can all work together to do something 
about it.
    Thank you, Mr. Chairman. I yield back the balance of my 
    The Chairman. I thank the gentlemen very much.
    The chair recognizes the gentlelady from West Virginia, Ms. 
Capito, and again we extend the sympathies of the entire 
committee to your State.
    Mrs. Capito. Thank you, Mr. Chairman. I thank the 
witnesses. And as a native born West Virginian I want to thank 
everybody here and really throughout the Nation who have 
extended their deep sympathies to us for this latest tragedy. 
It is gut wrenching and it is really difficult. In a small 
State we have a great sense of community, and so we all feel 
it. I appreciate everybody extending their prayers and good 
wishes to the families.
    Last week's mine disaster at Montcoal, at the Upper Big 
Branch Mine, which killed 29 miners, was the worst mine 
disaster in 40 years. But just 4 years ago, 12 miners were 
killed in the Sago Mine in my own district. With this 
investigation going on and further details that are coming 
forward, we must continue our commitment to keep miners safe 
and safety first. We cannot permit this, and we have to prevent 
this from happening again.
    The Upper Big Branch Mine disaster only furthers people's 
questions of coal mining and has led many to discuss the future 
of coal. As we have heard today, coal is a primary source of 
energy throughout the world. Our fast growing countries, and I 
would be interested to hear the gentleman's testimony on how 
much they are exporting to China and India, rely on coal to 
fuel their energy demands. But here in the United States coal 
is our most abundant domestic resource with recoverable 
resources sufficient to last 250 years. Coal currently fuels 50 
percent of our electricity in this country.
    In my State of West Virginia coal power is 98 percent of 
our electricity. Nationwide it provides 125,000 direct well 
paid jobs for the U.S. coal miners and supports hundreds of 
thousands of additional jobs throughout the supply chain.
    While considering the future of the coal and the global 
warming debate, the thing we need to consider and we need to 
remember is that climate change and energy policies are 
inextricably linked with economic, environmental, and social 
issues. Last year the House passed the American Clean Energy 
and Security Act; I did not support this legislation because I 
believe it stood to push energy prices upward and threaten an 
economy that is already in trouble. I also was displeased with 
the way I felt it set up winners and losers across this 
country. A tax increase on carbon dioxide emissions will 
directly come out of consumers' pockets in the form of higher 
electricity rates. Manufacturing output would also fall 
considerably. Manufacturing firms, who have traditionally 
relied on low and stable electric rates in our States, would be 
subject to massive cost increases, likely forcing them out of 
business or at least to relocate their operation overseas. We 
are seeing that now in any case.
    Instead, we need to do much more to accelerate the 
development of advanced clean coal technologies and, most 
importantly, CCS.
    Carbon capture is important to West Virginians in ensuring 
our Nation's energy independence. Without it we deprive 
ourselves of the important effective tool for addressing 
CO2 emissions from coal. We need to provide 
sufficient funding and incentives to accelerate the 
development, demonstration, and broad commercial deployment of 
CCS technologies.
    As my colleague from Missouri mentioned, the AEP plant in 
New Haven, West Virginia represents a milestone in our efforts 
to bring CCS on line. That is actually in my district. The 
facility began operations last fall, captures and stores 
approximately 100,000 metric tons of CO2 per year. 
It is a first demonstration at an existing coal-fired plant. 
The implementation of this technology will not only benefit a 
State like mine with jobs in technology and revenue, it will 
also benefit our Nation by making clean coal a reality.
    In addition to climate change, coal has been the subject of 
continued Federal scrutiny for its impact on water quality. 
Recent action by the President's administration and the EPA to 
further scrutinize mining permits only confirms an anti-coal 
agenda. The minority staff on the Senate Committee on 
Environmental and Public Works initiated an investigation into 
EPA's handling of Clean Water Act Section 404 permits for coal 
mining in Appalachia and found that in 2009 EPA froze 235 coal 
mining 404 permits, claiming that additional time was needed to 
assess the environmental impacts of mining operations. Since 
the initiation of this investigation, EPA issued 45 of the 235 
permits. And today there are 190 permits that EPA continues to 
hold for operations, including surface, underground and refuse 
    Furthermore, decisions being made by Federal environmental 
regulators are not focused enough on the importance of coal to 
the economy. In my conversations with Lisa Jackson, the head of 
the EPA, she said that she explicitly omits economic 
considerations from her decision-making process. I find this 
particularly troubling. The EPA's delays in handling these 
permits is already jeopardizing jobs in Appalachia and is 
weakening our energy security.
    Even more disturbing, on March 26, EPA announced their 
intent to veto the existing Spruce Mine permit. The decision by 
the EPA to veto the Spruce permit brings into question the 
reliability of the entire permitting process and shows their 
complete disregard for the impacts it will have on our Nation's 
economy and on my State in particular. And I think it reeks of 
a lack of a sense of fairness.
    I look forward to hearing the testimonies from the panel. 
Thank you.
    The Chairman. The gentlelady's time has expired. The chair 
recognizes the gentleman from Colorado, Mr. Salazar.
    Mr. Salazar. Thank you, Mr. Chairman. I do appreciate your 
having this hearing today. I am pleased to have three of 
Colorado's largest employers sitting in front of us here today. 
Arch Coal, Peabody, and Rio Tinto all provide much needed jobs 
in the Third Congressional District. Thank you very much for 
what you do for Colorado.
    The State of Colorado is home to 407 mining operations, and 
provides employment for nearly 45,000 Coloradans. Mining jobs 
in Colorado are high paying jobs, 43 percent higher than the 
average wage in the State. The average annual wage in the 
mining industry in Colorado was 65,000 in 2007. Total direct 
earnings from the State of Colorado's mining payroll were $810 
million. Clearly this is a sizable contribution to our State, 
particularly now at a time when jobs and income are at a 
    I think we all know that coal is not the only and final 
answer to energy independence, but we should realize that it 
must and it will play a valuable role in providing energy to 
our country, as it is one of America's most abundant natural 
resources. We must continue to invest financial resources in 
research and development for all potential clean energy 
sectors, such as biofuels, solar, wind, algae, and carbon 
capture and sequestration.
    Mr. Chairman, I want to thank you for holding this hearing 
once again and I think it is vitally important that coal remain 
a source of energy, but we must do everything that we can to 
minimize the carbon footprints that many mines and plants may 
leave behind. I refer to one of your comments in your opening 
statement where you mentioned that there was over $60 billion 
provided for the coal industry for clean coal burning 
technology, I believe. It is my understanding that the bill 
only secured $4\1/2\ billion, but maybe I am mistaken.
    Thank you.
    The Chairman. No, I thank the gentleman. The gentleman's 
time has expired. Inside the Waxman-Markey bill there is $60 
billion actually.
    Mr. Salazar. Sixty billion?
    The Chairman. Yes, at least $60 billion, to be honest with 
    The Chair recognizes the gentleman from Arizona, Mr. 
    Mr. Shadegg. Thank you, Mr. Chairman. I request unanimous 
consent to insert my opening statement into the record and not 
read it here in full in the interest of time for our hearing.
    The Chairman. Without objection, so ordered.
    [The statement of Mr. Shadegg follows:]

    Mr. Shadegg. I do want to thank all of the witnesses for 
being here and for their testimony today to help us answer what 
I think is a critically important question. I particularly want 
to recognize Peabody Energy, which operates in Arizona and 
produces coal there and provides thousands of jobs in Arizona, 
as well as Rio Tinto, which does not mine coal in Arizona but 
does mine copper in Arizona, also contributing to our economy.
    With respect to coal, coal is as I think we all know an 
important natural resource whose production creates many jobs 
for American workers. The United States has the largest natural 
coal reserves in the world, representing 28 percent, I believe, 
of the global reserves. It is America's most abundant energy 
resource. We have approximately 270 billion tons of coal 
reserves, enough to last well over 250 years.
    How we handle this resource is vitally important. If we 
mishandle it and impose restrictions on it which drive its 
costs through the roof or make it unaffordable, then we will 
all as a nation pay a price. Any tax that we impose on carbon 
will be passed on to the consumers of the energy that carbon 
producing fuel produces and will be absorbed by those consumers 
and do damage to the economic viability of the companies who 
rely upon it.
    Obviously we have a duty to be careful in our conduct and 
to carefully examine the issue. The questions about global 
warming need to be examined carefully and thought through 
thoroughly. David Sokel of Midamerican Energy Holdings 
testified before the Energy Committee earlier this year that he 
could meet every single carbon goal in the Waxman-Markey 
legislation but that by doing it through that legislation we 
were doubling the cost. It seems to me we cannot do that to our 
Nation at this particularly difficult and challenging economic 
time. We need those jobs and we need that energy.
    With that, Mr. Chairman, I yield back.
    They don't work, they just don't work.
    The Chairman. No, they don't. The Budget Committee----
    Mr. Shadegg. Can't afford mikes.
    The Chairman. Whose hearing room has not properly funded 
their communications system. We thank the gentleman.
    So that completes opening statements from the members.
    [The prepared statement of Mr. Sullivan follows:]

    The Chairman. And to just take a brief moment here, today 
is the last hearing for our Chief Clerk, Ali Brodsky. She has 
overseen every single hearing of the Select Committee since its 
inception, from the top of Cannon Mountain in New Hampshire to 
today in the Cannon Building. Ali has been our constant. We 
wish her all the best as she leaves to join Teach for America 
in Chicago. And as proof of her dedication to the Select 
Committee, she is flying there tonight and still came here 
today to oversee and run this last hearing. So, Ali, the 
committee owes you our thanks for your exemplary public 
service. Thank you so, so much for everything that you have 
    So now we will turn to our witnesses and we thank them for 
being here. Our first witness is Mr. Gregory Boyce. Mr. Boyce 
is the Chairman and Chief Executive Officer of Peabody Energy. 
Peabody is the world's biggest private sector coal company with 
customers in 23 countries and six continents. Mr. Boyce joined 
Peabody in 2003 as President and Chief Operating Officer and 
has extensive United States and international management 
operating and engineering experience. We look forward to your 
testimony, Mr. Boyce. Whenever you feel comfortable, please 



    Mr. Boyce. Well, good morning, Chairman Markey and 
distinguished members of the committee. On behalf of all of 
Peabody employees, we also extend our thought and prayers to 
the fallen miners in West Virginia.
