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







              THE FUTURE OF COAL UNDER CLIMATE LEGISLATION

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

                                HEARING

                               BEFORE THE

                 SUBCOMMITTEE ON ENERGY AND ENVIRONMENT

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 10, 2009

                               __________

                           Serial No. 111-10









      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov
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                    COMMITTEE ON ENERGY AND COMMERCE

                 HENRY A. WAXMAN, California, Chairman

JOHN D. DINGELL, Michigan            JOE BARTON, Texas
  Chairman Emeritus                    Ranking Member
EDWARD J. MARKEY, Massachusetts      RALPH M. HALL, Texas
RICK BOUCHER, Virginia               FRED UPTON, Michigan
FRANK PALLONE, Jr., New Jersey       CLIFF STEARNS, Florida
BART GORDON, Tennessee               NATHAN DEAL, Georgia
BOBBY L. RUSH, Illinois              ED WHITFIELD, Kentucky
ANNA G. ESHOO, California            JOHN SHIMKUS, Illinois
BART STUPAK, Michigan                JOHN B. SHADEGG, Arizona
ELIOT L. ENGEL, New York             ROY BLUNT, Missouri
GENE GREEN, Texas                    STEVE BUYER, Indiana
DIANA DeGETTE, Colorado              GEORGE RADANOVICH, California
  Vice Chairman                      JOSEPH R. PITTS, Pennsylvania
LOIS CAPPS, California               MARY BONO MACK, California
MICHAEL F. DOYLE, Pennsylvania       GREG WALDEN, Oregon
JANE HARMAN, California              LEE TERRY, Nebraska
TOM ALLEN, Maine                     MIKE ROGERS, Michigan
JAN SCHAKOWSKY, Illinois             SUE WILKINS MYRICK, North Carolina
HILDA L. SOLIS, California           JOHN SULLIVAN, Oklahoma
CHARLES A. GONZALEZ, Texas           TIM MURPHY, Pennsylvania
JAY INSLEE, Washington               MICHAEL C. BURGESS, Texas
TAMMY BALDWIN, Wisconsin             MARSHA BLACKBURN, Tennessee
MIKE ROSS, Arkansas                  PHIL GINGREY, Georgia
ANTHONY D. WEINER, New York          STEVE SCALISE, Louisiana
JIM MATHESON, Utah                   PARKER GRIFFITH, Alabama
G.K. BUTTERFIELD, North Carolina     ROBERT E. LATTA, Ohio
CHARLIE MELANCON, Louisiana
JOHN BARROW, Georgia
BARON P. HILL, Indiana
DORIS O. MATSUI, California
DONNA CHRISTENSEN, Virgin Islands
KATHY CASTOR, Florida
JOHN P. SARBANES, Maryland
CHRISTOPHER MURPHY, Connecticut
ZACHARY T. SPACE, Ohio
JERRY McNERNEY, California
BETTY SUTTON, Ohio
BRUCE BRALEY, Iowa
PETER WELCH, Vermont

                                  (ii)
                 Subcommittee on Energy and Environment

               EDWARD J. MARKEY, Massachusetts, Chairman
MICHAEL F. DOYLE, Pennsylvania       DENNIS HASTERT, Illinois
G.K. BUTTERFIELD, North Carolina          Ranking Member
CHARLIE MELANCON, Louisiana          RALPH M. HALL, Texas
BARON HILL, Indiana                  FRED UPTON, Michigan
DORIS O. MATSUI, California          ED WHITFIELD, Kentucky
JERRY McNERNEY, California           JOHN SHIMKUS, Illinois
PETER WELCH, Vermont                 HEATHER WILSON, New Mexico
JOHN D. DINGELL, Michigan            JOHN B. SHADEGG, Arizona
RICK BOUCHER, Virginia               CHARLES W. ``CHIP'' PICKERING, 
FRANK PALLONE, New Jersey                Mississippi
ELIOT ENGEL, New York                STEVE BUYER, Indiana
GENE GREEN, Texas                    GREG WALDEN, Oregon
LOIS CAPPS, California               SUE WILKINS MYRICK, North Carolina
JANE HARMAN, California              JOHN SULLIVAN, Oklahoma
CHARLES A. GONZALEZ, Texas           MICHAEL C. BURGESS, Texas
TAMMY BALDWIN, Wisconsin
MIKE ROSS, Arkansas
JIM MATHESON, Utah
JOHN BARROW, Georgia













                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Edward J. Markey, a Representative in Congress from the 
  Commonwealth of Massachussetts, opening statement..............     1
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, opening statement....................................     3
Hon. Henry A. Waxman, a Representative in Congress from the State 
  of California, opening statement...............................     4
    Prepared statement...........................................     6
Hon. Joe Barton, a Representative in Congress from the State of 
  Texas, opening statement.......................................     8
Hon. John D. Dingell, a Representative in Congress from the State 
  of Michigan, opening statement.................................     9
Hon. Ed Whitfield, a Representative in Congress from the 
  Commonwealth of Kentucky, opening statement....................    10
Hon. Michael F. Doyle, a Representative in Congress from the 
  State of Commonwealth of Massachussetts, opening statement.....    11
Hon. John Shimkus, a Representative in Congress from the State of 
  North Carolina, opening statement..............................    11
Hon. Gene Green, a Representative in Congress from the State of 
  North Carolina, opening statement..............................    12
    Prepared statement...........................................    14
Hon. Cliff Stearns, a Representative in Congress from the State 
  of Florida, opening statement..................................    16
Hon. Jay Inslee, a Representative in Congress from the State of 
  Washington, opening statement..................................    16
Hon. Steve Scalise, a Representative in Congress from the State 
  of Louisiana, opening statement................................    17
Hon. Joseph R. Pitts, a Representative in Congress from the 
  Commonwealth of Pennsylvania, opening statement................    18

                               Witnesses

David Hawkins, Director, Climate Center, Natural Resources 
  Defense Council................................................    19
    Prepared statement...........................................    21
    Answers to submitted questions...............................   123
David Crane, President and Chief Executive Officer, NRG Energy, 
  Inc............................................................    44
    Prepared statement...........................................    46
    Answers to submitted questions...............................   129
Ian Duncan, Associate Director for Earth and Environment Systems, 
  Bureau of Economic Geology, University of Texas at Austin......    50
    Prepared statement...........................................    52
Frank Alix, Chief Executive Officer, Powerspan Corp..............    69
    Prepared statement...........................................    71
    Answers to submitted questions...............................   131
Harold P. Quinn, Jr., President and CEO, National Mining 
  Association....................................................    81
    Prepared statement...........................................    83
    Answers to submitted questions...............................   133
Lindene Patton, Chief Climate Product Officer, Zurich Financial 
  Services.......................................................    87
    Prepared statement...........................................    89
    Answers to submitted questions...............................   138

                           Submitted Material

Charts from the Energy Information Administration, dated January, 
  2007 and February 2009, submitted by Mr. Barton................   120

 
              THE FUTURE OF COAL UNDER CLIMATE LEGISLATION

                              ----------                              


                        TUESDAY, MARCH 10, 2009

                  House of Representatives,
            Subcommittee on Energy and Environment,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 9:35 a.m., in 
Room 2123 of the Rayburn House Office Building, Hon. Edward J. 
Markey (chairman) presiding.
    Members present: Representatives Markey, Doyle, Inslee, 
McNerney, Dingell, Boucher, Green, Gonzalez, Matheson, Barrow, 
Waxman (ex officio), Upton, Hall, Stearns, Whitfield, Shimkus, 
Pitts, Sullivan, Scalise, Barton (ex officio), and Terry.
    Staff present: Matt Weiner, Clerk; Alexandra Teitz, Senior 
Counsel; Joe Beauvais, Counsel; Melissa Bez, Professional 
Staff; Ben Hergst, Senior Policy Analyst; Lindsay Vidal, Press 
Assistant; and Michael Goo, Counsel.

           OPENING STATEMENT OF HON. EDWARD J. MARKEY

    Mr. Markey. Welcome to the Subcommittee on Energy and 
Environment, and our very important hearing on the Future of 
Coal Under Climate Legislation. For the information of the 
members, this hearing is being televised, recorded by C-Span, 
and we thank Mr. Shimkus for his help in making sure that we 
have the cameras working. We have portable cameras in here 
today showing the ingenuity of technological innovation when 
necessity requires, and that breakthrough is the same kind of 
breakthrough that I think we are going to hear in coal and its 
sequestration and other potential processes.
    Before we get started this morning, I want to inform the 
members and their staff that tomorrow from noon to 1:00 p.m., 
the Secretary General of the United Nations, Mr. Ban Ki-moon, 
will brief our members and their staffs. The subject of the 
briefing will be global climate change and the international 
negotiations leading to the U.N. climate conference this 
December in Copenhagen. This briefing is for subcommittee 
members and their staffs only and will not be open to the 
public or the media. Secretary General Ban will address the 
subcommittee after which members will have an opportunity to 
direct questions to him. This is a great chance for us to have 
an open exchange with the Secretary General on this critical 
issue, and I strongly urge the members to attend so they can do 
so.
    There is a growing consensus that to avoid catastrophic 
climate change, we must cut global greenhouse gas emissions by 
at least 50 percent by 2050. U.S. emissions must be cut by at 
least 80 percent in the same period. Those objectives, quite 
simply, cannot be achieved unless we act quickly to control 
coal-fired powered plants. Coal supplies half of all 
electricity in the United States, and we have the largest coal 
reserves in the world. China and India also have abundant 
reserves and are even more coal dependent. But while coal is 
plentiful, it is also the leading source of global warming 
pollution. Coal-fired power plants are responsible for over a 
quarter of all U.S. and global greenhouse gas emissions. We are 
at a watershed moment.
    By 2030 U.S. electricity demand is expected to increase by 
30 percent and global demand will double. Coal's role in 
meeting that demand will play a huge role in determining the 
fate of our planet. Globally as many as 3,000 coal-fired power 
plants are projected to be built by 2030. These new plants 
alone would increase global emissions by 30 percent. At the 
same time, coal's future here in the United States is deeply 
uncertain. In the face of escalating public opposition and 
regulatory risk dozens of planned coal-fired plants have been 
cancelled in the last 2 years.
    The Department of Energy's Energy Information 
Administration is now predicting a flat line in construction of 
new coal plants over the next 20 years. Meanwhile, the 
Environmental Protection Agency is expected to move forward 
with regulation of carbon dioxide emissions from power plants 
and other sources under the Clean Air Act. Carbon capture and 
storage or CCS offers a path forward for coal and opportunity 
for the U.S. economy and a bridge to a low carbon future. CCS 
generally involves capturing CO2 emissions at the 
source and disposing of the CO2 in deep geological 
formations. All indications are that CCS is a viable interim 
solution to the coal problem.
    CCS could also dramatically increase domestic oil 
production by providing abundant CO2 for enhanced 
oil recovery. Ultimately, CCS can go beyond geological 
disposal. For example, Silicon Valley based Calera Corporation 
is proposing to convert captured CO2 into cement. 
That technology could be a game changer, a win-win solution 
that would dramatically reduce cement's carbon footprint while 
sequestering billions of tons of CO2 from power 
plants. All these advances are possible but only if we enact 
the right policies to drive innovation. The economic recovery 
package passed last month includes 3.4 billion in advanced coal 
technology funding much of which will be used for CCS 
demonstration projects. But ultimately only climate legislation 
can provide CCS the boost it needs to create jobs and unleash 
the private sector's vast resources and ingenuity. We need 
regulatory drivers and strong incentives.
    An economy wide cap on global warming pollution will 
provide the long-term investment incentive, but the cap alone 
will not insure rapid deployment of CCS. To drive innovation, 
we must require new coal plants to use CCS by a certain date. 
At the same time, we must provide robust financial incentives 
for early development of this technology. This carrot and stick 
approach was included both in my ICAP legislation and in the 
discussion draft put forward by Mr. Dingell and Mr. Boucher 
last year. If we fail to bring CCS online quickly, we will have 
the worst of all worlds. Coal's future here in the United 
States will remain dim and the fleet of coal-fired plants being 
built in China and India will swamp whatever emissions 
reductions we achieve at home.
    But if we blaze this trail, the world will follow, and we 
will reap the environmental and economic rewards of leadership. 
I trust that this morning's hearing will help guide us in that 
endeavor.
    Mr. Markey. Let me turn now and recognize the ranking 
member, the gentleman from Michigan, Mr. Upton, for his opening 
statement.

              OPENING STATEMENT OF HON. FRED UPTON

    Mr. Upton. Thank you, Mr. Chairman. The future of coal 
mirrors the future of our economy. Coal provides inexpensive 
American made energy to power our manufacturing sector and keep 
electricity affordable for millions of Americans, and, like it 
or not, without coal the U.S. would hemorrhage millions of 
jobs. Electricity rates would skyrocket and we would become 
dependent on imported natural gas to meet electricity demand. 
In a recent hearing, Treasury Secretary Geithner said cap and 
trade will increase the cost of energy on those fuels that are 
high in carbon. For people whose behavior is energy, and energy 
use doesn't change, the cost will go up. Translation, coal has 
a big target on its back and America's working families already 
struggling will get stuck with the bill. Now is not the time to 
send those costs higher. Now is not the time to turn our back 
on coal.
    It is imperative that we continue to take advantage of our 
Nation's vast coal resources, which have the promise to produce 
clean and affordable power for generations, and in our quest to 
reduce greenhouse gas emissions and protect the environment, we 
must promote clean coal technologies that will not only keep 
costs down from consumers but also foster new jobs and a strong 
economy. These technologies exhibit great promise and 
encouraging advancements in carbon capture. We will be able to 
responsibly fortify our Nation's energy supply with American 
made energy and protect the pocketbooks of our Nation's 
consumers as well. Last year, members of this committee 
introduced legislation that would block any new coal-fired 
power plant without carbon capture and sequestration.
    At the same time, I introduced bipartisan legislation with 
Representatives Boucher, Barton, and Shimkus that would spur 
investment in CCS technologies, and surprisingly none of the 
co-sponsors of the anti-coal bill co-sponsored our bill that 
would insure CCS actually would become available. We plan on 
reintroducing our CCS deployment bill in the next few days, and 
I would hope members of this committee would join us in co-
sponsoring that important legislation. In '08, the IEA noted 
CCS offers a viable and competitive route to mitigate 
CO2 emissions. Current spending and activity levels 
are nowhere near enough. Investment in CCS will only occur if 
there are suitable financial incentives. The next 10 years will 
be critical.
    To put our existing policies in perspective, wind currently 
enjoys a subsidy of $24.35 per megawatt hour versus 44 cents 
for coal, 24.35 versus 44 cents. Wind must be an important part 
of the overall equation, but it will never compare to the base 
load generation that we need for coal. To replace the 3,300 
megawatt coal-fired plant in Monroe, Michigan that sits on 200 
acres and runs at greater than 90 percent capacity would 
require 6,000 wind turbines covering some 300,000 acres 
generating a 30 percent capacity and over 2,300 megawatts of 
natural gas generation to act as a backup at nearly double the 
cost. By insuring that CCS becomes available, we won't need to 
set arbitrary mandates that will send electricity rates through 
the roof and American jobs overseas.
    We have a choice, pursue irrational policies that will 
bankrupt America's working families and eviscerate our economy 
or pursue sound policies that in fact will improve our 
environment, preserve the intensity of our economy, and keep 
costs down for consumers. We are clearly at a crossroads. 
Whatever course of action we pursue, we do so with the economy 
in a precarious position. By using a common sense, no regrets 
legislative approach that focuses on deployment of all clean 
energy, we can avoid a costly cap and trade scheme that will 
have no impact on emissions from the developing world. Instead, 
we will advance technology that creates U.S. jobs and provides 
the opportunity to export. Working Americans will be better 
off. I yield back.
    Mr. Markey. The gentleman's time has expired. The Chair 
recognizes the chairman of the full committee, the gentleman 
from California, Mr. Waxman.