    You have asked me to discuss the role of coal in a new 
energy age, and it is my privilege to speak to a topic of vital 
importance to the American people, the U.S. economy, and the 
    I am Chairman and CEO of Peabody Energy, the world largest 
private sector coal company, a global leader in clean coal 
solutions and, Mr. Chairman, I also agree that we can provide a 
safer and cleaner path for coal in the future. My testimony 
will focus on what I believe are the three top issues we face 
as a society, energy, the economy, and the environment. We call 
them the three Es. Coal plays an enormous role in solving each. 
I will take these one at a time.
    Energy security coal is a future fuel to provide clean 
made-in-America energy and we have the world's largest supply 
running at our feet.
    Economic stimulus, greater deployment of clean coal 
technology will reindustrialize the U.S. economy to create jobs 
and infrastructure.
    And environmental solutions, coal with carbon capture and 
storage or green coal is a low cost, low carbon energy 
    As we contemplate decisions that will affect every American 
and every global citizen, let me start with the macro view. Mr. 
Chairman, everyone here today is a member of the so-called 
``golden billion.'' We enjoy a standard of living most only can 
dream about, thanks in large part to affordable energy. The 
global population will grow 25 percent to more than 8 billion 
people by 2030 and the world will need the equivalent power of 
five more Americas to fuel these needs. This growth occurs at a 
time when more than half the world's population still lacks 
adequate access to electricity. So we have the dual challenge 
of providing electricity to 3.6 billion people who are not 
properly connected and expanding our infrastructure to another 
2 billion who will be people added to the grid.
    [Disruption of hearing.]
    The Chairman. We would please ask for--we would please ask 
for the security officials to restore order in the committee 
hearing room.
    We apologize to you for the interruption and we will 
recognize you again, Mr. Boyce, and without any time obviously 
deducted from your oral presentation.
    Mr. Boyce. Thank you, Mr. Chairman. As I was saying, we 
have an issue of 2 billion people added to our energy grid in 
the future. How we satisfy this growth with coal is the primary 
global generation fuel and is expected to grow faster than any 
other fuels combined in coming decades. Some while others call 
coal a bridge to the future, I say coal is the future. It 
powers nearly half of America's electricity at a fraction of 
the cost of other fuels and Americans enjoy the best quality of 
life in the world.
    Let's move to the economy. We all recognize the jobs is the 
number 1 priority for the American people. Creative deployment 
of advanced technologies, including CCS, over the next several 
decades would create tremendous economic stimulus, 
reindustrializing our economic base and putting people to work. 
A 2009 study with the National Coal Council concluded that the 
deployment of coal with CCS would increase U.S. GDP by $2.7 
trillion, create 20 million job years from new construction, 
and support 800,000 permanent jobs over 40 years. Enhanced oil 
recovery from CCS would produce additional 2 million barrels of 
oil per day. So our three E goals are complementary and advance 
through clean coal technologies which have a strong record of 
    U.S. coal use for electricity generation has more than 
tripled since 1970, yet criteria emissions have been reduced by 
84 percent. Technology can lead us to a lower CO2 
world. Here is the path.
    First, build super critical combustion plants with improved 
    Second, demonstrate carbon capture and storage. We know the 
technology works. Statoil's Sleipner project in the North Sea 
has been storing a million tons of CO2 annually for 
15 years.
    Third, complete large scale CCS demonstrations.
    Fourth, advance coal-to-gas with CCS so the ultimate cost 
of capturing and storing CO2 is reduced.
    Next, deploy commercial scale IGCC technology with CCS.
    And finally, retrofit the world's existing fleet of coal 
plants with CCS technologies.
    A growing number of studies conclude the coal with CCS is 
the low cost, low carbon solution, 15 to 50 percent less 
expensive than others. And around the world nations have 
committed significant finding for CCS demonstrations, but more 
funding is needed to bring this technology to commercial scale.
    That is a brief view of the essential role of coal and the 
need for continuous improvement in emissions toward shared goal 
of near zero emissions. But I would like to close with a look 
at carbon legislation.
    There is a growing recognition in Washington for the vital 
role that coal plays in providing energy security and 
affordable electricity for Americans, and we saw this in 
elements of the Waxman-Markey bill. Achieving our three E goals 
will require smart, science-based policy to protect the 
American consumer, worker and family. I say deployable 
technology should be available before regulation. And we have 
to take the time to get this right and we have to have the 
national commitment to get it right.
    Now let me emphasize Peabody will support the right kind of 
legislation which builds on the positives of the Waxman-Markey 
House bill. It is essential for us to provide a legal and 
regulatory structure to enable robust development of CCS that 
assumes Federal responsibility for long-term CO2 
storage, offers timelines for emissions reductions that allow 
for technology development, eliminates conflicting frameworks 
at the State and Federal level.
    We believe the strong energy bill that advances CCS is best 
way to achieve both our energy and our environmental goals. The 
goals are not accomplished by cap-and-trade programs that will 
result in punishing costs to economies and family budgets. For 
those who say that a cap-and-trade systems can be cost 
effective, I don't agree. The only reasonable possibility on 
this front would be a ceiling of say $12 a ton that Senators 
Bingaman and Specter advanced several years ago. But here again 
the only path to meet CO2 goals is true technology.
    I say this after just returning from China, where the 
Presidents of both our nations have committed to a clean energy 
path that includes low carbon coal. Peabody is the only non-
Chinese equity partner in GreenGen, a near zero emissions power 
plant that will begin generating power next year. If China can 
build these type of plants, why can we not here in the U.S.? 
The U.S. could also be a provider of technology for the rest of 
the world.
    So in conclusion, the real question isn't will we use coal. 
The U.S. uses more coal than any nation on Earth. We have 
hundreds of billions of tons of coal in the U.S., trillions of 
tons in the world, we will use it all. The real question is 
what is the proper path to move to what the Presidents of both 
China and the U.S. last year called, ``21st century coal.'' 
That path is technology first, deployment requirements second 
as we work together to accelerate the movement to clean coal.
    Thank you, Mr. Chairman.
    [The statement of Mr. Boyce follows:] 

    The Chairman. Thank you, Mr. Boyce.
    Our next witness is Mr. Steven Leer. He has served as the 
President and Chief Executive Officer of Arch Coal since 1992. 
Arch Coal is the Nation's second largest coal company.
    We welcome you, Mr. Leer.

                  STATEMENT OF STEVEN F. LEER

    Mr. Leer. Thank you, Chairman Markey, committee members. I 
appreciate the invitation to offer my views on the role of coal 
and coal technology in meeting the Nation's clean energy needs 
and for reducing CO2 emissions. But first let me 
echo our prayers and sympathy for the miners and their families 
that were lost last week in West Virginia.
    This committee has an extremely difficult task addressing 
an extremely complex subject. With this in mind, I am going to 
focus on four points.
    My first point is that coal is being used and will continue 
to be used around the globe. Coal supplies roughly 23 percent 
of the U.S. energy needs and roughly 27 percent of the global 
energy requirements. Global coal use since 2000 has increased 
more than any other fuel, and that trend is expected to 
continue. Coal use is growing because it is abundant, widely 
distributed, and relatively inexpensive. Coal helps billions of 
people around the world enjoy a higher standard of living than 
would otherwise be possible. That is the good news.
    My second point is the bad new; coal emits more carbon 
dioxide than other major fuel sources per unit of energy, which 
bring me to my third point.
    We believe technology is the answer. Clean coal technology 
has solved earlier environmental problems associated with coal 
use and continues to improve the burning of coal's emissions. 
Emissions of particulate matter, SO2 and 
NOX, have gone down as previously referenced in 
several comments. We can be successful in capturing and 
isolating CO2 with carbon capture and storage 
technologies, or CCS. Most elements of CCS have been shown to 
work in individual elements, but not necessarily at scale or 
all together, and it is not inexpensive at the moment. DOE and 
others have developed technology road maps for solving the 
technological problems associated with CCS and driving down 
costs. We know where we need to go with CCS and we have 
identified a path to get there, but I am not saying we are 
there yet because we are not. But I am convinced that we can 
get there, first because we have already gotten off to a fairly 
good start, and second because we really have no other choice 
if we are serious about and are going to be successful in 
stabilizing global CO2 concentrations in the 
    That is not just my view. In former Prime Minister Tony 
Blair's assessment of CCS he said, ``The vast majority of new 
power stations in India and China will be coal fired--not may 
be coal fired, will be--so developing carbon capture and 
storage technology is not optional, it is literally of the 
    Remember, China uses three times as much coal as the U.S. 
and the Chinese use of coal is growing at about 200 million 
tons every year.
    The International Energy Agency found that a scenario which 
lacked a CCS option was 97 percent more costly than one which 
included CCS technology. The IAEA has concluded that 
``CO2 capture and storage for power generation and 
industry is the most important single new technology.'' CCS 
technology is also a job creator. A report last December by the 
National Coal Council, a Federal advisory committee to the 
Secretary of Energy, concluded that CCS deployment through 2050 
could produce 28 million job years of construction employment 
and create 800,000 permanent jobs.
    The promise of CCS still has many barriers to overcome. 
American Electric Power is at the forefront of CCS technology 
and currently is in the process of scaling up a test facility 
in West Virginia that will store about 1.5 million tons of 
CO2 per year in deep saline formations. Their pilot 
demonstration plant is built, but we can't say that we have 
solved all the problems yet, and in reality we have over 2 
billion tons of power plant CO2 to deal with in the 
U.S., let alone the rest of the world.
    My fourth and final point covers the action that we need to 
take in order for CCS to be commercially available and 
affordable in a timely manner. One, we need to sharply expand 
the number of commercial CCS demonstration projects to the 15 
to 20 recommended by the NRC.
    Two, we need to follow up with continuing financial support 
for the next 60 gigawatts of generating capacity.
    Three, we need to address the legal framework that poses 
barriers to CCS technology, like the long-term viability of the 
stored CO2.
    Four, we need to ensure that the policies do no harm or 
provide disincentives to CCS.
    For example, some are proposing that we provide a financial 
incentive for the deployment of natural gas to displace coal in 
power plants. I believe this would be a mistake on several 
fronts. While natural gas emits 50 percent of the 
CO2 of coal, it will require CCS to achieve the 
long-term climate goal. A dash to gas will put CCS development 
on hold and the technology will not be available when it is 
needed domestically or globally. Of course the availability of 
sufficient quantities of natural gas to replace coal 
particularly at a reasonable price is another question mark.
    An alternative approach would be to expand current 
proposals for Federal renewable electricity standards to 
include fossil fuel generation with CCS, advanced nuclear power 
generation, and improved efficiencies at existing power plants.
    In closing, let me reiterate my four points. Coal is and 
will remain an important part of the U.S. and global energy 
mix, providing benefits to billions of people. Coal's issue is 
CO2; the solution is carbon capture and storage 
technologies. Commercializing CCS in the desired time frame 
will require industry-government collaboration, significant 
resources, and an appropriate legal framework. But it can be 
done. In fact, it must be done if we are going to stabilize 
global CO2 concentrations by 2050.
    Thank you for your time.
    [The statement of Mr. Leer follows:]

    The Chairman. Thank you, Mr. Leer. Our next witness is Mr. 
Mike Carey. Mr. Carey is the President of the Ohio Coal 
Association. He has a diverse background that includes military 
service and legislative relations in both the energy and 
natural resource industries.
    We welcome you, sir.


    Mr. Carey. Thank you, Chairman Markey, members of the 
committee. My name is Mike Carey, President of the Ohio Coal 
Association, border State to West Virginia, and our prayers are 
with the families there as well.
    I would like to take a moment to thank my fellow witnesses 
both from Arch Coal and Peabody Energy for their continued 
commitment to the American coal industry. However, I must point 
out at this time that Rio Tinto has been divesting themselves 
of domestic coal reserves for many years. I do not believe they 
represent the future of coal in America.
    Given the high levels of recoverable coal reserves and 
increasing demand for energy, especially in developing nations 
where low cost electricity is essential, coal's future global 
success is assured. However, coal mining and use in the United 
States is severely jeopardized by the war on coal waged through 
the legislative process and the unprecedented regulatory 
actions. But in the rest of the world our competitors are 
investing in coal to make them more competitive and to steal 
our jobs. China alone continues to build a new power plant 
about every week.
    I would like to leave you with three main points. First, 
the Obama administration's regulatory assault on energy 
production and the war on coal in particular is creating a de 
facto Obama energy tax on all American families.
    Second, the CCS provisions in the Waxman-Markey bill and 
other climate proposals encourage massive fuel switching to 
more expensive natural gas before the CCS technology can be 
deployed. But even then the lack of regulatory legal frameworks 
will prevent commercial deployment of the technology.
    And despite the recent tragedy in West Virginia, the U.S. 
coal mining industry has the best safety record in the world.
    The role of coal in the new energy age is greatly hampered 
by the regulatory assault waged by the Obama administration and 
in particular the Environmental Protection Agency. While 
President Obama may not directly raise taxes, his 
administration is implementing the Obama energy tax on all 
American families by administrative fiat. We are in the process 
of calculating how much this will cost the American families in 
higher energy bills.
    The chart that you see behind me lists a number of the 
proposals, final, planned regulatory assaults on the coal 
industry, and I will briefly highlight a couple of them. The 
Ohio Coal Association is challenging the endangerment finding 
in court. We believe that the science that is underpinning the 
endangerment finding is questionable and that the EPA did not 
include required parts of economic analysis. According to the 
EPA, they relied substantially on the IPCC and the data which 
is at the heart of the Climategate scandal. Only 52 scientists 
signed the U.N. IPCC fourth assessment report, and it is cited 
in the endangerment finding an astounding 49 times and 395 in 
the technical supporting documents.
    Next, we have seen the Clean Water Act used inappropriately 
in many ways to hamper the production and use of coal, such as 
the use of the clean water guidelines on surface mining permits 
issued just last month which would basically put a moratorium 
on mining in Appalachia. The Clean Water Act veto of an 
existing Army Corps of Engineers permit is unprecedented. The 
Waxman-Markey CCS provisions are an attempt to persuade the 
coal industry to support the cap and tax.
    The bill, according to my numbers, allocates $10 billion 
towards CCS but misses the mark in two regards. The first is 
timing. The legislation requires emission reductions starting 
in 2012. The restrictive performance standards on coal-fired 
power plants in 2020, ignoring what the developers of the CCS 
technology have been saying for years, which will take 15 to 20 
years before commercial development. The United States Congress 
simply cannot dictate a timeline of technological developments.
    Secondly, the bill calls merely for a study to report back 
to Congress with recommendations on issues such as CCS 
liability, permitting and other environmental considerations. 
CRS and GAO have already provided information on liability and 
permitting problems and the need to address for CCS to work.
    The way the CCS program and the Waxman-Markey bill is 
structured actually encourage massive fuel switching to more 
expensive natural gas before the CCS technology can actually be 
deployed. But even then, the lack of regulatory legal liability 
frameworks will prevent commercial deployment of the 
    In conclusion, domestic coal production needs the support 
of Congress in this administration. Despite the recent events 
in West Virginia, the U.S. coal mining industry has the best 
safety record in the world. Mine Safety and Health 
Administration data showed there were 18 coal mining fatalities 
last year amongst 133,000 coal miners, an improvement of up to 
63 percent over the numbers 3 years before. By contrast, the 
BBC estimates that 13 Chinese coal miners die every day in 
their coal mines. Our safety record is largely due to our 
combined national and State efforts to encourage innovative and 
safety practices. The Ohio Coal Association recently 
collaborated with the Ohio legislative process legislature and 
worked to pass a new mine safety bill in our State even though 
we had not had a mine fatality in 5 years.
    I want to thank you for the opportunity to testify, and I 
look forward to answering any of the questions you may have.
    [The statement of Mr. Carey follows:]

    The Chairman. Thank you, Mr. Carey. And our final witness 
is Mr. Preston Chiaro. He is the Chief Executive for Technology 
and Innovation for Rio Tinto. Rio Tinto is the largest 
diversified mining company in the United States and the third 
largest mining and exploration company in the world. Rio Tinto 
also holds a 48 percent interest in Cloud Peak Energy, which is 
the third largest coal company in the United States.
    We welcome you, Mr. Chiaro. Whenever you feel comfortable, 
please begin.


    Mr. Chiaro. Chairman Markey, distinguished members, first, 
thank you for inviting me to testify today on the role of coal 
in a new energy age. And like my fellow miners on behalf of the 
employees of Rio Tinto I wish to extend our thoughts and 
sympathy to the families of the miners who lost their lives in 
West Virginia last week.
    As you said, my name is Preston Chiaro. I am the group 
executive for technology and innovation for Rio Tinto. Rio is 
the largest diversified mining company in the U.S. and one of 
the largest diversified mining companies in the world. Our U.S. 
assets include coal holdings in Colorado, copper in Utah, 
nickel and copper projects in Michigan and Arizona, borates in 
California, talc in Montana and Vermont, as well as an aluminum 
smelter in Kentucky. We have nearly 5,000 U.S. employees all 
    As you also mentioned we hold a 48-percent interest in 
Cloud Peak Energy, formally known as Rio Tinto Energy America, 
the third largest coal company here in the U.S. We are also one 
of the largest coal producers and exporters in Australia, and 
we also happen to be a major uranium producer.
    Rio Tinto established its climate change position in 1998. 
We recognize that manmade emissions of greenhouse gases are 
contributing to global climate change and that action is 
necessary to reduce those emissions and to adapt to a changing 
    As a coal producer, a large energy consumer, and a 
technology developer, Rio Tinto continues to devote resources 
and funds to the development of low emission coal technology, 
in particular carbon capture and storage, or CCS, technology. 
This technology affords coal and eventually natural gas a 
tremendous opportunity to position itself as a low carbon 
energy source both in the U.S. and globally.
    In 2007, we launched the hydrogen energy joint venture with 
BPO Alternative Energy. Through the hydrogen energy California 
project in Kern County, California we are developing the first 
full scale, fossil fueled electricity plant to capture and 
store up to 90 percent of its emissions upon deployment. Once 
fully operational in 2015 the plant will provide low carbon 
electricity to 150,000 southern California homes while 
permanently storing 2 million tons of CO2 per year 
in a nearby oil field, creating 1,500 construction jobs and 100 
permanent operational positions.
    Rio Tinto believes that it is critical for the world to 
transition away from high emitting conventional fossil fuel 
electricity generation by the middle of this century. We 
continue to support and advocate the recommendations included 
in the blueprint for legislative action, developed last year by 
the U.S. Climate Action Partnership, of which we are a member. 
We have gone on record in support of their inclusion in H.R. 
2454 to address the existing technical, financial, legal and 
regulatory bottlenecks to the commercialization of carbon 
capture and storage technology.
    Economic modeling of U.S. Climate Action Partnership's 
recommendations indicates that the long run transition costs 
are small when climate policies are market-based and economy-
wide, when forest and land-based offsets are available to 
contain costs, and when we allocate funding to the development 
of technology such as carbon capture and storage that keep coal 
in the energy mix. In fact, USCAP studied a wide range of 
economic models and they all show that U.S. economic output 
levels of consumption and jobs, things we all care deeply 
about, are virtually identical to business as usual, even years 
after a climate policy such as H.R. 2454 is put in place. For 
example, compared to business as usual the sum total impact to 
the general economy, household consumption, and number of jobs 
can be viewed as a growth delay of 8 to 9 months over 20 years 
and most scenarios show a delay of only a couple of months.
    Mr. Chiaro [continuing]. Well-constructed policy provides 
the best means to address the multiple challenges facing our 
industry. We will either participate in the shaping of policy, 
or we will have the policy thrust upon us. Our experience has 
been that constructive participation in the policy process can 
yield positive outcomes on the issues most important to us. I 
thank you for your time.
    [The statement of Mr. Chiaro follows:]

    The Chairman. Thank you, Mr. Chiaro, very much. The chair 
will now recognize himself for a round of questions. And this 
is for you, Mr. Chiaro, Mr. Leer, and Mr. Boyce.
    You agree with the statement made by Mr. Don Blankenship of 
Massey Energy that ``global warming is a hoax and a Ponzi 
scheme,'' as he indicated on his Twitter page on February 19 of 
2010. Mr. Chiaro?
    Mr. Chiaro. As I mentioned, Rio Tinto recognized in 1998 
that climate change was a serious issue, that human emissions 
were a primary cause of it, and we think action needs to be 
taken soon to address it.
    The Chairman. Mr. Leer.