           OPENING STATEMENT OF HON. HENRY A. WAXMAN

    Mr. Waxman. Thank you very much, Mr. Chairman. Today's 
hearing is about the future of coal, and as we seek to reduce 
both domestic and global greenhouse gases addressing the use of 
coal will be at the center of our efforts in the years to come. 
The U.S. has abundant reserves of coal, and generating 
electricity from coal is inexpensive relative to other fuel 
types. Currently roughly half of our Nation's power is supplied 
by coal. Although coal is abundant the emissions resulting from 
its use are massive. Burning coal results in roughly twice as 
much carbon dioxide being emitted as compared to using natural 
gas.
    Coal-fired plants, which are large and typically have life 
spans measured in decades, can emit millions of tons of carbon 
dioxide per year. Today about 80 percent of the CO2 
emissions from domestic electricity generation come from coal. 
The U.S. and other countries are recognizing there is simply no 
way we can continue to use coal the way we do today if we 
intend to tackle climate change in a meaningful way. State 
energy companies and particularly the investment community have 
all begun to understand this new reality. With EPA regulation 
of carbon pollution imminent, new coal facilities are facing 
longer details and more cancellations. Climate change 
legislation that provides a framework for the substantial 
reduction of greenhouse gas emissions and that lays down clear 
rules going forward will provide a certainty to the 
marketplace. This is necessary to protect our planet, necessary 
to insure the long-term viability of coal, both domestically 
and globally.
    Today's hearing will examine the technologies that could 
allow for the continued use of coal while substantially 
reducing carbon dioxide emissions. In particular, we will hear 
about the technologies that will enable us to capture carbon 
and store it in geologic formations and underground. I believe 
these technologies hold great promise. The individual 
components of carbon capture and storage or CCS technologies 
are well understood and in many cases have been used in 
industrial settings for years. The challenge ahead of us is 
putting all the pieces together in a way to enable the cost 
effective production of low carbon electricity from coal.
    I hope this hearing will explore the ways in which federal 
climate legislation can help industry deploy CCS to realize its 
full economic and technical potential. Accomplishing that 
objective is essential if coal use is to be part of our 
Nation's low carbon energy future. I look forward to hearing 
the input of our witnesses on what role coal can play as we 
seek to address the threat of global climate change, and as we 
transform our Nation's economy to low carbon sources of power. 
Thank you, Mr. Chairman.
    [The prepared statement of Mr. Waxman follows:]




    
    Mr. Markey. Thank the gentleman. The Chair recognizes the 
gentleman from Texas, Mr. Barton.

              OPENING STATEMENT OF HON. JOE BARTON

    Mr. Barton. Thank you, Mr. Chairman. I appreciate you 
starting this hearing at 9:30. You saved me from having to go 
to a political meeting at the NRCC, so there is one good thing 
about this. It is good to have the hearing record being 
established on climate change and potential legislation. I am 
seriously supportive of establishing a true and fair record. 
And I think today's hearing is probably the--I am not sure how 
many others you are going to have, but I believe this is one of 
the most important ones, if not the most important, because as 
the chairman just pointed out, and other members of the panel, 
we are generating half of our base power load of electricity 
with coal, and it is an abundant domestic resource.
    We have somewhere between 250 and 500 years of supply of 
coal depending on the technologies that we choose to employ, 
and something that is not often said but I think needs to be 
said it is our cheapest base load fuel source. I know the 
advocates of climate change legislation aren't too concerned 
about the cost but if you look at the map of states, states 
like Kentucky and West Virginia and Ohio, their average retail 
price for electricity is somewhere between 5 and 6\1/2\ cents a 
kilowatt hour. They get over 90 percent of their electricity 
from coal, generated by coal power. On the other hand, if you 
look at your state, Mr. Markey, it gets only 2 percent of its 
electricity from coal generation and its base load cost, retail 
cost, is 15.4 cents kilowatt hour.
    The full committee chairman's State of California's 
electricity cost at retail is almost 15 cents. Well, you know, 
you compare 5 cents to 15 cents, that is 300 percent cost 
differential. Now if you are a Hollywood producer, it probably 
doesn't matter much, but if you are a manufacturer that is 
operating on a 2 percent margin, and you have to decide whether 
to keep your plant open in Ohio or move it to Mexico or China, 
it matters a lot. So coal matters. Our economy matters. We are 
in a very serious economic situation, and if we start shutting 
down coal-fired power plants, we just make our economic 
problems worse, not better.
    The issue at hand is the capture of CO2. Now 
CO2 is not a criteria pollutant under the Clean Air 
Act. It is not like lead. It is not like sulfur dioxide. It is 
not ozone. It is not like any of those things. CO2 
is a naturally occurring compound. It is a greenhouse gas. That 
is a true statement. It is not a pollutant in the sense of the 
word that it is harmful to public health. I am producing 
CO2 as I speak. I drink 3 or 4 Diet Dr. Peppers a 
day. They have CO2 in them. That is what makes it a 
carbonated beverage. So it is a little bit different breed of 
cat.
    And we can be on both sides of the issue. Somebody like me 
who is a climate change skeptic, and somebody like Mr. Markey 
or Mr. Waxman, who is a true believer, and still think that we 
need to do something to capture or convert CO2 if we 
can do it economically, if we can do it economically. We don't 
want to raise the price of coal to 15 cents a kilowatt hour at 
retail. We don't want to destroy the industrial base of 
America. So if we get this right, and Mr. Boucher has got a 
bill to do the research to see if there is a technology that 
works. I am a co-sponsor. I am going to be a co-sponsor when he 
reintroduces it some time in the near future. If we can get 
coal right in America, Mr. Markey can be happy, and I can be 
happy, and everybody can be happy, and all God's children can 
be happy, but we got to get it right. We can't kill coal.
    And so I am glad to see David Crane here. His company is a 
big industrial producer of electricity in Texas, and we are 
proud that he is although I wish he wasn't headquartered in New 
Jersey. It kind of galls me but that is the way it is. I am 
glad to see Mr. Hawkins here because he is one of the 
international experts, and I am glad to see somebody from the 
Mining Association in Ms. Patton, who is going to talk about 
some of the liability issues. This is a good panel, Mr. 
Chairman. And, as I said earlier, this is I think the most 
important hearing and if we get this hearing right and the 
policy coming out of it right our country has a chance to stay 
economically competitive. So with that, I yield back.
    Mr. Markey. We thank the gentleman. The chair recognizes 
the gentleman from Michigan, Chairman Emeritus Dingell.

           OPENING STATEMENT OF HON. JOHN D. DINGELL

    Mr. Dingell. Thank you, Mr. Chairman, and thank you for 
holding this hearing. It is an important one. The future of 
coal is an issue that must be addressed if we are to succeed in 
passing meaningful climate change legislation. As we all know, 
currently coal generates more than 50 percent of the United 
States electricity supply. We have hundreds of years of coal 
reserves. Realistically, coal must and will play a significant 
part in our energy future. The challenge, however, is to 
balance the need for dramatically reducing their greenhouse gas 
emissions with the continuing need for coal to power this 
Nation. To meet this challenge legislation must spur 
development and deployment of carbon capture and sequestration, 
CCS technology.
    China and India's reliance on coal makes the need for this 
technology that much greater. And when I hear my friends 
amongst the environmentalists tell us how we should develop 
technology, I agree, but this is some of the technology that 
should be developed here. One approach this committee 
considered at a hearing last year is Mr. Boucher's Carbon 
Capture and Storage Early Deployment Act. I was very 
sympathetic and remain so to that excellent piece of 
legislation. This bill is based on recommendations put forward 
last year by the advanced coal technology work group, an 
advisory panel to the EPA. I urge this committee to look at 
this draft legislation when considering broader climate change 
legislation although some changes may be appropriate given CCS 
provisions in the stimulus bill incorporating large scale grant 
programs to accelerate the commercial demonstration of CCS and 
for testing carbon dioxide storage sites which is essential to 
the success of CCS and therefore essential to the success of 
comprehensive climate change legislation.
    We are also becoming aware of the fact that there are now 
technologies which can be used by this country to convert 
CO2 emissions from power plants into a useful raw 
material for other industrial processes. This also must be 
pushed forward. The committee should also consider the CCS 
deployment program that Representative Boucher and I and other 
members of this committee released last year. We proposed an 
incentive system for carbon capture and sequestration 
technology. Power plants or large emitters that adopt CCS 
technology early would receive bonus allowances. A similar 
incentive system was included in the Blueprint for Action put 
forward by USCAP, an alliance of industry and environmental 
groups. Both the Boucher-Dingell draft and the Blueprint for 
Action coupled with the incentive program with requirements 
that insure that newly permitted coal-fired facilities will 
employ technology to capture and store carbon emissions.
    The date for compliance, however, merits further discussion 
in my view as we yet do not know when CCS technology can be 
ready. Therefore, in this hearing I look forward to hearing 
more about progress being made on CCS technology and prospects 
for wide scale commercial use. Many questions still need to be 
answered including can we achieve significant reductions in 
greenhouse gas emissions before CCS technologies are ready. Are 
we doing enough to insure that these technologies are on track? 
How will carbon stored underground impact water resources and 
the environment generally? What happens to CO2 after 
it is captured? Who owns it? Who is responsible for keeping it 
safe? These are just a few of the important questions that need 
to be answered about carbon capture and sequestration 
technology.
    I look forward to hearing from our witnesses and learning 
more about the future of coal and climate legislation, and I 
warn that this country must proceed carefully, wisely and well 
lest we create greater harm than benefit. I thank you, Mr. 
Chairman.
    Mr. Markey. We thank the gentleman. The chair recognizes 
the gentleman from Kentucky, Mr. Whitfield.

             OPENING STATEMENT OF HON. ED WHITFIELD

    Mr. Whitfield. Chairman Markey, thank you very much, and we 
certainly appreciate this important hearing on coal and the 
impact that environmental legislation and climate change 
legislation can have on this industry. I noticed that over the 
last couple of days the 2009 International Conference on 
Climate Change has been meeting in New York City, and basically 
that is a group of skeptics of global climate change. 
Primarily, I noticed in reading some of the speeches yesterday 
they were talking about the atmosphere of people creating an 
alarmist state on this whole issue, and that is one of the 
reasons why this hearing is particularly important because when 
you have one entity, the coal industry, providing 50 percent of 
the electricity in our country and then recently we met with a 
group of Chinese who came over, energy experts, and they 
quoted--they set out the fact that in China they are bringing 
on one new coal-powered plant into operation about every 2 
weeks.
    And that is why it is so vitally important that as we look 
at climate change legislation, we look at cap and trade 
legislation. We look at renewable mandates and the impact that 
that can have on the economy in the U.S., particularly at this 
time when our economy is weakening, unemployment is going up, 
if we do not move very carefully then I believe that we can put 
the United States at an economic disadvantage to other 
countries particularly like China and India who are relying 
more and more on the fuel that produces electricity at the most 
economical cost.
    And the thing that is really frustrating about all this is 
that as we look at the models projecting the future of global 
warming it is really almost impossible to detect the total cost 
of what the impact of that might be, and yet we can very 
clearly demonstrate the cost of renewable mandates and how much 
they will increase electricity, how that will make us less 
competitive in the global marketplace and will go a long way, I 
believe, in harming our economy as we try to come out of this 
economic decline. So I look forward to this hearing. I think it 
is vitally important and I yield back. I see I have no time to 
yield back.
    Mr. Markey. The gentleman's time has expired. The chair 
recognizes the gentleman from Pennsylvania, Mr. Doyle.

           OPENING STATEMENT OF HON. MICHAEL F. DOYLE

    Mr. Doyle. Mr. Chairman, I would like to start by thanking 
you for having this important hearing today. Mr. Chairman, it 
is clear that coal remains the fuel that powers the world for 
years to come even as we work dramatically to expand our own 
Nation's renewable energy technologies. Your recognition of 
this fact is much appreciated, and I want to offer you my 
continued support as we put together policies and incentives to 
encourage the rapid and immediate deployment of widespread 
carbon capture and storage technologies. In a hearing last 
week, British Secretary of State for Energy and Climate Change, 
Ed Miliband, warned our committee about the massive expansion 
of the Chinese economy expected over the next decade. This is 
an economy that is 78 percent powered by coal and has projected 
increases in emissions that are many times the current 
emissions of the entire European Union.
    Without widespread development and deployment of CCS 
technologies here in the United States, and the selling of 
these technologies to nations such as China, we will never be 
able to achieve the worldwide reductions we need to combat 
climate change. It is not a question of if we can do this, it 
is a question of how fast can we get it done. The building and 
export of clean technology such as CCS will revitalize our 
Nation's manufacturing base as America will become a world 
leader in the production of clean and cheap energy. Investments 
in CCS technology as well as those in wind and solar power will 
help lead this energy revolution here at home while the 
technologies we export will generate tremendous carbon 
reductions abroad.
    I look forward to continuing to work closely with you, Mr. 
Chairman, so that we can make the widespread deployment of CCS 
a reality here at home as well as abroad. And I yield back.
    Mr. Markey. We thank the gentleman. The chair recognizes 
the gentleman from Illinois, Mr. Shimkus.

             OPENING STATEMENT OF HON. JOHN SHIMKUS

    Mr. Shimkus. Thank you, Mr. Chairman. I will try to respect 
your comments from last week and start in third gear, not 
overdrive, as I did last time. To my colleague from 
Pennsylvania, I think that was the same guy who said he is not 
going to permit a single new coal-fired power plant in his 
country in that discussion, and I think that is what this is 
all about. I also want to appreciate the C-Span coverage, Mr. 
Chairman. This is really important for the public to understand 
and if this is our only shot then we need to take advantage of 
it. And it is a very good panel. I want to agree with 
Congressman Barton.
    Here is an article from the Alton Telegraph, 3,000 workers 
needed for refinery construction. There is an expansion going 
on. 100 full-time jobs will be added. This is what I want to 
see in the coal industry, but what I see especially--and we 
talked about this too last week, Mr. Chairman, is Peabody, you 
are going to get tired of seeing this, Peabody 10, 1,000 mine 
workers closed because of the Clean Air Act amendment, actually 
1,200. These are the individuals who lost their jobs. That is 
my passion and that is my focus. I actually found out more 
stats. This is another request I have for you, Mr. Chairman, to 
invite the United Mine Workers here to talk about the impact of 
job loss because I am throwing out what happened in the 
Midwest. Hopefully, they can give me the reasons why they are 
strangely silent on this bill, but after the '90 amendment in 
Southern Illinois alone 18,200 mine workers were working the 
mines in southern Illinois.
    That United Mine Worker region was reorganized into a 3-
state region that represented only 4,000 United Mine Workers. 
There is a devastating effect on this to jobs, rural America, 
and coal areas of this country. We better, in the words of John 
Dingell, tread very carefully. And I yield back.
    Mr. Markey. The gentleman's time has expired. The chair 
recognizes the gentleman from Texas, Mr. Green.

              OPENING STATEMENT OF HON. GENE GREEN

    Mr. Green. Thank you, Mr. Chairman. And seeing my colleague 
from Illinois hold up that sign about 1,000 workers needed to 
expand that refinery, we do expand refineries in my part of the 
country. And it is interesting following the merger, you say 
the United Mine Workers, I have the same thing in my area, the 
United Steel Workers. We don't have any steel plants, so to 
speak, in my area, but now they represent all my refineries so 
it is interesting what the market and the economy has done. 
Today's hearing reflects on the critical need to address coal's 
future, both under climate legislation and within our broader 
national energy security strategy.
    While coal emits high levels of carbon dioxide, it is also 
one of our Nation's most abundant energy resources. Long-term 
strategies must be in place to reduce coal's carbon footprint 
and incentivize new technology development for carbon capture 
and sequestration, CCS, in order to utilize our vast coal 
reserves. CCS is one of the most important possible solutions 
for climate change unlike capture carbon injection technology 
is well-established and has been used for enhanced oil recovery 
for over 30 years. The Permian Basin in west Texas is home to 
the majority of carbon dioxide injection in the entire world. 
This is good news for addressing climate change and producing 
more domestic energy.
    Federal policies to encourage the development of CCS 
related technologies are key to avoiding severe cost 
disruptions in our economy. Several cost models for climate 
change tell us that one of the largest variables for the impact 
of energy costs under the climate change program is the 
availability of CCS. EPA's analysis last year of the Leiberman-
Warner bill indicated that CCS could account for 30 percent of 
CO2 reductions by 2050 which would involve injecting 
several gigatons of CO2 underground. If CCS 
technologies were unavailable or not commercially viable these 
reductions would have to come from elsewhere and likely at a 
higher cost.
    I hope today's hearing and testimony will shed some light 
on the most appropriate policies and approaches to develop CCS 
technologies when allowance prices may not be sufficiently high 
to encourage rapid development of CCS. And, Mr. Chairman, like 
my colleague from Texas, I want to welcome Mr. Crane. NRG has a 
great office in Houston and does a lot of different things. 
Although we will try to do NRG just like we did Calpine. 
Calpine actually expanded more alternatives and natural gas 
facilities in my district than they did in California so they 
opened up an office in Houston and California Energy is now 
Calpine in Texas, so we don't mind you expanding your office in 
Houston. I yield back my time.
    [The prepared statement of Mr. Green follows:]




    
    Mr. Markey. The gentleman's time has expired. The Chair 
recognizes the gentleman from Florida, Mr. Stearns.