    Mr. Leer. I don't agree with Mr. Blankenship. We look at 
climate change as an evolving issue that's serious and needs to 
be addressed. We think how we address it and that technology is 
the most critical piece of that path forward.
    The Chairman. Mr. Boyce.
    Mr. Boyce. Do not agree with Mr. Blankenship. Our view is 
the globe's climate has been changing since the globe was 
formed. Levels of CO2 have risen in the atmosphere, 
and we have been a strong advocate for technology advances to 
reduce CO2 in the atmosphere, particularly from the 
use of coal.
    The Chairman. So the next question comes to you, Mr. Carey. 
I am a little bit confused, because we are being told by the 
natural gas industry that we did too much for coal in the 
Waxman-Markey bill and not enough for natural gas. And that is 
what natural gas executives are saying to us.
    Do natural gas executives not understand how much more we 
helped them than you, since they are of the opinion that this 
$60 billion which we put in for carbon capture and 
sequestration and the other tools that we put in place in order 
to minimize the impact on coal consumers across our country are 
clearly being viewed by the natural gas industry as being much 
more friendly to the coal industry than to the natural gas 
industry? What don't they understand? You seem to think that 
there is a bias towards natural gas.
    Mr. Carey. Mr. Chairman, I was referring to the time tables 
but unfortunately I don't work for the natural gas industry. 
But I can tell you this. According to the studies that I have 
read with regards to what coal production would look like by 
2030 under the proposals that have been initiated, we would 
look at a 77 percent decrease in the amount of coal. Now, for 
the 3,000 and some coal miners in Ohio, the folks in West 
Virginia, Kentucky, Western Pennsylvania, when you are 
eliminating 77 percent of those jobs, that is a concern. And 
when you look at the Appalachian communities and you look at 
what an average coal miner makes, in Ohio, it is roughly 
$65,000; I believe Congressman Salazar talked about Colorado 
being $65,000. Mr. Chairman, it is going to be devastating.
    The Chairman. To the question on natural gas, sir, you are 
just dead wrong. Okay? We absolutely insured that we would deal 
with the coal industry in a transition and in such a way that 
actually drew criticism from the natural gas industry. So you 
are just wrong. And I just want to put that out there plain and 
simple. We did not approach this issue as anything other than 
one in which we wanted to create a bridge for the coal industry 
to the future. Okay? And any other interpretation is just plain 
wrong. And the natural gas industry will testify to that, and 
over in the Senate, in fact, they are now lobbying in order to 
receive equivalent benefits to what the coal industry received.
    Mr. Boyce--and I think this is important for us to clarify 
this issue. In your petition to the Environmental Protection 
Agency to overturn the scientific finding that greenhouse gases 
endanger public health and welfare, you state: ``Peabody's 
petition is based primarily on the release of e-mail and other 
information from the University of East Anglia climate research 
unit in November of last year.''
    The British House of Commons has now reported that the 
hacked e-mails from the University of East Anglia climate 
research unit do not in any way cast doubt on the overwhelming 
scientific evidence of anthropogenic climate change. Do you now 
accept the broad understanding by scientists and governments 
that greenhouse gases threaten to destabilize global climate?
    Mr. Boyce. Our view and what we said in the petition was we 
think that EPA should take a step back and do more work 
internal to the U.S. To rely so heavily on an international 
body which did not have the ability for people here in the U.S. 
and scientists here in the U.S. to have the level of peer 
review, and with the number of issues that have come out 
relative to some of their basic data assumptions as well as 
interpretations. All we have asked is that the EPA step back 
and reconsider their endangerment finding.
    The Chairman. So you continue to question then the 
scientific finding that greenhouse gases endanger public health 
and welfare?
    Mr. Boyce. As we look at the IPCC report and all of the 
issues that came out relative to its data and interpretations, 
we think there needs to be another independent review of that 
data. Whether those findings are sound or not, we think there 
needs to be another review to put to rest all of those issues.
    The Chairman. Mr. Leer, do you question the scientific 
findings that greenhouse gases endanger public health and 
    Mr. Leer. I think that the EPA is a very, very--and using 
the Clean Air Act in their approach, the Clean Air Act is a 
very blunt instrument to try to address a very complex problem.
    The Chairman. I am just going to the question. You earlier 
seemed to indicate, you and Mr. Boyce, along with Mr. Chiaro, 
all seemed to indicate that you acknowledged that climate 
change is occurring and that it is caused by CO2 or 
other greenhouse gases. And now it seems as though you are 
backing away from it. So I am just trying to determine which is 
it. I am only going to the scientific question here of whether 
or not greenhouse gases do in fact cause global warming.
    Mr. Leer. I think they are contributing to global warming, 
and that--again, I was trained as an engineer. I look at it, 
how do we address the problem? And I will let others, because I 
am certainly not a climate scientist and only know what I have 
read as well as others' comments, that whether the east Angola 
e-mails are an issue or not. They certainly, I think, raise 
questions in people's minds. But, more importantly, if we are 
going to address this problem, which I think we should, it is 
going to be driven by technologies of carbon capture. 
Otherwise, I don't think we can achieve the 2050 goals that are 
outlined in your bill or outlined in many other bills. And that 
is--I am the engineer approach.
    The Chairman. We do agree with you on that. And that's why 
we put those tens of billions of dollars in the bill, so there 
would be a technological solution that we could partner on 
creating. Mr. Chiaro, do you agree that the scientific--with 
the scientific finding that greenhouse gases endanger public 
health and welfare?
    Mr. Chiaro. We do think the science is strong. Yes.
    The Chairman. Again, we thank you for that. We need to 
have--if we are going to create a public policy, we at least 
have to agree on this basic fundamental fact that the planet is 
warming and that greenhouse gases are contributing to that 
problem. And we still seem to have some disagreement here. And 
you, Mr. Boyce, are not, in fact, dealing with the issues 
scientifically in a way that divides the question from the 
means by which we would then deal with the issue. So we just 
need a clear statement here on that subject from you. And let 
me come back to you just this one final time on the science of 
global warming and on the relationship between greenhouse gases 
and the warming of the planet.
    Mr. Boyce. Well, as I said, Mr. Chairman, and the one known 
fact that we deal is that CO2 has risen in the 
atmosphere over the last 100 years. And what we have always 
said is we want to use coal cleaner every day that we use it. 
We have almost a dozen clean energy projects that we are 
involved with in Australia and China and the U.S. You know, I 
think the scientific discussion, we leave to the scientists. 
What we say is we understand the public policy and the desire 
to have cleaner coal. We agree with that, and we are putting a 
lot of money and a lot of effort into trying to make that 
happen on a global basis.
    Again, whether it is in Australia, tens of millions of 
dollars, whether it is our partnership in China in GreenGen or 
FutureGen here in the U.S., we have made investments in Calera, 
which is a new startup company to produce cement from 
CO2 capture. We have money invested in GreatPoint 
Energy, which is trying to develop cleaner ways of gasifying 
    So at the end of the day, it is our actions to try and 
promote and be a catalyst for clean coal technologies.
    The Chairman. And we agree with you, Mr. Boyce; that is, 
that your investments in Calera, your investments in other 
companies show that you are working to solve the problem, but 
what we need you to say, because that will end this first stage 
of debate, is that there is a problem and that the science has 
identified a problem that has to be solved, and that your 
investments are related to that conclusion that there is a 
problem and that you accept it. Because then we can move on to 
working together to put together the solutions to solve the 
problem. So can we come back again to that scientific question?
    Mr. Boyce. Mr. Chairman, I think I have said, we agree 
CO2 is rising in the atmosphere. That's an issue 
that needs to be addressed, and we are doing everything we can 
to try and promote technologies to address that issue.
    The Chairman. Thank you, Mr. Boyce. I thank all of you. Let 
me now turn and recognize the gentlelady from West Virginia, 
Mrs. Capito.
    Mrs. Capito. Thank you, Mr. Chairman.
    I wanted to ask a question to Mr. Boyce and Mr. Leer that I 
alluded to in my opening statement. And I am curious to know in 
both of your companies what percent of your coal do you 
currently export? What are your largest exporting countries? 
Mr. Boyce. This is domestic coal that's mined here.
    Mr. Boyce. Today we are exporting very, very small 
quantities of coal in the export business. As you know, we no 
longer have any operations in the eastern part of the U.S. 
where most of the U.S. exports come from. We have a small 
amount of coal from Colorado and a very small amount of coal 
from the Midwest which we export to Europe. Other than that, 
all of our exports are from Australia to the Far East.
    Mrs. Capito. So you are exporting your Australian product 
to China?
    Mr. Boyce. We export from Australia all over the world, 
China, India, Japan, Europe, Brazil.
    Mrs. Capito. Mr. Leer.
    Mr. Leer. Last year, even in the economic downturn, we did 
export a few boats out of Wyoming into the Pacific Rim. They 
ended up being in China, and I think India was a trader at the 
second boat. On the East Coast out of specifically mostly West 
Virginia, but also Kentucky and Virginia, we are exporting 
somewhere between 3 and 4 million tons of year in a normal 
year. Last year was down due to the economic recession. This 
year, just given the nature of particularly the metallurgical 
markets, we are seeing a significant rise in export 
opportunities; and I would guess that when the year is done, we 
will end up somewhere between the 4 to 6 million tons of 
    Mrs. Capito. Thank you. The reason I am bringing that out 
and am curious about whether it is on the rise is because if we 
are going to put forth policies here in our own country to meet 
certain emission goals, would the industry then begin to look 
at other areas of the world who maybe aren't buying into 
emission goals to then push the product out across the rest of 
the world? And I have a hunch, I mean, you are in business to 
make money, that is probably what could happen. But I am going 
to shift to another topic. Technology. All of you talked about 
the need for technology. But there is an undercurrent here of, 
is it technology before emission targets, or emission targets 
before technology?
    When do you reasonably think something that can be used 
full scale and go broad based in this country in terms of when 
CCS can actually be implemented in this country with success 
and achieving substantial targets? I know that is a ballpark.
    Mr. Leer. It is a ballpark. And no one can really project 
the technology curb, other than history would tell you that 
once we get started it comes sooner and often we get 
significant advances.
    In talking with our utility customers, who really are at 
the forefront of this, I think most of them talk somewhere in 
the mid 20s if we get started now. The key really is having the 
legal framework established and the funding, and certainly the 
Markey-Waxman bill was a great start on that one issue. We had 
other concerns. But, again, I am an engineer. I look at, how do 
you solve the problem? You solve the problem by technology. 