            OPENING STATEMENT OF HON. CLIFF STEARNS

    Mr. Stearns. Good morning, and thank you, Mr. Chairman. As 
pointed out by other speakers, the United States is the Saudi 
Arabia of coal, and we talked about the huge reserves that we 
have in this country. Recently, some of this research was put 
together in a paper that was published in the Stanford Law 
Review, December addition, so that I am a strong advocate of 
coal, and I was happy to see that President Clinton recently 
said--excuse me, President Obama recently said--``This is 
America. We figured out how to put a man on the moon in 10 
years. You can't tell me we can't figure out how to burn coal 
that we mine right here in the United States of America and 
make it work.'' So I think his statement, Mr. Chairman, shows 
that he recognizes, with the huge reserves we have, it is a 
national security to use that and learn to mine it right and to 
figure out to burn coal that does not affect our environment.
    It is so abundant in this Nation. In fact, on the average, 
coal costs $1 to $2 per million BTU compared with $6 to $12 per 
BTU for oil or natural gas and because of this plentiful and 
cost-effective coal reserves, power plants fueled by coal 
account for more than half of this Nation's electricity 
production, but because of the recent regulatory uncertainty 
surrounding climate change legislation, only 12 new coal-fired 
power plants have been built in the United States since 1990.
    Coal is a prime source of energy throughout the world as 
pointed out, particularly their moving ahead in China and will 
inevitably remain so as worldwide energy demand continues to 
rise. So, Mr. Chairman, any meaningful effort to achieve long-
term, sustainable reduction in global greenhouse gas emissions 
will depend on the development and deployment of new energy 
technology including advanced clean coal technology and carbon 
capture and sequestration. The rapid development demonstration 
of widespread deployment of such technologies are of paramount 
importance in any reasoned and effective effort to address 
climate change concerns. Thank you, Mr. Chairman.
    Mr. Markey. We thank the gentleman. The Chair recognizes 
the gentleman from Washington State, Mr. Inslee.

              OPENING STATEMENT OF HON. JAY INSLEE

    Mr. Inslee. There is widespread agreement that the future 
of the country's economy, the future of the planet, my 
grandkids' future depend upon the ability to find a technology 
to use coal cleanly. But I want to make two points that have 
not been made here yet. Point number one, this requires a 
major, technological transformation. It requires us to really 
look at the horizons and know the companies that are 
challenging those horizons right now. I want to list three of 
them. The Ramgen Power Systems Company in Bellview that has a 
compression technology that might reduce the cost of 
compression of CO2, which is necessary for 
geological sequestration by 30 percent.
    The Calera Cement Company that has found a technology where 
you can sequester CO2 from coal-fired plants in 
building materials so that we can make CO2 part of 
our buildings rather than wasting it and putting it below 
ground. The Sapphire Energy Company in San Diego that has a way 
to take algae that can eat the CO2 from the smoke 
stacks and produce a gasoline product chemically 
undistinguishable from gasoline. We need these technologies to 
advance, and that leads to point two. We have to have a fund by 
which to fund this research and development. And here is the 
point I want to make to my friends who want to advance coal. To 
have that fund, we have to have an auction of the permits under 
the cap and trade system.
    If, and only if, we have an auction that will generate 
revenues that can be used to help the coal industry develop 
these technologies does coal have a future in this country or 
anywhere on the planet. If we are going to sell these 
technologies to China, which we have to do so that China will 
not destroy the planet Earth, we are going to have to have a 
fund to invest in these technologies. The biggest debate in 
Congress this year on energy will be about this issue of 
whether we are going to have an auction, or whether we are 
going to give these permits away, and what we are going to use 
the money for, and I hope my friends who advocate for coal 
recognize the existence of this industry depends on actually 
having auctions and having the revenues that can save this 
industry for a future for the United States.
    So I know that seems counter-intuitive to some of my 
friends of coal, but until we realize the necessity of those 
revenues, we are not going to get this job done. Thank you.
    Mr. Markey. The gentleman's time has expired. The Chair 
recognizes the gentleman from Louisiana, Mr. Scalise.

            OPENING STATEMENT OF HON. STEVE SCALISE

    Mr. Scalise. Thank you, Mr. Chairman. I look forward to 
hearing the testimony from the panel as we continue the process 
of exploring all of the various pieces that are involved in 
coming up with a comprehensive national energy policy. I think 
as many of these issues are discussed it shows the problems 
that are created by the fact that our country doesn't have a 
comprehensive strategy. But we have got to also recognize that 
coal is still a very viable and inexpensive source of energy, 
and in fact, is a backup source of energy for many of these 
renewable sources as we advance more wind and solar 
technologies, and I encourage us to do that. We all know that 
the wind doesn't blow all the time. We all know that the sun 
isn't shining all the time and that coal is a backup source for 
many of those renewable sources of energy, and some people do 
have a desire to bankrupt the coal industry. We have heard 
those comments.
    I think we need to be much more pragmatic about encouraging 
clean coal technologies to advance as opposed to literally 
bankrupting an industry that provides so much of our power in 
an inexpensive way and in a way that can be captured in a much 
more clean and economic process. And so, I think as we look at 
some of these proposals, and especially the cap and trade 
proposals that are before us which in essence is an energy tax, 
a tax on energy, that by some estimates would cost American 
families up to $1,300 a year more in increased energy costs. I 
think that is a very dangerous road to go down as we are 
talking about economic shortfall where we are trying to get our 
economy back on track. Let us make sure that we don't create 
policies that cost our economy thousands more jobs and cost 
American consumers up to $1,300 a year more in energy taxes.
    There is a better way to do it. There is a cleaner way to 
do it, and let us pursue those technologies instead of trying 
to bankrupt some at the benefit of others, so look forward to 
hearing the panel. I yield back the balance of my time.
    Mr. Markey. The gentleman's time has expired. The Chair 
recognizes the gentleman from California, Mr. McNerney.
    Mr. McNerney. Thank you, Mr. Chairman. Well, we clearly 
need to include coal in our national energy mix, but I am not 
really sold on carbon sequestration technology. We have the 
geologic formations. We probably have the technology, but are 
we going to be able to do this cost effectively. That is what I 
am hoping you all can sell me on. I am open-minded about it. I 
want to see what we can do here, but I am a person that is 
going to have the same sort of skepticism that my friend from 
Washington State has, so I look forward to your testimony. I 
yield the balance of my time.
    Mr. Markey. The gentleman's time has expired. The Chair 
recognizes the gentleman from Pennsylvania, Mr. Pitts.

           OPENING STATEMENT OF HON. JOSEPH R. PITTS

    Mr. Pitts. Thank you, Mr. Chairman. I would like to thank 
you for convening this hearing today. The role of coal in 
climate change discussions is an important one. As most people 
know, coal is the most abundant energy resource in the United 
States and is particularly plentiful in my home State of 
Pennsylvania. It plays a crucial role in Pennsylvania's economy 
and will continue to do so as long as economically stifling 
climate change legislation does not force many coal-fired 
electricity plants out of business. While I believe it is 
essential to protect our environment and atmosphere, I do not 
believe it is prudent to bankrupt an industry that not only 
produces nearly 50 percent of our electricity today, but also 
provides jobs to countless Pennsylvanians and Americans 
throughout the country.
    Passing cap and trade legislation right now would certainly 
have a negative effect on the coal industry and on consumers 
who pay low prices for coal-generated electricity. It is 
essential that we work towards utilizing clean coal technology. 
We must take decisive action to insure that coal generation can 
continue while taking steps to improve the process of carbon 
capture and sequestration. We must ensure that liability issues 
are resolved so that carbon capture and sequestration projects 
can forge ahead. Investors, owners, and operators need to have 
confidence that litigation will not squander their investments. 
We also need to continue to work towards reducing the cost of 
carbon capture and sequestration projects so that it becomes a 
practical and economically sensible process. If people truly 
believe we need to mitigate the effects of carbon in the 
atmosphere.
    It is every bit as important to pursue ways to use coal in 
a clean manner. I look forward to hearing the testimony today, 
and I yield back.
    Mr. Markey. The gentleman's time has expired. The Chair 
recognizes the gentleman from Virginia, Mr. Boucher.
    Mr. Boucher. Thank you, Mr. Chairman. I am going to waive 
opening statement and reserve time for questions.
    Mr. Markey. The gentleman reserves time. The Chair 
recognizes the gentleman from Nebraska, Mr. Terry.
    Mr. Terry. Thank you, Mr. Chairman. I am an interloper on 
this subcommittee today. Obviously, Nebraska is about 70 
percent dependent on coal, so I want to hear what the industry 
has to say, and I will yield back.
    Mr. Markey. We thank the gentleman, and now we will turn to 
our witnesses, and we begin by welcoming Mr. David Hawkins who 
is the director of the Natural Resources Defense Council's 
Climate Center. He is also a former assistant administrator of 
the EPA and has more than 30 years of experience on air 
quality, climate change, and energy policy issues. We welcome 
you, sir. Whenever you are ready, please begin.

STATEMENTS OF DAVID HAWKINS, DIRECTOR, CLIMATE CENTER, NATURAL 
  RESOURCES DEFENSE COUNCIL; DAVID CRANE, PRESIDENT AND CHIEF 
  EXECUTIVE OFFICER, NRG ENERGY, INC.; IAN DUNCAN, ASSOCIATE 
DIRECTOR FOR EARTH AND ENVIRONMENT SYSTEMS, BUREAU OF ECONOMIC 
   GEOLOGY, UNIVERSITY OF TEXAS AT AUSTIN; FRANK ALIX, CHIEF 
   EXECUTIVE OFFICER, POWERSPAN CORP.; HAROLD P. QUINN, JR., 
  PRESIDENT AND CEO, NATIONAL MINING ASSOCIATION; AND LINDENE 
    PATTON, CHIEF CLIMATE PRODUCT OFFICER, ZURICH FINANCIAL 
                            SERVICES

                   STATEMENT OF DAVID HAWKINS

    Mr. Hawkins. Thank you, Mr. Chairman. Thank you for 
inviting me back to the committee. I would like to highlight 
six points in my prepared testimony. The first is that to 
prevent a climate catastrophe, we simply cannot keep using coal 
the way we use it today. Coal is so abundant that even if we 
put a small fraction of the carbon that it contains into the 
air global temperatures would rise to dangerous levels. New 
coal plants now on the drawing board around the world would put 
more carbon dioxide into the air over their operating lives 
than all the CO2 emitted from previous use of coal 
in human history.
    The second point is that carbon capture and disposal is 
ready for commercial deployment today, but without a strong 
climate protection law this deployment simply will not happen. 
Third, the failure to enact climate protection legislation 
would be disastrous for the climate, but ironically it would 
not assure a sustainable role for coal in the United States. 
Today regulators and investors are saying, wait a minute, when 
it comes to new coal. The most recent Energy Information 
Administration forecast flashes projected coal builds for new 
coal builds in the United States by 60 percent from the 
forecast that it issued just a year ago. Other than plants 
already under construction, the EIA projects that essentially 
now new coal plants would be built for over a decade if climate 
policy remains unresolved.
    The fourth point is that coal needs more than carbon 
capture and disposal for it to serve as the 21st century fuel. 
Shameful practices like mountaintop mining removal, 
conventional air pollution, coal ash management, these things 
have to be fixed as well, but carbon capture and disposal could 
make coal and climate protection compatible. The fifth point is 
that carbon capture and disposal could help reduce our 
dependence on imported oil as well. NRDC estimates that the 
CO2 captured in a robust carbon capture and disposal 
program could support an expanded, enhanced oil recovery 
industry large enough to back out about 2 million barrels of 
imported oil every day by 2020 and about 5 million barrels per 
day by 2025. In addition, electricity made from coal plants 
with carbon capture and disposal could back out more oil by 
powering plug-in hybrids.
    The sixth point I will make is that business leaders and 
environmental groups are coming together and have proposed a 
policy package that would both help protect the climate and 
speed deployment of carbon capture and disposal in the United 
States. In January of this year, the U.S. Climate Action 
Partnership, USCAP, issued its Blueprint for Legislative 
Action. In addition to an economy wide cap on global warming 
pollution, the Blueprint recommends a four-part package for 
using carbon capture and disposal to cut coal plant emissions. 
The first recommendation is to direct EPA and other agencies to 
adopt rules required for CO2 transport and disposal, 
second, to fund 5 gigawatts of coal plants with carbon capture 
and disposal by 2015, third, to enact CO2 emission 
standards for new coal plants now, and, fourth, to provide 
direct payments to create incentives for carbon capture and 
disposal in the early period of the cap program.
    Enactment of this package, Mr. Chairman, and members of the 
subcommittee, would make carbon capture and disposal a reality 
in the United States in the next few years and would show 
leadership to the world. Thank you.
    [The prepared statement of Mr. Hawkins follows:]




    
    Mr. Markey. Thank you, Mr. Hawkins. Our next witness is 
David Crane. Mr. Crane is President and CEO of NRG Energy, a 
leading wholesale power generation company. He has many years 
of experience and was previously the CEO of International 
Power. We welcome you, sir. Whenever you are ready, please 
begin.

                    STATEMENT OF DAVID CRANE

    Mr. Crane. Thank you, Mr. Chairman. Thanks to members of 
the committee and particularly Congressmen Barton and Green for 
their kind words to me. And I want to start by thanking you for 
addressing climate change and combating climate change which we 
believe is the critical task before us. We think clean coal is 
the key to successful combating of climate change and carbon 
capture and sequestration is the key to clean coal, so again we 
applaud you shining a spotlight on this technology, this issue 
which unfortunately remains obscure to the American public.
    NRG is a company that owns power plants. We own 24,000 
megawatts of power plants across the country. That is enough to 
power 20 million American homes. About 1/3 of our generation is 
coal. I think we are the fifth largest consumer of Powder River 
Basin coal, and we span the great expanse of red states to blue 
states in that we have coal-fired power plants in Texas, 
Delaware, New York State, and, Chairman Markey, in your home 
state of Massachusetts.
    We are not a rate-based utilized. We are not able to 
socialize the cost that we bear to the public but they are 
borne by our shareholders, and since 2006 we have been 
investing our shareholders' money in decarbonizing generation. 
We built 270 megawatts of wind in Texas. We announced last week 
an intent to build 500 megawatts of solar thermal plants in 
California and New Mexico, and we believe we will be the first 
company to build a new nuclear plant in the United States 
having filed with the NRC a year and a half ago to build a 
2,700 megawatt nuclear plant in Texas, which our company has 
already spent close to $200 million on just to file the permit.
    All told, what we have going so far would be about a $10 
billion investment and create about 9,000 high paying jobs. If 
we succeed in all we do, we would achieve a significant 
reduction in our carbon intensity. As a company currently we 
produce about 64 million tons of carbon emissions in the United 
States in order to make about 70 to 80 million megawatt hours 
of production. But when you hear the list of things we are 
doing, noticeably absent from that list is clean coal, and if I 
say one thing that this committee remembers one of the things I 
have been saying to our investors when they say, David, are you 
really able to develop nuclear power plants, I say developing 
nuclear power plants in this environment is easier than doing 
clean coal. That is the part that is really a challenge.
    But this is not for want of trying on our behalf. In 2006 
we won an award from the State of New York to build an 
integrated gasification combined cycle plant. Two years later 
after spending over $10 million of our shareholders' money, 
that project which was started by the Pataki Administration was 
cancelled by the Patterson Administration and in fairness to 
the Patterson Administration it just proved that doing a full-
blown IGCC project with CCS was just beyond the reach of any 
private company working with any state at this point in time so 
again we heartily support the federal government's effort to 
support this. I would just like to quickly list what we see as 
the five main obstacles to going forward with commercial scale 
CCS. Obviously, the first one is there is no price on carbon in 
the United States right now. The second would be even if there 
was a price it would be unlikely be set at a level that would 
incent carbon capture and sequestration.
    The lack of a proper legal and regulatory scheme proved to 
be an enormous impediment to us with our New York project. The 
fourth point would be that the normal government incentives, 
production tax credits, loan guarantees are not particularly 
useful in the course of CCS, particularly when you are talking 
about post-combustion carbon capture, which of all forms of 
carbon capture is by far the most important because of its 
ability to be retrofitted on existing plants. My colleague, Mr. 
Alix, will, I am sure, talk about that more. And the fifth 
point, which in this day and environment there is actually no 
money available from our normal sources for anything much less 
new technologies.
    So I would like to just a few thoughts for the committee to 
consider. One is I think that the big bang approach to going 
with CCS as maybe reflected by FutureGen is not going to be the 
quickest or the most cost-effective way to go forward. I have 
nothing against FutureGen, but I think there are other things 
that the committee can incent. I think that when looking at 
brown field coal plants, I think one thing the committee should 
recognize is that our analysis indicates that the best use for 
those plants is not to be retrofitted for post-combustion 
carbon capture but probably to be converted to gas so that they 
confirm renewables on a basis. And the last point I would make, 
and I respectfully would disagree with Congressman Inslee, 
whose book I have read and who I respect in his opinions but we 
don't support 100 percent auction because we think that the 
best people to get the carbon out of coal are coal companies 
and coal-using power general companies, so we support the USCAP 
Blueprint which calls for transitional and partial allocations 
plus auction for early funding. So thank you, Mr. Chairman.
    [The prepared statement of Mr. Crane follows:]




    
    Mr. Markey. Thank you, Mr. Crane, and thank you for the 
shout out for Mr. Inslee's book as well. We appreciate that, 
and that is why we have these cameras working again. Our next 
witness is Mr. Ian Duncan, who is the Associate Director for 
Earth and Environmental Systems for the Bureau of Economic 
Geology at the University of Texas at Austin. Dr. Duncan was 
the geologic sequestration lead for the Texas FutureGen team 
and focuses on the technical and legal aspects of long-term 
carbon storage. We welcome you, sir. Whenever you are ready, 
please begin.

                    STATEMENT OF IAN DUNCAN

    Mr. Duncan. Thank you, Mr. Chairman. I am part of the Gulf 
Coast Carbon Center at the University of Texas which is 
dedicated to doing the science, engineering, and policy 
research necessary to establish a successful sequestration 
industry in the Gulf Coast. My personal research is in the 
business operational and long-term risks associated with 
CO2 sequestration. I am going to organize my remarks 
around the four questions that you asked, Mr. Chairman, in your 
invitation. The first question was what experience do we have 
from CO2 enhanced recovery and other experience to 
help determine the feasibility of large scale CO2 
sequestration. The CO2 EOR industry in the U.S., 
over 80 percent of it in Texas, has transported 600 million 
tons of CO2 over the last 37 years. It has injected 
1,200 million tons into oil reservoirs in west Texas.
    Just to give you an example, the sack rock field currently 
injects about 30 million tons of CO2 and each year 6 
to 7 million tons of that is retained in the reservoir, and by 
that mark this is the largest sequestration project in the 
world if it was using anthropogenic CO2. Only part 
of it is. The safety record of the industry is stellar. There 
are no deaths, no serious injuries related to the injection of 
this CO2 or the transportation. As a scientist, that 
is somewhat problematical to me in that it is very difficult to 
calculate statistics from the set so I got some challenges as 
to how to do this. The second question, what degree of 
confidence can we have in the feasibility and safety of 
CO2 sequestration? Let me first define risk. Risk is 
likelihood or probability times consequence.
    Risky things typically have a probability of about 10 to 
minus 3. Things that we perceive as being not risky such as 
driving on the road and air travel have risks of about 10 to 
minus 4 or 10 to the minus 5. Most of the risks that I have 
evaluated and associated with CO2 sequestration so 
far have risks in the order of 10 to the minus 5 to 10 to the 
minus 7, so there are several orders of magnitude, less risky 
than flying in a plane. Now that is not to say that CCS and 
carbon sequestration is going to be risk free. However, if it 
is done in a proper way if it is regulated well, I think the 
risk is comparable to other industrial operations. The one that 
we know least about is the long-term risk to contamination of 
water, and this risk is clearly site dependent. In other words, 
there are some sites where one could infer that the probability 
would be higher.
    There are other sites where the consequences, the water 
resources are more valuable. This leads to the third question 
what are the principal regulatory obstacles. I would assess 
that the EPA has done a commendable job in its draft rules for 
class six wells, however, there is no mechanism in the EPA 
rules to identify the best sites for sequestration. The 
regulations are purely binary, sort of like a pass-fail exam. 
The EPA does not in my opinion have the authority to drive a 
mechanism to select best sites.
    Final question, what role can CCS play in expanding 
enhanced oil recovery and impact of U.S. oil supply. In Texas 
if we were capturing CO2, we could gather an extra 
3.8 billion barrels of oil. This is equivalent to discovering a 
giant field in Texas. However, there is an issue. There is no 
currently considered regulation of CO2 EOR in terms 
of sequestration. I would think that a class 2A regulation, A 
being anthropogenic, would help to introduce sequestration as 
part of enhanced oil recovery, and this would help develop CCS 
in conjunction with enhanced oil recovery. Thank you.
    [The prepared statement of Mr. Duncan follows:]




    
    Mr. Markey. Thank you, Dr. Duncan, very much. Our next 
witness is Mr. Frank Alix, CEO, and co-founder of Powerspan, a 
New Hampshire-based company, currently working on carbon 
dioxide capture technology for electric power companies. We 
welcome you, sir.

                    STATEMENT OF FRANK ALIX

    Mr. Alix. Thank you, Mr. Chairman, for the opportunity to 
share my perspective on the future of coal under climate 
legislation. My testimony today will focus on the prospects for 
commercial deployment of carbon capture technologies on coal-
fired power plants. Powerspan has been developing and 
commercializing advanced clean coal technology since 1994. Our 
approach to CO2 capture, called ECO2, is 
a post-combustion process designed to capture 90 percent of 
CO2 emissions. The technology is suitable for 
retrofit to the existing coal-fired generating fleet for new 
coal-fired plants. Pilot scale testing of our ECO2 
technology began in December of 2008 at FirstEnergy's Burger 
Plant in Southeastern Ohio. The ECO2 pilot was 
designed to treat a 1 megawatt flue gas stream and capture 20 
tons of CO2 per day.
    Initial testing has demonstrated 80 percent CO2 
capture efficiency which is a promising start. We recently 
completed two minor design modifications that we expect will 
increase the CO2 capture rate to 90 percent. The 
pilot plant was built using the same type of equipment that we 
plan to use in commercial systems. Therefore, successful 
operation of the pilot unit will confirm our design assumptions 
and cost estimates for large-scale CCS projects. Although 
commercial scale CCS projects still have some risk, that risk 
is manageable because the major equipment used in the 
ECO2 process has been used in other commercial 
applications at the scale required for CCS. Our experience in 
the emerging market for commercial scale CCS projects supports 
our optimism. In 2007, Basin Electric Power Cooperative 
conducted a competitive solicitation for a post-combustion C)s 
capture technology to retrofit their Antelope Valley Station, 
which is a coal-fired power plant located in Beulah, North 
Dakota. The Antelope Valley project will install CO2 
capture equipment on a 120 megawatt flue gas slipstream taken 
from a 450 megawatt unit. Basin Electric has targeted 90 
percent CO2 capture efficiency to provide 1 million 
tons of CO2 annually for enhanced oil recovery.
    Six of the leading CO2 vendors for post-
combustion capture technology responded to the Antelope Valley 
solicitation and after a detailed evaluation, Basin Electric 
selected Powerspan. This commercial CCS project is scheduled to 
start up in 2012. Since being selected for the Antelope Valley 
project, a feasibility study has confirmed that there are no 
technical limitations to deploying ECO2 at the 
plant. The study estimated cost of less than $40 per ton for 90 
percent CO2 capture and compression. A similar study 
of ECO2 recently conducted for a new 760 megawatt 
super critical coal plant estimates CO2 capture 
costs of under $30 per ton. A third engineering study focused 
on ECO2 scaling risks determined that our pilot 
plant will provide sufficient design information to 
confidentially build commercial scale systems up to 760 
megawatts.
    Independent engineering firms led the feasibility, cost, 
and scaling studies for our prospective customers. As a sign of 
our confidence, we will back our commercial ECO2 
installations with industry standard performance guarantees. 
Despite the promise indicated by the Basin Electric project, 
strong government action is needed to ensure timely deployment 
of CCS technology to support climate change mitigation goals. 
Government actions should focus on three areas: 1, a strong, 
market-based cap on greenhouse gas emissions; 2, a 
CO2 emission performance standard for new coal-based 
power plants; 3, early deployment incentives for commercial 
scale CCS systems.
    Incentives are needed to ensure early deployment of CCS 
because CO2 capture technology is not yet 
commercially proven on large coal plants and early 
CO2 prices will not be sufficient to offset CCS 
costs. To be most effective, CCS incentives must provide long-
term CO2 price certainty to facilitate project 
financing and must be awarded competitively, preferably by 
reverse auction in order to minimize cost while also providing 
a market signal on the real cost for early CCS installations. 
Early deployment of CCS technology will also create jobs and 
promote economic growth.
    CCS projects require 3 to 4 years to implement and create 
significant economic activity over their duration. In addition, 
by incentivizing early deployment of CCS, the U.S. can assume a 
leading position in this critical sector and create a thriving, 
high-tech export business, and the quality jobs that come with 
it. In summary, CO2 capture technology is 
commercially available from several qualified vendors with 
standard commercial guarantees. Independent studies show that 
early commercial installations of CO2 capture 
technology are likely to be successful. The cost of widespread 
deployment of these technologies appear manageable, 
particularly when compared to the cost of other low-carbon 
electricity solutions.
    The most important reason to promote early deployment of 
CCS is that post-combustion CO2 capture technologies 
will preserve the huge investment in existing coal-fired power 
plants and allow us to effectively use abundant, low cost, coal 
reserves in the U.S. and developing nations, even in a climate 
constrained world. Thank you, Mr. Chairman.
    [The prepared statement of Mr. Alix follows:]




    Mr. Markey. Thank you, Mr. Alix, very much. Our next 
witness is Mr. Hal Quinn, who is the President and CEO of the 
National Mining Association. The National Mining Association 
represents coal, metal, and industrial mineral producers, as 
well as equipment, manufacturers, and suppliers. We welcome 
you, sir.

               STATEMENT OF HAROLD P. QUINN, JR.

    Mr. Quinn. Thank you, Mr. Chairman, good morning, and good 
morning to the members of the subcommittee. I would just like 
to make several points this morning. Several of them have been 
well documented in your opening statements. The first point is 
coal is indispensable for meeting our energy needs here and 
worldwide for the foreseeable future. It is precisely because 
of the virtues of coal that were stated this morning in many of 
the opening statements, its abundance and affordability and it 
supplies over half the electricity in this country, and because 
of those virtues it also provides 125,000 high paying jobs for 
U.S. coal miners, as well as thousands of other jobs for many 
of the businesses and industries that depend on affordable and 
reliable electricity to remain competitive worldwide.
    Globally coal has been the most rapidly growing fuel in the 
world. Countries such as China and India already rely upon coal 
to meet over 70 percent of their electricity needs. They, like 
us, depend on coal to sustain their economies and to raise 
their standard of living. The second point is as follows. 
Neither this Nation nor the global community can address 
climate effectively without advance clean coal technologies 
including, and most importantly, carbon capture and storage. 
Between 2007 and 2030 global energy demand is projected to 
increase by 50 percent. CO2 emissions are projected 
to increase by 57 percent according to the International Energy 
Agency. Virtually all of this emissions growth will come from 
non-OECD nations, and the point being is if the United States 
and every OECD nation completely stopped using coal 75 percent 
of all CO2 emissions would remain untouched and 
unaddressed.
    In other words, without CCS, we deprive ourselves of the 
most effective tool for addressing climate change, particularly 
in the developing world. In other words, no climate policy will 
be successful without coal and CCS. This leads me to my third 
point. The United States must do much more to support 
accelerated development and deployment of CCS technologies. 
$3.4 billion including coal technologies including CCS provided 
for the American Recovery and Reinvestment Act is a good first 
step, but we need to push the technology as hard and fast as we 
can as noted by many members of the subcommittee this morning, 
and this will require further investment by the government and 
the industry.
    As the World Resources Institute has pointed out, CCS 
technologies not only have to be tested and brought up to 
scale, but also have to be integrated on a series of 
electricity generation platforms. That is a challenge beyond 
the sole scope of first-adopters in the coal-based generation 
community. Similarly, as others have pointed out, a carbon 
price signal alone is insufficient. There has to be a push as 
well as a pull to get the job done. The Carbon Capture and 
Storage Early Deployment Act sponsored by Representatives 
Boucher, Barton, Upton, Whitfield, and Shimkus provide such a 
push through mechanism for sustained funding to support 
development and deployment of the enabling CCS technology.
    This brings me to my fourth point for your consideration. 
The solution we all seek requires that we harmonize the timing 
when controls are placed on emissions with the commercial 
availability of the critical CCS technologies needed to reduce 
them. The consequences of getting this policy wrong could be 
dire. The period of time between when promising technologies 
are developed and successful commercialization is often 
referred to as potential valley of death. By extension 
industries may confront a valley of death but they are trapped 
in the period between the mandate requiring a certain level of 
performance and availability of the technology enabling them to 
meet the requirement. The same fate could befall our economy if 
we impose harsh restrictions that jeopardize our ability to 
meet electricity demand before we have the necessary tools to 
meet future emissions requirements.
    Our current economic crisis reminds us all the more the 
importance of structuring any actions responsibly so we can 
meet both our environmental and economic goals. In short, the 
solution must be sustainable in every respect, environmentally, 
economically, and politically. To sum up, Mr. Chairman, let me 
just make the following--sum up my points. First, coal is 
indispensable for meeting our energy needs domestically and 
globally. No climate policy will be successful without coal 
with CCS. We must accelerate the development and deployment of 
CCS, and the policy solutions must harmonize the expectations 
of commercial availability of enabling technology. Thank you 
very much for the invitation.
    [The prepared statement of Mr. Quinn follows:]




    
    Mr. Markey. Thank you, sir. And our final witness is 
Lindene Patton. She is the Chief Climate Product Officer with 
Zurich Financial Services. Ms. Patton works on developing 
insurance products that address the risk associated with 
climate change. We welcome you.