Otherwise, we can't stabilize CO2.
    Mrs. Capito. There is a body of thought out there that 
believes this technology never will be able to achieve. I hear 
it certainly around a lot of skeptics that we are never going 
to be able to meet these targets. Do you have a response to 
    Mr. Leer. I do. And when you look at global CO2 
emissions, we had better hope that we can establish this 
technology, because that is what you want. No one has offered a 
path that allows energy growth and meets energy growth demands 
on a global scale other than the technology to capture carbon 
and store it. And it is a pretty simple answer. People may 
disagree that they don't like it, but that is the path to 
stabilize CO2 in the atmosphere and no one else has 
offered a path to do it.
    Mrs. Capito. Thank you.
    The Chairman. Thank you. The chair recognizes the gentleman 
from Washington State, Mr. Inslee.
    Mr. Inslee. Thank you. Mr. Carey, I found your comments 
that somehow Congress is waging a war on your industry pretty 
astounding. And the reason I say that, as I was thinking about 
your comments I ran into my grandchild, he is 15 months old, 
yesterday, on the sidewalk, got to mess around with him for a 
while. And I started thinking about what your industry is doing 
to his future. Because of the emissions from your industry, it 
is probable that there will be no healthy coral reefs in the 
world during my grandson's lifetime. It is probable that there 
will be no glaciers in Glacier National Park, which is a 
national treasure, in his lifetime.
    It is probable that the acidification of the ocean will 
continue to an extent that, in some ways that we can't entirely 
predict will affect the food chain upon which the salmon 
depend, which my granddad and my dad and I and my wife fish 
for, that he won't be able to fish for. It is probable that 
there will be significant changes in the climate in the 
southwest so maybe he won't go and get to enjoy the southwest 
like I have in his lifetime.
    If there is a war being waged here, it is a war on our 
grandkids, because the emissions from your industry are 
destroying significant parts of this one and only little planet 
we have got. Now, that is just a scientific fact.
    Now, I don't think of it as a war, because the people in 
your industry are great people. They are hard-working folks, 
they are trying to make a living, they want to have a future in 
this industry. And I recognize that. So I don't use that term 
of war because I don't think they are waging war on our 
grandchildren. But I think your position is so irresponsible 
for your own industry that I have got to call it out.
    We have put in a pool of $60 billion to your industry to be 
able to save it, save it in the sense that you will have a way 
to sequester carbon dioxide. And the smart folks on this panel 
recognize that the day will come that coal will not be a viable 
alternative if we do not find that technology. And we have 
given you $60 billion. We don't give $60 billion to al Qaeda. 
You want to see a war? We are in a war. We don't give them $60 
billion. We don't give $60 billion to industries we are at war 
with. We give $60 billion to people that we hope maybe there is 
a chance of saving, and that is what we are doing.
    So let me just ask you. Will you personally, or your 
organization that you represent, tell us that you will replace 
that $60 billion that we have offered you in this bill?
    Mr. Carey. Chairman Markey, Congressman Inslee, it was a 
long question. There are many parts of it.
    Mr. Inslee. Listen, I don't want you to answer my comments. 
I want you to answer my question. Will you personally--and I 
think the answer is probably no--or your company or your 
organization tell the American public and the people you 
represent today that you will put up $60 billion to help save 
this industry by finding CCS technology to replace the money 
you are trying to take away by killing this legislation? Will 
you do that? And that is a pretty simple yes or no.
    Mr. Carey. I think the question, Mr. Chairman, Congressman 
Inslee, I think we have to examine parts of the question if we 
are talking about CCS technology. Now look, I am the chairman 
of the Ohio Coal Technical Advisory Committee. This is a body 
that actually works with clean coal projects, and we have been 
looking at for the last 10 years carbon sequestration and 
discussions on carbon sequestration. Nobody is arguing that is 
    Mr. Inslee. I would really appreciate an answer. Are you 
personally, or your organization willing to commit today to 
spending $60 billion to try to perfect CCS technology to 
replace the money you lose if this legislation doesn't pass? 
Just give me a yes, sir, or no. I have got one more question I 
have got to ask Mr. Boyce.
    Mr. Carey. Mr. Chairman, Congressman Inslee, I would say 
that CCS is important. But if you are asking me to make a 
personal commitment that I will personally put $60 billion into 
carbon sequestration, that is not a very serious question.
    Mr. Inslee. How about your company?
    Mr. Carey. My association? My association represents small, 
medium-ranged companies that actually work on behalf of Ohio.
    Mr. Inslee. I will take your answer as no. If you want to 
amend it, go ahead.
    Mr. Boyce, as I understand your position listening to your 
testimony, you seem to recognize the necessity, if not urgency, 
of developing CCS technology. But I seem to--if I can 
characterize your corporate philosophy, you have resisted in 
any way every way that I can ascertain any legal mechanism that 
would put a restriction on carbon dioxide emissions, which 
would--many of us would believe would drive investments into 
CCS technology. And what I hear you saying is that if we just 
trust the industry to make these investments, everything will 
be okay.
    Folks at this table will put in billions of dollars. I 
don't know where you are going to get it, because you won't get 
it from us if we don't pass this bill. But you will put in 
billions of dollars. You will solve this problem. And then, 
after you solve this problem, then we can put a regulation on 
the industry of CO2. Now, to me, that is a little 
bit like saying when they stop robbing banks, then we can put a 
law in effect saying you can't rob banks. And, frankly, I have 
not seen a major environmental problem solved without some 
message to the industry to make these investments.
    Now, is that a fair characterization, you are thinking on 
this? And I would ask you to comment on that thinking.
    Mr. Boyce. Thank you. No, I would have to say I don't 
believe it is a fair characterization. And the reason I say 
that is at the time of Waxman-Markey we indicated that there 
were some tremendous aspects to Waxman-Markey, great 
recognition of the role of coal, and, as you have both pointed 
out, strong funding for clean coal technologies and a mechanism 
to help provide some of that funding. But we had concerns that 
enabling the technology of CCS to go forward without having 
solved the legal and regulatory framework around the property 
rights, injection of CO2, the long-term storage, as 
well as the aspect of hard caps until the technology and the 
time frame for that technology to be determined left us to 
where we didn't believe that we could support the bill in its 
current form. And I think that is all that we ever said. We 
have always--as I said earlier, we have been working with 
Senator Bingaman for a number of years in terms of the original 
proposals that he had laid out for improving our reductions in 
carbon and for a carbon management program.
    It is just a matter of how all the components come 
together. We have concerns about the cost impacts. That is only 
natural. And we had concerns that capturing all the 
CO2 without the ability to actually store it in the 
ground was a Catch-22 that we could not see our way around.
    But I don't want anyone to believe that we don't feel that 
there needs to be carbon management programs going forward.
    Mr. Inslee. Thank you.
    The Chairman. The gentleman's time has expired. And to the 
gentleman from Arizona, the gentleman from Washington State 
went over and we will note that as the gentleman is engaging in 
his questions.
    Mr. Shadegg. I will do my best to give back the time he 
took in going over.
    I want to thank all the witnesses for your thoughtful 
testimony. I think these are complex issues that require 
thought and reflection.
    I want to start, Mr. Boyce, with you. In questions 
propounded by the chairman, you indicated that with regard to 
the endangerment finding you believe that, given some of the 
doubt now cast on the science developed and relied upon by the 
IPCC and the University of Anglia, that you thought it was 
appropriate and your company felt it was appropriate for the 
EPA to take a step back and reassess that science. Is that a 
correct statement of your position?
    Mr. Boyce. I will tell you that, given that, whatever 
burden we put on society based on this issue, we have to have, 
or at least I think we should have public support for our 
position. I couldn't agree more that we should, in fact, step 
back and take a close look at that.
    Mr. Shadegg. The chairman cited the fact that the 
Parliament in England had found that there was nothing wrong 
with the science in its basic findings. I guess I am a little 
curious about that. Do you know how many years the IPCC spent 
looking at science to reach its original conclusions?
    Mr. Boyce. The IPCC has been empanelled since 1992 or the 
early 1990s with the original Rio Treaty. So they have been 
looking at this data for a long period of time.
    Mr. Shadegg. So they have been looking at that data from 
1992 to 2010, we will say roughly 18 years, and we now discover 
major flaws in it, some of which they admit including flaws 
about the Himalayan glaciers disappearing by 2035. They 
acknowledged those flaws. They spent 18 years reaching the 
conclusions; we now discover the flaws. How long have we known 
about the flaws in the science? It hasn't been 18 years. Has 
    Mr. Boyce. No, sir. It has not.
    Mr. Shadegg. How long do you suppose it has been? Closer to 
18 months?
    Mr. Boyce. Not even that. The fourth quarter of last year.
    Mr. Shadegg. Well, then I think your view that we should 
take some time and look at that science again, given it took 18 
years to develop it and has now been cast in doubt, I don't 
think we can whitewash it in less than 18 months. So I think 
that is a considered position.
    I also want to clarify a point you made earlier. I believe 
you said that you, in fact, support CCS and CCS technology and 
all clean coal technology. You simply want a regulatory 
atmosphere in which that can be carried out and everybody can 
understand and follow the rules. Is that correct?
    Mr. Boyce. That is correct. As I said earlier, we are 
involved in a number of clean coal technology projects across 
the globe, China, Australia, here in the United States. And we 
just firmly believe that we have to understand the time frame 
for deployment of the technology and the cost impacts to the 
economy of that technology deployment before we put the hard 
caps in place.
    Mr. Shadegg. Again, as I mentioned in my opening statement, 
I believe those costs will necessarily pass on to the consuming 
public and to businesses in America which must compete around 
the globe, and I think looking at those cost factors and 
looking at issues like, okay, so we can capture it. We have got 
that figured out. Where can we store it, and can we store it 
legally? And I haven't seen anybody jump forward and say, gosh, 
I want it stored under my land. And we seem to have had a 
parallel issue in Nevada where we tried to store nuclear waste, 
and some people in Nevada seemed to get upset. I think there is 
a United States Senator who is a little concerned about the 
storage of nuclear waste in that State. It seems to me storing 
carbon might be almost as complex as storing nuclear waste.
    Can you elaborate for the committee--and this will be my 
last question--the specific elements of legislation we could 
pass that would allow for the utilization of coal that was, in 
fact, clean and in which the carbon had been removed? And we 
would resolve some of those issues so that we could in fact 
stop any of the uncertainty that I think is now impinging upon 
the development of coal and coal energy in the United States.
    Mr. Boyce. I think, as I indicate in my written comments 
and briefly alluded to in my verbal comments, we have laid out 
a path for technology. I firmly believe that supercritical and 
ultra-supercritical power stations that are carbon capture 
ready as well as IGCC plants are carbon capture ready should be 
enabled to be built today. We know what the work, for instance, 
at AEA is doing, that we will have retrofit technology 
available for those plans. But, in the meantime, we have a 
serious need for additional energy, as does the rest of the 
world. And so that is the first step. And then these carbon 
demonstrations. FutureGen.
    We have been a founding member of FutureGen and, like the 
committee, have been very frustrated that we have not been able 
to get that project up and running yet, although we continue to 
work extremely hard at trying to find the rest of the funding 
for that project. It is a full-scale plant. Inject 
CO2 in the ground and store it.
    Those are the types of things that need to be done. And 
then once that happens, then we can put in place the time 
frames and the regulatory framework to say this is the path and 
this is the ability of the U.S. economy and the global economy 
to absorb the cost of transforming our energy infrastructure.
    Mr. Shadegg. And you are willing to work with us on 
legislation to achieve those goals?
    Mr. Boyce. Absolutely.
    Mr. Shadegg. I yield back.
    The Chairman. The gentleman's time has expired. The Chair 
recognizes the gentleman from Colorado, Mr. Salazar.
    Mr. Salazar. Thank you, Mr. Chairman.
    Mr. Boyce, Senators Rockefeller and Voinovich have proposed 
a phase-in technology plan for CCS that takes into account 
electricity production and industrial activities that produce 
CO2, and proposes incentives for CO2 
development and deployment. Do you support that approach?
    Mr. Boyce. We support the premises in that bill. We are 
still looking at the specific language. But, basically, the 
concepts of enabling that technology, providing the framework 
for it, and then getting that technology right first, we 
absolutely support.
    Mr. Salazar. Mr. Leer.
    Mr. Leer. I would concur. I certainly have spoken with 
Senator Rockefeller on it, and again, we would like to review 
the details a bit more. But when you look at the premise, it, 
to us, is going in the right direction.
    Mr. Salazar. Mr. Carey.
    Mr. Carey. Congressman, Senator Voinovich being from Ohio, 
we have worked very closely with him. And we are still 
continuing to review it, but we like the premise.
    Mr. Salazar. Mr. Chiaro.
    Mr. Chiaro. Yes. We certainly support the rapid deployment 
of CCS technology. That is why we are investing tens of 
millions of dollars in it ourselves to built a plant in 
    Mr. Salazar. Okay. Well, I appreciate your comments. We 
will start again with Mr. Boyce. How is uncertainty over carbon 
and climate change legislation in the U.S. Congress affecting 
the buildout of coal fueled generation systems?
    Mr. Boyce. Well, I think there is no question that we have 
got basically a stand-still in terms of new investments in the 
advanced technology or current technologies for coal-fired 
power stations. We all know there has been a number of plants 
that have been put on the shelf or cancelled over the last year 
to 2 years because of the uncertainty around where are we going 
with carbon management in the future.
    As I said in my statement, I think we ought to enable 
ultra-supercritical and supercritical power stations to move 
forward. They have got a footprint of anywhere from 15 to 40 
percent lower carbon intensity of the existing fleet of plants 
that we have today. It is a fabulous first step. And then we 
add the carbon capture and storage technologies when they 
become available to those plants, which would be the preferred 
    Mr. Salazar. Mr. Leer.
    Mr. Leer. I would concur with Mr. Boyce. And when you look 
at the uncertainty, I think--I try to put myself and maybe some 
of our utility customers' positions, and think, what would I be 
doing then? And there were very few good things that came out 
of the recession, but one of them probably was we had moved 
back our capacity needs 3 or 4 years. And given all of the 
uncertainties that surround this question and other questions, 
and even if you look at, say, natural gas renewables and where 
they might end up, my conclusion would be that I would stop 
building anything for a period of time and just sit there and 
wait for clarity to occur.
    My concern with that is that we will let that--that will 
happen, and then 5, 6, 7 years from now, suddenly we will 
realize that the economy has started moving again, and 
hopefully in a dramatic fashion, and we will see reserve 
margins starting to diminish, and then we will be forced into 
taking panic positions and really on economic, I will call 
them, decisions because you just have to. And at the end of the 
day, American people do demand electricity, and they have every 
right to do that.
    Mr. Salazar. Mr. Chiaro.
    Mr. Chiaro. I think there is no question that the lack of a 
long-term carbon framework has a chilling effect on investment 
in coal-fired power generation. That is why we have been 
arguing for getting such a framework in place as soon as 
    Mr. Salazar. Thank you. Mr. Carey, you mentioned that this 
legislation had provided only $10 billion for carbon 
sequestration, I think, in your testimony. The chairman and Mr. 
Inslee say that the legislation provides $60 billion. I just--I 
want clarification. Where do you get your numbers?
    Mr. Carey. Mr. Chairman, Congressman Salazar, I would be 
more happy to provide that.
    The Chairman. If the gentleman would yield. There is $10 
billion that is included as part of a wires charged that is 
included to support research and development and carbon capture 
and sequestration. In addition, the Waxman-Markey bill provides 
$50 billion additional for bonus allowances for carbon capture 
and sequestration installed in coal-fired plants before 2025.
    So it is a grand total of approximately $60 billion for the 
coal industry for the research development and deployment of 
carbon capture and sequestration technology before 2025.
    Mr. Salazar. So, Mr. Chairman, would that go specifically 
to research and development of CCS?
    The Chairman. That is correct. And deployment. The $50 
billion is for deployment of carbon capture and sequestration 
technologies in coal plants in our country before 2025.
    Mr. Salazar. Thank you, sir, for that clarification. I 
yield back.
    The Chairman. The chair recognizes the gentleman from 
Oklahoma, Mr. Sullivan.
    Mr. Sullivan. Thank you, Mr. Chairman. First off, I got 
here late. I would like to extend to offer my condolences to 
the victims' families to the mining disaster last week in West 
Virginia, and I look forward to an investigation and learning 
what we can do to improve mining safety.
    I have some questions for everyone. If the United States 
were to cap greenhouse gas emissions without similar 
commitments from the developing nations, how much would that 
lower total worldwide greenhouse gas emissions from burning 
coal. If no one else does it, is that significant?
    Mr. Boyce. Well, the reality is we know that China has 
become the largest emitter of CO2, and that doesn't 
even include the rest of the world outside the U.S. So even 
with a cap here in the U.S., if nothing else was done 
particularly in the developing countries, the impacts would be 
negligible in terms of any impact and in terms of addressing 
rising levels of CO2 in the atmosphere.
    Mr. Leer. Again, we would concur with that conclusion. If 
you look at the developing world and the developed world, 
CO2 admissions in Europe and the U.S. essentially 
have flattened. I mean, they are still growing slightly, but 
they have essentially flattened. The developing world is now 
emitting more CO2 than the developed world.
    So, again, we come back to really my fundamental 
engineering premise: If we are going to address this problem, 
it is carbon capture and sequestration, and we share it with 
the rest of the world through trade agreements, 
commercialization, whatever, however we get it there. But it is 
going to have to be cost effective from their perspective.
    Mr. Carey. Mr. Chairman, Congressman, there would not be a 
lessening, there would actually just be a displacing of the 
carbon dioxide emissions. And we simply look at what China and 
India, what they will do over the course of the next 20 years, 
the fact that their demand for coal, their demand for energy, 
the fact that they are bringing power plants on line. The only 
people that would be affected by this type of legislation would 
be the American people, the people that are paying the electric 
bills every day.
    And point in fact, Administrator Lisa Jackson actually 
admitted this, I believe, in testimony before the EPW committee 
as did Secretary Chu. So both are very aware that this 
legislation would do little to curb overall worldwide 
CO2 numbers.
    Mr. Chiaro. I would agree, that if the U.S. is the only 
Nation that moves forward, the effect on total emissions to the 
atmosphere would be small, single digit percentages.
    I guess the bigger concern for me, having attended the 
U.S.-China energy summit last October in Beijing is looking at 
what the Chinese are doing in all these alternative energy 
technologies. They are now leading the world in nuclear power 
plant construction, wind construction, solar construction, 
electric cars. They are moving ahead very quickly on these 
clean energy technologies, much more rapidly than the U.S. And 
I fear that the jobs that will be lost will be in the new 
energy technologies.
    Mr. Sullivan. So it would be extremely unwise for us to 
unilaterally enter into any kind of agreement without other 
developing nations being involved as well. And I agree with 
    Another question. What foreseeable impact will the EPA's 
endangerment finding and pending regulation have on the 
domestic coal industry? And how are you preparing for something 
like that?
    Mr. Boyce. Well, I think, as was mentioned earlier on the 
panel, you know, the Clean Air Act is a blunt instrument and it 
is our view that it was never really designed to handle 
something like CO2. And if we are forced to go down 
an EPA regulatory path, the disruptions, not just to the coal 
industry but to every facet of American industry and our daily 
lives, is going to be significant as if EPA tries to regulate 
every emissions of CO2 in the country, which 
eventually they will have to under the Clean Air Act. So that 
is a significant issue.
    I would like to also add one point on CCS and why it is so 
critical. Post-2020, to meet the targets in Waxman-Markey, 
natural gas generating facilities will have to put 
CO2 capture and sequestration technologies on them. 
And so this technology is critical not only for the coal 
industry, but for the gas, for fuel in general, and that is why 
we are so strongly in favor of it.
    Mr. Leer. Again, I concur with Mr. Boyce. The EPA's 
approach on this I think will create unintended consequences 
that are unimaginable as it works through this economy. And we 
are focused very much on working with Congress to make sure 
that doesn't happen. I think Senator Rockefeller's proposal and 
Congressman Rahall's proposal to delay--step back and delay 
implementation 2 years is very sound as we really work through 
the system and work with Congress and all of industry to try to 
find a much better instrument to deal with the issue, as 
opposed to EPA handling it in a very blunt manner.