                  STATEMENT OF LINDENE PATTON

    Ms. Patton. Thank you. Chairman Markey, distinguished 
members of the Energy and Environment Subcommittee, my name is 
Lindene Patton and I serve as the Chief Climate Product Officer 
for Zurich Financial Services. Zurich is a global insurance 
company providing insurance and risk management solutions to 
customers in 170 countries. We have been serving customers in 
the United States since 1912. We are the third largest 
commercial property-casualty insurer in this country with over 
20,000 employees in the U.S. I would like to begin my testimony 
by thanking you for holding this critical and timely hearing 
because immediate, concrete and responsible actions including 
the commercial-scale deployment of carbon capture and 
sequestration should be taken to reduce the risks associated 
with climate change.
    Zurich is in the business of risk management. In 2008, 
Zurich announced as part of its climate initiative, that it 
would dedicate significant resources and apply its skills in 
the area of risk management to assist stakeholders in adapting 
to and mitigating the risks of climate change. Zurich has 
applied these skills specifically to commercial deployment of 
CCS. The focus of my testimony today will be identification of 
the essential risk management components of a legislative 
framework necessary to ensure the commercial deployment of CCS 
in an environmentally and economically sustainable manner. The 
role of an insurer in a CCS context is to assess risk, price 
risk, and create risk management best practices. Insurance 
imposes quality underwriting restrictions which are not only in 
the interest of the insurer but are in the interest of public 
good, reducing risk of property damage, bodily injury, 
environmental damage, and other economic loss.
    Insurance performs a role like no other in society, sending 
price signals to incentivize risk-reducing behavior. To ensure 
that commercial deployment of CCS occurs in a sustainable 
manner with respect to natural resources, the environment, and 
public safety, the following four elements of a risk management 
framework are critical. First, estimating the expected. 
Appropriate analysis is needed to estimate the expected value 
of financial consequences that may arise from each individual 
CCS site. Specialty insurers are expert at estimating these low 
frequency, potentially catastrophic risks.
    Second, proper identification and quantification must 
inform permitting, operation and maintenance requirements. No 
amount of insurance, trust fund, or other financial risk 
management system can overcome poor siting or inappropriate 
operating techniques. Third, establishment of a CCS safety 
board. With respect to siting, operational oversight and long-
term stewardship of CCS facilities, a private/public government 
corporation should be chartered and vested with the authority 
to oversee the siting and design of CCS facilities and the 
management of CCS facilities in the event of conflict of law or 
resources.
    Fourth, establishment of a CCS National Trust. A trust 
managed by the CCS safety board should be established to pay 
long-term stewardship costs only after the CCS facility is 
released from post-closure. Finally, it is critical that 
policymakers avoid the establishment of any liability scheme 
that would provide first dollar indemnity for liability during 
operational, closure or post-closure periods. No first dollar 
indemnity should be provided for sovereigns for risks 
manifesting from CCS activities during operational closure or 
post-closure periods because indemnity separates actions from 
consequences and masks risk price signals. Simply put, first 
dollar indemnity removes one of the greatest incentives to 
deploy CCS in an environmentally and economically sustainable 
manner.
    With respect to international action and implication of 
commercial scale deployment of CCS in the U.S., I have a few 
observations. If we as a global community are to meet 2050 
emissions reductions recommended by the IPCC scientists, the 
U.S., Europe, Australia, China and India must reduce emissions 
from coal-fired power plants. Ultimately, it may be necessary 
not only to export U.S. CCS technologies to China and India, 
but also our risk management frameworks and policies. Countries 
in the EU and Australia are moving forward with CCS deployment 
now.
    In closing, Mr. Chairman, Zurich strongly believes private 
insurance has a critical role to play in the deployment of CCS, 
and we look forward to working with you, members of the 
committee, and your staffs to make this happen.
    [The prepared statement of Ms. Patton follows:]





    Mr. Markey. Thank you, Ms. Patton. The Chair will now 
recognize himself for a round of questions. Mr. Crane, Mr. 
Hawkins outlined the USCAP proposal for a package of incentives 
and regulations to drive deployment of CCS. Do you believe that 
that package can work?
    Mr. Crane. Yes, Mr. Chairman. I do believe it works. I 
think the real--would work. I mean I think the real focus is 
how you get the 5 gigawatts, in particular what we call the 
rapid demonstration projects how to get them up and running. 
Certainly the idea is to get up enough scale so that some of 
the costs of these projects come down because I think everyone 
on the panel probably has their view on how much carbon capture 
and sequestration is going to cost, but until we do a few of 
these projects it is all guesswork.
    Mr. Markey. Thank you, Mr. Crane. Under the Obama 
Administration, there is an expectation that the EPA finally 
will follow the law and move forward with regulating 
CO2 emissions from coal-fired power plants under the 
Clean Air Act. Given those facts, it seems to me that coal is 
only going to have a future in the United States if we enact 
comprehensive climate legislation that provides the financial 
incentives and regulatory drivers to make CCS technology a 
reality. Would each of you respond to whether you agree with 
that assessment? Mr. Hawkins.
    Mr. Hawkins. Yes.
    Mr. Markey. Mr. Crane.
    Mr. Crane. Yes.
    Mr. Markey. Mr. Duncan.
    Mr. Duncan. Not really my field, I am afraid.
    Mr. Markey. OK, fine. Mr. Alix.
    Mr. Alix. Yes.
    Mr. Markey. Mr. Quinn.
    Mr. Quinn. Yes. It is in our interest to get this issue 
resolved.
    Mr. Markey. OK. Thank you. Ms. Patton.
    Ms. Patton. From an insurer's perspective insurance can 
accommodate the legal scheme of choice that is supplied.
    Mr. Markey. Mr. Alix, how significant is the potential of 
CCS technology to create jobs here in the United States? Are we 
at risk of losing this market to Europeans and others if we 
fail to follow it aggressively?
    Mr. Alix. I think that technology is being developed in 
many nations. When we competed in Canada, we competed against 
Japanese companies, French companies, Canadian companies, and 
certainly an individual project probably creates 500 jobs at 
its peak in construction and another 100 to operate the system 
so certainly a danger that if others moved before us that they 
will develop technology that will create jobs abroad instead of 
in the U.S.
    Mr. Markey. Now I heard you describe your technology, Mr. 
Alix. I met recently with Brent Constantz, who is a Stanford 
scientist who is the founder of Calera Corporation. Calera 
proposes to use CO2 capture from power plants and 
other sources to make cement simultaneously sequestering the 
CO2 and reducing cement's carbon footprint. I was 
very impressed with that technology's potential. Are you 
familiar with that technology, Mr. Crane?
    Mr. Crane. Yes, Mr. Chairman. In fact, the application that 
Calera has in front of the DOE for a loan guarantee is actually 
with our company at one of our coal plants. And, you know, we 
wouldn't be doing that if we weren't impressed with the 
technology but I just want to caution the chairman that Mr. 
Alix's technology needs to be scaled up from 1 megawatt to 
probably 100 megawatts. I will let him speak for himself but 
the Calera technology is almost at the test tube stage. They 
don't even have a continuous process going. They are mixing it 
in batches right now. So when you think of the millions of tons 
of carbon that come out of a 500 megawatt power plant, it is a 
great promising technology that the government should support, 
but scaling up to utility size power plants is not around the 
corner when it comes to the Calera technology.
    Mr. Markey. But if we had a cap placed upon carbon, would 
that not create a lot of market incentives for the development 
of technologies like that that might completely surpass 
anything that we are now contemplating?
    Mr. Crane. I agree with you completely, Mr. Chairman, that 
putting a cap on a cap and trade system, I mean, yes, to 
stimulate all sorts of innovation and disruptive technologies, 
you are exactly right.
    Mr. Markey. What do you think the likelihood of that 
happening, Mr. Crane, that a disruptive technology would in 
fact emerge as it did--You Tube and Google only have emerged 
because we changed from a narrow band to a broad band policy. 
If we move to a cap and trade system, do you think that that 
would encourage the private sector----
    Mr. Crane. Mr. Chairman, I am not a probability analysis 
guy. I am just a poor businessman, but Dr. Duncan may have a 
better view on that, but I would say that over 20, 30 years, I 
would be pretty confident that there would be disruptive 
technologies. I would not be confident over the next 5 to 10 
years. I think the next 5 to 10 years we are going to be 
slogging forward with what we have and demonstrating at scale.
    Mr. Markey. Mr. Hawkins, would you like to comment on that 
briefly?
    Mr. Hawkins. I would agree completely with Mr. Crane that 
adoption of the economic signal from a cap and trade program 
will unleash all sorts of interest in exploring technologies 
and systems that will keep greenhouse gases out of the 
atmosphere, and in the next 5 or 10 years we have lots of tools 
we can work with. The challenge is to get them deployed and 
create the market conditions. After that, we are going to see 
ideas coming out of the woodwork, and the regime for 
controlling global warming pollution 25 years from now is 
probably going to look very different than any analysis today 
would suggest.
    Mr. Markey. Thank you, Mr. Hawkins. My time has expired. 
The Chair recognizes the gentleman from Michigan, Mr. Upton.
    Mr. Upton. Thank you, Mr. Chairman. It has been noted that 
I think since 1990 we have built about or we have put on line 
about 12 plants, 12 coal plants, which is slightly more than 
one per year. At the same time, China is bringing on a new coal 
plant virtually every single week. Wall Street is not financing 
any of the projects unless they have carbon capture as part of 
the long-term goal. And I would just like to comment on the 
last question that the chairman asked, and that is as I look at 
cap and trade, I am a very strong supporter of CCS. We need 
legislation to do that. But the last thing that we want to do 
is embark on cap and trade without knowing whether in fact it 
is going to work for sure and it is in place or not as those 
years commence.
    Mr. Crane, you made the comment that nuclear would be a lot 
easier than clean coal from your experience in New York, and I 
know that as you were embarking on a project in New York State 
your CCS project virtually collapsed. The question that I have 
is you said that this technology is promising carbon capture 
but it is not around the corner. How long do you think it is 
until it can be in place whether it is using Mr. Alix's 
technology, when is the date that we can look at it----
    Mr. Crane. Well, I am actually not a technology--I think we 
are ready to go forward with scale demonstration projects right 
now. I think every element of the CCS chain is ready to go at 
scale whether it is with Frank's technology, and we have carbon 
pipelines down on the Gulf Coast in Mississippi and up in the 
Big Sky country. So, no, I am a big believer that it is ready 
to go, but in New York State it wasn't that we didn't think 
that we knew how to do it. It was just too expensive. And, you 
know, keep in mind that the greatest stimulant in the electric 
industry to doing other things apart from having money 
available from Wall Street, which there is none for anything, 
is high natural gas prices.
    So in a low natural gas price environment the trouble that 
you see with clean coal, solar, wind, everything, is that the 
price of natural gas is now so low that that is by far the 
cheapest way of producing electricity.
    Mr. Upton. Were there liability concerns in New York as 
well?
    Mr. Crane. Yes. Yes. Liability with the carbon migrate 
underground, and we had the geological studies to show that it 
would stay very contained and it did not propose a threat, but 
there is a big difference between having that in a study and 
making people comfortable. And we didn't even get out into the 
public with that. That is just making the public policymakers 
comfortable.
    Mr. Upton. Dr. Duncan, I know that Texas is not a Great 
Lake state. How do you get away with or how do you proceed with 
liability issues in Texas as it relates to ground water and the 
whole NIMBY factor? Is there a special law that Texas has that 
other states or Oklahoma may have that we don't have in places 
like New York and Michigan?
    Mr. Duncan. Well, there are some differences in the common 
law tradition in Texas that are different than other states. I 
think that the attitude in Texas was portrayed when the Texas 
legislature voted unanimously to take on the liability related 
to FutureGen CO2. So I think there is a high degree 
of comfort in Texas both amongst the general public and 
legislators as to the safety and efficacy of CO2 
injections, which comes from the long record that we have 
there. During the FutureGen project, I was out in the 
communities where we were considering FutureGen sites, and I 
think that there was a large degree of public acceptance. We 
found that there was a negative reaction towards new coal power 
plants that didn't have CCS, but there was a high degree of 
acceptance of carbon capture and storage.
    Mr. Upton. Last year there were certainly a lot of us that 
were encouraged that we would actually move the CCS legislation 
that Mr. Boucher and many of us were co-sponsors of. Have each 
of you had a chance to look at that legislation and what 
comments would you have as we look to have it moved this year 
in terms of changes that we might want to make to that 
legislation. Does anybody have a suggestion? Mr. Hawkins?
    Mr. Hawkins. We did review Mr. Boucher's legislation and 
commented favorably on it last year. This year we think it 
would be a good contributor to what we would call a two track 
proposal on CCS. Deployment is the top priority. Some of the 
concepts that are in the Boucher legislation would provide 
additional resources for research that could be done along with 
that deployment to advance some of the technologies that are 
further behind.
    Mr. Upton. I know my time has expired so I will ask my last 
question which may not require an affirmative answer. Is anyone 
on the panel against our legislation? That is a good answer. I 
yield back.
    Mr. Markey. The gentleman's time has expired. The Chair 
recognizes the gentleman from Pennsylvania Mr. Doyle.
    Mr. Doyle. Thank you, Mr. Chairman. I want to for all the 
panelists just first given the power makeup of the United 
States today and for the near future and given the prior makeup 
for developing countries like China and India, is there anybody 
here on the panel that thinks we can meet our greenhouse gas 
reduction goals without widespread development of CCS 
technology? Is there a way to do this without CCS? Does anybody 
think that? So it is critical that this technology be developed 
and deployed if we are going to have any chance of meeting 
these targets.
    Now here is my question for all of you. I heard Mr. Hawkins 
said that this technology is ready to go today. I have seen 
television commercials that says it is a complete myth and 
doesn't exist and won't be ready for 50 years, and I heard all 
of you talk a little bit about it, but I still don't have a 
clear--could each of you tell me in your opinions how long you 
think, how many years are we talking about until we have 
widespread deployment where we can go to our coal-fired utility 
plants here in this country and start to export this technology 
to countries like China and that. Are we 10 years away from 
that? Are we 20 years away from that? Is it ready today or is 
it a myth? Could each of you just tell me what your opinion of 
that is? Yes, go ahead.
    Mr. Hawkins. Yes. Mr. Doyle, I think what I would say is 
that with respect to the question of readiness it is ready 
today. My view is that if the comprehensive climate legislation 
were enacted, we would see contracts of the first commercial 
scale projects being firmed up within months, less than a year 
from enactment. That is my view. In terms of widespread 
deployment, that is more difficult to predict, but in terms 
of--you know, we build power plants one at a time, and the 
first ones could be on line within the normal construction time 
path of a power plant without carbon capture and disposal if 
you get the legislation and the economic conditions to support 
it.
    Mr. Doyle. Mr. Crane.
    Mr. Crane. My view is that the quickest way to go forward, 
and I agree with David's time table, is to split the carbon 
capture and the sequestration, prove carbon capture and combine 
it with enhanced oil recovery. You can do that now. Frank's 
technology is one of the leaders scaled up to the 100 megawatt 
size. Prove up sequestration sides by just putting off the 
shelf gasifiers from the chemical industry on top of the 
geological formations that you want to prove it in. And if you 
do that, you can be going within a year and you prove it up 
over the next 5 years, and you can be exporting at scale within 
a decade.
    Mr. Doyle. In a decade you think we can be to scale and 
deploy these things?
    Mr. Crane. Yes. And the huge market here obviously is all 
the newer coal plants, not the 50-year-old coal plants in the 
United States, which are reaching the end of their useful life 
anyway.
    Mr. Doyle. Mr. Duncan.
    Mr. Duncan. I believe from a technical viewpoint and a 
technological viewpoint we are ready to start now. I think 
there are some policy issues and regulatory issues that need to 
be worked out.
    Mr. Alix. Assuming the policy and regulatory issues are 
worked out, I think 3 to 4 years in a build cycle is about 
right, and as both Mr. Hawkins and Mr. Crane said, we are ready 
to go, so really the financial incentives have to be in place 
and we can see commercial units come on line 2012, 2013, then I 
would think a year or two on line is sufficient to demonstrate 
that it is commercially ready at any scale so I am a little bit 
more optimistic. I would say by 2015 we should be ready to do 
this everywhere at whatever scale is needed if we get going in 
the next year with the incentives needed to get commercial 
scale units deployed.
    Mr. Doyle. Very good.
    Mr. Quinn. My understanding of the consensus would be that 
a widespread deployment, commercial deployment, is 2020, 2025 
for CCS. That is not to say there can't be breakthroughs that 
some of the panel just mentioned that can accelerate that 
even----
    Mr. Doyle. You are saying the year 2020. You are not saying 
20 to 25 years.
    Mr. Quinn. No, the year 2020, between the year 2020 and 
2025 with widespread commercial deployment.
    Ms. Patton. I think the time frames which have been 
outlined are consistent with our understanding from the 
insurance industry perspective. At Zurich in January of this 
year we announced the availability of insurance capital that is 
immediately deployable in this context. And, in fact, we have 
been asked to and have provided an indication for coverage 
already so from my perspective not only is this technology 
technically ready to go but there are indications in the 
marketplace that the business is ready to go.
    Mr. Doyle. Very good. So basically the consensus is 
certainly within the decade or shortly thereafter we would be 
ready for widespread deployment of this technology. Is that 
what I am hearing? OK. Thank you very much. I think that is 
important to have on the record. Thank you.
    Mr. Markey. We thank the gentleman. The Chair recognizes 
the gentleman from Texas, Mr. Barton.
    Mr. Barton. Thank you, Mr. Chairman. I would ask unanimous 
consent to put two documents in the record for this hearing. 
Both are from the Energy Information Administration. One is the 
last updated price of coal per short ton in the United States. 
It is February of 2009. The other is a chart of coal prices per 
kilowatt hour by state that is from the EIA, and it is January 
of 2007.
    Mr. Markey. Without objection, it will be included.
    [The information appears at the conclusion of the hearing.]
    Mr. Barton. Thank you, Mr. Chairman. The reason I put those 
two documents in the record is because we are having a nice 
warm touchy feely discussion about CCS and all that, and I am 
on the Boucher bill. I am supportive of it. But consumers make 
decisions based on price and utilities make decisions on what 
kind of plants to build based on the price of the fuel. If I 
heard Mr. Alix correctly, he said that his technology is going 
to cost $40 a ton of CO2, which is the equivalent of 
$120 a ton of coal, so he is going to--the base load price of 
coal in the United States according to the EIA is around 
between $26 and $30 a ton. So he has just added 400 percent to 
the cost of coal if I understand him correctly. Now Mr. Doyle 
asked the question, and it is a good question, does anybody 
think that we can meet all of our environmental challenges 
without using CCS technology for coal, and you all answered no.
    But the real answer is yes. You don't use coal. You use 
natural gas or you use nuclear or you use some other 
alternative. Natural gas prices are falling like a rock. Last 
month in Texas in the Barnett Shale, which is partially in my 
district, you could buy all the natural gas you wanted at about 
between $4 and $5 a thousand cubic feet. Now there is a 
formation up through Pennsylvania and New York called the 
Marcellus Shale. It is estimated that it has so much natural--
it could have 500 trillion cubic feet of natural gas. Now to 
put that in perspective, we use about 22 trillion cubic feet of 
natural gas a year. The Barnett Shale, which is the largest new 
producing formation of natural gas in the world last year 
produced about a trillion cubic feet.
    So we have this formation up in Pennsylvania and New York 
that has so much natural gas potentially that we can't even 
estimate how much we have, so there is a way to do this without 
using coal, but having said that I think we need to use coal. 
Now my question to Mr. Crane and to Mr. Alix if we really, 
really, really study this CCS under Mr. Boucher's bill, what is 
a reasonable expectation of how much lower you can get the cost 
of this technology so that it really is cost competitive with 
natural gas and nuclear? Mr. Crane.
    Mr. Crane. Congressman, it is not clear to us that the 
house load of post-combustion carbon capture, it is difficult 
to see from an engineering perspective how it ever gets below 
sort of taking up 20 percent of the production of the power 
plant itself, so while we expect----
    Mr. Barton. It takes that much electricity just to run the 
technology?
    Mr. Crane. Yes.
    Mr. Barton. Twenty percent of the output?
    Mr. Crane. Yes.
    Mr. Barton. OK.
    Mr. Crane. So our view is that Mr. Alix's $40 a ton, I mean 
can it get down to $30 a ton? Maybe it can. We don't believe it 
will ever go----
    Mr. Barton. That is per ton of CO2?
    Mr. Crane. Yes, per ton of CO2. We don't believe 
it will ever get to--the economy is such that we don't believe 
it ever gets to $5 a ton or $10 a ton, so it becomes an 
inconsequential portion of the whole. When you talk about the 
cost of carbon for a coal-fired power plant on a deliberate 
basis $40 a ton is a little bit more than doubling the cost of 
coal because the $8 a ton of coal that you are talking about of 
course is up in Wyoming. You still have to get it to where you 
are using it. So it is a big adder but maybe not quite as large 
as you said.
    But the issue with gas is that if it turns out that the 
country has an infinite amount of gas in these shell formations 
then probably the future for coal isn't that great anyway. I 
think all of us in the power generation industry remember what 
happened the last time the power industry plunged wholesale at 
the gas which was that the price of gas went from $3 per 
million BTU to 15 last June, so I think we really think there 
needs to be a balance. I know that you agree with that.
    Mr. Barton. I agree with it. My time has--could I let Mr. 
Alix answer?
    Mr. Markey. Yes.
    Mr. Barton. How low can you bring the cost of your 
technology if you really refine it and expand it?
    Mr. Alix. I think we are looking at between $20 and $30 a 
ton as a reasonable goal based on what we know today for an 
advanced coal plant. I think that adds about 2 to 3 cents per 
kilowatt hour if you look at advanced coal plants. I think it 
is important to note that natural gas plants have about half 
CO2 of a coal plant, so CO2 emissions 
from natural gas plants would not be free under a cap and trade 
bill and they would increase as well, so under many scenarios 
we have seen even adding that 2 to 3 cents per kilowatt hour to 
coal, if you look at gas historically more in the 8 to 10 per 
million BTU and the CO2 emissions of gas coal still 
remains quite competitive.
    Mr. Barton. Thank you, Mr. Chairman.
    Mr. Markey. The gentleman's time has expired. The Chair 
recognizes the gentleman from Utah, Mr. Matheson.
    Mr. Matheson. Thank you, Mr. Chairman. I thank the panel as 
well. We may have covered this a little bit in Mr. Barton's 
questioning. I just want to say one of my concerns about moving 
too quickly on climate change in terms of whether the key 
technologies are really developed or not, you have heard in 
fact a lot of the members on the panel ask you questions about 
when is this going to be ready, when are we going to be viable. 
But beyond being viable, I guess the question is how much is it 
really going to cost? You know, 2 years ago a witness before 
this subcommittee noted the new technologies at that point 
predicted the total cost of a new coal-fired plant would 
increase by 60 to 70 percent.
    Do these new costs--what level of concern do you have about 
the potential cost impacts if we are going to employ carbon 
capture and sequestration? I just ask that to the panel in 
general. How much do these new costs concern you?
    Mr. Hawkins. Well, I pay electricity bills and so I can 
certainly relate to the concerns about cost. What I would say 
is that the first generation of these plants is likely to cost 
more and the percentage increase that you are describing is 
what is called the production cost of electricity. That is not 
going to translate into that kind of a price rise in retail 
electricity prices for several reasons. First, coal is half of 
the power production in the U.S. Second, production cost is 
about 60 percent of the electricity bill you pay, but most 
importantly we are not going to deploy this technology on all 
330 gigawatts of coal-fired power plants overnight. It is going 
to happen gradually. The first ones are going to be somewhat 
clunky. I remember the first portable computer that I had. It 
was about the size of a carry on bag on an airline, and it had 
a lot less computing power than this cell phone. So we are 
going to get better at this, and we are going to get better 
faster if we start right away.
    Mr. Matheson. Do people think cap and trade legislation, 
that there is going to be a way to provide cost mitigation to 
consumers that feel this? Is that a piece of this equation as 
well?
    Mr. Crane. Well, yes, at least that is part of the USCAP 
Blueprint is to provide cost mitigation through some of the 
proceeds from the auction to the hard-pressed consumers.
    Mr. Matheson. I would suggest that doing so is more 
complicated than it sounds. About half the states in this 
country have primary reliance on coal as their electric and 
fuel source, about half the states don't, and one of the 
concerns I have coming from one of those states that about 90 
percent of its electricity comes from coal is we are going to 
have a regional wealth transfer, if you will, in this country 
based on who pays more on the utility bills and how the cost 
mitigation funds are directed to consumers who are affected by 
it. So I don't know if anyone on the panel has expertise on 
that issue but I would just suggest to you that this is a lot 
more complicated than people are making it out to be I think in 
terms of how you do cost mitigation in a fair and equitable 
way.
    Let me move to--I mentioned that mid-term action--I 
mentioned that quote earlier. The witness in the 2007 hearing 
was Jeff Sterba, who is the CEO of PNM Resources. I know he 
can't be here today but at that same hearing in 2007 he said 
that it is only through the steady and judicious advancement of 
these applications during the course of the next decade we can 
start to bring the costs down. It seems to me we have a long 
way to go in terms of making the advances we need to make 
between 2007 and 2017. We thought we made some progress in the 
bill, the legislation that passed Congress in 2007, the Energy 
Independence and Security Act, but from the policymaker's side 
of the equation what more do we need to be doing?
    I am a co-sponsor of last Congress--the Boucher bill, as 
you heard before. Is that the approach we need to take? What 
are your suggestions policy wise for how we can move this 
technology along?
    Mr. Crane. Well, just even on your regional wealth transfer 