    Mr. Carey. Mr. Chairman, Congressman, we are actually in 
litigation right now on the endangerment finding. We have a lot 
of concerns with regards to the way the EPA came up with their 
data. Again, I mentioned it. They talk about the IPCC study 48 
times, and actually in the supporting documents, company 
documents they reference it 395 times. So we have a lot of 
concern with that. But I also have to look at the fact that the 
idea that you only--you didn't have to find endangerment. You 
may. And you may make a ruling. It was completely up to the 
administration on this.
    If you look at what Administrator Jackson actually said 
when she was in the EPW committee testifying on behalf of: If 
legislation such as the Kerry-Boxer bill were to have passed, 
would she still need to find this regulation. And she answered 
    So we are very concerned with this. And we are concerned 
about what that would do to the jobs. Again, we are talking 
about the elimination of thousands of hard-working coal mining 
jobs in areas of this country that don't need to be hurt 
economically any more than they are. This is about families, 
this is about small grandchildren. This is about people that 
are trying to provide for their families, and we are very 
    Mr. Chiaro. We don't think the Clean Air Act and the 
endangerment finding is the best approach to address the 
climate change issue, which is why we are a member of the U.S. 
Climate Action Partnership and support the principles that are 
largely embodied in H.R. 2454.
    The Chairman. The gentleman's time has expired. And, by the 
way, the chair will recognize himself for another round of 
questions. By the way, that is the point, the point that Mr. 
Chiaro is making. We are trying to create a legislative 
framework that is able to deal with the consequences of putting 
a cap on carbon. That is our goal in the legislation.
    And, again, it continues to be a little bit of a mystery to 
me. In 2009, there were no new coal-fired plants ordered. There 
are 10,000 new megawatts of wind installed in the United 
States, 500 new megawatts of solar, 200 new megawatts of 
geothermal, 200 new megawatts of biomass electrical generation 
installed in America, 10,000 new megawatts of natural gas. Coal 
saw its percentage of total electrical generated capacity 
decline from 49 percent down to 44 percent in 2009. We have 
seen the rise in the price of coal anyway. It has gone up 60 
percent over the last 5 years. Coal costs have gone up. That is 
without any price on carbon.
    This legislation that we passed through the House of 
Representatives is intended on helping the coal industry. The 
legislation which Senator Rockefeller has introduced has $850 
million a year for the next 10 years, our bill has $1 billion 
per year for the next 10 years to do research, to do 
development. But we add an additional $50 billion for the coal 
industry, which the Rockefeller legislation does not have. So 
we have a grand total of $60 billion; the Rockefeller 
legislation has a grand total of $10 billion.
    So this disparity goes right to the heart of the question 
of whether or not we are, in fact, engaging here legislatively 
in an attempt to harm rather than help the industry.
    We do believe there is an inexorable decline. We see it 
year after year in terms of the rise in the percentage of 
renewable electricity coming from natural gas, coming from 
wind, coming from solar, coming from actual installation of new 
energy efficiency technologies.
    So I just think, Mr. Carey, that a lot of what you are 
engaged in here is really just crocodile tears that you are 
shedding for an industry that we are trying to help; because, 
otherwise, you are basically mirroring the whole path that the 
auto industry took in denial in terms of the technology 
revolution that was taking place around it, the desire to help 
the industry to make the transition, and then blaming those who 
were trying to help. Okay? And it is just a repetition of that 
over and over again.
    And all I ask is that there not continue to be a 
misrepresentation, Mr. Carey, of what is, in fact, inside of 
the Waxman-Markey bill. And additional modifications that could 
be made as part of negotiations with the coal industry, with 
the utility industry, with natural gas and other industries as 
well. That goes right to the heart of this whole issue what we 
are doing. And my bottom line here is that we do believe that 
the coal miners of our country deserve a bridge to the future, 
and we are trying to provide that in the legislation. Trying to 
hold on to something that is not tenable is ultimately going to 
come to harm those families.
    That is our own belief, economically. And the reason--and 
we will go back to Mr. Chiaro's point. The reason that we do 
believe that we have to fund carbon capture and sequestration 
is that we have to solve it for the rest of the world. We have 
to develop a technology that can be used in China and in India. 
That is our responsibility as a Nation. We are a technological 
giant. We have the capacity to do this. The companies who are 
at this table are investing in carbon capture and sequestration 
technology. They are global companies, so they know that this 
is moving towards some--not only here but in other countries as 
    We are trying to provide the leadership and help the United 
States be first in its deployment. So that is really what this 
debate is all about. Okay? It is not whether or not we want to 
harm the coal industry. We don't. It is, can we make compatible 
the CO2 that is emitted from the coal industry with 
new technologies in a way that creates a bridge to the future. 
If we don't, I think the pathway is inexorable, and that is 
down in terms of the amount of coal which is used in 
electricity generation in our country.
    As State after State passes renewable electricity 
standards, there will be a higher and higher percentage of 
electricity generated from those alternative sources. We have 
all read the headlines in just the last couple of months with 
ExxonMobil purchasing a basically unheard of small natural gas 
company, which, along with six other natural gas companies, 
have discovered enough natural gas in our own country to 
increase natural gas reserves by 30 percent. And all of this 
has occurred just in the last 2 years. So this pathway is one 
where we want to partner with the coal industry to create this 
new technology in partnership you.
    And, again, I keep coming back to this because we do not 
believe that this should be adversarial. We should try to 
partner in order to try to find a way to accomplish this goal 
to the mutual benefit of our country and the coal industry. 
Otherwise, I am very much afraid that there will be negative 
consequences for the coal industry because of the development 
of alternative technologies and other electricity generating 
sectors in our country.
    And so I come back to use my 5 minutes to make that point 
and, again, to invite the industry to partner with us to solve 
the problem rather than continuing to engage in these kind of 
historical remain demand debates about whether or not the 
science is accurate or not. It is. But, rather, to really work 
as to how we can construct a technological pathway for the coal 
industry. If we do that, then it will be win-win.
    The chair's time has expired again. Let me turn and 
recognize the gentlelady from West Virginia, Mrs. Capito.
    Mrs. Capito. Thank you, Mr. Chairman. I am going to respond 
to some of your comments. I wasn't really going to say 
anything, but I want to do want to say we have the top two 
largest coal producing companies in our country. I did not 
    The Chairman. Actually, the three top.
    Mrs. Capito. Three. Excuse me. I did not hear a pushback or 
denial that CCS and increased technology and research is going 
to be a bridge to the future. I think they are fully engaged in 
this. They realize this is the bridge to the future, and that 
this will continue to use our most abundant resource and keep 
people working. You mentioned that we have used less coal--so I 
think we have unanimous consent that this is the direction that 
we need to go.
    You mentioned that less coal was used in 2009. We had a 
national recession. Many in my own district, we lost Century 
Aluminum out of our district, which was the largest energy 
consumer in our entire State, moved to, of all places, Iceland. 
But that is an enormous hit across this Nation in terms of why 
have we used less coal.
    The other thing, you mentioned that no new coal plants or 
coal-fired plants have been developed. This begs a whole other 
issue, this whole permitting issue that we have been talking 
about. This is an area that is pervasive in this administration 
with the EPA and other regulatory agencies basically conducting 
an anti-coal agenda. And I think that is part of what we are 
seeing with the lack of permitting.
    So I do think that we agree that CCS--I am really proud 
that the first experimental AEP plant is in the second largest 
coal-producing State in this country, in West Virginia.
    The other thing that I think Mr. Chiaro has brought up sort 
of peripherally but is not the subject of this debate or this 
testimony is that the natural gas industry is going to have to 
also be at the forefront of this technology to be able to exist 
in the existing plants that we have right now.
    And so I think, you know, that we realize in a State like 
West Virginia, whose State economy is heavily reliant on coal, 
that we need to begin to transition and transition into more 
advanced and more refined technologies to be able to use this. 
But at the same time, I have heard in the testimony, if we are 
going to ask for renewable standards--and that is great. But 
you are not calculating in we are going to have a larger demand 
for all kinds of energy. Why wouldn't we consider putting CCS 
or carbon sequestration as part of a renewable standard like 
they have in Pennsylvania? And I am not sure if it is in our 
West Virginia standard or it was put forth as a West Virginia 
standard. But these are the kind of questions that have come 
forth with me. And I think that acknowledging in your bill, 
while I didn't vote for it, that $60 billion--also, somebody 
says over here, well, you are saying you don't want $60 
billion. Excuse me. The bill is over in the Senate. We haven't 
even passed this. It is not like anybody is turning their head 
down to $60 billion to try to invest in a technology that is 
going to keep people working, make sense economically.
    So we are just looking for commonsense solutions. Let's 
look for a way to move forward. Maybe if we extend the 
deadlines out to where the technology can catch up to where we 
can meet admissions standards. These are the kinds of things 
that I keep hearing. I don't hear a denial that this is not a 
direction that we need to move as a Nation. Maybe where we are 
in disagreement is how quickly and in what kind of blunt 
instruments do we use to punish the middle part of our country 
or a State like West Virginia or the State in the middle where 
we are heavily reliant on fossil fuels to generate our energy. 
We want a commonsense energy plan that has an all-of-the-above 
solution that is going to meet these standards and move us 
toward cleaner air.
    So that is my comment. Thank you.
    The Chairman. I thank the gentlelady. The gentleman from 
Washington State, Mr. Inslee.
    Mr. Inslee. Thank you. We haven't talked about what we did 
in the stimulus bill, either, which was put $3.4 billion in to 
pursue carbon sequestration technology, including $20 million 
for a company called Ramgen, which is pursuing a compression 
technology which can make CCS more energy efficient by reducing 
compression costs. I just want to note that.
    I wanted to ask, I will just ask Mr. Boyce, I guess. Let me 
ask Mr. Leer. I have already run out my quota with you, Mr. 
Boyce. I want to ask you about the economics of carbon 
emissions. Paul Krugman wrote a really interesting piece about 
the economics of carbon emissions, and I recommend it to anyone 
who is interested in the economics of this issue. Basically, 
what he was arguing is that coal competes with other sources of 
energy. It competes with wind energy, it competes with 
hydroelectric energy, it competes with solar energy.
    Those three technologies don't put meaningful amounts of 
carbon dioxide. They do, in part, because you have to 
manufacture the stuff to make it. But certainly less than coal. 
And yet, so they are competing--you are competing with these 
other if I can just call them cleaner from a CO2 
aspect technologies. And yet, in the current state of the law, 
we allow one industry, the coal industry, to put gigatons of a 
pollutant, carbon dioxide, into our atmosphere which we all own 
jointly in unlimited amounts at zero cost, and that is using up 
the limited carrying capacity of our atmosphere. And I think 
any economist would look at that and say that is an 
externality. You are using up, you are costing society 
something, because you are using up our atmosphere's ability to 
absorb pollutants, but you are not paying anything for it and 
there is absolutely no limitation today whatsoever. You can put 
as many gigatons as you want without compensating the public 
for that loss at all, nor is it regulated.
    Now, there is two ways to deal with that. One is to 
regulate the amount going in; or, two, to impose some costs 
associated with that. And I guess I would just ask you, from an 
economic fairness standpoint, and realizing there is all kinds 
of issues about how to do this. Mr. Boyce expressed some of the 
concerns about the existing bill. I guess, Mr. Leer, do you 
think it is fair for the coal industry to be able to impose 
this cost on the rest of the world and be able to put unlimited 
amounts of carbon dioxide in the atmosphere at zero cost from 
an economic standpoint? Do you think that is a good economic 
    Mr. Leer. Congressman, I appreciate what your question is, 
and there is always a large debate on externalities and what 
price they should be and the real cost. But I think it is 
reflective also in your not addressing in your question at 
least the other side of the equation, is that coal is the most 
competitive fuel source typically in most applications around 
the world other than hydro. And then you can get down into 
externalities there and the other questions. And that low cost 
gets passed on to consumers.
    So can there be a price on carbon? Yes, there can be a 
price on carbon. And will that ultimately end up in consumers' 
cost of electricity, cost of products? Yes. That is the system 
ultimately that will be translated, or the business will go out 
of business. That can happen as well.
    Today, when you look at all of our renewables, the way we 
are established in promoting renewables is to subsidize them 
heavily to try to make them more competitive with fossil fuels. 
And that is okay. That is what we are going to have to do with 
carbon capture and sequestration as well.
    So in the premise, could there be a cost for carbon? 
Certainly. Will that cost ultimately end up in the price of 
electricity, in the price of all goods and services in the U.S. 
or elsewhere in the world? Yes.
    Mr. Inslee. So let me ask you, the experience we have had 
on trying to drive new technologies. When we needed a new 
technology to deal with sulfur dioxide, which scenario 
occurred? Scenario A, the industry on its own devices went out 
and made an investment to develop the technologies to deal with 
acid rain and develop the technologies to reduce sulfur dioxide 
emissions? Or, did scenario B take place, that the U.S. 
Congress imposed some cap, if you will, on the amount of sulfur 
dioxide going out, create a price associated with that 
pollution, and the industry then in response to that developed 
the technologies to solve that problem? Which occurred?
    Mr. Leer. Well, as you are well aware, the Congress did 
within the Clean Air Act, both phase one and phase two, tighten 
SO2 regulations. And ultimately the technologies 
advanced and were put into place.
    The issue with SO2 compared to carbon is 
SO2 frankly was more regional in the U.S. 
CO2 is global. And the point here, and also at the 
time, I think, if we go back--and we are going back to the very 
beginning of my career. There were alternatives. You know, 
utilities could do in an economic evaluation of moving to low 
sulfur coal. Scrubber technologies did exist. They got advanced 
further as a result of I think the legislation, but they were 
in existence. And we just find ourselves earlier in the 
technology curve at the moment.
    Mr. Inslee. If the chair would indulge me just one more 
question, if I may. Do you really think the industry would have 
solved the acid rain problem by itself in the absence of a 
regulatory requirement that they do so? Do you think they 
voluntarily would have made those investments, looking at it in 
    Mr. Leer. One, I am in the coal industry, you are really 
asking a utility question. But I think the utilities would have 
started to address it. I think legislation advanced it further.
    Mr. Inslee. Thank you.
    Mr. Leer. Or faster.
    Mr. Inslee. Thank you. I would point out we don't have a 
lot of time on this one, either.
    Mr. Leer. That is why carbon capture and sequestration is 
so critical.
    Mr. Inslee. As is this bill. Thank you.
    The Chairman. And while we have you here and you are the 
experts in the field, perhaps we can get brief comments from 
you on this: The U.S. Mine Safety and Health Administration 
cited the Upper Big Branch Mine with 1,324 safety violations 
from 2005 to 2010; in March of this year alone the mine cited 
53 safety violations, including improper failure to ventilate 
the combustible gas methane. Is that a typical rate of 
violations for mines and can you give us your sense of what is 
needed in this mine safety area in order to make sure that we 
reduce the likelihood that other families won't suffer what is 
now being borne by those families in West Virginia?
    Mr. Chiaro.
    Mr. Chiaro. Well, I am a board member of Cloud Peak Energy, 
the former Rio Tinto division, and I am happy to say that we 
have the best safety record of the mining industry at Cloud 
Peak. And Rio Tinto generally has a very good safety record. We 
don't see the kind of level of violations that you are talking 
about at any of our mines.
    To be fair, our mines are in the Powder River Basin, they 
are open cut mines, tend to have a different set of hazards 
associated with them than the underground mines in the East, 
and so I would expect there to be some difference. But I would 
have to say if I saw that level of violations at one of my 
mines I would be quite concerned.
    The Chairman. Thank you. Mr. Carey.
    Mr. Carey. As I mentioned in my written testimony, Mr. 
Chairman, and also I believe in my oral, the importance of mine 
safety is very critical to Ohio. Anybody--I do want to give an 
anecdotal example just real quickly. I was driving in and there 
is a barn on my way to the airport from my house in Ohio, and 
on that barn it says, every day is Earth Day to a farmer. And I 
can assure you that every day is Mine Safety Awareness Day to 
every coal operator and every coal miner that goes into the 
ground every day.
    The issues revolving around this tragedy, we do not know 
all of the answers yet, I don't know the level to what the 
seriousness, the size of the fines or the amount of fines or 
the size of the mine or any of that. It is not in Ohio, but I 
can assure you it will be addressed and we just have to keep 
those miners and their families in our prayers.
    The Chairman. Mr. Leer.
    Mr. Leer. You know safety and environmental compliance are 
core assets and values with us. When we look at violations we 
report them. Every week I get a report. If it is serious I get 
it instantaneously. If you look at operations like ours that 
operate large deep mines, large surface mines across the entire 
United States, we would argue with our peers, and it is a bit 
different than the profile that Preston talked about, was we 
really think we do lead the industry in overall safety 
performance, incident rates, lost time rates, and we set a 
standard that really our board doesn't even allow us to compare 
ourselves to the industry. We can only compare ourselves to 
ourselves. And last year was a record, the year before, beating 
the year before record. This year we are off to a record start. 
We will see how the year finishes. We take it very seriously, 
the number of violations that have been reported, and I 
certainly haven't verified those myself, and I think you have 
to look at the severity of the violations because within the 
framework of the coal industry it is true that the big mines 
virtually every day are being inspected by a State or Federal 
inspector. And some violations are very, very serious and some 
are really almost a traffic ticket approach. And the key that I 
always preach to all of our employees is we take them all very 
seriously, but if there is a violation out there that has 
endangerment and really a major concern on safety, you better 
be on it before the inspector gets there, let alone when the 
inspector is there. And we will fix them immediately.
    The Chairman. Thank you. Mr. Boyce.
    Mr. Boyce. You know we again feel like we are partners with 
both Steve and Preston in terms of trying to drive much better 
safety performance throughout our industry. 2009 was the safest 
year in our 126-year history, and over the last 3 years we have 
improved our safety performance over 40 percent. And we start 
every meeting within the company with a safety contact or a 
safety discussion, including our board meetings. So it is an 
issue that we deal with on a daily basis. Our safety vision is 
to be incident free at all of our operations, and we run 29 
operations within the U.S. and Australia.
    The issue of violations is one we treat every violation to 
look at and understand the underlying cause as to what occurred 
and why that violation was there and what we can do to rectify 
the situation.
    We had, as an example of how seriously we take this, we had 
an operation in Illinois several years ago where we had a high 
level of violations. As we looked, brought in the safety 
professionals in the company to look at that, we determined we 
could not continue to mine that operation safely and we 
actually went through with the decision to shut that operation 
down. We were fortunate to be able to move all of our employees 
to another operation in the area, but we had to then take the 
financial impact with the customers to make that decision. It 
is just something that you have to do. We have an obligation 
and we have a view. I joined the industry in 1977, the passage 
of the initial Safety Act. And when I joined the industry 
accidents were statistics; what we have tried to drive in the 
industry is every employee deserves the right to go home safe 
every day and we are not going to be happy until that happens. 
And we look at those citations and at our safety statistics 
very, very carefully, every day.
    The Chairman. Thank you, Mr. Boyce, very much. We thank our 
panelists for their participation here today. This issue of 
coal is right at the heart of the question of whether or not we 
are going to control dangerous greenhouse gases while at the 
same time enhancing our national security and creating jobs 
here in the United States. That is our goal. And what I would 
basically recommend to the industry is that they do engage in 
the Senate in their efforts right now to find a bridge to the 
future for the coal industry. We believe that Waxman-Markey is 
that bridge, but we also do not believe that it is in any way 
not capable of being improved. And so we would urge you to work 
towards that goal. There is an inevitability to there being a 
price placed on carbon, it is going to happen. And so I think 
the better course, one not adopted by the auto industry, would 
be to try to start out where you are going to be forced to wind 
up anyway because ultimately there are partnerships here, 
constructive partnerships, that be want to basically put 
together with the industry in order to achieve those goals.
    Mr. Boyce said earlier we should leave the science to the 
scientists, and we have a letter from 18 scientific groups, 
scientific organizations saying observations throughout the 
world make it clear that climate change is occurring and 
rigorous scientific research demonstrates that the greenhouse 
gases emitted by human activities are the primary driver.
    So that is the world and we should not be in denial, but 
rather we should be engaging this. We do believe that we can do 
so in a way that preserves coal mining jobs in our country. I 
am working with you in partnership to make coal mining a safer 
industry. We can do so for one that for the rest of the century 
continues to have coal as a central part of our industrial 
    We thank you for your participation. We want to work with 
you closely in these months ahead. And with that, this hearing 
is adjourned.
    [Whereupon, at 11:48 a.m., the committee was adjourned.]