point, I agree with you that there is the potential for that, 
and right now absent support for clean coal in particular, but 
also for nuclear there will be a wealth transfer to the parts 
of the country that have more solar, wind resources or more 
gas-fired generation than ones that depend on coal and nuclear, 
and we think all of those technologies, solar, wind, gas, 
nuclear, and clean coal need to be supported, so I would say to 
answer your last question what you can be doing is exactly what 
you are talking about which is early funding to get clean coal 
going because that is definitely the laggard of all those 
technologies right now in terms of, you know, ready for 
commercial deployment. So to prevent that regional wealth 
transfer, I think pushing forward the way you are is the way to 
go.
    Mr. Hawkins. And I would add we would recommend this USCP 
Blueprint, which has a series of proposals to address all the 
concerns that you mentioned, both in terms of regional impacts 
and in terms of the serious program to deploy carbon capture 
and disposal.
    Mr. Matheson. Thank you, Mr. Chairman.
    Mr. Markey. The gentleman's time has expired. The chair 
recognizes the gentleman from Kentucky, Mr. Whitfield.
    Mr. Whitfield. Thank you, Mr. Chairman. I guess after 
hearing all this testimony and reading it, I am not 
particularly optimistic about carbon capture and sequestration 
myself, but I noticed recently, Mr. Hawkins, that the NRDC in 
partnership with Alliance for Climate Protection produced some 
TV ads, and they focused on an employee of a plant using coal, 
and basically the commercial ends with a caption stating in 
reality there is no such thing as clean coat. Now does that ad, 
does that apply to a plant using CCS or not?
    Mr. Hawkins. Unfortunately, it does today, and that is the 
reason that we co-sponsored these ads. Today we don't have a 
commercial scale electric power plant in the United States that 
is using carbon capture and disposal.
    Mr. Whitfield. But you would be supportive of the coal 
industry if it did have CCS in a commercial----
    Mr. Hawkins. As I have testified, NRDC is a strong 
supporter of CCS deployment and we have supported it for a 
number of years now and continue to support it. We would like 
to be able to run an ad very soon saying in reality there is 
such a thing as coal with carbon capture.
    Mr. Whitfield. Now say by the year 2030 just from the 
NRDC's perspective, what would you like to see the fuel mix 
used worldwide to produce electricity, say about 2030?
    Mr. Hawkins. We don't think that it is appropriate for 
Congress or for an organization like ours to dictate the fuel 
mix. We think it is important for the Congress to set criteria 
for environmental performance, and we think the environmental 
performance of the global power sector has to be a lot better 
in terms of carbon dioxide pollution than it is today. You say 
by 2030? Globally, we should be trying to reduce emissions on 
the order of 30 percent or more. In the United States, we would 
like to see reductions on the order of 40 percent or more 
reflecting our large historic contributions to the 
CO2 in the atmosphere.
    Mr. Whitfield. Ms. Patton, one of the issues relating to 
commercial use of carbon capture and storage certainly relates 
to liability issues, and you touched on insurance policies in 
your testimony, but from the liability side of this companies 
that are first using commercial grade CCS and storing this the 
post-injection liability issue, is that something that you all 
are willing to cover?
    Ms. Patton. Absolutely. Our customers came to us and asked 
us for some assistance specifically in managing risk associated 
with carbon sequestration, especially the post-injection 
issues. From our perspective, we evaluated the existing suite 
of technologies in this case, and as I indicated in my written 
testimony we announced the availability in January of two 
policies that are designed to provide liability coverage during 
the operational closure and post-closure periods. The first 
policy addressed is the core risks were identified to us as 
unique for the sequestration activity, so clearly existing in 
the insurance industry already there was capital available to 
address construction liability associated with constructing 
capture ready facilities.
    With respect to the injection component our customers 
identified five areas which we developed a policy around. They 
were concerned about pollution liability for underground 
sequestration activities so what would happen, as Dr. Duncan 
noted, if there was a migration of stored CO2 into 
ground water. Our policy does respond to that. They were 
concerned about liabilities associated with transportation, 
whether that was a short distance or a long distance. Our 
policies respond to that. With respect to injection activities 
itself potentially that a well could go out of control, we were 
able to respond to that. There was concern about a geo-
mechanical event so basically the active putting the gas into 
the ground causing a geo-mechanical event, a seismic event. We 
are able to respond and provide coverage for that.
    And, finally, there were concerns about business 
interruption. What would happen if after this project was 
constructed there were circumstances where the plant had to--
had a business interruption and they might have to buy carbon 
credits or some other equivalent in that process. We are 
prepared to extend coverage to address that during that period. 
The second area of policy looks at the specified activities 
that may be imposed by a permitting system if one is 
implemented, which will dictate the terms under which those 
facilities will be closed and released in a post-closure 
context. So what must an operator do to prove that that site is 
stable enough for a long-term stewardship, and we have a second 
policy which addresses those issues. So, yes, we stand ready 
today to commit capital now for those applications.
    Mr. Markey. The gentleman's time has expired. The chair 
recognizes the gentleman from Washington State, Mr. Inslee.
    Mr. Inslee. Thank you. My compliments to the panel too. 
This has been one of the best panels. We have had about two 
dozen hearings and this has just been a great panel. I have 
1,000 questions. I will start with one to the whole panel. Does 
anyone believe that the coal industry has an ownership right in 
the atmosphere that gives it right to use the atmosphere? Does 
anybody believe that? No one said yes so far. OK. Does anybody 
believe that the coal industry should have the right to put 
unlimited amounts of carbon dioxide at zero cost into the 
atmosphere? Does anybody believe that?
    Mr. Quinn. Congressman, I am not sure of the point of your 
questions whether the coal industry has that right. Aren't we 
just talking about whether society in terms of how----
    Mr. Inslee. Yes, that is a good point. Let me rephrase the 
question. Does anybody at the table believe that anyone, any 
industrial group, utility or coal-based using industry have the 
right to put unlimited amounts of carbon dioxide which is 
causing global warming into the atmosphere at zero cost? Does 
anybody believe that? So far nobody----
    Mr. Quinn. Well, again I just think the question is a 
little narrow. It keeps invoking the coal industry, and we are 
talking about society and economic activity, and there is a lot 
of different activity that has carbon contribution.
    Mr. Inslee. Do you think a utility that has a coal plant 
that is spewing tons of CO2 into the atmosphere that 
is causing global warming, do you think that utility has a 
property right to put that CO2 into the atmosphere 
in unlimited amounts at zero cost? Does anybody believe that? 
OK. Nobody believes that, so there is a consensus that we 
should have a legal framework that does not allow that to 
happen so now here is my next question on how to form that 
consensus. Does anybody believe that the cost of developing 
this technology that I think there is broad consensus in this 
room needs to be developed to figure out a way to sequester 
carbon dioxide, does anybody believe that the cost of 
developing that technology should fall exclusively on the 
public as opposed to those industrial entities that are using 
the coal that are putting the CO2 into the 
atmosphere? In other words, does anybody believe that cost 
should be exclusively on the taxpayers who would have to fund 
that research?
    OK. Now one has said yes to that question, so that means 
there is someone else going to have to fund this research, so 
now I want to ask for your opinions about that. I have 
suggested, others on this committee have suggested, that we 
have a cap and trade system that auctions off the right to put 
carbon dioxide in the atmosphere and uses at least a 
substantial portion of the auction revenues to go to research 
and development activities, some of which would be through the 
utilities of actually doing this work. Some of this would be 
through the companies developing this coal-generating 
technology. Some would be from academic institutions but 
basically this fund would help fund this new technology.
    How many people think that at least in part is a good idea 
that we fund this new technological development at least in 
part to the auction revenues of a cap and trade system? I see a 
bunch of heads nodding. Why don't we just go down the table? 
How many people think that is a good idea in general?
    Ms. Patton. I think there are multiple methods for doing 
funding. I think the critical issue is that there needs to be 
funding.
    Mr. Quinn. I think in part an auction would assist in 
providing the push to funding, but I think it is also important 
that we allocate any allowances properly to protect any 
economic dislocation because after all we are talking about 
businesses that are going to have to adjust their cost 
structures to increase energy supplies, and if you are going to 
make them pay more some of their factories in your districts 
could be their last in the United States.
    Mr. Alix. I would support in part funding CCS technology 
with auction revenue.
    Mr. Duncan. This issue is outside my field of expertise, 
but I am in favor of funding.
    Mr. Crane. Yes, we agree in part auction but we know the 
government has many different uses for funds and that often 
they don't end up in the place where we would agree with you.
    Mr. Hawkins. We support funding for deployment of this 
technology. It could be done either through an auction or it 
could be done through direct allocation of allowances, which 
would then be turned into money, so you can turn the allowances 
into money at the start of the process or one step down the 
chain but it is important to get the funds there.
    Mr. Inslee. Thank you. And I just note Mr. Doyle and I are 
working on a provision that would allow a partial distribution 
of permits to energy intensive industries that compete in 
international commodities that would otherwise might have a 
difficulty of competing so at least I am proposing the bulk of 
these auction revenues to go to develop this new technology but 
that there be some assistance, if you will, to these energy 
intensive industries. Thank you very much to all the panelists.
    Mr. Markey. The gentleman's time has expired. The chair 
recognizes the gentleman from Louisiana, Mr. Scalise.
    Mr. Scalise. Thank you, Mr. Chairman. Mr. Crane, I think 
you had said your company, NRG, is the only company that is 
actually seeking a permit right now for nuclear plants?
    Mr. Crane. Well, no, I was just expressing a high level of 
confidence that we would be the first to build, but I think 
there are something like 24 companies that have filed permits. 
There are 14 that asked for the Department of Energy loan 
guarantees, and I think the Department of Energy is down to 
considering five and they will pick two to three.
    Mr. Scalise. So you are close enough to where you think 
you--do you have any time table when you think you would----
    Mr. Crane. Well, close enough in the nuclear world.
    Mr. Scalise. When do you think you would get that----
    Mr. Crane. Well, the Nuclear Regulatory Commission has 
published a schedule for our permit which would qualify for us 
getting the permit in 2011, and then if we proceed to build 
immediately we first would be on line in 2016.
    Mr. Scalise. Now how long has this process been going on 
for your company to try to get--and how much does it cost?
    Mr. Crane. We were a late start and we moved fast so it has 
been only 3 years for us so far but keep in mind we are 
permitting a nuclear design that has been previously designed 
certified by the NRC at a site that has been previously 
approved for four units and has two there now so----
    Mr. Scalise. It is not a new plant. It is not a new site or 
it is not a new model that you are using.
    Mr. Crane. Well, it is advanced. It is far newer than any 
other nuclear plant currently existing in the United States 
thanks to the 30-year lag, but it is not new by international 
standards.
    Mr. Scalise. And how much have you spent so far?
    Mr. Crane. The application process has cost us close to 
$200 million.
    Mr. Scalise. What do you think the reasons are for that 
high cost? There are a lot of barriers to entry----
    Mr. Crane. Nuclear plants are complicated, and the NRC 
takes their safety mission exceedingly seriously as they 
should. We have no criticism of the NRC in the way that they 
have been dealing with our application.
    Mr. Scalise. I don't want to put you on the spot because 
you are waiting for them to approve this but you have seen this 
across----
    Mr. Crane. Good point.
    Mr. Scalise. There are many people, not mentioning you, but 
there are many companies that want to pursue nuclear but 
consider barriers to entry, not just cost but regulatory 
burdens in a proven technology. This is not something new. This 
is something that has been perfected. It is very widely used in 
Europe. They sure don't put those same types of barrier to 
entry and have been able to get a carbon free energy product 
much more readily. It is much more widely used in other parts 
of the world.
    Mr. Crane. I think the biggest barrier to entry to nuclear 
as a macro-economic or solution in the U.S. is that I don't 
think in my life time there will be a nuclear plant developed 
in the United States that is not at an existing site, and since 
there are roughly 60 some existing sites and probably half of 
them they can't have expansion for various reasons, it limits--
the limiting factor for nuclear as a solution is siting long 
term.
    Mr. Scalise. Mr. Hawkins, I think you have talked about, 
and I will let you explain your real feelings on it, but in 
terms of coal, I think you have called for a moratorium on coal 
facilities, if you could expand on that.
    Mr. Hawkins. Nuclear plants should be built with carbon 
capture and disposal.
    Mr. Scalise. And so you are saying that that technology is 
not available today though, right?
    Mr. Hawkins. No, we are saying the technology is available 
but the policies are not there to require it or to create an 
economic incentive for it.
    Mr. Scalise. When would you foresee being in place where a 
facility could be built that would have that technology?
    Mr. Hawkins. Well, Chairman Waxman has said he wants to get 
a bill out of his committee by Memorial Day. If that happens 
and if the Senate moves it could be before the end of this 
year.
    Mr. Scalise. And how long would it take then to get those 
facilities built if, and assuming a lot of things, but----
    Mr. Hawkins. Well, the coal-fired power plant takes 3, 4, 
and 5 years to build and as soon as the policy signals are 
straight, I think, as I said before, you would see contracts 
written, and 3, 4, 5 years after that you would see projects 
that could come on line with this technology.
    Mr. Scalise. We have had hearings on a number of 
renewables. I think we all support the continued development of 
those renewables to get them at a place where they could be 
even more reliable. I think the estimates I have seen on wind 
and solar is you could maybe get 20 on the high end, 30 percent 
of your grid in electricity generated through those methods, 
and everybody acknowledges that even then it is not a 
continuous source and so you would need backup power supplies 
and another method of providing continuous power because when 
we turn on our lights of course we are not going to just have 
the lights be on when the wind is blowing, and so you have to 
have that backup. Even if under those scenarios you laid out, 
how would you suggest solving that problem of the fact that you 
don't have a continuous source just by using renewables?
    Mr. Hawkins. As I said, we don't propose a system that is 
100 percent renewables. We think that the most likely 
electricity system in the U.S. in the next several decades is 
going to be a mix of renewables.
    Mr. Scalise. Nuclear, gas?
    Mr. Hawkins. A mix of the technologies that we have today. 
With respect to renewables, I think we will see the development 
of storage technologies which will make renewables and the 
intermittent nature of renewables much less of an issue than it 
is today.
    Mr. Markey. The gentleman's time has expired. The chair 
recognizes the gentleman from Virginia, Mr. Boucher.
    Mr. Boucher. Thank you very much, Mr. Chairman, and I want 
to commend you on organizing our discussion this morning on the 
future of coal. It is a critically important conversation for 
us to have as we consider cap and trade legislation direct 
funding legislation for carbon capture and sequestration and 
other measures that are related to climate change. And I agree 
with Mr. Inslee. This has been one of the more productive 
conversations we have had in this subcommittee very recently. 
The Electric Power Research Institute widely regarded for its 
expertise in energy technology tell us that if we had a 
dedicated funding stream of approximately $1 billion per year 
for a 10-year period that at the end of that 10-year period by 
approximately 2020 we would have available, reliable, and 
affordable carbon capture and sequestration technology 
available. And very shortly within a matter now of just a 
couple of days, as has been mentioned in the course of our 
discussion today, bipartisan legislation that would achieve 
that funding schedule and put those dollars in place for 
research development and demonstration for carbon capture and 
sequestration will be introduced.
    I have heard some interesting testimony today from a number 
of the members about perhaps there being carbon capture and 
sequestration technologies available in the nearer term, and I 
would like to explore that for just a moment, and I would ask 
for relatively brief answers to these questions because I have 
another train of questions I would also like to ask. My sense, 
and I would like your reaction to this, is that it is possible 
certainly today for a CO2 emitting facility to 
install carbon capture and sequestration technology. That would 
be possible, for example, if you were sitting on top of an oil 
field and you are using a gasification technology which is well 
understood, and as Mr. Crane indicated has been a commercial 
application in the chemical industry now for a number of years, 
and you are simply injecting that carbon dioxide directly into 
the gas or oil field. In fact, that is happening today in 
Canada at Wayburn with natural gas that is--with CO2 
that is being generated from a coal-fired power plant, I think 
it is in one of our Great Plains northern states.
    But there are some challenges, and that is what the funding 
is designed to address. First of all, we really don't have 
storage caverns other than oil and gas fields, well 
characterized for CO2 sequestration. Secondly, we 
don't have post-combustion technologies that are at hand for 
CO2 separation. There is an older technology but 
improvements are on the way that will yield a larger suite of 
technologies including chilled ammonia, including oxygen 
firing, and other processes that will make far more reliable, 
available, and affordable that full suite of CCS technologies, 
and it is the need for that, the characterization of fields 
other than oil and gas, that being, saw caverns or perhaps 
unmountable coal seams. It is the need for these next 
generation technologies for CO2 capture that it is 
essential we provide this funding for.
    So let me just ask if there is general agreement with the 
statement I have just made about the need for this legislation 
directed towards those objectives. Mr. Crane.
    Mr. Crane. Well, Congressman, I agree with you completely. 
I would just be careful if you get the money, who is dispensing 
it because you are going to need someone with a bit of an 
entrepreneurial event, and the DOE has traditionally been 
exceedingly conservative in the way that they have----
    Mr. Boucher. Thank you. I appreciate the answer that we 
need to do it. We do have in our legislation a comprehensive 
mechanism involving broad participation in the policy making 
about how it would be distributed. Mr. Hawkins, would you care 
to comment?
    Mr. Hawkins. My view, Mr. Boucher, is that you would get a 
lot more bang for your buck if your legislation were 
incorporated into climate legislation that will make sure that 
the private sector is motivated to spend this money as 
effectively as possible to deliver results as quickly as 
possible.
    Mr. Boucher. Thank you very much, Mr. Hawkins. Mr. Quinn, 
would you care to comment?
    Mr. Quinn. Congressman, I agree totally with your 
statement, and we are supportive of your legislation.
    Mr. Boucher. All right. Does anyone have a different view? 
OK. I will take that as essentially unanimous agreement from 
the group. Mr. Hawkins, I would welcome your advice on the 
fundamental difference between research development and 
demonstration on the one hand which government typically funds 
because these are large scale projects often times beyond the 
scope of private industry in order to finance and the 
deployment of that technology once it is developed on the other 
hand. And my sense about how that division should be drawn is 
that a larger scale, longer term projects are deserving of 
government funding perhaps through a mechanism such as the 
legislation we are about to introduce that would speed those 
dollars to it. And then when it comes to deployment that should 
be a shared responsibility between the polluting--well, I don't 
want to use that word, between the emitting sector, the 
industry that is emitting, and the government perhaps through a 
mechanism in our cap and trade legislation that would devote 
revenues from whatever share of the allowances we decide to 
auction toward that purpose. Would that be essentially the 
right division?
    Mr. Hawkins. Yes, sir. The U.S. has supported deployment of 
critical technologies in the past. The interstate highway 
system is one such example, and I think that one can say that 
with respect to the electricity sector support for deployment 
is a reasonable thing to do for energy security reasons and to 
attack this critical problem of climate change.
    Mr. Boucher. Thank you very much, Mr. Hawkins. Ms. Patton, 
one question for you as my time expires. I am very encouraged 
to see that the insurance industry is now offering products to 
insure against liabilities, short term, long term, operation 
closure, post-closure, for those who inject carbon dioxide for 
sequestration purposes. And that tends to resolve some of the 
issues that we have discussed over the last several years about 
that liability and who is going to bear it. Now the industry 
potentially can bear it because they will have insurance 
against it.
    What I think is absent from this conversation is the cost 
of that insurance, and can you give us a sense of what the 
premium is on the policy that you are now offering perhaps in 
terms of the unit of dollars or sense, I suppose, per ton of 
carbon dioxide that is stored?
    Ms. Patton. In short, the answer is in the absence of a 
specific submission unfortunately, no, not in the amount of 
time that I have available.
    Mr. Boucher. So, in other words, you have a product 
available, price to be determined?
    Ms. Patton. It is price based on the geologic conditions 
that are present and to the extent that we provided indications 
to customers, they have indicated that they can absorb that 
within their business model.
    Mr. Boucher. All right. So they have found it to be 
affordable?
    Ms. Patton. Affirmative.
    Mr. Boucher. All right. Thank you very much. Thank you, Mr. 
Chairman.
    Mr. Markey. The gentleman's time has expired. The chair 
recognizes the gentleman from Illinois, Mr. Shimkus.
    Mr. Shimkus. Thank you, Mr. Chairman. I apologize. We have 
a health subcommittee meeting going on. We met with local 
county officials, so you know I would rather be here 100 
percent of the time, so I apologize for not being here.
    A couple of things. One is part of the memo from committee 
staff talks about, and I think, Mr. Hawkins, you referenced the 
fact that there is no really movement on fossil fuel in the 
capital market section. I would submit that it is more a fear 
of politics than the fear of--that fear is putting a high risk 
on raising capital for this because we are uncertain and we are 
not moving in the direction. In fact, I would talk about the 
new appointee to the Secretary of Health and Human Services, 
Governor Sebelius, who 3 times vetoed legislation for a coal-
fired power plant in the State of Kansas.
    That is the signals that are going out there in the 
community that--and added by, I know Mr. Whitfield talked about 
your ads that there is no clean coal, and I would add based 
upon your web site you say there is no such thing as clean coal 
even with carbon capture and sequestration. That uncertainty 
provides exactly what you all want is fear in the markets to 
move products. Now, fortunately, in Illinois we haven't fallen 
to those fears.
    I just talked about the mechanical refinery expansion. I 
got the Prairie State campus that is employing thousands of 
workers. In fact, it is taking the jobs of laid off 
steelworkers because of this economy and putting the work in 
the power plant now in my district. We have Taylorville, 
Illinois. We have Decatur, Illinois. So I would say that we 
need to get this right and we need to bring certainty, and it 
is the politicians who are doing this. Mr. Chairman, I would 
like to for the record also submit the Wall Street Journal 
editorial from yesterday which raises the issue of who pays for 
cap and trade. And you know who pays? The Midwest. Mr. Doyle, 
it is going to be Pennsylvania. It is going to be Virginia. It 
is going to be Louisiana. It is going to be Illinois. It is 
going to be those fossil fuel states who are going to be paying 
to really transfer wealth from the Midwest to the coastal 
states.
    And if you allow it to be submitted, Mr. Chairman, I would 
appreciate it. I think it adds to this debate on the whole cap 
and trade regime.
    Mr. Markey. Without objection, the Wall Street editorial 
mentioning my name will be included in the record.
    [The information was unavailable at the time of printing.]
    Mr. Shimkus. You are on here. I didn't know that. I didn't 
read that far down, Mr. Chairman. You are always one step ahead 
of me. I want to go--Mr. Crane, I think you made a critical 
point on the nuclear power and expansion, so I agree with you 
100 percent that site selection is a limiting factor. I wish 
the environmental community would get on board with helping us 
expand nuclear power. Let me address this current question as 
far as Yucca Mountain and the high level nuclear storage. If we 
don't address the nuclear storage issue, does that inhibit the 
ability of expansion on site for nuclear power?
    Mr. Crane. I don't think so. I mean whether Yucca Mountain 
goes forward or not is a decision you all make. That is above 
my pay scale. We proceeded with nuclear development on the view 
that dry cast storage----
    Mr. Shimkus. On site.
    Mr. Crane. On site would be good for one or two centuries.
    Mr. Shimkus. But you would have to get permission to 
expand. There are nuclear power plants right now that in the 
current siting they are almost at capacity.
    Mr. Crane. And I hate to be colloquial but that is 
someone's else problem. Our nuclear power plant is on 15,000 
acres.
    Mr. Shimkus. OK, but if you are talking about the expansion 
of nuclear power so what is not good for your competitors but 
nuclear power, which is important for the country to meet these 
caps, I hope that in this you would think better of the country 
than just your shareholders.
    Mr. Crane. Well, no, certainly as an American I am a huge 
proponent of nuclear power and I think it ties directly with 
the electric car which is I think a service that nuclear power 
is tied to. The siting question though and the nuclear storage 
question, again that is more of a political public policy 
issue.
    Mr. Shimkus. And, guess what, you are in front of 
politicians and the debate on public policy, and the Yucca 
Mountain debate is a current debate on how we deal with this, 
and there are nuclear power plants that are at capacity that 
will either have to expand their on site storage, and of course 
the State of Illinois is a big nuclear power state with 11 
reactors in suburbia. My colleague who chairs this talks about 
the threat and the risk. However, we never seem to address a 
threat and risk of major metropolitan areas that have nuclear 
power facilities while we keep high level nuclear waste right 
in the backyards of suburbia. Mr. Chairman, I could go on for 
more but my time is up and I don't want to push the limits. I 
yield back.
    Mr. Markey. Thank you. I thank the gentleman very much, and 
just a brief correction here that unless something has gone 
terribly, terribly wrong in the private sector, Mr. Crane, that 
decision on nuclear waste storage is actually way below your 
pay grade. We will make that note for the record. Let me turn 
now and recognize the gentleman from Florida, Mr. Stearns.
    Mr. Stearns. Thank you, Mr. Chairman. Well, let me see if I 
can get through this and perhaps speak a little louder. I had 
the opportunity to have dialogue with the European Union and I 
get a lot of information from those meetings over in Europe and 
then they come over here to the United States. And recently I 
read that the European commissioners for energy last November 
said that coal with CCS, carbon capture sequestration, is the 
low cost, low carbon alternative. Reports published by the 
European Commission and the IEA, which is the International 
Energy Agency, last year made the direct statements that, A, 
the cost of achieving European climate goals could be 40 
percent higher without CCS, the European EC, and, B, the cost 
of mitigation without CCS is 71 percent greater than coal with 
CCS. Given that position, is there an opportunity for large 
scale cooperation with the EU on large public-private CCS 
partnerships? Mr. Quinn and Mr. Hawkins.
    Mr. Quinn. Congressman, I think so, and I think it was the 
IEA that actually made the statement that in the long term that 
coal with CCS will be the most affordable, low carbon energy 
source for the world. Perhaps some of the panelists have better 
information than I do but there are sequestration demonstration 
projects currently proceeding in Europe. There are some 
American companies participating in Asia with carbon capture 
and storage projects in China, so there are opportunities on 
those I think that are underway in terms of those types of 
partnerships.
    Mr. Stearns. Mr. Hawkins.
    Mr. Hawkins. I would agree that there is great potential in 
these partnerships. Actually I am going to Europe on Saturday 
to have conversations in Brussels with European legislators 
about this very thing in addition to Europe, China, Australia 
or other places where this kind of work could pay off big 
benefits.
    Mr. Stearns. Anyone else like to comment on it? Yes.
    Mr. Alix. We have also been to Europe and asked to compete 
for projects in Europe and Australia, so I think the 
initiatives are in the national scope in terms of trying to 
bring the best technology to bear on the problem.
    Mr. Stearns. A study by a collaboration of both unions and 
industry leaders published last month estimate that 5 to 7 
million jobs would be created during the construction process 
of CCS facilities, and that a quarter of a million permanent 
jobs would be needed in order to operate these facilities. With 
that said, in your opinion what is needed to jump start the CCS 
technology industry to ensure widespread commercial deployment 
of the technology and what can Congress do to make these jobs a 
reality? The same two individuals perhaps. Mr. Quinn.
    Mr. Quinn. Well, Congressman, I think what we have heard 
today is two things. We need a push. Congressman Boucher's 
legislation provides part of that push in terms of sustained 
funding source for this technology. Probably also what we have 
heard today is that there needs to be a framework that 
establishes some certainty, a balanced framework in terms of 
carbon management. It provides a certainty we need to build out 
our existing coal-based generation source. Part of the 
discussion today has been about some of that uncertainty. Mr. 
Shimkus raised it. Uncertainty in terms of technology, 
operational uncertainty and policy uncertainty are all the 
enemy of investment and capital investment.
    Mr. Stearns. What do you think are the biggest hurdles to 
reaching CCS commercialization?
    Mr. Quinn. We have three pieces there. We have the 
technology in terms of capture and use, and from what I have 
heard today it sounds like we have very promising demo projects 
and pilot projects underway or close on their way. Scaling 
those up and to be applied and integrated into commercially 
available electricity generation platforms, still there is a 
way to go on that particularly in terms of the economics. The 
transportation segment, transporting that to a storage facility 
and then the siting for storage and what is suitable for 
siting, and I think on the last part there is quite a bit of 
studying underway that sounds very promising, but I am not--I 
will defer to Dr. Duncan in terms of the status of that.
    And there is probably the issue that Ms. Patton talked 
about in terms of how we underwrite the risk for long term for 
that type of storage. So there are a number of different 
hurdles there we have to get through but I am very confident 
that in the time horizons we talked about today that we will 
overcome those.
    Mr. Stearns. Mr. Hawkins.
    Mr. Hawkins. In terms of what Congress can do again I would 
hold up for the cameras the USCAP Blueprint. It provides a cap 
on emissions and it provides a very structured program to get 
carbon capture and disposal systems into the market, emission 
standards and financial incentives to make sure that these 
first projects are economically affordable to build and fold 
into our power system.
    Mr. Stearns. Mr. Duncan, is there anything you would like 
to add to this before I close?
    Mr. Duncan. Yes, thanks. I think that a number of the 
statements being made about cost of CCS and gas prices are a 
little misleading. First, all of the prices with regard to 
carbon capture are referred to retrofits of post-combustion 
capture. Capture can be much cheaper if you do it through an 
IGC plant or through oxy firing through new builds rather than 
just retrofitting. Another thing, if I might add just quickly, 
is the comments on natural gas prices and the Barnett Shale and 
so on were very misleading because those gas productions will 
not continue under gas prices, and the average life time of the 
Barnett on the shale well is about 9 months in terms of its 
productivity so gas prices are going to go higher.
    Mr. Stearns. Good point. Thank you.
    Mr. Markey. The gentleman's time has expired. The chair 
recognizes the gentleman from Texas, Mr. Hall.
    Mr. Hall. Mr. Chairman, can you hear me?
    Mr. Markey. Unfortunately, yes, very clearly.
    Mr. Hall. I just didn't want you to cut me off like you did 
my friend from Florida. I am from a fossil fuel state, and I 
realize the importance of technology to address CCS, and I 
support nuclear power totally and completely, clean coal, of 
course. But I also recognize the presence of a thing that some 
of you seem to forget, and that is the presence of a cash 
register. You know, China doesn't really want to go by the cash 
register.
    And you can, Mr. Hawkins, hold up all the periodicals that 
you have there in your whole briefcase and you can't force 
China to change their mind. They are not only refusing to 
participate financially in the clean up but they are 
deteriorating daily and weekly as has been testified to here 
and none of you objected to that or disagreed with it. And 
about the same thing can be said for Russia, Mexico, India, and 
go right on down the line. They just don't want to talk about 
the cash register. That is too plain. That is something that 
the American people can understand.
    I am a little bit sick of all the self-serving, worn out 
determination to push and rush to judgment when, you know, you 
don't even say global warming anymore. You are saying global 
change. And of course we have to have global change, and we 
ought to have technology. We ought to be addressing it. And 
this young lady over here can give you a quick policy of 
insurance, the whole line, legal reserve, non-cancellable on 
global change. Now I wonder if that would also include global 
freezing. Sometimes up here I am about as afraid of global 
freezing as I am global warming, but you all don't seem to 
notice that.
     I guess in the question by Mr. Inslee from Washington 
about unlimited amount of carbon dioxide, who has the right to 
do all that into the atmosphere and whether or not--I would 
really like to ask Ms. Patton a question but I think it would 
take too long to answer about your policy and how you arrive at 
a policy to insure against and what do you insure against on 
global warming, an occasion? Just yes or no. You insure the 
happening or the non-happening of an occasion, right?
    Ms. Patton. We insure the happening of the triggering 
event.
    Mr. Hall. OK. I think you might have meant mechanical 
event, and would that to get to be more plain that something an 
American, that I could understand, does that mean devastating--
is there something in the small print that describes what your 
mechanical might be?
    Ms. Patton. A geo-mechanical----
    Mr. Hall. Let me ask you, would that be when the Statue of 
Liberty is under water or the Sahara Desert becomes Sahara 
Ocean or what mechanical event has to happen before it triggers 
your pay off?
    Ms. Patton. Mr. Hall, in response to what coverage we are 
providing for the geo-mechanical issues, the covered event 
would be a resultant earthquake from the injection of gas.
    Mr. Hall. You have a board that can insure against 
earthquakes?
    Ms. Patton. If, in fact, the CCS injection, the injection 
of the carbon dioxide, does cause that event, we are prepared 
to pay in response for any consequential----
    Mr. Hall. I am pleased to know that it does exist, and do 
you sell many policies in China?
    Ms. Patton. We do offer coverage in China. However, this 
particular coverage is----
    Mr. Hall. I will get to my question before Mr. Markey turns 
me off like he did the guy from Florida here. I like Mr. 
Markey. Don't misunderstand me. I just don't like the way he 
votes. He has killed my vote for 28 years up here. Mr. Quinn, 
in your testimony you state that coal is not merely important 
to the United States and the world, it is indispensable for 
meeting our energy needs for the foreseeable future, and I sure 
agree with you to that effect. I am big on coal. Now only that, 
but coal could provide 125,000 direct high-paying jobs to the 
U.S. coal miners and support hundreds of thousands of 
additional jobs throughout the value chain and then companies 
and manufacturing operations that depend on reliable coal-based 
electricity to keep their energy costs down, and Mr. Barton 
alluded to that.
    What will happen to these jobs if we stop using coal-fired 
generation or we arbitrarily raise the price of coal-fired 
generation through cap and trade?
    Mr. Quinn. Well, if the wrong policy is chosen and coal is 
adversely impacted then those jobs would be gone. Those jobs 
happen to be the highest paying jobs in many of those regions 
including in your State of Texas as well.
    Mr. Hall. Do any of the other of you four who said yes, 
yes, yes, yes, have a different answer to that? I presume that 
you don't. I yield back my time, Mr. Chairman.
    Mr. Markey. The gentleman's time has expired. By unanimous 
consent, Mr. Terry, who is not a member of this subcommittee, 
will be recognized to ask questions.
    Mr. Terry. I appreciate it. Mr. Hawkins, in your booklet, 
the plan, does it state where the cap should be placed on 
CO2 emissions, at what level?
    Mr. Hawkins. It does.
    Mr. Terry. And what is that?
    Mr. Hawkins. There are targets for 2012, for 2020, for 
2030, and for 2050.
    Mr. Terry. Just for 2012, what would that be?
    Mr. Hawkins. It is a range of between 97 percent of 20205 
levels to 102 percent of 2005 levels, so basically bracketing 
2005 levels.
    Mr. Terry. Very good. Then the follow-up question would be 
to Mr. Crane and Mr. Alix, for a coal-fired plant in Omaha, 
Nebraska sitting on the Missouri River, 500 megawatts, does 
technology exist that allows them to comply to the cap by 2012?
    Mr. Crane. To take the carbon--to comply by not emitting 
the carbon as opposed to----
    Mr. Terry. Right, that plant, starting up a new one and 
shutting down the current one.
    Mr. Crane. My opinion is that the technology will not be 
ready so that by 2012 a 500 megawatt flue gas stream could all 
be 90 percent carbon captured but Mr. Alix may have a different 
point.
    Mr. Alix. I would agree with that. I would say it is 
available to confidently predict you can deploy it by that time 
frame. I would say it is not ready yet. It is available to 
demonstrate. It is not commercially proven.
    Mr. Terry. And by 2012, will it be commercially proven in 
your opinion?
    Mr. Alix. The current commercial demonstration project we 
have on track should be running in 2012. Generally, people want 
a year of operation to say it is commercially proven so I would 
say on that track by 2013 you might suggest it is commercially 
proven at that point.
    Mr. Terry. So perhaps maybe part of our discussion is not 
only what the level of the cap should be in a cap and trade, 
but also what year it should take effect. Would any of you 
support or feel that a trigger that the technology exists 
before the cap would be enforced is a reasonable position? Any 
of you have an opinion on that?
    Mr. Crane. Well, I have an opinion. I think it is a classic 
chicken and egg situation that you cannot wait for the 
technology to be proven or to put the cap and trade system in 
place or else it will never happen. Certainly that has been our 
history of progress over the last 10 years is there has been 
actually very little progress made in that regard, so I think 
you have to set the target out there and then set the private 
sector working with the government out there to get after it.
    Mr. Terry. I am curious--I am sorry. You wanted to say 
something?
    Mr. Quinn. I just would add that I think Mr. Crane makes 
some good points. I think it is important to know you shouldn't 
be picking a time frame that is arbitrary and then saying 
hopefully the technology catches up so somehow there has got to 
be integration in terms of figuring out what the time frame is 
based on what we know right now or in the near future about 
when that will be commercially available, and that is different 
than commercially--it has been commercially tested. I mean why 
leave available commercially is a whole different animal.
    Mr. Terry. I think that is an excellent point. Do any of 
you, again probably Mr. Crane or Mr. Alix, have any idea or 
opinion about what the cost to the utility would be around 2012 
to retrofit their coal-fired plant to be able to meet the 
requirements of the cap, what those costs would be, ballpark? 
We are guessing here but give me an educated ballpark.
    Mr. Alix. We have done a number of studies both for 
retrofitting new at commercial scale 500 to 760 megawatts and 
they indicate capture costs in the vicinity at large scale 
plants of $30 a ton. When you add in sequestration if it is 
enhanced oil recovery you may recoup some of those costs. If 
you pay to inject it in general people----
    Mr. Terry. Now is that the operating cost to do that or the 
upfront cost of the technology?
    Mr. Alix. That includes capital and operating with some 
assumption of financing costs which today is a big assumption 
because current markets are not widely open as Mr. Crane 
pointed out.
    Mr. Crane. I would agree with Frank. Normally you would 
express in our industry in dollars per megawatt, but in this 
market where you can't get the money to fund a 500 megawatt 
power plant would be looking at $500 million or more in upfront 
cost.
    Mr. Markey. The gentleman's time has expired. All time for 
questions has expired. What I am going to do now is ask each 
one of you to give us your 1-minute summation of what you want 
us to remember about your testimony as we move forward in 
drafting climate change legislation. We will begin with you, 
Ms. Patton.
    Ms. Patton. Thank you very much. In closing, Zurich 
believes that commercial scale deployment of CCS must be 
achieved soon to meet the 2050 emission reduction goals. Zurich 
encourages this committee to proceed with legislation of 
whatever form you see fit that would provide the necessary 
funding and support to study and generate data that is 
necessary for us as an industry to properly underwrite risk and 
send price signals in the form of insurance premiums and 
otherwise support risk mitigating technologies. The more data 
that we have available, the better sites we can select and the 
lower fees that we can charge in terms of deploying our 
capital.
    Mr. Markey. Thank you, Ms. Patton. Mr. Quinn.
    Mr. Quinn. Thank you, Mr. Chairman. I say again several 
points I would like to leave you with are that coal is 
indispensable for meeting our energy needs here in the United 
States, as well as globally. No climate policy will be 
successful without coal with CCS. We must accelerate the 
development and deployment, widespread deployment, of carbon 
capture and storage. And, finally, the policy solutions to meet 
those needs must be harmonized so that expectations are 
harmonized with commercial availability of the enabling 
technology.
    Mr. Markey. Thank you, Mr. Quinn. Mr. Alix.
    Mr. Alix. Thank you, Mr. Chairman. My point is that 
CO2 capture technology is commercially available 
today from several vendors with commercial guarantees. Studies 
suggest that they have a high likelihood of success upon 
deployment. To get those projects deployed, we need some type 
of financial incentive offered from the government either as 
part of a comprehensive climate bill or separately, and we 
suggest that those incentives be competitively awarded so we 
get the lowest cost solutions moving first at the best sites. 
Thank you.
    Mr. Markey. Thank you. Dr. Duncan.
    Mr. Duncan. I believe that CO2 sequestration and 
deep brine reservoirs and oil reservoirs can be done safely and 
effectively. I think that in order to do this, I think that 
Congress should develop some sort of regulatory mechanism that 
encourages the best sites to be selected, just not oK sites. I 
also think that they should encourage the development of 
regulations for CO2 sequestration in association 
with enhanced oil recovery.
    Mr. Markey. Thank you, Dr. Duncan. Mr. Crane.
    Mr. Crane. Thank you, Chairman Markey. What I would try and 
focus the committee on is as we go forward with looking at 
energy policy to not get distracted by wind, solar, smart 
grids, conservation efficiency. All those things are great, but 
what your focus on today, this is central, coal is central, 
carbon capture and sequestration is central, and as you turn to 
how to incent that focus on what we can do now. We need to get 
dirt turned. We have been studying this for so long. We need to 
get some metal in the ground to see what works and what is the 
cost of these various technological options.
    Mr. Markey. Thank you, Mr. Crane. Mr. Hawkins.
    Mr. Hawkins. Yes, Mr. Chairman. Carbon capture and dispose 
technology is ready for commercial use today. The industry is 
waiting for a signal, and that signal has to come starting with 
this subcommittee. If you consider and adopt legislation that 
applies a cap to global warming emissions that applies, 
emission standards for new coal power investments, and that 
couples that with a financial incentive program to promote the 
early use of carbon capture and storage, you will make that 
happen. Thank you.
    Mr. Markey. Thank you, Mr. Hawkins. We thank each of you, 
and I couldn't agree with all of your testimony more. This is--
--
    Mr. Hall. Mr. Chairman.
    Mr. Markey. The gentleman from Texas.
    Mr. Hall. Since you are telling them that you agree with 
them, do I have the right to tell them that I am disappointed 
that none of them mentioned the taxpayers and how much it would 
cost and how soon we would know that it would help, whether it 
be 10 years or 50 years, whether we would know that we had had 
any--and why they didn't mention China's inability or 
unwillingness to come forward and participate, Mexico, India, 
and the others. I think they ought to take those into 
consideration when they go to recommend what the taxpayers of 
this country have to pay for something they will never receive.
    Mr. Markey. I think they assume that one of the members 
would mention all those facts and that they could keep their 
testimony on the subject that was at hand which is that we have 
to find a solution to the burning of coal not only here but 
around the world and only if we find the solution here can we 
export that solution to China and India and other countries, 
and so the burden is on our shoulders. We are the technological 
giants on the planet. The world is looking to us. We have to 
put in place the incentives to find the solution to these 
problems. Thank you. We thank each of the witnesses for being 
here today.
    [Whereupon, at 12:15 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]







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